What are some of the arguments for and against free trade?

Answer 1

The most important argument for free trade is that it helps to use the world's resources in more efficient ways. This can be proven mathematically, and if your econ professor in college was any good, he demonstrated that proof to you.

The most important argument against free trade is that although free trade enriches many in small ways (mainly through lower prices), it hurts few in major ways (mainly through loss of employment and business profits).

For example, in Germany, the law requires that many types of skin care products be sold only in pharmacies. If trade in skin care products were free, most of those products would be sold in specialty stores, grocery stores, and department stores, in all likelihood at lower prices. Needless to say, this would adversely impact independent pharmacists (all pharmacies in Germany are independently owned, because another law forbids creation of drugstore chains)...

Answer 2

Free International Trade, like Free Trade in general, like when you trade on Craigslist is 'good'. In other words, you both are better off because you get what you want. If one person is better at producing something than another, then it pays to have that person to produce it, then trade for other stuff (this is NC's 'mathematical proof').

That is what I call the 'naive view of trade'.

In actual practice, there are costs to free trade. For example, if i buy goods at store X and then change to Y, X goes out of business, people are laid off, and the capital used in the store may go idle. Textbooks teach that these costs are insignificant to the gains of economic efficiency and technology. However, there is nothing stopping these costs being so high that the make a country a ghost town, provided there is enough of a lag between consumption and production.

There are also hidden costs to free trade. For instance, what if store Y pollutes more, treats their employees worse, makes products that are less safe or healthy? This is especially a problem in international trade. What if a international firm has goods which are priced cheaper only because it is able to pollute more?

The biggest problem with trade that no one really talks about, is the negative externality in employment. If everyone shops at Wal-Mart then lets say you will be laid off. But no one can express their social preference that they don't want to be laid off. All they can do is consume or not consume - and their behavior has no effect on the outcome, even though no one wants to be laid off.

Thus, it is conceivable for all consumers to buy Chinese goods, have the domestic industry disappear, then all get laid off, then no longer be able to afford Chinese goods or produce anything on their own, experiencing an aggregate fall in employment, earnings and output.

Answer 3

Free trade would normally be almost irrelevant under a gold backed moeny standard. Ther whole thing would be self regulating. If a country purchases too much it ran out of money and stops doing it. See? Instant balance.

Back in the 19th century the British empire desired to purchase chinese tea but the emperor only accepted silver bars as payment and the brits only had paper money. They tried to force the chinese to become opium addicts so they could balance their trade but the emperor baned the use of opium.

Then britain declared war on china.

You know who else wanted his payment in something more tangible than paper? Saddam.

Answer 4

This is kind of a loaded question, imo.

First point:
The trade is not free because the government's both of the importing & exporting countries regulate it to the hilt.

Second point:
It would only be free trade if it was trade done exclusively between a producer & a buyer.

Third point:
The different currency values are way out of kilter & would only be fair if the medium of exchange had the 'Same' value in every country......Such as an international Gold standard.

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Answer 5

Here's one of those outside opinions, that I really hope is more like "Out of hte mouths of babes", than just ignorant.

My gut reaction is that the larger the circle of trade the easier it is to funnel the lion's share of the profits to one small area.

So:
If you had 100 countries, and 70% of the resources end up in the possession of 1% of the population, then you have 1% times 100 countries.

If you have ten percent,
you have 1% of ten countries, which is less rich people, and more poor.
and if you have ONE WORLD trading,
then you have only 1% times one.
That's a lot more suffering victims of economic disadvantage, my friend!
Not only that, but the disparity between each class level becomes greater, so that the poor are much, much poorer, and the rich will not only not be able to take it with them, they won't even be able to fit it inside their tombs!!!

Answer 6

I purely understand my own argument against it. i do no longer purely like the way loose commerce is now simply by fact they might in simple terms sell a product although they desire to. in the event that they desire to value 500 funds for a product and then decrease it to 200 interior the subsequent 2 - 4 years, there isn't any longer something there asserting they might't do this. the way we value issues is tousled, or something is there to decrease to rubble that technique. i'm no longer that knowledgeable on economics, so those are purely from my own humble perceptions.

Answer 7

FOR
Protection of infant domestic industries.
Employment in own economy - imports seen as exporting jobs.
Give opportunity for an economy to be self reliant
AGAINST
Consumers can get better quality goods cheaper
Allows specialization within one country
Can foster closer ties between nations

Many more for and against. This is a start.

Answer 8

NAFTA falls into both categories I think.