Protectionism or Free Trade - which benefits humanity as a whole?
72All of you would have heard of words like "free trade," "outsourcing/offshoring," etc. People also tend to take extreme positions on these issues. Either for or against. I was wondering which one truly benefits humanity as a whole in the long term. Long term being the key word here. Because, in the short term, the benefits are not tangible to most people around the world. There have been calls for protecting local businesses and shutting off foreign competition. But, would doing so really benefit the countries impleting such protectionist measures? Lets examine in brief.
On the face of it, protectionism seems to be the attractive option to save local businesses. Theoretically, you just have to ban certain foreign companies from selling their products in the local markets and the expectation is that the local manufacturers would benefit and grow as a consequence. But, is it really as simple as it sounds? Would consumers who've been used to far cheaper prices pay significantly higher to buy local produce? Would patriotism triumph over economics amongst the buyers of goods? I would think not!! I don't see people buying goods at a far higher price (all of a sudden) just because the goods are manufactured locally.
Implications Of Protectionism
Protectionism would definitely lead to trade wars, which benefits none. Other countries would shield their businesses from foreign competition as well and therefore one would have a situation where a large number of businesses in the developed countries (Europe and US) would be severely affected, as developing markets are an integral part of their portfolios and often the most profitable part.
Therefore, free trade seems to be the best option, particularly for developed countries, and I think eventually it would benefit us all. Perhaps, those in the developed countries would be affected in terms of job losses in the near term, and those in developing nations would probably lose out in sectors that developed countries are already established and good at, driving them out of the market perhaps. But in the long term, I think both stand to benefit.
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Comments
Here's what Paul Krugman, Princeton economics professor and NYT op-ed writer said recently about free trade:
Protectionism or Free Trade which benefits humanity as a whole
Very creative
Ralph Deeds says:
2 years ago
The choice is not is not necessarily between free trade and protectionism. Steps should be taken to assure that free trade is also fair trade--fair to the workers in all countries involved and to American consumers. This will require adjustments both in the United States and in the countries from which we import.
Exactly who is benefiting from free trade is not clear? U.S. companies and their contractors are producing goods in China where workers are paid little (the Chinese government grabs about half of what they earn and invests it in U.S. government bonds),and they work in unsafe plants which are polluting the world's environment. Although Wal-Mart, et al, and U.S. consumers benefit from cheap imports from China (some of which are unsafe and of poor quality) thousands of manufacturing workers are losing their high paying jobs and receiving little help in finding other employment.
It strikes me as not unreasonable to expect U.S. companies who export jobs to export the health and safety, human resources policies (which of course must be adapted to local customs to a certain extent) and pollution control technology along with the production tools and techniques. Why should U.S. workers be expected to compete with Chinese workers working long hours for abysmally low wages in unsafe, unhealthful conditions?
Public support for free trade has declined substantially under the Bush administration. Future support will depend on a better security net for U.S. workers whose jobs are shipped overseas--higher and longer unemployment compensation or possibly wage insurance, retraining and relocation assistance. And a mechanism should be found to require U.S. companies and their contractors abroad to observe health and safety and worker rights policies comparable to those found in advanced industrialized countries.