Free Trade Vs Protectionism Essay

3984 words - 16 pages

Free Trade vs Protectionism

One of the greatest international economic debates of all time has been the issue of free trade versus protectionism. Proponents of free trade believe in opening the global market, with as few restrictions on trade as possible. Proponents of protectionism believe in concentrating on the welfare of the domestic economy by limiting the open-market policy of the United States. However, what effects does this policy have for the international market and the other respective countries in this market? The question is not as complex as it may seem. Both sides have strong opinions representing their respective viewpoints, and even the population of the United States is divided when it comes to taking a stand in the issue. After examining all factors on the two conflicting sides, it is clear that protectionism, from the side of the United States, is the only way the American industrial economy can expand for the benefit of its citizens and for its national welfare.

The economy needs to get itself out of the huge deficit hole that it has created for itself,and lean towards protectionist measures.

The dictionary definition of free trade states it as a policy of allowing people of one country to buy and sell from other countries without restrictions. This idea originated with the influential British economist, philosopher, and author of The Wealth of Nations, Adam Smith. He inspired the writings of great economists such as David Ricardo, Karl Marx, Thomas Malthus, and others. According to Smith, specialization and trade is the best solution to create a flourishing American economy, with its industries ruling the economic world.

William H. Peterson, holder of the Lundy Chair of Business Philosophy at Campbell University, agrees with Smith’s philosophy. He states that the idea of free trade allows the efficient use of economic resources and will promote international cooperation.

One of the biggest examples of international cooperation is the Bretton Woods
system that originated from a 1944 conference at Bretton Woods, New Hampshire. Those
participants in this conference created three organizations to help regulate the international economy. The first is the International Monetary Fund (IMF) which was established with the idea of regulating monetary policy. One of the benchmarks of the IMF is the stabilization of exchange rates and the loaning of money to help stabilize countries with balance of payments deficits. The second organization established was the General Agreement on Tariffs and Trade (GATT) whose main focus was on a liberal trading order.

Their mission was to reduce trade barriers on manufactured goods and to build-up the principle of most-favored nation (MFN) status. This would impose a sense of fairness
between countries in that each was required to levy the same low tariffs on each others
imports. The third and final organization sponsored by Bretton Woods is...

Find Another Essay On Free Trade vs Protectionism

Free Trade Vs Fair Trade Essay

2369 words - 9 pages /international_development/trade161004.html. Last accessed 30/12/2010. Hall, S. (2011). Pros & Cons of Protectionism . Available: http://www.ehow.com/about_5106315_pros-cons-protectionism.html. Last accessed 2/1/2011. Business Dictionary. (2011). Free Trade Definition. Available: http://www.businessdictionary.com/definition/free-trade.html. Last accessed 2/1/2011. Global Envision. (2005). free trade vs. fair trade . Available: http

The European Union (EU) vs the North American Free Trade Agreement

3368 words - 13 pages The European Union (EU) vs the North American Free Trade Agreement Introduction The European Union (EU) is the organization which integrates the countries listed below, both politically and economically. It is a customs union, which is an agreement amongst a group of countries to eliminate trade barriers between them on the movement of goods, services, labor and capital, and also to establish a common external tariff on goods and

Free Trade Theories: Threat to the American Worker?

951 words - 4 pages One of the most heatedly debated issues that are facing the American industries today is the topic concerning free trade vs. protectionism. Adam Smith's book, "Wealth of Nations," was published over 200 years ago in 1776. And yet today, economists still argue over the legitimacy of his words. Lobbyists and Unions argue that free trade has become a liability that is threatening to overtake U.S. security in sectors such as the job market

Globalization: An Argument For Limited Protectionism

1624 words - 6 pages . Globalization greatly empowers consumers, enables unprecedented market knowledge, and has pioneered breakthroughs in logistics. However, globalization can act as a detriment as well, to both underdeveloped and developed nations alike. Although free trade is an amiable goal, the realities of unrestricted trade must be evaluated and planned for. This paper will evaluate those realities through the economics of globalization in respect to protectionism

The Globalization Paradox

1333 words - 6 pages The discussion would revolve around this continuing debate on globalization which is, without a doubt, the controlling capitalistic trend in the world today. But there is a hotly debated contest on how globalization should continue. This is a contest between free trade and fair trade. Free trade and fair trade have been in constant tug of war pulled from each side by economists and politicians. Both carry an ideological approach

The Biographical Approach to History: Strengths and Weaknesses in the Context of Bismarck’s Germany

1032 words - 5 pages writes, “Initially free trade seemed to win, but by the end of the 1870s protection overtook it.” This approach leaves one wondering what global economic factors, instead of German political factors, led to Germany’s, as well as the majority of Europe’s, favoring of protectionism instead of free trade. When discussing Germany’s economic foreign policy Waller briefly mentions French protectionism, but fails to mention the underlying cause for

Trade Protectionism Put to the Test

2013 words - 8 pages Trade Protectionism Put to the Test The idea behind trade protectionism as policy is that domestic industry cannot or should not have to compete with imports from foreign producers and that domestic workers’ jobs are at risk when trade is unrestricted. Most economists, and a large portion of the public would agree when looking at the big picture that free trade is positive for importers and exporters, as well as consumers. The very basic

Trade, Protectionism, and the Developed Countries

1845 words - 7 pages 1.1 2 3.0) TRADE, PROTECTIONISM AND THE DEVELOPED COUNTRIES The World Trade Organization refers to an organization formed in 1995 with a stated goal of supporting and liberalizing international trade. Although it is in line with free international trade it allows governments to impose short term protectionist measures under specific circumstances (Shrybman, 2001). Developed countries have imposed remarkable protectionist measures since

International Business Means International Trade

696 words - 3 pages As with other theories, there are opposing views. International trade has two contrasting views regarding the level of control placed on trade: free trade and protectionism. Free trade is the simpler of the two theories: a laissez-faire approach, with no restrictions on trade. The main idea is that supply and demand factors, operating on a global scale, will ensure that production happens efficiently. Therefore, nothing needs to be done to

Trade Theories and Realities: Why Economists Should Study Fairness

527 words - 2 pages Trade Theories and Realities: Why Economists Should Study FairnessTheories in economics are both positive and negative for the general public. There are many current debates on whether one motion of economics is more beneficial to people than another. Such issues as Free trade can suggest an abomination or a godsend to social and economic order.Opponents to free trade argue that there is a no win situation for the countries that do not dominate

An essay on U.S. trade barriers and protectionism

3142 words - 13 pages political process more than the consumer, since their efforts are more concentrated. The prevalence of protectionist tariffs, quotas, and voluntary export restraints (VERs) are a direct result of this process.The rationale of free trade is explained using the welfare economic theory that measures the trade-offs of protectionism on a national scale versus the benefits of improved efficiency with free trade. But the rent-seeking and modern

Similar Essays

Free Trade Vs Protectionism Essay

1335 words - 5 pages Free trade is a policy of imposing no restrictions on the movement of goods and services between countries. It will lead to the most efficient allocation of world resources and higher standards of living for all participating countries. Yet countries in the world see a need for protection. Protectionism is a policy of protecting home industries from foreign competition by the imposition of trade barriers on foreign goods and services. This is

Free Trade Or Protectionism Essay

856 words - 4 pages The debate between protectionism and free trade is an issue that has been discussed for centuries throughout every nation. The main question is : Are protectionist policies are bad for America? The answer would be “no”. This is due to the fact that, while international competition from businesses benefits individual consumers, it takes away from the American economy. This in turn means America is losing money that can be income for another, or

Protectionism And Free Trade In America

2094 words - 8 pages The argument regarding protectionism and free trade in America can be traced back to our Founding Fathers. The first significant legislation passed by the First congress in 1789 and signed into law by President Washington on July Fourth was a protectionist tariff that provided for over 90 percent of the revenues to operate the new government and encouraged the building of industries and development of family farms. In contrast, Benjamin

The Choice: A Fable Of Free Trade And Protectionism

1065 words - 4 pages Book Review: The Choice: A Fable of Free Trade and Protectionism In the acclaimed novel, The Choice: A Fable of Free Trade and Protectionism, author Russell Roberts, an economist and writer, tells a fictional story that enlightens readers to the wonders of the economic system. Russell provides an insightful, thought provoking story that illustrates protectionism and free trade, while making the concepts and arguments easy to comprehend. The