NationStates Jolt Archive

Can someone help me out with the pros and cons of these two different ideas? I have a vague idea about what they mean but I can't get a very clear understanding about the arguements for both.

Protectionism reduces economic efficiency and ultimately crimps economic growth; in the short term, it can boost growth but is inherently unsustainable in the intermediate and long term.

Protectionism reduces economic efficiency and ultimately crimps economic growth; in the short term, it can boost growth but is inherently unsustainable in the intermediate and long term.

I'm told though that free trade just swamps countries markets with cheap goods and ruins their native industries. Is this at all accurate?

I'm told though that free trade just swamps countries markets with cheap goods and ruins their native industries. Is this at all accurate?

yep it looks like our children won't be down the coal mines after all

As long as you give people a good education free trade won’t mean anything but lowering the cost of McDonalds toys

Protectionism implies that it is more important to protect local business through tariffs on imported goods that are competitive to the local business. The plus side, is that a semblance of stability is provided, and additional revenue is added to government coffers if consumers decide not to purchase the local brand. The down side is that consumers are essentially paying an inflated price on all of their goods; essentially a hidden tax. On top of that, they are likely to see less new products from outside their geographic area due to lack of investment.

Free Trade, removes all tariffs so that all goods are made available to the consumer, and the consumer can choose to purchase the cheaper product. The down side, of course, is that if it's a product produced locally, there's a chance that the local business will shut down, and the number of consumers in the area will suddenly have less capital.

So, take your pick; Protectionism (i.e. stability, higher prices, less inovation and efficiency) or Free Trade (i.e. lack of stability, lower prices, more innovation and efficiency.)

Can someone help me out with the pros and cons of these two different ideas? I have a vague idea about what they mean but I can't get a very clear understanding about the arguements for both.

More often then not, its a false dichotomy. Most opponnents of free trade are opponents not because they support protectionism but because they dislike how globalism is being carried out. Right now, free trade is a policy supported by major First World corporations in order to reduce the cost of labor and thus boost profits.

I'm told though that free trade just swamps countries markets with cheap goods and ruins their native industries. Is this at all accurate?

It can, but theoretically that'll force said country to concentrate in the stuff they're good at and improve their native industries. It requires time, money and a good strategy, but it can work. It's better if markets are opened gradually, though.

More often then not, its a false dichotomy. Most opponnents of free trade are opponents not because they support protectionism but because they dislike how globalism is being carried out. Right now, free trade is a policy supported by major First World corporations in order to reduce the cost of labor and thus boost profits.

Mostly because they love it when other countries open their markets but not so much when they're required to open their own.

I'm told though that free trade just swamps countries markets with cheap goods and ruins their native industries. Is this at all accurate?

Yes, although that's not necessarily a bad thing; cheap goods only "swamp" the market because consumers want them. Dumping is illegal in the context of international trade agreements (in other words, underpricing goods through government subsidies) so the only reason native goods are displaced is due to competitive factors. These foreign goods are simply priced more competitively than the ones they displace; it's no different than goods manufactured in Texas displacing those manufactured in California because labor and material costs are cheaper in Texas and they can be sold at a lower price.

The jobs lost due to free trade are generally greatly outpaced by new ones created to manage international trade; NAFTA's job losses were about 400,000 but over that same period over 22 million new ones were created. You might argue that it has nothing to do with liberalization, but we also have to look at similar periods of growth in the 1950's/1960's and late 1930's, both of which had to do with revival in global trade following liberalization.

Plus, consumers have more choice; without free(r) trade (trade is not liberalized completely yet in any case), you wouldn't be able to get the kinds of goods and services you have now at the prices you currently pay. If people wanted to buy American, they would; however, most people aren't willing to pay significantly more for a good of equal or (in the case of US cars) lesser quality so they end up buying the imported good.

More often then not, its a false dichotomy. Most opponnents of free trade are opponents not because they support protectionism but because they dislike how globalism is being carried out. Right now, free trade is a policy supported by major First World corporations in order to reduce the cost of labor and thus boost profits.

So basically free trade results in corporations raking in profits while jobs are shipped out to Third World countries for the cheap labor?

So basically free trade results in corporations raking in profits while jobs are shipped out to Third World countries for the cheap labor?

Not really. More accurately, it results in you being able to buy products at significantly lower prices and greater variety than you would pay without free trade.

So basically free trade results in corporations raking in profits while jobs are shipped out to Third World countries for the cheap labor?

That's the idea. The hope is also that other countries will buy more goods from the home country. It also prevents Third World countries from developing a home industry (this way all surplus value goes to the parent corporation and their parliamentary lackies in government.)

So basically free trade results in corporations raking in profits while jobs are shipped out to Third World countries for the cheap labor?

Well, ideally the average citizen would have less expensive goods to purchase leaving more money in their pocket, and Third World countries can start working at not being third world anymore. Ideally...

Well, ideally the average citizen would have less expensive goods to purchase leaving more money in their pocket, and Third World countries can start working at not being third world anymore. Ideally...

Well, it does work in most cases. China and India would not be booming like they are without the huge steps towards trade liberalization made over the past two decades; we're talking over 2 billion people moving up the economic ladder.

Not really. More accurately, it results in you being able to buy products at significantly lower prices and greater variety than you would pay without free trade.

Well, ideally the average citizen would have less expensive goods to purchase leaving more money in their pocket, and Third World countries can start working at not being third world anymore. Ideally...

How would this work though if your job is sent out to another country? If you are unemployed and you have no job to go back to as now guy in Asia does it for a tenth of the cost, how can you enjoy the lower prices that free trade is supposed to bring?

How would this work though if your job is sent out to another country? If you are unemployed and you have no job to go back to as now guy in Asia does it for a tenth of the cost, how can you enjoy the lower prices that free trade is supposed to bring?

People are not one-trick ponies. They can be trained to do something else that the country is better at. And there are jobs that can't be transferred, like construction and such.

Right now, free trade is a policy supported by major First World corporations in order to reduce the cost of labor and thus boost profits.
Not anymore. The modern corporation already has all the cheap labour it wants - going international today is a way of gaining access to expertise, different views and different ideas all over the world. Besides gaining access to new markets, of course.

Protectionism reduces economic efficiency and ultimately crimps economic growth; in the short term, it can boost growth but is inherently unsustainable in the intermediate and long term.

The theory that free trade will enhance economic efficiency is premised on the assumption that all of the costs of production are factored in. This is not actually the case, especially as regard to environmental costs. Many environmental costs are externalities for the producers, and therefore are not reflected in the final cost of the goods. This means free trade can actually benefit a less efficient producer where that producer enjoys greater natural subsidies (due to, for example, lower environmental standards in a given country). The underpricing of goods also leads to overconsumption of these goods, exacerbating the negative environmental effects. Those realities, combined with the stated aim of free trade to address economic inequality through increased wealth (and consequently, increased throughput or use of resources) means that free trade as practiced can have devastating consequences for the environment. This is not a defence of protectionism (which can also have negative environmental consequences) but rather a reason why the free trading regime needs to engage with environmental costs more explicitly.

Free Trade policies drive the Production Possibilities Frontier outward, meaning...more stuff for everyone! Yay!

Meanwhile, protectionism often invites mutual response from other nations, and increased tariff barriers decreases foreign demand for your products, meaning less jobs, and less wealth creation. Booooo!

Free trade allows for companies to invest in the developing world, much as British firms invested in the US in the eighteenhundreds, and spur local industrialization, local investment and for local people to produce products that are higher up the value chain! Yay!

Protectionism does the opposite. Booooo!

Free trade allows for catch-up (which exists, contrary to the claims of so many leftists)! Yay!

Protectionism makes catch-up all the harder, because capital will accumulate much more slowly in the developing world. Boooo!

Not anymore. The modern corporation already has all the cheap labour it wants - going international today is a way of gaining access to expertise, different views and different ideas all over the world. Besides gaining access to new markets, of course.

For example, Tata Consultancy Services in India is running a unit in Uruguay. Is this for cheap labor? Certainly not, there's plenty of that in India, instead they're doing this to get the special expertise of the programmers and consultants in Uruguay.

meaning...more stuff for everyone!


Until ecosystems start collapsing ... BOO!

Until ecosystems start collapsing ... BOO!

It doesn't matter, because expansion is inevitable! Yay!

It doesn't matter, because expansion is inevitable

In other news, almost all 5 year olds find the sky big.

Until ecosystems start collapsing ... BOO!

Or until people get smart and recycle the 90% of stuff thrown away rather than remade in to new products...we could make a ton of stuff with considerably reduce environmental impact if we stopped wasting so many resources to make new things when the old ones are just thrown away.

Or until people get smart and recycle the 90% of stuff thrown away rather than remade in to new products...we could make a ton of stuff with considerably reduce environmental impact if we stopped wasting so many resources to make new things when the old ones are just thrown away.

Yes ... this would require us to behave more like natural systems! Yay!

It doesn't matter, because expansion is inevitable! Yay!

Keep me posted on how the terraforming of Mars is going.