Free Trade vs Protectionism

There are many arguments both for and against both free trade and protectionism. There are some that say that free trade should rule the day and that the market can regulate itself. There are others that suggest that the market is an immoral mess and/or that countries should be allowed to protect their national and economic interests if and when it becomes necessary. This report will talk about the pros and cons of each thought process and offer an overall opinion at the end.

While free trade is generally the better course of action to follow, there are times and situations where at least some elements of protectionism are not beyond the pale. Generally speaking, free trade is when trade is allowed to happen in an unfettered way.

Rather than goods being blocked from crossing borders in the form of exports or imports, free trade is all about letting people sell what they wish across borders without penalty or bans on items that are generally legal and without restriction when they are not crossing international lines. On the other end of the spectrum would be protectionism. While many economists and pro-trade people view this as a "bad word," there are times and situations where protectionism is not necessary a bad thing.

Indeed, there are some times where it is perhaps necessary or advisable. Indeed, there are many that say that free trade, for all of its benefits, tends to have hidden or obscured harm that is brought to bear on people who are just trying to get by. The main reason protectionism is employed is to protect national jobs and industries. For example, an oil-producing nation will often impose heavy restrictions on imports of oil so as to protect local suppliers.

The side effect this commonly has, and indeed a main complaint that people have about protectionism, is that this limits supply and this usually keeps prices up and higher than they technically have to be if supplies were not restricted. However, the complaints about free trade often involve the invoking of the term "race to the bottom" in that many poorer and developing countries will gladly take on low-paying jobs. However, many suggest that this only hurts these countries in the long run.

Beyond that, economies that are heavily dependent on exports often flounder and suffer greatly when world economic conditions go south. As with many things, the two sides being presented here are opposite ends of the same spectrum. The complexity of the situation dictates that either extreme on its own is not going to work because no single solution is going to fix or allay all concerns.

As such, there needs to be a sliding scale and the proper "balance" and equilibrium between free trade and protectionism should be somewhere in between the two extremes. That being said, limiting trade is generally not a good idea as it tends to raise prices and stifle economic growth. Conversely, free trade can lead to unintended consequences, including those listed above and others. Indeed, it is a valid concern to want a local or even national economy to be as self-sustaining and independent as possible.

At the same time, exports are a huge way to make money for a country, its businesses and its citizens. The best answer to the burning question of this report is to allow free trade as much as is possible but to develop and protect local and national interests as much.