Which is most profitable_ protectionist or free trade?
Some free-traders who are protectionists believe that protectionism is the best system for the economy. They believe that economic policies should be based solely on the needs of the consumers and that businesses should not be allowed to discriminate in the services or products they provide. This sounds appealing to business owners who feel that they are not being served properly. Protectionist policies may also give certain businesses a sense of security, since if competitors are not forced to compete, they might decide to offshore their production somewhere else.
The advantages and disadvantages of protectionism can be examined in detail in the book “The Great Trading Depression” by Herb Simon. In the 1940’s protectionism was popular and was used by the United States to fight off the competition from Germany and Japan. However, with the coming of the World War 2 the isolationist wing of the US began pushing for protectionist measures. Theodor W. Machado in his popular book “The Great Depression” pushed the argument that protectionism was good for business.
Theodor W. Machado was an ally of protectionism. He believed that protectionism would help the United States economy. In his book he wrote, “A protective tariff protects the consumer. The producer feels confident that he will get some return for the investment he has made in developing the product. The consumer expects to be repaid the value for which he has paid his money – in this case, his dollar.” Protectionism was good for business at the time, but things change.
In recent years protectionist policies have been rejected by many US citizens. This is especially true of the new President Bush, who favors free enterprise. However, the protectionist policies adopted by the last administration were not based on free-market principles. Rather, they were based on protecting specific industries. For example the minimum wage, worker’s compensation and other worker-related issues were not dealt with in any competitive manner.
The protectionism advocated by President Bush and his economic team are economically self-defeating. They will make the rich richer without anyone being better off. Workers will lose their jobs or receive no gain in salary as a result. Tariffs and subsidies make foreign goods more expensive than our own products. This is an unfair trade, but the problem is bigger than that.
So the question is, Which is the Most Profitable: Protectionism or Free Trade? This is a difficult question because it is impossible to answer objectively. Economics cannot be left to the whims of politicians, and the economic theory of supply and demand is impossible to apply to every situation. Some protectionist policies will help certain businesses while hurting others. The important thing is to choose what’s best for you, rather than what’s best for the economy as a whole.
With protectionist policies there is a chance that a country can become hyper-inflationary. Hyper-inflation means that the cost of everything will sky rocket, causing people to buy things they don’t really need just to save money. This theory is not far from reality, but it would be bad for the economy as a whole and could cause serious problems. But on the other hand, free trade promotes economic activity and competition which allow businesses to prosper at the expense of less efficient businesses who don’t take advantage of some of the basic principles of economics.
This theory has been around for long, it has always been called protectionism. As far back as the ancient Chinese trade, protectionism was the more profitable economic theory. Protectionism in the modern era has been the cause of many economic problems such as in the Great Depression. A lot of paper work has to be done before the government passes a law, but if you follow the theory closely enough, it should be quite easy to see why protectionism would be the most profitable economic system. Please consider all this.