Free Trade vs. Protectionism


Free trade is simply a policy of trading treating
foreign goods and services no differently than domestic goods and services are treated.
Free trade is a policy of allowing domestic consumers to buy from abroad just as freely
as they can buy at home. Protectionism is a policy of discriminating against foreign
goods and services,. aThe policy of saying to domestic consumers, “If you want to buy
foreign-made goods and services, you have to jump through some extra large hurdles to
buy those goods and services.” By far, the chief tool of protectionism is
a tariff, and a tariff is the a tax on imports. It’s a special levy that consumers in the
home economy are forced to pay if they want to buy goods made abroad. In practice, the
tariffs are imposed on the importers of the good,s and so that higher tax is reflected
in a higher price of the goods. So, when consumers buy the good, they don’t necessarily see
the tariff, they just see the price that reflects the tariff that the importer of the good is
forced by the government to pay for the privilege of importing that good. Free trade is not just a theory;, it’s been
practiced. The greatest example is Hong Kong. Hong Kong has virtually no natural resources;.
I think feldspart spar is the chief natural resource of Hong Kong. aAnd Hong Kong is one
of the world’s most wealthy places. And the reason Hong Kong is wealthy is because
for years Hong Kong has had a policy of pretty much unilateral free trade. It has a deep
water portur, and it allows its citizens to buy, on whatever terms its citizens want to
buy, goods and services from wherever else in the world they want to buy those goods
and services. As a result, Hong Kong is very, very rich. The United States is another example of success
of free trade. One of the intended consequences of the 1787 cConstitution was to turn the
United States into a free- trade zone. The fFounders didn’t use the term “free- trade
zone,” because it wasn’t not invented back then, but that’s what they had in mind.
So as a consequence, we have this huge transcontinental country, from the Atlantic to the Pacific,
from the Gulf Coast up to Canada, Americans are free to buy from any other American that
they want in this huge free- trade zone. And so people in Maine buy pineapples from people
in Hawaii, people in Hawaii buy maple syrup from people in Maine. One of the reasons for the United States’
enormous economic growth over the past 2 centuries and high standard of living is that we have
total free trade within America. There arey’ve no tariffs, there arey’ve no trade restrictions.
If protectionism was such a dandy thing, then you’d think each state could make its citizens
wealthier by putting up trade restrictions around the states’ borders. They don’t
do that, fortunately, because the cCommerce cClause in the cConstitution prohibits such
trade restrictions. As a consequence, we have this huge free- trade zone inacross America
and it’s unquestionable that the free trade that takes place within this huge transcontinental
nation is a major reason for American’s’ high standard of living and continued economic
growth. [End of Transcription 00:03:12]

100 thoughts on “Free Trade vs. Protectionism

  1. This is absolutely false! Most of the US' growth occurred during excessively high tariff periods in order to protect it's industries. Up until 1948 the LOWEST tariff rate in the US was 6.5% in 1815 and going as high as 44% in 1870. The avg tariff in the US during this time was about 19.3%! Furthermore, some of the counties founders like Alexander Hamilton understood the importance of building and protecting industries which is why he didn't allow foreign investors to have shares in the Fed.

  2. No, it didn't. America industrialized by levying massive tariffs to protect its fledgling industries.

  3. Cheaper stuff means that Jobs are outsourced which means higher unemployment which means less economic growth. Furthermore, it also means that the countries with the cheap labor don't have the capital to grow their infrastructure for a larger economy, and is the reason why we see very poor growth in "developing" countries.

  4. China is becoming increasingly more and more skilled. Nowadays China manufactures both T-shirts and computer equipment. Try buying a computer made in the USA. Unless you are buying the most advanced equipment on the market made for defense, government, etc., it is impossible. Bottom line, there is very little that Americans can manufacture that Chinese can't also manufacture. In another 20-30 years, the skill levels will be the same. Then Americans will be living a Chinese standard.

  5. Free trade means cheap labor for multinational corporations and cheap imported goods for those workers who now NEED those cheap goods because the only job they can find is working at Wal-Mart selling cheap imported goods. Free traders always leave out the part that the ability to buy cheap imported stuff never compensates for the loss of good-paying manufacturing jobs. The USA in the last 50 years is a perfect example. Look at the reduction in living standards for the average American worker.

  6. This is exactly right. American workers have to compete with Chinese workers not only for wages, but also for standards of living and working.

  7. Cheaper products are a negative when those working families NEED those cheaper products because the only jobs now available to them are low paying ones at Wal-Mart, Best Buy, Target, etc., selling those cheap imported products. Bottom line, if Americans want free trade, then they're going to have to compete with 4+ billion people in the developing world who are willing to work far harder for far less. The only jobs left over for Americans will be low paying service jobs.

  8. The only reason why Americans have been able to sustain the standard of living they have now is because the USD is the world reserve currency. We can get away with sending China USD in return for real consumer goods, living far beyond our means. But that system is going to end. And then Americans will really know what it's like to have to compete with billions of people who can do anything they can do for a fraction of the wages.

  9. If 1 billion Chinese are willing to do anything Americans can do for far less wages, what jobs will be left over for 300 million Americans who demand 40 hr work weeks, maternity leave, health care, vacation, safe working conditions, etc.? Nothing but service jobs driving buses or selling imported goods. By the time 1 billion Chinese reach an American standard of living (if they ever even do), the American economy will be finished. The proof is already visible in America today.

  10. Libertarians (free marketers) and communists are identical in that they both reduce man to a purely economic animal. They dismiss any distinctions of nations and race offhand as arbitrary obstacles to market efficiency. Meanwhile, in the real world, importing a 100 million or so Pakistanis or Somalians into your country, and the neckbreaking reverse in the standard of living that will follow, will teach white libertarians real quick that nations and race are in fact very real.

  11. Free trade makes sense because trade is what connects people and make this world a better place if done correctly. Only one philosophical problem I have is how much is the trade "free"? Having free trading also opens door for lot of influencing and politics which r many times taking advantage of ideas of the free trade, question is more who is balancing that? Who is having control if country on which whole world pushes to sell must sell and it has to sell it cheap? Where is the free trade then?

  12. It also gives Congress the power to levy tariffs. All of the early Federalists favored tariffs on foreign goods, which makes this Boudreaux guy delusional.

  13. @1:19,
    This is absurd. Hong Kong is a tiny city that's always been owned by another nation, either China or Britain.

  14. Free trade would be fine, if all other countries complied to US standards of labor. They don't and that's the main issue with free trade.

  15. If other countries do not support free trade, e.g. by imposing tariffs on their citizens, then this makes their populace less well off (they can get less goods and services than in the free-trade situation), and reduces the attractiveness of US exports to that country; however, imposing tariffs in the US in response only hurts the US consumer more — it doesn't do anything to offset the damage done by the foreign tariff. Free trade is beneficial regardless of other countries' trade policies.

  16. I'm not talking about other countries imposing tarifs and the US retaliating with tariff of their own. I'm talking about people in sweat shops working for $1 a day. It doesn't really hurt the US consumer that much. What do you think China would do if it wasn't for the US? They need us as a trading partner. I'd bet a 15% tariff wouldn't change exports a bit, but a 15% tariff would raise over $1 trillion in revenue. Does it hurt the consumer? Just give the tariff revenue to everyone.

  17. That helps protect US manufacturing and allows people in the US to get a rebate to help them out financially. What I'm against, is taking money from other Americans to redistribute because that divides the country.

  18. 1) Why should US consumers not be allowed to buy cheaper goods from China? Surely it's good for US consumers to pay less for goods, right?
    2) Imposing a 15% tariff *might* not affect trade volume from China to US but it certainly does affect US consumers — they pay 15% more for their imports.
    3) Any revenue collected from the tariff not given back to the consumers of Chinese imports would effectively be redistribution from some Americans to other Americans — which you said you don't want.

  19. 4) Tariffs are supposed to discourage imports, but if they don't (as you suggest) then all we're doing is making US consumers pay more, but not helping US producers at all. If tariffs do reduce imports, then that necessarily means reduced US exports too — tariffs hurt the US producer either way.
    5) We get richer by being able to produce more with less. Tariffs only slow this wealth creation down by keeping dying, inefficient industries alive with what is effectively industrial welfare.

  20. How do tariffs on imports effect exports? This makes no sense at all. Why should we not buy cheap goods from China? Because if you do business with your neighbor, then your neighbor has money to do business with you. If we bought more US made goods, then more people in the US would have money, which means more people are spending, which means everyone in the US has more money. Our money would be staying inside the US, rather than leaving.

  21. Further, I said to take the money made from the tariff and distribute it evenly among Americans. Why? To counter act the increase in prices. All my plan does, is make buying US goods more attractive, which increases production in the US, which makes more profit. Now, if it fails to do so, the fail safe is that everyone at least gets a rebate to handle the increased prices.

  22. [[I said to take the money made from the tariff and distribute it evenly among Americans. Why? To counter act the increase in prices.]]

    That won't work, and here's why. Tariffs are only collected on imports. But tariffed import cars, (for eg), it not only make import cars more expensive, but it makes domestic new cars more expensive also. (It increases demand over supply & new price equilibrium is established). That in turn makes last year's model more expensive, used cars more expensive, etc.

  23. Explain why free trade between you and a pizza vender is good for everyone involved, (division of labor), why interstate trade is good for America, i.e. everyone involved, but international trade is suddenly at the expense of the US.Voluntary trade is win/win, regardless of the scale involved. If any particular trade were not win/win, we or they would choose not to make that trade.

  24. Protectionism and tariffs is to pander to special interest groups, corporatism, and feed government for no good reason, at 100% of the consumer's expense.

    Here are two BRILLIANT & fascinating tandem videos that show exactly this, and how Tariffs leaves america with a DECREASED Economic Welfare (also known as Total Welfare to the nation). It also leaves us with DWL (Dead Weight Loss) economic inefficiencies.

    /watch?v=h2XAII9HdHA
    /watch?v=TDY2sIMDZLM

  25. That would only happen in some markets. New markets would also emerge. Also, if companies raised prices, less people would be able to buy, which might actually reduce profit. They might just use the competitive advantage to sell more at the same price and drive out foreign competition. I've found better arguments for why I was wrong however, so don't worry about convincing me.

  26. Woop, rather make that…
    Part 1, /watch?v=h2XAII9HdHA
    Part 2, /watch?v=TDY2sIMDZLM

    2 very good videos showing why you're barking up the wrong tree.

  27. I'll accept your money too. The thing is, intelligent people care to know, not just a satisfying theory, but something that rings true. Your machinations are obviously a means of running away from open discourse. Your loss.

  28. we cannot turn a blind eye to china. in our hand is free trade, in china's hand is HUGE protectionism, lined with protectionism, with protectionism on top… oh and throw in theft of all intellectual property.

    sure it's fantastic to buy hawaiian pineapples, without extra taxes, but buying chinese goods on the cheap while, american goods in china cost a super duper premium, which equals almost no sales, means it's not free trade. we should treat every country as they treat us.

  29. And then there is the US deficit vs China's surplus. This is no accident. China is using trade as a means of economic warfare against the US. The US debt is growning while China's reserves are growing. Those who favor free trade are the same who favor China's economic domination of the world.

  30. We can only hope. I'd prefer China over the US in world economic domination. It'd be nice to have a super power who doesn't invade a country and start a war every 20 years. Also, let's not forget a huge factor in the US's rise to the top; slavery. The kidnapped Africans that provided generations of free labor, have their descendants living in a country where they are incarcerated at a higher rate for the same crimes of white people.

  31. The south was supported by the British, who sought to separate the US into the north and south so that they could reclaim their colony. They supplied weapons to the south. Lincoln instituted a blockade to stop them, but most still arrived as planned. You should blame the Confederacy, the British, and the Jews for the slave trade, rather than the Union. The idea that the slaves somehow built America is a myth.

  32. The income inequality is that of warlord's country, more people are forced to live in prison per capita than anywhere else in the world, descendants of former slaves are dealt with 7 times more severely than others, the government uses their right to investigate and hold without trial any of their citizens (Guantanamo), they've been in a major war every 20yrs since being founded, they have more nuclear weapons than the rest of the world combined and are the world's leading supplier in weapons.

  33. sometimes it's healthy to view yourself under the same lens that you view others. Australia's media is the exact same. The US and China are both superpowers with morally questionable attributes but if you have to compare them, the US invades nations and puts in puppet leaders for their own benefit, China does not. The US provides foreign aid to African countries as a loan of which they cannot repay and then use the debt to justify taking their natural resources.

  34. China uses their navy to prevent Somalian piracy, free of charge. China have made more measures than most countries in the world in reducing carbon emissions, the US have not.

  35. Judges? Bzzzz!! I'm sorry but (the discredited neo-Marxist rantings of Ha Joon Chang notwithstanding), protectionism has never done anything but harm to the countries that utilize it and certainly can provide no help to "developing nations". In fact, the absence of trade barriers between the several states when the United States was "developing" is precisely why the US became an economic powerhouse in the first place (desoite the ridiculous Hamiltonian mythology).

  36. Firstly, Ha Joon Chang is a neo-Marist, not merely as a "development economist" but he expressly cites Marx and Marxian theory in his treatise on protectionism. And saying that he is out of the mainstream is a massive understatement. The actual evidence is overwhelming that free trade is mutually beneficial regardless of the level of economic development, actually raising countries up (and their living standards) to a higher level. Thus it is disastrous for such economies to be protectionist.

  37. You seriously think China wouldn't do that if it had the US military and economic power? Newsflash they would, the only thing stopping them is the fact that the US controls 75% of the worlds military power. Now I am by no means saying the US is some protector angel here but you seriously need to have a reality check if you think China wouldn't go expansionist and invade other countries.

  38. Hong Kong a special administrative region of China with a high degree of autonomy deferring to the Chinese government almost solely for military needs hence the high economic freedom.

  39. This is exactly right. Until the early 1980's, Soft-Protectionism was the dominant economic philosophy of the US.

    I'm against free-trade for this reason and think nations, all of them, are best off favoring their domestic industries to an extent. Even Singapore is a protectionist city-state and look at their success.

  40. The "infant industry" argument has not only proved to be economically disastrous where implemented, it is also based on economic fallacy. There is no more a need to protect "new" industries from foreign competition than there is to protect it form domestic competition. Businesses are not people, they do not go through supposed "growth stages."

    See also: "The Dangerous Nonsense of Protectionism"

  41. That was one of the few things that slowed the U.S. down. It wasn't the cause of wealth creation. It was an impediment.

  42. Rothbard doesn't say anything else other than what you quoted. He does nothing to substantiate his claims.

  43. For the most part Rothbard was essentially responding to inadequate and inaccurate claims by protectionists, especially in his skepticism towards "infant industries" as I have just mentioned as well as the absurdity of the argument for "domestic jobs." As any economist since Adam Smith can tell you, protectionist policies such as tariffs and quotas restrict artificially restrict supply and increase costs leaving society poorer as a result. There are many examples that demonstrate this.

  44. By supply you presumably mean the supply of inputs.

    The increased costs argument does not apply to manufacturing goods.

  45. "Read Founding Fathers." I read part of Hamilton's book on manufacturing. It was a mercantalist tract. It's full of economic fallacies.

    Some industries could produce goods at lower cost than American counterparts, but they still had to ship them here at great cost. Americans could produce some goods cheaper than their euro counterparts, but they still had the cost of shipping too.

    There are comparative advantages to free trade. We have corporatist managed trade at present, not free trade.

  46. Tariffs aren't the reason that our ancestors prospered. They had sound money (gold and silver govt. coins and private mintage thrived too), very little regulation, no production taxes and a largely free market economy.

    The tariffs, which are taxes on consumers, are one of the things that slowed us down. The growth would have been much higher in the absence of consumer taxes, i.e. tariffs.

  47. "Tariffs are not consumer taxes." Huh?

    A state has imaginary borders that are only visible on maps. The govt. imposes a tax on anyone who wants to sell across that imaginary line. It is most certainly a tax on the consumer!!!

    It protects certain manufacturing interests at the expense of everyone else.

    "Native industries." I should be able to buy from anyone I like from anywhere in the world without some tariff penalty imposed on the trade.

    You are peddling mercantalism.

  48. "No modern economist beyond Austrian economists think gold standard a good idea.''

    First, that isn't true. Second, and appeal to alleged authority or a poll is not proof of anything, nor is it a refutation of an idea. You are going to have to do much, much better.

    "Capitalism is good idea, hence taught in economics 101." That's a tautology. I, too, think capitalism is a good idea, which is why I want a free market in money, banking, and interest rates.

    You are full of contradictions.

  49. "Free markets generally better"….except when individuals seek to trade across imaginary borders on a map?

    "Nations give protections to metal industry." Because of politics and a corrupt political patronage system. The tariffs offer protections against competition. There tends to be less innovation and more inefficiency as a result.

    A car company that buys steel must pay a higher price for it due to tariffs. That means consumer pays more for car and auto workers MUST make less.

    See?

  50. Nice video on YouTube called "Free Trade and the Steel Industry." It explains more than I can here.

  51. "Gold standard retarded as 70's proved." Nixon abandoned gold standard in Aug. 1971. The rest of the decade was a fiat paper dollar standard.

    Nixon abandoned the gold-exchange standard (not as good as the classical gold standard, but it still placed limits on deficit spending and trade imbalances) because the fed. govt. monetized part of the cost of New Deal and Vietnam war. The dollar was being debased so countries demanded gold for their paper dollars. That's why Nixon closed gold window.

  52. "Every nation tried gold standard gets steamrolled." Was U.S. steamrolled throughout most of the 19th century?

    The period from 1873-1914 (period of classical gold standard) was a period of very low inflation (even slightly falling prices as was the case in the U.S.) and rising standards of living.

    Then came WWI. Govt.'s want to deficit spending during war time. Gold stands in the way. That's why govt.'s always resort to fiat paper currency. Some war spending can be monetized.

  53. "Debt-based economies are superior." Yes, so the crackpot Keynesians tell us. It's just that their ideas are failing all around you.

    The debt-based fiat paper currency system means that debt must continue to grow or the economy collapses. The catch is that if debt does continue to grow that chain letter runs out of chain. The bills come due eventually. It doesn't matter if the debt is sovereign backed debt. Governments can't repeal the laws of economics in the long run.

  54. Import tariffs restrict the import of both finished goods and factors of production.

    If the costs of the raw materials are increased, the costs of the final good is increased. How exactly are 'manufactured' goods exempt from this?

  55. Increasing a tarrif on, for example, steel, can be shown *transparently* to reduce national employment since, as a raw material they cost other domestic producers money.

    Increasing the price of a finished product does not cost anything directly for producers though the case is generally made it has a similar effect by dampening consumer demand for domestic products.

  56. Tariffs , like monopolies, are generally bad for consumers. Insulating firms from foreign competition means artificially increased prices and decreased.

    Relatively efficient domestic firms on the other hand have nothing to gain from tariffs and therefore, suffer the most when capital gets shifted over the the protected and otherwise inefficient industry, if a foreign nation imposes retaliation tariffs, and when further specialization is essentially discouraged.

  57. Free trade is fine as long as the countries we are trading with are first world countries and not third world dumps that we can't compete with in terms of labor costs and as a result many of our unskilled workers lose their jobs. I am a realist and I do not give a tinkers damn about modernizing China and making American corporations richer. If I had it my way the Chinese would still be living in mud huts. I am a patriotic American nationalist and war is better than slavery.

  58. When this guy was talking about American free trade, he was only talking about within the US, well that is almost (and I stress almost) a contradiction, because free trade is concerned with foreign trade, I cannot think of a country that would allow internal barriers to trade, the fact there are no trade barriers inside of any country is nothing special, I can't think of why it would ever happen except between colonies and a mother country, it's a dumb way of doing things. If you want a reason why the US is rich, how about vast swaths of arable territory linked into a natural water transport system, with good predictable weather and long growing seasons generating capital via trade (not always free trade though) used to invest in industrialising, education, improved transportation, etc. which gave their own returns,  which was reinvested and the cycle starts again.

  59. XD 3:12 I'm doing cost benefits of a free trade agreement with panama report for economics. Not a benefit benefit analysis. Unfortunately it's been very hard to find an unbiased article or video saying anything bad about a free trade agreement. Fucking hate bias presentations….

  60. Free trade worked within the US because the states were willing to submit to common regulations/laws.
    There's a very good reason why we have free trade agreements with some countries and protectionist policies against others.

  61. If the US is so free-trade, why can I not import a legally purchased, mint-condition car from Japan and drive it around on United States roads? The Japanese make the car product that I want to buy, but I can't import it.

  62. One of the first bills the president signed into law in 2009 was a raise on the tax on cigarettes. The rationale was that when prices rise demand falls and less cigarettes are sold. If that logic applies to cigarettes wouldn't it also apply to things like labor? Why does the president think raising the price of cigarettes discourages the purchase of cigarettes but raising the price of labor doesn't discourage the purchase of labor? #Keepaskingwhy

  63. If free trade is so good then where are the american clothing manufactures? If free trade isn't a race to the bottom then why do companies use as a cost cutting method out sourcing IT to India for example where an IT professional is paid only 1/4th of what an american is paid right here. What happens to the standard of living in a race to the bottom? What exactly are we producing in this country anymore might I ask?

  64. Trade policies
    (in 2 mins)
    The US constitution came into force in 1789
    George Washington was inaugurated as America’s first president and the 1st document
    he signed was the Tariff Act,  on  July 4, 1789. 
    Alexander Hamilton wrote this act to
    ”the encouragement and protection of manufactures”
    He laid out 11 points to make America strong
    1. “Protecting duties.” (Tariffs.)
    2. “Prohibition of rival articles or duties equivalent to prohibitions.” (Outright import bans.)
    3. “Prohibition of the exportation of the materials of manufactures.” (Export bans on industrial inputs, car parts and machine parts)
    4. “Pecuniary bounties.” (Export subsidies, like those provided today by the Export-Import Bank and other programs.)
    5. “Premiums.” (Subsidies for key innovations. Today, we would call them research and development tax credits.)
    6. “The exemption of the materials of manufactures from duty.” (Import liberalization for industrial inputs, so some other country can be the raw materials exporter.)
    7. “Drawbacks of the duties which are imposed on the materials of manufactures.” (Same idea, by means of tax rebates.)
    8. “The encouragement of new inventions and discoveries at home, and of the introduction into the United States of such as may have been made in other countries; particularly those, which relate to ma- chinery.” (Prizes for inventions and, more importantly, patents.)
    9. “Judicious regulations for the inspection of manufactured commodities.” (Regulation of product standards, as the USDA and FDA do today.)
    10. “The facilitating of pecuniary remittances from place to place.” (A sophisticated financial system.)
    11. “The facilitating of the transportation of commodities.” (Good infrastructure.)
    For the next 150 years our federal government’s only source of income was the 15% tariff on all imported goods.  George Washington, Thomas Jefferson , Theodore Roosevelt , and Abraham Lincoln (draw MT Rushmore), all supported tariffs for a strong manufacturing base.
    Our country’s citizen’s wealth and manufacturing base grew, under this trade policy, until we became a superpower.  #1 in manufacturing, education, wealth, medium income, life expectancy, tallest buildings, fastest trains and the most exports. the American dream was alive.
    In 1993 president bill Clinton, abandoned tariffs, signed NAFTA and ushered in Free trade.  At the time America made the most cars and computers in the world.  12.7 million cars.  China was making 1 million cars and no computers.    12 free trade agreements later, we take a 2nd global snapshot. 
    ASEAN Free Trade Area (AFTA)
    Asia-Pacific Trade Agreement (APTA)
    Central American Integration System (SICA)
    Central European Free Trade Agreement (CEFTA)[1]
    Common Market for Eastern and Southern Africa (COMESA)
    G-3 Free Trade Agreement (G-3)
    Greater Arab Free Trade Area (GAFTA) – June 1957[2]
    Dominican Republic–Central America Free Trade Agreement (DR-CAFTA)
    Gulf Cooperation Council (GCC)
    North American Free Trade Agreement (NAFTA)[3]
    Pacific Alliance[4]
    South Asia Free Trade Agreement (SAFTA)[5]
    Southern African Development Community (SADC)
    Southern Common Market (MERCOSUR)
    The united states now produces 5 million cars and year and Zero computers
    China makes 23 million cars and 454 million computers/year
    America has lost between 6 million and 20 million jobs to free trade agreements.  60,000 US plants have been shut down, boxed up and moved overseas.
    Our country’s citizen’s wealth and manufacturing base has shrunk, under  free trade.  #13 in manufacturing, 36th education, 19th wealth,6th  medium income, 34th in life expectancy and 3rd in exports.
    Asia now has 9 of the 10 tallest buildings in the world, the fastest trains and is ranked #1 in education, manufacturing and exports.
    How did China do this?  They copied Alexander Hamilton’s list of 11 things to make America strong and renamed  it, 11 things to make China strong.  And now you know the rest of the story.

  65. Free trade is a joke. It is intended to destroy nations, not build them. The U.S. became a super power because of protectionism — not because free trade. Bourdreaux is a Marxist and here is why:

    Said Marx: "the protective system of our day is conservative, while the free trade system is destructive. It breaks up old nationalities and pushes the antagonism of the proletariat and the bourgeoisie to the extreme point. In a word, the free trade system hastens the social revolution. It is in this revolutionary sense alone. . . . that I vote in favor of free trade."

    It was Alexander Hamilton who created the American economic system (the National System) which is based on autarky.

  66. The great thing about a city built on trade is the only thing you need is a port and an airport to make your economy flourish

  67. America's first major Act passed under the new constitution was hugely Protectionist, the Tariff of 1789, and it helped America develop. America has always been a Protectionist nation in one way or another. America just likes Free Trade when it benefits them—in the industries they already have an advantage against.

  68. Paul Krugman on free-trade March 6, 2016:

    But it’s also true that much of the elite defense of globalization is basically dishonest: false claims of inevitability, scare tactics (protectionism causes depressions!), vastly exaggerated claims for the benefits of trade liberalization and the costs of protection, hand-waving away the large distributional effects that are what standard models actually predict.

  69. so the gist I'm getting is that goods get cheaper but jobs will be harder to get. true?

  70. The only thing protectionism is good for is protecting politicians' cronies, and forcing people to pay more for inferior products. It is a restriction on the individuals right to trade with whomever they want, and it is invariably abused by special interests to protect them from competition. There is no justification for protectionism.

  71. I didn't even think about the U.S. in that way. That's interesting. Anyway, I completely support free trade over protectionism. One of the greatest arguments protectionists have against free trade is that it encourages outsourcing of jobs to other nations where wages are lower, thus harming domestic workers. This is true, however, this is not the entire picture. Free trade encourages businesses to produce their goods/services wherever it is most economical to do so. In protectionism, producing goods domestically is artificially made the more economical place. However, this artificially increases prices to domestic consumers. They don't get as low of prices as they could be getting, due to protectionism. So, it harms domestic consumers. Also, when businesses choose to produce their goods/services abroad (say, in poorer countries), they are providing those foreign people the ability to earn at least some income. These wages start out low, as those workers provide little value to the employer. However, over time, wages are increased as their is increased competition for workers between foreign and domestic businesses. We are currently seeing this in China, where wages are now increasing and American businesses are beginning to look elsewhere to produce their goods/services. The only downside is that this does harm American workers who often have their jobs shipped overseas. The answer to this is not, however, to do the less economical thing of protectionism, but rather for American workers to seek employment where there is demand. For example, there are plenty of jobs in health care, trade skills, and information technology in the U.S. and many of these jobs are going unfilled due to a lack of qualified applicants. We have a skills gap an several areas of the U.S. economy because workers simply aren't pursuing these job opportunities.

  72. Just because we can make nearly everything here we don't need to facilitate imports. When we in effect import labor from 3rd world countries what are our workers supposed to do? Sell their services to Chinese or Mexican employers at Chinese or Mexican wages?

  73. You cannot compare free trade in America to free trade between other countries. The US is a single country under a single government with its own work and wage standards to level the playing field. There is a federal minimum wage so that people from Kansas can't out bid workers from New York for low wages. You don't have that when competing with workers from Indonesia. Is there any country doesn't have free trade within its own borders? The very fact that this is being used as an argument boggles the mind.

  74. The example of the USA as Free Trade example is absolutely out of place and wrong. Regardless of Federalism, the USA is ONE country. Free Trade by definition has to happen among 2 or more DIFFERENT countries. USA and Canada as different States/ Countries is a good example. UK and USA is another good example. Virginia with New York is NOT a Free Trade example as they are in the SAME STATE/ country. By definition that is NOT Free Trade.

  75. What this professor who is obviously a member of the Keynesian school of economics is missing that Free trade only works when the other countries you work with have free trade policies as well. One sided free trade makes some people wealthier, but long term it causes economic destruction when it is one sided.

  76. I'm starting to believe that these people advocating free trade are living in a utopia. Economically speaking and apart from politics, I see free trade as the best possible system. However, what I think free trade advocates are missing is the political implications that comes with free trade. As an applied theory, free trade cannot be separated from politics. In a utopia it can, but in reality it cannot.

  77. I'm still quite new to economics so please correct me if I'm wrong, but from everything I've gathered Free Trade is good for strong developed countries, Protectionism is good for developing countries/countries in bad shape, since they need their local economy to prosper and Free Trade will obstruct that. Completely generalized and overly summarized but that's how I'm seeing it at the moment.

  78. So to really hurt a countries economy you might sell your goods to them for cheap but anything that goes out would be taxed?

  79. Yes, free trade is good inside the country, or between similar countries, but if it is between poor corrupt countries and civilized world, I call it cheating. When goods are produced in some third world country where people have no social security and are basically almost slaves, where factories can pollute as much as they want, most certainly this will be a cheaper choice for businesses, but is it fair competition and good for everybody, I dont think so.

  80. I'm not an expert in economy, but I'd really like an honest answer to these… if protectionism is so bad, why is it that every developed country used it while developing, and still do in sectors that they're not competitive? Of course protectionism, per se, does not bring growth or prosperity, but can't it be used as a part of a successful strategy for development? And lastly, saying that protectionism is bad for the general economy ins't like saying war is bad for the economy (in the sense that while it is true, but it doesn't mean it won't be necessary if people starting doing it against you)?

  81. 140+ countries in the world use a VAT tax system. VAT has a lot of moving parts but as it affects trade VAT is a tariff on imports with the proceeds of VAT rebated to help exports of mfg goods. China 13-17% Germany 19% Australia 10% Mexico 16%. Etc etc THE USA HAS NO VAT TAX. So there has been no free or fair trade for a very long time. This is reflected in out trade imbalances and crumbling mfg economy.

  82. This whole video is incorrect. 1st bill George Washington signed was a protectionist bill. Abraham Lincoln was elected as a protectionist to support the Morril tariff act. 140+ counties use VAT taxes that in terms of trade serve as an across the board tariff on all imports with proceeds rebated to help exports of mfg goods. The USA is the only developed country in the world without a VAT tax structure. This guy has no idea what he is talking about.

  83. A lot countries do that to us with their stupid rules, hence why we voted Trump.

  84. If Free Trade is so good why is American economy BOOMING right now?

    Free trade only benefit the marxists elites that work for the chinese.

  85. The Brexit, French riots and Trump's presidency are somewhat related. The common thread is Globalization. Especially the movement of production of goods FROM the countries that consume the goods. Balanced Trade is OK but Free Trade ends with the family wage jobs drained out of the consuming countries.

  86. Mexican companies don't have to worry about polluting the environment, they don't have to worry about paying decent wages, they don't worry about workers compensation rates and they don't worry about high taxes. If we give Mexican companies free assess to American markets, we'll destroy American business, American industry and maybe even millions of American jobs.

  87. You are arguing for globalism that has decimated American manufacturing and made us a more poor country. Thanks to the steel tariff’s, steel jobs in America are up over 700%. Ford is now expanding in Chicago to an area that desperately needs good manufacturing jobs. All free traders are are globalists who do not care about the american workers. You also want open borders to have this country flooded with immigrant slaves. You do not care about this country, you only care about multinational CEO’s profits.

  88. bullshit.. Free Trade is only fair if we have free flow of labour otherwise it's just the developed countries halting underdeveloped countries' development with cheaper and more advanced goods

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