What are some of the common arguments against free trade?
What will be an ideal response?
There are several arguments against free trade. Some of them are:
i. National security concerns – Countries would rather diversify by investing in steel production and defense technology and maintaining a variety of agricultural industries so that they do not need to rely on other countries during a war.
ii. Fear of the effects of globalization on a nation's culture – Globalization is the shift towards more open, integrated economies that participate in foreign trade and investment. Some people, however, want to maintain their culture's uniqueness and therefore view globalization as homogenization.
iii. Environmental and resource concerns – Countries with lax environmental policies allow for relatively more pollution than countries with strong environmental policies. Opponents of free trade often site these policy differences as creating "pollution havens" in poor countries.
iv. Infant industry arguments – Infant industry arguments rely on the idea that in industries with economies of scale, or substantial learning by doing, it is important for policymakers to protect local firms early in their development.
v. Potential negative effects on local wages and jobs – Domestic producers and consumers are affected in different ways by trade. Therefore, many individuals worry about their own jobs when trade increases between countries.
You might also like to view...
Which of the following statements is true?
A) Lower wages are normally offered for jobs with better amenities. B) Jobs that are relatively risky pay a lower wage than other safer jobs. C) Educational qualifications and wage rates are negatively correlated. D) Incentives are normally higher for desirable occupations in comparison to undesirable occupations.
If the intersection of the IS curve with the horizontal axis comes at a level of output below the natural level of output, lowering interest rate to zero will
A) bring economy back to natural output. B) not bring the economy back to natural output. C) will have inflationary effects on the economy. D) will cause saving rates to increase.