Is Free Trade Always Good?

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Is Free Trade Always Good? Free trade is a policy that relies on the concept of comparative advantage that when comparing two countries one of those countries will have the capability to make a product that is better than the other country. So it is best if each country focuses its efforts and resources into one product to increase the economic activity for both countries. The determination of who produces a product better is based on the open market without intervention from a government who may try to control a trade by imposing government protective measures such as tariffs. The World Trade Organization has been tasked with monitoring free trade, but it has been noted that their policing has not been effective to stop such interventions. Free trade not only relies on a laissez-faire approach but also on assumptions of conditions. The assumptions used by many for economic theories are not always accurate but rather the justification for using the assumptions is so that economic theories can be applied for the greater good of an economy. Laissez-Faire Approach Embracing the concept of free trade means that a government does not influence the trade by imposing sanctions but rather has a laissez-faire approach that allows the international market to decide which product has the comparative advantage. The global economy runs on this assumption but not all “play” by the same rules. The United States has limited sanctions imposed on free trade, allowing the free market to operate across the world. The United States’ approach to free trade is much like our approach to the US Olympic Team. Our athletes are unpaid volunteers that often fund their Olympic quest with sponsorships. As our metal count often shows, you do not always “win” ... ... middle of paper ... ...given its imperfections, until a groundbreaking theory is developed that supplants some of the inefficiencies of free trade. References Carbaugh, R. (2011). International economics (13th ed.). Mason, OH: South-Western, Cengage Learning. Fletcher, I. (2011). Crumbling of Free Trade – And Why it’s a Good Thing. Retrieved from http://www.tradereform.org/2011/05/the-crumbling-of-free-trade-%E2%80%94-and- why-it%E2%80%99s-a-good-thing/ Hindriks, F. (2005). Unobservability, tractability and the battle of assumptions. Journal of Economic Methodology. 12(3), 383-406. Krugman, P.R. (1987) Is free trade passé? The Journal of Economic Perspectives, 1(2), 131-144. Retrieved from http://bss.sfsu.edu/jmoss/resources/Is Free Trade Passe.pdf Prasch, R.E. (1996). Reassessing the Theory of Comparative Advantage. Review of Political Economy. 8(1), 37-55.

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