9.3 The Arguments for Restricting Trade

9.3 a. Job Preservation

A primary argument against trade is that trade reduces the number of jobs available domestically. While this is true of specific industries, trade does not generally reduce the jobs overall as it increases purchasing power of the consumers which simulates job creation both domestically and internationally. This argument is often presented by unions to protect union jobs who often stifle the economy by preventing companies from getting the lowest prices for their inputs, forcing them to raise prices. Unions actually decrease jobs, since there is less demand for higher-priced labor. Also, an economy can operate at maximum efficiency only if the labor force is mobile where people would be willing to change jobs as required. ^[12]

Example: Manufacturing jobs are mostly outsourced by the US as it is cheaper to produce the goods elsewhere where the labor forces are cheaper and also able to meet the demand of the goods.

^{Trade and Jobs [11]}

9.3 b. National Security

A primary argument against trade is that trade reduces the number of jobs available domestically. While this is true of specific industries, trade does not generally reduce the jobs overall as it increases purchasing power of the consumers which simulates job creation both domestically and internationally. This argument is often presented by unions to protect union jobs who often stifle the economy by preventing companies from getting the lowest prices for their inputs, forcing them to raise prices. Unions actually decrease jobs, since there is less demand for higher-priced labor. Also, an economy can operate at maximum efficiency only if the labor force is mobile where people would be willing to change jobs as required. ^[12]

Example: Manufacturing jobs are mostly outsourced by the US as it is cheaper to produce the goods elsewhere where the labor forces are cheaper and also able to meet the demand of the goods.

^{Trade and National Security[11]}

9.3 c. Infant Industry

The argument is often presented that infant industries should be protected until they can sustain themselves. Some mature industries argue that they should be protected so that they can adapt to new conditions. However, the whole point of competition is to allow only the most successful companies to thrive. In actuality, the main recipients of this type of protection are usually people who are politically and financially powerful. All governments today are influenced, if not controlled, by special interest groups that are financially powerful. ^[12]

Example: China has a 30 percent tax rates on imported clothing and textiles to block foreign goods from getting into the country. ^[13]

^{Tariffs and Protectionism [15]}

9.3 d. Unfair Competition

Industries in different countries are subject to different regulations, taxes and subsidiaries which gives some countries an unfair advantage over the others. ^[12]

Example: Some countries where manufacturing is often outsourced have less strict environmental laws than the host countries.

^{Unfair Advantage [16]}

9.3 e. Protectionism as a Game Theory

Another strong argument in favor of protectionism follows the logic of Game Theory. If your competitor countries are going to offer protection to their industries anyway, then you should offer protection to your industries, too. ^[14]

Example: If the US government is indirectly subsidizing the American company Boeing, then EU nations have a strong case to retaliate and consider subsidizing the European company Airbus as well. ^[14]

^{Protection as a Game Theory [17]}