Comment: free-trade versus protectionism

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free-trade versus protectionism

I feel the only "flaw" to free market is related to this and the ineffective way tariffs are used or are too slow to be put in place which stifle manufacturing here. The negative side of the market, when cheap low grade products keep flooding the store shelves and keep putting quality made businesses out to dry.

There are two sides to that coin. Yes, inefficient domestic firms may go out of business under pressure from foreign competitors, who can produce cheaper products; but domestic consumers get to enjoy lower prices. The bottom line is that protectionism is about benefiting select domestic companies at the expense of domestic consumers. Moreover, protectionism goes hand in hand with cartels. For example, the pharmaceutical cartel works by stifling its competitors, which allows it raise prices above market levels. It can stifle domestic competitors using the FDA and related government entities/laws, but it needs tariffs or other protectionist measures to stifle foreign competition. The end-result is ill-gotten profits for these politically connected companies, and higher prices for American consumers.

There's a famous saying (can't recall the author) that "the tariff is the mother of trusts (i.e. cartels)," and usually the prime political force behind protectionism is, surprise surprise, inefficient firms who can't hack it in the free market (US Steel, e.g.), and who want to tax foreign competition out of the market, so they can inflict their inferior and/or higher-priced products on the American consumer.

Protectionism is a racket, just another form of State intervention in the economy for the benefit of cronies: though of course they dress it up as something in the public interest, as they do with every economic intervention.

Free trade is a basic principle of libertarianism, if you don't believe in free trade, you really don't believe in the free market at all. I suggest some further reading, try browsing the literature section at www.mises.org

A good place to start would be Henry Hazlitt's "Economics in One Lesson"
http://library.mises.org/books/Henry%20Hazlitt/Economics%20i...

"Alas! I believe in the virtue of birds. And it only takes a feather for me to die laughing."