Sunday, December 12, 2010

Free Trade and World Peace

As in so many instances previously in history, the fear of free trade rings deep in the minds of a worker whom is misinformed of the circumstances. If people were truly for the basic principal of more progress, greater freedom, and world peace for human kind, they surely would see the notions of protectionism as naïve. Nevertheless, free trade is still railed against and pilloried, even though in all reality the skeptics are essentially jilting the richness America has endured, and hindering the world peace that would flourish, by preventing the free and voluntary exchange of goods and services.

What renders the whole situation grotesque is the fact that all countries want to decrease their imports, but at the same time to increase their exports. The effect of these policies is to interfere with the international division of labor and thereby generally to lower the productivity of labor. The only reason this result has not become more noticeable is that the advances of the capitalist system have always been so far sufficient to outweigh it. However, there can be no doubt that everyone today would be richer if the protective tariff did not artificially drive production from more favorable to less favorable localities.

What is very shameful is that at present, people fighting for “the greater good” continue to expound irony in all of their endeavors. People fight against poverty by attacking Free-Trade and feel more advanced nations are exploiting the citizens of lesser developed countries, simply in the pursuit of profit. What is incorrect is that these profitable companies are actually providing jobs for these impoverished nations, something otherwise not provided by their inefficient governments. In many cases, those jobs provided by larger corporations, are better paid and better equipped to suit the environment of the worker in the lesser developed country. Another perplexing and false argument is that Free-Trade takes jobs from the home country of the company, to export to another nation at the expense of the home nation’s workers. It is important to remember that in this case, companies should and must pursue profit making motives. By doing so, they reduce costs, create jobs, and are able to reinvest; the latter of course being the most globally beneficial, keeping the cycle of profits moving to other companies seeking capital.

Under a system of completely free trade, capital and labor would be employed wherever conditions are most favorable for production. Other locations would be used as long as it was still possible to produce anywhere under more favorable conditions. Capital and labor tend to move from areas where conditions are less favorable for production to those in which they are more favorable. In so mentioning the free movement of capital, immigration takes an important role as well. For if migration were constrained, considering that human capital is of course required within the sectors of the economy which that migrant is suited to work, business would lack the capacity to execute the best business policies, tactics and of course lack the ability to maximize efficiency. This would lead to a lack of good and services to the society in need of them.

The fear of displaced workers is of course empirically misgiven as well. Statistics show it is not outsourcing or even immigration that causes unemployment to rise, but other factors having to do with technology, domestic competition, changing consumer tastes, or the general business cycle. All of these factors are best solved and most often removed with the freeing up of the economy. Government regulation only constrains the Free-Market, and the attempt of saving jobs by regulating Free-Trade, is obviously at the expense of everyone else. This of course is a detrimental result of all regulation in general. The outcome of protectionism is, therefore, always a reduction in the productivity of human labor. In order to create the indispensable conditions for a lasting peace, one of the features of the present international situation that the libertarian wishes to change is the fact that emigrants from nations around the world looking for better job opportunities, must live in areas in which, because of the adoption of anti-libertarian policies, they are stuck clambering for a better life with limited resources. And therefore, the world sees the best tool to reaching world peace, above Democracy itself, destroyed at the whims of an ignorant collectivist society relying on an inefficient Government to nanny them.

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