Stiglitz is a modern economist who worries that the benefits of globalization are unevenly distributed. Stiglitz argues that free trade agreements like the recent TIPP target powerful multinational corporations. Stiglitz argues that we don`t want the money to leave the country, may seem like a reasonable argument when you look at the GDP formula. If we import more than we export, GDP will fall. Doesn`t that mean we`re in a worse situation? In a way, yes, but in a way, no. First, free trade can benefit advanced economies, but not backward economies. Free trade has brought enough misery to poor and less developed countries, if past experience is a guide. India was a classic example of the colonial dependence of British imperialist power before 1947. The principles of free trade dragged colonial imperialism in its wake.

Another common argument against free trade is that it is risky to rely on potentially hostile countries for vital goods and services. According to this argument, certain industries should be protected in the interest of national security. While this argument is not technically flawed, it is often applied much more widely than it should be in order to safeguard the interests of manufacturers and special interests at the expense of consumers. The following arguments are often made against free trade: it is argued that free trade can harm the environment, as LDCs can consume natural reserves of raw materials for export. Even countries with strict pollution controls may find that consumers import goods from other countries where legislation is lax and pollution is allowed. Special interest groups put forward a variety of arguments in support of their views. Some of these arguments make economic sense, and others are false or at least suspicious. However, the truth is that those who demand the protection of free trade usually benefit the most. The unfair treatment of their workers by other nations is a relatively new argument against imports, and it can be difficult to document and distract. It`s hard to document because, as we`ve learned, it`s all relative. The terrible truth is that jobs in sweatshops can allow people in poor countries to feed and dress. Limiting imports from these countries could hurt the very people we would be helping.

These arguments are difficult to refute, as the truth is that low-cost foreign manufacturing facilities often do not meet adequate health and safety standards. The argument that “cheap foreign wages” will destroy an American industry is false. What matters is not the level of wages, but the level of wages relative to the productivity of workers. If an American industry has high wages — say, four times the foreign wage — but is six times more productive, that industry is still very competitive with foreign industry. Economists conclude, under simple assumptions, that free trade in an economy improves the prosperity of society as a whole. If free trade opens up a market for imports, consumers benefit more from cheap imports than producers suffer. If free trade opens up a market for exports, producers will benefit from the new place to sell more than consumers will be harmed by higher prices. If developing countries have relatively new industries, then those industries would be fighting against international competition right now. However, if they have invested in the industry, they may be able to gain a comparative advantage in the future. In short, restricted trade prevents a nation from reaping the benefits of specialization, forces it to use less efficient production techniques, and forces consumers to pay higher prices for the production of protected industries.

The quality argument is often cited as a reason to keep jobs in the United States. In reality, however, lower quality imported products are sold at lower prices, which reflects their quality and gives the consumer a different choice. (Some people like cheap shoes.) In addition, foreign producers have a good track record of improving the quality of their products to meet U.S. standards. The Japanese automotive industry of the 1970s is an excellent example. U.S. producers in some industries have done the same. For example, over the past 20 years, california`s wine industry has improved the quality of its wines to compete with imports from France in the United States.

This created jobs in the U.S. wine industry — and in freight forwarding, warehousing, advertising, retail, and restaurants (employing otherwise unusable wine administrators) — while fighting imports from Burgundy and Bordeaux. Keeping money in the country is not a priority. We do not want exports to be high because they keep the money in the country, but because they stimulate production and national incomes. If this revenue is spent on imports, it can be a very good thing for consumers. From the economists` point of view, the way to promote exports is not to limit imports. Other nations will retaliate against protectionist policies anyway. The way to promote exports is to be as innovative, productive and efficient as possible. Free trade agreements create larger markets for companies to sell their products. This means that instead of producing everything needed within a country`s borders, countries can specialize in producing the things they excel at and instead import other things that would cost them dearly to make. In this way, productivity is increased and the economies of trading countries develop. It has been estimated that the GDP of the EU as a whole would be 8.7% lower without the single market.

Other countries that “dump” goods into the United States and keep our imports away give ammunition to protectionists in their fight against free trade. .