First individuals pursuing their own interests under conditions of competition would be self regulating and more prosperous (Skousen 2001); second liberty would be more profound among individuals; and thirdly self-interest is not ‘myopic selfishness’ (Friedman p27), self interest refers to individual goals, pursuits and values. First, ‘too much competition and too little cooperation’ can cause further inequality amongst individuals (Soros in Reisman, 2004) and thus; secondly the pursuit of self interest would lead to anarchy and crisis (Marx).
A societies values, it’s culture, it’s social conventions – all these develop in the same way, through voluntary exchange and spontaneous cooperation Economic freedom is an essential requisite for political freedom. If an exchange between two parties is voluntary, it will not take place unless both believe they will benefit from it Self interest is not myopic selfishness. When people are able to live free of government regulation they prosper- ‘ goods become cheaper, standards of living go up, and individual liberty is expanded. ‘ (Frazier 2004). A belief in free markets has nothing to contribute to distributive justice (Bishop p14)
Evidence to support claim First, coercion and intrusion is exemplified most profoundly through government intervention; second, the responsibility and moral obligation to the rest of society ‘lies outside of the market’ (Friedman p14) and; thirdly governments must take a stance less coercive, yet ‘sponsoring systems of welfare, social security, and subsidised education, health care and housing. ‘ (bishop p11) Counter Claim In support of domestic industries, government intervention through the methodical implementation of tariffs, regulations and subsidies, aim to regulate and protect those it otherwise may affect.
Claim Made in the Literature The purpose of government is to ‘make the world safe for human cooperation by protecting society against attacks on the part of foreign aggressors or domestic gangsters. ‘ Evidence to support claim Government policy could best aid it’s populace through two functions. Firstly the role of the government should be that of a protectionist -government should protect individuals and their property from acts of aggression – force, fraud, and coercion. Establish the rule of law, enforce private property and contracts. Protect citizens from foreign invasion (national defence) and protect citizens from each other.
Secondly government could provide a productive function. In some cases the market has trouble supplying a good or service when it is hard to establish a link between individual consumption and individual payment or it is costly to monitor individual use of a good or service and collect payment. (Gwartney 1998)From a broader prospective; people around the globe are more connected to each other than ever before; information and money flows more quickly; goods and services produced in one part of the world are increasingly available in all parts of the world.
International travel is more frequent. International communication is commonplace. I will argue that such intervention is driven by the notion that governments wish to live in explaining that. To maintain nation’s sovereignty in ‘a world shrinking and becoming a single place’ the protection of the industries and the populace it governs is vitally important. Many contemporary authors in the field of economics have resounded differing assumptions that support and contradict this newly formed convergence and regulation of markets.
One of the most sacred assumptions has been the hypothesis that an ‘invisible hand’ determines the market and its prices, in essence ridding the world of inequality . Such intervention is driven by the notion that governments wish to live in ‘a world less driven by economic exchange and more concerned with values, norms and rights. ‘(Clinton in Sullivan p. 1) I challenge this disposition. Current trends in government mindset and further regulation of trade impose new and improved powers to governments, while also negating the best use of resources procured through specialization.
Through an approach that is sustainable yet equitable, international cooperation could also generate boundless positive impacts. The aim of this essay endeavors to shed light on the benefits of free trade in relevance to the current ‘protectionist’ policies imposed through government regulations. In reference to current literature procured through inconceivable means, furthermore I will challenge current political thinking and asses the detrimental effect that regulations, namely subsidies, have toward developing countries’ economic growth.
Through increased integration between nations, economies experience increased trade, capital and labor movements. Hill defines trade as: – ‘A transaction involving the sale and purchase of a security; in general, the buying and selling of goods and services. ‘ (p. 166) People have traded with each other for centuries in order to overcome the local scarcity of resources. Scarcity, increased through consumption and an ever- growing populace, abets nations to seek globally as a means to feed their hunger.
As this hunger grows, consumers awaken to the reality that goods can be produced more efficiently and cheaply elsewhere, and fosters choice and freedom. Recent developments have emphasized further positive gains from increased trade. These include; increased power and national influence; aid in promoting foreign policy and goals; cultural/social reasons and; economic development. Although numerous advantages arise as a result of more open trade between countries, governments see a need to protect industries in order to safeguard their reign of dominative power.
As the trend leans more toward a more regulated and governed trade arena the envisaged future looks bleak for consumers as they are denied their sovereignty to choose. The world’s trading environment is changing rapidly; individual nations are becoming more integrated opening up new avenues for trade and foreign investment. Currently, the General Agreement on Tariffs and Trade (GATT), along with its descendant, The World Trade Organization (WTO), act as the foundation in harboring increased trade between nations. These organizations base their view on the fact that all countries will benefit from the unrestricted flow of cross-border trade.
The GATT, established in 1947, is central to trade negotiations and is based on two major principles. The first is non- discrimination between member states. Meaning, that an agreement should extend to its members first and only. The second principle is the prohibition of barriers other than tariffs. The GATT views tariffs as being rather transparent and therefore easier to negotiate. Through concentrating efforts primarily on the deregulation of tariffs, the recourse of non-tariff barriers has actually increased since the GATT’s inception. (Regional Trade Agreements p. 8).