Protectionism: Is protectionism more efficient than free trade?

  • Protectionism More Efficient than Free Trade

    Yes, protectionism is more efficient than free trade as proctectionism ensures a fair market. In a completely free trade market, larger businesses can exploit both their workers and the smaller businesses. This leads to inefficiency as the only way to rectify this is for a smaller business to luck out and become the next big thing, and only if that smaller business is anti-exploitation. A little government oversight sees that this never happens in the first place.

  • It all depends on the perspective

    The whole protectionism vs free trade debate all boils down to on who is being affected. If we are talking domestic production, then often protectionism is better than free trade. If we're talking the efficiency of trans national corporations, than free trade is typically more efficient. So it all depends on who is being affected in the end.

  • By nature, it is not efficient.

    Tariffs, quotas, subsidies - all those necessarily lead to deadweight loss. Take tariffs as an example. The price will rise from the world price to a new one, which must lead to a decrease in consumer surplus. There will be an increase in the domestic producer surplus and in government revenue, but there will be two triangles flanking the government revenue which are lost - that is the deadweight loss. Now, whether protectionism is good is another matter and I won't comment on it here.

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