Question

In: Economics

3. Would a pro-free market economist argue that garlic farmers facing competition from garlic farmers outside...

3. Would a pro-free market economist argue that garlic farmers facing competition from garlic farmers outside the United States (those foreign farmers can use very inexpensive labor) should be 'helped out' by the United States government (perhaps the government could give them some money)? Why, why not?

Solutions

Expert Solution

3.
A pro-free market economist will not argue as well as never favor the action of the government to help the farmers who are facing competition from the farmers outside of the USA, because a pro-free market economist wants market forces to take the control of the market and these economists don’t want government intervention. According to the pro-free market economist, it is the demand and supply forces of the economy that will define that who will excel in the market. A government action in the USA to help the farmer will be unnecessary intervention to disturb the market based economy.
If farmers face competition, then they should move up the value chain to produce garlic based products that can be sold at higher prices. Besides, the resources can be used to buy garlic at low cost from the foreign countries and process to produce garlic based products. Then, these products should be sold back to the foreign countries as well as in the USA to earn profit. It happens without the government intervention and market forces prevail. In a real world example, it happens between USA and Mexico regarding the tomato and tomato based products.


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