Question

#11 Summarize and Explain the Economic Situation:

WHO’S PROTECTED BY TARIFFS?

Amere recital of the economic policies of governments all over the world is calculated to cause any serious student of economics to throw up his hands in despair. What possible point can there be, he is likely to ask, in discussing refinements and advances in economic theory, when popular thought and the actual policies of governments, certainly in everything connected with international relations, have not yet caught up with Adam Smith? For present-day tariff and trade policies are not only as bad as those in the seventeenth and eighteenth centuries, but incomparably worse. The real reasons for those tariffs and other trade barriers are the same, and the pretended reasons are also the same.

In the century and three-quarters since The Wealth of Nations appeared, the case for free trade has been stated thousands of times, but perhaps never with more direct simplicity and force than it was stated in that volume. In general Smith rested his case on one fundamental proposition: "In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest." "The proposition is so very manifest," Smith continued, "that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question, had not the interested sophistry of mer- chants and manufacturers confounded the common-sense of mankind".

Answer 1

Summary

                        The paragraph talks about the condition of current economic policies all over the world and states that the current policies have not bettered the basic economic theory put forward by Adam Smith in his ‘Wealth of Nations’. The present day tariff and trade policies are stated as worse than those put forward by him and the concept of free trade and international trade has not moved forward. It concludes that the proportion of Smith that the people would buy cheaper and quality goods in the market which would form the basic market buying pattern of the economy.

Economic situation

                        The international trade, although has seen many developments from the older times, has not moved much forward with respect to the economic policies across the globe. The introduction of globalisation has brought in the concept of free trading mechanisms and the concept of global groupings which has indeed made certain better developments to the international trading mechanisms which would go against the given statements. The introduction of a global organisation like World Trade Organisation [WTO] has been instrumental in formulating various policies related to international trade. The basic trading pattern of an economy is influenced by the basic market mechanism which has remained almost similar over the years. The Law of supply and demand in the market mechanism has not seen a shift and has remained the major factor that governs the international trading mechanism. Free trade has been introduced in many global economic groupings like ASEAN which has helped the economies in the group to prosper. Thus, we can see that although international trade has been widened owing to the technological innovations that has occurred in the globe, the basic economic conditions of trade has remained the same which has been influencing the policy making even today.