Question

what are the benefits and the costs of free trade and how these both get distributed around the globe and does the dominant framework of free trade guided by the neoliberal economics, foster and threaten global welfare?

Answer 1

Benefits and costs of free trade :

Free trade means that countries can import and export goods without any tariff barriers or other non-tariff barriers to trade.

Essentially, free trade enables lower prices for consumers, increased exports, benefits from economies of scale and a greater choice of goods.

the benefits of free trade include:

1. The theory of comparative advantage

2. Reducing tariff barriers leads to trade creation

3. Increased exports

4. Economies of scale

5. Increased competition

6. Trade is an engine of growth.

Economists on Free Trade:

Adam Smith, The Wealth Of Nations (1776) Smith generally supported free trade. He made the argument there is no point in protecting the Scottish wine industry if it would cost 30 times the price of importing wine from warmer countries. Smith also argued that if our competitors become better off, they will be able to buy more of our exports. Smith saw trade as a way for all countries to become better off. This was in contrast to the zero-sum Mercantilist theories popular at the time.

Neoliberalism, the dominant political ideology and economic and political policy during the past 40 years, poses significant challenges for human rights, particularly economic, social, and cultural rights. Also referred to as market fundamentalism, neoliberalism maintains that human well-being can best be advanced within an institutional framework characterized by free markets, a minimal state, free trade, the absence of economic regulation, and strong individual property rights. Neoliberal doctrine seeks to reduce the role of the state on which human rights depend for protection and implementation, including to diminish or even eliminate its social and welfare responsibilities. A goal of neoliberalism is to cut public expenditures for social services such as health and education, including reducing welfare programs and the safety net for the poor, with policy makers often arguing that generous entitlements are unaffordable while enacting tax cuts benefiting the wealthy.