In: Economics
What are the problems with the argument of “maintain domestic employment” for trade protection? need answer in 200-250 words.
Trade protectionism refers to policies the government uses to prevent unfair competition from foreign industries. Policies mainly include:
These policies may create temporary jobs for the industry, which
is in protection while other sectors are still forced to contract.
If we check, it can be found that even the protected industry
cannot employ in the long run. This is mainly because the cause of
this problem is still there. This can be said to be a political
measure as products become more costly in the long term. This makes
them less competitive than foreign industries, which ultimately
destroys the industry.
Most industries that suffer from unemployment are industries with
wages far over nonunion market compensation. This high wage is by
labor unions who enforce them through restriction thereby creating
unemployment. They call for trade protection policies from the
government to create more competition and more unemployment.
Trade barriers exist today because workers believe that it
protects their wage rate from low-cost labor competition. But that
is not the case. It destroys more jobs than it creates in the long
run. That is where the concept of free trade needs to be
introduced, but this can only be applicable between countries of
similar wages.
**Hope this helped. Please Upvote**