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For the past few decades the theory of free trade has been debated and studied by a vareity of economists and think tanks. A large number of notable economists and self appointed experts have came to the conclusion that free trade is a given law of economics that wins hands down against what they have labeled protectionism.
Economics can be very complicated with terms like comparative advantage, absolute advantage, mercantilism, tarriffs and many other formulas for determining what is the best course to follow when managing an economy, or deciding to not manage an economy. I will break all this down by providing a very simple working economic model using two families and enlisting only the father on son of each family.
The families both own homes with large yards that requires mowing once a week during warm months. The fathers of both families are in charge of lawn care expenditures. One father believes in free trade and decided to take bids for mowing the yard. The free trade father knew that professional firms would be way too expensive so he put out flyers in economically depressed areas of town and found someone willing to mow the yard for twenty dollars per cut, outbidding his own sons lowest bid by twenty dollars. The other father hadnt read Ricardo or Smith and decided to see how much a professional service would charge and discovered that it would be seventy five dollars per cut. he didnt take bids looking for the lowest bidder but offered the job to his son for sixty dollars per cut. The son glady took the job.
The free trade supporting father enjoyed the bargain price for his lawn care and did not mind that sometimes it was cut a few days late and had a few missed places, after all look at all the money he was saving.
The protectionist father was paying his own son sixty dollars per cut, three times the amount of father free trade but he looked at things much differantly than Mr. free trade. He knew that if his son did not get his yard mowing business that had to subsidize him any way. He knew that he spent close to one hundred dollars per week on food, clothing and personal items and that having him cut the lawn put money in his pocket so he actually was only spending twenty dollars per cut and keeping that money in the family as well. As for father free trade he still had to support his son and actually spent more when all things were considered.
When you compare this story with the outsourcing of manufacturing you get the same results. Those people who lose their jobs to cheap overseas labor have to be subsidized with retraining costs, unemployment, welfare ,food stamps. The loss of their spendable income also effects the profits of local business so its a domino effect.
Take a look at Americas current economic situation and you will see free trade lying on the floor lifeless with no pulse, the wealthy elite desperatly trying to revive it so it can be used once again to further their own means which is unrelenting greed and disdain for the country that gave them so much.
