Which is better - the protection of the market or the policy of non-interference Today, protectionism and free trade are no longer two opposing principles of economic policy, but interrelated elements of the regulation of relations between countries.
The ratio of protectionism and free trade
Free trading is usually aimed at achieving long-term prospects, while protectionism is based on prevailing circumstances and national interests. The Italian economist and sociologist V. Pareto once said: "Knowing all the economic and social conditions of a particular country in the current situation, one should understand that for this country and at this very moment, protectionism or free trade is appropriate."
The very ideology of free trade originated in England in the 18th century under the influence of the industrial revolution. The aim of the struggle was the elimination of agrarian duties, which influenced the high cost of agricultural products, curbing the development of factory production, and lowering customs duties that hindered the export of goods.
Protectionism, on the other hand, is a state policy aimed at protecting the national economy from foreign competition. At one time, Europe and North America, only thanks to these measures, were able to carry out industrialization (XVIII-XIX centuries).
Downsides of protectionism
1. Protectionism undermines national production in the long run. It deprives competition from the world market - and the natural desire to develop is "muffled" by routine, unwillingness to part with acquired privileges. Strong support for the protectionist barrier is nothing more than the influence of private interests.
2. Harmfulness to the consumer is one of the consequences of protectionist policies. The overpayment for goods and services completely falls on the shoulders of the consumer due to the lack of competition in the pricing system. This applies to both national and imported products.
3. Protection of one of the industries will require protection and the other - the effect of a chain reaction.
4. Everything temporary sooner or later becomes permanent. Protectionism, as a temporary measure, is not effective, since it eliminates the natural development of production.
5. Increased interstate rivalry leads to a threat to security and stability. Mutual understanding between countries is lost - and hostility and mistrust appear on the "scene".
The goals of protectionist policies include: national security of the country, achieving certain political goals, high wages, maintaining a high standard of living, preserving social classes, preventing depression and recession.
Free trade versus free trade and protectionism
1. Improvement of welfare growing from international trade;
2. Natural development of competition, which increases the quality of manufactured products;
3. Expansion of sales markets, beneficial for the country and consumers in the conditions of mass production of goods.
