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THE CASE AGAINST FREE TRADE This essay suggests that the concept of free trade is fuzzily defined and possesses both theoretical and practical flaws which render it unusable as a rational basis of government policy making For alternative national trade policies see httpwwwmkeevercomessay Free Trade Defined Free trade seems to mean that trade between countries occurs with no government regulation or restraint Or in other words no quotas licenses taxes safety concerns inspections or limits of any kind Business people are free to do what they will in buying and selling products and services between countries This theory of trade has two categories of flaws theoretical and practical Consider the theoretical underpinnings of free trade theory Adam Smiths Invisible Hand Free Trade is a fuzzy concept which applies the concept of Adam Smiths Invisible Hand IH to international trade In order to fully understand free trade we must first look at the IH concept Free trade shares many characteristics and flaws with the IH Basically the IH holds that the greatest good will accrue to the greatest number of people when each agent in a market both buyers and sellers act in their own self interest This is so goes the theory because buyers want to buy more of any good at a lower price while sellers will sell more of any good at a higher price Market forces will conspire to force the price and quantity offered and sold to an equilibrium price If the price is higher than the equilibrium price sellers will offer more than the equilibrium quantity for sale the excess quantity will remain unsold until sellers in their own best interest lower the price until equilibrium is reached and the sellers sell the quantity they wish and buyers buy the quantity they wish at that price This automatic balancing system ensures that a nations productive resources are allocated to the most efficient
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