Question

It is argued that the United States would be foolish to maintain a free-trade stance in a world in which all other countries exploit child or prisoner labor, or are protectionist. On the other hand, Ricardo's classic demonstration of the sources and effects of comparative advantage cogently demonstrates that regardless of other country policy, free trade remains the first best policy for a country to follow, since it will maximize its consumption possibilities (conditional upon other country policies). EXPLAIN FULLY. Discuss the contradictions with the argument in the preceding paragraph.

Answer 1

Answer) First we will discuss the given statement,what is being argued is that in free trade stance US will have to face a lot of issues which it would not want such as child labor or unfair practices through tarrifs and barriers and would have to compromise some of trading standards it has set,while theory of comparitive advantage states that no matter what ,for a country to grow economically it must favor free trade and should ignore issues/sources,paragraph in a way talks about ethical issues vs. economic development.

But when we look closely,we find contradictions such as on one hand we are talking about free trade but on other hand we are looking at protectionism as one of the issues,we are looking at other country's policy in free trade which can be changed quickly if a government decided to,then is it really free trade and will US actually benefit from such free trade ,thus there is a contradiction with what free trade is and what it will be if issues are ignored.

Answer is complete.Thank you!