Question

Opponents of free trade argue that trade must be restricted in order to save domestic jobs. As a free-trade, how would you counter this argument?

Answer 1

For saving a job there is huge cost incurred by the nation's consumers if the trade is restricted due to an increase in prices due to trade restriction. So saving a job by restricting trade is very costly for the nation as a whole. Instead of restricting trade and making huge welfare losses, what can be done is that free trade should be allowed. Goverment should use a redistributive policy to redistribute the gains from trade. The consumers gain highly when there is no trade restriction. So, some of gains of Consumers must be taken by Government as taxes and must be distributed among the wokers who have lost their jobs as subsidy or Unemployment Benefits. This is true that the total gains of the consumers were higher than the total loss of workers due to job loss. Thus, through redistribution, everybody can be made better off without restricting trade.