Mercantilism is a bankrupt theory in that it encourages exports but discourages imports. It is based on the concept that income is earned through exports but that resources and income are traded for imported goods. The theory suggests that by limiting imports and increasing exports, a country is able to accumulate a trade surplus and, as a result, wealth and power. This theory is erroneous, however, because over time an influx of money into the mercantilist country would result in inflation. These high prices would discourage other countries from purchasing exports from the mercantilist country and, over time, the mercantilist countries source of income would stagnate.
Yes and no. In theory, free trade opens up the possibility for different …show more content…
To begin with, if a country determines that another country is able to better produce certain goods or services, it would behoove them to import those items from those other countries. In doing so, however, this can mean a loss of jobs in a particular industry. In this case, I believe that the government should offer retraining programs. For example, let’s assume that the U.S. has determined that another country is more efficient at producing a particular good. In this scenario, perhaps the U.S. decides to shut down operations here and import those goods from the other country. Perhaps the U.S. has even decided to focus their energy and efforts in another unrelated industry. In this case, the workers from the former industry could be trained to perform necessary job functions in the new industry to eliminate the potential for an increase in unemployment.
Finally, it has been argued that globalization and international trade has led to a decline in the quality of the environment and global warming. In an attempt to counter these negative effects of free trade, governments should institute environmental regulations to see that all countries and industries are doing everything in their power to conserve the quality of the environment. By reducing negative externalities and limiting the use of pollutants, it is possible to protect the
Yes and no. In theory, free trade opens up the possibility for different …show more content…
To begin with, if a country determines that another country is able to better produce certain goods or services, it would behoove them to import those items from those other countries. In doing so, however, this can mean a loss of jobs in a particular industry. In this case, I believe that the government should offer retraining programs. For example, let’s assume that the U.S. has determined that another country is more efficient at producing a particular good. In this scenario, perhaps the U.S. decides to shut down operations here and import those goods from the other country. Perhaps the U.S. has even decided to focus their energy and efforts in another unrelated industry. In this case, the workers from the former industry could be trained to perform necessary job functions in the new industry to eliminate the potential for an increase in unemployment.
Finally, it has been argued that globalization and international trade has led to a decline in the quality of the environment and global warming. In an attempt to counter these negative effects of free trade, governments should institute environmental regulations to see that all countries and industries are doing everything in their power to conserve the quality of the environment. By reducing negative externalities and limiting the use of pollutants, it is possible to protect the