a foreign country at a cheaper price than the same good with the same quality in his own country, he will purchase that good from the foreign country. However, if tariffs make the foreign good more expensive than the domestic good, the consumer will buy the domestic good. But he will have paid more than he originally could have. Thus he will have less money to spend on improving his standard of living than if he had bought the foreign good at its actual price. “Smith attacked the doctrine that in commerce neither side gains or loses.” By definition, a trade’s terms must be agreed upon by both parties. So both parties receive a good or service that they wanted or needed more than the good or service that they give to the other party. “Free trade is the true nature of things because it allows the whole world to obtain the greatest amount of enjoyments and satisfactions at the least labor and cost.” Free commerce allows consumers to obtain commodities at the lowest cost and highest quality, thus helping consumers to become wealthier and increasing their standard of living.
Free Trade Jesse Keipp, Writer
When the Industrial Revolution was dawning, Adam Smith published his economic theory of laissez-faire capitalism in his written work, The Wealth of Nations. In this book, Adam Smith argues for free trade: trade between nations without tariffs or restrictions. Free trade leads to prosperity for citizens of free trade nations and for those who trade with free trade nations. If there is more international commerce, all of those nations that trade with each other grow wealthier. Commerce leads to economic prosperity of entire nations. Commerce improves the standard of living for everyone--whether they are in the upper, middle, and lower class. “It is in the interest of the whole world that all commodities should be produced in those places where they can be obtained best and cheapest.” Consequentially it is also in the world’s greatest interest that goods are “exported to those places where they can only be produced of inferior quality and at a greater cost.” It is best for consumers to be able to obtain commodities at the lowest price and highest quality. Free trade allows consumers to obtain the cheapest and best commodities, while trade restrictions prevent them from obtaining these commodities, and thus prevent consumers from achieving the highest possible material standard of living. Inhibited trade leads to impoverishment. “Tariffs act at once as a barrier, and diminish the commercial intercourse of nations to their mutual loss and impoverishment.” Tariffs prevent trade, preventing people from acquiring the best goods at the cheapest possible cost. If a consumer can acquire a particular good from
Sources: Thomas Mackay, ed., A Policy of Free Exchange: An Argument Against Socialism and Socialistic Legislation (New York: D. Appleton and Co., 1894), HYPERLINK "http://econlib.org/library/LFBooks/MckyT/mckyPF1.h tml" http://econlib.org/library/LFBooks/MckyT/mckyPF1.h tml (accessed March 2, 2010) Emma Rothschild, Economic Sentiments: Adam Smith , Condorcet, and the Enlightenment (Cambridge, Massachusetts: Harvard University Press, 2001)
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