ond, marginalproducers are drawn into textiles and away from other goods, resulting in inefficientdomestic production. In the situation above, Ricardo shows that trade barriers onlyprevent a nation from taking advantage of the benefits of specialization (the idea ofconcentrating on a single or few tasks). Instead, the American economy is pushed toadopt relatively inefficient production techniques, and consumers are forced to pay higherprices for protected prices than they would otherwise pay. For example, trade barriers intwenty-one US industries saved 191,00 jobs at a cost to consumers of $170,00 per job. Along with Ricardo, the vast majority of American economists are also in favor offree trade. Among them is W. Allen Wallis, who stated in the Department of StateBulletin that the idea of protectionism only invites a spiral of retaliation. Protectionismraises the cost of living in the country introducing protection and even though a favoredgroup can benefit from it, the vast majority of the population will not. Domesticconsumers will be forced to pay higher prices. Wallis additionally states that protectionistmeasures are not really actions taken by one country vs. another country. Instead, theyare actions that benefit one domestic group at the expense of other groups in the samecountry. For example, there is a conflict between the opinions of producers vs.consumers, and import-competing industries vs. export-competing industries.Wallis is correct in saying that controversies do exist over protectionism, but thecontroversies are merely enhanced in a free trade/laissez-faire economy. In this type ofeconomy, the free market answers the basic economic questions (what to produce, how toproduce, and who gets what is produced). Because the system of free enterprise has nogovernment regulation and allows individual producers to decide its own actions,problems tend to arise with the absence of regulation. First, inefficiencies ten...
