Over the years, economists have disagreed on many things, stated the obvious much too.
often and have given people a lot of bad advice. However, one thing that the economists.
are right about is that free trade improves productivity. It is almost always better than.
protection, because protection just doesn't pay the benefits of free trade. Free trade.
improves productivity through comparative advantage, intense competition and larger.
markets through international trade.
The theory of combative advantage is one of the best points that illustrates how.
free trade can improve productivity. For example, America and Canada both produce.
footballs and helmets, and each have one hundred workers. Let's say that America can.
produce two hundred footballs and one hundred helmets, and Canada can produce fifty .
footballs and fifty helmets. This means that America has an absolute advantage in both.
categories, however, Canada would have a comparative advantage in helmet production. .
Now, if both countries wish to increase consumption, because consumption is more.
important to an economy than production, they could specialize in the industry until both.
have a comparative advantage. If each country specialized, America would produce two.
hundred and seven footballs, while also producing one hundred and two helmets. Canada.
would produce fifty-eight footballs and fifty-three helmets. Thus, through specialization,.
production increases as does consumption.
The old saying goes that "competition brings out the best in everybody." Well,.
that everybody also includes economics. With no free trade, domestic companies would.
be able to build monopolies and benefit greatly. Prices would be kept extremely high and.
far above the marginal costs. Competition would improve productivity because, if there is.
free trade, monopolies will be motivated to be more efficient, because they will not be.
alone in the market. Thus, productivity and consumption rise.
