Protectionism stifles growth from "summary" of Capitalism and Freedom by Milton Friedman
Protectionism, the practice of imposing restrictions on trade with other countries, is often seen as a way to protect domestic industries from foreign competition. However, protectionism can have negative consequences for economic growth. When a country restricts trade, it limits the ability of its domestic industries to access new markets and take advantage of economies of scale. This can lead to higher prices for consumers and less innovation in the economy. By limiting competition, protectionism can also lead to inefficiency in domestic industries. Without the pressure to improve and innovate in order to compete with foreign rivals, domestic industries may become complacent and less productive. This can ultimately harm the overall competitiveness of the economy and limit its growth potential. Furthermore, protectionism can result in retaliation from other countries, leading to a trade war that can further stifle economic growth. When countries engage in tit-for-tat trade restrictions, it can disrupt global supply chains and reduce international trade, which is a key driver of economic growth. In contrast, free trade promotes economic growth by allowing countries to specialize in the production of goods and services in which they have a comparative advantage. This leads to increased efficiency, lower prices for consumers, and greater innovation as companies compete in a global marketplace. Free trade also encourages countries to open up to new ideas and technologies from other countries, fostering a culture of innovation and growth.- While protectionism may seem like a way to protect domestic industries, it ultimately stifles economic growth by limiting competition, reducing efficiency, and provoking trade disputes. In contrast, free trade promotes economic growth by encouraging competition, innovation, and the efficient allocation of resources. By embracing free trade, countries can unlock their full economic potential and create a more prosperous future for their citizens.
