Policy Analysis No. 5
18 Pages Posted: 23 Apr 1998
Date Written: July, 1996
The vast majority of articles and books that have been written about trade and trade policy -- nearly all -- look at trade from a utilitarian perspective. Utilitarians take the position that if free trade is a good policy, it is good because the vast majority benefits. Free trade gives consumers more choices. It gives them lower prices. It creates more jobs than it destroys. It is a positive-sum game. An underlying assumption of most utilitarian-based trade arguments is that governments have some inherent right to regulate trade.
This article looks at trade policy from a different perspective. While utilitarian approaches to trade have some value, and while utilitarian arguments often --and rightly -- conclude that free and unrestricted trade is the best policy, they do so for the wrong reason. This article points out that the real reason why totally free and unrestricted trade is good is because it is the only trade policy that does not violate individual rights.
Part I provides an introduction and an overview. Part II reviews utilitarian approaches to trade policy and points out the weaknesses of the utilitarian approach. Part III presents the rights approach to trade policy, which is superior to the utilitarian approach for several reasons. Part IV summarizes the article and presents conclusions.
JEL Classification: D63, F13, K1, K2, L5
Suggested Citation: Suggested Citation