Hello friends!
               our classmate Kyle has gotten on the blogtrain and supplied us with a small piece to publish, let this be a lesson to you slackers and hopefully a little blogging competition will promote more 'articles'. Anyways, its about free trade and the benefits for global prosperity. I will comment in the comment section, as everyone else should.

Here is the piece:

Free trade has been proven to increase world welfare in the long-run. In the short-run some developing countries may not benefit due to a slow “learning curve” to the new system, but overall the world and the poor will benefit from free trade policy. Listed below are three reasons why I believe free trade is the best available world policy. These are arguments that I have read, and agree with. Not too much original thought, but nonetheless something I believe in.

1. Free trade raises relative income in developing countries

There is no argument that workers in developing countries are making very little relative to the developed world. People argue that globalization and free trade has hurt relative worker wage. This is wrong. The reason it appears this way, is because globalization has “opened our eyes” to the relative pay in the developing world, but they are actually getting higher pay than what they were before the globalized free trade economy. They are still getting low, and sorry to inform you, but there is little alternative to fix this. Fifty cents a day is better than ten cents, and if the wage is forced to go higher, their employers will simply pack up and leave. The only policy that can raise their wages higher without dependence is more free trade. Paul Krugman says this nice in his Slate article In Praise for Cheap Labour.

With free trade, developing country workers, either in manufacturing or agriculture, are now making more money, benefiting them directly. With free trade increasing world output, wages also increase. This is great for developing countries.

2. Developed country farmers are rich and the expense of developing country farmers because of subsidies.

The United States and European unions both have high agricultural subsidies that raise the domestic price in order for them to be self-sustaining, while lowering the world price. Not only does this hurt the domestic consumer, this hurts small developing countries as even if they have a comparative advantage in producing agriculture, they no longer are able to sell it, as the world price is too low for them to make any money. An argument some make is that these developing countries should also put up barriers in order to sell on the world market, but from where are these barriers going to come from? Trade barriers require subsidies, subsidies require higher taxes. These countries can’t afford an agricultural subsidy, and nonetheless there is evidence that free trade is more beneficial for growing than protectionism.

On the same note, domestically subsidies raise the domestic price, as mentioned. If free trade is implemented, consumers benefit around the world. It is estimated that some countries pay over $1000 a year more in groceries because of subsidies.

3. Free trade promotes world peace

Though an old argument, it is a valid one nonetheless. Free trade makes countries dependent on each other through comparative advantage or other free trade policies. When countries are dependent on each other it makes it near impossible for wars to last long as they are no longer self-sustaining.

Kyle