OpenEndedResponses
Editorial opinion pieces by Stratton Yolkmont representatives.
*All the content on this page is purely opinion and does not mean to provide any financial advice.
Stratton Yolkmont is not responsible for any losses or damages caused by negligence.
Overall, I support free trade and my opinion has been strengthened by the concepts of scarcity and comparitive advantage. Due to the fact that some countries are more efficient at producing certain goods, it proves beneficial for countries to specialize in their most cost-effective industries and trade to maximize production and supply.
Free trade includes numerous benefits:
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Increased competition within a worldwide market opening up access to higher-quality goods
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Lower prices as a result of increased supply, increased competition, and specialization
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Specialization promotes efficiency as workers focus on one industry
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Reduced business costs and increased growth
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Partial insulation from abusive domestic regulations or corruption such as Cronyism
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Foreign exchange market for international currency
A small number of negative results of free trade:
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Possible diplomatic or military conflict with other countries due to disagreements over trade terms
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If trade restrictions are implemented, consumers, producers, or foreign markets may respond negatively
The US government currently gives domestic farmers over $20 billion per year with approximately $2-8 billion of that given directly to corn farmers (farm.ewg.gov). These subsidies have existed since the 1920s and constitute a massive government expenditure that poorly supports the corn industry via controversial means such as ethanolized gasoline. A more effective usage of funds to support farmers would involve smaller subsidies that may only be used for the research and development of more efficient crop production, some capital goods such as tractors, and assistance for crop insurance. Stricter subsidy terms should be used in conjunction with offering agriculture-exclusive loans with reduced interest rates to encourage private investments in farming.
Benefits of Subsidy Changes:
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Less taxation and government spending
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R&D supports long-term growth
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Private sector investments boost economic growth
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Option for consumers to exclude ethanol in gasoline
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Government assistance for obtaining crop insurance increases industry and investor confidence
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Eliminates or reduces the overproduction of crops
Negative Consequences:
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Crop prices may increase due to reduced income for farmers
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Agriculture industry is less stable, less predictable, and less resistant to supply shocks
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Slight increase in pollution due to removal of ethanol from gasoline
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Considering the importance of a steady food supply to feed the country, any major losses in crops could affect the productivity of workers, negatively influencing real GDP