QUESTION 2: Whose interests should be the paramount concern of government trade policy - the interests of producers (businesses and their employees) or those of consumers?
ANSWER 2: The long run interests of consumers should be the primary concern of governments, based on a utilitarian approach (the most good). Unfortunately consumers, each of whom may be negatively impacted by only a few dollars, are less motivated and effective lobbyists than are a few producers who may have a great deal at stake. While in some instances it may be argued that domestic consumers will be better off if world-class domestic producers are nurtured and allowed to gain first mover advantages in international markets, it is doubtful that the government will be better than international capital markets at "picking winners", and will more likely pick the firms with the greatest political clout. While employees may well lose jobs if there are more efficient foreign competitors, some would argue that this is the nature of competition, and that the role of government should be to help these employees get jobs where they can be efficiently employed rather than to protect them from reality in inefficient firms.
QUESTION 2: Whose interests should be the paramount concern of government trade policy - the interests of producers (businesses and their employees) or those of consumers?ANSWER 2: The long run interests of consumers should be the primary concern of governments, based on a utilitarian approach (the most good). Unfortunately consumers, each of whom may be negatively impacted by only a few dollars, are less motivated and effective lobbyists than are a few producers who may have a great deal at stake. While in some instances it may be argued that domestic consumers will be better off if world-class domestic producers are nurtured and allowed to gain first mover advantages in international markets, it is doubtful that the government will be better than international capital markets at "picking winners", and will more likely pick the firms with the greatest political clout. While employees may well lose jobs if there are more efficient foreign competitors, some would argue that this is the nature of competition, and that the role of government should be to help these employees get jobs where they can be efficiently employed rather than to protect them from reality in inefficient firms.
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