ABSTRACT
The proposition that freedom of trade is on the whole economically more beneficial than protection is one of the most fundamental propositions economic theory has to offer for the guidance of economic policy. Broadly speaking, the proposition stands on two legs: the static argument that interference with freedom of trade worsens the allocation of national and world resources and so reduces realized output below potential output and the dynamic argument that economic liberty and freedom of competition, national and international, provides the most favourable environment for economic growth. Both arguments have been challenged by respectable counterarguments: that there are important cases in which free competition produces non-optimal results, for which a tariff may be an appropriate corrective, and that the tariff may be a potent means of accelerating economic growth.
