To add to some of the benefits mentioned in other articles, it is worthy to note that free trade not only benefits countries economically, but politically as well. The incentive for trade revenue and foreign direct investment encourages many political leaders in less then stable governments to minimize corruption, violence, crime, and other factors that would deter nations and corporations from doing business in that region.

Further, even countries with long standing rivalries have reduced acts of violence and warfare towards each other for this same purpose. In an interdependent global economy, it is becoming increasingly evident that governments can benefit far more from engaging in trade and appealing to investors who are willing to build up their regions then they could from waging war and border skirmishes resulting in higher taxes for military needs, loss of lives, and land destruction, just to name a few. This point is illustrated far better by economist Thomas Friedman in his book The World Is Flat.

One final point (although there are many more valid points that I hope the astute contributors to this site will discuss, for the purpose of this article I will only note one more), with free trade comes the debated issue of outsourcing. Many people, especially in the US, feel that outsourcing takes jobs away from Americans. Technically, this holds some truth, but only if ignore the far larger number of jobs that it creates for Americans.

Think about this: On the most basic level, if a company makes X amount a year, every year, it's employees will be paid the same, it will be taxed the same, and the cost of goods will remain the same. This is of course assuming that said company in its particular industry has no competition with any innovative ideas to save money and increase revenue; which of course would defeat purpose of a competitive economy, and the benefits of capitalism. As ridiculous as this sounds, try to follow along. What does this company do to grow if it can not save money through outsourcing. Certainly no American would want their salaries cut, and digitalizing jobs would completely eliminate the need for any person to hold the position. If your asking why the company needs to grow, aside from its legal obligation to its shareholders (if it's public), the indisputable fact of population increase indicates that if companies don't grow, and no new companies can emerge due to the economies of scale that potential new companies can not compete with by outsourcing in this scenario, there will be massive unemployment rates in the future. This of course Will lead to government programs which will be funded by increased taxes on individuals and corporations causing further layoffs, and less consumer spending, hence less revenue for companies, hence more layoffs, and an overall devastated economy.

Conversely, with outsourcing, companies can save money and increase revenue, which they are obliged to plow back into the business, therefore generating growth and establishing more, higher wage jobs for Americans. Furthermore, the increased revenues will result in more tax revenue (from corporations, not people), which can be used to help improve education programs, legal programs, and everything else government uses taxes for.

Learn more about this author, Kevin Pack.
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