Author Topic: UDN Economic Freedom Treaty  (Read 23 times)

Offline Allicia

  • Administrator
  • Civilian
  • *****
  • Posts: 7
  • Karma: +1/-0
    • View Profile
UDN Economic Freedom Treaty
« on: December 06, 2015, 03:05:02 pm »
This Treaty shall be created with the purpose of eliminating any tariffs that are upheld by nations within the UDN.
The purpose of a tariff is to allow local business to prevail against competition from other regions, however, this is not only harmful to the nation that is forced to pay said tariff, but also to the nation enforcing the tariff as well as the entire region as a whole.

A tariff is created in order to make a nation self-sufficient and support a broad spectrum of industry in an individual nation. Usually, a tariff is put in place in order to give domestic industry a chance to compete in the marketplace. However, by artificially inflating the prices of something so that domestic industry will be able to prosper, a nation is also forcing industry that needs to utilize a certain product to have to buy it at a higher price than what it should be. This artificial inflation of goods from other nations will actively harm a nation's people by forcing them to pay more per product in order to support an industry that is dying in their nation anyway.

Competition breeds innovation. This is a reality that has always existed in history. Technological innovation follows periods of conflict. By allowing one's domestic industry to never feel the pains that come with dealing with a competitor that is better at what they do, they will never innovate. What does a company that produces 10 pounds of beef for $5 have to fear a company that produces 10 pounds of beef for $3 have to fear if company B has to pay a $2 tariff? They do not need to innovate as the government is giving them a path that requires far less thinking and innovation.

In economics and trade, it is important to specialize in what one is best at. For example, let's say Nation A has 100 people and it is very good at cutting logs but poor at mining. It has 50 people cut 5 logs a day, and 50 people mine 3 stones a day. It desires more stone to build houses. Nation B has 100 people and is very good at mining but poor at cutting logs. If it has 50 people mine 5 stones and 50 people cut 3 logs a day, it will only be able to trade 5 stone for 5 logs. This leaves one nation with 8 stone and another with 8 logs. Now, if each nation had 100 people working on the same task, Nation A could produce 10 logs and Nation B could produce 10 stone. This allows each nation to have 10 stone and 10 logs in the end. This isn't even including the benefits that will come from Nation C, who will be able to profit from shipping the resources between the nations. Thus, each nation prospers.

Likewise, by creating tariffs, a nation is harming the peace in the region. How is that possible? Well, think about it. How does a nation support a war effort if the cheap steel they need comes from a nation across the sea? They cannot, not unless they have the military capability to force them to continue trading. A region with no tariffs will be so interconnected through trade that there will be no possible way for large conflicts to be fought between nations as other nations could simply cut off trade until both nations surrender due to a collapse of the economic structure in said nations.

I hope my desire to end tariffs will be understood by the nations in the UDN and legislation can be enacted that will prevent tariffs from harming our region ever again. I would love to here criticism of my policy as well as other comments about it.

Esteemed Consul of Allicia
« Last Edit: December 07, 2015, 05:38:06 am by Detreadan »

Share on Facebook Share on Twitter