Maggie's Farm

Perhaps, but trade restrictions generally reduce overall prosperity.

FRICTIONLESS: To the first order, reduced trade restrictions lead to market efficiency and greater prosperity. Tariffs and other trade barriers distort markets, warping the market signal.

FRICTION: However, markets are not frictionless. Consider when someone gains an advantage, so that some of the competing factories close or consolidate. Later, the advantage may disappear, but it takes time and money to reopen or rebuild those factories. Even if the newer factories could have an advantage, the potential profits may not justify the investment. A monopoly is an extreme example of this—even when the monopolist doesn't try to stifle competition.

MONOPOLY: But, in the real world, the monopolist will try to stifle competition (such as by applying inordinate pressure on suppliers and customers), so that the market signal in the industry becomes faint and tenuous. New competitors, even with great advantages, may not be able to enter the market.

REGULATION: Regulation, subsidies, and targeted taxation are essential for the reasonable workings of markets, but regulations always distort markets. Sometimes, as with a well thought out industrial policy, it tilts towards the future. But there is the problem of regulatory capture. As private entities grow in economic size (consider centi-billionaires*), they can have an inordinate influence on government, tilting the regulatory culture to their benefit.

ESSENTIALS: Many countries regulate trade in what they find to be essential products, typically agriculture and military supply (e.g. microchips, rare earths). But overall, lower trade barriers have led to increased competition and greater overall prosperity. But increased competition also means economic disruption (creative destruction), so governments and their citizens need to respond by looking towards the future.

NEGOTIATION: It is an imperative of negotiation that countries deal with one another openly and in good faith. When one partner abrogates an agreement, it makes futures agreements less likely and more likely to be circumvented. Unilaterally imposing tariffs with nonsensical justifications could cause long-term damage to the global economy.

AMERICA: In a free market, Chinese and Indian people can compete directly against American workers. Everyone has the right to the economic fruits of the modern world. But Americans will never prosper by making cheap plastic goods made by Japanese Chinese Vietnamese people. Anyone can make cheap plastic goods. Americans will only prosper by making next generation products.

* For instance, Elon Musk donated hundreds of millions of dollars to Trump's presidential campaign, then he was put in charge of gutting the regulatory agencies charged with overseeing his businesses.


Imagine that. The Chinese ship goods to the United States, and the United States pays with slips of paper denoted in their own currency.


So, liberal regulatory policy geared towards the future. Of course, that would be possible without unilaterally restricting trade.

James: All of your bloviating ignores the fact that the US federal government's most important obligation is the overall welfare of the median US citizen.

Not sure where in the U.S. Constitution it talks about "median US citizens", but certainly the rights of individuals and the general welfare of the people are central responsibilities of the US federal government.

But, while you mentioned the bloviating, you must not have read it. Because open markets generally bring higher levels of prosperity on average due to how market signals work to ensure more efficient production and distribution of goods. Markets are the engine of economic growth.

James: Because our economy is 3 to 5 times as large as the second largest national economy.

That's not accurate. China and the EU have economies of smaller but comparable size. The US economy is about 1/4 of the global economy, so most of the global economy is not the US.

James: And our geography is the best in the world by a mile.

The US has significant advantages, not just natural resources, but a large, educated, and highly-motivated workforce with a history of entrepreneurship and innovation; as well as a long-established national regulatory regime based on science and the rule of law (under strain, but still extant). Americans still aren't going to be able compete making cheap plastic stuff.

James: The US government should leverage those advantages to benefit Americans, not leave them unused to benefit the citizens of other countries.

Selfishness and insularity are self-defeating, both in terms of prosperity and in terms of security. As 1/4 of the global economy, the US does not stand alone. To remain prosperous and secure, the US must continue to ally with other democratic countries and build trade networks globally.

You can ignore market forces, but market forces will not ignore you.