(03-11-2009 09:38 AM)emmiesix Wrote:  If US-made goods are priced above those available from other countries, can't you just put taxes on those imports to balance things out? I realize that might not sound so great to the consumer, but it would place the advantage supplying the US population with those based locally.

In a very basic sense, you can have a country which is completely self-sufficient on one extreme, or a "world economy" where every country trades with every other, on the other. It seems untenable to me to try to maintain the vastly different standards of living the US enjoys as we move towards the latter. I get some sense that this is just a tectonic shift of sorts. I certainly have never believed the US would maintain it's high differential during my lifetime.

One thing we know is that a self-sufficient country is a poor one. To cite just a few clear examples: France in the 1810s, the Confederate States in the 1860s, and Germany in the 1940s all had to make due with what they could produce locally, because they were cut off from seaborne trade by the US and Royal navies. And those countries starved as a result. Even with "local" production augmented by conquered neighbors and slave labor, they still couldn't do it.

Trade does not necessarily narrow prosperity differences, nor should it. What it does do is raise the overall prosperity of everyone. Conversely, cramping trade may benefit some local would-be monopoly, but in the aggregate it decreases everyone's prosperity.
The key thing to remember is that economics is NOT a zero-sum game. The other key thing to remember is that no scientist or government can predict which specific economic activity will be beneficial and which will be dead ends. So the surest (indeed the only sure) way to increase prosperity across the board is to make it possible for people to interact with each other freely, knowledgeably, and securely. Trade is part of that; so is education; so are basic Western concepts like respect for law and contracts and a predictable justice system; and so is the most fundamental concept of all, liberty. The surest way to decrease prosperity for all is to erect barriers that make it harder for people to do that. Protectionism is the most obvious such barrier. Nationalization, monopolies, and oligopolies are other such barriers, less obvious but no less insidious.