A thought provoking article. However this old economics prof has some questions. Engaging in global markets is inevitable as domestic markets cannot provide all the goods and services wanted or needed by society. Global markets also increase the demand for domestically produced products. Look back at the Great Depression when the Smoot-Hawley tariffs virtually closed foreign markets to domestic producers. Due to the economic downturn domestic markets in the 1930s did not supply enough demand for full production, but some foreign markets could have. While we often lament that cheap foreign imports hurt US jobs, these imports allow us to enjoy a better standard of living.
The Great RJ.
Thank you for the thoughtful reply. Critique is definitely welcome. I’ve devoted six years and 200 plus textbooks to the effort. It’s refreshing not to immediately be called a moron without a technical explanation (a bit disappointed in some of my fellow conservatives). Admittedly, the argument is simplified and pushes aside the reality of geographically limited goods, etc. The original model was built on a very simple assumption: there is only one economy. The idea here was to first establish how I perceive money/industrial production interact.
I have done extensive reading on the history of American tariffs and therefore conclude it was a strawman. In other words, if tariffs cause harm, then the history of America should be one of depression (simply said). I view depressions typically due to speculative busts in supply limited assets (real estate/stocks) which can rapidly change prices overnight causing wealth destruction. I see this as an inversion of neoclassical price flexibility (i.e. flexible prices cause depression/don’t fix them). If stocks and real estate were a cost of production prices there would be no busts so to speak.
I have to run at this moment (not all your questions answered, written in haste), so if you’d like to discuss further I will get back to you. I might be booted off FR though (blog links might not be permitted—awaiting clarification). New to FR. thank you