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As another poster mentioned, when countries don't trade, they lose their comparative advantage in producing the products that they can produce most efficiently.

As another poster mentioned, when countries don't trade, they lose their comparative advantage in producing the products that they can produce most efficiently. With free trade, countries can focus on building the products that they're most efficient at producing. Now, it's important to bring that with free trade, the distribution of benefits is not equal. Those who produce a product that is now competitive in the global market stand to gain. Those who produce products that now face cheaper foreign competition stand to lose. It can be shown that the gains are always larger than the losses, but there may not be an effective mechanism to re-distribute the benefits and losses so that everyone wins. This is known as Kaldor-Hicks efficiency.

mistermann 7y ago
International trade and trade wars are two different things though. If one country conducts their trade in an unfair manner and won't stop until another country retaliates, after which they both trade fairly, this would be just one an example of an effective trade war. Whether any of this is happening today is very complex and seems to come down to a matter of opinion, especially since almost no one has sat down and really looked at the numbers and issues in depth.
tracker1 7y ago
First, I'm an advocate for fair trade, since truly free/open trade doesn't exist and in some cases could be very bad. For example, the US doesn't allow for slave labor (prison labor being a near exception). There are limits on forced work cycles and requirements for safety. I would suggest that we allow open trade with those countries that meet or exceed our own work, safety and environmental protection requirements. In this case, China, India, most of Africa and some of South America does not meet such levels. In which case, trade should appropriately be restricted unless and until such changes are implemented. This doesn't force our values on other countries, but would at the very least encourage better work and environmental conditions. In the process of deferring our own production overseas, we've lost our own ability to produce a lot of goods. Some of which requires material resources that are excessively scarce domestically while not fostering relationships with other countries that do have more of those natural resources. This has allowed China and others to foster those relationships, and the conditions relaxed to the point of the acquiring of those resources creating, IMHO, more damages than the good those resources bring. I do feel that environmental pollution is a real and serious problem, though I'm less inclined to support the paranoid delusions of some, and the outright disinformation of those that are pushing a political agenda over any real, meaningful environmental impact. There are real and meaningful changes that should happen, and negotiation with foreign governments and peoples are a part of that. As to balancing the winners and losers, I am not sure that should be a goal of trade, and even then that's a large part of what tariff and excise taxes are/were for. It will always balance out in the end and technology is ever increasingly the great equalizer.

mistermann 7y ago

International trade and trade wars are two different things though. If one country conducts their trade in an unfair manner and won't stop until another country retaliates, after which they both trade fairly, this would be just one an example of an effective trade war. Whether any of this is happening today is very complex and seems to come down to a matter of opinion, especially since almost no one has sat down and really looked at the numbers and issues in depth.

tracker1 7y ago

First, I'm an advocate for fair trade, since truly free/open trade doesn't exist and in some cases could be very bad. For example, the US doesn't allow for slave labor (prison labor being a near exception). There are limits on forced work cycles and requirements for safety. I would suggest that we allow open trade with those countries that meet or exceed our own work, safety and environmental protection requirements. In this case, China, India, most of Africa and some of South America does not meet such levels. In which case, trade should appropriately be restricted unless and until such changes are implemented. This doesn't force our values on other countries, but would at the very least encourage better work and environmental conditions. In the process of deferring our own production overseas, we've lost our own ability to produce a lot of goods. Some of which requires material resources that are excessively scarce domestically while not fostering relationships with other countries that do have more of those natural resources. This has allowed China and others to foster those relationships, and the conditions relaxed to the point of the acquiring of those resources creating, IMHO, more damages than the good those resources bring. I do feel that environmental pollution is a real and serious problem, though I'm less inclined to support the paranoid delusions of some, and the outright disinformation of those that are pushing a political agenda over any real, meaningful environmental impact. There are real and meaningful changes that should happen, and negotiation with foreign governments and peoples are a part of that. As to balancing the winners and losers, I am not sure that should be a goal of trade, and even then that's a large part of what tariff and excise taxes are/were for. It will always balance out in the end and technology is ever increasingly the great equalizer.