Expanding the Circle of Trade

I was asked to explain my view on trade - why I think Trump will make America a poorer nation and its people less well off.
So . . . consider this:

Is it a good idea to build a wall around the United States, build everything within the United States, keep all of the jobs here, and trade with nobody?

A great idea to make the United States a wealthier country . . . right?

Well, if it is such a great idea – why not then build a wall around each state and prohibit trade with any other state. Let us build all of our cars, air conditioners, medical equipment, movies, iPhones, doctors, engineers, internet search engines, computers – everything in Colorado. According to the plan mentioned above, each state would then become much more prosperous than it is now. Colorado, Maine, Rhode Island, Hawaii – each of them will become more prosperous if it was making everything locally.

But, then, if that is such a good idea – we can create even more prosperity if we put a wall around each county. Let each county do all of its manufacturing locally – every car, airplane, piece of office furniture, every bushel of wheat – all produced in one’s local county. Now, we will be wealthier still, according to this plan. We will have tons of jobs in our county. (I’d have to go back to Boulder County – but – I am certain they would find work for me.)

Yet, if that is the road to prosperity – how about building everything on one’s local block. Just take everybody on your block and refuse to trade with anybody else. All of your medical care, food, shelter, clothing, furniture – all of the energy you consume and the light bulbs you build – all scientific research is done by people on your block. Boy, would you have a whole lot of jobs to do! The people on your block would be so wealthy!

But, we can go further. Have everything done in your household. Put a wall around your building and tell your family that they cannot trade with anybody outside of that wall. You are going to take care of everything yourself. If a child breaks an arm – you’ll handle it. If you need food – you will grow your own. Cut off the electricity and all communication with the outside world – you will manufacture your own electrical power and the machines that use that power – all without even referencing information that people on the outside of the wall might have learned. Would it be even imaginable that you could be any wealthier than this?

Well, actually you could be. Let nobody in your family trade with anybody else. Everybody has to manufacture their own food, their own clothing, provide their own shelter, take care of their own medical needs, as if each was living alone on a very small island, trading with nobody. There is no greater wealth imaginable than to do everything yourself, according to this way of thinking.

Of course, this is not the case. As this example shows, we get wealthier by enlarging the numbers of people we trade with – not by decreasing it. You are wealthier when you can trade with other members of your family and split up the chores that need to be done.

Your family is wealthier when its members can trade with people outside of your family – when it can buy groceries from the grocery store, medical care from the medical facility, a car from a car dealership, education from professional educators.

The people of Colorado are made wealthier – not poorer – because they can buy software from Seattle, movies from Hollywood, medical research from Boston, and can go on vacation in Orlando.

Similarly, the United States is made wealthier – not poorer – when it trades with countries outside of the United States.
Now, it is true that every time the circle grows larger, certain types of jobs are lost. Because you trade with the grocery store, your family has “lost work” in that its members are no longer growing its own food. When you trade with a clothing store rather than create your own clothing (including the raising of your own sheep), you have “exported jobs” out of your household and those jobs have been “imported” by other families. However, this trade makes both households wealthier – it does not make each household poorer.

Trump’s economic plan will, in effect, make the United States a poorer country. We will have fewer goods and services available to buy, and that which is available will become far more expensive. We may have more “jobs” in a sense – but that is the case in the same way that the people in your household would have far more work to do if they decided to grow their own food and create their own clothes.