But if Louis had known modern economic theory, it would have been ridiculous. He would know that the wealthiest, most powerful nations ever on Earth - universally, with no others competing - were built on free trade.
It really depends on the context. Roman Empire wasn't built on free trade.
The Romans worship us, or would if they could have known. There is just no comparison. The worship of them is bizarre.
A house in the middle of Sahara desert is worth a negative amount.
You pretty much nailed the arguments in favor of trade protectionism right there. Import cheap unprocessed raw materials, export expensive finished goods, capture the majority of value created in the process.
Maybe the argument for colonialism? Regardless, countries that largely operate without protectionism or colonialism have become the wealthiest in the history of the world, without any real competition. There's not much argument remaining.
The wealthiest economies now are those of China and US. And both used colonialism and protectionism.
The further we look in history, the more we see most powerful economies practicing both colonialism and protectionism. From British Empire to Roman Empire.
China is not, unless you just add up the large number of people and their bank accounts (those who have any savings). Per capita, the "countries that largely operate without protectionism or colonialism have become the wealthiest in the history of the world, without any real competition.", as I said.
> both used colonialism and protectionism
Could you give examples? I mean, they used some, but not substantially. Unless you mean the distant past.
Note how this discussion is framed - for countries. I'm concerned with, and I think we should be concerned with, people.
> The further we look in history, the more we see most powerful economies practicing both colonialism and protectionism.
If you look at history, we are overwhelmingly nomadic hunter-gathers with stone tools - ~190,000 of 200,000 years of Homo sapiens. We are well beyond that history, and the history you name. Our economies far outstrip those empires, as well as our freedom and human rights and the benefit our economies provide to those outside aristrocracy.
Why do you keep trying to go backward to a relatively poor, oppressive time.
This is manufacturing economy 101 and how the US built and defended it's manufacturing base before the pivot to a "service" economy. China's trade strategy mirrors this, as is evidenced by the last 30-ish years of constant bitching by trade wonks and pundits.
What is? You haven't spelled out your theory. And I know economics well, and class 101 is free markets and specialization.
> how the US built and defended it's manufacturing base before the pivot to a "service" economy
Who wants to return to an economy of decades ago? The US was much poorer then. I want to move to the future. Services are much easier on people physically - you don't want to work in a coal mine.
Then something must have changed with the introduction texts at some point because the one I had to slog through covered the concept of manufactured goods being inherently more valuable shortly after defining basic terms like "product", "value", and "manufactured goods". Literally 2nd chapter in the book.
"Who wants to return to an economy of decades ago?"
Literally everyone who works for a living making shit or who are stuck in bullshit service industry McJobs that aren't paying the bills. Also every small business owner in the country, although admittedly not all of them realize it.
"The US was much poorer then."
The oligarch class was certainly much poorer then, the same can't be said for the other 99.9% of the population.
"Services are much easier on people physically"
You might want to look into the long term health effects of poverty and stress before you float that statement. Additionally "I'm too soft to actually work" only becomes a compelling argument when you can prove the condition applies to a simple majority of working age Americans. Good luck with that.
You still have to spend money on materials and labor - they are never free. You need to take them from other uses, and people may outbid you for them. There isn't infinite lumber and labor lying around the US for free - building houses is expensive!
The core of economics is there is a scarcity of resources and we want to allocate them as efficiently as possible. Money's fungibility allows us to move resources easily and rapidly. I can send you $50,000 much more easily than my car - you might be on a different continent; you might not even want my car or agree on its value, but I can count on you wanting $50K because you can buy whatever you need with it (a car, a few servers, a trip around the world ...).
It turns out in reality that someone with better skills and capital (hard resources, such as heavy equipment) can build a house so much more efficiently than you, that you would save money by hiring them rather than doing it yourself. That's specialization, another economic fundamental. Think of most work - orthopedists, C developers, pipe fitters, etc. They are so much more efficient than you are, you wouldn't dream of trying to do it yourself (on any significant level) - even if you are in the same domain, such as internists or Python developers.
You don't lose out at all, because they also hire you to do what you are specialized at. Then instead of the farmer building a house and the carpenter growing squash, both get better and more houses and squash for much less money.
> If you can take resources from some part of the world that you don't really care about, then you are adding wealth to your own country for basically free.
If you shoot someone on the street, you can take their wallet for 'free'!
... You are arguing against fundemental economics and even basic accounting. If you care about these things, learn about them a little. Microeconomics is actually fascinating, and basic double-entry accounting is essential.
> When? Not for a long time. Slavery and witchcraft were historically very popular ...
The wikipedia article places it as 16th to 19th century which is a longer time period than Globalism was popular.
If the end of my post wasn't clear, I'm not a fan of Mercantilism but one does need to understand the other side. Although a big critique I have of Globalism is that the gains from trade are not evenly dispersed automatically so countries like the US really need to raise the top tax rate and increase (or at least not lower) redistribution otherwise you get high income equality.
Also, slavery and witchcraft are still practiced to this day although maybe not globally popular.
> > when you buy stuff you're losing wealth
> That's a incredible failure of understanding. I can't believe that's the basis of mercantilism. Why would anyone buy something?
Economic theories like Mercantilism are on the country level so individuals would still buy stuff because they're not practicing Mercantilism.
On the country level, yeah you don't buy stuff. If your citizens love coffee and your climate doesn't support growing coffee beans then you get a South America colony so now your climate does support growing coffee beans.
Somebody's answer to the house example is pretty good to read as well - https://news.ycombinator.com/item?id=43630218
> Many transactions are better with people who happen to be outside the borders of your country - why wouldn't they be?
At the macro-level sure. However, if the USA had continued to practices mercantilism post-WW2 then we wouldn't have complaints about the lack of manufacturing.
The industrial plants in China would've never been built by US investment because that's literally handing money away to another country. If China doesn't have a factory its irrelevant if their labor is cheaper; the only labor with access to a factory is the USA.
When did globalism stop being popular?
> Did you happen to miss recent US news?
1. Not every reader lives in the USA
2. In my observation (not in the USA) in the last years (and also months/weeks) it has rather been a strong veering round back and forth of "globalism is good" vs "globalism is bad" with no clear observable direction at which side the pendulum will stop.
I agree with that critique, though it may be a problem with this specific version of Globalism, not globalism itself.
But do you think there is more equitable distribution with mercantilism or protectionism? Why would that be? In those systems government officials choose who gets the benefits; you can't get them for yourself. Also, they tend to oppress less powerful countries - globalism's astounding record of raising people from poverty all over the world is absolutely unmatched. People take for granted the relative prosperity in China, India, Brazil, ... - nothing like it ever happened before.
> if the USA had continued to practices mercantilism post-WW2 then we wouldn't have complaints about the lack of manufacturing.
You assume this mercantilist government can effectively manage manufacturing, and that it wouldn't deteriorate, having no competition. Industry without competition tends to do that. Basically, enshittification is doing that intentionally.
With only 5% of the population the US would not have nearly enough manufacturing capacity to meet modern needs.
Finally, keeping people in manufacturing (how? by force?) would prevent them from taking the newer, higher productivity jobs that followed.
The US was much less wealthy - order of magnitude at least - in the 1950s (or whatever golden age people think of). You don't want to go back to that economy.
> The industrial plants in China would've never been built by US investment because that's literally handing money away to another country.
If it was handing away money, then why would someone invest in it? They invest because the investment generates returns, in this case massive returns that changed hundreds of millions of lives and provided wealth that was used to buy and invest in yet more things.
Well, there's nothing about Globalism that enforces this so it's really a complaint about most if-not all Globalism.
> With only 5% of the population the US would not have nearly enough manufacturing capacity to meet modern needs.
Expand your borders to include say Canada or all of South America. The UK moved up the value chain into industrial jobs while delegating out the cotton farming to their North American _Colony_ (as well as their South East Asian colony).
> If it was handing away money, then why would someone invest in it? They invest because the investment generates returns, in this case massive returns that changed hundreds of millions of lives and provided wealth that was used to buy and invest in yet more things.
Sending over capital goods in exchange for future considerations is not a Mercantilism argument. The reason why somebody would invest in it is because they're a Globalist.
The reason why "we" switched from Mercantilism to Globalism is because it generates more growth but you can't use Globalism arguments in a Mercantilism framework unless you're making the argument to switch frameworks.
(Also Mercantilism is also causing income equality by having an underclass in your colonies to support a wealthier main land; but the mainland isn't going to be complaining about being poor).
When? Not for a long time. Slavery and witchcraft were historically very popular ...
> when you buy stuff you're losing wealth
That's a incredible failure of understanding. I can't believe that's the basis of mercantilism. Why would anyone buy something?
If you buy a house for $100,000, your wealth remains the same - you replace $100,000 in cash with a $100,000 house (ignoring complexities like a mortgage, transaction costs, etc.). That is basic accounting, of course.
In fact, your wealth probably increases: The house's value is <$100,000 to the seller and >$100,000 to the buyer, or else they would be disinclined to make the effort of making the deal - it would be like trading a $10 bill for a $10 bill, with lots of time and transaction costs. Market value - the value to others - may remain the same or vary, of course.
The economy works because people make these value-increasing transactions. I take $10 of inputs, manufacture $20 worth of output, and sell it to you for $15. We both gain $5. If your business isn't producing more output than its input, you're going to be out of business soon.
Many transactions are better with people who happen to be outside the borders of your country - why wouldn't they be?