Posted by Don Lloyd
Source link: http://archive.mises.org/1407/the-effect-of-global-trade-on-the-us-economy/
The Effect of Global Trade on the US Economy
To take a broader view of foreign outsourcing, consider what the effect would on the US economy if the US were to become entirely isolated, having neither imports nor exports. There is little question that the US standard of living would fall, and forever be below the level that would otherwise have existed going forward.
However, it may be useful to consider just how the possible causes of such a fall can be ranked. It is my claim, that under present conditions, that it would be the loss of imports that would far outrank the loss of exports. The major condition that an isolated US economy would struggle under would be a shortage of labor, not a shortage of jobs. This is consistent with both the higher costs of labor in the US and the fact that the worries about long term demographic problems with Social Security are with the projected shortages of tax-paying, goods-producing workers, not a shortage of available jobs. This would not change until the effective consumer demand in foreign markets becomes comparable to that in the US.
The imports that result from foreign outsourcing help create and sustain domestic prosperity and jobs, not destroy them overall. The vast majority of domestic jobs and goods owe part of either their existence or affordability to the employment of foreign labor.