with all this talk of job losses overseas and rising trade deficits, i was wondering what would happen if the usa went into complete economic isolation. so that means no imports or exports. for all you armchair economists, what are the consequences of this assuming that we can adequately supply our own energy needs internally?
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feasibility of economic isolation
- Thread starter jhu
- Start date
Stunt
Diamond Member
HAHAHAHAHA, no imports!!! lol
In all honesty though, no you cannot support your own energy needs...not even close...to even consider it shows complete lack of research. You'd have to convert to cavemen, as you'd have no electricity, plastic products, metals...
Sorry, nice thought though...haha...joke of the day
In all honesty though, no you cannot support your own energy needs...not even close...to even consider it shows complete lack of research. You'd have to convert to cavemen, as you'd have no electricity, plastic products, metals...
Sorry, nice thought though...haha...joke of the day
Colt45
Lifer
It could be done I suppose. You would need 100% state control of all importing/exporting though, and even then the black market would be HUGE for imported goods.
Not to mention a lot of things that are outsourced would have to be brought in, makes prices go ^^^^
All the companies that flog the majority of their goods in other countries would go bust
Tooling for production, and education for production and R&D would have to be developed for parts of industry that doesn't exist in the US.
And you still have a problem with natural resources. some elements just don't exist in the US. Also Energy is a large problem..
Not to mention a lot of things that are outsourced would have to be brought in, makes prices go ^^^^
All the companies that flog the majority of their goods in other countries would go bust
Tooling for production, and education for production and R&D would have to be developed for parts of industry that doesn't exist in the US.
And you still have a problem with natural resources. some elements just don't exist in the US. Also Energy is a large problem..
Even with the energy question laid to rest, you would still need raw material such as lumber, steel, uranium, albumin (used in the proccess that makes aluminium, I don't even think you have any of that naturally), the NA fisheries are in terrible shape, and all those types of things.
Let's make the question harder though: Assume that the US has all these things (by invading the North, perhaps?). What would happen if your economy closed, but was self-sustainable.
First, your products would become more expensive. The people in NY that buy cars made in Oshawa Ont. do so because it is chaper to have them made up there than in GA or WA. So, even keeping thier incomes constant, they would not be able to afford a new car. They'd have to choose between a replacement toaster or a new winter coat, instead of just buying both. Chicken, not steak. Car pooling, to save on gas. New, cheap techniques to overclock Vid cards would come about. An overall drop in standards of living. And let's not forget what business would have to put up with. They can't upgrade thier networks, revamp thier production lines or buy that shiny new Deere tractor as easily. That means that their workers would not become more productive. Which means that the businesses couldn't afford to pay them more money. This would slow the rate of growth of productivity in the long term.
Now, look on the supply side. Why does that seattle company those widjets to Vancouver, and not FLA? Because they can get paid more in Van. If they could only sell in Talahassee, they would get less money for it. That means that they would scale back production, because it wouldn't be worth it to run three lines at that price, you couldn't cover your overtime expenses for the graveyard shift. That means workers unemployed. That means (since it would happen everywhere) that there would be even less demand for the products. Note that this same thing happens to companies investing in capital. The extra money they might have put into that 3rd Transport Truck isn't worth the interest rate (even if they stayed reasonable) you'd have to pay on the loan, because you won't make enough money.
That's the long-term effects. In reality, all that coming together at once would likely be a "Perfect Storm" which would send the economy into a recession. Which could mean that it could be much worse than the scenario I painted above.
And then, what about all the assets owned by foriegners? Would you just take them? You couldn't pay fo them, your dollar would be worthless internationally. The foreigner's couldn't sell them, because you wouldln't let any productive result of those assets out of the country. What do you think would happen to American-owned assets when that happens? They would likely be expropriated by other gov'ts just in order to pay off what you (as a people, not just a gov't) owe them, for taking their land.
Hm. . . and how many people do you think would come up to Canada, or escape down through Mexico into Europe and Asia? Alot of people have Human capital that are worth more in other countries (all of a sudden) than your own. Doctors, engineers, journalists, top managers. All kicking back in London, or Rio. Making a decent lifestyle. While your country desparately needs it's best an brightest, some of them will by flying away.
Unless you stop them. Land of the free and all that.
If that scenario wouldn't screw my own country as much as yours, I'd want to see it happen, just to see the experiment.
Let's make the question harder though: Assume that the US has all these things (by invading the North, perhaps?). What would happen if your economy closed, but was self-sustainable.
First, your products would become more expensive. The people in NY that buy cars made in Oshawa Ont. do so because it is chaper to have them made up there than in GA or WA. So, even keeping thier incomes constant, they would not be able to afford a new car. They'd have to choose between a replacement toaster or a new winter coat, instead of just buying both. Chicken, not steak. Car pooling, to save on gas. New, cheap techniques to overclock Vid cards would come about. An overall drop in standards of living. And let's not forget what business would have to put up with. They can't upgrade thier networks, revamp thier production lines or buy that shiny new Deere tractor as easily. That means that their workers would not become more productive. Which means that the businesses couldn't afford to pay them more money. This would slow the rate of growth of productivity in the long term.
Now, look on the supply side. Why does that seattle company those widjets to Vancouver, and not FLA? Because they can get paid more in Van. If they could only sell in Talahassee, they would get less money for it. That means that they would scale back production, because it wouldn't be worth it to run three lines at that price, you couldn't cover your overtime expenses for the graveyard shift. That means workers unemployed. That means (since it would happen everywhere) that there would be even less demand for the products. Note that this same thing happens to companies investing in capital. The extra money they might have put into that 3rd Transport Truck isn't worth the interest rate (even if they stayed reasonable) you'd have to pay on the loan, because you won't make enough money.
That's the long-term effects. In reality, all that coming together at once would likely be a "Perfect Storm" which would send the economy into a recession. Which could mean that it could be much worse than the scenario I painted above.
And then, what about all the assets owned by foriegners? Would you just take them? You couldn't pay fo them, your dollar would be worthless internationally. The foreigner's couldn't sell them, because you wouldln't let any productive result of those assets out of the country. What do you think would happen to American-owned assets when that happens? They would likely be expropriated by other gov'ts just in order to pay off what you (as a people, not just a gov't) owe them, for taking their land.
Hm. . . and how many people do you think would come up to Canada, or escape down through Mexico into Europe and Asia? Alot of people have Human capital that are worth more in other countries (all of a sudden) than your own. Doctors, engineers, journalists, top managers. All kicking back in London, or Rio. Making a decent lifestyle. While your country desparately needs it's best an brightest, some of them will by flying away.
Unless you stop them. Land of the free and all that.
If that scenario wouldn't screw my own country as much as yours, I'd want to see it happen, just to see the experiment.
earthman
Golden Member
Heh. All you "information technology", "marketing" and "management" people whose main job is figuring out how to get something done cheaper in the Republic of Povertystan might actually have to get your soft little hands dirty. Unthinkable. On the bright side, I guess you could always live in your SUVs after you got foreclosed on by the bank where you USED to have a gold card.
Stunt
Diamond Member
Could work...with a massive population, good technology, and unlimited resouces comprised of most minerals.
But, the first thing any basic economics course will teach you is "trade makes everyone better off".
So by putting up barriers, economic potential is reduced significantly.
Basic macroeconomic theory, the idea of comparitive advantage, would be lost with isolationism. Cheap basic labor in other countries costs more here, so products requiring a lot of basic labor would be more expensive if made in the US. Our better educated workforce would need to sacrifice some of that high-tech production to meet basic needs. Even if we are better at EVERYTHING, we have limited resources, and relative to other countries, we have some areas we're better off putting our efforts into. The rest of the world would continue to benefit from this, which would leave us in the dust.
Ozoned
Diamond Member
It would be the end of the world as we know it...Entire civilizations would perish, hundreds of millions, if not billions would starve to death, Governments would collapse and chaos on a scale never seen before on this planet would ensue.
The magnitude of our power and our contribution to humanity would no longer be questioned.
Though we would have to invade Canada and Mexico 1st, to insure the quality of life that we have become accustomed to would not be severely impacted. 😉
zephyrprime
Diamond Member
Exactly. Clothes would become extremely expensive because of the large amount of labor needed to make them. The cheapest pair of sneakers would cost ~$100+ based on the fact that it currently cost Nike $2 in Chinese assembly labor to make a pair and that translates into roughly 6 hours of labor. In the US 6 hrs is roughly $100 on average.
dmcowen674
No Lifer
Very true, just about all Dictatorships have their currency so low to be virtually worthless, pretty much where the U.S. is headed so we won't be able to afford all the importing at current levels for very long.
That's cool though because it would help stem the flow of people wanting to come here and overpopulating except for our most southern State folks crossing the Rio Grande.
3chordcharlie
Diamond Member
Now now, don't insult the mainstream economists about something they don't support!
Isolationism is one of those policies that clearly can't make anyone better-off.
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