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An English corporate raider by the name of Goldsmith, who was the basis of the robber-baron turned good-guy in the movie "Wall Street," suggested many years ago that free trade should exist between similiar economies so that everyone in the First World is not totally undermined by cheap Third World labor. Free trade, or trade with minimal tariffs, between Japan, Australia, USA, Canada, Europe, et.al. would definately create enough competition to keep a lid on inflation and be condusive to middle class stability. In addition to strengthing our economies, it will definately strengthen our values!!

"Protectionism" is a loaded word whose use should be properly challenged. For the life of me I don't know why GM and Ford can't compete against Honda and Toyota. But I do know that I can't compete against cheap Chinese labor and that I'm not interested in lowering my standard of living until we reach an equilibrium with the new Chinese and Indian middle classes!

Ultimately we have to ultimately decide whether we are a nation or a market.

>Ultimately we have to ultimately decide whether we are a
>nation or a market.

You deserve a gold medal in the intellectual olympics for this quote.

Twenty years ago, we were undisputably the former. Today, under the pressure of outsourcing, illegal immigration, and a two party system that ignores the best interests of the majority of its citizens, we are increasingly the latter.

"For the life of me I don't know why GM and Ford can't compete against Honda and Toyota."

Well, the biggest reason is that the Japanese of the generation now retiring were extraordinarily hungry. Hungry for the wealth, the manufacturing prowess, and the respect of America. The Japanese are still driven by this desire for respect.

Another reason, in the case of Toyota's Prius, is that the battery and charging system is a major achievement. My own estimate is that Matshusta Electric (Panasonic) spent well over a billion dollars developing this technology. General Motors would have to pay for such an investment out of it's own resources. In Japan things don't work like that.

Toyota is selling the Prius at a very big loss. Tens of thousands of dollars. The development costs were incurred by Panasonic. Who actually loaned the money or bought the stock to supply the cash is unknown. Japanese banks carry an incredible amount of bad loans on the books.

Trade barriers reduce income in the home country and throughout the rest of the world. It is an Iron Law and unavoidable. As a result of the lowered income abroad less is exported from here. So we sell less and income is reduced again. This cycle continues until a new equilibrium with lowered supplies and demands is reached.

Just because my profits go up when my factory's product is protected does not mean the increase is not offset by losses to the rest of the country. Tariffs are an income redistribution scheme.

Reducing trade barriers on the other hand RAISES income inside and Outside the nation reducing them.

This is a no-brainer.