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Don't know what to tell you, you're probably right. Adam Smith used the phrase "nation of shopkeepers" to describe the exchange of talent and time for money. We're now a "world of shopkeepers." The competition is not just down the street or across the country, but on the other side of the globe.

But what is the role of government in this? Do we "apply" government power domestically to smooth the humps and bumps of a global economy or do we apply it on the international front to isolate ourselves via tariffs etc.?

If I was smart enough to figure this out, I'd be a rich guy.

Heres some more thoughts of mine on where there is all headed...and why...

First off, the notion of the nation-state. If you hold with this concept (and many leftists, nihilists, AND extreme libertarians have never, IMO, reconciled themselves with the notion of a nation-state), you believe that an individuals presence in a host country, unless that individual happens to be either a native born or a naturalized citizen, is at the pleasure of the host countries government.

Therefore, all foreign guest labor or H1b labor is here because the fed government, being an agent duly charged as per the Constitution, with regulatory duties...allows it. The aforementioned groups don't even concede this point.

I do believe, that some, perhaps well intentioned 'powers that be', have made a calculated, strategic decision, in regards to our current and would be allies (there are many others who are not so well intentioned...they promote national policies based on a global progressive Third Way political agenda, or due only to self interest).

In return for (in theory), strategic partnership, foreign policy cooperation, and to promote the growth of a democratic free market system in the selected countries, the Fed Government will, in effect, trade US jobs and selected US occupations with these countries.

With Mexico, and other South and Central American countries...its the jobs at the lower end of the wage scale.

For more developed countries, principally India...its jobs at the high end of the wage scale...in particular...engineering.

India has itself, IMO, made a national policy decision, as part of its quasi transitional or managed government economy...to position itself so as to have a future Comparative Advantage for these high skilled high wage jobs. India's goal is not 'win-win', its to capture market share in a growing world competitive market...i.e...its that which promotes its long term NATIONAL SELF-INTEREST.

People in this country who stand to benefit (at least short term) from this LABOR ARBITRAGE policy...are all those (as I mentioned above) whose jobs are largely immune to it...plus all those who have accumulated enough assets to live comfortably without labor income, or those retirees who already live on portfolios, and /or pensions, and /or SS.
Long term...I do believe that the nation as a whole...will suffer for this labor policy, both economically, politically..and more significantly...MILITARILY.