[rayiner]

I would like to believe that, but I really don't. I'm not convinced that people in Wisconsin are better off in the long run if we trade with China rather than bomb it (to set up two extremes). That is to say, I'm not convinced free trade is Pareto efficient.

[pfedor]

Would you mind if I ask you to elaborate? I can think of two ways to read this

1. If the USA bombs China, and China fights back, that means a global war and global wars accelerate the progress of science and technology, therefore in the long run people in Wisconsin will be better off just like quite possibly they are better off now than they'd be in the alternative universe where World War II never happened (where they might not have satellite TV, GPS navigation, nuclear energy, computers etc.)

2. If the USA continues to trade with China, in a number of years China may become equally as powerful as USA or more and then China may choose to go to war with America and win.

Did you mean any of the two? I'm assuming the long run part is critical since in the short term it's fairly obvious that people in Wisconsin and everywhere would be worse off if the US bombed China.

[rayiner]

So a common reason given for U.S. prosperity in the 1950's and 1960's was that the industrial base of the rest of the world was decimated which made the U.S. the unmatched economy in the world. I'm not saying whether it's true or not, I'm just saying that it's something people say. To the extent that's true, doesn't that mean it would be better to bomb countries like China and India to keep them from competing with us? I'm not saying we should, but isn't that the implication?

My point is that while I think globalized free trade probably maximizes world GDP (to the extent you can deal with externalities like pollution in the developing world), I don't think it's necessarily the course of action that maximizes prosperity for Americans. I wouldn't say that it definitely doesn't--I'm just not convinced.