Why does USA have to trade globally?

Short answer is that we would need to become a Communist nation. That was the dream of Mao for China. It has been tried in other places. It has never worked. It would require great discipline on the part of the population so each works producing what the .nation needs. If we are producing what we eat, for example, people will have to be shifted from one activity to another depending on where there is overproduction and where there is shortage. In the USSR they had the quinquennial plans, in which the population focused on different sets of products every 5 years. But then you ended up with people who became experts in rice production, having to switch to producing beet in the next quinquennial Such a thing would be impossible without a dictatorship. . And dictatorships do not tend to be a welcome form of government by most people.

But if that's your ideology... good luck... but you're not going to succeed. Not in the U.S.

 

More people can afford them because of free trade is the point.

 

You mean profit is one of the main goals but not the #1 goal?

Without profit, all else will become an academic hypothetical in a business.

 

Larger market = more profit.
Why would US companies NOT trade globally?

 

No .... I meant what I said. Profit is one of the main goals. Profit however, is not the only goal.

Running afoul of safety or regulatory hurdles can turn a business into a "hypothetical". Sacrificing quality for short term profits ended the car industry as we knew it in the US.

On a larger scale - too much profit in the hands of too few ends up causing revolutions such as what happened in Europe and Russia in particular. In such cases the pendulum swung so far to the other direction that it was just as bad as what the were revolting against.

Extreme Socialism ( such as totalitarian communism in Russia and other Eastern European countries) and extreme laissez faire capitalism meet at the far end of the political spectrum. In both cases you have a small number of elite controlling most resources and means of production.

 

I wonder. How much is the cost of the phone is due to labor costs? Cell phones are not a labor intensive product.

How much is due to US corporate taxes being the highest in the world?

 

They may not be labor intensive compared to ship building for example, but the volume needed to supply their demand is extremely high.

Outrageously high corporate taxes here don't help of course. Thanks to that tax rate, there are thousands of companies (legally) that keep their money in other countries.

 

In theory, I suppose we could just sell to a domestic market, but more markets, more money. Even if we wanted to I don't see any good way of withdrawing from the world market. We have to many dollars and treasury notes owned by foreigners.

There are still a lot of benefits from global trade, assuming we don't allow our jobs to be exported to the third world, like we've allowed to happen for the last couple of decades.

 

The last time countries put heavy tariffs on imports we had the depression, so selling only to fellow countrymen didn't work then and most likely wouldn't work now. Those who know economics better than me can explain why.

 

without international markets our poultry/produce industry would be in big trouble.

if we couldn't buy stuff from overseas we'd all go broke.

 

The US doesn't absolutely have to trade with the rest of the world, but would be much worse off if it didn't. The economic principal of comparative advantage explains why. While I don't in general agree with the Austrian school of economics, they are right about free trade.

"It shows that even if, for example, Country A is more efficient than Country B at producing both commodities X and Y, it will pay the citizens of Country A to specialize in producing X, which it is most best at producing, and buy all of commodity Y from Country B, which it is better at producing but does not have as great a comparative advantage as in making commodity X. In other words, each country should produce not just what it has an absolute advantage in making, but what it is most best at, or even least worst at, i.e. what it has a comparative advantage in producing."

https://mises.org/library/ricardian-law-comparative-advantage.

 

And given that we run a balance of trade deficit every year, more and more dollars and treasury notes are owned by foreigners every year.

What do foreigners do with this money? They buy stocks and real estate. We are giving our country away for the sake of cheap i-phones. We are selling our birth-right for a mess of pottage.

I have no problem with trade that results in a BoT surplus. But every month we send enough money to China to enable them to buy a medium size suburban town.

The Chinese are buying Detroit, for instance:

https://www.forbes.com/sites/gordon...-newest-city-we-call-it-detroit/#6211917f246f

 

One example. Lithium batteries in many products including cell phones.

The US has almost no lithium deposits.

 

Not correct:

"As a yardstick, the lithium reserves at Silver Peak, Nevada, the largest domestic producer of lithium total 118,000 tons in a 20-square-mile area. The University of Wyoming stated that in a best-case scenario, the Rock Springs Uplift’s 18 million tons of potential lithium reserves is equivalent to roughly 720 years of current global lithium production."


http://www.mining.com/web/america-finds-massive-source-of-lithium-in-wyoming/