Answer: No life forms could flourish indefinitely. In an isolated system, Entropy always increases. Life tries to push Entropy in the opposite direction. When life is created, entropy decreases in the cave but nature demands a greater Entropy increase offset. The cave, being sealed, would mean that Entropy would reach its max, thus energy necessary to sustain and generate new life would be unavailable. Maybe we should learn a lesson from this. Available energy is mandatory. Wealth may equate to available energy. If you want to live in a nation that is prospering make sure that its available energy supply is abundant.
Entropy is one of “Physics Foibles”. Look it up. Solve energy to mitigate all other issues.

There are other means by which international trade helps the economy as well. Trade also increases global competition. Because companies and consumers are acting out of their own self-interest, they should buy the best product at the cheapest price. This, in turn, causes local and global producers to fulfill these wants. International trade generally contributes to our overall well-being. This importance of international economic realtions is quite visible in the current issues with the American stock market. As our stock market has been falling, economies throughout the world have suffered too. This further proves the point that as one country succeeds, so do the others-and as one country suffers, the others do as well. We must not be blinded by the constant usage of the phrase ‘transfer of wealth’, as our wealth is not being transfered, but returned to us in other markets.

Great to hear from you!

Yes, “imports are paid for by exports” is just another way of saying that each country cannot use the other country’s currency so it must be spent back into the home economy. As I like to say, anytime you buy a Honda (Japan) that same money is going to be spent almost immediately right back to America. Think of it this way: the money you spend on a Honda will help some other American company dollar-for-dollar.

AAhhh….Patrick, you got to another level of complexity because you have now studied economics for two years: Japan may spend the US dollars we paid them for the Hondas by building a business in Alabama ( a gambling casino or car plant, for example). As an alternative, Japan may lend the US dollars back to the US Government by buying a US Bond. As another alternative they may elect to buy one of our buildings as rental property.

In all of the above cases, which is taught in Macroeconomics under “Balance of Payments”, the US dollars received by Japan for the Hondas is spent back immediately into the US and it helps our US economy in some way. If Japan builds the casino or car company on US soil that creates jobs and incomes in the US. If Japan lends it to the US Government (should the US need to borrow because of deficit spending) the Japanese are really temporarily “saving” the US dollars and they will eventually be paid back with interest and then buy something only in the USA. Also, until Japan does liquidate their US savings (sell their bonds), Japan has allowed our US Government to spend the dollars, provided by Japan.

Your last question is the toughest one. Is there a cultural problem with other countries buying real estate and building companies in our country. Well, I can’t speak for everyone on that one. I don’t mind at all! I am grateful for all the investment that countries like Japan, China, Germany, Canada, and Britain have done in our country with the US dollars we have sent them. They have created millions of jobs through their spending of dollars back into our country. In fact, many people believe they are buying from an American country, but they are not. For example, Burger King, Budweiser, and Giant Food are all foreign owned companies doing business in the United States as they have elected to take our US dollars paid for imports to establish businesses in the United States.

Thanks for the post!

If Japan buys oil from the United States, the US must use the Japanese Yen received to buy Japanese products.

In effect, and using my analogy in my posting, we would have a trade of oil (Japan gets) for Hondas (US gets).

I’m not sure the U.S. economy is crumbling…at least yet…. but a trade of oil for Hondas helps both the US and Japan ’cause both economies now have more goods and services than if they did not trade.

In fact, in our slowing U.S. economy it is trade that has been the “shining light” as trade has been at an all time high causing the U.S. economy to not be as bad off.

Thanks for the question!

Was I any help and are your questions now answerde?

I believe that the simple answer to your question is that citizens a) generally have not taken an economics course, and b) they focus on the loss of jobs by the businesses in their country that lose out to better competition.

The gains from trade are the positive net of two occurrences: the plus is more product choices, lower prices, and better quality for the “winners” which is the country’s citizens as a whole. But this gain is partially (&temporarily) offset by the “losers” which are the country’s businesses thaqt have to lay off workers (or close) that lose out to the better foreign competition. It is much more VISIBLE to see the 100 people laid off in Michigan than the lower auto prices spread out to millions of Americans.

Also, the great thing about trade is that the “losers” (displaced workers) get back in line and find other jobs which is evidenced by a very consistent employment/unemployment rate over the years that trade has been increasing. Its painful for the workers that are displaced but the alternative of forcing citizens to not enjoy trade would slow economic growth.

Thanks for participating!