Reply To: Trade wars


Consider this analogy: suppose your family had a homestead in the American territorial west and, while mostly self-sufficient, your family traded with the merchants in the local town for goods that they could sell more cheaply than you could produce. Then one day the merchants decided to give your family a discount for goods they sold to you because they wanted to expand their own business in these lines (let’s say they are forerunners of the strategy of Sam Walton). By accepting their discounted goods, your family would raise its standard of living by shifting to areas of production in which it had comparative advantage and the producers supplying the merchants would be doing likewise.