Dubious Assumption #1: Trade is sustainable.

[tangent4ronpaul]

The problem here is that the theory of comparative advantage pays no attention to the long term. So it can quite easily recommend a trade policy that gives us the highest possible living standard in the short run -- but by way of selling off our country out from under us.

This is what happens when a nation runs a trade deficit, which necessarily means that it's either sinking into debt to foreigners or selling off its existing assets to them.

The theory of comparative advantage is blind to this problem because it treats people's time horizons as a given. So if a nation wants a short-term consumption binge followed by long-term decline, the theory says "OK, no problem. You wanted it, you got it, what's not to like?"

A saner theory of trade (and of economics generally) would advise people that it's not a good idea to engage in decadent binges, regardless of how good it feels right now. It would recommend protectionist restraints on imports to force trade into balance, not free trade.

http://www.ronpaulforums.com/showthr...92#post3202492

[torchbearer]

if our currency was in gold, no trade imbalance could continue for long. if china out produced us and sold its goods for a lot less, and we payed in gold. we would eventually run out of gold. we would then be forced to actually produce something ourselves in order to trade for goods, or trade for gold.
unending trade deficit is a symptom of fake money. not a root cause.

[axiomata]

Yes, individuals have no idea what is best for their long term interest, let's let the state decide what and with whom they may trade.