Basic Economics: A Citizen's Guide to the Economy

Although the basic economics of international economic transactions is not rocket science, it does take a little more thought than some other economic principles. However, this alone is not enough to explain all the confusion that reigns on the subject. People with special interests to protect, or ideological visions to which they are committed, find international trade and international wealth movements a fertile field for bamboozling a public that has few reasons to pay much attention to international economics.

Most Americans' lives are not likely to be changed in any obvious and fundamental way by international trade or international financial activities. While there are many imported products in the American economy, these are typically products that Americans also make today or have made in the past and could make in the future, if there were no international trade.

There are, however, some important consequences of international economic events that may not be obvious. As already noted, the severe tariff restrictions put in place early in the Great Depression of the 1930s have been regarded by many economists as needlessly worsening and extending the worldwide depression. The last thing needed when the national income is going down is a policy that makes it go down faster, by denying consumers the benefits of being able to buy what they want at the lowest price available.

Even in normal times, the losses associated with producing many goods domestically at higher costs would add up to a loss of real purchasing power and the standard of living dependent on it. Virtually all high-quality cameras in America -- cameras with interchangeable lenses, for example -- are imported, and it

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