Mercantilism has somewhat different application in developed, rather than developing, nations, but its fundamentals still hold good. We at least need to defend against mercantilist aggression against us, something we are not doing.
Despite the fact that every major American trade agreement since NAFTA has worsened America's trade balance, Obama actually seems to think he can improve America's export performance by going for more.
While a rich nation can indeed borrow a huge amount of money and has a lot of assets to sell off, this doesn't mean Santa has installed an ATM on every street corner. Which is what a lot of people seem to think.
Democrats want to hear that America's trade problems are caused by exploitative capitalism. But the problem is that corporate pursuit of profit has been decoupled from the success of the economy as a whole.
There have been times in American history when there were good arguments for picking one partisan side or the other, but having heard Rep. Paul Ryan's response to Obama's State of the Union address, I don't know who's worse.
Here's a fascinating article by an intelligent economist, Jim Tankersly, apparently a perfectly nice fellow, puzzling over the "big mystery" of why the U.S. economy has lost so many jobs and isn't creating any more to replace them. It is rife with phrases like:
Free trade doesn't work, the global economy is a myth and the U.S. has been duped during trade negotiations for the past 40 years according to Ian Fletcher, author of Free Trade Doesn't Work: What Should Replace It and Why.
Whether a flat tariff is ultimately the best trade policy for America is an open question, but it is worth considering the possibility simply because it sets a baseline, the "least we can do," for a solution.
It is easy to forget that until about 1850, Britain, not the U.S., was the world's leading economic power. But then, of course, they blew it. There were many causes of this decline, but free trade was undoubtedly a major one.
India is building infrastructure and encouraging private enterprise. The US should invest and partner, not ignore and protect. We run the risk of becoming less relevant in Southeast Asia -- and the world.