Mercantilism

Because Mercantilists think that there is a finite amount of wealth in the world. You can create wealth, though. By having high economic activity. So Mercantilism is bad.

You can make brass cups for $20 each.
You can make steel rods for $50 each.

I can make brass cups for $10 each.
I can make steel rods for $70 each.

Mercantilist policy suggests it would be in your best interest to sell both the rods and cups to me and buy neither rods nor cups (because you are trying to acquire wealth, not trade it away). Likewise, I should do the same. Because you're stifling trade, you're distorting the market and actually losing more money than you would in a free market system.

But free market policy suggests I should buy your cheaper rods while you should buy my cheaper cups. Both of us benefit.

Yes, there are situations regarding national security (military, sometimes food production) where a nation might not want to be reliant on other nations for goods, but when it comes to consumer society, the free market is clearly a superior system.

>>2745220
>You can make brass cups for $20 each.
>You can make steel rods for $50 each.

>I can make brass cups for $10 each.
>I can make steel rods for $70 each.
If these were countries instead of individuals, the second country would lose since they would be importing more than they're exporting, meaning the national wealth would go down.

>>2745164
>What's so terrible about mercantilism that allowed Adam Smith to singlehandedly destroy it?

Basically, it amounted to enlarging your own power and actively trying to screw over others wherever and whenever possible. This led to more wars than if two or more parties decided to openly trade with each other, and promoted colonization of disparate regions to obtain absolute control over resources.

>Shouldn't a nation primarily focus on production, in order to not become dependent on foreign goods? Would a nation be able to secure themselves if they were dependent on a foreign power for weaponry?

Wealth is limited if everyone follows a mercantilist system of attempting to produce all goods in a given country (and dependent regions). Under such system, everything becomes more expensive due to the difficulty of production and selling in bulk. And would a country be able to secure themselves if they could only produce weaponry of inferior quality, in inferior quantity, compared to if they imported from abroad?

>Granted perhaps some goods of the highest quality can only be produced in regions of its needed natural resources, but mercantilists argue that the natural resources should be purchased from said region and manufactured into finished goods at home anyway.

What do you mean by regions? Do you mean regions under control of the same state that requires resources for manufacture, or foreign regions? In the case of the latter, such an action would be highly disincentivized by tariffs and would be nigh-impossible in a situation where everyone abided by mercantilism; in the case of the former, this of course was colonialism, which tended to involve more material investment than it was worth.

>You don't want to be dependent on another country, where they can grab yours by the balls; without finding some other way to grab them back.
If you both consent to having each other's balls grabbed, there is nothing wrong with interdependence.

>>2745273
Perhaps that analogy would be better understood in absolute productive values, instead of money, which is unreliable in this context:

You can produce 2 brass cups and 2 steel rods. If you really tried, you could produce 4 steel rods or 4 brass cups.

I can produce 4 brass cups and 1 steel rod. If I really tried, I could produce 2 steel rods or 8 brass cups.

If we both specialized in our most productive areas and traded with each other, we could both have 2 steel rods and 4 brass cups.

This of course is a gross oversimplification, and one that does not account for say, the relative value and demand of products, but it illustrates the rationale for economic specialization. As >2745185 states, there is no finite amount of wealth in the world, which is the key underlying assumption of mercantilism. It is true that there are some industries in each country which will lose out, but on the whole, each economy benefits from greater access to goods that would have previously been limited by cost.

>>2745164
>What's so terrible about mercantilism that allowed Adam Smith to singlehandedly destroy it?
It's inefficient.
There's a point in limited mercantilism for staples and strategic goods, but by and large mercantilism was only ever an option in times where skill was the main productive resource and you could just go to war for raw materials.
Nowadays you can't just go abroad and conquer some oil fields (kek you're not supposed to at any rate, unless you're the world police guy) and of course you can't develop an oil industry without access to oil.

That said, unhampered free market is not much wiser either. Trade balance is a thing, and if you can't generate wealth you're gonna run into trouble in no time. Not to mention that cheaper is only better given equal quality, which is not always the case.

Did you all learn nothing from 2008?

>>2746759
That markets failures are a possibility? It wasn't a shocking discovery. The first financial crisis can be traced to the ancient city-state of Ur.

>>2745164
>dependent on foreign goods
In the 18th century the situation was much the other way around with British manufacturing booming during the early industrial revoluton and France lagging behind.

The government didn't want to attract industry, it wanted to help domestic industry sell their goods and open up new markets. There was an almost desperation to do so which was one of the driving forces of the British Empire.

>>2748395
That would be more late 18th century/early 19th century. It was still very much in style up until at least past the mid 18th century, what with the restrictions on tea and the matter of the Scottish and Irish textile industries.

>>2746759
Overspeculation and bad debt happened during mercantilism's heyday as well. See the South Sea Bubble.

>>2745273

The other thing you are not getting at is that cheaper goods also increase the purchasing power of the citizens, which improves their quality of life.

A worker who makes $100 a day can buy 1 steel rod and 2 brass cups in country A's closed economy, 1 steel rod and 3 brass cups in country B's closed economy.

In a free trade system he can buy 1 steel rod and 5 brass cups.

>>2748606
In a free trade system, he can no longer buy anything because his job got shipped oversea. Then he has to get a shitty service job that wont pay as much because his country isn't producing anything anymore.

There is nothing internally overtly wrong with the model. As long as the government has enough control over the economy to guide good economic decision making. So if you country is great at producing Grain (Like say the U.S) it should tax grain imports so that local industry is favored.

>>2748632

If some uneducated laborer straight off a farm in China/India/Bangladesh can do your job well enough to replace you, you fucking suck at your job. Git Gud or find a better field to work in.

>>2748735

If the US is good at producing grain, it doesn't need to tax grain imports at all because it can out-compete all the other grain producers without them. It works the other way around, where countries with weaker agricultural industries than the US imposes taxes on cheaper US grain to protect their own farmers. Protecting vital industries like agriculture is one of the main exceptions in most free trade agreements.

>>2748768
>If some uneducated laborer straight off a farm in China/India/Bangladesh can do your job well enough to replace you, you fucking suck at your job. Git Gud or find a better field to work in.
It has nothing to do with talent, it's about wages. The much lower cost of life in poor countries allow them to live on much lower salaries, and that's why businesses move oversea. Then they claim that it's a good thing because it decreases price as well, but the truth is that it's better for a country to keep its production in so that there's more wealth in the country in the first place, so lower prices aren't needed as much.

>>2748768

Even if the U.S is great at producing Grain, it should still impose a tariff on grain products in my opinion to stimulate internal development of differentiated foreign products. Like all the different grains of rice.

>>2748804

It shouldn't because tariffs are a quid pro quo. Put a tariff on something and other nations can use it as a reason to retaliate.

Also what does your sentence even mean, like, you want the US to put a tariff on grain so there's incentive to produce arborio rice domestically or something?

What do you think are the benefits of that? In the short term, all consumers end up paying more for arborio, which is a drawback. If the US could end up producing those rice strains effectively, they already would.

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>>2745164
What a lot of people don't understand is that a trade deficit isn't necessarily bad if you got a kickass economy. Value, wealth or GDP is not a limited commodity but one that is created within an economy, the balance of trade just reflects how these economies interact with each other.