Some people say that countries get rich (example US) not by…

The argument that countries become wealthy through protectionism rather than free trade is based on historical observations and certain economic theories. Here are some key points that support this view:

1. **Infant Industry Argument**: This suggests that emerging industries in a country may need protection from international competition until they become competitive on a global scale. Tariffs and trade barriers can help these industries grow and stabilize.

2. **Historical Precedents**: Many now-wealthy countries, including the United States and the United Kingdom, used protectionist policies during their developmental stages. For example, the U.S. imposed high tariffs on imported goods in the 19th century to protect its budding industries.

3. **Strategic Trade Policy**: Some argue that government intervention can help develop industries that are strategically important for national security or economic stability.

4. **Domestic Job Preservation**: Protectionist measures can help maintain domestic employment by reducing the competition national companies face from foreign firms, thus reducing the outflow of jobs.

5. **Trade Deficits**: High levels of imports relative to exports can lead to trade deficits, which some argue can be harmful to a nation's economy over time. Protectionism aims to balance these deficits by restricting imports.

On the other side, advocates of free trade argue that open markets lead to more efficient resource allocation, lower prices for consumers, and greater innovation. Both perspectives have their merits and can be observed in different historical contexts and economic conditions.

What does Austrian economics have to say about it?

Austrian economics, with its roots in the work of economists like Ludwig von Mises and Friedrich Hayek, is generally in favor of free markets and less government intervention. Here's what it might have to say about this topic:

1. **Free Market Efficiency**: Austrian economics tends to emphasize the efficiency of free markets in allocating resources. When trade is free and unrestricted, goods and services tend to go where they are most needed or wanted. Interference with this process, such as through protectionism, can lead to inefficiencies.

2. **Consumer Sovereignty**: Austrian economists posit that consumers should dictate the direction of the economy through their preferences and purchasing decisions. Protectionism, by limiting access to foreign goods and services, can interfere with this sovereignty.

3. **Spontaneous Order**: This is a key concept in Austrian economics that refers to the natural order that emerges when individuals freely pursue their own interests. In terms of trade, this would mean unrestricted commercial interactions between countries.

4. **Negative View of Government Intervention**: Austrian economists generally view government intervention with suspicion. They argue that it often leads to unintended consequences. In terms of protectionism, these could include inefficiencies, higher costs for consumers, and retaliation from other countries.

5. **Criticism of Infant Industry Argument**: Austrian economists may argue that protectionism allows inefficient industries to survive longer than they should, which can be detrimental in the long run.

However, it's essential to note that there are differing views within the Austrian school, as with any economic school of thought. Austrian economics is more a method of analysis than a prescriptive set of policies.

What would happen if a US president starts putting high tariffs on countries that the US has a trade deficit with?
Use different economic theories and make a prediction for each.

Imposing high tariffs can have a range of potential impacts on the economy. Different economic theories may emphasize different outcomes:

1. **Neoclassical/Market Liberalism**: Firms are seen as best equipped to allocate resources and determine production. According to this theory, tariffs distort this efficient allocation system. Neoclassicists predict that tariffs would lead to inefficiencies and higher prices for consumers. In the long run, innovation may be stifled and consumption could decrease due to higher prices.

2. **Keynesian Economics**: Keynesian economists might argue that the increased government revenue from tariffs could be invested in the economy and stimulate demand. However, they would also point out that tariffs could lead to a decrease in export due to possible retaliatory action from trading partners - this might contract the economy if the drop in exports is significant.

3. **Monetarism**: Monetarists rely heavily on monetary policy to control the economy and might view tariffs as an unnecessary distortion. They predict that tariffs would cause inflation due to cost-push effects. The increase in the cost of imported goods will push up prices, and unless the money supply is tightened, this can lead to inflation.

4. **Austrian Economics**: Austrian theorists prioritize free markets and minimal government intervention. They might argue that tariffs impede the functioning of the free market and create inefficiencies. Imposing tariffs, according to Austrians, could lead to economic distortions and inefficiencies that harm businesses and consumers through higher prices and limited choices.

5. **Marxist Economics**: Marxist theory would argue that protectionism and tariffs are elements of a capitalist system in crisis. Tariffs might benefit the capitalists (business owners) at the expense of the workers because of the resultant increased prices and potential for trade wars.

Remember, these are simplifications and predictions. Real-world economic systems are incredibly complex, and reactions to tariffs involve many interrelated factors. The actual effects could vary depending on the specific economic conditions and responses of the countries involved.