Isolationism

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Isolationism is a foreign policy adopted by a nation in which the country refuses to enter into any alliances, foreign trade or economic commitments, or international agreements, in hopes of focusing all of its resources into advancement within its own borders while remaining at peace with foreign countries by avoiding all entanglements of foreign agreements. In other words, it asserts both of the following:

Contents

Introduction

"Isolationism" has always been a debated political topic. Whether or not a country should be or should not be isolationist affects both living standards and the ability of political rulers to benefit favored firms and industries.

All the First World countries (the UK, United States, etc.) trade in a world economy, and experienced an expansion of the division of labor, which generally raised living standards. However, some characterize this as "a wage race to the bottom" in the manufacturing industries that should be curtailed by protectionism. Some argue that isolating a country from a global division of labor—i.e. employing protectionist trading policies—could be potentially helpful. The consensus amongst most economists is that such a policy is detrimental, and point to the mercantilism of the pre-industrial era as the classic example. Others argue that as the world's biggest consumer, with its own natural resources, the U.S. can wisely dictate what conditions can apply to goods and services imported for U.S. consumption, misunderstanding the nature of prices and their emergent, non-centrally planned, nature. Countries and regions generally enjoy a comparative advantage over others in some area. Free trade between countries allows each country to do what it does best, and benefit from the products and services that others do best. But "best" too often means monetary, excluding human and ecological costs, due to firms externalizing costs as a result of inadequately defined property rights. Protectionism allegedly interferes in the market process, making people poorer than they would be otherwise.

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