Autarky is the economic concept of producing everything a nation consumes within its own borders. It's been tried numerous times, and inevitably leads at best to high prices and deprivation. At worst, it results in warfare.
Autarky was the official economic model of the Nazi Party after German economist Hjalmar Schacht joined the party in 1926 and after Gregor Strasser was ousted from party influence.* Nazi Germany provides a perfect example of how it doesn't work. Germany was a major industrial power leading up to, during and after World War Two (it still is), but it could never produce enough of anything for its own economy, even in peacetime. Moreover, it didn't have the raw materials to supply all it did produce. It imported 20% of its food supply in the early 1930s, and by the late 1930s the Nazis had only managed to boost that to 83%.
The solution was simple.
What the Germans did have, they could just seize from neighboring countries through war, and then either kill off the native population or subjugate it. That's exactly what it attempted to do. It pursued that murderously in Poland and the Soviet Union, and through vassal states in the form of France, Romania and Spain. Where that proved to be impossible. . . for the time being, it used bullying and threats, such as in regard to Sweden.
Even at that, it was never able to do it.
That seems to be to some extent what Donald Trump is advocating right now.
If we were playing hardball, all we'd do is say we're going to do no trading with Canada. If we did no trading with Canada would save $90 billion.
We could do tremendous good for ourselves by just not trading with countries.. We lose with Mexico $195 billion a year. They have nothing that we have to have, I mean. Hot tamales, tomatoes, a couple of things
Trump seems to believe that by closing the economic border with Canada and Mexico, and everyone else, unless they essentially become vassal states, the US can simply go it alone and not be harmed. Where it's obvious that won't work, we'll force acquisition, as we have now done in Venezuela and keep threatening to do with Greenland.
This is immoral, and stupid.
You'd think that a guy who went to Wharton would have a basic grasp of economics. Open economic borders, truly open economic borders, make countries rich, not poor. That doesn't mean that there's never a place for tariffs, including for protectionism, but it's generally a bad idea.
What makes for more sense is for the United States, Mexico, and Canada, to have a seamless economy with no tariffs at all. The US and Canada had a nearly duty free relationship prior to Trump, save for the infamous very high ones on dairy, poultry, and egg products. Those latter tariffs were absurd, but the US also has absurd tariffs in the agricultural sector. The US relationship with Mexico is, right now, duty free.
An absolute lack of tariffs is how it should be between the three major North American economies. Only an an economic ignoramus would disrupt that.
And only an immoral person would advocate taking the oil of another nation that is providing it under the gun. The US has been an oil addict for a century, but was showing signs of getting off the stuff. Trump, with his "it's always the 1950s" mindset can't seem to get out of that.
Trump should really know better. Wharton has a reputation as one of the best, maybe the best, business school in the country. He owes us an explanation, which he seems to be incapable of articulating, for his idiotic economic views. Wharton, and I'm serious about this, does as well. I know one Wharton graduate personally, and he is brilliant. But the example of Donald Trump is to weird to explain. For that matter, the example of Wyoming's Chuck Gray, who is an absolute Trump sycophant, is as well.
We need a combination of supreme moral sensitivity and economic knowledge. Economically ignorant moralism is as objectionable as morally callous economism. Ethics and economics are two equally difficult subjects, and while the former needs discerning and expert reason, the latter cannot do without humane values.
Wilhelm Röpke, A Humane Economy: The Social Framework of the Free Market
Footnotes
*Strasser was permanently ousted from influence in the Night of the Long Knives.
Schacht is interesting in that he was never a Nazi himself and was involved in prewar anti Nazi plots. He served in the German government nonetheless.
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