Is buying foreign goods harmful to our country?

There are a great deal of patriotic Americans that believe that we should always buy American products and that going anywhere else to get our goods and services feeds the overall downfall of our country. Many of those people feel we should close our borders and not do business with anyone outside of our country. While the hearts of these people are generally in the right place, their viewpoint is a bit shortsighted.

Our country, in fact any country, is really like a single enormous business with many little subsidiaries. The purpose of any business is to make money. Often a business can not produce all of the raw materials that it needs to make a finished product.

In such a case the business needs to seek outside sources for those materials. Countries operate the same way. Buying raw materials from one country at a low price and selling the finished product, at a premium, to any other country or even back to the same one that sold us the raw materials helps to ensure our financial success.

 Also, in any closed economy, that is one where you do not do business with others outside of a given area, there is only so much room for improvement. If there is no money coming into the economy it can only grow so far.

One might argue that as long as money can be printed the economy can grow. And that is true, up until a certain point. Every printed form of money is backed by a physical thing of which there is only a certain amount of. The collective amount of every dollar printed can not equal more in value than the physical amount of the thing backing it. Once that physical limit has been reached however, the value of each dollar printed actually decreases.

But, the currencies of each country are based on different physical things and differing amounts of those things. Trading with other countries allows for a larger total amount that we could have within our borders as part of our economy. It is actually better for our economy to have foreigners buy from us than it is for us to buy our own goods.

Still don't see it? Think of it this way. Let's say the world only has ten countries in it. And each country has ten people within it. If each person has 100 dollars, then the total amount of money available in each country is one thousand dollars.

As long as each country has a closed economy and no way of producing more money, no country can ever have more than one thousand dollars. No matter how good our technology gets or how efficient our methods become we will reach a stagnation point.

But if we buy raw materials from one country for a dollar and it costs us another dollar to turn those raw materials into something that we then sell to another country for five dollars, we have brought three extra dollars into our economy. That may not seem like much but when it happens dozens or even hundreds of times per day it certainly does add up quickly.

With an open world economy, as long as we get what we need from other countries at a competitive price and produce a good quality final product, we will continue to get wealthier and wealthier.

So you see, we actually need other countries to both sell us goods and to buy the goods and services that we have to offer in order to continue to be able to make improvements within our own country. Foreign trade, as long as it is handled correctly, is a necessity for our continued growth.