The threat from China
Money, therefore, necessarily runs after goods, but goods do not always or necessarily run after money. The man who buys, does not always mean to sell again, but frequently to use or to consume; whereas he who sells, always means to buy again.
Third, the reason that the Chinese are not buying U.S. products is that they can't afford them. Products are generally purchased by individuals while companies buy assets. Therefore, its easy to see why the money from trade flows the way it does. The Chinese workers cannot consume U.S. consumer goods because their wages do not allow it. Therefore, in the short run, U.S. manufacturing suffers. However, as Chinese workers specialize the available pool of workers will eventually (in the long run) be constrained. The result will be increased wages and an increased desire for consumer goods, some from the U.S. As Smith said
The desire for food is limited in every man by the narrow capacity for the human stomach; but the desire of the conveniences and ornaments of building, dress, equipage, and household furniture, seems to have no limit or certain boundary.
Fourth, [I will discuss the lessons of the luddites - 19th century workmen who destroyed labor saving technology out of fear of unemployment. The analogy between 19th century fear of technology and 21st century fear of free trade is unmistakable. Slashdotters would do well to recognize their contribution as supporters of technology (like the wheel) to unemployment].
Fifth, [I will discuss the relationship between competition and prosperity. Overall buying power of a worker is not increased by protectionist policies. Take the simple example of a TV assembly line worker. The worker who cannot afford what he produces will remain unable to afford the fruits of his labor under a protectionist regime because his wage will rise in proportion to the product. Now multiply that simple example across every product in the economy under a comprehensive protectionist plan. The advances from a protectionist plan come at the expense of a country's consumers. Workers are consumers and at best any increases in wages or employment can only offset the increase in consumer prices leaving a worker in no better position.]
Sixth, [I will discucss the experiences of Japan and Taiwan and the relation to the new round of 3rd world industrialization and the "catch-up affect"]