Let's start with the biggest domestic economic problems. Almost any one of them is a greater threat to the economy than virtually any imaginable form of terrorism. There is the record-breaking budget deficit that is likely to amount to $5 trillion over the next decade. Then there's the burgeoning trade deficit. And the $72 trillion in unfunded future retirement and health care obligations to our own citizens. And a record low savings rate, which suggests that we will need even more help with retirement funding. And the hemorrhaging of manufacturing jobs and the cost of fixing our dysfunctional health care and energy systems. Every one of these is a gigantic problem on its own. Taken together, they represent a series of bombs placed at the foundations of our society, and they are capable of exploding in ways that would touch more Americans than anything even the most sophisticated terrorists could devise.
Fixing Social Security, dropping trade barriers, reducing the deficit by trimming pork, ending stupid subsidies - any of these things would be far simpler than preventing terrorism, and have drastically more positive impact on the country. Which is not to say that these things are politically easy - they all piss of an entrenched power structure (old people, domestic producer of good produced cheaper elsewhere, pork recipients, subisdy recipients). Its not clear that leaving these problems will destroy us, we are resilient. But the sad thing is that they are technically trivial to fix, and would have a big impact on the average citizen. Whereas "stopping terrorism" is difficult if not impossible, and terrorism has little negative impact on us.
But it'll never happen, because government action is all about political pandering and ass-kissing, not making citizens lives better.
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patrissimo- Patri Friedman
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Da Truth Brother!
Then submit them. Life is too short. Start with us, your LJ peers, make it good.
In the short term, yes, you're right: unilaterally dropping trade barriers will increase the trade deficit. If everyone agreed to drop all trade barriers, the impact is harder to predict: the US is probably less protectionist than many of our major trading partners, so dropping all barriers would decrease the deficit if all other thing were equal. However, they're not: the labor costs you alluded to, and so forth. I don't know, a priori, how a negotiated global reduction of barriers would work out for the US.
Other random thoughts on the topic: in the short term, the trade deficit is beneficial to the US, because it means we're effectively exchanging dollars for goods. Most of these dollars end up being held overseas in the form of US government securities; this is how we've been funding the deficit for the last couple of decades. The long-term problem, of course, is that if the rest of the world decides it doesn't want as many US securities as it has, it start a sell-off that would have devastating effects on the value of the dollar, which would have unpredictable but probably maleficent effects on the global economy.
In the current economic and political situation, I'm not sure it's possible to eliminate the trade deficit. The divide between the first world and the third world seems almost designed to generate deficits. Moreover, many other countries have policies designed to increase it: for instance, China pegs the yuan to the dollar at below market value, making Chinese goods artificially cheap. The US has had little success at persuading China to float the yuan against the dollar or even to revalue it upwards. Eliminating the deficit is a nice dream, but I doubt it's realistic.
And anyone who ends up dead from a terrorist attack will challenge your conception that terrorism is a "small" problem. If they kill me, then the size of the economic problem pales in comparison.
I'd like to hear sometime what you think is a good strategy for preventing conversion to terrorism. I think that demonstrating that terrorism is futile and counter-productive, i.e., demonstrating strength, will deter future actions. Rolling over and ignoring it only encourages them. Remember the USS Cole and the African embassy bombings?