gpja's fact-checker's example is really dumb.
in reality:

the iraqi shoemaker is unemployed, cannot buy shoes, cannot buy a hat, cannot buy chocolate.. he could get as job as a prison guard in a new prison, or perhaps commit a crime to feed his family and end up as a prison inmate, along with most of his ex shoe making mates... and that's not even getting to the bit about the poor asian sweatshop worker who's slavery is now endorsed by a 'free' market in Iraq. not to mention the extra resources needed to tranpsort the shoes from asia to iraq.

your little economics lesson is a crock. better luck next time economics 101.