1. Hi there guest! Welcome to PoliticalJack.com. Register for free to join our community?
    Dismiss Notice

USA’s chronic trade deficits

Discussion in 'Economics, Business, and Taxes' started by Supposn, Mar 19, 2016.

  1. Supposn

    Supposn Council Member

    Joined:
    Dec 6, 2014
    Messages:
    79
    Likes Received:
    4
    USA’s chronic trade deficits.

    Annual trade deficits are ALWAYS immediately detrimental to their nations’ economies.

    There are only two presidential candidates that do actually reject and/or effectively avoid giving any credence to the problem of USA’s chronic global annual trade deficits. Nether Mr. Donald Trump or Senator Bernard Sanders offer any explicit proposal to significantly reduce USA’s annual global trade deficits.

    I’m a political orphan; there’s no candidate worthy of support.

    I’m among the proponents of USA adopting a specific unilateral Import Certificate policy for conducting our global trade of goods. It is a primarily market rather than government driven policy that’s entirely funded by USA purchasers of foreign goods.

    Google Wikipedia’s article entitled “Import Certificates”
    And/or
    The paragraphs entitled “Trade Balances' effects upon their nation’s GDP”
    within the article entitled “Balance of trade”.

    Respectfully, Supposn
     
    • Informative Informative x 1
  2. The Sage of Main Street

    The Sage of Main Street Governor

    Joined:
    May 15, 2015
    Messages:
    11,288
    Likes Received:
    1,771
    Looking to Business Bozos to Cure the Economy They Themselves Crippled

    Tariffs should be levied to equalize prices; imports would have to compete on quality only. As it is under the fair market price delusion, their prices reflect cheap slavish labor, low defense costs, and dumping.

    As for Buffett's proposal, it depends on our ability to produce a surplus of attractive products to supply foreign buyers. Our present MBA clique is incapable of even supplying the domestic market. Replacing incompetent management would be necessary before that happens. He himself is just a birth-privileged parasite living off other people's work, so I don't take him any more seriously than he and his class would take any of my suggestions.
     
    • Like Like x 1
    • Agree Agree x 1
  3. Woolleybugger

    Woolleybugger Mayor

    Joined:
    Sep 19, 2011
    Messages:
    4,586
    Likes Received:
    477
    It is a mystery to me how anyone could justify allowing trade deficits to continue unless one was an investor in a foreign company exporting to America. Am I missing something?
     
    • Agree Agree x 1
  4. Supposn

    Supposn Council Member

    Joined:
    Dec 6, 2014
    Messages:
    79
    Likes Received:
    4
    WooleyBugger, our previous poster, (the sage off Main Street), doesn’t explicitly blame Warren Buffette for USA’s trade deficit but does find him at fault.

    In my opinion there’s nothing to be gained by blaming the wealthy. Reducing the wealth of others generally does not generally improve the median wage because despite what the Sage apparently believes, economics is not a “zero sum game”.

    My concern is not with “Income disparity” but rather that it’s symptomatic of a poor economy. I’m a populist and contend superior national economies provide their populations with greater and sustained purchasing power of their median income.


    Many, if not most of us perform different tasks and serve different purposes at different times. Enterprise’s purchasing agents would be undermining their companies’ competitive positions, and consumers would reduce families’ financial conditions if they did not seek the best values for their purchasing dollars.

    Usually what is to individual commercial and consumers’ best financial interests are in aggregate to our nations better economic interests. But this is not the case when our nation experiences annual trade deficits and it’s more feasible to change our policy than to even consider inducing people to act contrary to their individual interests.


    I’m among the proponents of USA adopting a unilateral policy for our global trade as described in Wikipedia’s article entitled “Import Certificates”.


    All prices of goods are substantially determined by the market rather than by any government’s intervention. The policy is dependent upon people acting what they consider to be in their best interests. USA purchasers of foreign goods eventually pay the policy’s net costs and it behaves as an indirect but effective subsidy of USA exports. It would increase USA’s GDP, numbers of jobs and median wage more than otherwise. It would significantly (if not entirely) eliminate USA’s annual trade deficits of goods.


    Google Wikipedia’s article entitled “Import Certificates”
    and/or
    The paragraphs entitled “Trade Balances' effects upon their nation’s GDP”
    within the article entitled “Balance of trade”.

    Respectfully, Supposn
     
    • Like Like x 1
  5. The Sage of Main Street

    The Sage of Main Street Governor

    Joined:
    May 15, 2015
    Messages:
    11,288
    Likes Received:
    1,771
    Wear a Suit and You Can Loot and Scoot


    Investors can switch sides by selling stock in an industry they want to let die and buying foreign competitors. Suckers not in the loop buy these dumped stocks at their highs and are left holding the bag.
     
    • Like Like x 1
  6. The Sage of Main Street

    The Sage of Main Street Governor

    Joined:
    May 15, 2015
    Messages:
    11,288
    Likes Received:
    1,771
    You're in a Nation Whose Economy Is Modeled on Urination

    Nice trick, defining the other side's position as Zero-Sum so they won't find out the truth that it is actually a Minus Sum. When those who bake the pie only get the crumbs, they are demoralized so much that they make a smaller and crummier pie.
     
    • Like Like x 1
    • Agree Agree x 1
    • Creative Creative x 1
    Last edited: Mar 21, 2016
  7. Lukey

    Lukey Senator

    Joined:
    Sep 18, 2011
    Messages:
    21,771
    Likes Received:
    1,932
    Talk to any lefty "economist." They will tell you we are a "consumer economy." You know why? They hate businesses. So they only focus on boosting consumer spending. This isn't rocket science - in a world economy that policy will ALWAYS produce trade deficits. You want trade surpluses? Read up on Say's Law:

    https://mises.org/library/says-law-context

    Then start supporting supply side economic policies...
     
  8. Supposn

    Supposn Council Member

    Joined:
    Dec 6, 2014
    Messages:
    79
    Likes Received:
    4
    Lukey, I’ve read your link supporting Say’s law. I think otherwise; supply side economics is nonsense.

    Regarding demand for a product: “want” is not the equivalent of “effective demand”. Effective demands require the demanders’ be willing and able to obtain the product for which they’ve expressed a “want”.

    All people wanting Rolls Royces do not equate to effective demands for Rolls Royces. Only those wanting and are willing and able to pay or do otherwise to obtain Rolls Royces can constitute effective demand for Rolls Royces.

    This leads me to question the validity of Say’s contending a surplus of one product indicates an unmet demand for another product: "If certain goods remain unsold, it is because other goods are not produced."

    My conclusion is product surplus could be due to greater effective demand for an alternative product or lack of sufficient effective demand for the surplus product, and/or general lack of effective demand for any more products.
    I would suppose that many others would logically agree with my conclusions rather that that of Say’s contention.

    Respectfully, Supposn
     
    • Agree Agree x 1
  9. Lukey

    Lukey Senator

    Joined:
    Sep 18, 2011
    Messages:
    21,771
    Likes Received:
    1,932
    You are welcome to think otherwise, but doesn't make your position correct. Yes, everyone "wants" a Rolls Royce. That's because demand is infinite - not "limited" in the Keynesian concept of "inadequate aggregate demand." The very concept refutes itself - there is always infinite demand. What there is, is an inadequacy of production, which, according to Say's Law, is required to fund demand (increasingly, one hopes). Your conclusion is wrong. It is a result of looking at the economy backwards - focusing on labor and demand, rather than production and supply. It is, quite frankly (and obviously), an anti-capitalist viewpoint. Which is why it stokes the (not so latent) Marxist ideology that beats in the heart of every progressive policy advocate.
     
  10. Supposn

    Supposn Council Member

    Joined:
    Dec 6, 2014
    Messages:
    79
    Likes Received:
    4
    Lukey, “want” is not the equivalent of “effective demand”. We agree that the want for Rolls Royces is huge, (I would not choose your term “infinite”).
    The effective demand for Rolls Royces is very limited.

    There’s no point in you and I continuing a dialog regarding these points; each of us contends the other party is peering through the wrong end of a telescope.

    Respectfully, Supposn
     
  11. Lukey

    Lukey Senator

    Joined:
    Sep 18, 2011
    Messages:
    21,771
    Likes Received:
    1,932
    Yes, agreed. I'm looking at it from the capitalism end. Which end does that put you on?
     
  12. Fast Eddy

    Fast Eddy Mayor

    Joined:
    May 10, 2014
    Messages:
    6,614
    Likes Received:
    1,890
    Our economic policies guarantee it will not be even. For some damn reason every trade treaty we negotiate we allow the other side huge advantages. Trump is right, we should tear up these treaties and start over with provisions for currency evaluation.
     
    • Winner Winner x 1
  13. The Sage of Main Street

    The Sage of Main Street Governor

    Joined:
    May 15, 2015
    Messages:
    11,288
    Likes Received:
    1,771
    "My Way or the Highway" Means That Your Way Is the Low Way


    Is that the only way you can justify Capitalism, by claiming it is the only alternative to Communist economic dysfunction and government absolutism? Pretty cheap way to suppress criticism.
     
    • Agree Agree x 1
    • Thanks! Thanks! x 1
  14. Supposn

    Supposn Council Member

    Joined:
    Dec 6, 2014
    Messages:
    79
    Likes Received:
    4
    Fast Eddy, we and other nations can benefit from international agreements. We’ve participated within international agreements regarding standards for safety, navigation, environment, maintaining peace, and many other topics; the federal government has directly entered into individual transactions with foreign governments. (Specific transactions are not the same as agreements covering trade generally).

    But other than defining standards, we’ve often suffered net detriments and I cannot think of any net benefit due to USA having participated within international agreement regarding trade.

    Three reasons to support USA's adoption of the unilateral Import Certificate policy:
    (1) We must significantly reduce our annual trade deficits and their drastic effect upon our numbers of jobs, which in turn reduces our median wage. That economic detriment is primarily borne by employees, their dependents and those USA enterprises that are more dependent upon USA's wage levels.

    (2) Our trade agreements leave us subject to international courts. Sovereign nations should not compromise their sovereign right to determine who or what enters their nation. The unilateral Import Certificate policy does treat all foreign nations equally.

    (3) Currently our trade negotiation positions are greatly influenced by USA's governments' individual federal agencies and our larger domestic and multi-national corporations; but they affect our entire nation. The Import Certificate policy is less vulnerable (than is our current policies) to mischievous intervention by domestic or foreign entities.

    I consider the concept of “most favored nation” to be of some merit; but it doesn't reduce the need for the Import Certificate policy. I would not find fault with a bilateral agreement to treat each other nation’s traders and their products with no less consideration as the nation treats their "most favored (foreign) nation rather than in a inferior manner.

    Respectfully, Supposn
     
  15. EatTheRich

    EatTheRich President

    Joined:
    Sep 18, 2012
    Messages:
    57,081
    Likes Received:
    2,966
    1) The U.S. is not in the habit of entering into international agreements that aren't to its overwhelming advantage.
    2) Tariffs by their nature benefit one industry at a time at the cost of the economy-wide benefits of freer trade.
    3) It is only from a narrow point of view, that of the money fetishists, that trade deficits are bad. After all, what trade deficits really indicate is an influx of wealth (not money, which is only a means of exchange, but actual wealth in terms of food, steel, etc.) to the country with a deficit, and an outflow of wealth from the country with the surplus. Now of course the money going to pay for the inflow of cheap goods (which by the way are good for consumers and often manufacturers as well) represents a promise that it can be exchanged for other wealth later on. But history suggests that this is not always the case. Nazi Germany ran enormous trade deficits, borrowing with abandon from much poorer countries such as Argentina, while inflating the money supply in order to decrease the size of the debts thus incurred. As a result, the goods needed to finance their war machine flowed in from around the world. The people, of course, paid the price in terms of high cost of living and the wars needed to keep the scam going. But the point is that trade deficits can be a rational tool of state policy.
    4) I agree that trade needs to be regulated, but I think it should be done not for the companies with the most pull, but in the interests of the working class. And the most important step toward making that even a possibility is establishing a state monopoly on foreign trade.
     
  16. EatTheRich

    EatTheRich President

    Joined:
    Sep 18, 2012
    Messages:
    57,081
    Likes Received:
    2,966
    If the U.S. has money to buy foreign goods, it has money to invest in creating jobs. Maybe that does mean we import less, and that should be decided as part of a national economic plan. But the lack of jobs doesn't stem so much from not selling enough to foreigners (who are also looking for jobs) as from the ruling class deliberately limiting them (including by pitting workers of different countries against each other) in order to drive down wages.
     
  17. Supposn

    Supposn Council Member

    Joined:
    Dec 6, 2014
    Messages:
    79
    Likes Received:
    4
    EatTheRich, Other than the purchase of Alaska, I do not recall any international agreement for economic purposes that have been eventually to USA’s economic advantage; but we have entered many such agreements to our economic disadvantage.


    We should refrain from entering into international agreements drafted for economic purposes. Individual global trade transactions should be negotiated directly between and carried out by the agreements’ individual participating parties.


    That’s among the reasons I’m a proponent of the unilateral transferable Import Certificates policy for our global trade of goods.


    Respectfully, Supposn
     
  18. Supposn

    Supposn Council Member

    Joined:
    Dec 6, 2014
    Messages:
    79
    Likes Received:
    4
    there are significant differences between a tariff policy and the proposed Import Certificate policy. Your criticism of tariffs is not applicable to the Import Certificate proposal.

    Respectfully, Supposn
     
  19. Supposn

    Supposn Council Member

    Joined:
    Dec 6, 2014
    Messages:
    79
    Likes Received:
    4
    EatTheRich, the proposed unilateral transferable Import Certificate, (IC) policy is NOT “pure” free trade but it is absolutely pure competitive free enterprise.

    The policy changes the rules governing goods crossing USA borders. That change of environment induces response changes from involved entities.

    Entities generally seek what they perceive to be in their own best interests. The Import Certificate proposal would work because it’s predicated upon entities motivated by determining their own self-interests.

    You have not identified and explained specific points of fault you perceive within the proposal but you did write “the most important step toward making that, (i.e. regulation of foreign trade) even a possibility is establishing a state monopoly on foreign trade”.

    Your words lead me to suspect that you are not contending that the proposal’s consequences would not increase USA jobs and to some extent our median wage, but rather you’re opposed to a concept more driven by the market rather than by the government regulation.
    You don’t have confidence in competitive free enterprise.

    Respectfully. Supposn
     
  20. Supposn

    Supposn Council Member

    Joined:
    Dec 6, 2014
    Messages:
    79
    Likes Received:
    4
    EatTheRich, annual trade surpluses ALWAYS contributed to their nation’s GDP. They indicate their nation produced more goods and services and additionally induced increases of the median wage rate. The net benefits of production are entirely earned by the producing nation.

    Annual trade deficits ALWAYS indicate the values of what USA purchased from other nations exceeded what we sold to other nations.
    Foreign production contributes nothing to USA’s GDP but USA’s expenditures for imported products cannot again be spent by USA purchasers for USA products. That why trade deficits are deductions to GDP when we’re using the expenditure method to calculate the nation’s GDP.

    [The expenditure method is among, (if not THE) most generally used acceptable methods for calculating the GDP. All methods arrive at approximately the same GDP amount; this implies that formulas not including the factor of trade balance are actually reflecting that factor.

    This is the basis of how and why annual trade deficits are ALWAYS net detrimental to their nation’s GDP.

    Respectfully, Supposn
     

Share This Page