Trade balances affects upon their nations’ GDPs.

[Visbek]

Well, it is nitpicking, because you would have to invent an unrealistic scenario in which GDP shrinks at the same time there is job growth. Unless there is a point to such an example, it's just a waste of time.

I'm not denying that the conditions that would cause job losses would also almost certainly cause a drop in GDP.

I'm simply pointing out that GDP is an indicator, not a causal agent.

Yes, it did. We went into recession in 2000-2001.

We didn't go into a recession in 2000-2001 because of our trade deficits (or more specifically, due to high imports). It was because the Dot Com and equities bubbles burst.

In fact, the trade deficit improved significantly during and after the 2007 recession, because Americans bought fewer goods during that time.

It should be obvious that there is no correlation between GDP as a whole, and changes in the balance of trade.

This really shouldn't be that hard to understand. If trade isn't balanced, there should be a natural correction in the value of the currency, or the value whatever is being traded.

...unless the amount of the trade deficit is small, relative to the size of the rest of the economy, that any such effects are overwhelmed by monetary policy.

You aren't getting the gist of my argument.

Not for lack of trying

 

[calm]

No jobs are coming back to North America until all the baby boomers die off.

The reason for Free Trade was to allow the corporations run away from all the promises made to the baby boomers.

The manufacturing plants overseas are the largest and the most modern ever known to mankind. These manufacturing facilities can satisfy the North American Continent with just what falls off the assembly lines.

The Capitalists are just not gonna shut down overseas production and move it back to North America because they suffer from a guilt trip.

Calm

 

[Visbek]

Obviously, people will buy the $2 socks. That is why our textile industry is nearly nonexistent, and also why there are so many Americans out of work.

You get more stuff for your money with Chinese products, that is clear. But you also get more American unemployment, more harm to the environment (because Chinese standards are lax), currency manipulation, etc.

And yet, there is no correlation between the balance of trade, and unemployment, or LFPR, or average wages, or income.

It's a mystery!

Unless it isn't. The fear-mongering over outsourcing -- and automation, which for some reason you don't acknowledge in this process, even though it has likely killed as many jobs as outsourcing, if not more -- isn't really justified.

It would be stupid to compete with labor that costs a fraction of what American labor costs. That's why we are better off producing higher-end stuff.

...which is what we do, and what our trading partners generally buy from us.

You can see how well those free trade agreements work for us. We get cheap stuff, while our trading partners continue to operate to their own advantage. Their workers aren't making big strides toward a middle class, they aren't worried about the environment, and they aren't spending their dollar-denominated earnings.

Sorry, but that's incorrect.

Free trade agreements help prevent nations from putting their thumbs on the scale. One reason China pulls crap like pegging the yuan to the USD is because we don't have particularly good agreements with them. Mexico, in contrast, doesn't do nearly as much to undercut US labor or production.

There is no question that the cost of labor is going up for many of our trading partners.

'Made in China' labor is not actually that cheap - Mar. 17, 2016

That's the second time you have made that non-argument.

Yes, that's what I say when you seem to ignore the obvious.

Demand doesn't fall, you just get fewer socks for your money.

Did you miss that day in Econ 101?

That's quite an assumption.

Or, it's Microeconomics 101.

America was both very productive and had a high standard of living when we were making the toasters and the socks. Why?

Because we didn't have much competition, and had a much smaller labor force, and less automation.

Our biggest trading partners were decimated by WWII (Europe, Japan), or transitioning to industrial production whilst shackled by Communism (China).

Americans consumed far, far less than we do today -- meaning they had a lower standard of living in 1955 than today.

Women weren't a big part of the workforce after WWII, and started really joining in 1970. This almost certainly suppressed wages.

As did automation, which has been taking over for workers since the 1930s.

Because of the relative lack of competition and smaller workforces, unions were able to exert a powerful influence, and keep wages high. Arguably too high, since American goods got slaughtered by cheaper foreign goods once those competing nations were able to get their act together.

We should also remember that a lot of that Great American Stuff? Not so great. American autos in particular were pretty crappy from the 1960s through the 1990s. The GM-Ford-Chevy axis resulted in the production of terrible cars, resistance to innovation, and epic feuds between labor and management.

So in large part, the Great American Era of Making Stuff? Not so great, not at all "natural," and apparently not sustainable.

All of this leaves us with a question I've asked a few times now: If trade deficits are bad, then how can you fix them without causing worse problems?

 

[Visbek]

Visbek, just to be clear, GDP accounted for by the income method or the expenditure method reflects the entire costs that contributed to the nation’s production of goods and service products.

....yes, and that is normally termed GDI. We've been talking GDP, whose official numbers use the expense method. What's your point?

But costs that are not reflected within the prices of globally traded goods or service products will not be attributed to global trade.
To that extent a nation’s imports, exports and net balances of trade are somewhat understated.

GDI also includes exports and imports. Neither method understates them.

I’m unaware of anyone asserting that trade balances alone determine the rise or fall of the nation’s GDP, or that changes of a nation’s annual balance of trade and changes of their GDP retain some proportional relationships. If you have mistaken what others have written, that’s due to your own misunderstandings.

I assure you, I'm reading and comprehending what you're saying. It's pretty obvious that several people in this thread are trying to say that GDP will fall when trade deficits increase. And while Ex and Im are parts of GDP/GDI, the total does not correlate specifically to the trade balance (see posts above).

Regardless of a nation’s economic condition, due to a nation’s annual trade surplus, a nation’s GDP is greater than otherwise; (otherwise being if the nation had not experienced a trade surplus).
Similarly due to a nation’s annual trade deficit, a nation’s GDP is less than otherwise; (otherwise being if the nation had not experienced a trade deficit).
Trade deficit are always an immediate drag upon their nation’s GDP. Anything that’s a drag upon their nation’s GDP is also a drag upon their numbers of jobs and anything that’s a drag upon their nation’s numbers of jobs promotes unemployment and lesser wages’ purchasing powers.

What the...?

No, there is not a direct correlation between trade deficits and wages, or unemployment figures, or LFPR, or average wages, or incomes. The numbers on that are abundantly clear.

No, it is not the case that anything which reduces GDP also negatively impacts the labor market. E.g. if government cuts back on spending during a period of full employment, those workers will very likely get picked up quickly, and possibly hired for higher pay and/or more productive positions.

I’m aware that you refute all of this but you haven’t provided any compelling logical argument to sufficiently support your contrary opinion.

First, I've been explicating my positions for days. If you haven't read it, that's not my problem.

Second, you've said nothing except "economists say trade is bad!" while apparently not reading the evidence to the contrary, including the Investopedia article I linked yesterday.

 

[Visbek]

Visbek, since the end of the Second World War USA has been seeking and participating in free trade agreements. Our government has to a great extent refrained from meddling within global trade....

:lamo

most of our trade agreements more reflect the thinking of executives from major corporate enterprises rather than those of civil servants or academians.

Uh huh

So tell me, which provisions of NAFTA were crafted by CEOs?

We’ve achieved in excess of a half-century of continuously increasing trade deficits of goods and our declining proportion of middle-income earners.

You sure about that?

As to the shrinking middle class, there are numerous reasons for that, including but not limited to:
• The shift from an industrial to service economy
• Women joining the workforce
• The rise of automation / increases in productivity
• Corporations focusing heavily on profits, and not caring about rank-and-file
• Executives taking bigger and bigger slices of the pay
• The weakening of unions
• Foreign competitors getting better at manufacturing

The last element gets all the attention (and fury), but it's absurd to blame everything on foreigners. Especially since we are the ones are buying the stuff they make.

We should also note that while it's true that many of the formerly middle class are now poorer, the ranks of the wealthier have also increased, by more than the poor. Oh, and that this trend does not correlate to the changes in trade balance (chart above).

I’m not opposed to the laborers of any nation but my primary concern is for USA employees, their dependents and all others tat are more dependent upon enterprises that are highly sensitive to USA’s lesser jobs and median wage’s purchasing power.

Why?

Is a Chinese worker less deserving of a living wage than an American one?

Should China stay in a pre-industrial economy for the benefit of American workers?

Should we carve out some kind of exception to the laws of economics, just for American workers?

For over a century, it was American workers who were the cheap labor compared to European workers. Is the US the only nation allowed to benefit from undercutting foreign labor?

Should we be upset about automation, which easily kills as many US jobs as do outsourcing?

Why isn't this alleged harm showing up in the statistics?

And if buying foreign goods is so awful, why do Americans keep doing it? Why aren't they willing to pay the premium price for US-made goods?

 

[I'm Supposn]

... As to the shrinking middle class, there are numerous reasons for that, including but not limited to:
• The shift from an industrial to service economy
• Women joining the workforce
• The rise of automation / increases in productivity
• Corporations focusing heavily on profits, and not caring about rank-and-file
• Executives taking bigger and bigger slices of the pay
• The weakening of unions
• Foreign competitors getting better at manufacturing

The last element gets all the attention (and fury), but it's absurd to blame everything on foreigners. Especially since we are the ones are buying the stuff they make.

We should also note that while it's true that many of the formerly middle class are now poorer, the ranks of the wealthier have also increased, by more than the poor. Oh, and that this trend does not correlate to the changes in trade balance (chart above). ...

Visbek, women joining the workforce; the rise of automation, increased productivity are net contributors to our living standards; they are not the cause of our declining proportion of middle income earners and their wages declining purchasing powers.
Corporations focusing heavily on profits and caring less for employees are not new or unusual phenomena. It wasn't responsible for the reducing our proportion or purchasing powers of those within our middle-income earners segment of our population.

Income disparity, (i.e. executives taking bigger and bigger slices of the pay) is a symptom rather than a cause of our economic faults. Our economy and our living standards would not be perceivably improved if we could “cap” or otherwise limit any people’s ability to earn more money.

It’s true that due to the greater economies of scale integral to mass production which is encountered to a greater degree in manufacturing and other industries with less labor intensive tasks, the value of the "work line's" productivity and the costs due to its interruptions are much greater per worker. That significantly increases the value of employees to their enterprises.
The loss of such enterprises has been a significant drag upon our numbers of jobs and their wage scales ; these are mainstays of our middle-income population segment. Other than recovering some of such lost enterprises, improving the knowledge and skills of our labor force would bolster our middle-income segment of our population.

Agricultural workers are of particular disadvantage because so many of them are members of foreign crews imported to perform seasonal tasks and then they are less needed or not needed until next season.

The reduction of enterprises where substantial numbers of workers are employed within almost constant view upon each and the anti-labor laws such as the outlawing of union shops have greatly reduced the negotiating power of labor and contributes to the drag upon numbers of jobs and the purchasing powers of employees.

I very much doubt that "the ranks of the wealthier have also increased, by more than the poor".

Respectfully, Supposn

[Excerpted from the post of 7:38 PM, June 16, 2016:
I’m unaware of anyone asserting that trade balances alone determine the rise or fall of the nation’s GDP, or that changes of a nation’s annual balance of trade and changes of their GDP retain some proportional relationships. If you have mistaken what others have written, that’s due to your own misunderstandings.

Regardless of a nation’s economic condition, due to a nation’s annual trade surplus, a nation’s GDP is greater than otherwise; (otherwise being if the nation had not experienced a trade surplus).
Similarly due to a nation’s annual trade deficit, a nation’s GDP is less than otherwise; (otherwise being if the nation had not experienced a trade deficit).
Trade deficit are always an immediate drag upon their nation’s GDP. Anything that’s a drag upon their nation’s GDP is also a drag upon their numbers of jobs and anything that’s a drag upon their nation’s numbers of jobs promotes unemployment and lesser wages’ purchasing powers].

I’m aware that you refute all of this but you haven’t provided any compelling logical argument to sufficiently support your contrary opinion.

 

[James972]

Trade deficit are always an immediate drag upon their nation’s GDP.

so why not eliminate the liberal policies that cause the[trade] deficit, namely, liberal taxes, unions, and [fiscal]deficits. And this is not to mention the liberal war on the family, school and religion. Now do you finally understand?

 

[I'm Supposn]

Visbek, I wrote I’m not opposed to the laborers of any nation but my primary concern is for USA employees, their dependents and all others tat are more dependent upon enterprises that are highly sensitive to USA’s lesser jobs and median wage’s purchasing power.

: ...Why?

Is a Chinese worker less deserving of a living wage than an American one?
Should China stay in a pre-industrial economy for the benefit of American workers?
Should we carve out some kind of exception to the laws of economics, just for American workers?
For over a century, it was American workers who were the cheap labor compared to European workers. Is the US the only nation allowed to benefit from undercutting foreign labor?
Should we be upset about automation, which easily kills as many US jobs as do outsourcing?
Why isn't this alleged harm showing up in the statistics?
And if buying foreign goods is so awful, why do Americans keep doing it? Why aren't they willing to pay the premium price for US-made goods?

Visbek, I’m not as angelic you and I do not agree with your contention that the USA should practice an altruistic trade policy for the benefit of other nations and to our own economic detriment.

I do not “blame” foreigners, enterprises, or U.S. consumers for choosing better values for their money and purchasing foreign goods. I do blame U.S. Congresses, voters and presidents for not creating an environment that would be in the best economic interest of our entire nation.

Respectfully, Supposn

 

[JohnfrmClevelan]

I'm not denying that the conditions that would cause job losses would also almost certainly cause a drop in GDP.

I'm simply pointing out that GDP is an indicator, not a causal agent.

I'm not suggesting that GDP is a causal agent. It's the components that add up to GDP that I am talking about.

We didn't go into a recession in 2000-2001 because of our trade deficits (or more specifically, due to high imports). It was because the Dot Com and equities bubbles burst.

...which causes people to spend less, because their investments went bust. Earlier, when their investments were doing well, they spent, probably more than they should have. Clinton's federal surpluses took real money out of people's pockets, and a lot of the increased tax revenue was due to stock market gains. The same thing happened a few years later with the housing bubble - people took out a lot of home equity loans, spent too much, then found themselves in over their heads when home prices went down. Bubbles are a problem because they cause strange ups and downs in consumption.

Whether you blame Clinton's surpluses for the recession is a matter of how immediate you like your connections to be. But surpluses, by definition, remove dollars from people's pockets, and that's never good for consumption. Periods of tax surpluses have historically preceeded recessions and depressions. Think big deficits cause recessions Combine that with stock market losses, and you get reduced demand.

In fact, the trade deficit improved significantly during and after the 2007 recession, because Americans bought fewer goods during that time.

But we agreed that that always happens, didn't we? So it doesn't really tell us much.

It should be obvious that there is no correlation between GDP as a whole, and changes in the balance of trade.

As net imports/exports is a component of GDP, I have to disagree with you there. Don't you see the correlation in those graphs?

...unless the amount of the trade deficit is small, relative to the size of the rest of the economy, that any such effects are overwhelmed by monetary policy.

Monetary policy? You are going to have to explain that one for me.

 

[JohnfrmClevelan]

And yet, there is no correlation between the balance of trade, and unemployment, or LFPR, or average wages, or income.

It's a mystery!

Unless it isn't. The fear-mongering over outsourcing -- and automation, which for some reason you don't acknowledge in this process, even though it has likely killed as many jobs as outsourcing, if not more -- isn't really justified.

This thread isn't about automation. I try to stay on-topic. But at least you recognize that both of these things kill American jobs.

...which is what we do, and what our trading partners generally buy from us.

But there are going to be overlaps - like steel. No country should be 100% dependent on foreign trade for things like steel; that's a matter of national security. So seeing as how we need our steel industry to survive, we need to protect them from unfair competition. (And I use the term "unfair" in the broadest sense here.)

Sorry, but that's incorrect.

What part of what I said is incorrect?

There is no question that the cost of labor is going up for many of our trading partners.

That's good. It's one of the things that is supposed to happen.

Yes, that's what I say when you seem to ignore the obvious.

I thought it was something you said when you had no argument.

Did you miss that day in Econ 101?

We should be well past Econ 101, Visbek. You should understand by now that that graph isn't good for much in the real world. This isn't widget production on an island. If you need socks, you buy socks.

Because we didn't have much competition, and had a much smaller labor force, and less automation.

Our biggest trading partners were decimated by WWII (Europe, Japan), or transitioning to industrial production whilst shackled by Communism (China).

Americans consumed far, far less than we do today -- meaning they had a lower standard of living in 1955 than today.

So having lots of Chinese stuff is what makes a high standard of living? That's not the standard I would use. I would look to other things, like living wages, job security, the ability to afford a house and a car, decent medical care, decent education, one earner being able to support a whole family, etc.

Women weren't a big part of the workforce after WWII, and started really joining in 1970. This almost certainly suppressed wages.

As did automation, which has been taking over for workers since the 1930s.

Because of the relative lack of competition and smaller workforces, unions were able to exert a powerful influence, and keep wages high. Arguably too high, since American goods got slaughtered by cheaper foreign goods once those competing nations were able to get their act together.

We should also remember that a lot of that Great American Stuff? Not so great. American autos in particular were pretty crappy from the 1960s through the 1990s. The GM-Ford-Chevy axis resulted in the production of terrible cars, resistance to innovation, and epic feuds between labor and management.

So in large part, the Great American Era of Making Stuff? Not so great, not at all "natural," and apparently not sustainable.

Kind of a broad brush you're painting with there. American labor was doing very, very well, right up into the 1970's.

All of this leaves us with a question I've asked a few times now: If trade deficits are bad, then how can you fix them without causing worse problems?

Like I said before, our government should be demanding more from our trading partners. Make them adopt 21st-century environmental standards, for one. And at least 20th-century labor standards. Fight the currency manipulation as much as possible. China and Mexico are no longer third-world countries; they are more than capable of meeting these standards right now. Also, I would be a lot freer with deficit spending, since it is the surest way to keep demand up.

But we are getting away from the point of the thread, which is that trade deficits do have negative effects on our economy.

 

[I'm Supposn]

/////////////////////////////
Posted 7:38 PM by Supposn:
Visbek, just to be clear, GDP accounted for by the income method or the expenditure method reflects the entire costs that contributed to the nation’s production of goods and service products.

....yes, and that is normally termed GDI. We've been talking GDP, whose official numbers use the expense method. What's your point?

I stated GDP because I meant GDP; although I would suppose that statement’s applicable to all creditable methods of calculating GDP or GDI.
/////////////////////

Posted 7:38 PM by Supposn:
Visbek, just to be clear, GDP accounted for by the income method or the expenditure method reflects the entire costs that contributed to the nation’s production of goods and service products. But costs that are not reflected within the prices of globally traded goods or service products will not be attributed to global trade.
To that extent a nation’s imports, exports and net balances of trade are somewhat understated.

....GDI also includes exports and imports. Neither method understates them.

If a statistic item is dependent upon the prices of globally traded products and the entire costs of goods and services that supported the production of the globally traded product are not reflected within the prices of any globally traded products, then it was not possible to attribute those production supporting goods and services to global trade.
If you can conceive as to how that it could ever be otherwise, please explain it to all of us.
//////////////////////////

Posted 7:38 PM by Supposn:
Regardless of a nation’s economic condition, due to a nation’s annual trade surplus, a nation’s GDP is greater than otherwise; (otherwise being if the nation had not experienced a trade surplus).
Similarly due to a nation’s annual trade deficit, a nation’s GDP is less than otherwise; (otherwise being if the nation had not experienced a trade deficit).
Trade deficit are always an immediate drag upon their nation’s GDP. Anything that’s a drag upon their nation’s GDP is also a drag upon their numbers of jobs and anything that’s a drag upon their nation’s numbers of jobs promotes unemployment and lesser wages’ purchasing powers.

....I assure you, I'm reading and comprehending what you're saying. It's pretty obvious that several people in this thread are trying to say that GDP will fall when trade deficits increase. And while Ex and Im are parts of GDP/GDI, the total does not correlate specifically to the trade balance (see posts above).

Visbek, you quoted me correctly. You simply misunderstand what you’re reading. I did not write that trade deficits will cause GDP to fall. I wrote, “Similarly due to a nation’s annual trade deficit, a nation’s GDP is less than otherwise; (otherwise being if the nation had not experienced a trade deficit)”.

I also stated “I’m unaware of anyone asserting that trade balances alone determine the rise or fall of the nation’s GDP, or that changes of a nation’s annual balance of trade and changes of their GDP retain some proportional relationships. If you have mistaken what others have written, that’s due to your own misunderstandings”.

If you should come across any post where I inadvertently wrote otherwise, please bring it to my attention. If I made an error, I want to correct it. Have you found any such instances inadvertent error?

Respectfully, Supposn

 

[I'm Supposn]

....What the...?


... No, it is not the case that anything which reduces GDP also negatively impacts the labor market. E.g. if government cuts back on spending during a period of full employment, those workers will very likely get picked up quickly, and possibly hired for higher pay and/or more productive positions. ...

Visbek, when you’re right your right. I sit corrected because I don’t stand by my keyboard. In response to post, I'm correcting my error. I'm inserting the modifier “net” where it’s appropriate.

Posted 7:38 PM by Supposn:
... “Regardless of a nation’s economic condition, due to a nation’s annual trade surplus, a nation’s GDP is greater than otherwise; (otherwise being if the nation had not experienced a trade surplus).
Similarly due to a nation’s annual trade deficit, a nation’s GDP is less than otherwise; (otherwise being if the nation had not experienced a trade deficit).
Trade deficit are always an immediate drag upon their nation’s GDP. Anything that’s a NET drag upon their nation’s GDP is also a NET drag upon their numbers of jobs and anything that’s a NET drag upon their nation’s numbers of jobs promotes unemployment and lesser wages’ purchasing powers”.

Respectfully, Supposn

 

[I'm Supposn]

.... First, I've been explicating my positions for days. If you haven't read it, that's not my problem.

Second, you've said nothing except "economists say trade is bad!" while apparently not reading the evidence to the contrary, including the Investopedia article I linked yesterday.

Visbek, Investopedia states, “trade deficit may be more pro-cyclical, moving in the same direction as local GDP”, which I suppose implies that it may not be pro-cyclical. My concern is not of business cycles. Consistent annual trade deficits of goods in excess of a half-century are not simply a business cycle.
I don’t doubt that balance of trade affects and is affected by its nation’s currency’s value within global exchange markets. But my concern is for balance of trades’ affects upon their nation’s production, (i.e. their GDP).

I doubt you can find a creditable economist that will argue that there is no relationship between balance of trade and GDP. The Investopedia link you provided does not make such a statement.
I doubt you can find a creditable economist that will argue there’s no relationship between a nation’s GDPs and numbers of jobs or between their numbers of jobs and their wage rates or their unemployment rates.

Those such as yourself point out that our USA experience has been that trade deficits have decreased during years of poor GDP behavior and our trade deficits have increased during more robust economic years.
Both imported and domestic products are sold within USA’s domestic market places. When the markets' are poor, why should we not expect they’re poor for both domestic and imported products? Similarly markets are good for all of the goods they sell. “All boats are rising or dropping in unison due to the same tides”.

Regardless of the nation’s economic condition, an annual trade surplus directly contributed to their nation’s GDP and an annual trade deficit was an indirect drag upon their nation’s GDP.
Those that perform the tasks earn the net benefits of products’ production, delivery and otherwise servicing those products. In the cases of products imported into the USA, their foreign production and foreign provided delivery to USA purchasers or to USA’s jurisdictions all contribute to foreign, (i.e. not USA’s) GDP.
The entire economic differences between imported and domestic products occur prior to the domestic products reaching their producers’ shipping platforms or prior to the imports reaching their destination nation’s jurisdictions. During those prior times the imported products effectively contributed nothing to the importing nation’s GDP.

I’m aware that you refute all of this but you haven’t provided any compelling logical argument to sufficiently support your contrary opinion.

Respectfully, Supposn

 

[James972]

I doubt you can find a creditable economist that will argue that there is no relationship between balance of trade and GDP.

obviously trade deficits are a symptom not a cause. The way to eliminate the deficit is to make our goods less expensive and higher quality to the point where every nation wants to buy them.

Treating the symptom by protecting and crippling our industries, by trade wars, and perhaps real wars, is something so totally stupid that only a liberal would propose it. The Hawley-Smoot Great Depression and WW 2 caused the worlds economists to switch to free trade. A liberal will be so illiterate as to not know this. Sad but true.

 

[csbrown28]

So what?

Again, GDP is only one measure, and imperfect measure, of national productivity. Wages don't go up or down based on GDP; consumers don't have more or less money to spend based on GDP; taxes are not indexed to GDP; we don't lose tax dollars because of imports.

I would agree, but it is one of the most widely used metrics available. For better or worse, virtually everything scales to GDP. When we discuss it, we need to be aware of it's shortcomings.

I think his point is "trade deficit BAD!!!" without actually understanding the issue(s).

Agreed, but "bad" is a relative term and not very useful out of any context.

For example, foreign investment is not counted by GDP. All those Chinese and Russians buying multi-million dollar apartments in NYC, and stock in American companies? Not included. Many economists believe that the US trade deficit is offset by foreign investment.

According to this report, foreign investment in 2013 was $236b while the trade deficit was 3 times that. Furthermore, much of what is invested in, stocks, bonds ect, does little to drive jobs in the US, would you agree?

 

[csbrown28]

Visbek, since the end of the Second World War USA has been seeking and participating in free trade agreements. Our government has to a great extent refrained from meddling within global trade and most of our trade agreements more reflect the thinking of executives from major corporate enterprises rather than those of civil servants or academians. We’ve achieved in excess of a half-century of continuously increasing trade deficits of goods and our declining proportion of middle-income earners. We have also increased employment for Chinese labor.

I’m not opposed to the laborers of any nation but my primary concern is for USA employees, their dependents and all others tat are more dependent upon enterprises that are highly sensitive to USA’s lesser jobs and median wage’s purchasing power.

Respectfully, Supposn

I'm not saying any of this to refute what you've said. Hopefully you'll see it as adding to the conversation....

There is another relevant point I haven't seen addressed (though I skipped a few pages). The price of a good or service isn't just determined by the cost of labor. Other costs include infrustructure related costs like transportation, fire police and logistics, energy, waste treatment and water. Taxes, fee's raw materials, construction, demolition and all the other capital purchases combine to determine the total cost of a product. You can also add things like political stability, rule of law, patent enforcement.

Other nations are able to undercut our labor costs, but another strategy, imo, to reducing the final cost of goods and services should be to, lower corporate taxes, improve infrustructure (ports, airports, rail, trucking ect...) via spending, subsidies or grants. The extra spending would add more money to the domestic economy, increase demand, increase employment, increase quality of life, lower long term costs (due to lack of maintenance)and could decrease the other costs associated with the creation of new products. A well educated (more education opportunities) healthy (better affordable healthcare) populace will be more productive. If our workers are more productive, it reduces the cost of labor.

The balance of dollars overseas exist there because we traded our dollars for things of real value. Exports are a cost, imports are benefits. However, if we are going to export our dollars, we need to replace the dollars that never find their way back home.

 

[James972]

Other nations are able to undercut our labor costs, but another strategy, imo, to reducing the final cost of goods and services should be to, lower corporate taxes,

Yes of course, we see corporations moving out all the time because of the highest tax rate in the world. Rather than protect and cripple our industries and impoverish American consumers with a tariff it s far better to simply eliminate the corporate tax so our corporations can compete!! This is a win win win. Liberals hate it because they hate freedom. Their solution is always some form of govt violence.

 

[csbrown28]

Yes of course, we see corporations moving out all the time because of the highest tax rate in the world. Rather than protect and cripple our industries and impoverish American consumers with a tariff it s far better to simply eliminate the corporate tax so our corporations can compete!! This is a win win win. Liberals hate it because they hate freedom. Their solution is always some form of govt violence.

Verbal diarrhea.

 

[I'm Supposn]

I'm not saying any of this to refute what you've said. Hopefully you'll see it as adding to the conversation....

There is another relevant point I haven't seen addressed (though I skipped a few pages). The price of a good or service isn't just determined by the cost of labor. Other costs include infrustructure related costs like transportation, fire police and logistics, energy, waste treatment and water. Taxes, fee's raw materials, construction, demolition and all the other capital purchases combine to determine the total cost of a product. You can also add things like political stability, rule of law, patent enforcement.

Other nations are able to undercut our labor costs, but another strategy, imo, to reducing the final cost of goods and services should be to, lower corporate taxes, improve infrustructure (ports, airports, rail, trucking ect...) via spending, subsidies or grants. The extra spending would add more money to the domestic economy, increase demand, increase employment, increase quality of life, lower long term costs (due to lack of maintenance)and could decrease the other costs associated with the creation of new products. A well educated (more education opportunities) healthy (better affordable healthcare) populace will be more productive. If our workers are more productive, it reduces the cost of labor.

The balance of dollars overseas exist there because we traded our dollars for things of real value. Exports are a cost, imports are benefits. However, if we are going to export our dollars, we need to replace the dollars that never find their way back home.

CSBrown28, the Import Certificate proposal addresses the issue of USA’s chronic annual trade deficits of goods detriment to our numbers of job and median wages. Additionally, (unlike tariffs) it’s substantially market driven and serves as an indirect but effective subsidy of USA’s exported goods.
The purpose of Import Certificates is not to completely eliminate USA importing of goods.

Any other continuing problems that are beyond the scope of the import policy will remain to be addressed by other methods.
I agree with much if not all of what you touched on within your post. We’re a poorer nation because too many believe it is uneconomical for government to support public infrastructure, health and education.
But an import Certificate policy would not divert resources that could be used to improve our nation. Unfortunately we’re not yet adopting the Import Certificate policy or sufficiently improving our public infrastructure or health or education.

Currently USA cannot compete with marginally lesser cost goods imported from low-wage nations. Within an Import Certificate policy could successfully compete with such foreign goods within the USA’s domestic markets and within the remainder of the world.
To what extent are the differences in prices marginal? That’s determined by the free market price rates of globally traded transferable Import Certificates.

Within the expenditure method of calculating GDP, a nation’s annual balance of trade explicitly contributes to their nation’s annual GDP. (A trade deficit’s a negative balance of trade). Annual trade surpluses have increased their nation’s GDP (more than otherwise); [otherwise being if the nation had not experienced a trade deficit]. Trade surpluses promote job numbers.
Annual trade deficits drag upon nation’s GDP (more than otherwise) and the drag upon their numbers of jobs.

Respectfully, Supposn