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USA goods could compete with marginally under-priced products of low-wage nations.

I'm Supposn

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Re: USA goods could compete with marginally under-priced products of low-wage nations

Part IV ... The import certificates are little more than a means to an end, they are not the end or an end. As noted above and in my prior post the Buffet proposal is nothing other than a quota. It happens to be a variable rather than static quota, but it's a quota all the same. (If you haven't yet watched one of the quota videos, you may want to do so now for the following won't make sense to you if you don't have a keen understanding of quotas.)

  • Static quota --> X quantity or X dollar-value of goods can be imported.
  • Variable quota --> The quantity/dollar-value of goods that can be imported is a function of something. In "Buffet," it's a function of the value of goods exported; thus the more of our stuff that foreign consumers purchase (technically speaking, import into their country; whether the final consumer, rather than intermediate consumers, purchase the goods isn't relevant), the more of their stuff we'll allow their nation's (or nations') producers to export to the U.S.
The certificates merely (1) allow for tracking and (2) quantifiably establish a privilege to import goods into the U.S. Ancillary to those primary purposes the certificates can be used to create a new market, the market for the certificates themselves. Put another way, the market in which people/firms purchase the privilege to import goods into the U.S.

If you watched either of the quota videosI posted earlier, you'll recall that tariffs and quotas are the same things. Insofar as they are, it likely occurs to you that the notion of purchasing a privilege to import has exactly the same economic substance as an exemption/exception from being subject to a tariff. The only difference between them is tactical. ...
Xelor, Import Certificate proposals effectively “cap” their nation's volume of imported goods to their volume of exported goods; (i.e. maximum imports are effectively pegged to a variable, MARKET DETERMINED statistic). If your link considers this to be a quota, and addresses the differences between this and a fixed numerical quota and NON-MARKET determined variables, then there's some reason to consider your link.

What do mean by “tracking”? Any information other than the date of issue and the “face value” that would appear or be linked to an Import Certificate, are only to facilitate the detection of fraud, such as counterfeiting. The information serves a purpose similar to serial numbers on U.S. Dollars.

Although tariff, quota, and Import Certificate policy all some what increase prices to purchasers of imported goods, there are distinct differences and consequences due to each of the proposed policies. You cannot determine they have similar faults until you determine that they are similarly vulnerable to those faults. There are even significant differences with the Import proposal brought up in 2006 U.S. Senate, and the Wikipedia proposal. I'm among the proponent of the Wikipedia proposal.

Since levy Institute has critiqued the 2006 proposal, and I'm among the advocates for the Wikipedia proposal, let's start by discussing their commonly shared points. What's the point of discussing what neither of us favor?

Respectfully, Supposn
 

Xelor

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Re: USA goods could compete with marginally under-priced products of low-wage nations

Xelor, Import Certificate proposals effectively “cap” their nation's volume of imported goods to their volume of exported goods; (i.e. maximum imports are effectively pegged to a variable, MARKET DETERMINED statistic).
Wow! You actually think I don't understand the role of import certificates vis-a-vis X minus M in the calculation of GDP. Astounding....

If your link considers this to be a quota, and addresses the differences between this and a fixed numerical quota and NON-MARKET determined variables, then there's some reason to consider your link.
Okeey dookeey....I'm done with this conversation. I spent the majority of two posts didactically discussing quotas, their nature and their impacts and you have now responded to me by implicitly asserting that the import certificate proposal is not a quota. That you did so informs me you don't at all understand quotas. That you don't informs that the extent of economics theory instruction I'm going to have to undertake with you is comparable to that which I delivered when I taught principles of economics. Frankly, my days as a graduate assistant teaching econ are long, long gone; thus I have neither the time nor the will to engage with someone at that level of novelty with regard to economic theory. I don't because while I love economics, conversations at that level are, to me, boring.

I know the above may to you seem dripping with condescension and arrogance, but it isn't that at all, for my remarks have nothing to do with you, per se. They are merely a reflection of my frustration and dismay. I don't participate on this forum with any aim of being an educator. I participate here, particularly in the Economics subforum, in the hope of finding like or differently minded individuals who have come prepared to engage in policy discourse. What's my idea of "prepared?" Well, minimally full mastery of the content in principles of macro and micro economics and full mastery of intermediate macro and micro economics.

I'm fine with folks not knowing economics as well as might one having a minor in the discipline. Lots of folks don't, and that they don't is no personal demerit in my eyes; however, their not recognizing something so basic as whether a given trade restricting proposal is tariff, quota or subsidy tells me they are not ready to engage in technical economic discussion, most especially if after being shown that a given simpe policy implements a quota, their response is to deny that is so.


It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.
-- Murray N. Rothbard​
 

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Re: USA goods could compete with marginally under-priced products of low-wage nations

Xelor, I suppose the Levy Institute's Working Paper No. 538 is entitled “The Buffett Plan for Reducing the Trade Deficit” is actually an analysis was of the Balanced Trade Restoration Act of 2006 proposed in the U.S. Senate. That's an explicit draft based upon the Warren Buffett and Carol Loomis's Fortune magazine article. There is no explicitly drafted Buffett proposal.

I'd have to retrieve and reread copies of both to be certain, but I recall the both proposed versions did not mention exporters of USA goods paying any substantial fees or fee-rates to acquire the Import Certificates.
This is consequentially lesser, (comparative to the Wikipedia proposal's) costs to exporters of USA goods, and importers of goods into the USA, and USA purchasers of imported goods, and does not reduce the proposals' effectiveness to behave a a price subsidy for USA's exported goods.
. But I'm opposed to gratuitously increasing expenses to annual federal budgets and to USA taxpayers. I'm also opposed to federal fee rates that beyond direct federal expenses due to the Import policy, would NOT serve as a net source of government tax revenue. Although increasing government's net tax revenue can be desirable, the ability of the certificates to, (beyond defraying federal expenses), also effectively behave as subsidy for USA's exported goods prices is more economically beneficial.

Thus far in reading the Levy Institute's critique, I've encountered no recognition of the proposal's ability to effectively subsidize USA's exported goods at no additional costs to anyone. But maybe I missed it?
Quotas or tariffs do not subsidize their nation's exported goods.

Respectfully, Supposn
 
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I'm Supposn

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Excerpted from https://en.wikipedia.org/wiki/Import_certificates :
Many who are aware of the ”Balanced Trade Restoration Act of 2006” text find it has faults that could have been easily corrected:
They regret that assessments would not be adjusted to exclude the value of specifically listed scarce or precious minerals integral to the goods being assessed. We should discourage the export of cast gold paper weights encrusted with gems in order to facilitate importing high-tech or labor intensive goods. This fault could severely undermine the bill’s economic benefit to our nation. Natural gas and oil should have also been included in such a scarce or precious minerals list. The proposal itself should not favor the export or inhibit the import of such scarce minerals. (The original U.S. Senate draft temporarily (for only 5 years) excluded the entire value of goods containing petroleum). The act should be self-funding. Only those exporters of goods from the USA who choose to pay fees that would fund all of the act ’s entire net expenses should have their goods assessed and receive the transferable ICs based upon that assessment. Exporter’s potential profits would motivate them to pay those fees.

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Xelor, Quotas or tariffs, or auctions of Import Certificates do not subsidize prices of their nation's exported goods.

Regardless of the minimally achieved global market price rate of Import Certificates, (and thus the minimally reflected prices to importers of goods entering the USA, or USA purchasers and users of imported goods), Import Certificate proposals will always eliminate or significantly reduce, if not entirely eliminate its nation's trade deficit of goods and thus, increase their GDP and numbers of jobs more than otherwise.

Even the most drastically high tariff rates. or drastically lowest quota volumes could not so effectively assure such consequences, (but rather they would assure the highest costs to importers of goods into the USA and to USA purchasers and users of imported goods).



Respectfully, Supposn
 

I'm Supposn

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Re: USA goods could compete with marginally under-priced products of low-wage nations

Excerpted from http://www.levyinstitute.org/pubs/wp_538.pdf :
(8) The proposed import-certificate market could be somewhat unstable, as the price of certificates fluctuated from day to day and season to season. Such fluctuations might discourage investment and cause changes in inflation and employment in the United States.
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Xelor, anyone, anywhere, at any time can effectively be an exporter of USA goods and be entitled to USA Import Certificates, (unless some entity is able to prevent USA goods departure from the USA). It is not feasible to “corner the global market” of USA Import Certificates, (ICs).
On the contrary, if global IC price rates become too high, USA goods that were marginally to expensive for global trade would then be transformed to be more price competitive. Exporters of USA goods could reduce their goods prices and recoup the lost goods revenues with their increased IC sales or trade revenues. Additionally, this increases certificate issued which in turn reduces prices of certificates in global markets.

I'm opposed to the certificates being issued for fees less or greater than to defray direct federal expenses due to the Import Certificate policy. The fee rates should be monitored and annually updated. The policy will eventually increase USA's export volumes more than otherwise but it's not a bonanza for those exporters. They will be under pressures from both their their competitors and their customers to reduce their prices for USA goods.

Respectfully, Supposn
 
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Excerptedfrom http://www.levyinstitute.org/pubs/wp_538.pdf:
(9) Perhaps the main drawback of the Buffett plan is its susceptibilityto diplomatic and economic retaliation by foreign governments,including new trade barriers directed at U.S. exports. Ourprojections depend on the assumption that retaliation against the Buffett plan would raise foreign prices of U.S. exports by half asmuch as dollar prices for U.S. Imports.
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Xelor,global trade environments change; commercial and government entities adjust. The UA shouldn't bully, or be bullied by other individual or pacts of nations. There will still be profitable opportunities for importing into a nation that adopts an ImportCertificate policy. Import Certificate policy is global and doesn't differentiate among foreign nations. This is not similar to president Trump's tariffs upon steel and then granting exceptions to many other nations.
It's of no particular consequence for our GDP to increase to satisfy our domestic marketplaces and/or our export trade. Increasing USA's GDP to satisfy any or both markets is economically beneficial.


Respectfully, Supposn
 
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James972

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Re: USA goods could compete with marginally under-priced products of low-wage nations

James972, the Import Certificate policy does favor its own nation among all other nations. You’re attributing false purposes and consequences to this trade policy. Its purpose and its consequences is not to eliminate its nation’s global trade nor would it do so.

wrong of course. there is nothing to stop other nations states cities individuals from responding in kind until we are all subsistence farmers again.
Always remember the golden rule: In Econ. 101 you learn the Golden Rule:

The more with whom you trade the richer you get whether they are across the street or across the globe. The fewer with whom you trade the poorer you get. Imagine how poor you'd be if you had to trade with 1000 people only, or, imagine if there was no trade and you had to make everything yourself. This is Econ 101 class one day one

Also, you learn that Hawley Smoot Tariff trade wars helped caused the Great Depression by collapsing word trade.

Now you know why we have free trade and why virtually all economists find it about the only thing upon which they can agree.
 

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Re: USA goods could compete with marginally under-priced products of low-wage nations

Excerpted from page 22 of http://www.levyinstitute.org/pubs/wp_538.pdf :
At the same time, ICs would be a new joint output for exporting firms, which would have a value in the market for certificates. This would encourage exporting firms to increase their output of goods and possibly reduce their prices to foreign buyers. Employment in the export sector might rise at the expense of employment in industries that used imported machinery and inputs or that sold imported merchandise.
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Xelor, within pages 21 & 22, I've noticed references germane to Import Certificate nation's numbers of jobs. It also refer to the policy nation's increase of domestic production. The policy's consequential increase of domestic production also promotes increased numbers of jobs.

Differences between the federal fee rate paid by exporters of USA goods, and USA's issued certificates' price rate within global markets, all serve as an indirect but effective price subsidy for USA's exported goods.
There's no economical differences between similar products after they've reached their domestic producers' shipping platforms or imported goods after they've reached their entry port's dock.

Within a nation that has adopted an Import Certificate policy, to the extents of their enterprise's relationships with imported products, those enterprises may lose some jobs; but to the extents of their relationships to products of domestic increased production, those enterprises may gain some jobs.
Respectfully, Supposn
 

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Re: USA goods could compete with marginally under-priced products of low-wage nations

Excerpted from page 24 of http://www.levyinstitute.org/pubs/wp_538.pdf :
Given our discussion about the price elasticity of U.S. export demand, we assume here, rather arbitrarily, that exporters would cut their prices on foreign markets by a fraction of the increase in their revenues from the sales of ICs, so as to eliminate completely the effects of retaliation from U.S. trading partners. (In the absence of retaliation, we estimate that exporting firms would cut their prices on foreign markets only moderately, as the demand they face is price inelastic. They would therefore reap a windfall in profits almost equal to the full value of the certificates they sold, minus any increase in the costs of the imported intermediate goods they use to produce exports.) We assume that extra profits from the sales of ICs would be spent on additional investment, …

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Xelor, the Levy Institute's analysis of Import Policy devoted time and effort to considering the elasticity of sales relative to price and supply and to supply and demand graphs. Unlike tariff or quotas, Import policy is drafted as applicable to almost all tangible goods. It grants government extremely little policy determination and is very sensitive to markets behaviors because markets and users are flexible. Levy Institute's concerns regarding individual product's “elasticity” are not applicable to analysis of Import Certificate policy. There are so many available substitutes and other options.

Observations such as USA's export products are now less, and our imports are more elastically affected by price, does not mean that will hold true all of the new mix of imports and exports that would occur if USA adopted the Import Certificate policy.

Respectfully, Supposn
 

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Re: USA goods could compete with marginally under-priced products of low-wage nations

Excerpted from page 24 of http://www.levyinstitute.org/pubs/wp_538.pdf :
Given our discussion about the price elasticity of U.S. export demand, we assume here, rather arbitrarily, that exporters would cut their prices on foreign markets by a fraction of the increase in their revenues from the sales of ICs, so as to eliminate completely the effects of retaliation from U.S. trading partners. (In the absence of retaliation, we estimate that exporting firms would cut their prices on foreign markets only moderately, as the demand they face is price inelastic. They would therefore reap a windfall in profits almost equal to the full value of the certificates they sold, minus any increase in the costs of the imported intermediate goods they use to produce exports.) We assume that extra profits from the sales of ICs would be spent on additional investment, …

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Xelor, regarding Levy Institute's concern for the the extents of foreign nations retaliation to USA adopting the IC policy, We can presuppose that foreign nations will not be amiable to our new unilateral trade policy. All foreign nations and pacts of foreign nations are within a U.S. Import Certificate Act's laws and regulations, to be treated similarly without exception. (the language of a “most favored nation” concept not necessarily requires it be drafted as to participants being prohibited from favoring their own entities), but otherwise, all industries and enterprises and other entities are to be treated similarly.

If our nation chooses to take any action in regard to an individual foreign nation, those motivations and determinations of actions would have to be done outside and beyond the laws and regulations of this particular policy.
The Import Certificate's Act should not enable the laws and regulations of the act itself to deal with nations or pacts of nations that are, or attempting to “dump” their products into our nation, or treating our products or our entities in a manner less favorable than we consider to be acceptable. I'm opposed to our entering international trade agreements, (as opposed to other motivations such as environmental, humane, or military considerations).

Respectfully, Supposn
 

Xelor

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The proposed transferable Import Certificate for USA’s global trade would enable USA goods to compete with many marginally under-priced products of low-wage nations.

Please reconcile the statement above in terms of and with integrated application of the following concepts:
 

Northern Light

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The race to the bottom continues.

Gut the unions, gut education, reduce wages, compete with third world countries.

Makes a whole lot of sense.
 

James972

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The race to the bottom continues.

Gut the unions, gut education, reduce wages, compete with third world countries.

.

we should makes unions illegal again since their high prices drove about 10 million jobs offshore.
 
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