Trade deficits are ALWAYS detrimental to their nations’ GDPs.

[Toddsterpatriot]

Why should we reduce our "trade deficit"?

ToddsterPariot, trade deficits are detrimental to GDPs (more than otherwise).

Trade deficits are detrimental to GDPs which in turn affect our median wage and rates of unemployment. This all can be determined logically but not historically demonstrated.

This cannot be proved or disproved historically because:
Sales of foreign and domestic products move in tandem within the domestic markets;
domestic markets move in tandem with the GDP;
trade deficits are one of the factors for determining the GDP and it proportional affect upon GDP is variable.

Respectfully Supposn

Individuals freely buying from sellers (from anywhere in the world) do not reduce GDP.

Feel free to do as you wish with your money and stop telling me what to do with mine.

 

[itfitzme]

Here is an interesting article.

Growing U.S. trade deficit with China cost 2.8 million jobs between 2001 and 2010.
By Robert E. Scott | September 20, 2011

Nearly 2.8 million U.S. jobs eliminated or displaced since 2001 due to growing U.S.-China trade deficit, EPI analysis finds

Growing U.S. trade deficit with China cost 2.8 million jobs between 2001 and 2010 | Economic Policy Institute

Who is the Economic Policy Institute?

Does the article present a rational basis for "then it would be otherwise"?

 

[Toddsterpatriot]

Here is an interesting article.

Growing U.S. trade deficit with China cost 2.8 million jobs between 2001 and 2010.
By Robert E. Scott | September 20, 2011

Nearly 2.8 million U.S. jobs eliminated or displaced since 2001 due to growing U.S.-China trade deficit, EPI analysis finds

Growing U.S. trade deficit with China cost 2.8 million jobs between 2001 and 2010 | Economic Policy Institute

Who is the Economic Policy Institute?

Does the article present a rational basis for "then it would be otherwise"?

EPI is a bunch of union stooges.

 

[Supposn]

ItFitzMe, within my previous post #149 I’ve again explained why historic data does not prove or disprove the theories regarding the relationship between the nations’ global trade deficits and their GDPs.
An increased GDP is more, and a decreased GDP is less beneficial to nations’ economies.

If I can stipulate that I cannot “prove”, (but can only argue that trade deficits are detrimental to our economy, can you “prove” the Import Certificate, (IC) proposal would not be economically beneficial to our economy?

Right wingers’ solution is to increase the GDP by reducing taxes levied upon all U.S. enterprises or upon only goods producing enterprises.
I’m among those that believe if U.S. corporate income tax rates exceed individuals’ income tax rates, entrepreneurs will show much less individual incomes and live comfortably upon their corporate expense accounts. Income tax rates favoring corporations will reduce federal tax revenue, be economically detrimental and inequitable to all other taxpayers not favored with such tax regulations.

I am a proponent of replacing all, ( corporate, income taxes with a general consumption tax to whatever extent practical.
I’m also a proponent of the transferable Import Certificate, (i.e. IC) proposal.

In order to increase our GDP, we must increase the sum of our domestic sold within our domestic msarkets or sold to foreign purchasers. The desire for profits already drives entrepreneurs to do so. But for more than a half century, (due primarily to lower foreign wages) we’ve been experiencing annual trade deficits for each year.

The IC proposal prevents the total assessed values of out imports from exceeding our total exports of such assessed goods. It also behaves as an indirect but effective export subsidy.
Unless U.S. consumers are satisfied with fewer goods, any reduction of imports due to the IC proposal will induce some increase of domestic goods sold within USA’s domestic markets.

USA’s GDP will increase within these afore mentioned conditions.

Respectfully, Supposn

 

[EdwardBaiamonte]

But for more than a half century, (due primarily to lower foreign wages) we’ve been experiencing annual trade deficits for each year.

of course in a free market there are no trade deficits since supply equals demand. Econ 101, class one day one.

Would the silly liberal want a federal law that made all wages the same in the USA so each state would increase its GDP?? Different prices are critical to economic growth and efficiency, to discerning what to buy and what not to buy. Again Econ 101, class one, day one, minute one.

 

[DSGE]

But for more than a half century, (due primarily to lower foreign wages) we’ve been experiencing annual trade deficits for each year.

of course in a free market there are no trade deficits since supply equals demand. Econ 101, class one day one.

Dumbest thing you've ever said. Maybe you should actually take Econ 101, huh? Obviously trade deficits happen in a free market. A trade deficit is just credit from one country to another. In a closed system, like the world, the total balance of trade is zero because for one country to run a deficit it requires that other countries run a surplus equal to that deficit. But individual countries can run deficits. You have the worst case of shit for brains I've ever seen.

 

[Toddsterpatriot]

But for more than a half century, (due primarily to lower foreign wages) we’ve been experiencing annual trade deficits for each year.

of course in a free market there are no trade deficits since supply equals demand. Econ 101, class one day one.

Dumbest thing you've ever said. Maybe you should actually take Econ 101, huh? Obviously trade deficits happen in a free market. A trade deficit is just credit from one country to another. In a closed system, like the world, the total balance of trade is zero because for one country to run a deficit it requires that other countries run a surplus equal to that deficit. But individual countries can run deficits. You have the worst case of shit for brains I've ever seen.

A trade deficit is just credit from one country to another.

If I buy a case of German beer, my country isn't involved and neither is Germany.
So why does it matter if the US has a deficit and Germany a surplus?

 

[Supposn]

But for more than a half century, (due primarily to lower foreign wages) we’ve been experiencing annual trade deficits for each year.

of course in a free market there are no trade deficits since supply equals demand. Econ 101, class one day one.

Would the silly liberal want a federal law that made all wages the same in the USA so each state would increase its GDP?? Different prices are critical to economic growth and efficiency, to discerning what to buy and what not to buy. Again Econ 101, class one, day one, minute one.

Edward Baiamonte, what are you writing about?
The definition of a trade deficit is the value of imports exceeds our annual exports. That’s not a matter of opinion.

Respectfully, Supposn

 

[DSGE]

of course in a free market there are no trade deficits since supply equals demand. Econ 101, class one day one.

Dumbest thing you've ever said. Maybe you should actually take Econ 101, huh? Obviously trade deficits happen in a free market. A trade deficit is just credit from one country to another. In a closed system, like the world, the total balance of trade is zero because for one country to run a deficit it requires that other countries run a surplus equal to that deficit. But individual countries can run deficits. You have the worst case of shit for brains I've ever seen.

A trade deficit is just credit from one country to another.

If I buy a case of German beer, my country isn't involved and neither is Germany.

Yeah. I'm not talking about a loan from one sovereign government to another. I'm talking about aggregates for the countries. If you buy beer from a German brewer, what are they gonna do with your US dollars? Either they'll buy US goods with it - in which case a US import (beer) is offset by an export (whatever the brewer buys) and trade is balanced -, or the brewer will lend the dollars to people who are able to spend them (or take some action which ultimately results in that), in which case there the German has postponed their own consumption and granted somebody in the US credit. A trade deficit is just a net credit flow from one country to another. Or in other words, the trade deficit must always be equal in size to the capital account surplus.

So why does it matter if the US has a deficit and Germany a surplus?

It doesn't at all. It's just one of the consequences of trade. No different than if I obtain net credit from a bank. But nobody seems to want to hear that. I find it strange that people here are able to analyse domestic trade semi-reasonably, but when that gets extended to international trade (which only requires adding arbitrarily drawn borders and a foreign exchange market) peoples' brain goes to mush.

 

[Supposn]

Dumbest thing you've ever said. Maybe you should actually take Econ 101, huh? Obviously trade deficits happen in a free market. A trade deficit is just credit from one country to another. In a closed system, like the world, the total balance of trade is zero because for one country to run a deficit it requires that other countries run a surplus equal to that deficit. But individual countries can run deficits. You have the worst case of shit for brains I've ever seen.

A trade deficit is just credit from one country to another.

If I buy a case of German beer, my country isn't involved and neither is Germany.

Yeah. I'm not talking about a loan from one sovereign government to another. I'm talking about aggregates for the countries. If you buy beer from a German brewer, what are they gonna do with your US dollars? Either they'll buy US goods with it - in which case a US import (beer) is offset by an export (whatever the brewer buys) and trade is balanced -, or the brewer will lend the dollars to people who are able to spend them (or take some action which ultimately results in that), in which case there the German has postponed their own consumption and granted somebody in the US credit. A trade deficit is just a net credit flow from one country to another. Or in other words, the trade deficit must always be equal in size to the capital account surplus.

So why does it matter if the US has a deficit and Germany a surplus?

It doesn't at all. It's just one of the consequences of trade. No different than if I obtain net credit from a bank. But nobody seems to want to hear that. I find it strange that people here are able to analyse domestic trade semi-reasonably, but when that gets extended to international trade (which only requires adding arbitrarily drawn borders and a foreign exchange market) peoples' brain goes to mush.

Purchasing stocks & bonds contribute nothing to the GDP.

I’m continuously responding to contentions that USA’s imports are paid for in U.S. dollars and thus must fully contribute to our GDP.

When speaking and writing precisely, economists differentiate `between the words “investment” and “transfers of wealth”. Investments are the purchase or dedication of goods or service products for the eventual purpose of producing additional goods or service products of greater value.

Purchasing initial public offering, (IPO) or treasury stocks is investing; the stock issuing enterprise receives some additional capital due to the purchase. Other stock sales transactions provide no additional capital to the stock issuing enterprises.

Other than the brokerage fees which are a service product that enables liquidating the seller’s stock holdings, the price of other stock sales transactions are transfers of wealth rather than investments or products.

Transfers of wealth, (the vast proportion of stock and bond sales, deposits and contributions to bank and other financial accounts are not factored into GDPs; investments are factored into GDPs.

Vast amounts and proportions of revenues directly derived from importing products into the USA are used for transfers of wealth rather than for investments and as such contributes nothing to USA’s GDP. (They do appear in USA’s capital account).

Respectfully, Supposn

 

[DSGE]

A trade deficit is just credit from one country to another.

If I buy a case of German beer, my country isn't involved and neither is Germany.

Yeah. I'm not talking about a loan from one sovereign government to another. I'm talking about aggregates for the countries. If you buy beer from a German brewer, what are they gonna do with your US dollars? Either they'll buy US goods with it - in which case a US import (beer) is offset by an export (whatever the brewer buys) and trade is balanced -, or the brewer will lend the dollars to people who are able to spend them (or take some action which ultimately results in that), in which case there the German has postponed their own consumption and granted somebody in the US credit. A trade deficit is just a net credit flow from one country to another. Or in other words, the trade deficit must always be equal in size to the capital account surplus.

So why does it matter if the US has a deficit and Germany a surplus?

It doesn't at all. It's just one of the consequences of trade. No different than if I obtain net credit from a bank. But nobody seems to want to hear that. I find it strange that people here are able to analyse domestic trade semi-reasonably, but when that gets extended to international trade (which only requires adding arbitrarily drawn borders and a foreign exchange market) peoples' brain goes to mush.

Purchasing stocks & bonds contribute nothing to the GDP.

I’m continuously responding to contentions that USA’s imports are paid for in U.S. dollars and thus must fully contribute to our GDP.

When speaking and writing precisely, economists differentiate `between the words “investment” and “transfers of wealth”. Investments are the purchase or dedication of goods or service products for the eventual purpose of producing additional goods or service products of greater value.

Purchasing initial public offering, (IPO) or treasury stocks is investing; the stock issuing enterprise receives some additional capital due to the purchase. Other stock sales transactions provide no additional capital to the stock issuing enterprises.

Other than the brokerage fees which are a service product that enables liquidating the seller’s stock holdings, the price of other stock sales transactions are transfers of wealth rather than investments or products.

Transfers of wealth, (the vast proportion of stock and bond sales, deposits and contributions to bank and other financial accounts are not factored into GDPs; investments are factored into GDPs.

Vast amounts and proportions of revenues directly derived from importing products into the USA are used for transfers of wealth rather than for investments and as such contributes nothing to USA’s GDP. (They do appear in USA’s capital account).

Respectfully, Supposn

Blah blah blah same irrelevant shit over and over again. Not that I actually expect you to comprehend this, but I'll say it once more:

Transfers of wealth from abroad do actually increase the stock of savings, and hence investment. The purchase of securities in the secondary market aren't counted as investment themselves, but when from abroad, they increase the stock of savings which is used to fund investment. It's not fucking rocket science. Drop your biases and actually take the time to learn some fucking economics.

 

[editec]

But for more than a half century, (due primarily to lower foreign wages) we’ve been experiencing annual trade deficits for each year.

of course in a free market there are no trade deficits since supply equals demand. Econ 101, class one day one.

Would the silly liberal want a federal law that made all wages the same in the USA so each state would increase its GDP?? Different prices are critical to economic growth and efficiency, to discerning what to buy and what not to buy. Again Econ 101, class one, day one, minute one.

 

[itfitzme]

Why should we reduce our "trade deficit"?

ToddsterPariot, trade deficits are detrimental to GDPs (more than otherwise).

Trade deficits are detrimental to GDPs which in turn affect our median wage and rates of unemployment. This all can be determined logically but not historically demonstrated.

This cannot be proved or disproved historically because:
Sales of foreign and domestic products move in tandem within the domestic markets;
domestic markets move in tandem with the GDP;
trade deficits are one of the factors for determining the GDP and it proportional affect upon GDP is variable.

Respectfully Supposn

This is quite impressive.

In all the history of science, there has never been anything proven logically but not demonstrated empirically.

In all of science, with one exception, everything has begun from empirical data and a model was developed that explained that data.

The one exception was Einstein's 1905 work, "On the Electrodynamics of Moving Bodies", popularly known as The Theory of Relativity. It was the first and only time that unobserved observations were predicted by logical deduction. And yet, though so simple in it's prove, it was also so outrageous in it's claimed that it was not accepted as a theory until it was demonstrated in nature.

Not in all of history has there ever been, "proven logically but not demonstrated historically."

Here is the problem. Unfortunately, you provide so little information beyond your conclusion that it is difficult to understand where you may be coming from.

I had to give this some thought to first understand what the unstated premise is. Then I had to give it some thought within the context of how the economy functions.

The premise, and many like it, are based upon the observation that there are imports while there are people without jobs. The idea is that if those imports were produced domestically, then the unemployed would be employed.

The problem is it assumes that production could somehow be just transplanted into the existing economy without any other effects. It cannot.

The economy is a fluid thing that is where it is, having developed historically.

If, suppose, the trade had been balanced from day 1 such that there was no imbalance, when a recession hit there would still be unemployed. No improvement would be seen because the decline in demand would be just as well to the otherwise imported domestic products. The decline in demand would be the same as they are to the imported products as they are now. There would be no net gain in jobs.

With every recession, the trade "imbalance" recedes as there is a decline in demand for imported products.

If, suppose, the nation were to be isolated in it's entirety, as the economy developed, it would still go into a recession based upon the same factors that effect the globe as an economy. When that recession hit, the decline in demand would be proportionally the same and there would still be fewer jobs.

No manner of isolationist policies will change things. What isolationist policies will change is the rate of growth. Imports exists, in the greater part, due to comparative advantage. And in this comparative advantage, both the export and import country gain.

 

[Widdekind]

GDP is calculated by starting with the value all final goods and services that are purchased. Since GDP is a measure of production, rather than purchases, things that are purchased here, but produced somewhere else, have to be subtracted out...

and, "things that are purchased somewhere else, but produced here, have to be added in" ?

If so, then calculated GDP = P Q - I + X = P Q + Trade ?

Naively, all products imported, represent foreign-filled, domestic, demand, i.e. "we want it, but they have it". If so, then a "trade deficit", i.e. "high imports" (I-X), would "cut into" domestic production (GDP), if-and-only-if the products imported, competed against domestic substitutes, i.e. "we buy Japanese cars, instead of American cars". But if the products imported, "complimented" & "supplemented" domestic production, i.e. "we buy Italian olive oil, b/c olives don't grow in America anyway"; then the imported products would not directly reduce either demand, or supply, of other "unrelated" products.

Trade harms domestic economies, only when imported products compete against domestic substitutes, i.e. "foreign vs. domestic fight for market share" ?

e.g. China, whose exports (products, labor) directly compete against "exposed" American substitutes:

The trade deficit with China grew from $84 billion in 2001, when China entered the WTO, to $278 billion in 2010. It eliminated or displaced 2,790,100 jobs, or about 2% of total U.S. employment over that period...

Of the nearly 2.8 million jobs lost or displaced, 1.9 million of them were in manufacturing... The largest share of manufacturing jobs lost or displaced were in computer and electronic parts, at 909,400 jobs, or 32% of all jobs lost or displaced. Other hard-hit sectors of the manufacturing industry were apparel and accessories, textile fabrics and products, fabricated metal products, plastic and rubber products and motor vehicles and parts... Several service sectors were also hit hard by indirect job losses, including administrative, support, and waste management services (204,300) and professional, scientific, and technical services (173,100)...

The hardest-hit congressional districts were concentrated in states that were heavily exposed to growing China trade deficits, in computer and electronic products and other industries such as furniture, textiles, apparel, and durable goods manufacturing...

The job displacement estimates in this study are conservative. They include only the direct and indirect jobs displaced by trade, and exclude jobs in domestic wholesale and retail trade and advertising...


Outsourcing — through foreign direct investment, in factories, that make goods for export to the United States — has played a key role, in the shift, of manufacturing production and jobs, from the United States to China, since it entered the WTO in 2001 ["everybody pays China to out-compete America"]... [Chinese] repression of labor rights has suppressed wages, thereby artificially subsidizing exports ["forcefully driving down wages, to undercut American businesses" ?]

 

[Widdekind]

A trade deficit is just a net credit flow from one country to another. Or in other words, the trade deficit must always be equal in size to the capital account surplus.

i.e. the importer loses "money" (trade deficit); but gains "products" (capital account) ? e.g. Americans lose "money"; but gain "Japanese cars" ?

 

[DSGE]

A trade deficit is just a net credit flow from one country to another. Or in other words, the trade deficit must always be equal in size to the capital account surplus.

i.e. the importer loses "money" (trade deficit); but gains "products" (capital account) ? e.g. Americans lose "money"; but gain "Japanese cars" ?

Not quite. The importer gains products now, like Japanese cars, but in the future must repay the value of that import plus interest.

edit: Oh the capital account + current account = 0 part. A trade deficit is where a country consumes/invests more that it produces. It uses up all its income, then wants to consume/invest more. So products are imported (trade deficit) and they're paid for with money borrowed from abroad (capital surplus).

 

[Widdekind]

Not quite. The importer gains products now, like Japanese cars, but in the future must repay the value of that import plus interest.

edit: Oh the capital account + current account = 0 part. A trade deficit is where a country consumes/invests more that it produces. It uses up all its income, then wants to consume/invest more. So products are imported (trade deficit) and they're paid for with money borrowed from abroad (capital surplus).

what are "imports", purchased with "income", i.e. "cash on hand" ?

 

[editec]

I can't believe that this issue is really under debate.

What a tangled web we weave when at first we practice to decieve.

 

[Supposn]

Blah blah blah same irrelevant shit over and over again. Not that I actually expect you to comprehend this, but I'll say it once more:

Transfers of wealth from abroad do actually increase the stock of savings, and hence investment. The purchase of securities in the secondary market aren't counted as investment themselves, but when from abroad, they increase the stock of savings which is used to fund investment. It's not fucking rocket science. Drop your biases and actually take the time to learn some fucking economics.

DSGE, when speaking or writing precisely, economists differentiate between “investments” and “transfers of wealth”.
Investments dedicate goods and service products to create additional products of greater net value.

Investments dedicate goods and service products to create additional products of greater net value. Investments are factored into the calculation of and thus contribute to the gross domestic products, (i.e. GDPs).
Transfers of wealth do not create additional products and ARE NOT factored into the calculation of and thus ARE NOT contributors to the GDPs.
/////////////////////////////////////////

Could you make some effort to write more CIVIALLY? Your language doesn’t advance or better promote your arguing positions. I don’t believe you’re foolish but you’re not striving to optimize your arguments effectiveness.

Respectfully, Supposn

 

[DSGE]

Could you make some effort to write more CIVIALLY? Your language doesn’t advance or better promote your arguing positions. I don’t believe you’re foolish but you’re not striving to optimize your arguments effectiveness.

Not really. If you recall, back when I started talking to you about this I was very civil. But since you turned out to be either ignorant, stupid, or a computer with preprogrammed responses, I've lost my patience.

DSGE, when speaking or writing precisely, economists differentiate between “investments” and “transfers of wealth”.
Investments dedicate goods and service products to create additional products of greater net value.

Investments dedicate goods and service products to create additional products of greater net value. Investments are factored into the calculation of and thus contribute to the gross domestic products, (i.e. GDPs).
Transfers of wealth do not create additional products and ARE NOT factored into the calculation of and thus ARE NOT contributors to the GDPs.

Case in point. You've regurgitated this shit again without even attempting to understand the content of my post. Remember I said "The purchase of securities in the secondary market aren't counted as investment themselves"? That is effectively your whole post. What you just replied to me with is exactly something I already put in my post and agreed with. Do you see why I'm getting frustrated? I also followed it up with: "but when from abroad, they increase the stock of savings which is used to fund investment".

Now if there's something you don't understand in my point, don't just fucking churn out a stock response. Take the time to identify exactly which part you don't get, and ask me to clarify.