Liberal think tank says chinese trade deficit cost 2.4 million jobs

[Rick]

In the process, deficits and surpluses in balances of payments are unavoidable.

First, nobody is debating THAT - OF COURSE everything won't match up EXACTLY.

Friedman's statement was made in 1999, when the trade deficit with china was one third what it is now. It was also made before the gigantic Bush II and obozo national debt run-up. Friedman in 1999 probably wouldn't have believed that in the following decade a nation debt of ten trillion dollars had been run up. Would he really believe that >>NOW<<, with the tremendously weakened dollar, and international fears that the US can't pay it's national debt, that chinese capital would continue to move into US government securities? If they stop, what will happen to rates of return generally?

And what would he think of california >>NOW<<? A basket case in almost every respect.

 

[BigRob]

First, nobody is debating THAT - OF COURSE everything won't match up EXACTLY.

Friedman's statement was made in 1999, when the trade deficit with china was one third what it is now. It was also made before the gigantic Bush II and obozo national debt run-up. Friedman in 1999 probably wouldn't have believed that in the following decade a nation debt of ten trillion dollars had been run up. Would he really believe that >>NOW<<, with the tremendously weakened dollar, and international fears that the US can't pay it's national debt, that chinese capital would continue to move into US government securities? If they stop, what will happen to rates of return generally?

And what would he think of california >>NOW<<? A basket case in almost every respect.

David Friedman, Milton Friedman's son, argues in a similar fashion to his father in more recent commentary...

In recent years, foreign trade has been a popular topic with newspaper writers and television commentators. The peculiar thing about the public discussion, which largely centers on the issue of trade deficits and American "competitiveness," is that most of it is based on ideas that have been obsolete for more than a hundred and fifty years --at least since David Ricardo discovered the principle of comparative advantage....

One implication of this analysis is that terms such as "trade deficit" and "unfavorable balance of payments" are highly deceptive. There is nothing inherently bad about an inflow of capital. The United States had a capital inflow, and consequently an "unfavorable balance of payments," through most of the nineteenth century; we were building our canals and railroads largely with European money.....

Whether our present trade deficit should be viewed as a problem depends on what you think the reason for it is. If capital is flowing into the United States because foreigners think America is a safe and prosperous place to invest, then the trade deficit is no more a problem now than it was a hundred and fifty years ago. If capital is flowing into the United States because Americans prefer to live on borrowed money and let their children worry about the bill, then that is a problem; but the trade deficit is the symptom, not the disease....

I see it as the world continues to think that America is a safe place to invest, and therefore the trade deficit is not a major issue.

 

[pocketfullofshells]

David Friedman, Milton Friedman's son, argues in a similar fashion to his father in more recent commentary...



I see it as the world continues to think that America is a safe place to invest, and therefore the trade deficit is not a major issue.

They see it that way now...but the path leads to a place where they may start to change there mind...and better to look at that now, then when to late. And the issue will get worse with SS and Medicare as the population ages....though after that passes, long term, we will have a very young popluation and have to import workers just to fill jobs needed and should be in a position for massive gains....I will just be pretty old for that part lol

 

[Rick]

If capital is flowing into the United States because Americans prefer to live on borrowed money and let their children worry about the bill, then that is a problem; but the trade deficit is the symptom, not the disease....

This hits the nail on the head.