Trade deficits are always detrimental to their nations’ GDPs.

There are within our laws, examples of specific individuals’ acts or contracts between mutually agreeing parties as being contrary to the public’s interest. Our laws have deemed mutual agreements enabling or evoking those undesirable practices to be illegal.
Please provide an example.

Although individuals enterprises realize gains due to reduced payrolls, their nations’ realize net economic losses due to trade deficits.
What leads you to believe that quadrupling the cost of living (the cost of goods and services) is in the public's interest?
 
Werbung:
Please provide an example.

Gen Seneca, building codes, fire safety laws, health inspection laws, zoning laws, bank regulatary laws and regulations, Security and Exchange Commission regulations, are examples of government regulations enforcing public interests regardless of individual’s and agreeing parties’ perception of what’s to their own best interests.

What leads you to believe that quadrupling the cost of living (the cost of goods and services) is in the public's interest?

How did you arrive at “quadrupling the cost of living”?
You would prefer we undermine USA’s median wage? Wage earning families benefit from cheaper imported goods but it doesn’t compensate them for their costs due to our trade deficits detrimental effect upon our GDP, median wage and unemployment rate.

Refer to the topic “Reduce the trade deficit; increase GDP & median wage “
last posted January 16, 2012 2 10;05 PM.

We can have a median wage with greater purchasing power AND obtain cheap imported goods.
We cannot afford the absolute cheapest foreign goods; the prices are too high.

The net expenses due to a market (rather than government driven) USA global trade policy that I advocate are entirely borne byUSA purchasers of imported goods. The proposal also functions as an indirect but effective subsidy of USA export goods.

Respectfully, Supposn
 
Gen Seneca, building codes, fire safety laws, health inspection laws, zoning laws, bank regulatary laws and regulations, Security and Exchange Commission regulations, are examples of government regulations enforcing public interests regardless of individual’s and agreeing parties’ perception of what’s to their own best interests.
How is it in my best interest to agree to build a building that is structurally unsound, or has a high risk of going up in flames? It's not, but that's the flawed premise upon which you rationalize your view of needing a totalitarian government.

Since you believe the government is better suited then you to decide what is in your own best interest, tell me... What limits, if any, should be placed on government's ability to dictate to you what it believes is in your own best interest?
How did you arrive at “quadrupling the cost of living”?
Math. For example, I need plain white T shirts for work, I can buy 4 of them made in China for $10. If I buy the same type of T shirt that's made in America, it costs me $10. What your myopic view of trade deficits ignores is the massive increase in purchasing power that results from having lower cost goods available to the public.

Restricting, or eliminating, low cost imports because of your mythical fear of a trade deficit would inevitably result in dramatically reducing the average Americans standard of living - due to the fact that it would unnecessarily increase the cost of living.
You would prefer we undermine USA’s median wage?
That would be the inevitable result of the policies you support. If you forced all Americans to buy American made goods, then yes, wages would increase but the purchasing power of every dollar would collapse as the cost of everyday goods became more expensive to cover the cost of higher wages.

Your failed ideology is built on the premise that there is such a thing as a free lunch, that companies can pay Americans higher wages without increasing the costs of the goods those companies provide. None of your psuedo-intellectual gobbelty gook addresses this point.

Let's say you have a lemonade stand. You charge $1 per glass. You currently import lemons from elsewhere and get 4 lemons for a $1 and it takes 2 lemons for each glass of lemonade. The other costs of producing your product include 10c per glass for sugar and 5c for each cup. So each glass is costing you .65c to produce and your profit (labor wage) is .35c per glass.

Your precious totalitarian government comes along and demands that you buy only from local growers who charge $1 per lemon because that's in the public's best interest. Since it takes 2 lemons for each cup of lemonade, and there is the cost of 10c per glass for sugar and 5c for each cup, you will have to raise the selling price to at least $2.15 per glass just to break even but you would have to charge $2.50 per glass just to maintain your .35c per glass wage.

Now let's say those local growers do get a small increase in wages, because you have to buy their lemons, what you're not accounting for is the fact that the cost of buying a glass of lemonade has more than doubled. So while their wages did go up, their purchasing power was reduced and their standard of living falls as they have to pay higher prices for goods and services. As for you, the business owner, your wages did not go up but the cost of everything you are forced to buy to run your business has.

The fact that you think such policies are actually in the public interest shows how far disconnected your ideology is from reality.
 
I'm quite sure Supposn isn't alone in the belief that trade deficits are detrimental, I hear this nonsense from both the Left and Right. So if ANYONE cares to explain the detrimental effects of my trade deficit with the grocer, I welcome you to make the case. If you cannot make the case, then perhaps you should take a good hard look at the subject and consider the possibility that I'm right, it's a propaganda technique designed to get you to go along with a political agenda.

I believe what the poster was trying to elude to is the GDP is completely meaningless if the Federal Government is allowed to borrow $7 trillion dollars between 2009 and 2012 then shove it into the economy anyway it chooses. By borrowing and moving money around in and out of industries, commodities, stock markets etc it can give the illusion of any kind of growth, prosperity or anything else it pleases.

You also have the problem of the Federal Reserve loaning money at 0% interest to the Big Five banks who then do the same thing the Federal Government is doing. They shove hundreds of billions into anything they please giving an illusion of growth or even stifle growth as in the precious metals markets. For all practical purposes using government borrowing/spending and 0% interest rate investment money makes GDP a total fabrication.

Using these methods the government and FED bankers can give any financial illusion they want.
 
I believe what the poster was trying to elude to is the GDP is completely meaningless if the Federal Government is allowed to borrow $7 trillion dollars between 2009 and 2012 then shove it into the economy anyway it chooses.
Greetings and welcome to the HOP ConstitutionLuvR, we greatly enjoy getting new posters. :)

As to Supposn, he is arguing for a protectionist trade policy whereby government would limit the amount of imports into the US based on the value of the goods exported by the US. If we export $100 worth of goods, we could only import $100 worth of goods and thereby "balance" the trade deficit. He is not complaining about government subsidization of US goods but actually supports greater levels of government interference into the economy.

Supposn is arguing for the implementation of Import Certificates which, in theory, would increase US GDP by balancing the trade deficit - because he mistakenly believes the goods we could no longer import would have to be produced in the US and that such a policy would not remove capital that would otherwise be allocated to other areas of the economy.

He points to the fact that foreign goods are subtracted from the calculation of US GDP to claim that imports reduce GDP while ignoring the fact that they are subtracted because Foreign goods are not produced here in the US and therefore cannot be counted toward Gross Domestic Production. His is a flawed understanding of GDP, the measurements used to calculate the numbers, and the huge societal benefits that result from being able to import cheap foreign goods. As a result, his proposed solution to end the trade deficit using import certificates would be disastrous for US production and GDP.

The US trade deficit as a destructive force is a myth and that myth is used to scare the economically illiterate into accepting Big Government command and control policies over our economy.
 
To:Subhayu Bandyopadhyay, editor of the Regional Economist
Federal Reserve Bank of St. Louis, Box 442, St. Louis, MO 63166
Excerpted from July 2012, YiLi Chien’s
“Is the Large and Persistent U.S. Trade Deficit a Concern?"
http://www.stlouisfed.org/publications/re/articles/?id=2262
YiLi Chien wrote: “……………………”This deficit must be financed either by reducing U.S. external assets or by increasing U.S. external liabilities. On balance, it seems possible that a persistent trade deficit would deplete U.S. overseas assets and perhaps, in the longer run, lead to insolvency…………………In sum, as long as the net investment income from the U.S. external account is sufficiently large, the trade deficit can be paid for and is not a major concern…………………………….”.
///////////////////////////////////////////////////////////////////

Apparently YiLi Chien’s greater interest and concern are for banking rather than wage earning households.
Nations’ trade balances are understated factors of their nation’s GDPs. The actual rather than the understated trade balances effects upon nations’ GDPs and median wages are of leveraged and greater benefit for nations enjoying trade surpluses or detriment to those nations with trade deficits.

Consider New Zealand lamb that are nurtured, butchered, packed and shipped to the USA. We contributed to the funding of New Zealand taxes, roads, schools, veterinarian colleges’ research and development programs and many other of their enterprises’ overhead expenses. We contributed to their knowledge and experience because they, (not us) were employed to perform all of those tasks.

[All production supporting goods and services provided to the New Zealand’s lamb industry at reduced cost, (e.g. infrastructure, marketing expertise, veterinarian research and development) are reflected within the producing nation’s, (i.e. New Zealand’s) GDP. but the cost reductions enjoyed by the lamb goods producers understates the real value of the globally traded goods. It denies the portion of New Zealand’s GDP attributable to global trade and USA denied to its own GDP. USA’s trade deficit includes our net loss of additional tasks and payrolls we outsourced beyond our borders.

Refer to: www.USA-Trade-Deficit.Blogspot.com
or to: http//en.wikipedia.org/wiki/Import_Certificates

Respectfully, Supposn
 
Trade is made of WIN!

Part 1: Wealth Creation

Part 2: Cooperation

Part 3: Conservation

Import Certificates are made of FAIL.

Broken Window Fallacy:
 
How is it in my best interest to agree to build a building that is structurally unsound, or has a high risk of going up in flames? It's not, but that's the flawed premise upon which you rationalize your view of needing a totalitarian government.

Since you believe the government is better suited then you to decide what is in your own best interest, tell me... What limits, if any, should be placed on government's ability to dictate to you what it believes is in your own best interest?

Math. For example, I need plain white T shirts for work, I can buy 4 of them made in China for $10. If I buy the same type of T shirt that's made in America, it costs me $10. What your myopic view of trade deficits ignores is the massive increase in purchasing power that results from having lower cost goods available to the public.

Restricting, or eliminating, low cost imports because of your mythical fear of a trade deficit would inevitably result in dramatically reducing the average Americans standard of living - due to the fact that it would unnecessarily increase the cost of living.

That would be the inevitable result of the policies you support. If you forced all Americans to buy American made goods, then yes, wages would increase but the purchasing power of every dollar would collapse as the cost of everyday goods became more expensive to cover the cost of higher wages.

Your failed ideology is built on the premise that there is such a thing as a free lunch, that companies can pay Americans higher wages without increasing the costs of the goods those companies provide. None of your psuedo-intellectual gobbelty gook addresses this point.

Let's say you have a lemonade stand. You charge $1 per glass. You currently import lemons from elsewhere and get 4 lemons for a $1 and it takes 2 lemons for each glass of lemonade. The other costs of producing your product include 10c per glass for sugar and 5c for each cup. So each glass is costing you .65c to produce and your profit (labor wage) is .35c per glass.

Your precious totalitarian government comes along and demands that you buy only from local growers who charge $1 per lemon because that's in the public's best interest. Since it takes 2 lemons for each cup of lemonade, and there is the cost of 10c per glass for sugar and 5c for each cup, you will have to raise the selling price to at least $2.15 per glass just to break even but you would have to charge $2.50 per glass just to maintain your .35c per glass wage.

Now let's say those local growers do get a small increase in wages, because you have to buy their lemons, what you're not accounting for is the fact that the cost of buying a glass of lemonade has more than doubled. So while their wages did go up, their purchasing power was reduced and their standard of living falls as they have to pay higher prices for goods and services. As for you, the business owner, your wages did not go up but the cost of everything you are forced to buy to run your business has.

The fact that you think such policies are actually in the public interest shows how far disconnected your ideology is from reality.

How is it in my best interest to agree to build a building that is structurally unsound, or has a high risk of going up in flames? It's not, but that's the flawed premise upon which you rationalize your view of needing a totalitarian government.

Since you believe the government is better suited then you to decide what is in your own best interest, tell me... What limits, if any, should be placed on government's ability to dictate to you what it believes is in your own best interest?

Math. For example, I need plain white T shirts for work, I can buy 4 of them made in China for $10. If I buy the same type of T shirt that's made in America, it costs me $10. What your myopic view of trade deficits ignores is the massive increase in purchasing power that results from having lower cost goods available to the public.

Restricting, or eliminating, low cost imports because of your mythical fear of a trade deficit would inevitably result in dramatically reducing the average Americans standard of living - due to the fact that it would unnecessarily increase the cost of living.

That would be the inevitable result of the policies you support. If you forced all Americans to buy American made goods, then yes, wages would increase but the purchasing power of every dollar would collapse as the cost of everyday goods became more expensive to cover the cost of higher wages.

Your failed ideology is built on the premise that there is such a thing as a free lunch, that companies can pay Americans higher wages without increasing the costs of the goods those companies provide. None of your psuedo-intellectual gobbelty gook addresses this point.

Let's say you have a lemonade stand. You charge $1 per glass. You currently import lemons from elsewhere and get 4 lemons for a $1 and it takes 2 lemons for each glass of lemonade. The other costs of producing your product include 10c per glass for sugar and 5c for each cup. So each glass is costing you .65c to produce and your profit (labor wage) is .35c per glass.

Your precious totalitarian government comes along and demands that you buy only from local growers who charge $1 per lemon because that's in the public's best interest. Since it takes 2 lemons for each cup of lemonade, and there is the cost of 10c per glass for sugar and 5c for each cup, you will have to raise the selling price to at least $2.15 per glass just to break even but you would have to charge $2.50 per glass just to maintain your .35c per glass wage.

Now let's say those local growers do get a small increase in wages, because you have to buy their lemons, what you're not accounting for is the fact that the cost of buying a glass of lemonade has more than doubled. So while their wages did go up, their purchasing power was reduced and their standard of living falls as they have to pay higher prices for goods and services. As for you, the business owner, your wages did not go up but the cost of everything you are forced to buy to run your business has.

The fact that you think such policies are actually in the public interest shows how far disconnected your ideology is from reality.
 
Gen Senica wrote:
"How is it in my best interest to agree to build a building that is structurally unsound, or has a high risk of going up in flames? It's not, but that's the flawed premise upon which you rationalize your view of needing a totalitarian government".
///////////////////////////////

Gen Seneca, you’re contending individual or consenting persons and/ or enterprises SO RARELY, (due to ignorance or motivated by some perception of advantages to themselves); disobey some laws, regulations or an industry’s recognized best practices?

Due to their perceived advantages, culprits did not risk eventual financial or personal or physical costs to themselves, and/or their associates and/or to third parties not associated to the culprits?

Reconsider your contention that due to the public’s consistent logic and their general awareness of what’s in their own best interests or their reasonable concern for minimal public safety and convenience renders an EXTRORDINARY portion of our laws and regulations to be unnecessary. That is not the case.

You inquired “What limits, if any, should be placed on government's ability to dictate to you what it believes is in your own best interest?”.
With regard to the federal government, those limits are specified within the United States Constitution.

Respectfully, Supposn
 
............................................ If you forced all Americans to buy American made goods, then yes, wages would increase but the purchasing power of every dollar would collapse as the cost of everyday goods became more expensive to cover the cost of higher wages. .............

.........................The fact that you think such policies are actually in the public interest shows how far disconnected your ideology is from reality.

“Forcing” purchases of USA goods?

Gen Seneca, I’m a proponent of a trade policy that is market driven. It does require importers to surrender Import Certificates to cover the assessed value of their goods; absolutely NOTHING ELSE IS MANDATED.
If you consider this proposed policy as “forcing” the purchase of USA goods, do you similarly consider the inability or unwillingness of other nations to better compensate their laborers as “forcing” us to purchase foreign goods?
What is actually occurring reduces both our GDP and the purchasing power of our median wage (more than otherwise).

You continue to argue trade policies’ affects upon individual entrepreneurs, enterprises and industries. Upon most issues businesses best interests do more or less align with the net interests of our entire nation; but on some issues commercial interests diverge from our entire nation’s best net interests.

Respectfully, Supposn
 
...............................

Restricting, or eliminating, low cost imports because of your mythical fear of a trade deficit would inevitably result in dramatically reducing the average Americans standard of living - due to the fact that it would unnecessarily increase the cost of living.


Your failed ideology is built on the premise that there is such a thing as a free lunch, that companies can pay Americans higher wages without increasing the costs of the goods those companies provide. None of your psuedo-intellectual gobbelty gook addresses this point.

The fact that you think such policies are actually in the public interest shows how far disconnected your ideology is from reality.

Competitive advantages or disadvantages?
Gen Seneca, enterprises enter trade agreements because they perceive probable profits. Cheaper imports reduce USA enterprises’ costs to produce goods and services.

Under our present trade policies, enterprises that do not avail themselves of opportunities to purchase cheaper imports place themselves individually at competitive disadvantage to both other USA and foreign enterprises. Enterprises that do avail themselves of cheaper imports realize no competitive advantage because all USA competitors can act in a similar manner.
Additionally (regardless of what USA enterprises do), lower foreign labor costs grants competitive advantages for producers of USA’s imports not exports. This proposed pollicy limits their advantages.

Within the proposed Import Certificate policy, USA enterprises would be at no greater or less competitive advantage to any other USA enterprise; but they would be at lesser disadvantage to foreign enterprises.

The Import Certificate proposal I advocate behaves as an indirect but effective subsidy of USA’s exports. The policy would be of some advantage to any USA enterprise that competes or aspires to compete with foreign producers of goods.

Wage earning families benefit from cheaper imported goods but they are every day dependent upon their USA wages. Cheaper imports do not compensate those families for the consequences of our trade deficit.
Trade deficits are ALWAYS detrimental to their nation’s GDP and to the purchasing power of their median wage.

Respectfully, Supposn
 
Trade deficits are ALWAYS detrimental to their nation’s GDP and to the purchasing power of their median wage.
Trade deficits are NOT detrimental to Gross DOMESTIC Production. Once again I'll point out the facts regarding GDP, how it's calculated, and why FOREIGN produced goods are not counted toward DOMESTIC production (hint, it's not because foreign goods reduce domestic production):

e3cb2605a39e6608ee35c95e285b30a7.png
M (imports) represents gross imports. Imports are subtracted since imported goods will be included in the terms G, I, or C, and must be deducted to avoid counting foreign supply as domestic.​

As for the claim that trade deficits are detrimental to purchasing power, this too is false. Free Trade creates wealth, dramatically lowers the cost of living, and increases productivity, conservation, and efficiency. Trade deficits do nothing to reduce these facts. For example, each of us has a "trade deficit" with the local grocery store - we buy more from them than they buy from us. If this trade deficit were detrimental to our purchasing power, we'd all become progressively more impoverished and financially destitute with each and every meal until we couldn't afford to eat and finally starved to death. Absurd, right?

Now imagine applying the concept of Import Certificates to you as an individual, you could only purchase food from your grocer equal to the amount of goods your grocery purchased from you. Millions would starve to death as a result of such an insane policy being implemented on the individual level and it would be just as disastrous to implement such an insane policy on the national level.

Import Certificates would ALWAYS be detrimental to a nations GDP... Just as they would ALWAYS be detrimental to the economies of individuals, cities, counties, and states. Apply the concept of IC's to any of those and it becomes obvious that such a policy is economic suicide.

-------------------

Does anyone here besides Supposn support the concept of Import Certificates? It would be nice to discuss this topic with someone who didn't just repeat the same talking points... (n)
 
To:Subhayu Bandyopadhyay
Editor of the Regional Economist
Federal Reserve Bank of St. Louis
PO Box 442, St. Louis, MO 63166

Excerpted from July 2012, YiLi Chien’s
“Is the Large and Persistent U.S. Trade Deficit a Concern?"
http://www.stlouisfed.org/publications/re/articles/?id=2262

YiLi Chien wrote:
“This deficit must be financed either by reducing U.S. external assets or by increasing U.S. external liabilities. On balance, it seems possible that a persistent trade deficit would deplete U.S. overseas assets and perhaps, in the longer run, lead to insolvency………………………….. In sum, as long as the net investment income from the U.S. external account is sufficiently large, the trade deficit can be paid for and is not a major concern”.

Apparently YiLi Chien’s greater interest and concern are for banking rather than wage earning households.
Nations’ trade balances are understated factors of their nation’s GDPs. The actual rather than the understated trade balances affects upon nations’ GDPs and median wages are of leveraged and greater benefit for nations enjoying trade surpluses or detriment to those nations with trade deficits.

Let us consider New Zealand lamb that are nurtured, butchered, packed and shipped to the USA. We contributed to the funding of New Zealand taxes, roads, schools, veterinarian colleges’ research and development programs and many other of their enterprises’ overhead expenses. We contributed to their knowledge and experience because they, (not us) were employed to perform all of those tasks.

[All production supporting goods and services provided to the New Zealand’s lamb industry at reduced cost, (e.g. infrastructure, marketing expertise, veterinarian research and development) are reflected within the producing nation’s, (i.e. New Zealand’s) GDP. but the cost reductions enjoyed by the lamb goods producers understates the real value of the globally traded goods. It denies the portion of New Zealand’s GDP attributable to global trade and USA denied to its own GDP. USA’s trade deficit includes our net loss of additional tasks and payrolls we outsourced beyond our borders.

Respectfully, Supposn
 
Gen Seneca, the reduced production support costs enjoyed by the lamb goods producers, (e.g. infrastructure, marketing expertise, veterinarian research and development provided by governments, universities or other profit or non-profit enterprises) are not reflected within their lamb prices.

All production expenditures are captured by the producing nations’ GDPs but to the extent that all production costs are not reflected within the prices of goods, global trade’s effects upon nations’ GDPs are understated.

You are correct; trade deficit’s reduction within the calculation of GDP is to reconcile the expenditures for the purchase of imports. But the purchasers cannot spend the same U.S. dollar twice.

In most cases dollars that were diverted from purchasing imports would have purchased domestic products or been spent within wealth transfer transactions (e.g. deposits to banks or financial funds, purchases of stocks or bonds).
Transfers of wealth are measured when they’re used to purchase goods and services but otherwise they do not create products and are not otherwise factored into the calculation of GDP.

It is the production of goods and services that drive payrolls which drives our median wage, which drives sales, which drives the GDP.

Respectfully, Supposn
 
Werbung:
You are correct; trade deficit’s reduction within the calculation of GDP is to reconcile the expenditures for the purchase of imports.
That is not what I said and that is not why imports are deducted from GDP. GDP is a measure of domestic production and Foreign goods are not produced domestically, ergo, foreign made goods cannot be counted among domestic production. Deducting imports from the calculation of GDP has nothing to do with trying to "reconcile the expenditures... of imports", imports ADD to the GDP and must be subtracted to give an accurate measure of domestic production.

In most cases dollars that were diverted from purchasing imports would have purchased domestic products or been spent within wealth transfer transactions (e.g. deposits to banks or financial funds, purchases of stocks or bonds).
Once again with the Broken Window Fallacy... It's frustrating that you refuse to have an actual conversation and instead just keep regurgitating the same nonsensical fallacies. What do you think happens to GDP when the cost of goods and services increase? Does GDP go up or down as the cost of products becomes more expensive? What then will happen to GDP when Import Certificates increase the costs of goods and services?

It is the production of goods and services that drive payrolls which drives our median wage, which drives sales, which drives the GDP.
Listen to what you've just said... Production drives sales.. Production drives payrolls... Production drives Production... Do you really not see the fallacious reasoning that exists in such statements?
 
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