Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Why does the U.S. always run a trade deficit?

libertystreeteconomics.newyorkfed.org

Post reply on HN
Print view View original

221–230 of 814 posts

Re: Why does the U.S. always run a trade deficit?

#221

Post by PKop »

ryandrake wrote: post #155
hunglee2 wrote: post #44

Earlier quoted context omitted.

yes indeed - it has been conflated with the decline of US manufacturing. Reality is the most significant export of the US is the USD itself - that is the trade good which everyone must have (at US insistence)

Out of all the many industries out there, I don't understand why we keep glorifying and romanticizing manufacturing and trying to "bring it back." Depending on what you are manufacturing, it can be a very boring, stressful, stinky, physically taxing, or dangerous job. And it really doesn't pay well. It may have paid well 70 years ago, but it doesn't today, and you can't turn time back. A lot of customer service and t…

China wouldn't be the number 2 economy and massively increasing in global power, military, and technology if domestic manufacturing wasn't valuable and important. The US itself wouldn't have risen to preeminent global power and technology center if not for post-WW2 being worlds manufacturer and supplier.

Re: Why does the U.S. always run a trade deficit?

#222

Post by HDThoreaun »

franktankbank wrote: post #101
HDThoreaun wrote: post #76

Earlier quoted context omitted.

Dumping the gold standard was one of the best moves nixon made. The gold standard was directly responsible for untold economic suffering in the country.

[flagged]

Second worst economic period in US history directly caused by the lack of fiat currency. https://en.wikipedia.org/wiki/Long_Depression

Worst economic period in US history directly caused by the lack of fiat currency. https://en.wikipedia.org/wiki/Great_Depression

Fiat currency is just below electricity and insulin as the greatest inventions of the recent centuries.

Re: Why does the U.S. always run a trade deficit?

#223

Post by pirate787 »

bumby wrote: post #200
chris_va wrote: post #191

The author seems to gloss over the economy not being a zero sum game. As an example, since this is HN: the US creates a ton of startups. Any country that creates new businesses is going to see foreign investment, which on paper leads to a trade deficit. Essentially, the US exports businesses to the rest of the world, but that is not tallied in a 19th century model for the trade balance of goods. However, it's arguabl…

> However, it's arguably a better export that commoditized goods, from a margin standpoint. Importantly, this is the same dynamic that causes economies to move away from manufacturing towards service-oriented economies. Capitalism is going to chase higher margins, but there should be guardrails that mitigate the negative externalities of such behavior. Else we are left with an eroded middle class, lack of supply chai…

The US is manufacturing more than ever and is the second largest manufacturer in the world after China. The US middle class has actually "eroded" upwards -- our wealthiest population cohort has tripled in the last thirty years.

Re: Why does the U.S. always run a trade deficit?

#224

Post by s1artibartfast »

mrtksn wrote: post #115
hunglee2 wrote: post #35

Using a national currency as the de facto global reserve guarantees a trade deficit for that country. No one else can manufacture USD's, so other countries have to acquire them by shaping their economies to supply goods and services demanded by the US. They can then use these earned dollars to transact with other countries, as the US itself insists they do. For the US, this is a simple trade off - gain massive politi…

US doesn't just get political influence. It gets massive amounts of products and services enabling the US residents live well beyond their means. China for example, sends huge number of electronics and all kind of other consumer goods that Chinese produce by sweating in 12 hours shifts in 6 day work weeks in exchange for imaginary numbers. US is definitely not the victim here. There's the risk of this system stop wor…

>There's the risk of this system stop working and that's when the US might have hard times due to being forced to live by its means and have no ability to kickstart its own production when that time comes.

I think the risk is greater than that. A concern is not just a regression to the mean, but indebtedness and the future having to pay up for the spending of the past.

I think a different analogy would be a joint credit card where someone can run up the bill and then die. Like national debt, you can always default, but it will be the survivor that takes the hit, not the dead person that spent their life in luxury.

The trade deficit isn't necessarily a problem, but national debt is. It would be one thing if this money was being invested in growth, but it largely isn't. Most of it funds non-growth consumption.

This is largely a self-made internal problem around governmental prioritization and balancing revenue with expenditure. That isn't to say other countries don't also benefit.

The US is trading future prosperity for consumption today. Investing countries are trading consumption today for future prosperity.

Re: Why does the U.S. always run a trade deficit?

#225

Post by mousethatroared »

actionfromafar wrote: post #132
mrtksn wrote: post #115

Earlier quoted context omitted.

US doesn't just get political influence. It gets massive amounts of products and services enabling the US residents live well beyond their means. China for example, sends huge number of electronics and all kind of other consumer goods that Chinese produce by sweating in 12 hours shifts in 6 day work weeks in exchange for imaginary numbers. US is definitely not the victim here. There's the risk of this system stop wor…

Even more sad that the US chose NOT to invest this surplus, for instance in infrastructure, education and a sensible health system.

The US spends, per capita, more public funds on education and health care than any other industrialized nation in the world.

Some of the worse performing schools in the US have the most per capita funding.

Re: Why does the U.S. always run a trade deficit?

#226

Post by Joel_Mckay »

The premise is false, and the billions of dollars spent by manufactures every year training foreign-market competitors had increased exponentially since the 1990s.

There is no fix for the world moving into its own derivative technologies, and simply abandoning increasingly hostile origin markets.

It is a complex situation, and throwing taxes/money at the issue is naive =3

Re: Why does the U.S. always run a trade deficit?

#227

Post by s1artibartfast »

fatbird wrote: post #189
NoMoreNicksLeft wrote: post #135

Earlier quoted context omitted.

The surplus came with alot of responsibilities, like policing the world. And that had a hefty price tag... nearly $1 trillion annually. Wasn't much left over for public transit and free foot massages. I can entertain arguments that it was a bad bargain.

That $1T isn't an expense. Part of it is operational, meaning keepiong boats and bases running around the world, which earns the US yet more influence and soft power and unearned media. Much of it is acquisition costs, meaning $ going into a US defense tech for research and procurement of the most advanced hardware and maintenance of those industrial bases to do so; that hardware then gets sold to allies, among other…

Just because there is a soft power upside does not mean that it is a net positive. I often see this stated without any form of quantification. It is essentially a matter of faith.

Re: Why does the U.S. always run a trade deficit?

#228

Post by hollerith »

ryandrake wrote: post #164
hollerith wrote: post #154

Earlier quoted context omitted.

We are in a discussion of the US trade deficit. Obviously, moving a factory from China to Nebraska reduces the US's trade deficit.

But, how does changing some number on a "trade deficit" spreadsheet materially affect Apple or Americans? Apple pays slightly more taxes to the government than it did before. Big deal. There is no incentive to demolish an automated factory in China and re-build it in Nebraska.

Apparently the US can sustain a trade deficit with the rest of the world, but certainly this ability to sustain one is not unlimited, so lowering the trade deficit tends to help Americans by making it more likely that the US economy can continue to import things (including some things are are available only outside the US, e.g., fruits that only grow in tropical climate).

Re: Why does the U.S. always run a trade deficit?

#229

Post by brad0 »

chris_va wrote: post #191

The author seems to gloss over the economy not being a zero sum game. As an example, since this is HN: the US creates a ton of startups. Any country that creates new businesses is going to see foreign investment, which on paper leads to a trade deficit. Essentially, the US exports businesses to the rest of the world, but that is not tallied in a 19th century model for the trade balance of goods. However, it's arguabl…

There was another reply here earlier that was saying it isn't a trade deficit. I wanted to steelman the parent post:

Foreign investment into USA companies reduces the USA trade deficit but it isn't tracked in traditional methods.

I've heard that foreign investment in real estate generally isn't counted as each country owns properties equally between the two, so it nets out. I wonder if investments into companies is the same?

Re: Why does the U.S. always run a trade deficit?

#230

Post by triceratops »

mitthrowaway2 wrote: post #201
triceratops wrote: post #181

Earlier quoted context omitted.

So why gold? Why not buildings or factories or railroads or ports?

How do you ship fixed infrastructure to another country when they want to redeem their USD?

You don't. You give them a title to the infrastructure. Exchange paper for paper. Pretty neat right?
Post reply on HN