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

libertystreeteconomics.newyorkfed.org

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

#441

Post by [deleted] »

ikiris wrote: post #373
treis wrote: post #254

Earlier quoted context omitted.

Exporting business ownership when seen on a national level is just another form of debt. You're trading future production for stuff now. The fundamental problem is that the balance of goods flows into the US today. If debts and profits are going to be paid out eventually that will have to reverse. But it's going to be politically impossible for the US to ever send out 5-10% of its GDP in goods. That's the fundamental…

If I buy an apple from an orchard with money, I haven’t indebted myself an apple man. I got a real product for effectively an iou that everyone pretends has value and that orchard can trade to someone else for fertilizer. You have the entire concept backwards.

[deleted]

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

#442

Post by aeternum »

sorcerer-mar wrote: post #397
jerkstate wrote: post #263

Earlier quoted context omitted.

That’s what the data shows until you peel back the covers and understand that nothing at all could be manufactured here at all without enormous imports of not just raw materials but partially completed goods. US manufacturing output looks large economically because it’s mostly final assembly of imported partially completed goods, but if you looked at the value added (manufacturing output minus imports) it would be mu…

Outside of a few strategic industries or products, why is this bad?

Because we can't actually make the strategic products. You might have a factory to assemble the highly strategic fighter jet in the US but it is problematic if you are dependent on foreign countries to source or manufacture the multitude of parts.

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

#443

Post by aeternum »

ijk wrote: post #304
palmotea wrote: post #208

Earlier quoted context omitted.

No. The US will win the next world war by replying on its advanced capabilities in restaurant work and business consulting.

You joke, but wars are won on logistics. Famously, the US military can deploy a Burger King anywhere on Earth within 24 hours.

The US military used to be good at logistics. Is it still?

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

#444

Post by wonnage »

rayiner wrote: post #3

> The saving gap framework helps clarify what trade policies can and can’t do. For example, a free-trade agreement encourages exports, and an industrial policy can foster a re-shoring of production to replace imports. Such policies influence the size and composition of cross-border trade, but the difference between imports and exports is only affected if these policies also change the gap between domestic saving and…

"Saving" in the accounting identity is just money not spent on consumption. Cheaper imports can increase domestic saving because people now spend less for the same goods. That could then increase domestic investment due to the increased savings.

Or the same situation could reduce savings, if people increasing consumption because the imports are so cheap.

The accounting identity doesn't explain anything other than the mathematical truth that the money needs to add up in the end. Savings are not inherently good, deficits are not inherently bad

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

#445

Post by [deleted] »

starspangled wrote: post #369
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…

> It gets massive amounts of products and services enabling the US residents live well beyond their means. What does this mean really? That is their means. For a somewhat topical example, people of Australia get access to cheap medications (in part because they pay to subsidize the cost of them but also because) their government negotiates with pharmaceutical corporations to pay lower prices. This kind of negotiation…

[deleted]

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

#446

Post by ggm »

aeternum wrote: post #437
ggm wrote: post #364

Earlier quoted context omitted.

> The author seems to gloss over the economy not being a zero sum game. The current incumbent of the WH seems to think two things: 1) all games are zero sum games 2) he has authority to sack or functionally wreck any institution he likes without legal recourse. I would expect in the light of 2) it's possible people write as if 1) is being respected.

This is a common soundbite and an unfair simplification. Non zero sum games often still have winners and losers. Also a positive sum trade deal for both sides does not mean it is the best trade deal.

"best" is highly subjective. It certainly might not deliver the highest dollar value across the exchange.

The reason for this highly unfair soundbite is that most international trade treaty processes are designed NOT to favour one economy over the others and use "most favoured nation" language to try and put equity on the table. Thats before the US enters the room: My reading online in years past says that every economy which did the TPP said it did better overall when the US walked away from that deal.

Trump and his negotiators are not remotely interested in fixing problems globally, they're fixing their own vision of internal problems. A 10% across the board impost on goods coming in is frankly ludicrous, and the lack of awareness about how VAT/GST models work for importers and exporters in Europe and like economies is pretty stunning: In no way does VAT impose a burden on US incoming goods. it's neutral to all sources. Yet, Trump and his negotiators want to pretend they don't know that.

I'm not an economist or a game theoretician. I'm fine with you correcting my simplified language, but I do not think it was unfairly applied to the current political situation. I'm a simpleton shouting about another simpleton: the one who thinks the only negotiation worth doing is one he "wins" in and for him, winning definitionally means somebody has to lose.

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

#447

Post by giardini »

triceratops wrote: post #354
jandrewrogers wrote: post #212

Earlier quoted context omitted.

The US spends $1T on education. It is extremely difficult to justify spending more when the US already spends far more per student than other developed countries. Same with infrastructure and healthcare. Without accountability for where that money went it would be foolish to throw even more money at it. Also, in the US, infrastructure, education, and healthcare is primarily the responsibility of individual States, so…

If there's so much money, why do American schoolteachers buy classroom supplies out of their own pocket?

b/c they're not very bright?

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

#448

Post by jorts »

motorest wrote: post #423
AnIrishDuck wrote: post #411

Earlier quoted context omitted.

What other system of value are you using here? Bottle caps? Nostalgia? While the dollar remains the global reserve currency, this is just a wild theory of trade. If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie? (they clearly already do this everywhere they can)

> If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie? If you pay attention, you'll notice that's what China is doing. For decades, China's GDP growth towered over the US's. Around 2015, China's GDP PPP overtook the US's.

China’s GDP growth is great but they will face a huge pain now that they face an unsustainable population decline. They have more people aged over 52 than younger. I empathize with their youth.

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

#449

Post by wqaatwt »

motorest wrote: post #423
AnIrishDuck wrote: post #411

Earlier quoted context omitted.

What other system of value are you using here? Bottle caps? Nostalgia? While the dollar remains the global reserve currency, this is just a wild theory of trade. If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie? (they clearly already do this everywhere they can)

> If the $450 of value was so easy to extract, why wouldn't China simply assemble it in their own country and take the whole pie? If you pay attention, you'll notice that's what China is doing. For decades, China's GDP growth towered over the US's. Around 2015, China's GDP PPP overtook the US's.

> GDP PPP

That’s not a particularly meaningful metric.

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

#450

Post by wqaatwt »

TacticalCoder wrote: post #346
EasyMark wrote: post #313

Earlier quoted context omitted.

I see this tossed around but no one ever seems to point out that EU has similar numbers, which are about half, but still extremely higher than global average; and much more so in the richer countries of the EU (per capita of course)

[flagged]

> Zeiss

Since when is Zeiss Swiss and not German?

Also if ASML is partially US owned so are all major US tech companies partially “EU owned” in a similar way.

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