> Why does the U.S. always run a trade deficit?
For the same reason why I run a trade deficit with my barber and my grocery store.
Why does the U.S. always run a trade deficit?
581–590 of 814 posts
Re: Why does the U.S. always run a trade deficit?
#582Earlier quoted context omitted.
> US manufacturing output is double that of China's on a per-capita basis. Only on a dollar value basis. And that's heavily skewed on how an item's value is calculated. When you use $50 of parts (all made in China) to assemble a machine that you sold at $500 , $50 of GDP value is attributed to China while $450 of GDP value is attributed to the US. But who did more "manufacturing"?
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)
> What other system of value are you using here? Bottle caps? Nostalgia?
The system where "production" means "where has item XYZ actually been made".
And for more than 1/3rd of all items, the answer to that question is: China.
https://cepr.org/voxeu/columns/china-worlds-sole-manufacturi...
Re: Why does the U.S. always run a trade deficit?
#583Earlier quoted context omitted.
Or maybe the EU should subsidize more instead of policing around? The EU reminds me of the teacher's pet going around the playground, telling all the other children that they should follow the rules. But of course, the pet doesn't have a big stick, so nobody really bothers listening to him/her.
I don't disagree with the EU's laggardness around changing economic tides, but if just about every major economic bloc and country is initiating trade barriers against China to protect their domestic industries, at some point the common denominator is China. And as I mentioned elsewhere, much of this overproduction would go away were Chinese consumers able to dip into their savings if China's social safety net was ex…
Of course but the EU thinks it’s a better strategy to engage with China which remains a major partner to move the needle in the right direction rather than burn bridges. There are a lot of tools which could be used to limit the impact of Chinese surproduction and push China towards shoring up its internal market.
The US used to do the same and will hopefully be sane again in three years.
Re: Why does the U.S. always run a trade deficit?
#584Earlier quoted context omitted.
> What other system of value are you using here? Bottle caps? Nostalgia? A common proxy is "metric tonnes of steel produced" and "metric tonnes of sulfuric acid produced". For China, these have been going up in-line with their GDP growth, whereas for USA they have flatlined since 1980 despite the increase in manufacturing dollar-value output.
You, of course, can choose these as your units of value. I think it is telling that the rest of the world (particularly the central banks of most countries) have instead chosen USD (well, more specifically US treasuries) as their preferred store of value. Well, at least, for now...
I didn't "choose" these, they are standard metrics used by industrial analysts. You know, the people who plan port expansions and cargo ship purchases, they need to deal with the actual tonnes of goods moved, not the dollar value of those goods.
Re: Why does the U.S. always run a trade deficit?
#585Earlier quoted context omitted.
> Which means 100% of the money goes to the owner. As more jobs get automated, this is becoming more and more inevitable anyways. There have been massive strides in computer vision and planning in the past few years. I think in 5-10 years we'll have robots that can handle nearly any manual labor task. In 10-15 years, we could be facing skyrocketing unemployment. We'll either see the collapse of society as the economy…
This is the obvious end-state of unregulated capitalism. Fewer and fewer people owning and benefiting from the means of production, and more and more people with nothing and nothing to do besides revolt and (eventually) chop heads off. All the ownership class needs to stop the "head chopping" part is a robust and powerful police/surveillance state, which we all know they are diligently working on right now.
The wealthiest 10% of America have increased the ownership of wealth from about 40% in the 1970s to 70% today, with no sign of slowing.
A typical HN techbro may not care because they're likely in the wealthiest 35 million, but the only way for the top 3 million / 1% to continue growing at the same rate once the bottom 90% have nothing more to lose is to take the wealth from the 32 million between 1% and 10%.
It took 50 years for the bottom 90% to halve the ownership of wealth in the US. Once they are fully tapped out the only way the 1% will continue to increase their wealth is taking it from the 10%. Then the 0.1% from the 1%.
Re: Why does the U.S. always run a trade deficit?
#586Earlier quoted context omitted.
How will apple being in Nebraska make any difference to Joe Bloggs from Oklahoma importing something?
If the trade deficit becomes or continues to be unsustainably large, that would devalue the dollar so that Joe's dollar buy less imports than it does now. There are hints of a strange energy to your questions, which does not bother me, but I am curious whether you feel hostile to me, e.g., because you inferred from my answers that I probably support a political faction that you regard as the enemy.
Not really, you seem to think that the location of an automated factory which employs basically nobody makes a material difference to anyone, and I'm trying to work out what that is
Re: Why does the U.S. always run a trade deficit?
#587Earlier 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…
> just handwaving about how USD's status as a global currency somehow makes trade deficits inevitable despite simple facts available that US had a surplus trade balance 50 years ago, when the USD has been considered the global / reserve currency for over 60 years.
US has had two trade surplus years since the USD essentially replaced gold as the reserve asset: 1973 and 1975. The reserve currency status is the primary reason for the practically constant deficit. During the Bretton Woods era US ran consistent surplus.
https://www.stlouisfed.org/publications/regional-economist/t...
Re: Why does the U.S. always run a trade deficit?
#588Earlier quoted context omitted.
OK lets assume the entire chain is automated and you don't need to employ anyone. The factory can go anywhere, in China, in France, in California, in North Dakota. What benefit is that to the average American citizen?
You'd need to site it near to the Grand Forks air force base (almost Minnesota) because that's the only runway in state capable of handling 747 cargo flights.
Or you just build a big runway.
Re: Why does the U.S. always run a trade deficit?
#589Earlier quoted context omitted.
China's GDP (PPP) is already ~22% higher than the USA's [1]. Arguably, isn't this a better measure of value? PPP measures the real value to the citizens in a nation, and more closely measures actual economic activity. Say a bottle of wine costs $20 in the USA, and in total one bottle is produced and sold for a total of $20 GDP. France makes 10 bottles at $2 each, for a similar GDP of $20. It's cool that the USA manag…
> China's GDP (PPP) is already ~22% higher than the USA's [1]. Arguably, isn't this a better measure of value? PPP measures the real value to the citizens in a nation, and more closely measures actual economic activity. Only if the only things you purchase are exclusively domestic. Turns out, the vast majority of Chinese citizens with any means are interested in foreign products (like most people in the world).
> Only if the only things you purchase are exclusively domestic. Turns out, the vast majority of Chinese citizens with any means are interested in foreign products (like most people in the world).
Are they, though? China has its own huge software stacks, cloud providers, car manufacturers, etc? Is China really starving for anything not made in China, except for luxury goods? To which, I would point at Lexus (the archetypal example from Japan, a comparable country) and say that if you're a luxury good manufacturer in the Western world, I would not rest on my laurels, it's just a matter of time: either by development or acquisition, China will be making its own luxury goods and even exporting them, soon.
Re: Why does the U.S. always run a trade deficit?
#590Earlier quoted context omitted.
> Which means 100% of the money goes to the owner. As more jobs get automated, this is becoming more and more inevitable anyways. There have been massive strides in computer vision and planning in the past few years. I think in 5-10 years we'll have robots that can handle nearly any manual labor task. In 10-15 years, we could be facing skyrocketing unemployment. We'll either see the collapse of society as the economy…
> In 10-15 years, we could be facing skyrocketing unemployment The productivity growth from such new technology would induce more consumption, and induce _different_ consumption. These would produce new work opportunities. UBI is not necessarily the only solution. And to me, it cannot be a solution from which taxation is utilized to fund.
> The productivity growth from such new technology would induce more consumption
Whose consumption? There is nothing impossible about a scenario in which there are about 2-3 millions of owners of fully automatic businesses and/or landlords who, with their total output combined, produce more than enough of anything needed for, or desired by, 2-3 million people. The only problem is that the rest of humanity would have to somehow disappear to not sullen this perfectly harmonious market economy of entrepreneurs (which is ironically quite similar to Adam Smith's naive descriptions of it in his own times), but we do have negative fertility rates, after all.
So there is absolutely a path where the well-to-do will just switch to trading with each other, with aggregate output shrinking to match the shrunk demand, and the rest of people could go and drop dead or whatever they want, as long as they don't trespass on the private property. After all, most of what those losers would have would be their ability to work but it just won't be priced competitively: the fair market price equals marginal costs (which for labour is the price of the subsistence minimum), and if robot maintenance is cheaper... yeah. To quote on of the designers of the shock reforms of 1992 in Russia, "what do you care for those people? So, 30 millions will go extinct. They failed to fit into the market".