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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?

#711

Post by sorcerer-mar »

bumby wrote: post #710
sorcerer-mar wrote: post #706

Earlier quoted context omitted.

The answer to this is unions and social reforms, not more manufacturing. Manufacturing sans social reforms produce absolutely horrific conditions. Good conditions can be created by any highly productive industry (of which manufacturing isn't on a relative basis anymore) paired with social reforms.

Agree. Unfortunately, there seems to be a change in the social norms of business. Eg, pay structures that would be laughed out of the board room in previous generations are considered just the way we do business now. Same with the erosion of unions, etc.

Haha, we are very in sync on this: https://news.ycombinator.com/item?id=44035239

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

#712

Post by sgc »

mrtksn wrote: post #667
sgc wrote: post #658

Earlier quoted context omitted.

> who don't mean bad but just want to see the current order teared apart at any price. That sounds like a terribly bad intention to me. Significant destruction of social order leads to either authoritarianism or anarchy. Neither are even remotely desirable. The only sane path to deep, lasting, but also healthy change is to systematically work on each specific sector - only dismantling while building something better…

Sure its bad but its worse for those who have it good. Also, people don't plan or predict every outcome, they just want change and when that change is denied that's how we have civil wars. It all starts with a peaceful protest or some petty grievances and keeps growing when ignored or dismissed.

Yes, people do terrible things by neglecting their moral duty to actually think things through. This is a very basic known truth.

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

#713

Post by quacksilver »

JPLeRouzic wrote: post #665
Buttons840 wrote: post #653

Earlier quoted context omitted.

How does the life of a US metallurgist who works part time at a grocery store compare to a Chinese metallurgist who is working 70 hours a week doing metallurgy?

I have interacted with Chinese people in IT for a few months, and they worked 5 days per week. I don't know how many hours they made per day. Another interesting stat is that they live longer on average than US people. And until recently, men retired at 60 and women at 55 yo. https://www.bbc.com/news/articles/cpd9v48yn8ro

From working in China a bit (though could be wrong, n=1 anecdotes etc.), the majority of IT people are probably the lucky ones who mostly had a middle class upbringing, could live in a reasonable city and studied hard at school or had well connected parents. Life growing up with parents who were a rural rice farmer or metal scrapper or something would be way different. It is very hard to get a job after a certain age compared to the west, and there is pressure in some areas for women to quit once they have children.

It was common to see people working from 7 or 8 am to 8 or 10pm in my office, though with a 2 hour lunch break where most people slept.

On average, people tended to look way healthier (at least superficially) on average compared to places I have been in the US. Maybe due to diet and activity level.

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

#714

Post by s1artibartfast »

fakedang wrote: post #619
alexey-salmin wrote: post #473

Earlier quoted context omitted.

Yes, but it's a temporary turbulence that lasts for a few years, then you can rebound. The debt on the other hand can last for decades taxing the economy more and more. If the cost of servicing the debt crosses a certain threshold there can be no rebound, not without a default. Effectively when printing money you reset both the debt and the savings. If your debt is much bigger than savings it becomes a good deal.

The US economy still hasn't "rebounded" from the effects of the 2008 recession, forget COVID, even after the bailouts and the offloading of the US debt onto Europe, Japan and China, even though that was in the order of single digit trillions. I don't know where people get the idea that adding a hundred trillion more is where you can cure the deficit. Especially when this time around, you're not going to have EU, Chin…

>.That requires intense taxation for a few years on the rich and corporations alike, and using those proceeds to pay it off.

This is your bias and preference seeping in. Simply put, you need to balance your budget.

The US already has some of the highest corporate taxes in the world. Most countries don't rely on them, and instead focus on the individual pass through profits. most European democracies tax the middle class much more heavily through value-added taxes.

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

#715

Post by nisegami »

mrtksn wrote: post #504
starspangled wrote: post #369

Earlier quoted context omitted.

> 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…

For other countries USD is something they have to work for or sell something to acquire it. If they screw up they may end up in crisis being unable to obtain USD. Borrowing in their own currency will be much more limited and borrowing in USD much more costly. USA on the other hand can just print it out of thin air and because the global USD liquidity is huge they can do it for much longer without facing the consequen…

>For other countries USD is something they have to work for or sell something to acquire it. If they screw up they may end up in crisis being unable to obtain USD.

Right on the mark. This is happening to my country and it's an existential threat to my country's continued existence tbqh.

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

#716

Post by bumby »

sorcerer-mar wrote: post #700
bumby wrote: post #694

Earlier quoted context omitted.

I’m saying it’s much harder than your original comment insinuates. That jet in your example has tens of thousands of parts and if you want to protect the entire supply chain, it can’t just be a few companies. Many of those suppliers are also not just supporting jet manufacturers. Eg, a company that makes teflon o-rings for the jet likely makes o-rings for dozens of non-aerospace products. Complex machines are not nic…

I am aware of this, but obviously it's much easier (in that it doesn't outright destroy our way of life) to do it in narrow cases than for everything.

Perhaps I’m confused and misreading your previous comments. It seems like on one hand you’re advocating narrow application, while also saying an entire supply chain would need to be protected to have the intended effect. In a modern economy, those two seem in conflict in any complex system. This means the execution is neither easy nor obvious. The only one I can think of where that may apply is nuclear weapons, which is so tightly controlled it’s more of a quasi-government manufacturing endeavor.

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

#717

Post by cogman10 »

germinalphrase wrote: post #632
gambiting wrote: post #580

Earlier quoted context omitted.

I mean, of course they are. If you have a population increase you have plenty of young people who will complain that automation is taking their jobs. But with a population decrease you eventually end up with just old people and not enough working people to sweep the streets or wash cars or whatever - so automation is welcome because it doesn't "steal" jobs.

I do not think that labor sentiment has a strong impact on whether or not jobs are automated away. Go watch an old movie from the 40’s or 50’s that features a hotel. The number of small, niche jobs that existed are surprisingly numerous by modern standards: porters, elevator operators, switchboard attendants, and so on. Busy places employing a lot of people. This was undoubtably true across industries, and we have au…

This sort of automation along with consolidation has been the death of small cities and towns in the US.

It's basically what's mostly killed my own small town.

My hometown, with a fairly consistent population of about 300 people, used to have a restaurant, bowling alley, full-service station, hardware store, bar, and grocery store. In my childhood, the restaurant, grocery store, and hardware store were still around. They died. And they died partially because gas got cheap and partly because goods producers increasingly jacked up their prices to small suppliers because they didn't want to deal with them. It was simply more lucrative and easier to see 1000 units to walmart than 10 to "Small town USA grocer". Near the EOL of the grocer, they'd literally buy their good from walmart because they couldn't get them anywhere else. The cheap gas led to people from my town traveling to nearby larger towns and cities to find cheaper goods.

The restaurant went out of business because it depended heavily on the prices of the local grocer. Towards the end, you'd literally call ahead the owner so they could open the doors and start cooking for you.

I can't say what the solution to all this is. The market is simply busted for small time business owners who want to move any sort of physical good. That has had knock on effects nationwide that haven't been positive, particularly for rural america.

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

#718

Post by philistine »

tialaramex wrote: post #401
ijk wrote: post #304

Earlier quoted context omitted.

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

No, in order to win a war, it must have a clear objective which can be successful. The US is terrible at this because the objectives of war by a democratic country will be set by politicians, who've never seen an objective which couldn't be made vaguer. Operation Iraqi Freedom had so many sub-objectives key military leadership didn't even agree what the goals all were - and even then some of those goals are nonsense,…

Under your premise that you must have a clear objective to the exclusion of other things, Russia would have handily won its war against Ukraine years ago. Their objectives are very clear.

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

#719

Post by philistine »

palmotea wrote: post #319
ijk wrote: post #304

Earlier quoted context omitted.

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

> You joke, but wars are won on logistics. Famously, the US military can deploy a Burger King anywhere on Earth within 24 hours. But not only on logistics. If the "US military can deploy a Burger King anywhere on Earth within 24 hours," but little else, it's fucked. Right now its production base is so addled and weakened that it can't even sustain the wartime production really needed by Ukraine without cleaning out t…

You're conflating civilian production with military production. Does China have 40% of world military production? Or is the plan to throw electric golf carts at US aircraft carriers?

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

#720

Post by fooker »

Buttons840 wrote: post #653
IG_Semmelweiss wrote: post #634

Earlier quoted context omitted.

Your statement would be true without nuance. Yes. The mass of US consumers do benefit from penny subsidies of certain foreign product. However, for every penny of foreign subsidy benefitting US consumers buying finished iron or steel goods, a US metallurgist is losing a job somewhere. On strictly numbers, we are better off with foreing-paid subsidies yes, but there are losers, and they take the brunt of the downside.…

How does the life of a US metallurgist who works part time at a grocery store compare to a Chinese metallurgist who is working 70 hours a week doing metallurgy?

Good question, the former will have an easier life but still struggle to support a family (and will likely not have a family). The later will have a harder life but people depending on the later will live standard middle income lives.

What happens when the part time grocery job is automated away?

The answer to that is not very pleasant for consumer economies.

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