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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?

#791

Post by zaphar »

0xBDB wrote: post #727
zaphar wrote: post #684

Earlier quoted context omitted.

Taxes don't remove money from the supply unless the government is refusing to spend it. In which case that is just "reduce your budget and spend less" with extra steps. If you could do one you could do the other just as easily. And letting bubbles pop isn't an MMT thing. It's bog-standard economic theory. The fact that politicians often don't do it has nothing to do with which theory they subscribe to. It's just cowa…

> In which case that is just "reduce your budget and spend less" with extra steps. I'm pretty sure the extra steps are the point, in that I simply don't believe the MMT folks expect them to ever take place. It's not a coincidence it's an American theory, from a country where it's politically almost impossible to raise taxes. Otherwise it would just be a roundabout way to raise taxes and pay for stuff in reverse order…

I don't know why one would think they would perform the extra steps any more than you would expect them to reduce the budget and spend less.

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

#792

Post by graemep »

wkat4242 wrote: post #786
monkeyfun wrote: post #774

Earlier quoted context omitted.

You're overall correct, but made me notice that there is actually an unusually coherent argument (by their standards) being presented by the reactionaries pushing for the things you mention. It goes roughly like: >The reason these jobs are terrible is because immigrants are doing it for wages that would be intolerably low to anyone else. >This is also why it's hard to find a decent job in general, our competition is…

Well it's not just that but also the expectation that their wages will increase. The current government is only trying to drop the minimum wage (under the guise of minimum wage earners being losers/leeches which is a strange reasoning) And very few Americans are actually unemployed. The disappearance of manufacturing is a process that started decades ago and most people have moved on to bigger and better things. So w…

> We don't have a two party system (except for the UK which is in a similar situation to the US).

The UK does not have a two party system to anything like the same extent the US does. There are 13 parties with at least one seat in the House of Commons and 15 independents.

Smaller parties look likely to gain a lot more seats in the next election.

> But yes the reasons we're doing better in Europe is that we're not giving free reign to companies and have good welfare systems

Historically true, but it seems to be less so.

> Its followers like being told what to believe. This works best on the poorly educated.

I think it is not that simple. The poorly educated correlate strongly with the poor, who have done badly in recent decades.

> We do of course have similar problems (housing is a problem too and there is resentment of immigrants)

To a great extent in some countries. There are multiple European countries that have parties more extreme than the US right that are growing: AfD, PVV, Fidesz, Rassemblement national etc.

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

#793

Post by ashoeafoot »

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

That is a side effect of chinese kitchens shunning refrigeration and thus processed food. Even with the polution that makes for a healthier lifestyle .Although the younger generations catch up diabetes wise .

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

#794

Post by seanhunter »

_1tem wrote: post #785
seanhunter wrote: post #769

Earlier quoted context omitted.

I didn't misunderstand at all. There is no reason to expect bilateral trade to be balanced and thus there is no reason to expect the aggregate of a large number of bilateral trade relationships to be balanced. "Nothing, however, can be more absurd than this whole doctrine of the balance of trade, upon which, not only these restraints, but almost all the other regulations of commerce are founded. " Adam Smith, "Wealth…

The problem with trade deficits is that you eventually run out of money. It’s basic math. In what universe can you just keep spending more than your earn?

Why do you run out of money in a trade deficit? Your entire economy isn’t just import and export. You have a domestic economy and a services economy as well. Perhaps you don’t think Adam Smith could do basic math.

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

#795

Post by bryan_w »

_1tem wrote: post #785
seanhunter wrote: post #769

Earlier quoted context omitted.

I didn't misunderstand at all. There is no reason to expect bilateral trade to be balanced and thus there is no reason to expect the aggregate of a large number of bilateral trade relationships to be balanced. "Nothing, however, can be more absurd than this whole doctrine of the balance of trade, upon which, not only these restraints, but almost all the other regulations of commerce are founded. " Adam Smith, "Wealth…

The problem with trade deficits is that you eventually run out of money. It’s basic math. In what universe can you just keep spending more than your earn?

Domestic production of things that (usually services) continues to grow the money supply

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

#796

Post by philistine »

tialaramex wrote: post #730
philistine wrote: post #718

Earlier quoted context omitted.

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.

It's a necessary but not sufficient criterion.

> No, in order to win a war, it must have a clear objective which can be successful.

You said no.

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

#797

Post by fakedang »

coliveira wrote: post #778
fakedang wrote: post #623

Earlier quoted context omitted.

Command economies hell-bent on economic dominance are not going to engage. The only way to limit Chinese super production is to either block their goods outright or to subsidize your own to out-price theirs locally. A lot of people don't understand the CCP mentality clearly. China was once the epicenter of human production, making things the rest of the world desired, from Chinaware to silk to tea. The rest of the wo…

> sat on their thrones and levied tributes from every farflung nation You mean, like the US is now doing?

Nope. Would have been the case if the US imposed usage taxes on foreign users of its goods and services, like tech products and cloud services, but that's not what's happening.

The Chinese tributes were more like payments for the right to trade those goods (which were separate from the cost of goods itself). That's why when the European traders arrived in China, the Emperor simply thought that they were another tributary state seeking protection and trade rights.

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

#798

Post by sorcerer-mar »

20after4 wrote: post #779
sorcerer-mar wrote: post #237

Earlier quoted context omitted.

What's the relevance?

Just that they maybe were looking for an excuse and weren't genuinely that concerned about Kuwait.

It seems much more likely they were concerned about disruptions to energy which can immediately cripple an economy than some abstract vague mentions of using a different currency.

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

#799

Post by coliveira »

fakedang wrote: post #797
coliveira wrote: post #778

Earlier quoted context omitted.

> sat on their thrones and levied tributes from every farflung nation You mean, like the US is now doing?

Nope. Would have been the case if the US imposed usage taxes on foreign users of its goods and services, like tech products and cloud services, but that's not what's happening. The Chinese tributes were more like payments for the right to trade those goods (which were separate from the cost of goods itself). That's why when the European traders arrived in China, the Emperor simply thought that they were another tribu…

The US is imposing terms on foreign countries for use of its goods, that's what the chips restrictions are all about.

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

#800

Post by deeg »

roenxi wrote: post #520
deeg wrote: post #426

Earlier quoted context omitted.

This isn't correct. The gold standard caused a lot of problems with money shortages; in the 1800s they were called panics. The shortages powered William Jennings Bryan to the Democratic presidential nomination after his "Cross of Gold" speech. https://en.m.wikipedia.org/wiki/Cross_of_Gold_speech

Were those panics ultimately bad for growth? The US in the 1800s was one of the fastest growing economies we've ever seen in all of human history; growing from ~0% to ~20% of the world economy. It isn't often someone outpaces that. The gold standard clearly didn't limit growth in any concerning way if you are associating it with one of the top 10 all time growing economies. In fact, dropping the gold standard has bee…

If you don't think panics are a bad thing I don't know what to tell you. Can you point to a panic that was good?

My point about Bryan is that the gold standard was causing so much pain that he rode his solution to the nomination. That his solution (bimetallism) was terrible helps explain his loss.

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