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Growing trade deficit is selling the nation out from under us (2003) [pdf]

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Re: Growing trade deficit is selling the nation out from under us (2003) [pdf]

#111

Post by weatherlite »

dachworker wrote: post #105

Americans should study Germany and Japan. Do their economies look healthy? Are those manufacturing jobs attractive? Are the Germans and the Japanese richer? Do Germany and Japan have good economic prospects? I'll spare you the research. The answer is, "No". Turns out, having an economy based on manufacturing high-end door knobs in 2025 is not great. Economic growth and innovation is not there, because there is so muc…

> Do their economies look healthy?

It's all relative. Relative to what? I think its healthier than it would have been had there been no manufacturing at all.

> Are those manufacturing jobs attractive?

Not all but some are for sure. I'm sure there are enough people working for Volkswagen, BMW or Bosch that earn well and prefer working for them than doing something else.

> Are the Germans and the Japanese richer?

Again, richer than what? I think they're richer than they would have been had they not been manufacturing anything. If you're asking whether they're richer than Americans, no they're not, but that's mostly due to historical reasons (U.S dollar is the world reserve currency).

Re: Growing trade deficit is selling the nation out from under us (2003) [pdf]

#112

Post by zabzonk »

sam_lowry_ wrote: post #75
zabzonk wrote: post #60

Earlier quoted context omitted.

> any physical USA goods Do you see the word "physical" in my original comment? And me saying that I don't buy such things? I will admit to buying Intel CPUs, but aren't they manufactured in the Far East?

I am from EU and the only physical idem proudly wearing "Made in USA" label I saw over the years is the Urimat pad in public toilets. P.S. Upon inspecting my memory, I think the other one was an HP cesium clock, but that was many years ago.

HP oscilloscopes were pretty good too, back when . But I haven't been there for many years, and I guess you can get good, cheap, LCD ones today for much less money.

And rotating rusty hard drives, I suppose. But still all gone.

And don't get me started on American urinals!

Re: Growing trade deficit is selling the nation out from under us (2003) [pdf]

#113

Post by ucha »

You can have growing deficits without actually "selling the nation" when you account for growth and inflation.

Say foreigners own 50% of US assets. When someone creates in the US a company ex nihilo and sells 10% of it to foreign investors, even though foreigners bought more US assets, this new wealth creation causes the % of foreign-owned US assets to diminish.

When foreign investors own US bonds, as inflation increases and the money supply increases, they end up owning less in real terms.

This doesn't account for investments that are limited in quantity such as real estate.

Also just because those are opposing forces, doesn't mean that foreign ownership wouldn't increase. As a matter of fact, when looking at the foreign ownership of US stocks, it has been steadily increasing.

Re: Growing trade deficit is selling the nation out from under us (2003) [pdf]

#114

Post by rib3ye »

avodonosov wrote: post #101

So he says foreigners buy US assets for the dollars US pays them for their goods, and that's the problem - the US being sold out. My question: don"t these foreigners become Americans in a sense? E.g. by holding shares of US companies they have common interests with other shareholders. Upd: I mean, if considering nation as a partnership, those new asset co-owners are new parnters. Does it imply old co-owners are delut…

Until they become majority shareholders or outright owners.

In the short-term it may turn out to be fine, but over the long run, you have to pray the foreign owners' values are aligned with American success (keeping Americans employed, building value and not asset stripping the company).

Though I will admit recently I don't even feel like even American owners' values are aligned with American success.

Re: Growing trade deficit is selling the nation out from under us (2003) [pdf]

#115

Post by tdullien »

energy123 wrote: post #43
iNic wrote: post #26

Interesting, and worrying at the time, but he clearly turned out to be wrong. The trend never stopped [1] and is not obviously responsible for any negative economic trend. The trend has continued [2]. The thing to worry about is probably not that it is happening, but who is holding these investments. [1]: https://www.bea.gov/data/intl-trade-investment/international... [2]: https://fred.stlouisfed.org/graph/?g=1HrHY

The way he views net investment and net foreign ownership seem wrong. He uses the analogy of a farm owner selling bits of their farm to fund their trade deficit. But in the real world, it's not zero sum like this. The pie isn't fixed to the size of the farm. New companies serving new needs can be created. If you're a poor country wanting to escape poverty, you want FDI to be high because you realize it's not zero sum…

This. There is a joke that Germany delivered Porsches in the 1990s and hot .com stocks in return, and then until 2008 they got CDOs in return. And t-bills -- the US has been a major exporter of TBills.

Fwiw, the US has a big surplus in services,so it'll be interesting to see if other countries retaliate against that.

Re: Growing trade deficit is selling the nation out from under us (2003) [pdf]

#116

Post by jocaal »

pyrale wrote: post #89
mhogers wrote: post #47

Earlier quoted context omitted.

The t-shirt metaphor is completely unjust - there is no value there for national security nor strategic autonomy. Consider instead: - Semiconductor low-end fabrication (Taiwan, Korea) - Basic electronics: circuit boards, USB devices, .. (China) - Auto parts (Mexico, China, Germany) - Generic drugs (India, China) The reality is that the US is not the ultimate global hegemon anymore and therefore offshoring industries…

So basically, you want everyone to depend on you, but you want to depend on no one. And if a more balanced trade relation arises, your current leadership is willing to destabilize the whole world, and threaten war.

China's playbook in a nutshell

Re: Growing trade deficit is selling the nation out from under us (2003) [pdf]

#117

Post by amanaplanacanal »

zabzonk wrote: post #100
graemep wrote: post #90

Earlier quoted context omitted.

As an individual you would own consumer goods. A lot of international trade is other goods. Think of how much the UK has paid for things like American aircraft, ships, machinery, or materials used in manufacturing. Our armed forces use a lot of American stuff, and often even British made things have American parts (and a lot of it is covered by ITAR, to an even greater extent than the rest of Europe). People also ten…

> As an individual you would own consumer goods. Not American ones I don't. Is Trump suggesting tariffs on incredibly over-priced and under-performing military and civil aircraft, when we can buy from Europe, or make our own? To me it seems that the only things the USA sells us are horrible foods, and crap cars for fat people.

How much American media do you consume? Things like movies, tv shows, or music? Or is it mostly home grown? That's America's export, along with software.

Re: Growing trade deficit is selling the nation out from under us (2003) [pdf]

#118

Post by jocaal »

sandworm101 wrote: post #80
mhogers wrote: post #47

Earlier quoted context omitted.

The t-shirt metaphor is completely unjust - there is no value there for national security nor strategic autonomy. Consider instead: - Semiconductor low-end fabrication (Taiwan, Korea) - Basic electronics: circuit boards, USB devices, .. (China) - Auto parts (Mexico, China, Germany) - Generic drugs (India, China) The reality is that the US is not the ultimate global hegemon anymore and therefore offshoring industries…

>> the US is not the ultimate global hegemon anymore The hegemon concept is also out of date. World trade is not dominated by countries but by multinationals. For instance, there are no real "US" car companies. There are a handful of huge conglomerates who can choose to operate wherever best suits their needs. These respond to edicts from individual countries but operate at a level above nation states. This is why in…

That is the case for western economies. China controls nearly all levels of its supply chain. In the past, they didn't have the skills for design, but over time has gained that skill set (china now creates nearly a third of the worlds new engineers per year) and is now capable of designing and manufacturing world class products all in-house.

I guess the only exception is semi-conductors, but we all know they are desperately trying to remedy that.

Re: Growing trade deficit is selling the nation out from under us (2003) [pdf]

#119

Post by throw0101b »

mhogers wrote: post #47
forgotoldacc wrote: post #13

A long time ago, Britain was the dominant economic power in the world. Britain had a massive trade deficit with India. It imported far more from India than it exported to India. But what Britain did was import massive amounts from India and made high value goods at home and provided high value services that couldn't be provided elsewhere. Should it have flipped the other way? In 1800, should Britain have suddenly shi…

The t-shirt metaphor is completely unjust - there is no value there for national security nor strategic autonomy. Consider instead: - Semiconductor low-end fabrication (Taiwan, Korea) - Basic electronics: circuit boards, USB devices, .. (China) - Auto parts (Mexico, China, Germany) - Generic drugs (India, China) The reality is that the US is not the ultimate global hegemon anymore and therefore offshoring industries…

> The t-shirt metaphor is completely unjust - there is no value there for national security nor strategic autonomy.

And yet tariffs were put on countries where clothes are generally manufactured and imported into the US from, which is why companies like Nike got walloped on the stock market.

> The reality is that the US is not the ultimate global hegemon anymore and therefore offshoring industries cannot simply be viewed through an economic lens.

Trump et al put a 37% import tariff on Botswana. What national security interest is served by that?

Israel got a 17% tariff place on it, but Iran is part of the general 10% tariff list. If these are about national security, why does Israel have a higher number than Iran?

There are valid reasons for tariffs:

* https://www.noahpinion.blog/p/when-are-tariffs-good

The universal tariffs that have been acted don't seem to have been done for those reasons.

Re: Growing trade deficit is selling the nation out from under us (2003) [pdf]

#120

Post by fakedang »

forgotoldacc wrote: post #13

A long time ago, Britain was the dominant economic power in the world. Britain had a massive trade deficit with India. It imported far more from India than it exported to India. But what Britain did was import massive amounts from India and made high value goods at home and provided high value services that couldn't be provided elsewhere. Should it have flipped the other way? In 1800, should Britain have suddenly shi…

The US does not have most countries in an economic chokehold - it's laughable even compare the US and its partners to India and Britain. India was forced to buy cheaper machine made cloth by the shipload in a concerted effort to kill off the traditional Indian man-powered textile industry. Meanwhile the EU and the rest of USA's trading partners choose to use American services or buy American products (granted, in Europe, we don't see much American product either). They could have switched away from American goods but chose not to, because of free trade. With tariffs in place, if there aren't severe switching costs, most countries will definitely move away from the US in the short-term, while drawing up plans to move away from US services in the long term.

Your examples of Cambodia and Bangladesh don't really fit in as American colonies. Both countries are already more dependent on China than on the US for imports. Only a fraction of their populations actually use American goods, what maybe an iPhone or some American brands tops.

They do however manufacture final goods for the American market (and the overall worldwide market), so I don't see any losers here except for American consumers. Your average American clothing company isn't going to move away from these countries because they have the full supply chain in place, and your average overseas production facility isn't going to continue producing for an American company at a cheap price if tariffs are in place.

You're on the money with the last point though. The only way to balance it out is to make low value goods, but that was the whole point of outsourcing it to Bangladesh or Cambodia in the first place. Because that was low value production.

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