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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]

#121

Post by rib3ye »

I feel like a lot of people are really getting stuck on the Trump stuff and missing Buffetts core argument. Here's a pretty simple guy:

When the US has a trade deficit with China, it tries to balance that out by issuing debt in the form of treasuries.

As more treasuries get issued to foreign nations, the risk to American sovereignty increases. People really forget Japan's blitz on US real estate and businesses in the 80s and the drastic actions of that era the US took to knee-cap Japan.

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

#122

Post by dachworker »

weatherlite wrote: post #111
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…

OK, let's put it this way. You would struggle to buy a house if you worked at VW assembling cars. You would be able to rent an apartment and have a relatively good if modest existence. Nothing close to what Americans are able to afford.

But if you wanted to create blue collar jobs and if the government was going to step in and contort the economy with heavy handed measures, anyway, then just setup a public works program and build a bunch of housing, build and maintain energy and transport infrastructure, build climate mitigation projects. That would actually address a real demand and make a whole lot of sense.

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

#123

Post by whall6 »

kdjs7 wrote: post #65
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…

Thats just half the story. What the US has traditionally done is make these countries then take Dollar loans from the IMF and World Bank to buy American defense and high tech products. When they naturally then default (right now there are more than 50 countries that cant pay back these dollar loans cause where the fuck are they going to get dollars from) their only option is to sell off their natural resources to Wal…

I get the sentiment, but using ship building is an unfortunate example with respect to substantiating your point. The US shipbuilders are alive and well (not to the extent they were in WWII era). Military ships, Jones Act compliant commercial vessels, ferries, tugboats, etc. All US made.

Separately, your first paragraph also seems problematic. Let’s take Vietnam and Cambodia as examples: neither has a US military base, port, nor sells natural resources to “Wall St”.

Finally, I’m not sure I follow how that would cause the US to accumulate 50% of the world’s market cap—especially because the vast majority of the companies in the S&P 500 have nothing to do with defense, shipping or natural resources. I haven’t done the math, but I would venture to guess that >50% of the S&P 500 market cap is tech or tech-adjacent.

I decry this misplaced pessimism.

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

#124

Post by zabzonk »

amanaplanacanal wrote: post #117
zabzonk wrote: post #100

Earlier quoted context omitted.

> 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.

But no tariffs on them? And actually I mostly watch home grown stuff - can't stand US TV series.

Most of the software I use is open source, and again even if I pay for it, is there a tariff?

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

#126

Post by tzs »

If a country decides that it is important to not be a net importer the method to achieve that proposed by Buffett in the article is infinitely better than the way Trump is going about it.

Essentially what Buffett suggests in the article is a cap and trade system on imports.

To import $X worth of goods the importer must have $X worth of ICs (import certificates), which consumes those ICs. ICs are created when exporters export, with each dollar of exports creating a dollars worth of ICs.

ICs are tradable so an exporter does not have to use the ICs created by their own exports. They can sell them to importers.

Note that under this system it is perfectly fine to have a trade deficit with any given country, as long as their are trade surpluses with other countries that balance it.

Trump wants trade with each country to be balanced (or a surplus).

Consider this hypothetical.

• Country A needs to import some natural resource. They import it from country B and use it to manufacture something.

• Country B doesn't need anything that A makes, but does need something from country C.

• Country C doesn't need anything from B, but imports the thing A is manufacturing.

If Trump were running country A he would view this as A getting ripped off by B. Under Trump logic B would be getting ripped off by C, and C would be getting ripped off by A, but he wouldn't care about the former and would probably by bragging about the later but not calling it a rip off.

One of the big reasons money was developed in the first place was so goods did not need to be balanced between each pair of traders.

Before money if a farmer had chickens and wanted a goat he had to find someone who wanted chickens and would trade a goat for it. If the only guy with goats he could find didn't want chickens but wanted a pig the farmer was out of luck, unless he could find someone who had a pig and wanted chickens. It can keep going...maybe pig guy wants a cow so now the guy with chickens also needs to find someone who will trade a cow for pigs.

Money made it so trades become money for goods instead of goods for goods. Chicken guy just needed to find someone with a goat for sale for money instead of finding someone with a goat who specifically needed chickens.

Same thing applies to trade between countries, and for some inexplicable reason Trump wants it to work like the old chickens for goat days.

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

#127

Post by weatherlite »

dachworker wrote: post #122
weatherlite wrote: post #111

Earlier quoted context omitted.

> 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…

OK, let's put it this way. You would struggle to buy a house if you worked at VW assembling cars. You would be able to rent an apartment and have a relatively good if modest existence. Nothing close to what Americans are able to afford. But if you wanted to create blue collar jobs and if the government was going to step in and contort the economy with heavy handed measures, anyway, then just setup a public works prog…

> You would struggle to buy a house if you worked at VW assembling cars.

Any source for that? What's the average VW salary , I'm assuming life long VW workers are actually pretty well compensated.

> Nothing close to what Americans are able to afford.

Americans are rich in small part due to true innovation (Google, Microsoft, biotech etc) and large part running endless deficits by having the world's reserve currency. Also America is the complete opposite of the government planned economy / state socialism you're proposing the Germans should do.

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

#128

Post by exe34 »

mk89 wrote: post #83
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…

Come on, did you see the trade for goods and services deficit with EU? It's ludicrous. But hey, the president decided to focus only on goods. Why not on everything ? Because it's unjustified. He needs money. A lot. And throwing out accusations at other countries is the only way he can get out of it fine. If he had just set a 10-15% tax on all imports "just because" people would have never approved. Now, on the other…

I was thinking, the UK and EU should set extra taxes on US tech companies to offset the tariffs. don't even need to fix the amount - just tie it to whatever the tariffs are.

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

#130

Post by numpad0 »

zabzonk wrote: post #9

Strange. I, as a UK citizen, don't seem to buy almost any physical USA goods at all.

I think that's what they're trying to fix. They want stuffs around you that says "Made in China(PRC)" to instead say "Made in USA", and everyone is saying that that is a really weird hill to die on, but they want to.
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