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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]

#181

Post by thefounder »

tonyedgecombe wrote: post #140
thefounder wrote: post #55

This looks like the end of story is that the US will consume less, "more expensive" and home made. I think it will have disastrous consequences for the U.S IF the rest of the world keeps trading free. There will be more jobs in the U.S but in the end will become a more inefficient market.

That wouldn't necessarily be a bad thing if it meant a flattening of inequality however I don't think that is on the cards.

I think the inequality could be even higher because the rich can simply move the investments aboard while the working people have no real choice but “enjoy” the local economy.

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

#182

Post by KentGeek »

thaumasiotes wrote: post #45
randyrand wrote: post #28

The USA captures most of the value from selling iPhones worldwide, but yet the entire value of an iPhone counts only as a Chinese export. Something is not right with how we calculate these things.

Quoting from wikipedia: > Prior to 20th-century monetarist theory, the 19th-century economist and philosopher Frédéric Bastiat expressed the idea that trade deficits actually were a manifestation of profit, rather than a loss. He proposed as an example to suppose that he, a Frenchman, exported French wine and imported British coal, turning a profit. > He supposed he was in France and sent a cask of wine which was wor…

Get this: China sends us all this great stuff, and the only thing they get is OUR FIAT CURRENCY, which is essentially worthless. And then, what do they do with that currency? They buy our treasury bonds, which pay them interest in our own fiat currency. Not only that, but every bond they buy is more encouragement to help us keep the US economy strong and stable. The trade deficit thing looks like a great deal for us when viewed from some angles.

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

#183

Post by cantrecallmypwd »

SiempreViernes wrote: post #72
supermatt wrote: post #22

It seems like the way to "fix" a trade deficit is to create products the rest of the world actually wants to buy. The application of any reciprocal arrangement, whether tariffs or these ICs as proposed in the article only achieves "balance" through punishing others. Aside from the obvious consumer technology and software I am hard pushed to think of any USA produce I would buy that would meet the standards we have in…

> The simple reality is that the USA consumes more than it produces. Indeed, and the US can afford this because it has concentrated a lot of the world's wealth within its borders. So it is not really clear what they want to fix.

This is the dilemma of spoiled rich kids who got too big for their breeches.

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

#184

Post by cantrecallmypwd »

gargan wrote: post #46

Business people don't necessarily make the best economists or politicians, that's the main lesson from the last few years to me.

There's an American monetary economist living in Poland who does a good job of explaining things. "Econ Lessons" on YT.

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

#185

Post by cantrecallmypwd »

RGamma wrote: post #110
gargan wrote: post #46

Business people don't necessarily make the best economists or politicians, that's the main lesson from the last few years to me.

My main lesson is that in (esp. macro) economics nobody knows what's really going on. Too many, too diverse things happening at breakneck speed.

That's a vague and unconvincing chicken little argument for not making models using the wealth of open and for-purchase data that's available and understanding the limitations.

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

#186

Post by cantrecallmypwd »

thefounder wrote: post #181
tonyedgecombe wrote: post #140

Earlier quoted context omitted.

That wouldn't necessarily be a bad thing if it meant a flattening of inequality however I don't think that is on the cards.

I think the inequality could be even higher because the rich can simply move the investments aboard while the working people have no real choice but “enjoy” the local economy.

No need to "think". These policies are all magnifying stagflation. Recession if not depression. There won't be anything to buy because America doesn't have much of a manufacturing supply chain, isn't willing to pay workers enough, and prices are rocketing to the moon such that Americans won't buy domestic or imported goods. Domestic producers, having less international competition, will raise prices leading to a massive similar price-profit contributing 60% of inflation post-pandemic in the K-shaped recovery. The soonest manufacturing could be setup in America is 3 years, but this is work American corporations don't want to pay workers fair wages for.

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

#187

Post by disambiguation »

xuki wrote: post #14

Can someone explain to me how the US can reshore manufacturing without dramatically lower their standard of living? Maybe they can subsidize some essential industries but I can’t see a path to do it for everything.

In the future, rich Chinese programmers will discuss the economics of their trade deficit with poor American factory workers :^)

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

#188

Post by FooBarBizBazz »

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…

> 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

Does this story really describe a trade deficit? Trade is measured in units of currency, not in kilograms.

If I import a quantity of sugar from the West Indies for $1, turn it into rum, and export that rum for $10, then I have, net, produced $9 of exports.

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

#189

Post by snowwrestler »

rib3ye wrote: post #139
snowwrestler wrote: post #136

Earlier quoted context omitted.

American sovereignty is a matter of geography, firepower, culture, and law. It’s not easy to threaten. And private trade deficits are not balanced by sovereign debt, they are balanced by private debt and foreign direct investment, which don’t threaten sovereignty. The 1990s U.S. reaction to Japanese business success was primarily driven by popular xenophobia, not economic analysis. It was resolved by the dotcom bubbl…

It's hard to ignore the implosion of the Japanese real estate bubble as a contributor of receding Japanese influence in the US since then. The Plaza Accords are widely attributed to this.

Maybe hard to ignore in Japan. In the U.S., their success was based on their leadership in technology innovation, not real estate. Leadership which was eaten by the U.S. tech industry starting in the late 90s.

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

#190

Post by refurb »

maxglute wrote: post #180
refurb wrote: post #67

Earlier quoted context omitted.

That’s not true. Apple has internal transfer pricing which is dictated by accounting regulations and tax law. Companies try and set transfer prices to minimize local taxes, but need to follow regulations. A phone made in China is “purchased” by say Apple Canada for some fraction the price it sells for - regulation usually require the Value to reflect the cost of inputs. So Apple Canada might purchase a phone from App…

Most of that $600 is BOM inputs where most of high end components worth $$$$$ is ultimately captured by US / western suppliers (i.e. chips, sensors, screens for iphones). The actual value of export from PRC in terms of material and labour is $, but still counted as $$$$$+$. Though iphone/high tech unique since US plays hand - sanction $$$$$ PRC components so Apple can't integrate them and raise PRC share of Apple BOM…

No, that’s not how the math works. Apple Pay’s for the valued added, not the total value.

So if Foxconn is assembling a phone from components, they are paid for just that. The export is labor, not a fully valued finished phone.

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