Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

faculty.washington.edu

Post reply on HN
Print view View original

191–200 of 200 posts

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

#191

Post by robocat »

fakedang wrote: post #120
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 Eur…

> The US does not have most countries in an economic chokehold

Tell that to any country having trouble repaying USD denominated debts. The US loves lending money to other countries, especially via military goods, and then the US uses the debt as a hammer.

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

#192

Post by thaumasiotes »

KentGeek wrote: post #182
thaumasiotes wrote: post #45

Earlier quoted context omitted.

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…

My gut says the concern arose around the balance of gold, which would behave differently. But that really doesn't work with Bastiat's example, because there is no flow of gold (or other currency) in or out of either country.

But the fact that there is no flow of currency makes the problem look stupider. England is notionally benefiting because it has gained some wine "worth" 50 francs while losing some coal "worth" 70 francs. France is suffering because it's lost some wine worth 50 francs while gaining some coal worth 70 francs. With no francs traveling abroad, the matter is closed and France has ended up better off. What was the problem?

From this perspective, "trade deficit" appears to be synonymous with "gains from trade". (But note that the analogy falls apart immediately; England is also experiencing gains from trade, but it has a surplus instead of a deficit. The difference is driven by the artificial division of the trade into two legs, one of which happens first. If the import happens first, you get a surplus. If not, you get a deficit.)

With fiat, I think there is a concern floating around that if some foreign party absorbs a lot of our currency, and then we print more to replace the loss (so that we continue to have an appropriate amount domestically), the foreign party could suddenly crash the value of the currency by deciding to spend it. That's true. It can't be the origin of the fear of trade deficits, though, because nothing similar appears in Bastiat's example, where currency never moves. It's more analogous to the traditional fear of seeing your country's supply of gold drained away by trade.

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

#193

Post by SethMurphy »

lantry wrote: post #172
SethMurphy wrote: post #63

Earlier quoted context omitted.

If the answer is the end of - I'll call it - "Consumerism", and the industries we choose to subsidize are those that are more essential to a community driven life (e.g. food, shelter, health, education, transportation, communication, etc ...), I think it is possible to lower the "Standard of Living" as reshaping what the term means, undoing years of advertisement based conditioning. Americans may no longer have an un…

Not to mention this is almost certainly not what will happen in the USA. Trump and the GOP have no interest in reducing wealth inequality, and the vision you have laid out would be immediately labeled "communism"

Yes, my thoughts exactly too. Not an endorsement by the way.

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

#194

Post by maxglute »

refurb wrote: post #190
maxglute wrote: post #180

Earlier quoted context omitted.

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.

>not a fully valued finished phone.

No, I should have been more clear relative to original comment. I was pointing out even % Apple charge customs, i.e. imports from PRC, large % is still ultimately not value captured by PRC.

For full priced iphone, i.e. $1200, Apple captures or offshores another big slice of $800 in Ireland for intangibles like software related IP. But within the $400-600 BOM for physical device / import unit cost for customs, ~80% are western components, i.e. western value capture.

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

#195

Post by forgotoldacc »

franga2000 wrote: post #57
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 only way to balance that is to make things they can afford. Which means low value items. How about the US pays them well for their work so they can afford all these "high value" items? Oh no, we economically enslaved all these people to our clothing in sweatshops for pennies an hour, but now they're not buying our...1000$ tablets that don't even have a calculator app...or whatever else the US considers "high va…

I choose to buy more expensive clothing produced in places that pay employees a decent wage.

I think the US should pay them more. But the fact of the matter is people really want socks and shirts for a few dollars. People can choose to pay more and avoid sweatshops right now. But the fact is, most don't want to do that, and when given a choice, they won't.

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

#196

Post by forgotoldacc »

textlapse wrote: post #87
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…

Britain was not importing. Britain was stealing resources from India. It was beyond slavery. The words plunder and pillage come to mind. USA on the other hand has a completely different problem (perhaps opposite of what you describe - being the world’s gracious and benevolent trade partner).

Other countries trade with the US in order to avoid their wrath.

And now it's apparent that even being a great ally will result in economic attacks.

So the world gives the US tangible goods. In exchange they get shittalked and more demanded of them.

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

#197

Post by illiac786 »

sjx24 wrote: post #104
borlox wrote: post #17

So, you don't want to have "the world" own shares of american companies? Okay, let europe just sell all their stocks and ETF. But also, let them build alternatives to all american products. Let them keep the money they are spending for their Windows and Office licenses, their Netflix and Disney plans. Let them no longer create ad revenues on youtube. Let them buy korean Samsung phones instead of american iPhones. Wou…

Yes? If the American consumer can benefit from more competition and has the ability to subscribe to British Netflix (Brit box?) and French HBO, and the existing monopolies had to work a bit harder for subscribers, that could be an improvement.

Interesting take. I would love to see more competition in the smartphone OS market for example, but the problem is that at the same time, the tariffs kill international competition…

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

#198

Post by fakedang »

overfeed wrote: post #174
fakedang wrote: post #120

Earlier quoted context omitted.

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 Eur…

> The US does not have most countries in an economic chokehold For most of living history, the US went out of it's way to ensure that crude oil is sold in USD, including oil that's extracted in oilfields halfway around the world. There's only one way to get USD is to trade with the US.

Yes, but in our very recent history, the US has enabled policies that have driven countries to purchase using currencies other than the USD.

Only if you're buying direct from the gulf countries or you're buying on the spot markets are you forced to pay with the USD. For example, the EU had a long standing agreement to pay for Russian oil and gas with Euros, India has recently begun paying for Russian gas with Indian rupee, as does China with yuan. While Saudi Arabia and the rest of the oil dependent GCC are forced to curtail production to force prices up, Russia floods the oil market to account for the shortfall.

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

#199

Post by [deleted] »

forgotoldacc wrote: post #195
franga2000 wrote: post #57

Earlier quoted context omitted.

> The only way to balance that is to make things they can afford. Which means low value items. How about the US pays them well for their work so they can afford all these "high value" items? Oh no, we economically enslaved all these people to our clothing in sweatshops for pennies an hour, but now they're not buying our...1000$ tablets that don't even have a calculator app...or whatever else the US considers "high va…

I choose to buy more expensive clothing produced in places that pay employees a decent wage. I think the US should pay them more. But the fact of the matter is people really want socks and shirts for a few dollars. People can choose to pay more and avoid sweatshops right now. But the fact is, most don't want to do that, and when given a choice, they won't.

[deleted]

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

#200

Post by deathlight »

collaborative wrote: post #148
torginus wrote: post #18

This would be true for any other country, but the dollar is the world's reserve currency. The US can simply go 'money printer go BRR' and create money out of thin air, without devaluing the dollar too much, which it can exchange for physical goods. The US creates a 'trade deficit' by swapping things that have imaginary value for things that do not. Under these circumstances they'd be foolish on not running a trade de…

I don't understand how nobody in the media is talking about this. The world accepts the US as the producer of currency, trades energy in dollars, etc. The US gets to print money for free, how is that bad for the US? So far I can only see 2 reasons why Trump wants this: 1. He believes the US can force others to pay even more, via tariffs, and they will just accept it. No retaliatory tariffs. Kind of like how he says G…

Trump has been singing the same tune for over 40 years. If he's an asset of anybody it's Lou Dobbs, not Putin.
Post reply on HN