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Buffett: America's Growing Trade Deficit Is Selling the Nation Out from Under Us [pdf] (2003)

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Re: Buffett: America's Growing Trade Deficit Is Selling the Nation Out from Under Us [pdf] (2003)

#71

Post by AlchemistCamp »

rayiner wrote: post #18
throw0101d wrote: post #15

That's from 2003. In a more recent interview in March 2025: > Asked about how tariffs will affect the economy, Buffett stated, "Tariffs are actually, we've had a lot of experience with them. They're an act of war, to some degree." > I asked, "How do you think tariffs will impact inflation?" > "Over time, they are a tax on goods. I mean, the Tooth Fairy doesn't pay 'em!" he laughed. "And then what? You always have to…

> That's from 2003. Would you argue that the period between 2003 and 2025 have strengthened or weakened the case for free trade?

Another interesting question is, would you rather trust the thinking of a 70 year-old or a 90 year-old Warren Buffet.

For the vast majority of people, I’d pick the 70 year-old version even if they did live to 90. With Buffet, I’m not so sure.

Re: Buffett: America's Growing Trade Deficit Is Selling the Nation Out from Under Us [pdf] (2003)

#72

Post by BrickFingers »

This was a great read.

Can someone explain how this translates for average American citizens? What have been the effects, if any, of consistently trading at a deficit since the 80s?

I've been trying to wrap my head around it, but it seems like there are so many factors at play that the effects aren't obvious.

My intuition is that maintaining trade deficits could cause inflation since US often needs to print money to service its debts. But, that only depends on consistent budget deficits. Inflation also depends on Fed rate somehow...Do consistent deficits increase housing prices? I'm lost..

I hardly know anything about econ. But, my gut feeling is that the effects of 40 years of trade deficits should be clearer than they are. It feels like maybe the status quo has been artificially propped up.

Re: Buffett: America's Growing Trade Deficit Is Selling the Nation Out from Under Us [pdf] (2003)

#73

Post by api »

surgical_fire wrote: post #67
api wrote: post #60

Earlier quoted context omitted.

I agreed with that, though not entirely with how it was done, but they didn't take credit for it. Very few people even knew it was happening. Objectively I don't think Biden was a bad president, and no I didn't vote for Trump. They also never took a principled stand on it. Biden and Harris never said "the trade policy of Reagan and Clinton was a mistake and we are reversing it." If Harris had said that, she would hav…

> The Democratic Party has an enormous communication problem. They don't know how to connect. I am not from the US, but I perceive the same problem in my country of residence (and in other countries I know people from). The main issue I see is that politics became a sort of entertainment. So a more serious politician (the adults in the room, so to say), communicate in a fairly dry, and even careful tone. And that hap…

It's part politics-as-entertainment and part the fact that the whole late 20th century PR flunkie style of communication was never popular. People never liked it. Now that the Internet has blown up the old media that used that style, people don't tolerate it anymore.

Re: Buffett: America's Growing Trade Deficit Is Selling the Nation Out from Under Us [pdf] (2003)

#74

Post by hayst4ck »

marcosdumay wrote: post #58
hayst4ck wrote: post #44

Earlier quoted context omitted.

Blockades are an act of war. How expensive does a tariff have to be before it is a de facto blockade? I think that comparison is much more apt than it first appears.

Blockades usually refer to impeding a country to trade with anybody. Tariffs are only comparable if you consider the US tariffs to be an act of war against the US. (Having said that, it's not such a ridiculous concept as it seemed.)

A second in command of the US military, Jim Mattis, during Trump's first term said:

“Donald Trump is the first president in my lifetime who does not try to unite the American people—does not even pretend to try. Instead, he tries to divide us,” Mattis writes. “We are witnessing the consequences of three years of this deliberate effort... I swore an oath to support and defend the Constitution. Never did I dream that troops taking that same oath would be ordered under any circumstance to violate the Constitutional rights of their fellow citizens—much less to provide a bizarre photo op for the elected commander-in-chief, with military leadership standing alongside.

If you are ideologically in the group that he used the military against on American soil, or you are in the half of the divided country that he doesn't see as his supporters, then the concept is even less ridiculous sounding, cogent even. He's effectively taken a government that represents a whole country and turned it into a government that only represents half of the country. When you realize that all he supports are American oligarchs who are international in nature the comparison starts to get more and more and more cogent.

These are two of the complaints of America's founding fathers against King George III written in the declaration of independence.

  "For cutting off our Trade with all parts of the world:"
  "For imposing Taxes on us without our Consent:"
The British government was the founding father's government.

As far a "acts of war" against their own citizens: Israel is Gaza's government and that blockade is so strong it is called an open air prison. Russia is fighting to be Ukraine's government. China is Hong Kong, Tibet, and Xinjiang's government.

In an authoritarian's government, it is not your government, it is only their government. Authoritarianism is in many ways a state of persistent war against people, which intuitively makes sense, because war is how you resolve disputes when negotiation doesn't work. War is the state of power alone resolving disputes, which is also what authoritarianism is.

Re: Buffett: America's Growing Trade Deficit Is Selling the Nation Out from Under Us [pdf] (2003)

#75

Post by twoodfin »

rayiner wrote: post #47
twoodfin wrote: post #26

Earlier quoted context omitted.

Strengthened. In the US this has happened: https://fred.stlouisfed.org/series/MEPAINUSA646N https://fred.stlouisfed.org/series/DSPIC96 Meanwhile across the entire world this has happened: https://ourworldindata.org/history-of-poverty-data-appendix You can argue the growth of globalization & lowering of trade barriers were unrelated to this up-and-to-the-right, but it’s hard to argue they’re making things worse unless…

But the political climate during that time period—starting on the left and now going to the right—has been that the middle class is being hollowed out. Is your argument that the Bush/Obama regime (recall that the Bush administration developed the bank bailout plan that Obama implemented) was basically correct? All the economy required was a little more regulation via Dodd Frank and the CFPB?

The argument that “the middle class is being hollowed out” is (IMO) pure dogma, there’s very little evidence to support it.

Take the median US household by gross income in 2003 & compare it to that same household in 2025. The 2025 household will utterly destroy it across any economic or hedonic metric.

If you control for household demographics and generational immigration history the gap becomes even more dramatic.

Re: Buffett: America's Growing Trade Deficit Is Selling the Nation Out from Under Us [pdf] (2003)

#76

Post by twoodfin »

leereeves wrote: post #63
twoodfin wrote: post #26

Earlier quoted context omitted.

Strengthened. In the US this has happened: https://fred.stlouisfed.org/series/MEPAINUSA646N https://fred.stlouisfed.org/series/DSPIC96 Meanwhile across the entire world this has happened: https://ourworldindata.org/history-of-poverty-data-appendix You can argue the growth of globalization & lowering of trade barriers were unrelated to this up-and-to-the-right, but it’s hard to argue they’re making things worse unless…

That first graph says the median income in 1974 was the equivalent of $5335 in today's dollars. I don't think it's adjusting for cost of living, because people lived a lot better in 1974 than you could live today on $5k per year.

Oops, yes meant to post real median personal income:

https://fred.stlouisfed.org/series/MEPAINUSA672N

Re: Buffett: America's Growing Trade Deficit Is Selling the Nation Out from Under Us [pdf] (2003)

#77

Post by throw0101d »

throw0101d wrote: post #15

That's from 2003. In a more recent interview in March 2025: > Asked about how tariffs will affect the economy, Buffett stated, "Tariffs are actually, we've had a lot of experience with them. They're an act of war, to some degree." > I asked, "How do you think tariffs will impact inflation?" > "Over time, they are a tax on goods. I mean, the Tooth Fairy doesn't pay 'em!" he laughed. "And then what? You always have to…

> "Over time, they are a tax on goods.

To pile on this point, tariffs are a tax and a subsidy:

> Executives from U.S. steel companies were enthusiastic backers of the 2018 tariffs and have urged Trump to deploy them again in his second term. They have called for the elimination of tariff exemptions and duty-free import quotas, saying those carve-outs allow unfairly low-price steel to enter the U.S. and undermine the steel market.

[…]

> Higher prices for imported steel are often followed by domestic suppliers raising their own prices, which then get passed through supply chains, manufacturing executives said. For consumers already reeling from rising retail prices and inflation, pricier steel and aluminum could further lift costs for durable goods like appliances and automobiles, as well as consumer products with aluminum packaging, such as canned beverages.

> “The issue with tariffs is everybody raises their prices, even the domestics,” said Ralph Hardt, owner of Belleville International, a Pennsylvania-based manufacturer of valves and components used in the energy and defense industries. Steel and aluminum are Belleville’s largest expenses.

* https://archive.is/https://www.wsj.com/economy/trade/trump-t...

So tariffs are (regressive) taxes in the sense that consumers are paying higher prices (with the money going to the government). But they are subsidies in that domestic companies don't have as much pressure on prices and can get more money.

So if you want to help a particular industry might as well just go with subsidies directly instead of the taxation add-on as well.

Re: Buffett: America's Growing Trade Deficit Is Selling the Nation Out from Under Us [pdf] (2003)

#78

Post by tim333 »

While I'm a fan of Buffett, as he himself says macroeconomics isn't his speciality.

One issue with the story is he suggests the people selling America stuff, say China end up accumulating American land and owning the country but it's not what generally happens in practice. In practice foreigners tend to end up either with US dollar debt, which tends to inflate away, or equity in US companies, of which YCombinator and similar churn out hundreds of new ones each year.

Another thing is foreigners may end up buying some US real estate but the likes of Amazon ends up taking over much of the worlds retail industry as local shops close around the globe.

For reasons like this it's probably not worth worrying too much about the deficit and leaving it to market forces to figure out.

Re: Buffett: America's Growing Trade Deficit Is Selling the Nation Out from Under Us [pdf] (2003)

#79

Post by tim333 »

rib3ye wrote: post #66

I see many comments here saying “but stock market went up” while ignoring the bare bone problem Buffett is presenting: Disproportionate foreign ownership of US assets harms American sovereignty. The issue may be that sovereignty is hard to measure, but I think we have been complaining about the long-tail effects for a while: - wealth inequality (as businesses become optimized on foreign labor, execs are paid more and…

In theory but compared with 2003 when that was written I'd say American sovereignty has increased. In Europe and most places we buy from Amazon, search with Google, the computers run Windows or MacOS, the phones run US software etc. It's more the US owning abroad than abroad owning the US.

Re: Buffett: America's Growing Trade Deficit Is Selling the Nation Out from Under Us [pdf] (2003)

#80

Post by mitthrowaway2 »

andsoitis wrote: post #61
graemep wrote: post #36

Earlier quoted context omitted.

Yes, that is stupid. Why not apply that to the big economies that the GP comment said was 90% of the deficit. Exempt small low income countries - save a lot of people a lot of paid at little cost. On the other hand this is a bargaining tactic. I do not think these tariffs will last. > Instead, recall that President Trump views tariffs as generating negotiating leverage for making deals. It is easier to imagine that a…

More than half of factories in Cambodia are Chinese owned. The idea is to put pressure on China.

Pressure to move back to China where their tariff drops from 49% to 34%?

Over the past few years a lot of companies have moved production out of China and into friendlier countries like Vietnam, anticipating US pressure on China. Vietnam's tariff rate is 42%. Now they wish they'd left their production lines in China.

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