Posted on 01/07/2017 10:36:27 AM PST by expat_panama
As Dr. Walter E. Williams points out, I have a trade deficit with my local grocery store. (A few of them, actually.)
There’ve been folks on these threads who say we can sell to foreigners but we should never buy. They have a hard time saying what they plan to do w/ all that foreign money they get paid with.
You have to decide what is appropriate to buy and what isn’t. America doesn’t produce bananas.
Bad analogy. A nation is not a randomly selected group of people whose names end in the letter N. If it (and its partner’s) trading policies result in one country manufacturing mostly dollars to trade for the other country’s stuff, there are consequences. Manufacturing dollars seems like a cool way to get cheap stuff in the short term. In the long term, it hollows out an economy and makes the country strategically weak.
To go back to Adam Smith, the Wealth of Nations is what it produces. A nation that produces dollars is kind of like the Spanish Empire—seemed very wealthy but in the long term got their a$$es kicked by nations that figured out how to produce stuff. And a Spanish Empire kind of nation has a very different kind of wealth than a nation that actually can produce stuff. The piles of gold or piles of dollars nations are entirely dependent on other nations continuing to value pieces of paper or dubloons.
“They have a hard time saying what they plan to do w/ all that foreign money they get paid with.”
Can you explain why all these other nations are not, definitely, NOT, in competition to rack up a trade deficit with other nations, that all these other nations go to extreme measures to NOT rack up a trade deficit, that all these other nations are bent on having the United States absorb trade deficits, if it is such a desirable thing?
fantastic response to an argument that I thought was finished around here. Thank God Trump got elected.
How is that? It’s a two way transaction, unless they’re loaning me money when I go shopping.
I give them cash, they give me milk and eggs. Value for value.
You say macro, I say micro
Let’s call the whole thing off.
I used to go for this same macroeconomic analysis, but now I’m not so sure. If the trade balance — whatever it is — has been engineered to put money into the pockets of those with influence while leaving millions of other pockets empty, then there’s something wrong
Bodyslam! :) as for one of the above examples, I don’t have a trade deficit with my grocery store because they use the labor dispatch company that I work for to have their lot cleared of Snow and to make repairs here and there.
I would have a trade deficit if he let illegals do it. I would also have a trade deficit if a company comprised of third world country folk with visas undercut our price by 60% by ignoring all the permits Etc that we legally need to get.
The reason that Joe six pack cares is because the cheap stuff being sent into America, is being produced by jobs that were formerly their jobs.
There are a lot of reasons including taxes, regulations, unions, stupidity and graft, but none the less, we have 95,000,000 people that are not counted as people when we are tallying the labor force.
It is not the imbalance of trade that is the issue, it is why we have such an imbalance, and how can it be corrected.
The trade policies eg. nafta, are a big part of the problem, and Trump is going to help solve this problem.
It's hard to blame them, when we live in a country where this sort of thing has been going on for decades. A grain farmer who raises 1,000 acres of wheat and only has customers for 80% of it will still find a paying customer for the rest in the form of the U.S. Department of Agriculture.
Milk and eggs have to be produced before they can be delivered.
The cash has already been obtained through some prior production (or government printing).
If transactions such as you propose continue, eventually the cash would run out. At the end, the producer of milk and eggs is holding all the cash. The consumer of milk and eggs is now broke.
Which party would you rather be? Which is in the position to dictate future terms for transactions?
It's really no different than a landscaping business, when you think about it. Landscapers -- and certainly the people who WORK for landscapers -- never do landscaping work in their own neighborhoods. The nature of this business is such that you always need a wealthier customer base.
Haha! If you give me eggs and I give you money, I got life sustaining food and you got pieces of paper engraved “In God We Trust”. Better yet give me the eggs on credit so that what you have is a piece of paper (my credit loan agreement) backed by a promise to give you pieces of paper. Even better those engraved pieces of paper you get are guaranteed redeemable for even more pieces of paper.
The big boogeyman called Trade Deficit does not exist. The books balance. I have seen many trade scares. I remember when it was Germany, then Japan, even little ole Korea for awhile, now China, or the Middle east if its oil. the scares are always a government fueled frenzy leading the way to more government control and more government spending and higher taxation.
I believe in balance of trade.
A grocery store that buys lots more produce than it sells is going to go broke.
The history of the banana trade actually teaches some great lessons that would apply to global trade today. Bananas were practically unheard of in the U.S. for much of our history. It wasn't feasible to import them here because they couldn't be kept fresh for the duration of a long ocean voyage from the tropics. This all changed when steamships replaced sailing ships as the standard means of ocean travel. With these faster ships, bananas could be transported to large U.S. cities fast enough that they'd still have a decent shelf life in a grocery store.
The reason this example is relevant today is that it illustrates the importance of transportation methods and logistics in foreign trade. I've said for years that the invention of the shipping container has had a far bigger impact on U.S. trade balances than most people realize.
Any word in this piece about the 95M people out of the workforce, or is that a benefit as well?
Nice big round scary number. So break it down a little.
How many are out of the workforce voluntarily?
How many are out because the are faking disability?
How many are out because welfare pays better than work?
How many are out because they are unemployable?
How many are out because they cannot pass a drug test?
How many of these people will go back to work if there is no Trade Deficit?
I'm surprised the U.S. Labor Department doesn't break out the retirement figures from those who are "out of the work force."
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