Why can I tell by the headline who posts certain stories?
Posted on 10/20/2004 2:40:59 PM PDT by Willie Green
For education and discussion only. Not for commercial use.
If you think Pedro Martinez' numbers against the New York Yankees look bad (and they do), they're nothing compared with the government's latest monthly trade figures. Dismal as the Boston Red Sox ace's performance against the Bronx Bombers has been, he looks like a champion next to the trade numbers, which are one important measure of the U.S. economy's performance against the rest of the world.
Not that the trade surplus and deficit figures tell us everything we need to know about America's competitiveness. In particular, they compare apples and oranges – how U.S. products fare in overseas markets versus how foreign products do in U.S. markets. And even studying the trade figures industry by industry can be misleading. By definition, they can't shed light on which U.S. industries depend how heavily on exports and/or face major foreign competitors, and which U.S. industries sell mainly to the humongous U.S. market and/or face little import competition.
Still, according to mainstream economic theory, these trade balance figures say a great deal about the relative strength of America's economy, whether it is waxing or waning, and what its future composition will be. The reason? What a country trades most successfully – where it wracks up its biggest surpluses - eventually becomes what it makes most successfully and prolifically. And what it trades least successfully – where it wracks up its biggest deficits - eventually becomes what it makes least successfully and prolifically. That, in plain English, is what comparative advantage in all its forms is all about.
The deficits also show that the United States is a country that consumes far more than it produces. Although the economic price for this profligacy has appeared minor so far, anyone expecting the situation to last forever and is blasé about its worsening must believe there really are free lunches after all.
The August, 2004 trade figures released Oct. 14 by the Census Bureau show an overall U.S. deficit in goods and services of $54.04 billion, second all-time only to June´s $55.2 billion. This year´s January-August deficit level, as a result, is more than 19 percent larger than last year´s, meaning that the annual deficit figure is on its way to smashing last year´s $421 billion record total.
Even worse, the U.S. deficits keep soaring despite the soft patch recently encountered in domestic growth, and the gradual continued weakening of the dollar. The first is supposed to keep imports down and the second is supposed to buoy exports, but little of these macroeconomic effects are being felt.
Further, the closer one examines the deficit figures, the worse they look. Remember the rule that what a country trades most successfully it will wind up making most successfully? Well, by this logic, the United States doesn´t have much of a long-term future as a manufacturer. August´s manufacturing deficit was the second highest on record, and this year´s cumulative manufacturing deficit so far is more than 21 percent higher than last year´s January to August record total of $307.45 billion.
And don´t think that the problem is concentrated in so-called dinosaur, smokestack industries – which, incidentally, create most of America´s best-paying jobs on average. The $4.5 billion August deficit in advanced technology products set a new record, too.
Of course, many supporters of current U.S. trade policies see no special value in maintaining a world-class domestic manufacturing at all. But the August trade figures should scare them, too. America´s longstanding surplus in tradable services shrank by 19 percent, to $3.2 billion – the lowest surplus since the Census Bureau began tracking this trade in 1992. Since 2001, moreover, the January-August service surplus has declined a stunning 27 percent, to $33.07 billion. Still think that we can export our way out of our enormous national trade deficits and resulting debts by speeding up our shift to a service economy? Please!
Even more worrisome, much evidence indicates that the United States is also seeing its competitive edge erode in information technology and professional services – the supposed industries of the future, for which displaced manufacturing workers are supposed to reeducate and retrain themselves, and which America´s youth should target during their schooling.
The U.S. surplus in the “other private services” category, which captures trends in these sectors, did rise from $31.44 billion in the January-August, 2001 period to $33.15 billion in January-August, 2002. Since then, however, the surplus has fallen by 4.4 percent, including a fractional decrease in August, 2004, to $3.96 billion. In August, 2003, the surplus was $4.08 billion – 2.94 percent higher.
When America began losing older industries such as textile and apparel and steel, free trade cheerleaders predicted that the forces of comparative advantage would push the nation up the technology ladder to automobiles and ships and machine tools and consumer electronics. When these industries began faltering, Americans were told not to worry, for they would be freed up to concentrate on high tech goods like computers and semiconductors and aircraft and advanced telecoms equipment. When many of these industries began migrating en masse to high-income Japan and then low-income countries like China, professional services like law, engineering, and finance, and info-tech services like software writing were then declared the new economic future.
The latest trade figures show that these sectors won´t be saviors for the vast majority of America´s workforce, either – leaving two obvious alternatives. Americans´ comparative advantage will be in sales – hawking to each other the wares of other nations. Or maybe we´ll just all go back to the farm. But the only problem with that scenario is that farming is also under intensive attack from foreign competition.
ping
Why can I tell by the headline who posts certain stories?
Ever noticw that right before every election the obligatory "republican trade deficit threatens economy" bullshit starts.
Four more years!!!!
Four more years!!!!
Four more years!!!!
Four more years!!!!
Four more years!!!!
Because we can!!!
More crap from Buchananland.
Bush is having the difficulties he has in Ohio and Michigan because they have borne the brunt of "free trade" policies.
If that's the case, then why did Gore (the boy of the feller who signed NAFTA) win Michigan?
This is bunk. People have been complaining about the trade deficit for years, but in fact, a new economic theory holds that trade deficits are a conseqence of wealth. We have a trade deficit because we have so much more to spend.
DETROIT -- General Motors will cut about 900 jobs early next year at a pickup plant in Pontiac, Mich., in a move underscoring sagging demand for some of its most profitable vehicles.
Some of the affected workers, who account for almost 20 percent of the plant's work force, could be offered jobs at other GM plants, the automaker said Wednesday.
Detroit automakers have cut tens of thousands of jobs in recent years as they face mounting competition from foreign rivals such as Toyota Motor Corp., which has scored huge gains in U.S. market share.
GM will cut a third shift at the plant in January, which builds the Chevrolet Silverado and GMC Sierra full-sized pickups, spokesman Stefan Weinmann said.
"It's really a market-driven decision so that we can better align our production output with current demand and also what we see for future demand," Weinmann said.
The pickups are two of GM's top-selling vehicles, but both of the trucks are aging and face competition from newer models. This month, GM launched an incentive program called Truckfest that included as much as $2,500 cash back on many of its 2005 model-year pickups.
Weinmann said GM would discuss with the United Auto Workers union the possibility of placing some of the workers at other plants. Terms of the union contract prevent GM from permanently laying off workers. Typically, the laid off workers receive 95 percent of their take-home pay from government unemployment benefits and supplemental pay.
The job cuts follow last week's financial results when GM posted the first quarterly loss in its core automotive business since strikes effectively shut its North American operations for most of the third quarter of 1998.
GM last week said it would cut up to 12,000 jobs in Europe, where the automaker has lost money since 1999 and grapples with growing competition from Asian automakers, weak European economies and high labor costs.
Automotive News / September 27, 2004
Toyota Motor Corp. will invest $250 million in its Huntsville, Ala., engine plant to more than double its output of V-8 engines for light trucks.
The investment will give Toyota U.S.-made V-8s for the full-sized Sequoia SUV made in Princeton, Ind., and the Tundra pickup that will be built in San Antonio, Texas.
Huntsville builds 120,000 V-8s a year only for the Indiana-built Tundra pickup. When the expansion is completed in late 2006, the plant will supply 270,000 V-8s annually.
Tell that to 11th century Byzantium, 17th century Spain, 18th century Holland, and 20th century Britain.
"We have so much more to spend". Have you any idea how sunk in debt the American household and corporation are ? We have been running up the plastic to disguise net downwards social mobility. The bankruptcy rates have been astronomical because households cannot survive even short periods of unemployment.
If you had asked me when I was 20 how I would feel if I made $XXXXX a year (what I'm making now), I would say, "I'm going to be rich!"). However, in 2004, I am quite middle-classed. In fact, if I lived in CA, I'd be near poverty-level. It'a sll relative.
That's not an economic theory.
It's a political theory, intended to misguide, snooker and bamboozle the American People.
One months figures do not an economy make - especially before an election.
Sienfeld looks into the camera and says: "Bush"
Buy all that cheapo Chicom stuff now before the sinking dollar puts them out of reach of the "new peasantry" of the United States of America.
Due to Asian over production you can buy great 19" LCD monitors for $379 at NewEgg and it ain't gonna last
All Toyota profits from their USA production go to Japan. You are colonized and too numbed down to know it or care.
NIPPON-NOMICS 101
Jobs here/profits there
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