Posted on 03/07/2016 9:01:17 AM PST by reaganaut1
Somebody please tell Donald Trump: A trade deficit isnt a loss. You could even argue its a gain.
The Republican presidential frontrunner has been railing against bad trade deals since declaring his candidacy last summer. And hes amplified the criticism, if thats possible, in recent weeks. If you look at China, and you look at Japan, and if you look at Mexico theyre killing us, he said during the latest Republican debate on Fox News. With China were going to lose $505 billion in terms of trade . Mexico, $58 billion. Japan, probably about $109 billion.
Trump is talking about the annual U.S. trade deficit with those three countriesbut the amounts in question are anything but losses. Trade occurs when one party buys something from another, and trade between countries has the same mutual benefit as trade between an individual consumer and a merchant: each side gets something they want. Theyre sending us goods and were sending them green pieces of paper, says Patrick Newport, U.S. economist for forecasting firm IHS Global Insight. I dont see how thats a loss.
Trump's numbers, incidentally, are off. Here are the U.S. trade deficits with each country in 2015:
China: $366 billion
Japan: $69 billion
Mexico: $58 billion
Those numbers might seem high, but in an $18 trillion economy, they don't really worry economists. What does worry economists is Trump's plan to slap tariffs of 35% to 45% on imports from China and Mexico, a tax that would be passed along almost entirely to consumers. Trump's logic seems to be this: Low-wage countries where workers get paid a fraction of U.S. wages are basically undercutting American workers, and therefore ought to be punished. But his tariffs would punish Americans too, especially lower-income consumers who benefit most from cheap imports.
(Excerpt) Read more at finance.yahoo.com ...
“No, the ones we are getting right off the boat from China. Those are worthless, according to you, so give me one of those for free.”
I never said they were “worthless”.
Reading comprehension course for you!
“If its not wealth, then it must be worthless. There is no in-between state.”
Ridiculous! Is a can of beans “wealth” or “worthless”?
Is an underwater house being rented out “wealth” or “worthless”?
“How one accumulates wealth is an entirely separate question from the current question, which is whether the trade between China and the US is imbalanced, so your objection is irrelevant.”
No it isn’t.
By your logic if I buy a flat screen tv, I’m somehow “wealthier”. All I’ve done is taken 500 dollars and traded it for a tv that will be worthless in 5 years.
There’s no net gain, and in time a net loss.
and if we as a nation buy millions of flat screen tvs we’re all NOT wealthier.
On the other hand, if I took that same 500 dollars and bought Apple stock, in 5 years, I’d (most likely) be “wealthier”.
“Wealth is wealth.”
And consumer goods are not wealth.
“I suggest you take a refresher economics course, or just crack open a dictionary.”
Tell you what, go out and buy large amounts of flat screen tv’s and I’ll buy an equal dollar amount of stocks, bonds, real estate, etc...
...and we’ll meet in a couple of years to see who has “wealth”.
Lol.
bfl
On average labor is about 8% of the retail price, and that is the high end for union labor.
These companies are increasing their profit bottom lines, they wouldn't do it to keep the same profit level. I would be pointless.
And we send them our good food and get their tainted food back!!
“On average labor is about 8% of the retail price, and that is the high end for union labor.”
Good, so if your thesis is correct, then any of these companies can slash their prices by 8%, and thereby undercut the competition. Why haven’t any of them done that?
“These companies are increasing their profit bottom lines, they wouldn’t do it to keep the same profit level. I would be pointless.”
You are neglecting to consider the third possibility: that keeping the same profit level is preferable to taking a loss in profits.
If you think the effects of trade ends with the simple exchange of products, you are mistaken.
“I never said they were worthless.
Reading comprehension course for you!”
Au contraire, you said so by implication when you said they were “not wealth”. If something isn’t wealth, then it is worthless. Anything that has worth is wealth. Logic comprehension course for you!
“Ridiculous! Is a can of beans wealth or worthless?”
Obviously, since I can exchange a can of beans for money, or other goods with value, a can of beans must be wealth.
“Is an underwater house being rented out wealth or worthless?”
The fact that it is being rented demonstrates it is wealth.
“By your logic if I buy a flat screen tv, Im somehow wealthier.”
Wrong, that is not “my logic”, you are trying to argue with a straw man. If someone gave you a flatscreen tv, you would be wealthier. If you exchange an equivalent amount of currency for a flat screen tv, there is no net increase or decrease in wealth.
“On the other hand, if I took that same 500 dollars and bought Apple stock, in 5 years, Id (most likely) be wealthier.”
You are still confusing your economic concepts. In this case, you’re confusing appreciating assets (the stock), with wealth. Appreciating assets can indeed create wealth, however that doesn’t mean that your wealth disappears unless you purchase appreciating assets. It may, over time, but that isn’t a foregone conclusion.
“And consumer goods are not wealth.”
Then give them to me for free. The fact that nobody is stupid enough to do that demonstrates that they indeed have value, and are, therefore, wealth.
“Tell you what, go out and buy large amounts of flat screen tvs and Ill buy an equal dollar amount of stocks, bonds, real estate, etc...”
You’re just demonstrating your confusion some more here. I never suggested that consumer goods were a great investment plan. However, consumer goods do have value, and are therefore “wealth”. You cannot disprove that by making apples and oranges comparisons like you are trying to do here.
If the slash their price by 8% what was the point in moving offshore?
Nabisco just announced that Oeros made in Mexico are being reduced in price too! < /sarc >
Or that companies prefer to stay in business
IIRC, ‘wealth’ is more properly measured with utility. That is, what we DO with the money and the goods. Or more accurately, what CAN be done.
If you were talking about simply the free exchange of goods, that’s one thing, but add in jobs and that’s another thing entirely.
I never said they were worthless.
Reading comprehension course for you!
“Au contraire, you said so by implication when you said they were not wealth. “
So you admit I never said they were “worthless”. Good.
“If something isnt wealth, then it is worthless. Anything that has worth is wealth. Logic comprehension course for you!”
Lol, You’re making the common mistake of many economic illiterates and confusing “value” with “wealth”, argument and definition go waaaay back :
“All things which have an exchange value are, therefore, NOT wealth, in the only sense in which the term can be used in political economy. Only such things can be wealth the production of which increases and the destruction of which decreases the aggregate of wealth. If we consider what these things are, and what their nature is, we shall have no difficulty in defining wealth.”-Henry George (PROGRESS AND POVERTY)
Ridiculous! Is a can of beans wealth or worthless?
“Obviously, since I can exchange a can of beans for money, or other goods with value, a can of beans must be wealth.”
Wrong, value vs wealth, see above go study.
Is an underwater house being rented out wealth or worthless?
“The fact that it is being rented demonstrates it is wealth.”
Wrong again, the rent doesn’t cover the mortgage, the market price is lower than what’s owed, so it’s a liability.
By your logic if I buy a flat screen tv, Im somehow wealthier.
“Wrong, that is not my logic, you are trying to argue with a straw man. If someone gave you a flatscreen tv, you would be wealthier.”
Lol...China isn’t GIVING us flat screen TVs.
” If you exchange an equivalent amount of currency for a flat screen tv, there is no net increase or decrease in wealth.”
Wrong again. The value of the TV quickly goes to zero = Loss of 500 dollars.
On the other hand, if I took that same 500 dollars and bought Apple stock, in 5 years, Id (most likely) be wealthier.
“You are still confusing your economic concepts. In this case, youre confusing appreciating assets (the stock), with wealth. “
No you’re confusing value with wealth, consumer goods with assets and assets and liabilities.
And you have the nerve to lecture me!
Go study.
“Appreciating assets can indeed create wealth, however that doesnt mean that your wealth disappears unless you purchase appreciating assets. It may, over time, but that isnt a foregone conclusion.”
Lol, but your wealth WILL disapear if you buy flat screen tv’s.
And consumer goods are not wealth.
“Then give them to me for free. The fact that nobody is stupid enough to do that demonstrates that they indeed have value, and are, therefore, wealth.”
Value is not wealth, see above, go study.
Tell you what, go out and buy large amounts of flat screen tvs and Ill buy an equal dollar amount of stocks, bonds, real estate, etc...
“Youre just demonstrating your confusion some more here. I never suggested that consumer goods were a great investment plan.”
Give me a break! You’ve been saying all along that consumer goods are “wealth”...
You’re incoherent!
“However, consumer goods do have value,”
Right and value is not wealth, as you previously and brilliantly stated: “wealth is wealth”.
” and are therefore wealth.
Sigh. Go study please.
“You cannot disprove that by making apples and oranges comparisons like you are trying to do here.”
Gibberish.
Well, this government thing is strong stuff - you could almost call it a stronghold. I mean if so-called “conservatives” are so emotionally attached to that which is really the opposite of what they are calling themselves, then it is strong medicine indeed - strong delusion and confusion.
It’s a pretty good explanation. Certainly explains why so many uneducated millennials are emotionally attached to Crazy Bernie whose message is totally emotional but who in fact wants to take all their money and have all power over them. Insanity. Hitler. Same as it ever was, I guess. Nothing new I suppose.
I’ll say it again - Lord, help us.
Interesting.
I look out at the skyline in and around Washington D.C. and haven’t seen this many Construction cranes since the late 1990’s. All building office buildings when the current occupancy rate is at or near all time lows.
Now I understand that the “Owners” can and will “Depreciate” that “Asset” and they are motivated by an artificially low “Cost of funds”. They don’t care if they go un-leased since the our tax code allows them to use these “idle assets” as a loss against any producing assets.
Where is the wealth?
Ownership of a physical thing?
I will take $20 from my left pocket in order to put $50 in my right all day long.
Is the difference considered wealth?
If you have a point to make you should make it. I was only trying to provide a very simple illustration of why trade deficits = losses thinking is incorrect.
Trump knows finance.
Open in another window and keep FReeping.
https://www.youtube.com/watch?v=Rksd80-FCAw
LOL! That's funny right there.
“Interesting.
“I look out at the skyline in and around Washington D.C. and havent seen this many Construction cranes since the late 1990s. All building office buildings when the current occupancy rate is at or near all time lows.”
I look out at the rest of the country and see no cranes at all only “AVAILABLE”, “FOR SALE/LEASE” signs hanging on one hook, blowing in the wind.
“They dont care if they go un-leased since the our tax code allows them to use these idle assets as a loss against any producing assets.”
“Where is the wealth?”
China.
“Ownership of a physical thing?”
Perhaps Ownership of A physical thing that produces other physical things, i.e “producing assets.”
“I will take $20 from my left pocket in order to put $50 in my right all day long.
Is the difference considered wealth?”
Imo, The key to real wealth would be your “producing assets”; and using tax code to offset “idle assets” would be “financing”.
Now that we have that straight.
You do know that both Amazon and Price line lost money on EVERY transaction when they first started?
Did you buy their stock?
China is a wholly different animal since they don’t care if their people stave to death.
Yes, until escapee corporations get the message that American workers need jobs. A rising tide floats all boats. More jobs=more paychecks=stronger economy=smaller government=less government control and regulations which contribute to the exodus from America of our manufacturing base.
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