Posted on 05/31/2019 7:15:12 AM PDT by SeekAndFind
I keep reading where the Chinese are flaying us in trade. Balance of trade deficits keep going up, and the Chicken Littles scream that the sky is falling.
Seems to me balance-of-trade worries are misplaced. Supposedly, we got equal value for what we spent; it's just easier to quantify the dollars we put up than the goods they put up.
Example: Who got more out of the deal when you bought your car? All you got was a car, but the dealer got, say, $40K. Is your balance of trade with the dealer out of whack? Not at all. He got money; you got a car. Fair trade. Both sides got what they wanted at an agreed on price.
Meanwhile, a guy the next town over is selling solar equipment at $40K per average house. He bought a new car from the car dealer, but the car dealer didn't return the favor — he didn't buy solar equipment, even though the cost of solar in that specific town was artificially reduced by government tariff. In the free market, it would go at $45k. This is nice for solar workers in town, but it puts them out of work in the car dealer's town.
But the real issue isn't tariffs or balances of trade. The real issue is that the car dealer just doesn't like solar, even at special prices. By extant thinking, that's not fair. If solar guy's going to spend money in car dealer's town, then car dealer guy should spend money in his town. Right?
I'm willing to be educated on this, but in this example, nobody got shafted, and everybody did what he thought was in his own best interest. Balance of trade considerations didn't enter in at all, anywhere, even though the solar guy was "cheating."
(Excerpt) Read more at americanthinker.com ...
The author is right. Trade deficits are not necessarily a problem, since the main benefit of trade is the goods and you services you get from another country.
If China was a “friendly democracy” that was not hell bent on world domination, a trade deficit wouldn’t be so bad, within reason. In addition to the massive trade deficit, China also steals intellectual property on a massive scale.
Permit free trade between all nations regardless of communist affiliation and regardless of whether or not items could be used for war.Don’t have time for anyone who would sell the national security of the USA for a bowl of pottage. Those who are willing to engage in commerce with hostile godless communist nations, and thus helping to fulfill a specific goal of the communists as noted above, are worshipers of Mammon and haters of God.
— Communist goal #4
Stupid article.
Trump is making a huge mistake dealing with China with blunt tariffs. If he had control of the levers of power, he would do far better prosecuting Chinese individuals and companies that steal and misuse patents and intellectual property. Read Milton Friedman. Free trade increases wealth and prosperity. Eventually it all balances out. Either they recycle dollars that they are getting for all the desirable goods sent to America or they sit on a lot of paper in vaults. It is true that China is being hurt badly by these tariffs ( no sympathy for a repressive country run by evil communists) but the tariffs are hurting the American economy and putting Trump’s reelection at risk. The real tragedy will be if the Democrats win in 2020.
> Trump is making a huge mistake dealing with China with blunt tariffs.
Blunt tariffs are the 2x4 being used to get their attention. The other items will follow downstream of that. It’s part of the “sales” process.
>>>Lighthizer has said before Congress that the main problems with China are forced technology transfer, the stealing of intellectual property, and currency manipulation.
If forced technology transfers were reduced, might that actually encourage more firms to produce in China?
What about all those Americans who lost their jobs because the US companies decided it would be cheaper to off-shore?
Why did Henry Ford pay his assembly workers so well?
He said he did it because he knew they’d buy Ford autos.
It was this attitude a cyclical, ever-growing economy that got the United States the largest, most prosperous middle class in history.
Now who has the largest middle class? Red China.
So, while our elites make their fortunes, we further burden out middle class with ever increasing taxes to support welfare for those who can’t find work. We further teach laziness and a “gimedat” culture.
What did the liberals say? Oh, yes, “Learn to code.”
Henry Ford attitude beats the liberals’ every time.
Trump’s tariffs to get a balance back into our trade is because he loves America and Americans more than $$$.
I remember when “Price-earnings ratios don’t matter any more”. I have learned that the mentality in the world during the ‘20s was that “it’s a no-brainer; sure stock price are high; but they keep going up so everyone wins!”; ditto for the NINJA loans during the housing boom. Ditto for the massive debt the world is carrying; it all works out (more or less) until it doesn’t; then implosion.
When you regard imbalance and unequal equations, sooner or later reality sets in.
The author takes a short-term, transactional view of the trade deficit, as if each transaction occurred in a vacuum.
The reality is, that the real cost is longer term - in the loss of industries, their jobs, and the tax revenues they produce.
The Chinese (and other unfair competitors) will accept a short term loss on transactions (they subsidize it), to bankrupt the competition, and take their business long term. They have centrally planned and systematically targeted US industries for takeover for decades, and we have blindly allowed it to happen.
Their subsidies and anti-competitive cheating are all illegal under WTO rules, but they have simply not been enforced, as Chinese officials bought influence and corrupted politicians (worldwide).
The economic theory of free trade only works in practice if it is fair. China is one of the most extreme examples on Earth of predatory, merchantalist, unfair trade practices.
RE: What about all those Americans who lost their jobs because the US companies decided it would be cheaper to off-shore?
I’m not sure if I get this reasoning. If our purpose is to always help workers keep the jobs that they currently have, then it can be argued that all new technology should not progress because doing so will necessarily make old skills obsolete.
Think of all the switchboard operators, stagecoach drivers, slide rule, calculator makers and even Fortran programmers who have lost their jobs because new technology replaced them all.
The argument that making things in China will cause jobs to be lost here in the USA applies as well to jobs that will be lost in New York because factories have moved to say, Georgia or Tennessee. Is New York going to put a tax on products made in Georgia or Tennessee?
Also, it has been said that even if China were to increase her tariffs against US goods and even if tariffs were put on Chinese goods, American businesses can MOVE THEIR FACTORIES to other countries like Vietnam, Thailand, India or the Philippines.
Well if they did this, how is this going to restore jobs lost in the USA unless we demand that these countries pay the same benefits and wages that we pay our workers?
Maybe. But the alternative is to let the Chinese force US firms to provide their technology and then produce those same items destroying the US firm. Add to that Chinese government subsidies to give their own firms even more of an advantage.
Hopefully, US firms could relocate elsewhere and not put their futures at risk.
So far the tariffs are not hurting the US economy. No inflation and it appears the Chinese are lowering their export prices to retain access to the US market. The tariffs may actually cause deflation.
China has no alternative market for the $500 billion worth of exports to the US. Our exposure is $130 billion a year in exports to China. We have all the leverage.
That “We got something” argument is retarded. It skips right over where the magic dollars came from. If one country basically only sells, and another buys... the buying country will soon be broke.
Like the buying a car argument. But a car every month, and the dealer bus nothing from you. Let me know how that works out. More free traitor BS
The problem with the trade deficit with China is that it was artificially created by state lending and currency manipulation and is part of a larger Chinese strategy of using export-led industrialization to build Chinese state power. China is increasingly aggressive toward the US with the express aim of displacing the US as the world’s dominant power. Do we really want to feed cash to such an adversary?
The problem with the trade deficit with China is that it was artificially created by state lending and currency manipulation and is part of a larger Chinese strategy of using export-led industrialization to build Chinese state power. China is increasingly aggressive toward the US with the express aim of displacing the US as the world’s dominant power. Do we really want to feed cash to such an adversary?
America first. China understands the danger have their Market being flooded with foreign products and they charge us hefty tariffs.
Globalists worship trade, not America. And they are entering the next phase by importing the third world here. Then they can have cheap labor and cut transport costs.
Globalists hate the America people
First, we don't have free and fair trade with China or most of the world. It is not a level playing field.
Second, you need to analyze why US firms relocated overseas in the first place. Lower labor costs, less regulation, lower taxes, etc. play a role. The US must create a more friendly environment for business. Trump is doing that with the lowering of the corporate tax rate, cutting regulations, lowering energy costs, etc. We also have the advantages of dependable property rights, stable government, an educated work force, etc.
Third, tariffs work. When the US implemented the so-called chicken tax (25 percent tariff on light trucks imposed in 1964 by the United States under President Lyndon B. Johnson in response to tariffs placed by France and West Germany on importation of U.S. chicken), it resulted to this day in the moving a European car manufacturers to the US to make light trucks and SUVs. There is a reason why BMW, Mercedes, Toyota, etc. have major production facilities in the US. The message: Relocate to the US and avoid the tariffs. The fallacy of NAFTA resulted in an outflow of automotive jobs to Mexico and Canada where cars were made and then shipped for sale into the US without any tariffs.
Some of the most prosperous times in US history came during times of tariffs. The US is the most lucrative and largest export markets in the world. We have all the leverage when it comes to dictating terms on who gets access to that market. Until Trump arrived, we didn't use that leverage and instead allowed the world to take advantage of our very low tariffs while they protected access to their own markets thru high tariffs and other trade barriers.
China will have real political problems if they lose access to our markets. They are far more dependent upon exports than we are. Their loss of jobs would be catastrophic.
Our Founders had no issue with tariffs. They use them to fund the country for about the first hundred years, until the Wilson era.
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