Posted on 07/28/2003 11:01:09 AM PDT by Willie Green
That's it? That's supposed to be the profound question by which free traders fail to respond? It's very easy to describe what the US would be like with a $500B surplus - it would be like Japan.
It would have a very high currency value and wages relative to other countries, which would force it to move its productive capacity offshore to other lower cost counties (Korea/Taiwan/Malaysia/Mexico), including its primary market (US), in order to compete in export trade.
In the home country, people would protest that jobs/investment were moving offshore (true), while the target countries would benefit from the job creation and net capital inflows.
Because its currency value would be so high, the country would experience limited if not a complete absence of tourism, thereby destroying that part of the economy. [Aside: I see zillions of Japanese tourists in CA; I've personally been to many regions in the world, but have no plans on visiting Japan where bottles of beer cost $10.]
Who benefits from this. Certainly not the average American worker. It all goes to the corporation and their leaders siphon it off for their own.
If we are importing more goods than we export, but foreigners are investing the profits and more back here by buying our stocks and bonds, that's a net positive for us in terms of cash flow.
Where does the profit from those stocks and bonds go. To the foreign country. Once again the money in this situation is directed right back to the corporation leaders.
BTW you have not answered my question. All you have tried to do is convince me that trade deficits a) don't exist and b) even if they did exist they would still be good for us.
I totally disagree on both points.
I work for a large corporation and as a blue collar worker I don't see any of the profit put into wages for us. It all goes to the corporate leaders and back into the corporation. While the people at the top never lose any money, those of us who produce the goods get nothing.
You still haven't answered my question. It sounds to me that you think we need trade deficits in order to be profitable.
I suppose I'm just a sucker for a debate, and I'm not detecting an overt troll (though you could be very good, and if so, then I'm owned), so I'll take the bait.
(1) Japan produces a limited number of goods? I mean, where does one start to respond to such a broadly incorrect statement?
(2) We have all the natural resources we need? I mean, again, where does one start to respond to such a broadly incorrect statement (hint: oil)?
Come on, admit it, I'm being trolled, right?
Depends on the location and brand. Try Super 8. As for the degree, I'd look into the ROI on that before wasting my money on a degree.
Ok, I'll answer the question. If I remember, you wanted to know where we would be if we had a $500 surplus instead of a $500 billion deficit. If we had a $500 billion deficit, it would account for about 6 percent of our $8 trillion economy, so I guess we'd be 12 percent better off in the short term. Over the long run we'd lose huge amounts of foreign capital, the benefits of foreign competition, higher prices on both domestic and foreign goods, trade reciprocity as other countries impose tariffs on us, and a monetary crisis as confidence in the dollar erodes. In short, we'd be in the boat Japan is in now.
I totally disagree on both points...
They weren't points, they were facts. You can disagree with facts if you like, I suppose. But that's where democracy gets us in trouble as people vote their instincts and personal interests rather than objectively examining the ramifications of their actions.
I work for a large corporation and as a blue collar worker I don't see any of the profit put into wages for us.
You chose your job. You can choose not to work in that job. Your pay and your circumstances are strictly defined by the demand/supply equilibrium of whatever it is you do. That is an irreversible fact of life for all of us. If the value is not high enough for you, you should change your circumstances. Become self-employed. Work for a better firm. If these corporations are so inefficient then you should be able to make a fortune by competing with them.
By asking me to support trade barriers you are asking me to endure higher prices and economic disaster so that you can make more than you are worth at a job you don't seem to like much, anyway.
No thank you.
This is liberal claptrap. This country was built with imagination, courage, hard work and fortitude. So long as we have those things we can successfully compete. If, instead, we decide we want to make permanent the spare tires around our waists, then we deserve to become the third world country we are becoming.
You want to see the effects of trade barriers combined with socialism? Look at Europe. Double-digit unemployment, massive losses in productivity, and a lazy citizenry that just doesn't care anymore. That's what trade barriers beget, my friend.
The government does have the power to make your life a little more comfortable over the short term. But at what expense? We cannot reverse the global economy by government fiat. We all need to figure out how to profit from the reality of this difficult environment rather than whining about what once was.
Trade barriers and socialism go hand in hand. Why do you think they called it the IRON CUTAIN? Because nothing could get in or out: not goods, not information, not people. Freedom requires free trade.
No, they're going to vote in the next FDR. Which is what none of us on FR want.
This is why we were supposed to have a government limited by the constitution. Unfortunately, tyrrany of the voting majority has become a reality. Just look at California. If we succumb to the temptation to impose trade barriers, God help us.
As far as FDR, he never increased government spending to the degree of GW, so maybe he would be an improvement.
Please name one of them that is economically better off than us. Their trade barriers do them more harm than good. Look at Japan. Look at Europe. They've had trade barriers for decades and their ecomomies are in far worse shape than ours.
Please name one, just one, instance where trade barriers have worked to benefit a national economy over the long term?
Actually, this is true, and a good point. Trade barriers are probably advantageous for countries with high growth rates. They benefited Japan, for example, in the 70's and 80's and they are benefiting China right now. But when the growth levels out, watch out. Japan is suffering the ill-effects of its trade barriers now, just as we suffered ours during the great depression.
Amen, but by the same token, nothing lasts forever, and the cost of freedom is not always what you think it is, specifically, 'stability' and 'certainty' are the opposite of freedom.
We in the IT industry are reliving what our fathers had to go through -- remember that they had great jobs back in the 1950's in factories that actually built things...
the greatest danger is to succumb to the temptation of keeping things static -- for the government will gladly step in and "keep things static" ...forever. this is exactly what has happened in Germany and Europe which is why they are so stagnant and bereft of new ideas.
what is happening in the US is quite troubling - it can be both the dawn of the next big technological thing (perhaps nanotechnology) but it can also be the thin edge of the wedge to a completely determined economy -- which of course is another name for socialism
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