Only a complete dumba$$ thinks the cost reductions of using coolie labor is passed on the consumer.
Posted on 03/07/2016 9:01:17 AM PST by reaganaut1
Somebody please tell Donald Trump: A trade deficit isn’t a loss. You could even argue it’s a gain.
The Republican presidential frontrunner has been railing against “bad trade deals” since declaring his candidacy last summer. And he’s amplified the criticism, if that’s possible, in recent weeks. “If you look at China, and you look at Japan, and if you look at Mexico … they’re killing us,” he said during the latest Republican debate on Fox News. “With China we’re 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 countries—but 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. “They’re sending us goods and we’re sending them green pieces of paper,” says Patrick Newport, U.S. economist for forecasting firm IHS Global Insight. “I don’t see how that’s 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 ...
>>God how Trumpsters hate logic and reality!<<
The numbers speak for themselves.
I am not a “Trumpster” but can read the writing on the wall.
Can you? Or will you continue to vote in the Great State of Denial?
The problem with trade deficits, is persistent trade deficits. That did not continue forever in the nations which have historically done this, from Rome to England.
It’s great while it’s happening, but it is unsustainable. Sort of like supplementing shortfalls with credit cards and then assuming that income level to be the new normal.
If you go to a single market, and I think that’s why these guys are being so irresponsible, then you can realign everyone’s fortunes. Leveraging your nations future for short term gain might seem like a non issue if you are working under the assumption that your nation has no future.
If out flow is bad how come states that produce more than others are not broke? How comes states that produce less are not broke?
Since this author - or evidently you as well - fail to understand WHY there is a huge trade deficit with China, I’ll explain it.
China’s false pegging of the yuan to the dollar ensures a positive trade flow no matter what. That is currency manipulation, to favor their exports over our goods. It was part and parcel of the Clinton sell out of the US, followed by the Bush administration.
By threatening tariffs on Chinese goods, leverage is given back to the US to force the Chinese into allowing their currency to be traded at its real value versus an artificial one. That will bring goods manufactured in the US on par price-wise with Chinese goods, bringing manufacturing back to the US. There will never be large scale buying of US goods in China, where the average salary is almost nothing.
No other candidate - ESPECIALLY CRUZ - says anything about our trade with China. But since Cruz worked at the FTC for Bush, implementing this “free trade”, that’s no surprise.
Trade imbalances are a disaster. What utter BS. This economic voodoo is why Trump is wining.
“All the gain goes to the smaller group of investors.”
The gain goes to government workers:
They’re immune from losing their jobs.
They get annual pay increases.
PBOC takes all the dollars we send their and buys US Treasuries which are used to ....
Pay government workers. (and retirees)
Scammy.
Wrong. Money is not wealth. Goods and services are wealth. Money is the medium of exchange. If money were wealth we could just print up as much as we want and everyone could be rich, but it doesn't work that way. That would only make the goods and services more expensive.
When we send money to China to buy goods it's because we are getting them cheaper than any other source. Getting them cheaper makes us richer. People talk about trade as if the actual goods were static things and there's no economic benefit to us from buying them from China. But there is. Making Chinese goods more expensive makes US poorer.
Trump for President.
I buy a lot on Ebay, over 90% of all goods is made in China.
Quality is garbage, even when you think you get a good deal its usually short lived, your battery explodes, your led or hod light quits early, your supposedly affordable steel item that can be anything from a simple utility knife to automotive parts is sub grade.
And so you just buy more because you cannot even find good stuff made in America.
I say shut down all crap from China, that alone will improve Ametica. China deliberately sells us inferior cheap products to lower our standards of living.
The trade imbalance is why food prices are climbing. We export food and import manufactured goods. Manufactured goods are higher on the value chain than agri products. Hence we lose.
“Those numbers might seem high, but in an $18 trillion economy, they don’t really worry economists.”
Of course they don’t, because the “economists” are part of the 1%, and they derive their incomes from doing the bidding of the super rich who have a vested interest in keeping things as they are. The bigger issue is that all these countries need to open their markets to our products. Japan allows the importation of almost NO new US-made automobiles. The Japanese say that it’s because their citizens don’t want American cars. If that’s the case, why are the Japanese “importing” used American cars? I was in Kyoto not long ago and saw a Chevrolet Crew Cab Duelie Piockup navigating the narrow downtown streets. It had a California license plate on the front and one of those Kanji-Critter lit up rear Japanese plates on the back?
Of course the author is wrong and you are so easily fooled. They don't teach economics or civics in school anymore, not really. And, of course, Reagan is so.... 1980s - only to be brought up in campaign sloganeering and never really explored as to how he governed.
Oh, and the founding fathers are great for a Cruz campaign meme about Constitution stuff.... but again, how they really governed is completely ignored - how about their first tax being a tariff.
The bottom line is China, Mexico etc are all protectionist, and China is particularly good at devaluing their currency. So, there is no free trade. Just like Reagan did, you slap on some strategic tariffs to make free trade actual free trade.
Let's get the facts straight: shipping jobs overseas and to Mexico kills our tax base. Taxing Wall STreet doesn't work because their profits really come from the Fed printing money and giving it to them interest free - so, it's all paper wealth. You need to make things... get it... not just service things or short stock for a living.
This higher prices for the consumer meme is a ruse. How about those Polo shirts, Nike shoes and IPhones - really cheap aren't they.
vote Trump.
“We get lots of stuff, they get dollars, the dollars come back.”
...to the federal government, to grow the federal government.
A stat I have never seen, but would love to see.
Of all the goods the US imports, how many of those are authentic products from some foreign nation, and how many are products of US owned companies that moved production to take advantage of cheap labor in a foreign nation?
How much of what we import from Mexico are authentically Mexican products, and how much simply US company products produced in Mexico?
Much of what is now loosely called trade is not even trade, it’s capital and technology relocation to cheap labor nations. Or, trading cheap labor for US factories and jobs for those who still like the simple little word “trade”.
Only a complete dumba$$ thinks the cost reductions of using coolie labor is passed on the consumer.
Making China trade their currency on open markets should be a requirement for any access to world markets for them. Otherwise their behavior is predatory.
If you think it is smart for us to fully fund China’s military through your desire for low priced items at Wal Mart, then you do not know much about China.
That giant flushing sound is the neocons’ New Whirled Order, going down the tubes.
So don't give me Adam Smith....
A Deficit Is A Gain !
Down Is The New Up !
Equality Is Racist !
I’ll bite.
A family friend bought a new Toyota Land Cruiser for $80,000+. He also had bought one new years ago-for $3,300.
A lot is inflation. Not all.
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