Posted on 02/20/2003 6:34:20 AM PST by maui_hawaii
Acutally it means we just gave away $435B. Deficits are good so long as they are Republican deficits, right?
TRADE DEFICIT: Formally termed a balance of trade deficit, a condition in which a nation's imports are greater than exports. In other words, a country is buying more stuff for foreigners than foreigners are buying from domestic producers. A trade deficit is usually thought to be bad for a country. For this reason, some countries seek to reduce their trade deficit by--
- establishing trade barriers on imports,
- reducing the exchange rate (termed devaluation) such that exports are less expensive and imports more expensive, or
- invading foreign countries with sizable armies.
Fundamentally, we believe that the U.S. government needs to devote more resources and put in place new programs to build wider expertise about China and to protect our industrial base from eroding as a result of our economic relations with China.
-- C. Richard DAmato, chairman
U.S.-China Security Review Commission
(How to improve U.S.-China relations )
If you go to the store and buy $10 worth of groceries, did you "give away" $10? Seems like you got groceries in exchange. Now since your grocer didn't buy anything from you, you do have a trade deficit with him. Big deal. I spend loads of money and never get return purchases from the same people. I run trade deficits with hundreds of people. But my employeer runs a trade deficit with me.
Trade always balances -- even if you can't see through the complexity of the trading.
Otherwise we'd be getting foreign goods for NOTHING IN RETURN. Sweet!
Here we go again with the grocer analogy. There is certainly a difference between domestic trade and international trade. Your analogy would belong to the fictional world of nano-economics. I am talking about trade between us and every other country, not a one to one trade like you suggest. The trade deficit is a measure of what we are buying from overseas that we could produce ourselves. We made Japan and Germany rich with free trade, and now we are moving on to China. At least we had some control over the former two, now we are just enriching what could turn out to be a dangerous foe. Our insistance on building an import economy will be no more successful in the long run than Japan's export economy. What happened to Japan when their labor costs rose to where they could no longer be competitive on price? So far, a decade of stagnation. What happens when we run out of cheap sources of labor? We are forced to pay higher prioces, or rebuild the industry we spent the last few decades exporting overseas. Why go through that wasted exercise when we could have been constantly improving our own industry? And still we haven't even gone into the issue of exporting sovereignty. Your world view is based entirely on theory, and fails to address the growing income divide and salary stagnation in this country.
No such thing. If we import stuff we have to export stuff or they'd be getting nothing in return for the goods they ship us. Only a fool would do that.
If there is a "trade imbalance" it means we got the goods and they got nothing.
So you're gonna say they got dollars. Well dollars are but IOU's. You have to redeem IOU's. You do that by coming back to the US to purchase goods.
Goods inport, goods export. They balance.
Say you go to a party and give one gift, but get six. That would be a "trade imbalance" and you would walk away the winner. If there really were a trade imbalance, products coming in but not going out, we'd be the winner in that exchange.
But in reality it is just a measuring artifact. Those poor countries have no incentive to ship us goods for nothing in return. They're the least ones to be able to afford it. So it really doesn't happen.
Trade balances.
Actually it's more complex than that, initally there is no coming back to the US to purchase goods. Instead the dollars are either kept as dollars, traded for goods or securities, or usually exchanged for foreign currency. If there is a trade deficit, then the exchange rate for the dollar drops making the dollar cheaper and making our goods cheaper. Cheaper goods increaces exports and reduces or eliminates the trade deficet. So eventially they balance, but it may not happen right away.
??? What says they must come back to the US to purchase goods? With their dollars they can purchase their own goods or goods from any other country.
Jobs aren't shipped overseas. They go overseas because the cost of doing business here is too high. Tariffs would raise the cost of doing business here as well as raising the overall price level.
So now you do think a balance is important? The current balance is only achieved if you count the jobs and sovereignty that are exported from our country. But, I'm getting the impression you do not understand the balance. We are basically importing more than we are exporting. It has nothing to do with prices or what we pay. It means that we are becoming dependent on the rest of the world. Good idea? I don't think so, and the oil embargo a few decades ago should lead you to the same conclusion.
When is it going to happen? Is there a point where you would give up on this theory if it did not happen? How long do we have to wait? There is growing evidnece year after year that your explanation only accounts for intermediate changes in the trade deficit, however, the long-term trend toward larger and larger deficits remains unexplained. Let me suggest to you that we are exporting our manufacturing sector in an attempt to build a new world order which no one really wants, but as long as the handouts keep coming, more and more people will get in line.
This is a very important point, and it reminds me a lot of the people who argue that we should disarm along with the rest of the world. Who's the sucker in games like this?
Jobs ARE shipped overseas, not literally or we would have nothing to complain about. Personally I would love to work my same job in a foreign country. Ping WillieGreen for a whole bunch of articles with companies who announce a plant closing coupled with a plant opening overseas, and I think you'll have trouble continuing to deny that jobs are getting exported.
Using the industry lingo here, they are "shipped overseas". I come from a union family - most of which work for the major automakers. I also happen to work at a job supporting one of those companies. Companies ship jobs overseas to take advantage of things that all have to do with cost of production vs profit. Ship jobs to mexico and you have a lower wage base combined with a lower tax outlay - translation - lower cost to manufacture while maintaining same retail pricing = larger profit margin. They just aren't intelligent enough to realize that the reason people afford their product is because they pay people enough money to allow them to afford it (which isn't the case in outsourced labor).
Net impact is a three-fer, loss of paying Jobs for us market AND loss of the investment in the us economy which results in a hit to tax revenues. Three seperate impacts that are all tied together in a nice package. Each time a company outsources, this is the result. We have a narrowing income base with a widening retail market price. From a standpoint of logic, eventually, we lose big time. That or we scrap Nafta and put an end to outsourcing. And we force people to come up to our level on wages rather than gutting our prosperity to lower ourselves to theirs. Charity is one thing. Slitting our throat and wrists in order to donate blood is quite another..
Of course, as a side note, the dirty little secret here in at least a few instances is that the cheap labor ends up costing a bit not accounted for in the standard figuring due to product quality loss. Irony is a beautiful thing sometimes.
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