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U.S. 2002 Trade Deficit Reaches $435.2B
Excite News ^ | 2.20.03

Posted on 02/20/2003 9:31:20 AM PST by Enemy Of The State

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To: Toddsterpatriot
Whatever happened to freedom?

I don't know ---it seems the Communists have won because our government has given them all our jobs and our entire economy. We're supporting Communist economies, freedom is gone.

51 posted on 02/20/2003 1:39:55 PM PST by FITZ
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To: FITZ
You're the one who wants to limit freedom. You work for the government, don't you?
52 posted on 02/20/2003 1:42:52 PM PST by Toddsterpatriot
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To: Toddsterpatriot
Excellent point. Willie was peddling this stuff a few weeks ago, and was absolutely schooled by some freeper who I forget, that knew his stuff. In any case, Germany's economy, for example, is based more on production than ours, but I sure wouldn't want it. Our trade deficit is an example of the relative strength of our economy compared to the rest of the world, in fact, only a few categories, clothing, autos, oil, and electronic commodities like TV's make up $400 billion of the deficit by themselves.
53 posted on 02/20/2003 1:44:02 PM PST by Citizen of the Savage Nation
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To: Willie Green
Other than some of the statistics you cite, you more or less make up everything you say about the economy as you go.
54 posted on 02/20/2003 1:44:17 PM PST by lasereye
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To: Toddsterpatriot
Where is the freedom with our high taxes when we're supporting so many unemployed, displaced NAFTA workers, and a very large welfare class? Our economy won't be better until Americans are working. We're not really going to get taxes down, they may shift them around is all. Texas looks like it's headed for a state income tax.
55 posted on 02/20/2003 1:45:56 PM PST by FITZ
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To: lasereye
you more or less make up everything you say about the economy as you go.

It appears that's more your specialty: babble some irrelevant and incoherent nonsense, then turn around and belittle those who dismiss you.
Buzz off, I'm not playing your game today.

56 posted on 02/20/2003 1:59:17 PM PST by Willie Green (Go Pat Go!!!)
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To: Citizen of the Savage Nation
Don't forget Japan. Willie was probably worried about them in the 1980's. They had huge surpluses and their economy is much more manufacturing based than ours.

They've had what, 10 years of recession in the last 13 or so. They now have the largest government deficit compared to GDP of all the industrialized countries.

57 posted on 02/20/2003 2:02:08 PM PST by Toddsterpatriot
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To: Willie Green
So, what countries have the largest trade surplus? Are their economies better than ours? Are their citizens better off than ours?

Still waiting for your wisdom.

58 posted on 02/20/2003 2:11:34 PM PST by Toddsterpatriot
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To: Toddsterpatriot
Right, before it was Japan, now its China who we want to emulate, because they manufacture everything. No thanks.
59 posted on 02/20/2003 2:20:36 PM PST by Citizen of the Savage Nation
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To: Toddsterpatriot
 U.S. Trade with China 
(billion dollars)
Year
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
U.S. Imports
19.0
25.7
31.5
38.8
45.5
51.5
62.6
71.2
81.8
100.1
102.3
125.1
U.S. Exports
6.3
7.4
8.8
9.3
11.7
12.0
12.9
14.2
13.1
16.3
19.2
22.0
Trade Deficit
12.7
18.3
22.7
29.5
33.8
39.5
49.7
56.9
68.7
83.8
83.1
103.1

China Says Economy Grew 8.0 Pct in 2002
'China to Replace US as the Engine for World Economy'

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 D’Amato, chairman
U.S.-China Security Review Commission
(How to improve U.S.-China relations )


60 posted on 02/20/2003 2:28:17 PM PST by Willie Green (Go Pat Go!!!)
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To: Willie Green
So, China's economy is better than ours? What's their GDP per capita again?

Remember when the CIA thought that East Germany's economy was bigger than West Germany's?

You really believe China's economy grew 8% in 2002?

61 posted on 02/20/2003 3:11:16 PM PST by Toddsterpatriot
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To: Willie Green
With their roaring economy its a wonder boats aren't smuggling Americans into China.
62 posted on 02/20/2003 3:12:57 PM PST by Toddsterpatriot
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To: Toddsterpatriot
I believe that loss of our manufacturing technology to China severely jeopardizes our National Security.
63 posted on 02/20/2003 3:15:46 PM PST by Willie Green (Go Pat Go!!!)
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To: Willie Green
Well, that's different than saying the trade deficit is a threat.
64 posted on 02/20/2003 3:25:42 PM PST by Toddsterpatriot
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To: Toddsterpatriot
No it's not.
65 posted on 02/20/2003 3:33:19 PM PST by Willie Green (Go Pat Go!!!)
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To: Willie Green
I believe that loss of our manufacturing technology to China severely jeopardizes our National Security.

Which manufacturing technology have we lost that threatens our security?

66 posted on 02/20/2003 3:43:04 PM PST by Toddsterpatriot
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To: Willie Green
So, how is the trade deficit a threat?
67 posted on 02/20/2003 3:43:47 PM PST by Toddsterpatriot
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To: Enemy Of The State
Hooray for Wal-Mart and the Chicoms! They have combined to screw the US economy.
68 posted on 02/20/2003 3:53:52 PM PST by Paulus Invictus (Coke make)
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To: Toddsterpatriot
"It is as useless to argue with those who have renounced the use and authority of reason as to administer medication to the dead."

-- Thomas Jefferson


69 posted on 02/20/2003 3:55:53 PM PST by Willie Green (Go Pat Go!!!)
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To: Willie Green
Quoting Jefferson, that'll work. What did he say about China?

Your answers always seem to involve keeping taxes high and raising costs to American consumers.

Did Jefferson say that was a good idea?

70 posted on 02/20/2003 6:24:39 PM PST by Toddsterpatriot
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To: Toddsterpatriot

"The prohibiting duties we lay on all articles of foreign manufacture which prudence requires us to establish at home, with the patriotic determination of every good citizen to use no foreign article which can be made within ourselves without regard to difference of price, secures us against a relapse into foreign dependency."

--Thomas Jefferson to Jean Baptiste Say, 1815.

"We are infinitely better off without treaties of commerce with any nation."

--Thomas Jefferson to James Madison, 1815.


71 posted on 02/20/2003 6:28:25 PM PST by Willie Green (Go Pat Go!!!)
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To: Willie Green
I don't see the word China in that quote.
72 posted on 02/20/2003 6:30:27 PM PST by Toddsterpatriot
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To: Willie Green
I'm not going to waste my time ...

In the movie Love Story, the famous line went "love means never having to say you're sorry". I think on FR "I'm not going to waste my time" is another way of saying "I will never admit I may be wrong"

73 posted on 02/20/2003 10:10:10 PM PST by staytrue
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To: Willie Green
and belittle those who dismiss you

It's a little like the kettle calling the pot black don't you think ?

74 posted on 02/20/2003 10:16:27 PM PST by staytrue
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To: lasereye
You don't know what you're talking about. Exports keep going up.

Actually I do know what I'm talking about. The trade balance keeps getting worse, despite the increase in exports. That we are transfering wealth by investing more of our capital each year in foreign production for domestic consumption cannot be disputed. That same capital invested in domestic production for domestic consumption, instead of trade, would cause twice the wealth at home. By encouraging international division of labor (which is different than trade), we are decreasing the per capita capital investment in domestic labor, i.e., decreasing our standards of living, and we are increasing the per capita capital investment in foreign labor. Increased exports are more than offset by increased imports, and the effect is a net loss of capital.

The formula for GNP is C + I + G + X - M. Since M has been consistently worse than X for the last 40 years, the government decided to use the term GDP, which conveniently sets aside M, to avoid having to show red ink.

Now if X + M were spent on C instead, our DNP and GDP would increase by exactly that much. If X and M were equal, then entire capital expended in trade would amount to a wash - the "zero sum" that free traders claim doesn't exist.

Now the reality is we have to trade. But we do not have to "free trade" - which is to say, we do not have to engage in division of labor with other countries. The cost for the privledge to trade with us should be an ad valorum tariff. The cost for free trade - i.e., division of labor -- should be statehood, in which case the division of labor might really be beneficial to all involved. But few people think of trade in this way, because of the low degree of mental rigor applied to the issue in our colleges and our talking head shows.

75 posted on 02/21/2003 8:56:06 AM PST by Publius Maximus
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To: Southack
So I remain unconvinced of even "service" jobs as being "valueless" or manufacturing jobs always being the panacea.

For me the issue isn't what the domestic labor is doing, services or manufactures, but how much capital is being invested in it. My concern is that we are engaging in division of labor with other nations without the proper free market framework (which our Constitution provides for the 50 United States), and in so doing causing capital that would otherwise be invested in domestic labor to be invested in foreign labor - the exact OPPOSITE of what Smith identified as the most efficient use of a nation's capital for the purpose of increasing national wealth. As a matter of policy, we should promote domestic industry and domestic capital investment, and discourage activity that would cause that capital investment not to occur. I don't pretend to know what that industry "ought" to be doing, but I damn well want it to be doing it with American labor. Not, mind you, because I have any illusions or delusions of grandeur about labor per se, but because I (selfishly) want to live in a wealthier, more prosperous country. Call me silly.

76 posted on 02/21/2003 9:08:35 AM PST by Publius Maximus
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To: Publius Maximus
It's something to be looked at and watched today, but I wouldn't sound the Red Alert until or unless our annual trade deficit is LARGER than our annual domestic GDP growth.

In 2002 it was 3.6% foreign deficit versus 4.7% domestic growth. Reverse those numbers and then you'll have a valid point (presuming that it isn't too late by that time).

77 posted on 02/21/2003 9:15:58 AM PST by Southack (Media bias means that Castro won't be punished for Cuban war crimes against Black Angolans in Africa)
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To: Publius Maximus
The trade balance does keep getting worse, but your statement that exports have failed to materialize is clearly wrong. They have gone up substantially. The single biggest factor in the large imports is that the dollar has been strong, which is a good thing, and which makes imported goods cheaper, which is a good thing.

Also, your statement that we are investing more capital each year in foreign production is as erroneous as your statement that exports failed to materialize. Trade deficits result in net foreign investment in the United States. The net foreign investment is equal to the amount of the deficit.

Net foreign investment equals the amount that foreigners invest in the U.S. (their purchase of assets here) minus the amount that U.S. residents invest abroad (U.S. residents' purchase of assets in other countries). Net foreign investment generally equals net exports.

"For example, if you and your neighbors want to buy jackets made in Mexico, a local wholesaler trades dollars for Mexican currency, the peso, and buys the jackets. The person or bank that traded the pesos for dollars must have a plan for those dollars. One possibility is that the person plans to buy something in the U.S.; U.S. exports would rise. Another possibility is that the person plans to invest in the United States (lend money to someone here or actually invest in the U.S. economy, perhaps purchasing stock or buying a company).

If the first option is chosen, exports will rise with imports and there will not be a merchandise trade deficit. However, if the second option holds, there will be a merchandise trade deficit (exports will be less than imports). And, if the "extra" dollars are used by foreigners to invest in the U.S., then net foreign investment (the difference between U.S. investments abroad and the investments of foreign residents in the U.S.)will be negative, equal to the merchandise trade deficit (the value of exports minus imports ­ referred to as "net exports").

Net exports equal net foreign investment. In other words:
--------------------------------------------------------------------------------

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Exports -­ Imports = U.S. Investments Abroad ­- Foreign Investments in the U.S.

If dollars leave the U.S. to buy foreign goods and they are not used, in turn, to buy goodsin the U.S., then they must be used for some other purpose, and that is often directinvestment in the U.S. economy.Here is one way to think about it. The total value of all final products produced in a yearin the United States is called the Gross Domestic Product or GDP. The total value of final goods produced in the United States equals the total value of what is purchased.

These purchases can be broken down into several components:
Consumption Expenditures (C)
Investment Expenditures (I)
Government Spending (G)
Net Exports (Exports ­- Imports) (NX)

Exports are part of domestic production. Imported goods are produced abroad. Becauseimports are included in measures of consumption, investment and government expenditures -- yet they are produced abroad ­imports must be subtracted out.

This can be written:

Y = C + I + G + NX
Or alternatively:

Y ­ C ­ G = I + NX

If the economy is closed to international investment, there will be no imports or exports. In this case, domestic saving (S) will tend to equal domestic investment (I) in equilibrium. The interest rate will adjust until the quantity supplied of loanable funds (by those who save) is equal to the quantity demanded of loanable funds (by those who want to invest).

But, in an open economy, investments move across countries. If foreign individuals, from whom we purchase goods, decide to use the dollars they earn to invest in the U.S.economy, then NX will be negative and an equal amount of funds will be invested in the U.S. by foreign individuals and firms. Foreigners who hold our dollars will directly invest in the United States. Mathematically, S -­ NX = I (remember, NX is negative when imports are greater than exports, so "minus NX" is a positive number).

Alternatively, we can write:

S ­ I = NX

If I > S, this means that NX < 0; in other words funds are flowing into the U.S. from abroad. (We must be borrowing from the rest of the world.)
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If I < S, this means that NX > 0; in other words, U.S. savings are flowing out of the U.S. for investment abroad.

One more time: If imports are greater than exports, NX will be negative. Dollars will be in the hands of individuals in foreign countries who do not want to buy goods and services from us but, instead, plan to invest in our economy.

A merchandise trade deficit (imports greater than exports) means that net foreigninvestment is negative as well (more funds are invested in the U.S. than we invest abroad). The dollars that are traded to pay for our imports come back in the form of investments in the U.S. by foreign individuals or companies. We buy goods and services from them, they "buy" investments here.

Is this good or bad? Economists would say "resources are going to their highest valueduse." However, if you are an exporter in the U.S., you won't like it! Overall, foreign investment has a positive effect on economic activity in the U.S. When investment in the U.S. rises, the rate of capital growth increases (factories are built or remodeled). Investments in the U.S. economy also spur research and development, which leads to innovation and technological advances. Increases in the physical capital stock and advances in technology increase the productivity of U.S. labor and other resources, pushing up the market value of workers, thereby increasing domestic incomes and wealth overall.

So, don't get confused when you see a large trade imbalance. All you see, when you look at the trade balance, is the merchandise side, not the financial side of trade."

MacroeconomicsTopic 10: "Explain why the merchandise trade deficit is offsetby capital flows and investment in debtor countries"

78 posted on 02/21/2003 9:45:25 AM PST by lasereye
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To: Willie Green
i>babble some irrelevant and incoherent nonsense,

What did I say that was irrelevant or incoherent? The single post I made was to ask you to explain how tax increases would help the trade deficit. You obviously have this rote response when anyone points out that you don't know what you're talking about.

You want an example of irrelevant or incoherent? Here's one:

Service sector activities do not create wealth, they merely transfer, redistribute and eventually dissipate wealth as consumption. Thus, as value-added activities move offshore and the U.S. labor force shifts to the Service Sector, wealth is dissipated, not created. And the U.S. standard of living declines as a result.

This is idiotic second grade kind of stuff. By this logic production of goods also represents dissipation of wealth, since all physical goods eventually wear out. The definition of wealth includes financial assets, which are not physical. Most wealth is in that form, not physical assets, as anyone who's not a complete idiot understands. Those financial assets can be exchanged for either goods or services.

Your attempt to assert services somehow don't have a value is nutty. Your focus on the term "value added" is pointless. This refers only to manufacturing because only a manufacturing process has distinct stages where value is "added". The value of anything is what people pay for it. A service and good have the same value if their price is the same. Production of either goods or services adds to wealth.

79 posted on 02/21/2003 10:00:09 AM PST by lasereye
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To: Toddsterpatriot
So, what countries have the largest trade surplus? Are their economies better than ours? Are their citizens better off than ours?
You're thinking is one dimensional. There is such a thing as trade balance, where you have an equal amount of imports and exports. This would be the ideal place to be, not a net importer and not a net exporter.

80 posted on 02/24/2003 8:53:07 PM PST by sixmil (down with open-borders-tariff-free traitors)
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To: sixmil
You're thinking is one dimensional. There is such a thing as trade balance, where you have an equal amount of imports and exports. This would be the ideal place to be, not a net importer and not a net exporter.

I noticed you didn't answer my question. Saying a trade balance is best shows how little you understand of economics.

So, where is the list of countries with big trade surpluses and how great are their economies? Japan, Germany? Excuse me while I laugh.

81 posted on 02/24/2003 9:01:58 PM PST by Toddsterpatriot
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To: Toddsterpatriot
So, where is the list of countries with big trade surpluses and how great are their economies? Japan, Germany? Excuse me while I laugh.
I don't want a trade surplus, that's why I said balanced trade. No surplus, no deficit, get it? I don't want to be a stagnant export economy like Japan, and I don't want to be an import dependent nation like we are currently becoming. I want the benefits of trade without the downside, that's all.

82 posted on 02/24/2003 9:07:16 PM PST by sixmil (down with open-borders-tariff-free traitors)
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To: sixmil
I don't want a trade surplus, that's why I said balanced trade.

Well, if you don't want it, that must be best for the economy.

The point of this thread was the big trade deficit with China. You know what a trade deficit is, right? We send China little green pieces of paper and they send us computers, CD's, DVD's etc.

Willie is worried that they'll keep our little pieces of green paper and never give them back. If they want to do that, we've got plenty of paper.

If they use that paper to buy stuff from us, you and Willie are happy and American jobs are created. If they use that paper to buy t-bills, they reduce American interest rates which helps the economy and creates American jobs and reduces interest the govt pays to finance the federal deficit.

So, either way, I don't see a problem

Enlighten me, show me the problem.

83 posted on 02/24/2003 9:19:40 PM PST by Toddsterpatriot
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To: sixmil
I don't want to be a stagnant export economy like Japan,

Aha, so it is possible to have a trade surplus and still have a bad economy. Quick, tell Willie. There must be a Jefferson quote that applies.

84 posted on 02/24/2003 9:20:58 PM PST by Toddsterpatriot
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To: Toddsterpatriot
The point of this thread was the big trade deficit with China. You know what a trade deficit is, right? We send China little green pieces of paper and they send us computers, CD's, DVD's etc.
So you plan on not honoring those greenbacks for all debts public and private?
Willie is worried that they'll keep our little pieces of green paper and never give them back. If they want to do that, we've got plenty of paper.
Nope.
If they use that paper to buy stuff from us, you and Willie are happy and American jobs are created. If they use that paper to buy t-bills, they reduce American interest rates which helps the economy and creates American jobs and reduces interest the govt pays to finance the federal deficit.
I don't care what they do with the money, I just think we should give them less of it. You however, must be very worried about what they do and don't do since that is part and parcel with your version of free trade.
So, either way, I don't see a problem

Enlighten me, show me the problem.

The problem is that you are investing in everybody else's manufacturing sector. The income gap is growing. Real wages are not growing. People are losing good paying jobs. Mothers have to work instead of staying home raising their kids. You are making a communist country wealthy. You are making us dependent on the rest of the world.

85 posted on 02/24/2003 9:27:10 PM PST by sixmil (down with open-borders-tariff-free traitors)
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To: sixmil
So you plan on not honoring those greenbacks for all debts public and private?

Sure, I'll honor the pieces of paper, all they have to do is buy stuff. If they prefer paper, I guess they could eat it.

The income gap is growing.

Income gap, you sound like Clinton.

Real wages are not growing. People are losing good paying jobs. Mothers have to work instead of staying home raising their kids.

Mothers have to work because the goverment takes half our money, not because China gives us cool stuff for green paper.

You are making a communist country wealthy. You are making us dependent on the rest of the world.

Yeah, China is so wealthy that Americans risk their lives to get smuggled into China everyday, oh wait, Chinese get smuggled here. Nevermind.

86 posted on 02/24/2003 9:55:49 PM PST by Toddsterpatriot
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To: Toddsterpatriot
Mothers have to work because the goverment takes half our money, not because China gives us cool stuff for green paper.

Yeah, China is so wealthy that Americans risk their lives to get smuggled into China everyday, oh wait, Chinese get smuggled here. Nevermind.

And why is it that gov't takes half our money? Because they no longer collect tariffs. You do realize that the gov't used to fund itself almost entirely through tariffs. Tax-cut Republicans like you have a single solution for all that ails us, tax cuts. Find a tax and cut it, problem solved. And it's a perpetual power source too since Dems will raise taxes, and then you get to go cut them again. Is it ever necessary to accomplish anything tangeable or is does the rhetoric justify itself? You need to learn to read more carefully. I said we are making the Chinese wealthy, not the Chinese are wealthy.

87 posted on 02/25/2003 8:03:20 AM PST by sixmil (down with open-borders-tariff-free traitors)
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To: sixmil
And why is it that gov't takes half our money? Because they no longer collect tariffs.

Yeah, if only we lived in the 1800's and the government was funded only thru tariffs.

Tax cuts aren't the solution for everything, but neither is the government. If we ever cut government to where it should be (much less than 20% of GDP) then maybe we could fund it with tariffs alone. I'd be willing to cut income taxes to zero and try that.

Yes, we're making the Chinese wealthy,

The result has been a quadrupling of GDP since 1978. In 2001, with its 1.27 billion people but a GDP of just $4,300 per capita, China stood as the second largest economy in the world after the US. At this rate of growth, by 2024 they'll be up to $17,200 per capita.

The US has the largest and most technologically powerful economy in the world, with a per capita GDP of $36,300.

They still have a long way to go.

http://www.cia.gov/cia/publications/factbook/geos/ch.html

88 posted on 02/25/2003 8:21:18 AM PST by Toddsterpatriot
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To: Southack
3.6% of our annual GDP is lost in our annual trade deficit. OK, but how much did our economy grow in that same year? 4.7%.

Not sure where you get your data from but, economagic.com has '02 GDP at about $9.5T and yoy growth at 2.75%

If my math is correct that would put the $435B trade deficit at approx. 4.6% of GDP.

89 posted on 02/25/2003 8:22:42 AM PST by getsoutalive
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To: Toddsterpatriot
Yeah, if only we lived in the 1800's and the government was funded only thru tariffs.
Are you suggesting that the system did not work then, or that it won't work now?
Tax cuts aren't the solution for everything, but neither is the government.
So tariffs are big government, but trade deals are not?
The result has been a quadrupling of GDP since 1978. In 2001, with its 1.27 billion people but a GDP of just $4,300 per capita, China stood as the second largest economy in the world after the US. At this rate of growth, by 2024 they'll be up to $17,200 per capita.
Sounds like you are suggesting that China is not a threat until they are equal to us in per capita GNP. Did you make the same argument with respect to the Soviets during the cold war?

90 posted on 02/25/2003 9:11:45 AM PST by sixmil (down with open-borders-tariff-free traitors)
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To: sixmil
Are you suggesting that the system did not work then, or that it won't work now?

I suggested no such thing. You get government spending down to 10% of GDP and I'll support tariffs to finance the spending. As long as income tax is eliminated.

Tax cuts aren't the solution for everything, but neither is the government.

So tariffs are big government, but trade deals are not?

Tariffs which raise costs to consumers and give the government more money would be big government, yes.

The result has been a quadrupling of GDP since 1978. In 2001, with its 1.27 billion people but a GDP of just $4,300 per capita, China stood as the second largest economy in the world after the US. At this rate of growth, by 2024 they'll be up to $17,200 per capita.

Sounds like you are suggesting that China is not a threat until they are equal to us in per capita GNP. Did you make the same argument with respect to the Soviets during the cold war?

I was never worried about the GDP of the Soviets. I'm worried about the Chinese, sure, but because they're aggressive and expansionist. Their military will be a problem, eventually. No argument there.

91 posted on 02/25/2003 9:24:18 AM PST by Toddsterpatriot
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