BluePhantom
Educator (of liberals)
- Thread starter
- #61
Let me ask you one question (despite my lack of hope I'll get a straight answer, I'll ask it anyway).
I'll give you a straight answer. No need to be a jack ass.
Why do we have trade deficits with countries like France, Germany, Japan, Canada and quite a few others where
1. labor is not cheap
2. regulation is not limited, i.e., environmental laws etc.
3. energy is not cheap
4. taxes are not low
5. healthcare is universal
Well the answer to that question is a thread unto itself and the reasons also depend on the specific nation you are talking about. Trade deficits with Canada for example have a lot to do with their oil exports to the United States while that's not a factor when considering a trade deficit with Japan. However, there are several big reasons why we see this:
1) The United States tends to honor our free trade agreements and we allow other nations to get away with not honoring those agreements. As a result the prices of our exported goods are artificially inflated in foreign markets due to tariffs, penalties, taxes, etc. That means our goods are particularly more expensive in foreign markets as compared to domestic goods.
2) We are a nation of spenders. We spend money like pigs. If you give the average American $10 they will spend $20. If the next day you give them $20 (thinking that they spent that much yesterday) they will spend $40. We also consume raw materials like ravenous dogs. The more we have the more we consume. We are also a very impatient society. We want things NOW and we are not willing to wait for them to develop over time. Other nations do not have that mentality...at least not to the degree that we do.
3) We are a very large and very populated nation. We have the third highest population in the world behind only India and China. Now consider that in combination with point #2.
4) We refuse to tap our own energy resources and instead buy energy from other countries which is a major contributor to our overall trade deficits worldwide.
Now when you combine all this you create a lot of problems economically. Let's take the auto industry as a single example.
A previous poster correctly pointed out that Japanese cars are superior to American cars in quality. That's true. The question is "why?" It's not that American industry can't build a durable car, it's that they won't. Depending on the year and the source you look at most studies suggest that the average American family buy a new car every 3-7 years roughly. Let's just split the difference at 5 to make the point.
Ok well the mentality of the American auto industry is: "why build a car that will last 10 years when our customers are only going to keep it for five? Furthermore, if the American consumer is happy buying a car every five years we really don't want it to last ten years because we want to force them into a position where they must buy a car at such a time as they would be normally comfortable doing so anyhow. That means we can cut back on the quality of of parts and production as it relates to durability and that means we spend less money on production and minimize costs."
Now one might think that means they can charge less for the car because they are building it at a lower quality. On the surface that's true...BUT because of our instant gratification culture investors are not satisfied with that. They demand the highest rate of return on their investment in the fastest time possible. This creates an environment where corporations are forced to emphasize short-term financial objectives instead of long-term financial objective. Japan on the other hand is the exact opposite. The Japanese investor is willing to accept lower short term returns so long as the overall rate continues to rise over time.
It's a little baseball. The Japanese are happy to hit 12 singles in a row. Americans don't want singles. We want home runs....fuck that....we want grand slams. Well sometimes we get one....usually we strike out over time swinging for the fences too often. But that's ok with us because we don't mind that we are driving expensive, gas hog, high maintenance, low durability cars of overall inferior quality. Dodge Chargers (for example) look cool, attract chicks, and make our neighbors jealous and that's what we value. The fact that it will be dead in five years is irrelevant. We will feel good now.
Well other countries don't have that mentality. Their consumers are not going to purchase a Dodge Charger that is all those things I mentioned above in addition to the artificial price inflation placed upon it by their government.
Combined with our ridiculous oil policy it's really not that hard to figure out why we run trade deficits. Now reverse all that....establish energy independence and start embracing long-term financial objectives and that trend will quickly reverse....and I might add you will see countries like Canada suddenly unable to provide all the entitlements to their citizens that they do because we will no longer be flooding them with the money with which to do so.
Is that straight enough for you?