Trade Deficit

[Supposn]

annual trade deficits are always net detrimental to their nations GDP, drag upon their numbers of jobs and payroll amounts.

Not always true. All else being equal, if you import a billion dollars worth of raw materials and you use those raw materials to produce 2 billion dollars of some product, then that trade deficit is NOT detrimental. In fact, it would positive to GDP, you would be creating new jobs and greater payrolls.

Task0778, regardless of the nation's annual amounts spent for final sales of goods or service products, if the nation experienced an annual trade deficit, that deficit reduced the nation GDP more than otherwise; (otherwise being if it had not experienced an annual trade deficit).
Respectfully, Supposn​

 

[task0778]

annual trade deficits are always net detrimental to their nations GDP, drag upon their numbers of jobs and payroll amounts.

Not always true. All else being equal, if you import a billion dollars worth of raw materials and you use those raw materials to produce 2 billion dollars of some product, then that trade deficit is NOT detrimental. In fact, it would positive to GDP, you would be creating new jobs and greater payrolls.

Task0778, regardless of the nation's annual amounts spent for final sales of goods or service products, if the nation experienced an annual trade deficit, that deficit reduced the nation GDP more than otherwise; (otherwise being if it had not experienced an annual trade deficit).
Respectfully, Supposn​

And I believe you are mistaken, if the trade deficit is less than the gain in GDP resulting from that deficit then obviously the trade deficit was NOT an overall drag on the economy or jobs/payrolls.

Consider this: When they talk about a favorable balance of trade, what is that term taken to mean? It’s taken to mean that we export more than we import. But from the point of view of our economic well-being and our standard of living, that’s an unfavorable balance. That means we’re sending out more goods and getting fewer in return. Each of you in your private household would know better than that. You don’t regard it as a favorable balance when you have to send out more goods to get less coming in. It’s favorable when you can get more by sending out less.

Then there's the question of jobs: Consider the assertion that U.S. trade deficits with the rest of the world reduce overall employment in the U.S. This assertion, too, is wildly mistaken—largely, but not only, because it ignores the fact that a U.S. trade (or, more precisely, current-account) deficit is matched dollar-for-dollar by a U.S. capital-account surplus (meaning that the dollars in the U.S. current-account deficit return to the U.S. as dollars invested here). Which means that those US dollars that went out to pay for the trade deficit have to come back as investments in our economy or in purchases of US goods and services. Which translates into more jobs.

Consider these facts too: 1) Between 1997 and 2003, the US trade deficit increased by a factor of 5X from roughly $100 billion to $500 billion during a period when US employment increased by more than 8 million and by more than 6%. Between 2003 and 2008, the US trade deficit increased by nearly 44% and by $220 billion, while the US added 7.6 million jobs. And between 2009 and 2017, US employment increased by more than 13 million in the post-recession recovery while the trade deficit increased by $182 billion and by 46%.

 

[Supposn]

to clarify, annual trade deficits are always net detrimental to their nations GDP, drag upon their numbers of jobs and payroll amounts.

I did state that annual net trade deficits are always detrimental to their nation’s volume of domestic production. I did not state that importers or importing is detrimental to USA’s GDP, our domestic production and our numbers of jobs.

Trade Deficit

You're flopping back and forth in this thread.

Why did you say importing is not detrimental to GDP or domestic production?

ToddsterPatriot, can you provide a link to the post you're referring to?
Respectfully, Supposn

 

[Toddsterpatriot]

to clarify, annual trade deficits are always net detrimental to their nations GDP, drag upon their numbers of jobs and payroll amounts.

I did state that annual net trade deficits are always detrimental to their nation’s volume of domestic production. I did not state that importers or importing is detrimental to USA’s GDP, our domestic production and our numbers of jobs.

Trade Deficit

You're flopping back and forth in this thread.

Why did you say importing is not detrimental to GDP or domestic production?

ToddsterPatriot, can you provide a link to the post you're referring to?
Respectfully, Supposn

The one I linked and the one I responded to...….

 

[Supposn]

the issue is whether you support intercity and interstate trade tariff wars like you support international trade tariff wars.

EdwardBaiamonte, those are your issues. You own them and are welcome to them.

I never advocated intercity or interstate trade tariffs. I'm an advocate of mutual “most favored nation” agreements. Import Certificate policy complies with the concept of "most favored nation". It does not discriminate among foreign nations.

Respectfully, Supposn

Most favoured nation - Wikipedia
A most favoured nation clause (also called a most favoured customer clause or most favoured licensee clause) is a contract provision in which a seller (or licensor) agrees to give the buyer (or licensee) the best terms it makes available to any other buyer (or licensee).

 

[Supposn]

Task0778, individual buyers and sellers can, and they generally do derive gains from international transactions. A nation gains additional annual GDP due to experiencing an annual global trade surplus, or a reduction of GDP due to an annual trade deficit. A trade deficit indicates the nation (in aggregate) has purchased more products than it produced. A trade surplus indicates the opposite.
Regardless of a nation's economic condition during any year, due to a trade deficit, (unless a nation enjoys full employment), a nation experiencing a trade deficit will have lesser jobs and payrolls than otherwise; (otherwise being if the nation had not experienced a global trade deficit).
Respectfully, Supposn

 

[Toddsterpatriot]

Task0778, individual buyers and sellers can, and they generally do derive gains from international transactions. A nation gains additional annual GDP due to experiencing an annual global trade surplus, or a reduction of GDP due to an annual trade deficit. A trade deficit indicates the nation (in aggregate) has purchased more products than it produced. A trade surplus indicates the opposite.
Regardless of a nation's economic condition during any year, due to a trade deficit, (unless a nation enjoys full employment), a nation experiencing a trade deficit will have lesser jobs and payrolls than otherwise; (otherwise being if the nation had not experienced a global trade deficit).
Respectfully, Supposn

Regardless of a nation's economic condition during any year, due to a trade deficit, (unless a nation enjoys full employment), a nation experiencing a trade deficit will have lesser jobs and payrolls than otherwise;

Still wrong.

 

[otto105]

It is obvious that something must be done about the exponentially growing budget deficit. More importantly, the trade deficit, which is a huge problem, and is mostly a result of billions of dollars owed to foreign countries. America and the government must do something in order to set imports and exports at equilibrium. Currently, our imports far exceed our exports due to the fact that these foreign power nations are making many products found in America, but at a much cheaper price. In order to reduce trade deficit we must compete with these nations. We can not allow foreign countries to steal some of our GDP. The American producers must fight to compete with foreign prices and the American people most make a stand on domestic consumption.

Let me hear your thoughts on this topic?

First, let’s kill the run on sentence

 

[Supposn]

Task0778, you contend USA purchasing more goods than we produce is a sustainable economic policy that promotes a higher standard of living?
Respectfully, Supposn

 

[task0778]

Task0778, individual buyers and sellers can, and they generally do derive gains from international transactions. A nation gains additional annual GDP due to experiencing an annual global trade surplus, or a reduction of GDP due to an annual trade deficit. A trade deficit indicates the nation (in aggregate) has purchased more products than it produced. A trade surplus indicates the opposite.
Regardless of a nation's economic condition during any year, due to a trade deficit, (unless a nation enjoys full employment), a nation experiencing a trade deficit will have lesser jobs and payrolls than otherwise; (otherwise being if the nation had not experienced a global trade deficit).
Respectfully, Supposn

First of all, I noticed that you totally ignored my post about the capital account surplus that occurs when you have a trade account deficit. What do you suppose all those foreign companies do with our dollars that we paid them? Their choices are that they buy some of our stuff, invest in our businesses or start up their own here, buy our gov't debt, or sit on that money and do nothing with it. I think you can pretty much throw out the last option, they ain't going to sit on our dollars for long, cuz then it's not earning anything and nobody like money that isn't earning a return. And the first 3 options are all good. All of them increase our GDP in varying degrees.

Next:

" A trade deficit indicates the nation (in aggregate) has purchased more products than it produced. " THIS IS WRONG!

I think your problem is specified right here. The truth is that a trade deficit indicates the nation (in aggregate) has purchased more products FROM FOREIGN COUNTRIES THAN IT SOLD TO THEM. But our GDP is more than that, it also includes domestic products we bought and sold to ourselves and some that includes domestic products that used materials from foreign sources, i.e., imports. Consider Hershey's Chocolate:

In order to make their chocolate products, they have to import cocoa beans, true? So, they import these cocoa beans from wherever, and that right there is a trade deficit. We give them dollars and they give us the beans. Which Hershey's uses to make their chocolate products, right? And people are employed to do that, right? And then they sell their chocolates to us for a profit, and GDP is increased.

This example shows that a single trade deficit is not necessarily a bad thing. How then can you show that the aggregate trade deficit is a bad thing? The aggregate is nothing more than all of the single transactions lumped together, right? Did you not see the graph I displayed in post #62? It shows where trade deficits increased but more jobs were created, how do you explain that?

 

[Supposn]

ToddsterPatriot, you provided links to two of my posts. I did post "to clarify, annual trade deficits are always net detrimental to their nations GDP, drag upon their numbers of jobs and payroll amounts".
I did state that annual net trade deficits are always detrimental to their nation’s volume of domestic production. I did not state that importers or importing is detrimental to USA’s GDP, our domestic production and our numbers of jobs.

You contend, but are unable to provide a link to a post where I stated anything otherwise? Why not?

Respectfully, Supposn

 

[task0778]

Task0778, you contend USA purchasing more goods than we produce is a sustainable economic policy that promotes a higher standard of living?
Respectfully, Supposn

That is not what I said. If we purchase more imports than we export then our standard of living is improved and that is sustainable. Again, what are those foreign businesses that we paid our dollars to gong to do with that money? Where's the downside? But we produce a hell of a lot more stuff than we import and export, and that production is enhanced by those imports. Say I go to Walmart and I buy a shirt for $10 that was made elsewhere, instead of a US shirt that costs $20. I can now spend that extra $10 that I saved by not buying the more expensive shirt on something else. That means my standard of living is better than it would have been without the choice to buy the $10 shirt.

 

[Toddsterpatriot]

ToddsterPatriot, you provided links to two of my posts. I did post "to clarify, annual trade deficits are always net detrimental to their nations GDP, drag upon their numbers of jobs and payroll amounts".
I did state that annual net trade deficits are always detrimental to their nation’s volume of domestic production. I did not state that importers or importing is detrimental to USA’s GDP, our domestic production and our numbers of jobs.

You contend, but are unable to provide a link to a post where I stated anything otherwise? Why not?

Respectfully, Supposn

"to clarify, annual trade deficits are always net detrimental to their nations GDP, drag upon their numbers of jobs and payroll amounts".


I did not state that [importers or ] importing is detrimental to USA’s GDP, our domestic production

You don't see the conflict between your two claims? Why not?

 

[Supposn]

ToddsterPatriot, you provided links to two of my posts. I did post "to clarify, annual trade deficits are always net detrimental to their nations GDP, drag upon their numbers of jobs and payroll amounts".
I did state that annual net trade deficits are always detrimental to their nation’s volume of domestic production. I did not state that importers or importing is detrimental to USA’s GDP, our domestic production and our numbers of jobs.

You contend, but are unable to provide a link to a post where I stated anything otherwise? Why not?

Respectfully, Supposn

You don't see the conflict between your two claims? Why not?

ToddsterPatriot, I do not detect any logical error in the sentences, but I'm not a particularly talented writer. I'm passing it on to the best writer I may have access to, but I wouldn't count upon him granting me his time. If you perceive I've committed some grammatical error that inadvertently makes these sentence logically contradictory, please inform us all. I wouldn't bet the farm on this question, but I suspect that you're not the English maven you believe yourself to be.

Respectfully, Supposn

 

[Toddsterpatriot]

ToddsterPatriot, you provided links to two of my posts. I did post "to clarify, annual trade deficits are always net detrimental to their nations GDP, drag upon their numbers of jobs and payroll amounts".
I did state that annual net trade deficits are always detrimental to their nation’s volume of domestic production. I did not state that importers or importing is detrimental to USA’s GDP, our domestic production and our numbers of jobs.

You contend, but are unable to provide a link to a post where I stated anything otherwise? Why not?

Respectfully, Supposn

You don't see the conflict between your two claims? Why not?

ToddsterPatriot, I do not detect any logical error in the sentences, but I'm not a particularly talented writer. I'm passing it on to the best writer I may have access to, but I wouldn't count upon him granting me his time. If you perceive I've committed some grammatical error that inadvertently makes these sentence logically contradictory, please inform us all. I wouldn't bet the farm on this question, but I suspect that you're not the English maven you believe yourself to be.

Respectfully, Supposn

I did state that annual net trade deficits are always detrimental to ...... domestic production


I did not state that importers or importing is detrimental to …. domestic production

 

[Supposn]

I did state that annual net trade deficits are always detrimental to ...... domestic production


I did not state that importers or importing is detrimental to …. domestic production

yes, the grammar and the meaning seems to be correct. Importing and exporting, (i.e. international trade) is not detrimental to a nation's GDP, BUT trade deficits are always net detrimental, (i.e. never net beneficial) to their nation's GDP and in turn drag upon their nation's numbers of jobs and payrolls.

ToddsterPatriot, yes, the grammar of both sentences seem to be correct and their meanings are not contradictory.

Importing and exporting, (i.e. international trade) are not detrimental to a nation's GDP, BUT trade deficits are always net detrimental, (i.e. never net beneficial) to their nation's GDP and in turn drag upon their nation's numbers of jobs and payrolls.

Respectfully, Supposn

 

[Supposn]

Task0778, you contend USA purchasing more goods than we produce is a sustainable economic policy that promotes a higher standard of living?
Respectfully, Supposn

That is not what I said. If we purchase more imports than we export then our standard of living is improved and that is sustainable. Again, what are those foreign businesses that we paid our dollars to gong to do with that money? Where's the downside? But we produce a hell of a lot more stuff than we import and export, and that production is enhanced by those imports. Say I go to Walmart and I buy a shirt for $10 that was made elsewhere, instead of a US shirt that costs $20. I can now spend that extra $10 that I saved by not buying the more expensive shirt on something else. That means my standard of living is better than it would have been without the choice to buy the $10 shirt.

Task0778, we all benefit from cheaper imported goods. But they do not fully compensate for USA's chronic annual trade deficits' effects upon the purchasing power of our median wage rate. This, in turn, affects our numbers of jobs and total payrolls.

The purchasing power of the median wage is the best indicator of our nation's living standard.
Regardless of the nation's economic condition, regardless of its GDP within any particular year, any annual trade deficit was, is, and in the future will be net detrimental to their nation's GDP. Trade deficits are always net detrimental to their nation's GDP. Annual trade deficits indicate the nation has purchased more goods than it produced.

Per Capita GDP indicates how much of the Pie there is to be distributed. Median wage rate proportional to the per capita GDP indicates how it was distributed. Income disparity (when it affects elections) is a political, but not an economic problem. Lesser purchasing power of the nation's median wage is what I, (among populists) are opposed to.

Respectfully, Supposn

 

[Supposn]

First of all, I noticed that you totally ignored my post about the capital account surplus that occurs when you have a trade account deficit. What do you suppose all those foreign companies do with our dollars that we paid them? Their choices are that they buy some of our stuff, invest in our businesses or start up their own here, buy our gov't debt, or sit on that money and do nothing with it. I think you can pretty much throw out the last option, they ain't going to sit on our dollars for long, cuz then it's not earning anything and nobody like money that isn't earning a return. And the first 3 options are all good. All of them increase our GDP in varying degrees. ...

Task0778, capital goods purchase or sales transactions are captured within their nation's balances of trade and are reflected within their GDP.

Most of our trade deficits became foreign loans or other transfers of wealth, They generally purchased USA titles ownership and those trade deficits reduced rather than contributed to our nation's GDP. Only final purchases of USA products, contribute to USA's gross domestic product, (GDP).

[Although we loosely speak of purchasing stocks and bonds as “investments” they do not contribute to USA GDP unless the purchase price was revenue to the issuing enterprise that uses the money to purchase products on the enterprise's behalf. Those, rather than general purchases and sales on the security exchange markets), are the “investments” being referred to within the GDP's expenditure formula as the “investment” sector of transactions].

The current account that you referred to, include some transactions other than import and export of products. Nations' balances of payments are composed of their current and capital accounts. Nations' balances of payments are always kept (comparatively) near zero. When the nation's annual balance of trade is negative, (i.e. when it's a trade deficit), it has always reduced the nation's GDP more than otherwise. The capital account has little or no effect upon the nation's GDP which only reports production.

Respectfully, Supposn

 

[Toddsterpatriot]

I did state that annual net trade deficits are always detrimental to ...... domestic production


I did not state that importers or importing is detrimental to …. domestic production

yes, the grammar and the meaning seems to be correct. Importing and exporting, (i.e. international trade) is not detrimental to a nation's GDP, BUT trade deficits are always net detrimental, (i.e. never net beneficial) to their nation's GDP and in turn drag upon their nation's numbers of jobs and payrolls.

ToddsterPatriot, yes, the grammar of both sentences seem to be correct and their meanings are not contradictory.

Importing and exporting, (i.e. international trade) are not detrimental to a nation's GDP, BUT trade deficits are always net detrimental, (i.e. never net beneficial) to their nation's GDP and in turn drag upon their nation's numbers of jobs and payrolls.

Respectfully, Supposn

Importing and exporting, (i.e. international trade) is not detrimental to a nation's GDP,

The GDP formula shows every dollar of imports reduces GDP by $1.
Are imports always detrimental to domestic production?

 

[Supposn]

Importing and exporting, (i.e. international trade) is not detrimental to a nation's GDP,

The GDP formula shows every dollar of imports reduces GDP by $1.
Are imports always detrimental to domestic production?

ToddsterPatriot, net annual balances of trade affects their nation's GDP; if there's zero net balance then the nation's trade balance had essentially little or no net effect upon their nation's GDP. Trade surpluses are positive, and trade deficits are negative balances of trade.
The actual extents of contributions or reductions to a nations' GDPs due to their nation's global trade are generally more, and never less than the nation's net annual trade balance.

Portions of domestic production that supported production of globally traded goods, but are not reflected within their price valuations, or were affected by the production of globally traded goods, cannot be identified and attributed to global trade.

Respectfully, Supposn