Trade deficits are net detrimental to their nation's GDP

[Supposn]

Trade deficits are net detrimental to their nation's GDP.

Economists do not refute annual trade deficits detrimental affects upon their nation's GDP. They certainly do not contend that nation's annual trade deficits were net beneficial to their nation's GDP.
Economists, (even economists not opposed to trade deficits), do not refute THE FACT of nation's annual trade deficits, (i.e. their negative balances of international trade), are negative factors when determining their nation's annual GDP.

Due to USA's annual trade deficits, our annual GDPs are less than otherwise.

Many creditable economists contend USA's trade deficit's economic detriment to our entire GDP is comparatively small and not of great concern. But even economists not opposed to trade deficits, do not refute the fact, due to USA's chronic annual trade deficits, our annual GDPs are less than otherwise.
I agree with other credible economists contending a nation's net balance of trade's amount understates the nation's international trades' effects upon the nation's GDP. International balance of trade only accounts for the values of products crossing the nation's borders. It does not account for domestic production that's generated by production for export, but is not reflected within the prices of internationally traded products.
USA's annual trade deficits are particularly detrimental to wage earners, their dependents, and enterprises more sensitive to the financial conditions of those great population segments.

Respectfully, Supposn

 

[Harpy Eagle]

Many creditable economists contend USA's trade deficit's economic detriment to our entire GDP is comparatively small and not of great concern.

I agree with other credible economists contending a nation's net balance of trade's amount understates the nation's international trades' effects upon the nation's GDP.

 

[theHawk]

Trade deficits are net detrimental to their nation's GDP.

Economists do not refute annual trade deficits detrimental affects upon their nation's GDP. They certainly do not contend that nation's annual trade deficits were net beneficial to their nation's GDP.
Economists, (even economists not opposed to trade deficits), do not refute THE FACT of nation's annual trade deficits, (i.e. their negative balances of international trade), are negative factors when determining their nation's annual GDP.

Due to USA's annual trade deficits, our annual GDPs are less than otherwise.

Many creditable economists contend USA's trade deficit's economic detriment to our entire GDP is comparatively small and not of great concern. But even economists not opposed to trade deficits, do not refute the fact, due to USA's chronic annual trade deficits, our annual GDPs are less than otherwise.
I agree with other credible economists contending a nation's net balance of trade's amount understates the nation's international trades' effects upon the nation's GDP. International balance of trade only accounts for the values of products crossing the nation's borders. It does not account for domestic production that's generated by production for export, but is not reflected within the prices of internationally traded products.
USA's annual trade deficits are particularly detrimental to wage earners, their dependents, and enterprises more sensitive to the financial conditions of those great population segments.

Respectfully, Supposn

A “trade deficit” itself doesn’t mean much, it just means we are wealthy enough to import more than we export. But outsourcing our jobs and the manufacturing of critical supplies and technology now makes us beholden to China and others.

 

[Toddsterpatriot]

Trade deficits are net detrimental to their nation's GDP.

Economists do not refute annual trade deficits detrimental affects upon their nation's GDP. They certainly do not contend that nation's annual trade deficits were net beneficial to their nation's GDP.
Economists, (even economists not opposed to trade deficits), do not refute THE FACT of nation's annual trade deficits, (i.e. their negative balances of international trade), are negative factors when determining their nation's annual GDP.

Due to USA's annual trade deficits, our annual GDPs are less than otherwise.

Many creditable economists contend USA's trade deficit's economic detriment to our entire GDP is comparatively small and not of great concern. But even economists not opposed to trade deficits, do not refute the fact, due to USA's chronic annual trade deficits, our annual GDPs are less than otherwise.
I agree with other credible economists contending a nation's net balance of trade's amount understates the nation's international trades' effects upon the nation's GDP. International balance of trade only accounts for the values of products crossing the nation's borders. It does not account for domestic production that's generated by production for export, but is not reflected within the prices of internationally traded products.
USA's annual trade deficits are particularly detrimental to wage earners, their dependents, and enterprises more sensitive to the financial conditions of those great population segments.

Respectfully, Supposn

Math is still math.

So what?

 

[Pete7469]

This is why I propose selling 20% of our most liberal population into chattel slavery.

I'm not fucking joking either.

We need to be rid of these parasites. Not only are they simply unproductive despotic oxygen thieves, they reduce the quality of life for everyone else and interfere with productive people.

Of course we'd have to offer incentives and we could do exchange programs with a country like North Korea. We can take 1 political prisoner from them, for 10 bed wetters, 1000 pounds of rice, 10 processed wild hogs, 10 dozen eggs, 120 ears of corn, 50 pounds of cheese, 100 gallons of milk and 10 chickens plus shipping and actually be gaining on the deal even if they convert the bed wetters to fertilizer. After all, that's all commies will ever amount to any fuckin way.


.

 

[Supposn]

A “trade deficit” itself doesn’t mean much, it just means we are wealthy enough to import more than we export. But outsourcing our jobs and the manufacturing of critical supplies and technology now makes us beholden to China and others.

The Hawk, an annual trade deficit indicates the NET EXPEDITURES OF THE ENTIRE NATION, (i.e. the net expenditures of its governments', population, and enterprises) exceeded their entire annual production.

Refer to the GDP the expenditure formula. Respectfully, Supposn

 

[Supposn]

Golfing Gator: some cites regarding trade deficits' economic effects:
//////////////

U.S. Trade Deficits: Causes, Consequences, and Policy Implications | Economic Policy Institute (epi.org)

Consequences of trade deficits
... Trade deficits have harmed the domestic economy in at least three direct ways. First, the steady growth in our trade deficits over the past two decades has eliminated millions of U.S. manufacturing jobs. Between 1979 and 1994, trade eliminated 2.4 million jobs in the U.S.2 Growing trade deficits were responsible for most of these job losses, which were concentrated in manufacturing, because most trade involves the sale of manufactured goods. …
//////////////


The U.S. Trade Deficit: How Much Does It Matter? | Council on Foreign Relations (cfr.org)





The deficit has heightened concerns among some economists over job losses and their repercussions in local communities.


//////////////


Trade Deficit: Definition, Causes, and Effects (thebalance.com)

… The Bottom Line​

A nation with a trade deficit spends more on imports than it makes on its exports. In the short run, a negative balance of trade curbs inflation. But over time, a substantial trade deficit weakens domestic industries and decreases job opportunities. A huge reliance on imports also leaves a country vulnerable to economic downturns. Currency devaluations, for example, make imports more costly. This situation stimulates inflation.5 6


At present, the United States has had a trade deficit every year since 1976. ...


////////////////


Trade Deficit: Definition, Causes, and Economic Effects - 2022 - MasterClass


[economist Paul Krugman who's not opposed to a national trade deficit, makes these points. Respectfully, Supposn] : 4 Potential Trade Deficit Disadvantages


Depending on the overall economic context, a growing trade deficit can be a cause for concern.


1. Foreign buyout: If a country has a trade deficit over the long term, this can have a negative impact on the ownership of businesses, property, raw materials, and other assets. A country with a trade deficit will attract foreign investors who can buy assets from the country. The more this happens, the less the country retains ownership of its own assets.

2. Currency problems: If a country has a fixed exchange rate, a trade deficit may make devaluation of the currency impossible, which will negatively impact wages and employment in the country.

3. Increased budget deficits: Some economists believe there are strong correlations between trade deficits and budget deficits. A country with a trade deficit may keep their national budget tight for fear of increasing the trade deficit further. Budget deficits can impact all parts of civic life, including education, infrastructure, and business.

4. Reliance on foreign countries: If a trade deficit is caused by a large amount of importing from another country, that can leave the importing country at the mercy of the exporting country’s foreign trade policy or supply chain issues. Some see this power as a potential security threat.

 

[Supposn]

Trade deficits:
Among those contending international trade deficits are or are not net detrimental to their individual nation's net economy, all or almost entirely all who are credible economists do mutually concur upon some facts regarding trade balance's effects upon their nation's gross domestic product, (GDP).

All or almost entirely all credible economists do not refute the following:

1. The purposes and uses of GDPs are statistical comparative representations of net amount of goods and services production during a reported duration.
   
2. GDPs not considering and/or expressed per capita and in the currencies adjusted for their common purchasing powers are less useful.
   
3. Surplus trade nations' net balances of trade increased, and trade deficit nations' reduced their nation's GDP more than otherwise.

[Credible economists contending USA's great annual trade deficits are not significantly detrimental to USA's economy believe so due to those deficits' being small proportions of USA's entire GDP amounts. It's not those facts, but rather the conclusions arrived at due to the facts that are the points of disagreement. I doubt if any credible economist contends trade deficits and their consequential reductions of their nation's GDP are net beneficial to their nation's economy.]

I agree with those contending despite trade deficit's lesser proportional relationship to USA's GDPs, due to trade deficits being particularly detrimental to wage earners, and wage earners' dependents, and enterprises more sensitive to those population segment's financial well-being, trade deficit's detriments to our nation's economy are not insignificant.

I also believe beyond trade deficits amounts and proportions to USA's GDP, our nation net suffers many effects that are not expressed as amounts of currency values.

Producers sometimes are beneficiaries of goods or service products at lesser or of no cost to them. Those additional contributions to globally traded products are, (as all products are) reflected within their nation's GDP; but because those additional products entire values were not reflected within the prices or values of globally traded goods, to those extents balances of trade understated their effects upon their nations' GDPs;
[i.e. I contend to those extents the net balances of nations' global trades understate their contributions to surplus nation's and their detriments to trade deficit nation's GDPs.]

Respectfully, Supposn

 

[Toddsterpatriot]

Trade deficits are net detrimental to their nation's GDP​

What do they do to our standard of living?

 

[Supposn]

Trade deficits are net detrimental to their nation's GDP
What do they do to our standard of living?

... I agree with those contending despite trade deficit's lesser proportional relationship to USA's GDPs, due to trade deficits being particularly detrimental to wage earners, and wage earners' dependents, and enterprises more sensitive to those population segment's financial well-being, trade deficit's detriments to our nation's economy are not insignificant. ...

Whining Toddsterpatriot, unless a nation is effectively experiencing “full-employment”, annual trade deficits are net detrimental to their nation's GDP and thus, to their living standards. Respectfully, Supposn

 

[Toddsterpatriot]

Whining Toddsterpatriot, unless a nation is effectively experiencing “full-employment”, annual trade deficits are net detrimental to their nation's GDP and thus, to their living standards. Respectfully, Supposn

The imported things I buy improve my standard of living more than the money I spent on them.

Whether or not we have full employment. Even if you're only making minimum wage.

 

[para bellum]

The Hawk, an annual trade deficit indicates the NET EXPEDITURES OF THE ENTIRE NATION, (i.e. the net expenditures of its governments', population, and enterprises) exceeded their entire annual production.

Refer to the GDP the expenditure formula. Respectfully, Supposn

Well no, it does not. GDP is total annual production. (x-m) is just one part of the equation.

~70% of GDP is C, which is a much larger number than (x-m).

Imports are part of domestic production, so m is incorporated into C. I purchase stainless steel from Taiwan, and turn it into a product to sell in the US. The value of the product is added to C, but the cost of the stainless goes into m where it belongs.

That makes is very hard to separate out the impact of a trade deficit. If (x-m) is a negative number, then yes it subtracts from the total GDP calculation, but it is detrimental only if the import could be produced more economically in the US. Because otherwise the production would not exist at all, and it's contribution to C would also go away. Or you would be less competitive because you are using overpriced inputs.

The other thing trade deficits do is inject US dollars into foreign capital reserves, which is a good thing if you want to be the reserve currency for the World.

Some trade deficit is desirable- excess trade deficits are not because they squeeze out domestic production.

Managed trade (which is what we have) takes away comparative advantage and replaces it with political favors, and that sucks.

*** I'm not an economist, just a lowly member of the merchant class.

 

[Toddsterpatriot]

Well no, it does not. GDP is total annual production. (x-m) is just one part of the equation.

~70% of GDP is C, which is a much larger number than (x-m).

Imports are part of domestic production, so m is incorporated into C. I purchase stainless steel from Taiwan, and turn it into a product to sell in the US. The value of the product is added to C, but the cost of the stainless goes into m where it belongs.

That makes is very hard to separate out the impact of a trade deficit. If (x-m) is a negative number, then yes it subtracts from the total GDP calculation, but it is detrimental only if the import could be produced more economically in the US. Because otherwise the production would not exist at all, and it's contribution to C would also go away. Or you would be less competitive because you are using overpriced inputs.

The other thing trade deficits do is inject US dollars into foreign capital reserves, which is a good thing if you want to be the reserve currency for the World.

Some trade deficit is desirable- excess trade deficits are not because they squeeze out domestic production.

Managed trade (which is what we have) takes away comparative advantage and replaces it with political favors, and that sucks.

*** I'm not an economist, just a lowly member of the merchant class.

Don't try logic on Supposn, he's immune.

 

[para bellum]

Don't try logic on Supposn, he's immune.

I'm sympathetic to his position- I think our trade deficits are completely out of control. There is so much manipulation in these "Free Trade Agreements", favored sectors are handed beneficial terms at the expense of disfavored sectors.

They are always the same- a page of flowery language about "breaking down barriers", followed by several hundred pages of tariff schedules and quotas and carve-outs for politically connected companies.

I'm good with free trade and true comparative advantage, but I'm in manufacturing, which the US has sacrificed to give favors to Big Ag. That makes me hate these FTA's (and the WTO).

So don't be surprised if I go off on trade one of these days, lol.

 

[Supposn]

Well no, it does not. GDP is total annual production. (x-m) is just one part of the equation.

~70% of GDP is C, which is a much larger number than (x-m).

Imports are part of domestic production, so m is incorporated into C. I purchase stainless steel from Taiwan, and turn it into a product to sell in the US. The value of the product is added to C, but the cost of the stainless goes into m where it belongs.

That makes is very hard to separate out the impact of a trade deficit. If (x-m) is a negative number, then yes it subtracts from the total GDP calculation, but it is detrimental only if the import could be produced more economically in the US. Because otherwise the production would not exist at all, and it's contribution to C would also go away. Or you would be less competitive because you are using overpriced inputs.

The other thing trade deficits do is inject US dollars into foreign capital reserves, which is a good thing if you want to be the reserve currency for the World.

Some trade deficit is desirable- excess trade deficits are not because they squeeze out domestic production.

Managed trade (which is what we have) takes away comparative advantage and replaces it with political favors, and that sucks.

*** I'm not an economist, just a lowly member of the merchant class.

Para Bellum. concerning "Trade deficits are net detrimental to their nation's GDP", you posted "no, it does not". Your post correctly quoted my statement, ... an annual trade deficit indicates the NET EXPEDITURES OF THE ENTIRE NATION, (i.e. the net expenditures of its governments', population, and enterprises) exceeded their entire annual production ... "; but there's nothing within your post that refutes that statement. Why did you then write “it does not”if you didn't intend to refute that statement?

You realize that stating “imports are domestic production” is incorrect? You inadvertently lost the words “foreign nations'” prior to the “domestic”? You meant to post, ”Imports are part of domestic production”?

I disagree with your statement, “It, [i.e. a nation's annual trade deficit] subtracts from the total GDP calculation, but it is detrimental only if the import could be produced more economically in the US”. Unless a nation has effectively full-employment, annual trade deficits ALWAYS reduced their GDP more than otherwise and was net detrimental to their economy. You cannot site a single nation or historical time when that wasn't the case? You write of nations' annual trade deficits as if their entire economies were based upon and their population's consuming extremely few varieties of products. We're discussing nations annual aggregate productions, imports, and exports.

You're not differentiating between the benefit of transactions to the principal participants and to their nations. We all should do what's best for ourselves. A trade deficit nation is acting contrary to their nation's economic interests. Refer to Wikipedia's “Import Certificates” article, Wickipedia's “Import Certificates” article - Search
Respectfully, Supposn

 

[para bellum]

Para Bellum. concerning "Trade deficits are net detrimental to their nation's GDP", you posted "no, it does not". Your post correctly quoted my statement, ... an annual trade deficit indicates the NET EXPEDITURES OF THE ENTIRE NATION, (i.e. the net expenditures of its governments', population, and enterprises) exceeded their entire annual production ... "; but there's nothing within your post that refutes that statement. Why did you then write “it does not”if you didn't intend to refute that statement?

Let me try again.

"an annual trade deficit indicates the NET EXPEDITURES OF THE ENTIRE NATION,"

This is incorrect. The entire equation is expenditures. Expenditures are a proxy for production. C,G,I, and (x-m) are ALL expenditures. That's why it's called the Expenditure Equation. Net exports (x-m) is just one component. If it's a deficit it's subtracted, if it's a surplus it's added.

You realize that stating “imports are domestic production” is incorrect? You inadvertently lost the words “foreign nations'” prior to the “domestic”? You meant to post, ”Imports are part of domestic production”?

I did say imports are part of domestic production. That is to say, imported components are used in domestic products.

All of GDP is "production", so whether the product or service is counted in C or G or I or x, m has to be subtracted, to put the "D" in GDP.

I disagree with your statement, “It, [i.e. a nation's annual trade deficit] subtracts from the total GDP calculation, but it is detrimental only if the import could be produced more economically in the US”. Unless a nation has effectively full-employment, annual trade deficits ALWAYS reduced their GDP more than otherwise and was net detrimental to their economy. You cannot site a single nation or historical time when that wasn't the case? You write of nations' annual trade deficits as if their entire economies were based upon and their population's consuming extremely few varieties of products. We're discussing nations annual aggregate productions, imports, and exports.

I will give you an example. You can have 100% unemployment, and you are still not going hire people and build Boeings if you have no titanium. You need that titanium to produce the Boeing.

Importing the titanium increases m in the expenditure equation, but it is offset by the value added that is hidden in G or I or x. That is not detrimental to the GDP total.

If you stop your titanium imports to reduce your trade deficit, you will hurt your economy because you lose the offset. The benefit of the money saved by not importing the raw material is not offset by not building airplanes.

In the end, your GDP will be smaller if you reduce your trade deficit in that manner.

You're not differentiating between the benefit of transactions to the principal participants and to their nations. We all should do what's best for ourselves. A trade deficit nation is acting contrary to their nation's economic interests. Refer to Wikipedia's “Import Certificates” article, Wickipedia's “Import Certificates” article - Search
Respectfully, Supposn

Benefits to the principals are not macroeconomics.

I did comment on them in my remarks about the trade agreements, which I do not support in their current form. They harm poor people in other countries for Monsanto's gain, and they harm domestic manufacturing by allowing Ford and GM to hire those displaced farmers at cheap labor rates and get favorable import duties on the products.

In Canada, it's dairy and timber, but every country has favored sectors that enjoy protectionism.

 

[Supposn]

Let me try again. "an annual trade deficit indicates the NET EXPEDITURES OF THE ENTIRE NATION have exceeded the nation's entire net production of goods and services. note that it fully accounts for imports that are included as components within products for both domestic or export consumption.
But you posted "This is incorrect. The entire equation is expenditures. Expenditures are a proxy for production. C,G,I, and (x-m) are ALL expenditures. That's why it's called the Expenditure Equation. Net exports (x-m) is just one component. If it's a deficit it's subtracted, if it's a surplus it's added. ..." .

Para Bellum, I'll try again. Your post begins by correctly quoting my statement, ... an annual trade deficit indicates the NET EXPEDITURES OF THE ENTIRE NATION, (i.e. the net expenditures of its governments', population, and enterprises) exceeded their entire annual production. (I should have had a period or a comma here to make it clearer).
In this excerpt from Wikipedia's GDP article, Y = GDP.
There's nothing within your or my posts that refute this. Where do you find any disagreement between us on this point? Respectfully, Supposn
///////////////
Excerpted from Wikipedia's GDP article, (Y = GDP). Note that (X - M) = (The nation's net international balance of trade).
Refer to Gross domestic product – Wikipedia : “... Expenditure approach:
The third way to estimate GDP is to calculate the sum of the final uses of goods and services (all uses except intermediate consumption) measured in purchasers' prices. …
GDP (Y) is the sum of consumption (C), investment (I), government Expenditures (G) and net exports (X – M).

Y = C + I + G + (X − M) “.

 

[para bellum]

... an annual trade deficit indicates the NET EXPEDITURES OF THE ENTIRE NATION, (i.e. the net expenditures of its governments', population, and enterprises) exceeded their entire annual production. (I should have had a period or a comma here to make it clearer).
In this excerpt from Wikipedia's GDP article, Y = GDP.
There's nothing within your or my posts that refute this. Where do you find any disagreement between us on this point? Respectfully, Supposn

The disagreement is that the trade deficit is only the (x-m) portion of the expenditure equation. A trade deficit only says imports exceeded exports.

It does not mean "the net expenditures of its governments', population, and enterprises exceeded their entire annual production", because expenditures are the way production is defined.

Allow me to illustrate this with your sentence:

"the net expenditures of its governments', population, and enterprises (GDP) exceeded their entire annual production (GDP)"

Comprende? Net exports are just there to make the number "Domestic". (We didn't make that stainless steel I imported from Taiwan, we can't claim we produced it.)

 

[Supposn]

The disagreement is that the trade deficit is only the (x-m) portion of the expenditure equation. A trade deficit only says imports exceeded exports.

It does not mean "the net expenditures of its governments', population, and enterprises exceeded their entire annual production", because expenditures are the way production is defined.

Allow me to illustrate this with your sentence:

"the net expenditures of its governments', population, and enterprises (GDP) exceeded their entire annual production (GDP)"

Comprende? Net exports are just there to make the number "Domestic". (We didn't make that stainless steel I imported from Taiwan, we can't claim we produced it.)

Para Bellum, a trade deficit indicates the nation imported a greater value of products than it exported. Consequentially it also indicates the nation's entire net expenditures for producing and consuming products exceeded the values of all of the products the nation produced. That's why imports reduce and exports increase their nation's calculated GDP.

Gross expenditures are not the manner by which production is defined. Your expenditures for imported steel were deducted from gross spending for products within our nation. The term “net” rather than “gross” was used because products values are entered into calculations of GDP in a manner similar to the calculations of “value added taxes”. VAT does not additionally tax previously paid VATs, and a nation's GDP does not reflect the values of what was not produced within the nation.

What is it you believe we disagree upon? Respectfully, Supposn

 

[para bellum]

What is it you believe we disagree upon?

This:
"Gross expenditures are not the manner by which production is defined."

It certainly is when you are using the Expenditure Equation to define GDP!

G+C+I+(x-m)=Y

This equation says GDP (Y) is the sum of those 4 values. That is a definition, because it tells you what numbers you have to have, in order to calculate the value of your GDP.

G is not net government spending, it is gross spending. It does not consider revenue. (The net number is reflected as the budget deficit or surplus)

C is gross consumption, I is gross private investments.

(x-m) is the only net number, because it's how you have to separate out the domestic component of trade to maintain the D in GDP.

Added together, they are the Gross Domestic Production. (x-m) is a gross number in the eyes of the equation- the total contribution of trade to the GDP.

"a trade deficit indicates the nation imported a greater value of products than it exported."

Yes, that's what it means.

"Consequentially it also indicates the nation's entire net expenditures for producing and consuming products exceeded the values of all of the products the nation produced."

No, it does not mean that. How are you deriving the net expenditure for producing and consuming something? They are not the same thing. The equation assumes all consumption is production.

There is no "net expenditure" for producing something. There is only the cost of producing it. Profit or loss is the net result, and the equation does not care about profit or loss. It only cares how much it sold for.

"That's why imports reduce and exports increase their nation's calculated GDP."

Because imports can't be called domestic production. It's just a math equation. You attribute far more importance to the trade deficit than it deserves. 100% of M is hidden inside C or G or I or X.