Warren Buffett's concept to (significantly) reduce USA's trade deficit

Discussion in 'Economy' started by Supposn, Jul 27, 2009.

  1. Supposn
    Offline

    Supposn Senior Member

    Joined:
    Jul 26, 2009
    Messages:
    863
    Thanks Received:
    27
    Trophy Points:
    51
    Ratings:
    +31
    Warren Buffett co-authored a concept that was the basis of Senators Dorgan and Feingold’s 2006 bill to significantly reduce USA’s trade deficit of goods. Trade deficit’s detriment to the GDP greatly exceeds the amount of the deficit itself. What’s detrimental to the GDP is also generally detrimental to the median wage.

    I urge browsing the paragraph sub-titles within the web site
    of " USA-Trade-Deficit.Blogspot.Com "
    and reading those titled paragraphs that catch your interest.

    Excerpted from the refered to World Wide Web (site).

    “ *** Warren Buffett’s concept to significantly decrease USA’s global trade deficit of goods.

    …………… Exporters would be issued TRANSFERABLE IMPORT CERTIFICATES for that assessed value of their goods leaving the USA. Importers would be required to surrender IMPORT Certificates for the assessed value of their goods entering the USA. Surrendered certificates are cancelled.

    The 2006 draft did not reach a senate floor vote. Many of us regret the draft was not self-funding. We prefer that goods leaving the USA be assessed and certificates issued only for exporter that choose to pay fees covering all government expenses due to this trade act. The open market value of transferable import certificates would sufficiently motivate exporters. ......
    ................ We also regret that assessments would not be adjusted to exclude the value of specifically listed scarce or precious minerals integral to the goods being assessed. We should discourage the export of cast gold paper weights encrusted with gems in order to facilitate importing high-tech or labor intensive goods. [This should be a deal buster. The absence of such an exclusion would undermine, (if not completely evade) the act’s purpose]. The 2006 draft did completely exclude assessment of gas and petroleum products within the five years duration after the act’s initial enactment. .

    ………………… *** Conclusions.

    Buffett’s concept is a restriction upon pure free trade but it is certainly pure free enterprise. The market (rather than government) driven proposal grants government no policy discretion and would certainly decrease USA’s trade deficit.

    It's advantageous to any domestic producer competing with foreign goods within or beyond our borders. It would also induce the aggregate sum of our imports plus exports to increase.

    All of this would significantly increase our GDP which in turn induces increasing median wage. Unlike temporary trillion dollar economic stimulus, this will not increase present and future debts or taxes.

    I'm aware of no existing or proposed trade policy that would accomplish all of this with no net government expense, less government intervention and less increased prices of imported goods”.

    Respectfully, Supposn
     
  2. editec
    Offline

    editec Mr. Forgot-it-All

    Joined:
    Jun 5, 2008
    Messages:
    41,427
    Thanks Received:
    5,598
    Trophy Points:
    48
    Location:
    Maine
    Ratings:
    +5,617
    Thanks for the links, Suppos'n, I'll be checking it out.

    I'm still unsure how his proposed system work, but the fact that this issue is finally coming to the fore is a damned good sign.
     
  3. editec
    Offline

    editec Mr. Forgot-it-All

    Joined:
    Jun 5, 2008
    Messages:
    41,427
    Thanks Received:
    5,598
    Trophy Points:
    48
    Location:
    Maine
    Ratings:
    +5,617
    Okay had time to read this.

    They are proposing a system of trade-balance indulges.

    Transferable indulgences, I note.


    It will certainly have the effect of making imports more expensive.

    It also give exporters a tradeable commodity (their export certificates).
    I also note with some trepidation that Homeland security will oversee the issuence and brokerage of these certificates, too.


    Homeland security?! Is there anything they cannot do?


    Seems to me that the exporting certificates aspect of this proposal is an unnecessary complication.

    What purpose does that serve other than to give exporters a windfall profit for selling their certificates to the importers?
     
    • Thank You! Thank You! x 1
  4. Supposn
    Offline

    Supposn Senior Member

    Joined:
    Jul 26, 2009
    Messages:
    863
    Thanks Received:
    27
    Trophy Points:
    51
    Ratings:
    +31
    Editec. Wrote, “Seems to me that the exporting certificates aspect of this proposal is an unnecessary complication". What purpose does that serve other than to give exporters a windfall profit for selling their certificates to the importers?”.

    Editec, where did you find reference to an “exporting certificate”? Was it a typographical error you read or wrote? Warren Buffett’s concept refers only to “transferable IMPORT certificates”. Excerpted from the USA-Trade-Deficit.Blogspot.Com we site:
    ”Exporters would be issued transferable IMPORT Certificates for that assessed value of their goods leaving the USA. Importers would be required to surrender IMPORT Certificates for the assessed value of their goods entering the USA. Surrendered certificates are cancelled”.

    The concept would NOT “give exporters a windfall profits”. Exporters' ability to profit from acquiring IMPORT certificates could increase their margin of profit. The characteristics of free enterprise is such that it’s more likely that foreign purchasers will negotiate cheaper prices for USA goods or insist that the IMPORT certificates be included within he purchase.

    The value of the IMPORT certificates will enable the export of many USA products that otherwise could not otherwise have competed in the global market.

    The concept of transferable IMPORT certificates would induce greater volumes of USA exports. This proposal will increase the aggregate total of USA’s imports plus exports. It will not reduce USA’s global trade of goods but that trade will now run both ways. Cargo ships entering the USA will cease being almost empty when they depart.

    We’ve been importing cars and exporting scrap metal. You read about the “green” future? Under our present trade policy the wind generators, solar power plant equipment and much more will be imported into the USA.

    Respectfully, Supposn
     
  5. editec
    Offline

    editec Mr. Forgot-it-All

    Joined:
    Jun 5, 2008
    Messages:
    41,427
    Thanks Received:
    5,598
    Trophy Points:
    48
    Location:
    Maine
    Ratings:
    +5,617

     
  6. editec
    Offline

    editec Mr. Forgot-it-All

    Joined:
    Jun 5, 2008
    Messages:
    41,427
    Thanks Received:
    5,598
    Trophy Points:
    48
    Location:
    Maine
    Ratings:
    +5,617
     
  7. Supposn
    Offline

    Supposn Senior Member

    Joined:
    Jul 26, 2009
    Messages:
    863
    Thanks Received:
    27
    Trophy Points:
    51
    Ratings:
    +31
    Editec,
    Within our present trade policy, the market price of USA beef at dockside or when being loaded for export from the USA is one and the same.

    Under Buffett’s concept, the market price of USA beef being loaded for export would be less. Purchasers of exported goods would generally negotiate cheaper prices to reflect the exporters’ profits due to acquiring the Import certificates, (the ICs). The ICs are additional by-products of export sales transactions.

    If an exporter of USA beef were to refrain from granting such price concessions, other competing exporters would be pleased to do so.

    Of course the beef exporters will profit. Foreign purchasers and consumers of USA beef will also profit. I do not consider this as a “windfall” profit for USA beef exporters.

    The lower prices of USA beef within foreign markets should hopefully increase USA beef export volumes, increasing USA beef production, butchering, transportation of beef to ports of departure, and the loading of beef on to the cargo ships.

    The increases to the GDP are not limited to these services that I’ve mentioned. That is why the increase to the GDP in this example far exceeds USA beef’s additional contribution to USA’s exports and its decrease of USA’s trade deficit.

    This is an excerpt from the paragraphs
    entitled “*** A nation’s trade deficit is always a net economic detriment”
    within the world wide web
    (site of) USA-Trade-Deficit.Blogspot.Com .

    “……………… Modification of a community's gross production affects local employment and wage rates. This same phenomenon occurs when the initial catalytic producers were small but acting in concert. (That's often the case within single or allied industries). On a national scale this is all generally dispersed and thus less obvious but no less real”.

    Respectfully, Supposn
     
  8. JW Frogen
    Offline

    JW Frogen Gold Member

    Joined:
    May 10, 2009
    Messages:
    6,165
    Thanks Received:
    1,167
    Trophy Points:
    153
    Ratings:
    +1,206
    He said Buffet and beef.


    heeee he hehhe hhe heeee he.
     
  9. Supposn
    Offline

    Supposn Senior Member

    Joined:
    Jul 26, 2009
    Messages:
    863
    Thanks Received:
    27
    Trophy Points:
    51
    Ratings:
    +31
    Editec, I should not have abridged the transcript I posted of the first paragraph within the world wide web
    (site of) USA-Trade-Deficit.Blogspot.Com . :
    “ “*** A nation’s trade deficit is always a net economic detriment.

    When local producers have perceptively modified their volumes of productions, there is often obvious resonating production modifications within the community. Producers of completely unrelated products and services can be affected, (i.e. factory production affecting beauty parlors revenues).

    Modification of a community's gross production affects local employment and wage rates. This same phenomenon occurs when the initial catalytic producers were small but acting in concert. (That's often the case within single or allied industries). On a national scale this is all generally dispersed and thus less obvious but no less real”.

    Respectfully, Supposn
     
  10. Supposn
    Offline

    Supposn Senior Member

    Joined:
    Jul 26, 2009
    Messages:
    863
    Thanks Received:
    27
    Trophy Points:
    51
    Ratings:
    +31
    Editec,
    You I and some others agree that the transferable IMORT certificates, (the ICs) should not be GIVEV away freely.

    Excerpted from the referred web site’s paragraphs
    Entitled “*** Warren Buffett’s concept to significantly decrease USA’s global trade deficit of goods”:

    “………….. The 2006 draft did not reach a senate floor vote. Many of us regret the draft was not self-funding. We prefer that goods leaving the USA be assessed and certificates issued only for exporter that choose to pay fees covering all government expenses due to this trade act. The open market value of transferable import certificates would sufficiently motivate exporters”.

    The fees purpose is not to mitigate any supposed “exporters’ windfalls” or to be a source of net government revenue. The fees should fully cover all government’s assessment and administrative expenses. (Expenses for policing imports will not be attributed to this program. Homeland security is now mandated to be aware of every person or thing entering the USA).

    This program shouldn’t induce present or future additional net government expenses, debts or taxes
    .
    Respectfully, Supposn
     

Share This Page