Annual Trade Deficits

[Supposn]

Not necessarily true. Many imports are used as inputs into American manufacturing, thereby benefitting employees, consumers, other suppliers that contribute to that manufacturing and ultimately net economic growth. I did not find that statement in your Wikipedia link BTW.

Task0778, “comparative advantage” describes a concept of a major benefit to those directly participating in global trade transactions. Although (as you posted) we all generally benefit from lesser prices of imported goods, USA's employees and their dependents, (i.e. the great majority of our population) do not (in aggregate) net benefit from USA's chronic annual trade deficits. They certainly more than otherwise reduce jobs which in turn does not bolster wage scales.
USA's annual trade deficit means we in aggregate, (i.e. our governments, our enterprises, our consumers) have spent more than the value of the entire goods and service products we have produced during that year.

Trade deficit nations' negative annual balances of international trade were ALWAYS net detrimental to their nations' gross domestic product, (GDP). Respectfully, Supposn

 

[Toddsterpatriot]

Trade deficit nations' negative annual balances of international trade were ALWAYS net detrimental to their nations' gross domestic product, (GDP).

Prove it.

I used this.....

To buy this from Germany.

How did I reduce US GDP? Show your math.

 

[Supposn]

Task0778, I very much doubt (as you posted),”about half of our imports are necessary materials used in manufacturing stuff: oil, steel, rubber, etc. ...”. Specifically regarding oil.
Respectfully, Supposn

Excerpted from: Import certificates - Wikipedia
“Many who are aware of the ”Balanced Trade Restoration Act of 2006” text find it has faults that could have been easily corrected:
They 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 fault could severely undermine the bill’s economic benefit to our nation.
Natural gas and oil should have also been included in such a scarce or precious minerals list. The proposal itself should not favor the export or inhibit the import of such scarce minerals. (The original U.S. Senate draft temporarily (for only 5 years) excluded the entire value of goods containing petroleum)”.

 

[Supposn]

[Supposn posted:]

"There are economists and statisticians that believe GDP per capita is not the best indicator of a nation's economic and social well-being; the majority of explanations offered from such doubters were their contentions that trade deficits understated the detriments to their nations' economic and social well-being."

Show me the reference that says that from a credible economist. I contend that is not true. You are conflating the GDP calculation as an accurate portrayal of a nation's economic growth and well-being. ...

Regarding employing other than GDP per capita to gauge nations' economic and/or social living standards, refer to:
New Zealand Ditches GDP For Happiness And Wellbeing
and to: GDP Alternatives: 7 Ways to Measure a Country's Wealth

Respectfully, Supposn

 

[task0778]

Task0778, I very much doubt (as you posted),”about half of our imports are necessary materials used in manufacturing stuff: oil, steel, rubber, etc. ...”. Specifically regarding oil.
Respectfully, Supposn

Excerpted from: Import certificates - Wikipedia
“Many who are aware of the ”Balanced Trade Restoration Act of 2006” text find it has faults that could have been easily corrected:
They 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 fault could severely undermine the bill’s economic benefit to our nation.
Natural gas and oil should have also been included in such a scarce or precious minerals list. The proposal itself should not favor the export or inhibit the import of such scarce minerals. (The original U.S. Senate draft temporarily (for only 5 years) excluded the entire value of goods containing petroleum)”.

From the St Louis Fed:

U.S. trade policy continues to change, with rising tariffs on imports of capital goods and intermediate inputs from China and other countries. But how important are these types of imports for the U.S. economy, especially compared with total U.S. imports? As usual, FRED can help answer our question: The graph above plots the share of capital and intermediate inputs in aggregate U.S. imports over the period 1999-2019.

As the graph shows, the share is not small. In fact, it’s the majority of total imports, ranging from 46% to 61% over this period, with an average well above 50%. Because these imports play an important role for the domestic production of U.S. goods, one would expect that raising tariffs on these goods would have a negative impact on domestic production.

 

[task0778]

Task0778, “comparative advantage” describes a concept of a major benefit to those directly participating in global trade transactions. Although (as you posted) we all generally benefit from lesser prices of imported goods, USA's employees and their dependents, (i.e. the great majority of our population) do not (in aggregate) net benefit from USA's chronic annual trade deficits. They certainly more than otherwise reduce jobs which in turn does not bolster wage scales.
USA's annual trade deficit means we in aggregate, (i.e. our governments, our enterprises, our consumers) have spent more than the value of the entire goods and service products we have produced during that year.

Trade deficit nations' negative annual balances of international trade were ALWAYS net detrimental to their nations' gross domestic product, (GDP). Respectfully, Supposn

Excerpted from Investopedia:

When a country is importing goods, this represents an outflow of funds from that country. Local companies are the importers and they make payments to overseas entities, or the exporters. A high level of imports indicates robust domestic demand and a growing economy. If these imports are mainly productive assets, such as machinery and equipment, this is even more favorable for a country since productive assets will improve the economy's productivity over the long run.

A healthy economy is one where both exports and imports are experiencing growth. This typically indicates economic strength and a sustainable trade surplus or deficit. If exports are growing, but imports have declined significantly, it may indicate that foreign economies are in better shape than the domestic economy. Conversely, if exports fall sharply but imports surge, this may indicate that the domestic economy is faring better than overseas markets.

For example, the U.S. trade deficit tends to worsen when the economy is growing strongly. This is the level at which U.S. imports exceed U.S. exports. However, the U.S.’s chronic trade deficit has not impeded it from continuing to have one of the most productive economies in the world.

How Importing and Exporting Impacts the Economy

Learn how imports and exports have a profound influence on the economies of nations.

www.investopedia.com

Maybe it's not ALWAYS detrimental.

 

[Supposn]

View attachment 555753

Task0778, you posted a graph indicating the changing proportions of USA's manufacturing and non-manufacturing employees among 100% of USA's entire non-agricultural employees over a duration in excess of a half century. The graph doesn't indicate USA's unemployment or underemployment rate, or the purchasing power of our median wage, or the proportion of our population that's employed within that duration?

I'm a proponent of the Import Certificate proposal because trade deficits are detrimental to their nation's numbers of jobs and those purchasing powers of those jobs.
Estimated values minerals integral to globally traded goods and explicitly included on a scarce or precious minerals, are proposed to be subtracted from such goods assessed values. To that extent some tangible products are less affected by the proposal. The proposal's fully applicable to manufacturing, lumber, chemical, farming and and ranching, industries. But it's substantially less directly applicable to the mining industry.

What's the point of this graph you're referring to? Respectfully, Supposn

 

[task0778]

Task0778, you posted a graph indicating the changing proportions of USA's manufacturing and non-manufacturing employees among 100% of USA's entire non-agricultural employees over a duration in excess of a half century. The graph doesn't indicate USA's unemployment or underemployment rate, or the purchasing power of our median wage, or the proportion of our population that's employed within that duration?

I'm a proponent of the Import Certificate proposal because trade deficits are detrimental to their nation's numbers of jobs and those purchasing powers of those jobs.
Estimated values minerals integral to globally traded goods and explicitly included on a scarce or precious minerals, are proposed to be subtracted from such goods assessed values. To that extent some tangible products are less affected by the proposal. The proposal's fully applicable to manufacturing, lumber, chemical, farming and and ranching, industries. But it's substantially less directly applicable to the mining industry.

What's the point of this graph you're referring to? Respectfully, Supposn

The point of that graph is to show that US manufacturing jobs have been in decline long before we started the trade deficits. Ergo, manufacturing jobs are declining for a number of reasons but a trade deficit does not appear to be one of them. Actually, if you notice the the manufacturing decline has been leveling off since about 2010, as our trade deficits have increased. If trade deficits were really a problem for jobs, that would not be the case.

Therefore, the declining manufacturing employment in the U.S. may have little to do with U.S. trade deficits. In fact, data show the downward trend of manufacturing employment in the U.S. started in the 1960s (see Figure 3) as labor productivity continuously rose in the manufacturing sector; it has increased sevenfold in the U.S. since 1960.


Import certificates are really nothing more than an attempt to raise the price of imports to make them less attractive to US consumers, which is another form of protectionism. It is gov't intervention that is totally unnecessary; Since Nixon took us off the gold standard the balance of trade doesn't mean squat. Whatever the amount of capital going out to pay for our imports comes back as investments in our economy or our gov't bonds and treasuries. IOW, it's wash.

Ask yourself why the President and the Congress are not pushing the idea of ICs since 2006. The reason is because it's a bad idea, nobody wants to raise prices to American consumers.

 

[Supposn]

The point of that graph is to show that US manufacturing jobs have been in decline long before we started the trade deficits. Ergo, manufacturing jobs are declining for a number of reasons but a trade deficit does not appear to be one of them. ...

Cascading losses:

Task0778, an annual trade indicates (the nation's governments, and enterprises, and population, (i.e. all in aggregate), have net spent more for products, than the value of all they produced that year. USA's annual trade deficits did not increase because of our declining manufacturing production; our manufacturing production began to decline due to lesser priced imported products. Whatever led you to believe otherwise?

The primary economic detriment of our chronic great annual trade deficits is our are losses of jobs, those jobs wage rates' purchasing powers, and the depreciation and losses of producing enterprises and infrastructures that supported the lost production.

Manufacturing is not the only industry that's impacted by our annual trade deficits, but the consequential increases of per unit production costs due to lesser sales of domestic products, have a greater impact upon mass producing manufacturing industries. The losses of production and final closings of domestic manufacturing production facilities, cascade to the detriment of all other enterprises that previously directly and indirectly provided goods and services for the enterprises operating in those facilities.
An annual trade deficit is ALWAYS net detrimental to its nation's economy.
Respectfully, Supposn

 

[Supposn]

... Import certificates are really nothing more than an attempt to raise the price of imports to make them less attractive to US consumers, which is another form of protectionism. It is gov't intervention that is totally unnecessary ...

Task0778, no one denies the Import Certificate, (IC) proposal is a form of protectionism. It “caps”, (i.e. limits) the extents imports can displace domestic goods within its nation's domestic markets. The broad based unilateral policy isn't an absolute shield against competing imports and does not favor or disfavor among enterprises, or industries, or foreign nations.
Regarding questioning the necessity of IC, I believe it's preferable to promote USA's net jobs and wages' purchasing powers.

An IC nation would be intolerant of its economy experiencing annual trade deficits of goods, to the extent that increased import prices paid by USA purchasers exceed the nation's certificate fees to exporters of the IC nation's goods, the proposal serves as an indirect but effective subsidy of the IC nation's export prices. (exporters of the IC nation's goods are motivated by the opportunity to profit, they're not required to request their cargoes be assessed and receive transferable ICs based upon those assessments.
Refer to Import certificates - Wikipedia Respectfully, Supposn

 

[wamose]

Capitalist care about profits they don't care if Susie makes an income that allows her the ability to buy a widget.

That would be capitalist pigs, not patriotic capitalists. We need more patriotic capitalists who appreciate the value of the American worker and the middle class. Our free trade agreements and our open borders suck.

 

[Supposn]

...Since Nixon took us off the gold standard the balance of trade doesn't mean squat. Whatever the amount of capital going out to pay for our imports comes back as investments in our economy or our gov't bonds and treasuries. IOW, it's wash. ...

Task0778, regarding USA's annual trade deficits promoting foreign investment into our economy:
Unless I'm effectively purchasing corporate stock directly from the issuing corporation, I am not investing in support of that company. I'm speculating upon the future value of that stock and relieving the seller of their future risk or profit due to owning the stock.

I would suppose even when initial public offered (IPO) shares of stock are usually purchased by individuals, they're directly or indirectly purchasing from an underwriting financial institution such as a bank. In that case my investment's not actually directly supporting the issuing corporation.

In the cases when I was purchasing or retaining debt securities, I was speculating upon those debts being paid, and the purchasing power of the currency when they're paid, and all of those values if I have a need to liquidate the asset before those debts are to be retired. The point is I'm not actually “investing” into the organization that issued those debt securities. Respectfully, Supposn

 

[Supposn]

Task0778, annual trade deficits indicate their nation's spending has exceeded the value of their entire goods and service production. They entail net spending of their nation's governments and non-government organizations and their entire population; it's deficit financing on steroids.
Annual trade deficits are (more than otherwise) ALWAYS, (rather than sometimes) net detrimental to their nation's GDP, and numbers of jobs, and wages' purchasing powers.

A wealthy man can continuously light his cigars with $100 bills and USA can continue experiencing great annual trade deficits. Both of those practices are sustainable and undesirable policies. That's why I'm among the proponents of the Import Certificate proposal.
Refer to Import certificates - Wikipedia . Respectfully, Supposn

 

[Toddsterpatriot]

They entail net spending of their nation's governments and non-government organizations and their entire population;

What about foreigners spending to invest in the US?
Does that increase US GDP?

 

[Supposn]

What about foreigners spending to invest in the US?
Does that increase US GDP?

ToddsterPatriot, as I recall when the common expenditure method for calculating GDP is used, the actual transfers of wealth do not affect nations' GDPs. But when a loan is used to purchase goods or services, those purchases are net increases of the producing nations' GDPs. Respectfully, Supposn

 

[Toddsterpatriot]

ToddsterPatriot, as I recall when the common expenditure method for calculating GDP is used, the actual transfers of wealth do not affect nations' GDPs. But when a loan is used to purchase goods or services, those purchases are net increases of the producing nations' GDPs. Respectfully, Supposn

as I recall when the common expenditure method for calculating GDP is used, the actual transfers of wealth do not affect nations' GDPs.

Wealth? Where do you see wealth mentioned in the expenditure approach?

Three Approaches of Calculating GDP » Economics Tutorials

One of the most common ways to measure the size of an economy, in other words, the aggregate output of a country, is by compiling the gross domestic product (GDP). As defined by the World Bank, GDP represents the market value of all final goods and services produced within a country’s borders...

econtutorials.com

But when a loan is used to purchase goods or services, those purchases are net increases of the producing nations' GDPs.

Where do you see loan mentioned?

 

[Supposn]

as I recall when the common expenditure method for calculating GDP is used, the actual transfers of wealth do not affect nations' GDPs.

Wealth? Where do you see wealth mentioned in the expenditure approach?

View attachment 558772

Three Approaches of Calculating GDP » Economics Tutorials

One of the most common ways to measure the size of an economy, in other words, the aggregate output of a country, is by compiling the gross domestic product (GDP). As defined by the World Bank, GDP represents the market value of all final goods and services produced within a country’s borders...

econtutorials.com

But when a loan is used to purchase goods or services, those purchases are net increases of the producing nations' GDPs.

Where do you see loan mentioned?

ToddsterPatriot, it's regrettable that the word 'wealth” upsets your sensibilities. I'm unaware of your phobias.

I posted "as I recall when the common expenditure method for calculating GDP is used, the actual transfers of wealth do not affect nations' GDPs. But when a loan is used to purchase goods or services, those purchases are net increases of the producing nations' GDPs”.
Where's the contradiction between our posts? Respectfully, Supposn

 

[Toddsterpatriot]

ToddsterPatriot, it's regrettable that the word 'wealth” upsets your sensibilities. I'm unaware of your phobias.

I posted "as I recall when the common expenditure method for calculating GDP is used, the actual transfers of wealth do not affect nations' GDPs. But when a loan is used to purchase goods or services, those purchases are net increases of the producing nations' GDPs”.
Where's the contradiction between our posts? Respectfully, Supposn

ToddsterPatriot, it's regrettable that the word 'wealth” upsets your sensibilities.

Wealth doesn't upset me. Neither does your confusion about how GDP is calculated.

Where's the contradiction between our posts?

Wealth isn't in the GDP calculation. Neither is loan.

 

[Colin norris]

Prove it.

I used this.....

View attachment 556665

To buy this from Germany.

View attachment 556666


How did I reduce US GDP? Show your math.

The OP was totally wasted on you.

 

[Toddsterpatriot]

The OP was totally wasted on you.

Feel free to do the math to help Supposn.