'Free Trade' Means Less Employment

[doctor100]

I dispute that graph conclusion. (yes i know it seems that i'm taking opposite sides of what i was saying, but that makes me a "lefty that makes everything complicated").

the conclusion you draw from that graph is that as trade imbalance increases then unemployment decreases. i propose instead-as unemployment decreases then trade imbalance increases.

Income causes a rise in imports; imports don't cause a rise in income.

 

[boedicca]

The thread title is inaccurate. It should read:

Big Government Crony Favoring Policies mean Less Employment.

 

[expat_panama]

...in physical products we have nearly nothing that can compete internationally...

Welcome to the USMB, we hope you find the place useful.

Standard news sources spit out lots of doom'n'gloom but the story about America not selling goods is just one of many on their long America-bash list. People that actually track exports find we're exporting goods at record levels--

--and at least as far as exports go the recessions completely over.

 

[doctor100]

Thank you for the education. I am now researching american exports. But that graph doesn't look like it's been normalized for inflation.

 

[Wiseacre]

...in physical products we have nearly nothing that can compete internationally...

Welcome to the USMB, we hope you find the place useful.

Standard news sources spit out lots of doom'n'gloom but the story about America not selling goods is just one of many on their long America-bash list. People that actually track exports find we're exporting goods at record levels--

--and at least as far as exports go the recessions completely over.

Thanks to a weaker dollar, that's why exports are up. I don't see that much of a direct connection to unemployment though, I suspect there are several othe factors at play.

 

[expat_panama]

...

...The fact is that the trade balance getting 'worse' means lower unemployment, and reducing the trade deficit means more people out of work...

...the conclusion you draw from that graph is that as trade imbalance increases then unemployment decreases. i propose instead-as unemployment decreases then trade imbalance increases. Income causes a rise in imports; imports don't cause a rise in income.

Too much miscommunicationizing going on here. Let's get together. Bigger trade deficits and soaring unemployment go together. That's what we see when we look at unemployment and trade deficits.

Proving which causes which is a lot harder, and it might be interesting to look into some day, but in the mean time we can agree that finding out the trade deficit's getting bigger usually means unemployment's going down.

 

[doctor100]

This is what i learned: America is the #3 exporter in the world, after China and Germany. that makes us easily in the top 10.

Most of America's exports are technology based (see! I was right). Imports are currently rising at a rate slower than exports; our deficit is declining. Currently we export roughly 61% of what we import is USD.

Specifically our exports are:
1. Civilian aircraft … $74 billion, up 1.3% from 2007 (5.7% of total US exports)
2. Semiconductors … $50.6 billion, up 0.3% (3.9%)
3. Passenger cars … $49.6 billion, up 13.3% (3.9%)
4. Medicinal, dental and pharmaceutical preparations … $40.4 billion, up 15% (3.1%)
5. Other vehicle parts and accessories … $39.9 billion, down 10.1% (3.1%)
6. Other industrial machinery … $38.1 billion, down 0.6% (3%)
7. Fuel oil … $34.9 billion, up 124.1% (2.7%)
8. Organic chemicals … $33.4 billion, up 5.5% (2.6%)
9. Telecommunications equipment … $32.9 billion, up 4.6% (2.6%)
10. Plastic materials … $31.6 billion, up 8.7% (2.5%).

our imports are:
1. Crude oil … US$341.9 billion, up 44.1% from 2007 (16.3% of total US imports)
2. Passenger cars … $125.6 billion, down 6.2% (6%)
3. Medicinal, dental and pharmaceutical preparations … $78.9 billion, up 10% (3.8%)
4. Other vehicle parts and accessories … $64.9 billion, down 11.5% (3.1%)
5. Other household goods … $61.6 billion, up 9.9% (2.9%)
6. Computer accessories … $60.2 billion, down 4.5% (2.9%)
7. Other petroleum products … $52.3 billion, up 8.2% (2.5%)
8. Cotton apparel and household goods … $49.5 billion, down 2.7% (2.4%)
9. Telecommunications equipment … $44.8 billion, up 1.1% (2.1%)
10. Video equipment (television receivers, VCRs, DVD players) … $41 billion, up 3% (1.9%).


Which means we have an unfortunate number of things we produce that we also import. The top example of this is Cars; which we have reduced imports of and increased exports. I also learned that Obama pledged to double exports; he seems to be on the right track.

I also learned that Obama has a position I agree with about fair trade (which I think I already knew), specifically that 'standards' should be met by fair trade partners: you get fair trade tax rates if you meet environmental conditions and labor conditions. He is also against fair trade with nations with currency controls and heavy subsidies; which I have less an opinion on.

So effectively, it seems to me, he is agreeing on fair trade only with hegemony. Limited hegemony, but hegemony still. so long as each of the hegemonic traits he is pushing for are those of a clear an rational ethical character, I cannot say I disagree. I do not know enough about currency controls to form an opinion on them or their ethics.

 

[expat_panama]

...that graph doesn't look like it's been normalized for inflation.

No you're right, the numbers are just in $Mil not 'constant dollars. If you're interested we can come up with something in constant dollars but that gets into which price index is right for exports, the cpi, the BOC export price index, the GDP deflator, etc. The hard part is agreeing, the easy part is slapping it on a spreadsheet and mashing the 'graph' icon.

 

[doctor100]

Thanks to a weaker dollar, that's why exports are up.

that doesn't make sense with the graph; that would imply that the dollar has been getting weaker since the 70's. If you take that claim than you are ignoring the "relative to what?" relationship.

 

[expat_panama]

...Thanks to a weaker dollar, that's why exports are up...

Everyone says that but it doesn't work that way--

--in fact lots of time exports jump when the dollar shows strength.

... I don't see that much of a direct connection to unemployment though, I suspect there are several othe factors at play.

That one's easy though. The combo graph in post #66 shows trade deficits and unemployment move at the same time consistantly. Like I was saying to Doc, the 'why' is debatable but the 'is' isn't.

 

[expat_panama]

This is what i learned: America is the #3 exporter in the world, after China and Germany. that makes us easily in the top 10.... .

Terrific, thanks for the facts! When you get your 15 posts you can share the link to where you got your info, or maybe please just type out the name of the site an maybe the admin won't gripe, I'd really like to know.

...I also learned that Obama has a position I agree with about fair trade...

He's kind of said that, but then flipflops back and forth with no sense to it. His rejecting the Colombia and Panama pacts was crazy. iirc the only pact he's done anything with is Korea and why that place is any more 'level' than the Americas makes no sense whatsoever.

My guess is he's bought off by the unions but that's a guess.

 

[doctor100]

Where do you get your graphs?

I get mine from Google image search, but yours seem just a hair more custom than that.

 

[Wiseacre]

Thanks to a weaker dollar, that's why exports are up.

that doesn't make sense with the graph; that would imply that the dollar has been getting weaker since the 70's. If you take that claim than you are ignoring the "relative to what?" relationship.

I think the claim that there is an exclusive relationship between unemployment and the trade imbalance is wrong. There are too many other factors, such as a weak dollar, that could impact one or the other.

 

[doctor100]

Can't give you the link, but a google search for "what does the us export?" will turn it up first link. Got most of my info from there.

 

[doctor100]

I think the claim that there is an exclusive relationship between unemployment and the trade imbalance is wrong. There are too many other factors, such as a weak dollar, that could impact one or the other.

It's not exclusive, nothing in social science is exclusive; it's also not causation, it's correlation. (the bit with causation was what we discussed before).

however, I would like to find a international graph that showed the same relationship; see if all things hold equal.

 

[Wiseacre]

...Thanks to a weaker dollar, that's why exports are up...

Everyone says that but it doesn't work that way--

--in fact lots of time exports jump when the dollar shows strength.

... I don't see that much of a direct connection to unemployment though, I suspect there are several othe factors at play.

That one's easy though. The combo graph in post #66 shows trade deficits and unemployment move at the same time consistantly. Like I was saying to Doc, the 'why' is debatable but the 'is' isn't.

Yeah, but the "is" doesn't really matter does it, if there's no logical connection between the two. IOW, the fact that trade deficits and unemployment move int he same direction does not mean either one causes the other. There could be other factors, probably many other factors, that cause both of them to move one way or another. One of which could be the strength of the dollar.

 

[Brutus]

IOW, the fact that trade deficits and unemployment move int he same direction does not mean either one causes the other. There could be other factors, probably many other factors, that cause both of them to move one way or another. One of which could be the strength of the dollar.

yes many factors. In this case we have a huge deficit with China and Japan. That means they have a ton of US dollars. If we had a Republcan Balanced Budget Amendment and so no debt to sell China and Japan they would have to buy our goods and services, and thus reduce our unemployment.

 

[expat_panama]

...the "is" doesn't really matter does it, if there's no logical connection between the two. IOW, the fact that trade deficits and unemployment move in the same direction does not mean either one causes the other. There could be other factors, probably many other factors, that cause both of them to move one way or another. One of which could be the strength of the dollar.

--and that's where correlations are useful. When two things happen at the same time it means one of three things, that the first caused the second, the second caused the first, or a third caused both. Got to be one of those three.

If we suspect that the dollar is a third factor that causes both high unemployment and low trade deficits, then there has to be a correlation with the third factor and the first two. There isn't so it isn't. This is great. We not only know that trade deficits are for rejoicing not mourning, but we also know we can forget the dollar when talking trade and jobs.

 

[expat_panama]

...we have a huge deficit with China and Japan. That means they have a ton of US dollars...

That's really easy to think which is probably why most people say that. It's not true though and it's not what happens.

When Chinese or Japanese factories sell stuff to Americans they require payment in Yuan and Yen, not dollars. The dollars go to a currency exchange and get converted to Yuan and Yen, and the currency exchange only keeps that big pile of dollars long enough to swap for something else. Payments across borders for buying and selling stuff always balances. It's called the Balance of Payments

So how can there be a trade deficit? The only way we can buy more goods'n'services from foreigners then they from us, is when they buy more other stuff from us. The 'other stuff' is capital and financial assets like bonds, copyrights, real estate, stocks, patents, etc. Selling more than buying of that stuff causes a 'Capital Surplus' which is always equal to and pays for the 'trade deficit'.

...If we had a Republcan Balanced Budget Amendment and so no debt to sell China and Japan they would have to buy our goods and services, and thus reduce our unemployment.

OK, foreigners buying T-bills either adds to the capital surplus paid with a trade deficit, or it's covered when Americans buy foreign bonds, real estate, etc. Foreigners not buying T-bills won't make them buy our goods.

 

[editec]

Amazing.

According to a recently published, peer reviewed, study free trade actually increase employment.

Trade and Unemployment: What Do the Data Say?

That study actually says “A 10 percentage point increase lowers the equilibrium rate of unemployment by about 0.76 percentage points.” In other words, free trade creates jobs.

This is where critical thinking skills come in. I have two conflicting opinions, one written by a guy who subtitles his blog "Marxism Fresh Daily," and the other is written by 3 European economics professors. Which should I give more credence too? Personally, I take the paper where I can actually read and analyze the data for myself over a blog.

Now I remember who tried to convince me how offshoring was good for America.

LOL
thanks for the reminder.

Free trade is good for America, and the world. No country in the history of the world has ever been destroyed by trade. Many countries that have tried to isolate themselves and protect themselves from trad no longer exist.

This nation became the wealthiest nation on earth behind protective tariffs.

Hell, QQ, our goverment paid for most of its operations with revenue from tariffs. We didn't have income tax for 150 years because, in large part, the government RAN on tariff revenues.

READ THE HISTORY OF THE NATION YOU PREPORT TO LOVE.

You have OBVIOUSLY been completely misinformed.