Global trade’s affects upon GDP.

[DSGE]

Some specific product prices may not reflect all goods and service that contributed or supported the production of the specific items.

Enterprises occasionally benefit from university or government research and development assistance provided at lesser or no cost to the enterprise. Local governments may provide beneficial infrastructure to induce an enterprise’s relocation. Enterprises may manipulate their cost accounting to encourage the market for their newer products. All of this is of no consequences with regard to domestic products sold within the nation’s domestic markets.

The majority of goods and services that support the production of a final product global product are produced within the same nation as the final product. To the extent that those supporting products are not included within the prices global products they support, global product prices are understated.

The benefits of production are earned by the producing nations and denied to the importing nations;
(i.e. ALWAYS trade surpluses contribute and trade deficits are detrimental to their nation’s GDP).

Furthermore due to under-statements of global trade products’ prices,
Surpluses contributions and trade deficits’ detriments to their nations’ GDPs are generally understated.

Respectfully, Supposn

So we've moved away from the GDP = C + I + G + X - M argument? We're clear that that doesn't imply that imports lower GDP? If that's the case, and we're moving on to a different line of argument, then I'll respond to this.

 

[Supposn]

[......................................................You've correctly identified GDP = (C + I + G) + (X - M), total consumption plus total investment plus total government consumption, plus the balance of trade. Your mistake is in assuming that the " - M" term means imports lower GDP. You're saying "all other things held constant, more M means less GDP". That's fallacious, because other things can't be held constant. M is also counted in C, I and G. "Total consumption" means the consumption of domestic goods and the consumption of imported goods. Same for investment and government consumption.

The "- M" component is just there so that things which have been measured as counting towards GDP, but also count the consumption/investment/etc of foreign goods, have the "foreign goods" part removed. We don't want to count foreign produced machinery that is used in our factories, or foreign produced beer that we drink, in our calculation of gross domestic product. But all that stuff is present in C, I and G. So we subtract M from everything so that we don't count foreign made stuff.

DSGE, I contend that under the IC proposal, at a 10% increase of import prices to U.S, purchasers will not significantly decrease U.S. spending for goods and services.

Respectfully, Supposn
/////////////////////////////////////////////////////

Excerpted from message #56:

Due to a 10% increase of import prices to U.S. purchasers, I expect the reduction of “M” to be perceivable but not of great significance. So much of “Ms” reduction will be replaced with purchases of other domestic goods and services. Those other products need not be a substitute or an alternative replacement for the import product that was not purchased; (i.e. having rejected to the increased priced imported electronic device, a gift shopper might choose to purchase theater tickets).

If there were suddenly less imported goods available within USA’s domestic markets, how do you believe USA’s expenditures would be affected? Much as it might benefit individuals to do so, I don’t believe Americans’ would purchase more stocks and bonds, or deposit more money in their bank accounts.
///////////////////////////////////////

 

[Supposn]

Some specific product prices may not reflect all goods and service that contributed or supported the production of the specific items.

Enterprises occasionally benefit from university or government research and development assistance provided at lesser or no cost to the enterprise. Local governments may provide beneficial infrastructure to induce an enterprise’s relocation. Enterprises may manipulate their cost accounting to encourage the market for their newer products. All of this is of no consequences with regard to domestic products sold within the nation’s domestic markets.

The majority of goods and services that support the production of a final product global product are produced within the same nation as the final product. To the extent that those supporting products are not included within the prices global products they support, global product prices are understated.

The benefits of production are earned by the producing nations and denied to the importing nations;
(i.e. ALWAYS trade surpluses contribute and trade deficits are detrimental to their nation’s GDP).

Furthermore due to under-statements of global trade products’ prices,
Surpluses contributions and trade deficits’ detriments to their nations’ GDPs are generally understated.

Respectfully, Supposn

So we've moved away from the GDP = C + I + G + X - M argument? We're clear that that doesn't imply that imports lower GDP? If that's the case, and we're moving on to a different line of argument, then I'll respond to this.

DSGE, this message #61 doesn’t imply, it supports the fact that trade deficits reduce their nation’s GDPs.

Respectfully, Supposn

DSGE, this message #61 doesn’t imply, it fully supports the fact that trade deficits reduce their nation’s GDPs.

Respectfully, Supposn

 

[DSGE]

Some specific product prices may not reflect all goods and service that contributed or supported the production of the specific items.

Enterprises occasionally benefit from university or government research and development assistance provided at lesser or no cost to the enterprise. Local governments may provide beneficial infrastructure to induce an enterprise’s relocation. Enterprises may manipulate their cost accounting to encourage the market for their newer products. All of this is of no consequences with regard to domestic products sold within the nation’s domestic markets.

The majority of goods and services that support the production of a final product global product are produced within the same nation as the final product. To the extent that those supporting products are not included within the prices global products they support, global product prices are understated.

The benefits of production are earned by the producing nations and denied to the importing nations;
(i.e. ALWAYS trade surpluses contribute and trade deficits are detrimental to their nation’s GDP).

Furthermore due to under-statements of global trade products’ prices,
Surpluses contributions and trade deficits’ detriments to their nations’ GDPs are generally understated.

Respectfully, Supposn

So we've moved away from the GDP = C + I + G + X - M argument? We're clear that that doesn't imply that imports lower GDP? If that's the case, and we're moving on to a different line of argument, then I'll respond to this.

DSGE, this message #61 doesn’t imply, it supports the fact that trade deficits reduce their nation’s GDPs.

Respectfully, Supposn

Well I'd like to follow a nice straight line of reasoning please. I don't want you to jump to a new argument after I've addressed the old one only to jump back to the old one at a later date.

Did you understand, and agree with, my argument that the identity GDP = C + I + G + X - M does not suggest that imports lower GDP. There may be other reasons imports might lower GDP, which we'll get to once this argument is dealt with. If you agree that the income-expenditure identity doesn't at all suggest imports lower GDP, we can move on to other arguments. If you don't understand or agree, then why would you try shifting to a new argument? Please deal with one step at a time. If you don't understand, say so. If you disagree, point to the part of the reasoning you disagree with and elaborate on it specifically, just like I did for you.

 

[DSGE]

[......................................................You've correctly identified GDP = (C + I + G) + (X - M), total consumption plus total investment plus total government consumption, plus the balance of trade. Your mistake is in assuming that the " - M" term means imports lower GDP. You're saying "all other things held constant, more M means less GDP". That's fallacious, because other things can't be held constant. M is also counted in C, I and G. "Total consumption" means the consumption of domestic goods and the consumption of imported goods. Same for investment and government consumption.

The "- M" component is just there so that things which have been measured as counting towards GDP, but also count the consumption/investment/etc of foreign goods, have the "foreign goods" part removed. We don't want to count foreign produced machinery that is used in our factories, or foreign produced beer that we drink, in our calculation of gross domestic product. But all that stuff is present in C, I and G. So we subtract M from everything so that we don't count foreign made stuff.

DSGE, I contend that under the IC proposal, at a 10% increase of import prices to U.S, purchasers will not significantly decrease U.S. spending for goods and services.

Respectfully, Supposn

That has nothing to do with anything I said. See, this is what I was yelling about earlier. I take the time and effort to form a detailed argument starting by pointing out exactly where I think you erred and why. And what do you do? You follow up my careful response with an irrelevant non-sequitur. If you disagree with anything in my post, point out exactly where the error was made and why it's an error. Just like I did. If you can't follow or form a structured argument, there is nothing to be gained here and there's no point in anybody reading your posts.

 

[editec]

Exporting jobs EXPORTS American wealth that could have been better spend here in the USA.

Anybody disagree?

 

[EdwardBaiamonte]

Exporting jobs EXPORTS American wealth that could have been better spend here in the USA.

Anybody disagree?

we all want jobs here so why not send 15 million illegals home to create 15 million new American jobs and why not make unions illegal again to create another 15 million jobs?

Ans: liberals want the union vote and the immigrant community's vote.

 

[Toro]

Exporting jobs EXPORTS American wealth that could have been better spend here in the USA.

Anybody disagree?

we all want jobs here so why not send 15 million illegals home to create 15 million new American jobs and why not make unions illegal again to create another 15 million jobs?

Ans: liberals want the union vote and the immigrant community's vote.

If free trade in goods and services is good, why is free trade in labor bad? If putting up restrictions on goods and services coming across the border is bad, why is putting up restrictions on labor coming across the border good?

 

[likeabird03]

Global trade’s affects upon GDP.

[Trade surpluses contribute and trade deficits are detrimental to their nations’ GDPs because the benefits of production are earned by the producing nations and are denied to the importing nation].



Respectfully, Supposn

of course that idiotic since we buy from China in dollars; so if we buy $100 of stuff from them they have to buy $100 of stuff from us and our GDP then stays the same.

Except they don't buy a $100 worth of stuff. For every $100 worth of stuff we buy from them they buy about $40 from us. The other sixty bucks? Debt, T-Bills. Hardly a productive export.

 

[EdwardBaiamonte]

Except they don't buy a $100 worth of stuff. For every $100 worth of stuff we buy from them they buy about $40 from us. The other sixty bucks? Debt, T-Bills. Hardly a productive export.

Ah, you've stepped right into the trap haven't you? Our subject is "trade" isn't it? You just admitted that because of liberal budget deficits, debt etc China and Japan don't have to buy our products, they can buy of liberal debt.

Liberals want a tariff or tax on imports to drive up prices for already struggling Americans while conservatives want a responsible Republican fiscal policy like the Balanced Budget Amendment Republicans have been promoting since the first Republican, Jefferson.

 

[EdwardBaiamonte]

If free trade in goods and services is good, why is free trade in labor bad?

what on earth?????? Who would advocate buying or selling Mexicans. Buying people is illegal?

 

[Middleoftheroad]

If free trade in goods and services is good, why is free trade in labor bad?

what on earth?????? Who would advocate buying or selling Mexicans. Buying people is illegal?

He was talking about free flow of labor, you can't be that dense.

 

[Toro]

If free trade in goods and services is good, why is free trade in labor bad?

what on earth?????? Who would advocate buying or selling Mexicans. Buying people is illegal?

He was talking about free flow of labor, you can't be that dense.

If he's serious, he's a moronic idiot.

If he's not, that's pretty damn funny.

At this point, I have no idea if he is or not.

 

[Supposn]

So we've moved away from the GDP = C + I + G + X - M argument? We're clear that that doesn't imply that imports lower GDP? If that's the case, and we're moving on to a different line of argument, then I'll respond to this.

DSGE, this message #61 doesn’t imply, it supports the fact that trade deficits reduce their nation’s GDPs.

Respectfully, Supposn

Well I'd like to follow a nice straight line of reasoning please. I don't want you to jump to a new argument after I've addressed the old one only to jump back to the old one at a later date.

Did you understand, and agree with, my argument that the identity GDP = C + I + G + X - M does not suggest that imports lower GDP. There may be other reasons imports might lower GDP, which we'll get to once this argument is dealt with. If you agree that the income-expenditure identity doesn't at all suggest imports lower GDP, we can move on to other arguments. If you don't understand or agree, then why would you try shifting to a new argument? Please deal with one step at a time. If you don't understand, say so. If you disagree, point to the part of the reasoning you disagree with and elaborate on it specifically, just like I did for you.

DSGE, yes I understood your argument and no I do not agree with it.

You correctly state that the formula doesn’t suggest that imports lower GDP; it absolutely indicates that trade surpluses contribute and presents a strong argument that trade deficits are detrimental to their GDPs.

Maybe I could better understand your position if you would use a word other than “identity” as in “income-expenditure identity”. I’m not certain as to what you precisely mean by that phrase.

I’m particularly interested as to what you believe would be done with money involved if U.S. purchasers decided to purchase less imported goods? Try this explanation.

(T) Expenditures for transfers of wealth which contribute nothing to the GDP. This includes stuffing the money under a mattress. Unless or until these expenditures are liquidated and spent for goods or services, this money is not included within GDP calculation formulas.

(D) Purchases or dedication or use of domestic products for consumption or use for the benefits of individuals or commercial enterprises within the domestic market. These domestic products purchase for consumption or use increases the nation’s GDP.

(M) Purchases or dedication of imported products for consumption or use for the benefits of individuals or enterprises within our domestic market. These purchases wash each other out to leave the GDP unchanged.

(X) Exported domestically produced goods and service products. These increase our GDP.


All of our nation’s monetary wealth is within these four accounts.

Let us reduce (M), Imports. To the extent we shift money from Imports (M) into Domestic (D) or Exports (X), GDP is increased. To the extent it’s shifted into transfers of wealth (T), there’s no change in the GDP.

Thus a reduction of Imports (M) cannot decrease GDP and can increase GDP.

Similarly if we increase (M) Imports. To the extent we shift money from Domestic (D) or Exports (X) into Imports (I), GDP is decreased. To the extent it’s shifted from transfers of wealth (T), there’s no change in the GDP.

Thus an increase of Imports (M) cannot increase GDP and can reduce GDP.

Utilizing similar logic the results will in a reverse fashion is similar when exports are increased or decreased.

Respectfully, Supposn

 

[Supposn]

Very nice post as it provides so much information and really going to help in daily life.Thanks for such a wonderful post.

Ana2222, I’m a proponent of a proposal that by reducing our trade deficit would cause our GDP to increase.
That in turn would increase our median wage and numbers of jobs to all increase. Now that would be of benefit to wage and salary earning U.S. families.

The problem is that many people do not know that a trade deficit is ALWAYS detrimental to their nations’ GDPs.

Until U.S. voters knows about our trade deficits affect upon our GDP, the U.S. Congress will not consider this proposal.

Refer to:
the topic “Warren Buffett's concept to significantly reduce USA's trade deficit”,
posted @ 08-30-2009, 08:10 PM;

or to: www.USA-Trade-Deficit.Blogspot.Com .

Respectfully, Supposn

 

[editec]

Manufacture in the USA, baby, manufacture in the USA!

 

[DSGE]

DSGE, this message #61 doesn’t imply, it supports the fact that trade deficits reduce their nation’s GDPs.

Respectfully, Supposn

Well I'd like to follow a nice straight line of reasoning please. I don't want you to jump to a new argument after I've addressed the old one only to jump back to the old one at a later date.

Did you understand, and agree with, my argument that the identity GDP = C + I + G + X - M does not suggest that imports lower GDP. There may be other reasons imports might lower GDP, which we'll get to once this argument is dealt with. If you agree that the income-expenditure identity doesn't at all suggest imports lower GDP, we can move on to other arguments. If you don't understand or agree, then why would you try shifting to a new argument? Please deal with one step at a time. If you don't understand, say so. If you disagree, point to the part of the reasoning you disagree with and elaborate on it specifically, just like I did for you.

DSGE, yes I understood your argument and no I do not agree with it.

You correctly state that the formula doesn’t suggest that imports lower GDP;

Those two are in contradiction. "I disagree with the argument [that the GDP formula doesn't imply that imports lower GDP]", "you correctly state that the formula doesn't suggest that imports lower GDP". Which is it? You agree, or you disagree?

And like I asked, like I did for you, if you disagree with the argument, you must identify the specific step in the argument you think is in error and elaborate on why it is an error. I don't want to go jumping around with you presenting different arguments not related to the argument I gave you. Let's follow a straight got damn line of reasoning. We'll get to the rest of the arguments for why trade deficits lower GDP later. For now can we please deal with the GDP = C+I+G+X-M argument please?

it absolutely indicates that trade surpluses contribute

No, it tells you that exports contribute. It also says that government spending contributes. But I'm sure you wouldn't try to argue that if we just ramped up government spending we'd all have a better standard of living. But that's a different argument.

and presents a strong argument that trade deficits are detrimental to their GDPs.

That's exactly what my post was about. Again, if you disagree with my post, if you disagree with the idea that the GDP formula doesn't in fact suggest imports lower GDP, then find the part of my argument where I went wrong, and elaborate on why it went wrong.

Have you never formed a ******* structured argument before? This is getting seriously annoying.

Maybe I could better understand your position if you would use a word other than “identity” as in “income-expenditure identity”. I’m not certain as to what you precisely mean by that phrase.

In economics the formula Y (GDP) = C + I + G + X - M is called an "income-expenditure identity". "Identity" just means "something which always holds". It's "income-expenditure" because on the left we have total income and on the right we have total expenditure. Those two are always equal (hence "identity") because any expenditure is received by someone as income, and any income was generated by expenditure

 

[Supposn]

[..................................hose two are in contradiction. "I disagree with the argument [that the GDP formula doesn't imply that imports lower GDP]", "you correctly state that the formula doesn't suggest that imports lower GDP". Which is it? You agree, or you disagree?....................................

DSGE, you stopped reading the message when you encountered a semi-colon? You’re parsing and editing my messages to suit your preferences?

You quoted part of the sentence and clause within message #74;
this was the full sentence:

“You correctly state that the formula doesn’t suggest that imports lower GDP; it absolutely indicates that trade surpluses contribute and presents a strong argument that trade deficits are detrimental to their GDPs”.

Respectfully,Supposdn

 

[Supposn]

DSGE, you agree mathematically there’s no doubt exports increase a nation’s GDP?
Then how can you not accept that trade surpluses increase their nations’ GDPs?

I can’t understand from your message if you accept or disagree with the contention that trade deficits decrease their GDP?
What about surpluses? Do you accept or reject that imports increase their nation’s GDP.

An identity is a synonym for an “axiom”?.

Respectfully, Supposn

 

[editec]

The theory that exporting manufacturer and replacing those goods with imports is good for the economy is specious.

Can the activity of buying and selling imported good increase the GDP?

If course it can.

But will the GDP be a high if those same imported goods that will be bought and sold in this nation, increase the GDP as much as if those same items and been manufactured here, and then also bought and sold?

Of course not.

FREE TRADE as currently practiced mostly serves to benefit BIG CAPITAL well, but only at the expense of labor in this nation.

FREE TRADE as currently practiced is a form of CLASS INDIFFERENCE to the national economic health.


Anybody who tries to tell you otherwise is either mistaken or a liar.