Global trade’s affects upon GDP.

[EdwardBaiamonte]

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

of course that is perfectly idiotic and liberal which is why you were so afraid to say how you would like to see free trade practiced.

 

[EdwardBaiamonte]

[..................................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

your subject is of course goofy. Can anyone say with a straight face that our GDP would be higher if we made international free trade illegal??

 

[EdwardBaiamonte]

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

we could make that the law but our standard of living would then be 30% of what it is now?? Only a fool or a few liberals would disagree which is why no economists would recommend that.

 

[Supposn]

your subject is of course goofy. Can anyone say with a straight face that our GDP would be higher if we made international free trade illegal??

Edward Baiamonte, your messages usually read as from a Ron Paul/Libertarian/anarchist.

When Ron Paul begins to speak I nod in agreement but then he keeps going beyond the libertarians’ pier until falls into the deep anarchist waters. Ron’s goes too far beyond libertarianism.

But now you’re off in a completely different tack. Why are you promoting elimination of USA’s global trade?

We trade with government’ that are unable or unwilling to enable their workers to earn reasonable compensations and to work and live in better environments. You seemed pleased with U.S. wage earners competing against Chinese wage and living standard. Why have you changed your mind?

Respectfully, Supposn

 

[EdwardBaiamonte]

Ron’s goes too far beyond libertarianism.

why not cut the BS and say where he's wrong?????

.

why are you promoting elimination of USA’s global trade?

too stupid!! libertarians are for free trade and think trade deficts are self-correcting in the absense of liberal government

We trade with government’ that are unable or unwilling to enable their workers to earn reasonable compensations and to work and live in better environments.

Its nice to see our standard of living rise thanks to all the freebies from China isn't it? Would you have them to charge us more??? Or would you like a tariff tax so we all can pay more and be poorer???

You seemed pleased with U.S. wage earners competing against Chinese wage and living standard.

sure why not, we're doing great with our wages averaging 15 times theirs. If we had a Balanced Budget Amendment, no liberal unions, and closed borders( all opposed by liberals) our industries' would be booming and wages sky rocketing

 

[Widdekind]

... money that flows out of the country when buying foreign goods (contributing to a trade deficit) does one of two things: It either is used by foreign countries to buy US export goods (reducing the deficit), or it flows back into the country through the capital...account as US dollar loans/foreign direct investment/etc and is used to buy US goods domestically, contributing to GDP. They use US dollars to, say, buy US bonds. Yes, the purchase of a bond doesn't count towards GDP. But the bond issuer uses the money from the sale of the bond to buy real goods and services. Imports do not lower GDP.

what about "Displacement", of domestic production, by Imported foreign production ? what happens by the removal, of domestic production ("Ford in Detroit"), to foreign producers ("Toyota in Japan") ?

naively, instead of domestic (Blue & White Collar) Labor being paid from the proceeds, foreign Labor is paid. But, those US Dollars "must come back home"; however, instead of paying US Labor, they now buy US Debt & Capital. Then, those US Dollars "must be spent" (technically, you are ignoring "hoarding", i.e. "demand for money"?). Which-so-ever domestic businesses receive the foreign Investment, expand operations, e.g. paying other domestic Labor. Thus, Imports shift employment, away from uncompetitive domestic producers (displaced by foreign producers); towards other domestic producers (favored by foreigners).

naively, "universal" money (e.g. gold, gold-backed) would not "have to come back home". Then, Imports would "drain the coffers dry", as specie & bullion accumulated to foreigners. But, paper money, being "on a leash", implies that foreigners will only supply Imports into the US economy, if-and-only-if they plan to purchase US products (Exports) or US investments (Debt & Capital); relatively low US Exports implies the predominance of the latter.

ipso facto, if US consumers see foreign wares offered, in domestic markets; then US consumers "ought" to know, that they are "bartering away" some other Debt/Capital asset, for that foreign object ("gain a Toyota, lose a (part of a) business"). I.e. US paper money is "chained" to the US economy ("and nobody wants Green-Backs just for sentimental reasons"); foreign trade is de facto bartering, swapping foreign products, for US Capital. what happens, when all US Capital, is foreign owned ?

 

[Widdekind]

because Economy A has a surplus of Economy B's currency [Investment B --> A], it MUST do something with it. If Economy A decides it doesn't want to invest in Economy B (and thus has a capital account surplus), it MUST use the currency of Economy B to purchase goods from Economy B [products B --> A]. Thus, Economy A will run a trade deficit with Economy B because Economy B decided to invest in Economy A.

the key word is "MUST" -- if the global economy utilized a "universal" money; then money would be "good anywhere", could be utilized "anywhere"; and then international trade would be "structured" very differently.

but when money is "shackled to some country", then

• producers will only send "Imports" into other countries, if they can buy "Investments" (or products) in those countries
• countries will only accept "Investments" from other countries, if they can buy "Imports" (or Investments) from those countries

i.e. foreign trade is intrinsically bi-lateral, de facto bartering between products & Investments. E.g. "US consumers only see Chinese wares, on domestic markets, b/c the Chinese plan to purchase US businesses, with the proceeds". Americans are accustomed to a "universal" national money (Federal Reserve Notes), with which the national economy is "free-wheeling"; but Americans are not as accustomed, to "state & local monies" (e.g. "tokens good only at the local Chucky Cheeses"), whose economic uses are dramatically different (e.g. "you only take tokens, if you know you can get something else, at that Chucky Cheeses, with them").

 

[Widdekind]

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

counterfeiting ?

if the RHS is "expenditures"; then why is the RHS not "C + I + G + M - X" ? Aren't exports a source of "income", and imports the "expenditure" ?

 

[Widdekind]

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

US paper money, on international markets, is "local tokens", redeemable only in the US. so, foreigners only sell products, to Americans, in order to buy Capital, in America. massive Imports displace domestic production, dis-employing domestic Labor; equally massive foreign Investment buoys "chosen" businesses

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

US workers, who buy cheap foreign Imports, are funding the foreign Investors, whose Investments then influence domestic corporations -- which fact all Americans seem equally to support ("you vote loudest with your wallet (and nobody buys pricey US products)"), cp. "you get what you pay for"

 

[Widdekind]

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?

Americans have been "wooed" with "have their cake & eat it to"; apparently, Americans will not elect politicians who try to tell them otherwise; e.g. "whether the cheaper-labor is Chinese, in China; or Mexican, in America; both generate the cheaper-products people prefer to purchase". If you cared about American businesses & jobs, then you would prove it, by working harder-for-less, economically out-competing foreigners, and so not being economically displaceable (due to transportation costs, Americans already have a "home-field advantage"). C.p. "ask not what 'your' business can do for you, ask what you can do for that business"

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.

...because of liberal budget deficits, debt etc China and Japan don't have to buy our products, they can buy...liberal debt.

de facto China et al loan their profits, back to US politicians, who disperse the money, amongst voters, for various social programs, in exchange for office (and a "cushy job"); voters get "free welfare" today, China gets "interest plus principal" tomorrow

 

[Widdekind]

GDP = (C + I + G) + (X - M), total consumption plus total investment plus total government consumption, plus the balance of trade... 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... 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.

what if X=0, GDP=0; then M=CIG, i.e. "everything consumed domestically was produced foreignly" ??

you're saying, that "M is already buried within CIG" ?? I.e. de facto, "government accountants" hawk over every domestic market; over the course of the year, they tabulate all "CIG" expenditures occurring in the country; meanwhile, "customs accountants" hawk over every domestic port-of-entry; over the course of the year, they tabulate all "X-M" entering & leaving the country. Then, the former "CIG" grand-total includes both domestically, and foreignly, produced Goods & Services; subtracting off "-M" yields that part of "CIG" which was produced domestically. And then, you add in "+X", figures given from foreign markets, wherein domestically-produced products were sold, "out-of-sight of the government accountants above".

so, "all else equal", reducing iMports would leave gDp unchanged -- foreign products would vanish from domestic markets, the "government accounts" wouldn't see them for sale, reducing "CIG"; the "customs accountants" wouldn't see them entering the country, reducing "-M" by the exact-same amount. Logically, Domestic production is not (directly) related to Foreign production; Foreign products could be excluded completely, with no (direct) impacts on Domestic activities. However, shortages of previously-Foreign-supplied products, i.e. Imports, could plausibly impair Domestic production, which was dependent upon those Foreign parts, resulting in (indirect) reduction to GDP. If so, then denial of access, to superior Foreign parts, i.e. lower Imports, could actually reduce GDP !! (Cp. Libertarian laissez-faire -- if foreign parts are economically superior, then 'tis better to use them; cp. "cheaper foreign labor")

ultimately, the only thing that increases GDP, is a vigorous domestic "DIY" mentality -- i.e. "work more, for less", i.e. "be more economically competitive", so that domestic products are preferred

we need to borrow money from abroad in order to buy goods from abroad.

"foreign financed Imports"

what if all earth utilized a single "universal" currency -- some sort of "electronic gold", according to which, all national currencies would be "automatically inter-convertible" (as if they were all backed by 'phantom electronic gold') ?

then, purchases made in US dollars would be legally equivalent, to those made in (a different number of) Yuan. Perhaps, instead of a "gold standard", there could be a "real absolute value standard", whereby currencies could always be converted, on demand, to an appropriate amount of "absolute value", not necessarily all in gold, at then-current exchange rates ("i demand to convert my money", "sure, here's 1ton of gold, 2tons of silver, 4-truck-loads of timber, a flock of sheep, a thousand bushels of corn, and a partridge in a pear tree")

 

[Widdekind]

In either sense it doesn't really matter. The US trade deficit ends up with foreign ownership of our debt and our companies. Which I don't think you are arguing against.

That's true, but I don't think that's a bad thing.

WHOA WHOA WHOA
How is the Chinese owning our businesses not a bad thing? That means they are getting rich, not American's.

logically, if foreign "Blue-Collar" Labor can be economically superior ("cheaper"); then foreign "White-Collar" Labor could be economically superior ("better managers"); better business management makes all workers wealthier (potentially)

prima facie, foreigners winding up owning all American businesses implies that those foreigners are economically better at business

Americans being bad at business is not good (will not make more wealth, for anybody)

 

[DSGE]

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

counterfeiting ?

Haha. Thinking outside the box there. My best answer would be that counterfeited money doesn't really count as anything until somebody tries to spend it. Once you spend it, then it becomes expenditure, and income of whoever you're buying from.

But it's a good point which leads to a more general question (which I don't really have an answer for). What about all the stuff you produce yourself? Mowing your own lawn, keeping your house clean, making your own furniture, fixing your own car. This is all production but it doesn't get counted in the national accounts (because it's hard to measure). So if it's gonna be counted, even in theory, how would that work? Is it income that you give to yourself? Or should self-production just not be counted at all; since economics is about trade after all and if you're just producing your own stuff that only you consume, there's no real economy going on. But once trade happens then we should start counting things. I guess that answer, which I'm not entirely satisfied with, would tie in with my best guess for the counterfeiting point.

if the RHS is "expenditures"; then why is the RHS not "C + I + G + M - X" ? Aren't exports a source of "income", and imports the "expenditure" ?

Because it'ss not "domestic expenditure" as in "expenditure by domestic citizens", it's "expenditure on domestic products". So that's why it's + X. The - M is there because when we calculate total expenditure on consumption/investment/government spending, just measuring total consumption expenditure counts both consumption expenditure on domestically produced goods and expenditure on import goods. Since we're only trying to count expenditure on domestic products with C/I/G, we subtract total imports.

 

[DSGE]

... money that flows out of the country when buying foreign goods (contributing to a trade deficit) does one of two things: It either is used by foreign countries to buy US export goods (reducing the deficit), or it flows back into the country through the capital...account as US dollar loans/foreign direct investment/etc and is used to buy US goods domestically, contributing to GDP. They use US dollars to, say, buy US bonds. Yes, the purchase of a bond doesn't count towards GDP. But the bond issuer uses the money from the sale of the bond to buy real goods and services. Imports do not lower GDP.

what about "Displacement", of domestic production, by Imported foreign production ? what happens by the removal, of domestic production ("Ford in Detroit"), to foreign producers ("Toyota in Japan") ?

naively, instead of domestic (Blue & White Collar) Labor being paid from the proceeds, foreign Labor is paid. But, those US Dollars "must come back home"; however, instead of paying US Labor, they now buy US Debt & Capital. Then, those US Dollars "must be spent" (technically, you are ignoring "hoarding", i.e. "demand for money"?). Which-so-ever domestic businesses receive the foreign Investment, expand operations, e.g. paying other domestic Labor. Thus, Imports shift employment, away from uncompetitive domestic producers (displaced by foreign producers); towards other domestic producers (favored by foreigners).

Yeah I think that's a pretty good summary of comparative advantage in the long run. The only point I might disagree with is the money hoarding bit; not sure why a company would borrow lots of money at interest only to hoard it.

naively, "universal" money (e.g. gold, gold-backed) would not "have to come back home". Then, Imports would "drain the coffers dry", as specie & bullion accumulated to foreigners. But, paper money, being "on a leash", implies that foreigners will only supply Imports into the US economy, if-and-only-if they plan to purchase US products (Exports) or US investments (Debt & Capital); relatively low US Exports implies the predominance of the latter.

ipso facto, if US consumers see foreign wares offered, in domestic markets; then US consumers "ought" to know, that they are "bartering away" some other Debt/Capital asset, for that foreign object ("gain a Toyota, lose a (part of a) business"). I.e. US paper money is "chained" to the US economy ("and nobody wants Green-Backs just for sentimental reasons"); foreign trade is de facto bartering, swapping foreign products, for US Capital. what happens, when all US Capital, is foreign owned ?

Absolutely agree. I find it helpful when thinking about international trade to just think about domestic trade. After all, the only difference between the two is the arbitrary drawing of borders and the addition of a foreign exchange market (which I don't think radically changes anything). So to the question "what happens when all Us capital is foreign owned", I think in terms of a US company. Say a US company wants to buy more that what they're currently producing (that is, they want to invest but don't have sufficient retained earnings). They can either sell a corporate bond to somebody or they can sell equity. Both entail gaining resources now but giving up a portion of earnings in the future. So what's the difference between Californian capital being mostly owned by New York, and Californian capital being mostly owned by China?

 

[Widdekind]

What about all the stuff you produce yourself? Mowing your own lawn, keeping your house clean, making your own furniture, fixing your own car. This is all production but it doesn't get counted in the national accounts (because it's hard to measure)... economics is about trade after all and if you're just producing your own stuff that only you consume, there's no real economy going on. But once trade happens then we should start counting things.

that explains why "aboriginal peoples" are accounted as "economically poor", even whilst they perceives themselves as "free", "satisfied", and (generally) "healthy". I.e. "DIY = extra-economic value" ("mountain-men aren't good consumers"), et vice versa (large economies imply large inter-dependency, large utilizations of "stuff others made for trade"). Economic indices measure "social dependency"; "improving" economic statistics of developing nations may reflect "increasing international dependency" more than "improving human health" "on the ground".

 

[Widdekind]

what's the difference between Californian capital being mostly owned by New York, and Californian capital being mostly owned by China?

by (extreme) extrapolation, what about Californian capital (on earth) being owned by Aliens (in space) ? remote "absentee land-and-capital-lords" may be feared to have interests remote from present locals (cp. "law of blood", "me before my brother before my cousin before foreigners [before Aliens]")

 

[Supposn]

............................. So what's the difference between Californian capital being mostly owned by New York, and Californian capital being mostly owned by China?

DSGE, a trade deficit is harmful to a state just as it is to a nation.
That was one of the primary reasons for our replacing the Articles of Confederation with the USA constitution.

We are constitutionally required to tolerate any economic disadvantage our state may suffer due to our trade deficit with other states,
We are not as a nation required to tolerate economic disadvantages due to our global trade deficit.

Respectfully, Supposn

 

[EdwardBaiamonte]

DSGE, a trade deficit is harmful to a state just as it is to a nation.

its harmful in the same sense to a region or city or neighborhood but Supposin lacks the IQ to see it..

 

[Supposn]

Transcript of reply #97 of this discussion thread:
Quote: Originally Posted by DSGE:
............................. So what's the difference between Californian capital being mostly owned by New York, and Californian capital being mostly owned by China?
* * *
Quote: Originally Posted by Supposn:
DSGE, a trade deficit is harmful to a state just as it is to a nation.
That was one of the primary reasons for our replacing the Articles of Confederation with the USA constitution.

We are constitutionally required to tolerate any economic disadvantage our state may suffer due to our trade deficit with other states,
we are not as a nation required to tolerate economic disadvantages due to our global trade deficit.

Respectfully, Supposn

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

DSGE, a trade deficit is harmful to a state just as it is to a nation.

its harmful in the same sense to a region or city or neighborhood but Supposin lacks the IQ to see it..

Edward Baiamonte, you quoted me out of context. You only quoted one sentence of a 4 sentence post.

I iterate we are CONSTITUTIONALLY REQUIRED to tolerate any economic disadvantage our state may suffer due to our trade deficit with other states.
I suppose you just assume that anything I post is contrary to your opinions?

You don’t bother to fully read my posts or did you actually miss the word “constitutionally”?
I’ve questioned your judgment but never did and I’m unlikely to ever question your intelligence.

Respectfully, Supposn

 

[EdwardBaiamonte]

I iterate we are CONSTITUTIONALLY REQUIRED to tolerate any economic disadvantage our state may suffer due to our trade deficit with other states.

of course if true you would not be so afraid to say where in the Constitution that is? Besides, even if it was true, is it desirable to have poor states like Arkansas charge such low prices?? What not have liberal intervention like you want in international trade??

I suppose you just assume that anything I post is contrary to your opinions?

yes you're a liberal looking to magical government because you lack the IQ to understand capitalism

[/QUOTE]