Trade balances effects upon their nation's GDPs.

[expat_panama]

...a nation’s annual GDP, it was affected by its balance of trade. A positive trade balance increased it or a negative balance reduced it...

You keep saying that and I keep telling you no it doesn't. A lot of people who say that are thinking about the old formula:

GDP = +ConsumerSpending +GovernmentSpending +BusinessInvestment and -TradeDeficit​

All this really means is that production is the difference between total spending and netexports. It does not mean that an increase in the TradeDeficit could magically reduce Production any more than increasing production could force the government to spend more money. Think of the formula for calculating what happened on my drive from Omaha to Miami:

Distance OmahaMiami = + MilesDrivenMiamiEtc - MilesDrivenWrongTurns​

The millage driven on wrong turns did not change the distance from Omaha to Miami.

...Oh yeah? Well, I can snark back saying that the fact that your sophistry is mendacious makes it even worse than specious. [ooooh, that felt gooood! ...

.....you can do better. Respectfully,

OK, if you really want I can go along and butt heads w/ you but please just for short time:

--and you can do better by paying attention to the point --what followed was "OK, back to work." The point is that snarky sniping name calling is not work and if that's your game you can just play it by yourself although I hear if you play it by yourself to much you can go blind.
​

Let's please try and keep that to a minimum as my time is limited. Yeah, I lied. I'd rather not indulge because frankly I'm just not very good at it.

 

[EdwardBaiamonte]

thats a really tricky issue it seems to me. China just bought Waldorf, for example, with their surplus dollars. The more dollars they have the more we can raise prices for financial assets and the more this discourages China from wanting to acquire dollars from us through trade since our goods are not competitive and our financial assets get more costly in dollars until trade eventually slows and stops. So what happens along the way is:
1) Americans lose jobs because they don't produce competitively
2) Americans who also want to buy financial assets must pay the higher prices too so are rendered, in effect, poorer just like American workers.

The only solution for Americans is to eliminate taxes and most regulations to become competitive again.

EdwardBaiamonte, both the quality and price of products are affected by the time and quality of labor that was devoted to the products. (Note; differing quality of labor command differing wage rates).

The price advantages of imports from lower-wage nations exist even among their mass-produced products; labor’s required to create and maintain the mass production tools, assembly lines and infrastructures to support the production of goods].

USA’s labor or management are not at fault because they’re unable to compete with foreign nation’s lower wages’ purchasing powers. We should not fault USA purchasers because they seek the optimum value for the money they spend.
We must all function within our environment. USA’s trade policies encourage our annual trade deficits. Change the policies and we change purchasing decisions.

Your equating our inability to produce cheaply as being an inability to produce quality is nonsense.

Regarding your general comment that we reduce taxes rather than modifying our trade policies:
The purposes of those taxes are to provide government tax revenues.
Please refer me to the discussion thread where you explain which expenditures we no longer need to fund or did you intend we reduce tax revenues and increase federal borrowing?

I don’t doubt that you have a list of expenditures in mind but many of us others also have a list. Our lists do not correlate with your list. I’m more inclined to believe that our government is not spending too much but rather we are not receiving the best values for our amounts of spending.

Respectfully, Supposn

the corporate tax shipped 10 million jobs off shore and is totally stupid anyway since it is passed on to consumers. We have only to pander to the pure ignorance of liberals.

 

[EdwardBaiamonte]

Bottom line is that the bigger the 'trade deficit' the better we get at creating assets like new hotels..

ideally, but in reality the more lazy and socialist America gets the
less likely we will be competitive making hotels and other stuff. The only real solution is to get tough lean and competitive.

 

[yiostheoy]

Excerpted from Wikipedia’s “Balance of Trade” article:

“Trade balances effects upon their nation's GDPs.
Exports directly contribute and imports directly reduce their nation's balance of trade (i.e. net exports). A trade surplus is positive net balance of trade, and a trade deficit is a negative net balance of trade. Due to balance of trade being explicitly added to the calculation of their nation's gross domestic product using the expenditure method of calculating gross domestic production (i.e. GDP), trade surpluses are contributions and trade deficits are "drags" upon their nation's GDP”. …
… Refer to:

“Expenditure Method
http://www.bea.gov/methodologies/index.htm#national_meth
http://www.britannica.com/topic/gross-domestic-product”.

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

If a nation experienced an annual negative balance of global trade, (i.e. a trade deficit), that nation’s GDP was less than otherwise. A lesser GDP reflects upon, and is reflected upon by the nation’s lesser numbers of jobs during that same year. I’m unaware of any nation that enjoyed full employment while experiencing an annual trade deficit.

Proving trade deficits are beneficial or not detrimental to nations’ GDPs by statistical “proofs” are based upon specious reasoning.

[Within a nation’s markets, both their domestic and imported goods are sold. (We have no general rules applicable to aggregate types of goods and the proportional volumes between domestic and imports sold within each nation’s domestic markets during each of their markets differing conditions].

Generally, we expect that during a nation’s periods of improved GDP, the sales volumes of their domestic markets similarly improve; when their GDPs are stagnant or declining. we expect those sales volumes to similarly be stagnant or decline. Demonstrating trade deficits are reduced during times of lesser national GDPs only indicates that less imports are sold within the nation’s domestic markets during those periods.

Regardless of a nation’s annual GDP, a positive trade balance increased it or a negative balance reduced it.

There are some production supporting goods and service products that are not fully reflected within the prices of final products because their entire costs were not passed on to the final producers; (for example, government provided infrastructure, reduced utility rates, government or university research and development may be provided to producers at less than their actual costs, although they all contribute to the producing nations’ GDPs.)

If entire production support is not reflected within nations’ globally traded goods’ prices, those nations’ trade balances are understated and trade deficit’s reductions or trade surpluses contributions to their nation’s GDPs are similarly understated.

Nations attract investment due primarily to expectations of investments’ security and rates of return rather than by the nation’s trade volumes or trade balances.

Respectfully, Supposn

It's not rocket science.

Exporting creates jobs.

Importing kills jobs.

There you have it -- 6 words -- 2 sentences.

 

[EdwardBaiamonte]

The bigger the trade deficit the richer we get.

???? so if
so if we raised corporate tax to 90% to balloon trade deficit that would make us richer??

 

[EdwardBaiamonte]

It's not rocket science.

Exporting creates jobs.

Importing kills jobs.

There you have it -- 6 words -- 2 sentences.

stupid and simplistic since you cant export without importing an equal amount

 

[task0778]

It's not rocket science.

Exporting creates jobs.

Importing kills jobs.

There you have it -- 6 words -- 2 sentences.[/QUOTE]

Not necessarily, depends on what you're importing. The US needs many raw materials from other countries that frankly we don't have. The other thing is this, and liberals absolutely hate this: if a foreign country can make and ship a product that is cheaper than what we can make it for here then that is a net positive for our economy. Why? Because then the American consumer has more money to spend on more stuff. So maybe the workers that make the higher priced product lose jobs but that loss is made up by more workers in some other industry or sector that grows because of increased demand.

Look at Japan - they've been running a trade surplus for decades, but their economy sucks.

 

[expat_panama]

Bottom line is that the bigger the 'trade deficit' the better we get at creating assets like new hotels..

...ideally, but in reality...

Reality is just what we've done and how it came out. Anything else is imagination.

...the more lazy and socialist America gets the less likely we will be competitive making hotels and other stuff. The only real solution is to get tough lean and competitive.

Well it sure seems that way sometimes but the U.S.A. has not changed its name to the United Socialist States of America and it's not about to. Lazy and uncompetitive business don't stay in business for long, and most business we got have been doing pretty good for a looong time.

 

[expat_panama]

The bigger the trade deficit the richer we get.

...if we raised corporate tax to 90% to balloon trade deficit...

Wait a sec, we tax people so they have less money, then that means if they have less money they'll buy more imports?

Somehow that just doesn't make any sense.

 

[Supposn]

Not necessarily, depends on what you're importing. The US needs many raw materials from other countries that frankly we don't have. The other thing is this, and liberals absolutely hate this: if a foreign country can make and ship a product that is cheaper than what we can make it for here then that is a net positive for our economy. Why? Because then the American consumer has more money to spend on more stuff. So maybe the workers that make the higher priced product lose jobs but that loss is made up by more workers in some other industry or sector that grows because of increased demand.

Look at Japan - they've been running a trade surplus for decades, but their economy sucks.

Task0778, we’re not discussing individual transactions, we’re discussing USA’s annual balances of trade. USA’s annual trade deficits are not due to our importing products to support USA’s productions.

Annual trade deficits are always of net detriment to their nation’s GDPs and numbers of jobs. We all benefit from cheaper products but that doesn’t compensate for trade deficits net detrimental effects upon the purchasing powers of USA’s wage earning families.

You’re incorrect when you state “So maybe the workers that make the higher priced product lose jobs but that loss is made up by more workers in some other industry or sector that grows because of increased demand”.

Annual trade deficits are ALWAYS net detrimental to their nation’s GDPs and numbers of jobs.

Regarding Japan, their economy would be much poorer if they were to suffer annual trade deficits. They and many other nations’ economies benefit from maintaining annual trade surpluses.

Respectfully, Supposn

 

[Supposn]

...a nation’s annual GDP, it was affected by its balance of trade. A positive trade balance increased it or a negative balance reduced it...

You keep saying that and I keep telling you no it doesn't. A lot of people who say that are thinking about the old formula:

GDP = +ConsumerSpending +GovernmentSpending +BusinessInvestment and -TradeDeficit​

All this really means is that production is the difference between total spending and netexports. It does not mean that an increase in the TradeDeficit could magically reduce Production any more than increasing production could force the government to spend more money. Think of the formula for calculating what happened on my drive from Omaha to Miami:

Distance OmahaMiami = + MilesDrivenMiamiEtc - MilesDrivenWrongTurns​

The millage driven on wrong turns did not change the distance from Omaha to Miami.

...Oh yeah? Well, I can snark back saying that the fact that your sophistry is mendacious makes it even worse than specious. [ooooh, that felt gooood! ...

.....you can do better. Respectfully,

OK, if you really want I can go along and butt heads w/ you but please just for short time:

--and you can do better by paying attention to the point --what followed was "OK, back to work." The point is that snarky sniping name calling is not work and if that's your game you can just play it by yourself although I hear if you play it by yourself to much you can go blind.
​

Let's please try and keep that to a minimum as my time is limited. Yeah, I lied. I'd rather not indulge because frankly I'm just not very good at it.

Expan_Panama, you don’t seem to have regard for the meanings of the words and sentences within our posts. What’s your point or points within this quoted post? What "old formula" are you referring to? Have the economists and statisticians of the world's governments and univerities agreed and adopted a "new" creditable formula for calculating nations' GDPs? GDP's expediture formula is the assumed formula used throughout the world.

Respectfully, Supposn

 

[task0778]

Not necessarily, depends on what you're importing. The US needs many raw materials from other countries that frankly we don't have. The other thing is this, and liberals absolutely hate this: if a foreign country can make and ship a product that is cheaper than what we can make it for here then that is a net positive for our economy. Why? Because then the American consumer has more money to spend on more stuff. So maybe the workers that make the higher priced product lose jobs but that loss is made up by more workers in some other industry or sector that grows because of increased demand.

Look at Japan - they've been running a trade surplus for decades, but their economy sucks.

Task0778, we’re not discussing individual transactions, we’re discussing USA’s annual balances of trade. USA’s annual trade deficits are not due to our importing products to support USA’s productions.

Annual trade deficits are always of net detriment to their nation’s GDPs and numbers of jobs. We all benefit from cheaper products but that doesn’t compensate for trade deficits net detrimental effects upon the purchasing powers of USA’s wage earning families.

You’re incorrect when you state “So maybe the workers that make the higher priced product lose jobs but that loss is made up by more workers in some other industry or sector that grows because of increased demand”.

Annual trade deficits are ALWAYS net detrimental to their nation’s GDPs and numbers of jobs.

Regarding Japan, their economy would be much poorer if they were to suffer annual trade deficits. They and many other nations’ economies benefit from maintaining annual trade surpluses.

Respectfully, Supposn

Task0778, we’re not discussing individual transactions, we’re discussing USA’s annual balances of trade. USA’s annual trade deficits are not due to our importing products to support USA’s productions. A large part of our trade deficits for many years has been the importing of oil, which obviously supports the USA's production.

Annual trade deficits are always of net detriment to their nation’s GDPs and numbers of jobs. Not True. We all benefit from cheaper products but that doesn’t compensate for trade deficits net detrimental effects upon the purchasing powers of USA’s wage earning families. I'm pretty sure the positive effects of an increased purchasing power resulting from increased competition due to cheaper foreign products is an absolute boon to every US family cuz their dollars go a lot further. Especially the families at or below the poverty level.

You’re incorrect when you state “So maybe the workers that make the higher priced product lose jobs but that loss is made up by more workers in some other industry or sector that grows because of increased demand”. Says you. Dude, when a lower priced product comes on the market then those workers who were making the higher priced product are going to find themselves working for less or out of a job. Doesn't matter where the lower priced product came from, across the street, across the country or across the world.

Annual trade deficits are ALWAYS net detrimental to their nation’s GDPs and numbers of jobs. Totally wrong. A trade deficit does negatively impact the GDP number, but it does not necessarily impact the number of jobs. There is no proof at all that trade deficits cause unemployment, and history bears that out. If you look at a graph that shows trade deficits over the past 50 years or so and then you look at a graph that shows unemployment over the same period you will not see a correlation.

Regarding Japan, their economy would be much poorer if they were to suffer annual trade deficits. They and many other nations’ economies benefit from maintaining annual trade surpluses. This is ridiculous. What are you saying, if only they could run a larger surplus they'd be good to go? You tell me, how big a surplus do they need to reach, and why has their economy sucked for at least the last 30 years while they've had the trade surplus?

 

[Supposn]

Expan_Panama, balance of payments tracks international transfers of currency. Every nation’s balance of payments is reconciled to be approximately zeroed out, similar to an ongoing checking account. Transfers of currency regarding global trade are included within nations’ balances of payments but balances of payments do not indicate or affect their nation’s GDPs.

Other than to add confusion to this discussion, why do you mention balance of payments?

Respectfully, Supposn

 

[EdwardBaiamonte]

and most business we got have been doing pretty good for a looong time.

That's the whole point. you have poverty up, food stamps up, kids living in parents basements, industrial workers now working at Walmart at 1/3 pay, and most importantly GDP half what it should be.

 

[EdwardBaiamonte]

The bigger the trade deficit the richer we get.

...if we raised corporate tax to 90% to balloon trade deficit...

Wait a sec, we tax people so they have less money, then that means if they have less money they'll buy more imports?

Somehow that just doesn't make any sense.

you said a big trade deficit makes us rich. if so why not make exports illegal or tax them to increase trade deficit???

 

[EdwardBaiamonte]

Reality is just what we've done and how it came out. Anything else is imagination..

1-2% GDP with new jobs at Walmart for 1/3 pay is how it came out- right?

 

[yiostheoy]

Excerpted from Wikipedia’s “Balance of Trade” article:

“Trade balances effects upon their nation's GDPs.
Exports directly contribute and imports directly reduce their nation's balance of trade (i.e. net exports). A trade surplus is positive net balance of trade, and a trade deficit is a negative net balance of trade. Due to balance of trade being explicitly added to the calculation of their nation's gross domestic product using the expenditure method of calculating gross domestic production (i.e. GDP), trade surpluses are contributions and trade deficits are "drags" upon their nation's GDP”. …
… Refer to:

“Expenditure Method
http://www.bea.gov/methodologies/index.htm#national_meth
http://www.britannica.com/topic/gross-domestic-product”.

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

If a nation experienced an annual negative balance of global trade, (i.e. a trade deficit), that nation’s GDP was less than otherwise. A lesser GDP reflects upon, and is reflected upon by the nation’s lesser numbers of jobs during that same year. I’m unaware of any nation that enjoyed full employment while experiencing an annual trade deficit.

Proving trade deficits are beneficial or not detrimental to nations’ GDPs by statistical “proofs” are based upon specious reasoning.

[Within a nation’s markets, both their domestic and imported goods are sold. (We have no general rules applicable to aggregate types of goods and the proportional volumes between domestic and imports sold within each nation’s domestic markets during each of their markets differing conditions].

Generally, we expect that during a nation’s periods of improved GDP, the sales volumes of their domestic markets similarly improve; when their GDPs are stagnant or declining. we expect those sales volumes to similarly be stagnant or decline. Demonstrating trade deficits are reduced during times of lesser national GDPs only indicates that less imports are sold within the nation’s domestic markets during those periods.

Regardless of a nation’s annual GDP, a positive trade balance increased it or a negative balance reduced it.

There are some production supporting goods and service products that are not fully reflected within the prices of final products because their entire costs were not passed on to the final producers; (for example, government provided infrastructure, reduced utility rates, government or university research and development may be provided to producers at less than their actual costs, although they all contribute to the producing nations’ GDPs.)

If entire production support is not reflected within nations’ globally traded goods’ prices, those nations’ trade balances are understated and trade deficit’s reductions or trade surpluses contributions to their nation’s GDPs are similarly understated.

Nations attract investment due primarily to expectations of investments’ security and rates of return rather than by the nation’s trade volumes or trade balances.

Respectfully, Supposn

From now on anyone without an avatar is going onto my ignore list.

 

[expat_panama]

...a "new" creditable formula for calculating nations' GDPs? ...

fwiw from here, more info here or here):

1) The Expenditure Approach

This method of determining GDP adds up the market value of all domestic expenditures made on final goods and services in a single year, including consumption expenditures, investment expenditures, government expenditures, and net exports. Add all of the expenditures together and you determine GDP.

2) The Production Approach

This method also called the Net Product or Value added method requires three stages of analysis. First gross value of output from all sectors is estimated. Then, intermediate consumption such as cost of materials, supplies and services used in production final output is derived. Then gross output is reduced by intermediate consumption to develop net production.

3) The Income Approach

This method of determining GDP is to add up all the income earned by households and firms in the year. The total expenditures on all of the final goods and services are also income received as wages, profits, rents, and interest income. By adding together all of the wages, profits, rents, and interest income, you determine GDP:

The three methods of measuring GDP should result in the same number...​

 

[expat_panama]

...why do you mention balance of payments?

We were talking about it earlier. No matter.

...anyone without an avatar is going onto my ignore list.

Huh. Somehow that's got to be the most insightful post on this entire thread!


tx!

 

[Supposn]

A large part of our trade deficits for many years has been the importing of oil, which obviously supports the USA's production.

Task0778, I sit corrected because I type sitting down. You’re correct, for a number of years petroleum products were more significant net contributors to USA’s annual trade deficits for a number of years. (But much of USA’s gasoline consumption does not support USA’s production).

[I’m among the proponents of the trade policy described by Wikipedia’s “Import Certificates” article. The proposal’s not applicable to the values of scarce or precious mineral materials integral to goods passing through USA’s borders. It’s expected that congress would designate crude oil within their list of such materials.]

Says you. Dude, when a lower priced product comes on the market then those workers who were making the higher priced product are going to find themselves working for less or out of a job. Doesn't matter where the lower priced product came from, across the street, across the country or across the world.

The difference is who win and who loses. USA GDP has not been decreased because production has relocated across USA state lines; if some USA labor has been displaced, other USA labor is doing the job.
When USA GDP is reduced (as it is reduced more than otherwise due to our annual trade deficits), there are lesser numbers of jobs than otherwise and lesser jobs drags upon the nation’s median wage.

This is ridiculous. What are you saying, if only they could run a larger surplus they'd be good to go? You tell me, how big a surplus do they need to reach, and why has their economy sucked for at least the last 30 years while they've had the trade surplus?

It’s not stated that balance of trade determines their nation’s GDP, but rather that it’s among the factors affecting their nation’s GDP. Due to trade surpluses. their nation’s annual GDPs are greater (THAN OTHERWISE; due to trade deficits, their nation’s annual GDPs are less (THAN OTHERWISE).

Totally wrong. A trade deficit does negatively impact the GDP number, but it does not necessarily impact the number of jobs.

Please further explain this statement.

I'm pretty sure the positive effects of an increased purchasing power resulting from increased competition due to cheaper foreign products is an absolute boon to every US family cuz their dollars go a lot further. Especially the families at or below the poverty level.

How does reducing USA’s GDP more than otherwise, thus reducing USA’s numbers of jobs more than otherwise improve the financial condition of USA’s wage earning families more than otherwise?

Respectfully, Supposn