Yeah, no kidding. This is just this simple.
Imports cannot be detrimental to a nation's GDP when everyone is working. During all the times of full employment, imports are just more stuff to consume and not detrimental to production. We can't produce more stuff without more people to produce it. Imports are just some other nation producing that more stuff for us.
ItFitzMe, Im 75 years of age.
Thus far within my lifetime the only period when ALMOST everyone in the USA was working, occurred during World War Two.
For the remainder of those 75 years, due to our annual trade deficits, our GDPs and median wages were less than otherwise. (Otherwise being if the USA had not been experiencing annual trade deficits).
Respectfully, Supposn
Well there is the unstated premise to your hypothesis, that there has always been unemployment caused by imports. Employment being compared to what it was during WWII. "Less then otherwise" is "less then WWII".
And, that there has always been is why there is no history which which to compare a time that there wasn't. Of course, we can ignore all those times when there were fewer imports. They don't count.
This is exactly what I meant by all measures being relative to something. The foundation upon which your measure is relative to is the level of "employment" when the world is at war. That is, though, not a standard definition for defining employment.
Nor is there any easy reason to conclude that trade restrictions are going to achieve the same effect. The economy of WWII was clearly not the economy of NOW and far different then the economy of 2006. If we are to use WWII as a basis for comparison, then we might just as well consider going around and breaking all the windows in every house because this will, for sure, put a shit load of people to work fixing windows.
I am, in no way, particularly pleased with the cyclical nature of the economy. But if we have learned anything from history, it is how restricting some singular part of the economy inevitably leads to an imbalance far worse then the problem it was meant to solve. The economy is a precariously balance system that is a reflection of the individual motivations of all of it's members.
If your going to base an argument upon some non standard, personal definitions, it is of little wonder that I cannot seem to find some evidence for what you propose. Nor should you be terribly surprised when others cannot come to your conclusion. I, for one, learned how carpenters measure lumber, and purchased a tape measure, rather than devise my own measuring device with which to order wood paneling for my den.
This is exactly why an operable definition is of such fundamental importance. A lot of confusion would have been saved if you had stated it specifically in the first place.
"Description: By comparison to the level of employment and trade balance of WWII. The United States economy has experienced a trade deficit and negative running trade balance with less then 100% employment since 1973, including four recession."
Hypothesis: Restricting trade to a zero net export will cause employment to be about 1.2% as experienced during WWII.
Null Hypothesis: The unemployment rate has been more than 1.2% for years when the trade deficit was zero."
With all due respect, I cannot help it if you have your own proprietary measures. I can only speak based on the standard accepted measures.
The standard for the natural rate of unemployment is about 5%. That means that, on average, 5% of the population is between jobs. Indeed, if we look back at the record for employment, the unemployment rate has often been as low as 3%. This is considered to be full employment. And while I do not consider it to be a particularly successful achievement, given the government's mandate to assure full employment, 34% of the months since 1948 have been at or better then 5%.
Just as well, since 1964, the workforce itself has continued to increase as more and more of the population chose or had to enter the workforce. Whatever it's nature, a 7% unemployment rate in 1976 is a far larger percentage of the population then a 3% in 1948.
There are, therefore, two underlying references of employment. The first is that there have been stretches of years when the existing workforce was fully utilized, unemployment below the natural turnover rate of 5%. Just as well, there have been stretches of years when the underlying workforce was increasing. And if the percentage of the population that is working is increasing, it is clear that employment was full the immediate time before.
Even so there have been, periods when the workforce itself declined, an effect that I cannot interpret in any other way except people dropping out of the workforce for lack of finding sufficient work. And there are times when it was increasing, but was below what it was at it's previous peak, a situation that I must interpret as the previously disillusioned, disenchanted, disenfranchised, disgruntled and discouraged unemployed working finally finding reason to rejoin the workforce.
So, on one side, the economy has continued to develop to employ a larger proportion of the population while simultaneously dropping them back out again as it fails to sustain the level to which we become accustom.
On the other side, the fact that there have been stretches with the unemployment rate remaining steady and with the workforce increasing cannot be interpreted as anything else but full employment. More and more people, in excess of population growth and in excess of the number that had been working at the previous peak. Whether this constitutes a greater of lesser part all of the years may be in question, but it remains a fact. We cannot ignore one third of reality for the sake of some reference point where the country was busy building bombs to blow up large parts of the European countryside.
Whatever your personal and anecdotal experience may be, the facts remain that employment has repeatedly peaked in utilizing the entire available workforce. On this basis alone, the hypothesis that "The trade deficit is ALWAYS detrimental to a nation's GDP" fails.
The fact that the workforce, efficiency, and standard of living steadily increases AT THE SAME TIME that the US has been running a "trade deficit" is a easier argument to make. And that it is so easy to make requires that it be addressed. The reality is that a far lesser proportion of the population was working during the years before 1973 when the US ran a trade surplus. The fact is that every time the trade deficit recedes, it is followed by a recession. Since the end of 2007, when the recession began, the trade deficit has fallen by half. And to look at the trajectory towards which it was headed, it clearly indicates that a zero trade imbalance was going to be accompanied by an unemployment rate of over 20%.
Certainly, in spite of these facts, we are not likely to conclude that the decrease in the trade imbalance causes an increase in unemployment. But the logic cuts both ways. If we cannot conclude that a declining trade imbalance causes unemployment, in spite of the actual facts, we can certainly not conclude that a decreasing trade imbalance is going to increase employment by any stretch of reasoning. The two are either directly connected or they are not. Correlation doesn't prove causation but a complete lack of correlation does prove a lack of causality. And in examination of the evidence, it is clear that they are connected only in that increased employment will drives demand for products, including and depending on other factors, the demand for imports.
That you happened to have experienced extreme labor utilization during WWII, with no imports from other countries, is not a basis for a sound argument. All it says is that everyone was busy making tanks.
The fact that the only time in which the trade deficit recedes while employment rises is in the years before a recession suggests that the problem, and it's solution, lies elsewhere.
Going after exports is like not using the air hose at Exxon because last time you used it your tire went flat. And, after all, it didn't go flat when you put air in your tire at Shell. It's actually worse then that. At least with the Exxon air theory causes flats theory, there is a correlation. There is no correlation between imports and employment except that during WWII, everyone was employed and no one was exporting.
It may be that it represents the economy seeking a zero growth point and that a zero growth point is unstable. And it may very well be, should other things be made such that it can maintain that zero growth without crashing, the trade balance will tend towards zero. But that is a secondary effect, not a focal point with which to achieve stability.
