Warren Buffett's concept to significantly reduce USA's trade deficit

[expat_panama]

fwiw, here's the balance on good'n'services %gdp:

Reducing the trade deficit is for them that either hate America or don't understand money.

 

[Rshermr]

fwiw, here's the balance on good'n'services %gdp:

Reducing the trade deficit is for them that either hate America or don't understand money.

Crazy post. You feel that trade deficits are a good thing??? Or did I misread your post. Never run into that idea before.

 

[Supposn]

.....................Whether we're willing to understand it or not, the payments always balance, and there's no way around it.

ExPat Panama, you’re mistaken. The definition of a nation’s global trade deficit is the values of the nation’s global imports exceed their exports. The USA has had a trade deficit of goods every year for the past half century...

When I look at official historical records I get the impression that you're mistaken, but whether you're mistaken or not is not important and off topic. We're talking about the so-called 'trade deficit' which's defined any way people want. They usually end up using the BEA's records on how much money's spent on US exports and imports of goods'n'services--

--and it was positive 36 years ago, and that it gets bigger when the economy gets better.
.

ExPat Panama, you’re not entitled to your own facts. Gross domestic product is defined by the conventional definition accepted by economists and statistician communities throughout our entire globe.

The graph provided by your link is too small to read. It graphs the entire trade deficits, (i.e. goods and services). It seems to indicate a tiny “blip” of positivity at approximately 1974-1975?

The proposal I advocate involves only goods. As I’ve written, the USA has suffered a trade deficit of goods every year of the past half century.

I believe that I’ve written of services’ trade deficits on this discussion board. Refer to the topic “Outsourcing Services”
within the world wide web site of USA.Imports.Blogspot.Com

Respectfully, Supposn

 

[OohPooPahDoo]

An economic stimulus at no expense. Warren Buffett’s proposal to significantly decrease USA’s trade deficit.
I'm a proponent of Warren Buffett’s concept to significantly decrease USA’s trade deficit of goods. A senate bill based upon the concept was proposed in 2006 by Senators Dorgan and Feingold.
Trade deficit's detriment to the gross domestic product, (GDP) exceeds the amount of the deficit itself. Anything detrimental to the GDP is generally detrimental to the median wage.

As proposed to the U.S. Senate, goods leaving the USA would be assessed and transferable IMPORT certificates for their assessed value would be issued to the exporter.

Importers would be required to surrender transferable IMPORT certificates for the assessed value of their goods entering the USA. Surrendered certificates are cancelled. This would significantly reduce our trade deficit and induce the sum of our imports plus exports to increase.

GDP and median wage are the most indicative measures of current production and distribution of wealth. Due to significantly reducing our trade deficit of goods and supporting our exports, this proposal would increase USA's GDP and median wage. It would also encourage the aggregate sum of USA’s imports plus exports to increase. We can continue enjoying cheap, (but not the absolute cheapest) foreign goods.

This is a permanent economic stimulus that doesn’t require federal disbursement or risk of trillions of dollars. I'm aware of no single economic proposal that could accomplish all this with less government intervention and less increased prices of imported goods.

Although the initial 2006 bill draft would be of small expense, I’m among those that regret that draft was not, (as it should have been) completely self funding.

The 2006 initial draft of the bill would not apply to petroleum goods for five years from the date of enactment. We regret that it did not (forever) exclude the values of specifically listed precious or scarce materials integral to goods being assessed. Enabling the export made in USA cast gold paperweights imbedded with precious gems in order to import electronic goods would undermine the bill’s purpose.

Refer to: World Wide Web site “USA-Trade-Deficit,Blogspot.Com “.
Respectfully, Supposn

Wow, what a good idea. Its like a free allocations cap and trade for the traded deficit.

 

[OohPooPahDoo]

Such a tariff will drive up costs of goods to U.S. consumers.
I honestly fail to see the virtue of this.

You fail to see the virtue in higher profits and wages for those in the U.S.?

 

[Supposn]

A nation’s economy is less robust than otherwise due to the extent of its trade deficit.
We imported about $331.7 billion worth of crude oil last year.
Do you really think this portion of the deficit made our economy less robust?

ToddsterPatriot, you apparently haven’t noticed I’m a proponent of a trade policy that excludes the values of specifically listed scarce or precious minerals integral to all goods that are assessed for the purpose of that policy.
Of course I would expect that Congress would include petroleum within that list of excluded materials.

What we each spend for medical expenses reduces our wealth. We do so because we believe the alternative to no spending it would be of greater detriment to our best interests.

Similarly the answer to your question is Yes, I certainly do really think this portion of the deficit makes our economy less robust; but until we can do something to make us less dependent upon foreign petroleum, the alternative to not importing petroleum or petroleum products would be a greater detriment to our economy.

[Precious minerals such gold, platinum, gem stones are often used in place of money. If we included such materials within goods assessed values, we would be undermining the purpose of the trade proposal. Money is a convenient measure of goods’ relatively comparative values but the trade deficits’ detriment to their nations’ economies is not due to a monetary deficit; it is due to the loss of jobs and to the nations’ abilities to produce (goods)].

Respectfully, Supposn

Yes, I certainly do really think this portion of the deficit makes our economy less robust; but until we can do something to make us less dependent upon foreign petroleum, the alternative to not importing petroleum or petroleum products would be a greater detriment to our economy.

Not importing oil would be a greater detriment, but importing oil "makes our economy less robust".

This shows me your logic, and understanding of economics, is weak.

You should read some Thomas Sowell and answer his two questions.

"Compared to what?" and "At what cost?"

It would greatly improve your understanding.

ToddsterPatriot, within reply #196 I wrote:
What we each spend for medical expenses reduces our wealth. We do so because we believe the alternative to no spending it would be of greater detriment to our best interests.

Similarly the answer to your question is Yes, I certainly do really think this portion of the deficit makes our economy less robust; but until we can do something to make us less dependent upon foreign petroleum, the alternative to not importing petroleum or petroleum products would be a greater detriment to our economy.
/////////////////////////////////////
I’m logical and you were inattentive.

Respectfully, Supposn

 

[expat_panama]

...You feel that trade deficits are a good thing?...

Very good question-- should we "feel that trade deficit"?

We should feel good about America being a force for peace and prosperity at home and throughout the world. You probably feel as strongly as I the need to prevent the needless suffering of the poor. If we're serious about these feelings then we've got to control our actions so that we don't harm America, the poor, the world.

The question is do we love America and care for the poor enough to open our eyes and see--

--the grey recession bars start when the line goes up. That means when the trade deficit gets bigger, America gets stronger and richer while the poor are cared for.

 

[Toddsterpatriot]

ToddsterPatriot, you apparently haven’t noticed I’m a proponent of a trade policy that excludes the values of specifically listed scarce or precious minerals integral to all goods that are assessed for the purpose of that policy.
Of course I would expect that Congress would include petroleum within that list of excluded materials.

What we each spend for medical expenses reduces our wealth. We do so because we believe the alternative to no spending it would be of greater detriment to our best interests.

Similarly the answer to your question is Yes, I certainly do really think this portion of the deficit makes our economy less robust; but until we can do something to make us less dependent upon foreign petroleum, the alternative to not importing petroleum or petroleum products would be a greater detriment to our economy.

[Precious minerals such gold, platinum, gem stones are often used in place of money. If we included such materials within goods assessed values, we would be undermining the purpose of the trade proposal. Money is a convenient measure of goods’ relatively comparative values but the trade deficits’ detriment to their nations’ economies is not due to a monetary deficit; it is due to the loss of jobs and to the nations’ abilities to produce (goods)].

Respectfully, Supposn

Yes, I certainly do really think this portion of the deficit makes our economy less robust; but until we can do something to make us less dependent upon foreign petroleum, the alternative to not importing petroleum or petroleum products would be a greater detriment to our economy.

Not importing oil would be a greater detriment, but importing oil "makes our economy less robust".

This shows me your logic, and understanding of economics, is weak.

You should read some Thomas Sowell and answer his two questions.

"Compared to what?" and "At what cost?"

It would greatly improve your understanding.

ToddsterPatriot, within reply #196 I wrote:
What we each spend for medical expenses reduces our wealth. We do so because we believe the alternative to no spending it would be of greater detriment to our best interests.

Similarly the answer to your question is Yes, I certainly do really think this portion of the deficit makes our economy less robust; but until we can do something to make us less dependent upon foreign petroleum, the alternative to not importing petroleum or petroleum products would be a greater detriment to our economy.
/////////////////////////////////////
I’m logical and you were inattentive.

Respectfully, Supposn

Importing oil "makes our economy less robust".

Compared to what?

You're inconsistent and your support of Buffett's silly plan shows your understanding of economics is weak.
And I pointed it out.

 

[Toddsterpatriot]

Now prove it that outsourcing isn't responsible for the decline in wages and jobs.
Go ahead, I want to see HOW you prove this.

Editec, global trade itself is beneficial to its participants. It is trade deficits that are detrimental to the nation’s economy.

The first topic of USA's Trade deficits and Warren Buffett's proposal discusses what is witnessed globally within all societies when there is a significant introduction or decrease of production within all societies, all manner of governments and all economic systems. The extent of significant modification induces a much greater modification upon the society’s aggregate gross production.

There’s no economic benefit due to a trade deficit. Each dollar decrease of our trade deficit of goods induces a three dollar increase of our GDP. Our GDP bolsters our median.

Respectfully, Supposn

There’s no economic benefit due to a trade deficit. Each dollar decrease of our trade deficit of goods induces a three dollar increase of our GDP.

Three dollars? I'd love to see your proof.

 

[expat_panama]

...ExPat Panama, you’re mistaken. The definition of a nation’s global trade deficit is the values of the nation’s global imports exceed their exports. The USA has had a trade deficit of goods every year for the past half century....

...whether you're mistaken or not is not important and off topic...it was positive 36 years ago, and that it gets bigger when the economy gets better...

ExPat Panama, you’re not entitled to your own facts...

Please focus on facts that we should be able to share--

--and let's see if we agree that we had a surplus 36 years ago. After that we can look at the strength of the US economy to see how employment, income, and GDP track when the so-called 'trade deficit' rises or falls:

 

[Widdekind]

A nation’s economy is less robust than otherwise due to the extent of its trade deficit.

We imported about $331.7 billion worth of crude oil last year. Do you really think this portion of the deficit made our economy less robust?

having access to valuable products, which would otherwise be domestically unavailable, cannot be bad. A consistent pattern, of importing over exporting, implies that domestic producers are not price-competitive, even compared to foreigners, who have to ship their products from far away. Persistent trade deficits are symptomatic of uncompetitiveness. That uncompetitiveness is the problem, not the trade deficits which result

symptom -- persistent trade deficit
cause -- economic uncompetitiveness​

Basic economic doctrine (Classic Dichotomy, neutrality of money) states that price-levels don't much matter. As long as you don't need wheelbarrows worth of money to buy bread, whether prices are "X", "half X", or "twice X" doesn't much matter.

real GDP (Y/P) and real wages (W/P) are what matter most. Cheap imports push down prices (P), improving the domestic economy, by boosting both real GDP & real wages. Domestic purchasing power cannot be reduced, by buying cheaper

...

On the contrary trade deficits are ALWAYS detrimental to their nations GDP and thus to some extent are detrimental to the median wage.

First, as observed by "ExpatPanama", dollars are only good on US markets. So, nobody takes US dollars for anything, not even as a free gift, unless they can buy something from the US, with them. And so, either they accept US dollars (for their imports into the US) because they want to buy US exports (newly produced goods & services); or because they want to buy existing US assets (land, buildings, businesses). Either way, the dollars wind up back in the US, the only place they're valuable.

Now, a 'trade deficit' (imports > exports) reduces US income (GDP), earned on new & final goods & services (since foreigners are making them better & cheaper). Meanwhile, the flip-side 'capital surplus' increases US revenue, earned from selling off existing US assets. Whoever is selling their land, buildings, businesses to foreigners is making more capital gains. Stereotypically, "blue collars" lose income, whilst "white collars" make capital gains. In nominal terms (raw dollars, not adjusted for inflation), official US "net exports" are -4% of US GDP. So, on average, US workers are losing 4 cents per dollar, to foreign competition. But, cheap foreign products cost even less -- way more than 4 cents per dollar -- and everybody knows it.

wages (W) are lower
prices (P) are even lower still
real wages (W/P) are not reduced, by buying cheaper products (even from abroad)​

Yet, 'tis true -- buying cheaper products, from domestic US producers, who were more economically competitive, cutting costs by working harder for less pay, would reduce prices (P), and keep all the income at home (no trade deficit), and obviate the need to sell off US assets to pay for the imports. "Sadly", that would require accepting reduced wages (W). In effect, US workers would be working for less, to "buy back" all the land, buildings, & businesses that they prefer, at present, to sell off abroad, so that they can both buy cheap from abroad (low P), whilst earning more at home (high W). That "standard of living" is sustainable, as long as the US has land, building, & businesses to sell to foreigners.

Then, no, nobody will support that "standard of living" anymore. So now what?

 

[Widdekind]

"wholesale" vs. "retail" price-levels

From 1980-2000, the price-level of US trade-goods (net exports) tracked the "wholesale" price-level of US investment-goods (houses; machines, factories). Afterwards, the price-level of trade-goods increased to the "retail" price-level of US consumer-goods (C) and government goods & services (G). Under Pres. Bush the younger, foreign trade "inflated" in price-level, from "business wholesale", to "consumer retail". (In 2008, demand dropped, and prices plummeted, recovering rapidly.)

(top to bottom)
G, C
NX = x - m
I​

(To produce the plot, i "form fitted" the price-indexes for trade (NX, x, m) to the price-index for investment (I), because the former "behaved like" the latter, increasing by the same amounts, in the same ways, at the same times; in clear contra-distinction to the price-indeces for government & consumption (G,C). Never-the-less, the procedure was subjective, albeit plausible -- domestic investment prices for houses, buildings, machines & factories plausibly reflect import prices for raw materials, and export prices for completed capital equipment.)

 

[Widdekind]

Prices communicate information

US products are pricey. In the 1990s, Walmart promoted domestic products. But "buy American" failed to sell, and today over half of their products are imports. Prices communicate information. Pricey US products telegraph how much US workers are demanding to cost their companies, in wages. Foreign workers are "doing more for their countries", whereas US workers are "demanding more from theirs". Pricey US products telegraph to everybody, how much US workers are wanting in wages. US workers earn earth's highest per capita incomes. That shows up in the prices of their products. Ironically, foreign workers are "more JFK" than US workers. Prices communicate valuable information.

 

[EdwardBaiamonte]

Then, no, nobody will support that "standard of living" anymore. So now what?

its easy to focus on China as the major problem but we could obviously have 30 million new jobs tomorrow with the attendent tremendous upward pressure on wages:

1) Make unions illegal ( 10 million new jobs) Democrats oppose

2) make minimum wage illegal ( 5 million new jobs) Democrats oppose

3) end business taxation; especially tax incentives to off-shore jobs ( 5 million new jobs) Democrats oppose

4) make inflation illegal ( 2 million new jobs) Democrats oppose


5) make Federal debt illegal( 2 million new jobs) Democrats oppose

6) send illegal workers home(8 million new jobs) Democrats oppose

7) Pass Balanced Budget Amendment to Constitution( 3 million new jobs) Democrats oppose

8) cut pay of government workers in half( 4 million new jobs) Democrats oppose

9) Make health insurance competition legal( 6 million new jobs) Democrats oppose

10) end needless business regulations ( 2 million new jobs) Democrats oppose

11) restrict Federal spending to 15% of GNP( 2 million new jobs) Democrats oppose

12) support unlimited free trade( 2 million new jobs) Democrats oppose

13) reduced unemployment compensation, welfare, food stamps, medicaid.( 2 million new jobs) Democrats oppose

14) privatize education, social security ( 4 million new jobs) Democrats oppose

15) end payroll taxes ( 1 million new jobs) Democrats oppose

Since Democrats always oppose wisdom and common sense the only serious option is to make them illegal as the Constitution intended.

 

[Widdekind]

we could obviously have 30 million new jobs tomorrow with the attendent tremendous upward pressure on wages:

1) Make unions illegal ( 10 million new jobs)

Unions inflate wages. That's what attracts workers. But inflated wages are making US workers economically uncompetitive, compared to foreigners, who will work for less. i don't advocate Unions; i don't advocate invoking Big Brother to "bust the Unions" either. If US workers insist on world-record wages, then they will price themselves out of their jobs, one way (outsourcing) or another (collapse of entire US economy).

Czar Peter Romanov said, "delay is death". If "business is war", then "high maintenance workers" are costing the US economy, in "business-is-war-time". That's not competitive. And is not long-term sustainable. Wage supports (Unions, minimum wages) cripple US economic competitiveness.

 

[Rshermr]

Then, no, nobody will support that "standard of living" anymore. So now what?

its easy to focus on China as the major problem but we could obviously have 30 million new jobs tomorrow with the attendent tremendous upward pressure on wages:

1) Make unions illegal ( 10 million new jobs) Democrats oppose

2) make minimum wage illegal ( 5 million new jobs) Democrats oppose

3) end business taxation; especially tax incentives to off-shore jobs ( 5 million new jobs) Democrats oppose

4) make inflation illegal ( 2 million new jobs) Democrats oppose


5) make Federal debt illegal( 2 million new jobs) Democrats oppose

6) send illegal workers home(8 million new jobs) Democrats oppose

7) Pass Balanced Budget Amendment to Constitution( 3 million new jobs) Democrats oppose

8) cut pay of government workers in half( 4 million new jobs) Democrats oppose

9) Make health insurance competition legal( 6 million new jobs) Democrats oppose

10) end needless business regulations ( 2 million new jobs) Democrats oppose

11) restrict Federal spending to 15% of GNP( 2 million new jobs) Democrats oppose

12) support unlimited free trade( 2 million new jobs) Democrats oppose

13) reduced unemployment compensation, welfare, food stamps, medicaid.( 2 million new jobs) Democrats oppose

14) privatize education, social security ( 4 million new jobs) Democrats oppose

15) end payroll taxes ( 1 million new jobs) Democrats oppose

Since Democrats always oppose wisdom and common sense the only serious option is to make them illegal as the Constitution intended.

Copy and paste again. Ed's fantasy list of tea party talking points. Totally vacuous.

 

[expat_panama]

...Make unions illegal...

...i don't advocate Unions; i don't advocate invoking Big Brother to "bust the Unions" either...

Unions are good for the labor market.

Classical textbook definition of 'pure capitalism' has market prices unaffected by any single buyer or seller. Labor markets can be asymmetrical when say, a town factory is the single buyer and the workers are all competing to sell their labor, and that makes for inefficient pricing. Labor unions can balance the negotiations and improve pricing.

They're also a fact of life, and government intervention to attempt their abolition is futile, just as most other attempts by government to make markets 'fair'.

 

[Euroconservativ]

The international status of the U.S. Dollar as the main reserve currency is what explains trade deficits. NOT the alleged deindustrialization (e.g. America is a net exporter ot capital goods).

The world still loves the Dollar. The US government borrows at zero no matter how large the budget deficit is. Americans buy 14 million cars per year... And the rest of the world is glad to sell their stuff in America. It's a win-win situation. The U.S. is at least the second or third larger commercial partner of any major nation on Earth.

In other words. If America stops importing stuff, the world will stop loving the Dollar.

 

[Widdekind]

Unions are good for the labor market.

Unions are "labor cartels". If workers can form "cabals" (unions), then they cannot complain about "business cartels" (monopolies) without being hypocritical. If government can break up "business cartels" (e.g. "bust the trusts", Microsoft), then government cannot be prevented from breaking up "labor cartels" (unions), without being hypocritical.

alleged deindustrialization (e.g. America is a net exporter of capital goods).

the US "industrial production index" has steadily increased, for the past hundred years, albeit slumping in recessions, and especially so in 2008. Excepting recessions, US industry (IPI) has more than kept pace with the US economy (GDP):

http://research.stlouisfed.org/fredgraph.png?g=8v7​

So sayeth said statistics, "deindustrialization" is bogus. Huge US trade deficits, in consumer goods, require US "trade" surpluses in other sectors -- capital goods (new equipment, machines), or capital assets (land, buildings, businesses).

 

[Supposn]

"wholesale" vs. "retail" price-levels.............

Widdekind, regarding your response #212 entitled "wholesale" vs. "retail" price-levels”:

I try to promote mutual respect but the title of your response #212 is nonsensical to an extent that strains my goodwill and my patience.

Providing all statistics are calculated and expressed in the same uniform manner, its inconsequential if those statistics re expressed as the products wholesale or retail prices. The statistics are used for comparative purposes.

If you’re contending that relative comparisons and proportions significantly change if all the figures are uniformly calculated and expressed as wholesale or as retail prices, you’re incorrect. Such a contention is foolish.

Let’s retain some mutual respect for each other.
Respectfully, Supposn