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

[antagon]

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 is a system?

apart from the ambiguity of what is being proposed, the only value-added way to reduce the trade deficit is to export more.

 

[loosecannon]

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 is a system?

apart from the ambiguity of what is being proposed, the only value-added way to reduce the trade deficit is to export more.

or import less.

 

[Supposn]

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 is a system?

apart from the ambiguity of what is being proposed, the only value-added way to reduce the trade deficit is to export more.

Antagon, I didn’t realize that my messages and the links I provided were (as you describe) “ambiguous”. If you’ll explain what it is that you do not understand or find so confusing, I or some other of this group’s contributors may be able to further explain it to you.

As Loose Canon pointed out, increasing exports and/or decreasing imports would lead to trade deficit reduction. Since you seem to particularly advocate increasing exports, and the trade proposal would indirectly promotes the increase USA’s exports while additionally increasing our aggregate total of imports plus exports, you should logically be a proponent of this trade proposal.

Respectfully, Supposn

 

[loosecannon]

Supposn, Antogon's actual statement pivoted on the term "value added":

the only value-added way to reduce the trade deficit is to export more.

Of course that isn't true, you could add as much value by reducing imports but Antagon is making a point about his perception of positives and negatives.

I can only assume he means more int. trade = good, less int. trade = bad.

 

[Supposn]

Supposn, Antogon's actual statement pivoted on the term "value added":

the only value-added way to reduce the trade deficit is to export more.

Of course that isn't true, you could add as much value by reducing imports but Antagon is making a point about his perception of positives and negatives.

I can only assume he means more int. trade = good, less int. trade = bad.

Loose Cannon, I’m opposed to trade deficits but I’m not at all opposed to global trade. We can and should decrease our global trade deficit while continuing to increase our aggregate global trade.

Respectfully, Supposn

 

[loosecannon]

Supposn, Antogon's actual statement pivoted on the term "value added":

the only value-added way to reduce the trade deficit is to export more.

Of course that isn't true, you could add as much value by reducing imports but Antagon is making a point about his perception of positives and negatives.

I can only assume he means more int. trade = good, less int. trade = bad.

Loose Cannon, I’m opposed to trade deficits but I’m not at all opposed to global trade. We can and should decrease our global trade deficit while continuing to increase our aggregate global trade.

Respectfully, Supposn

talk to Antagon.

 

[bag]

I've read it and still don't understand it.
Such a tariff will drive up costs of goods to U.S. consumers.
I honestly fail to see the virtue of this. So did Congress. And the proposal is at least 4 years old.

yes, initially the cost for goods will go up and provide for US businesses to compete fairly with foreign competitors. as time passes, cost for goods will MIGHT fall. it's a good gamble.

 

[Supposn]

Rabbi, I don’t doubt that you or a Republican congress did not understand the trade proposal. It’s difficult to understand what we do not wish to understand.

The extent of foreign goods’ price increases to USA purchasers would be dependent upon the open competitive market price of the transferable Import Certificates, (ICs). That price would be directly dependent upon USA purchasers’ aggregate willingness to pay the additional prices.

The market price of ICs serves as an additional revenue source for exporters of USA goods and thus they indirectly subsidize prices of USA exports. The open market price of ICs is indirectly and inversely related to the volume of USA’s exported goods.

Under this trade proposal U.S. purchasers will still have access to cheap, (but not the absolute cheapest) priced foreign goods. The cheapest priced foreign goods do not compensate for our trade deficit’s detriment to our GDP and our median wage.

USA wage earning families are dependent upon their wages every day of every year.

Respectfully, Supposn

 

[antagon]

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 is a system?

apart from the ambiguity of what is being proposed, the only value-added way to reduce the trade deficit is to export more.

or import less.

by value added, i mean to contest the OP's contention that a trade deficit will negatively affect the GDP in and of itself. the fact of the matter is that a trade restriction which impedes or captures trade will, in fact, adversely affect the GDP. only an increase in exports will improve both the trade deficit and the GDP at once.

the guy has misunderstood the GDP calculation by not considering that by subtracting imports, the importer's profit is still captured in the GDP figure. there are trillions of dollars left on the table by his misperception.

i dont think there's any value in harping on the trade deficit. if you want to improve employment, manufacture or the GDP, work with them directly.

 

[antagon]

Supposn, thinking about this bill, it is likely made to subsidize exporters at the expense of importers. ultimately that will be at the expense of american consumers, aka americans which the economy is there to serve anyhow. i think that the real focus should be about domestic business, not just exporters.

projecting an easily replicable (i mean by other nations) policy which directly affects trade will balance out in a short term. US exports are not as direly necessary to the world, and we have to be careful not to compromise them with policies that put them in jeopardy just to line the pockets of retiring export execs. such policies have to have a deeper looking objective than what lobbyists hoping to protect their client's short term interests could avail.

 

[Supposn]

Antagon, what’s this “OP” you refer to?

You’re contesting the concept of GDP being a statistically superior method of describing or comparing nation’s productivity?

I’m confused by your writing “the guy has misunderstood the GDP calculation by not considering that by subtracting imports, the importer's profit is still captured in the GDP figure. There are trillions of dollars left on the table by his misperception”.
What “guy” are you referring to?

Individual’s participant’s monetary profits or losses have no direct relationship to the volume of a nation’s production.

Respectfully, Supposn

 

[boedicca]

Yes, let's do this.

Smoot Hawley helped destroy international trade and worsened the Great Depression.

Engaging in a trade war now will send us into a deep double dip, but that does appear to be the objective of Obama and his Big Government Cronies (of which Buffett is one).

 

[antagon]

by value added, i mean to contest the OP's contention that a trade deficit will negatively affect the GDP in and of itself. the fact of the matter is that a trade restriction which impedes or captures trade will, in fact, adversely affect the GDP. only an increase in exports will improve both the trade deficit and the GDP at once.

the guy has misunderstood the GDP calculation by not considering that by subtracting imports, the importer's profit is still captured in the GDP figure. there are trillions of dollars left on the table by his misperception.

i dont think there's any value in harping on the trade deficit. if you want to improve employment, manufacture or the GDP, work with them directly.

Antagon, what’s this “OP” you refer to?

the original post.

You’re contesting the concept of GDP being a statistically superior method of describing or comparing nation’s productivity?

no. that would be a different argument. instead, i mean that your statement in the OP doesn't seem to follow logic:

"Due to significantly reducing our trade deficit of goods and supporting our exports, this proposal would increase USA's GDP and median wage."​

i contend that the only way that the trade deficit and the GDP could both be improved would be by increasing exports, and that is not directly indicated by this proposal.

I’m confused by your writing “the guy has misunderstood the GDP calculation by not considering that by subtracting imports, the importer's profit is still captured in the GDP figure. There are trillions of dollars left on the table by his misperception”.

What “guy” are you referring to?

Individual’s participant’s monetary profits or losses have no direct relationship to the volume of a nation’s production.

Respectfully, Supposn

sorry, you were the guy that i was referring to, but did not remember your screenname. the relationship between import profits and the GDP is direct. profits are only realized when items are sold in the domestic market - a direct input on the GDP. when the net exports (a negative number) is added to the GDP, the import price is subtracted from the retail price and the profit for the importer/retailer is retained as the balance. these are the trillions of dollars which you've failed to account for in our GDP.

walmart's domestic product, for example, is comprised of their total sales, minus the amount of money which they've paid to overseas sources. this is of course a positive number contributing billions of dollars to the US GDP. less directly attached are their contributions to the domestic economy through thrift of goods and wages. these factors work to facillitate commerce.

aiming to impede the business plan of one of the nation's top firms is not a way to improve the GDP, the amount of exports, wages or employment.

 

[Supposn]

Walmart's domestic product, for example, is comprised of their total sales, minus the amount of money which they've paid to overseas sources. this is of course a positive number contributing billions of dollars to the US GDP. less directly attached are their contributions to the domestic economy through thrift of goods and wages. these factors work to facillitate commerce.

aiming to impede the business plan of one of the nation's top firms is not a way to improve the GDP, the amount of exports, wages or employment.

Antagon, after foreign goods reach a U.S. port of entry, or USA goods reach the domestic producer’s shipping platform they will be of equal economic benefit to our nation.

[Prior to those occurrences the foreign goods have contributed nothing, or almost nothing to USA’s economy. To the extent that the domestic goods were produced, handled and are products of USA labor, materials, and components, The USA goods represent significant contributions to USA’s economy. They contributed to our governments’ revenues, their multiplier effect (that’s greater than the value of the goods themselves) additionally contributed to USA’s GDP].

To that extent this trade would increase USA’s domestic retail sales because GDP bolsters median wage.

If Wal-Mart could sell TV’s at $10 each, they’d still be at competitive disadvantage to any other retailer that could sell similar items for $9 each. Competitive positions are certainly of corporations’ concern. This trade proposal could indirectly increase, but it wouldn’t cause any decrease of Wal-Mart profits.

(I suppose there are those who will refuse to consider this proposal because it is not of disadvantage to Wal-Mart). This trade proposal would not affect how Wal-Mart determines their purchases but it will certainly (to USA’s economic benefit) affect the source of their merchandise.

Respectfully, Supposn

 

[antagon]

Walmart's domestic product, for example, is comprised of their total sales, minus the amount of money which they've paid to overseas sources. this is of course a positive number contributing billions of dollars to the US GDP. less directly attached are their contributions to the domestic economy through thrift of goods and wages. these factors work to facillitate commerce.

aiming to impede the business plan of one of the nation's top firms is not a way to improve the GDP, the amount of exports, wages or employment.

Antagon, after foreign goods reach a U.S. port of entry, or USA goods reach the domestic producer’s shipping platform they will be of equal economic benefit to our nation.

[Prior to those occurrences the foreign goods have contributed nothing, or almost nothing to USA’s economy. To the extent that the domestic goods were produced, handled and are products of USA labor, materials, and components, The USA goods represent significant contributions to USA’s economy. They contributed to our governments’ revenues, their multiplier effect (that’s greater than the value of the goods themselves) additionally contributed to USA’s GDP].

To that extent this trade would increase USA’s domestic retail sales because GDP bolsters median wage.

If Wal-Mart could sell TV’s at $10 each, they’d still be at competitive disadvantage to any other retailer that could sell similar items for $9 each. Competitive positions are certainly of corporations’ concern. This trade proposal could indirectly increase, but it wouldn’t cause any decrease of Wal-Mart profits.

(I suppose there are those who will refuse to consider this proposal because it is not of disadvantage to Wal-Mart). This trade proposal would not affect how Wal-Mart determines their purchases but it will certainly (to USA’s economic benefit) affect the source of their merchandise.

Respectfully, Supposn

i think the implications of imports vs. domestic goods is obvious, however, there is not a natural link between imports and exports. this is merely a statistical link which facilitates calculating the GDP. on that basis, i dont see there being any value in bridging the two with a policy that does not fundamentally assist businesses that either import or export with those aspects of their enterprise which policy ought endeavor to promote. (hiring and commerce, for example.)

furthermore, i dont see how it could be proposed that wally buy these credits off of exporters without compromising their profitability. it is a new cost borne by the imports. there will be inflation which would impair their profit qualitatively. if they pass it on the consumers, it will likely be impaired quantitatively and market-wide. why should consumers have to pay for this?

how wally determines their purchases is the same thing as how they source their merchandise. can you restate that?

can you explain your median wage mechanism? are you talking about quantitative wage increases through more hiring or do you mean wage inflation? either way i am missing how this will be directly effected and why one won't sooner help out the job market in a more direct way, or help out exporters in a more direct way.

the bottom line remains that gleaning a boost in the trade deficit and the GDP at once can only come by way of boosting exports. fiddling with imports does not cut it.

i'm not impressed by this proposal at all. it doesn't even capture revenues for the treasury.

 

[Supposn]

Supposn, thinking about this bill, it is likely made to subsidize exporters at the expense of importers. ultimately that will be at the expense of american consumers, aka americans which the economy is there to serve anyhow. i think that the real focus should be about domestic business, not just exporters.

projecting an easily replicable (i mean by other nations) policy which directly affects trade will balance out in a short term. US exports are not as direly necessary to the world, and we have to be careful not to compromise them with policies that put them in jeopardy just to line the pockets of retiring export execs. such policies have to have a deeper looking objective than what lobbyists hoping to protect their client's short term interests could avail.

Antagon, yes! You get it! It subsidizes exporters of USA goods at the expense of USA purchasers of foreign goods. That’s because exports increase our GDP and imports are detrimental to our GDP.

GDP formulas decrease or increase GDP only to the actual extent of the nation’s net global trade imbalance. It does not estimate due to the multiplier effect of production by what additional factor we should additionally adjust global trade’s net affect upon GDP. That’s why the effects of global trade within formulas calculating GDP are always understated.

You state that “US exports are not as direly necessary to the world ” but they are of critical importance to foreign producers of goods that are destined or could be destined for USA’s domestic market.

What do you mean by “the real focus should be about domestic business, not just exporters”? USA’s imports and exports certainly do affect USA’s economy. Our trade deficit has caused our effective loss of some segments or entire USA industries.

Respectfully, Supposn

 

[Supposn]

Yes, let's do this.
Smoot Hawley helped destroy international trade and worsened the Great Depression.
Engaging in a trade war now will send us into a deep double dip, but that does appear to be the objective of Obama and his Big Government Cronies (of which Buffett is one).

Boedicca, Smoot Hawley was enacted after the 1929 stock market crash and the entire world was well into economic depression.

USA’s trade policy was historically, (similar to most nations), a tariff policy and we enjoyed a trade surplus.

I suppose that this trade policy proposal is within your mind similar to tariffs EXCEPT:

Rather than serving as a government revenue source, it provides exporters of USA goods an opportunity, (which is not the same as a guarantee), for additional revenue; that additional revenue is an indirect subsidy of USA exported goods;

It’s only of benefit to nations that would otherwise suffer a trade deficit;

Other nation’s similarly adopting this policy would not be of net harm to the USA;

The additional cost of foreign goods to USA purchasers would be determined by the open market rather than the government;

While decreasing USA’s trade deficit it would induce increased aggregate total of USA’s imports plus exports;

It is less susceptible (than tariffs) to counter tariffs or other international mischief.

With regard to international trade mischief, under our policy of seeking pure unrestricted global trade, our legislatures and presidents have constantly complained of other nations’ currency manipulations and other methods to prevent USA goods from entering their domestic markets. Thus far for various reasons our government has not been able or willing to do anything to remedy these situations.

Respectfully, Supposn

 

[antagon]

Supposn, thinking about this bill, it is likely made to subsidize exporters at the expense of importers. ultimately that will be at the expense of american consumers, aka americans which the economy is there to serve anyhow. i think that the real focus should be about domestic business, not just exporters.

projecting an easily replicable (i mean by other nations) policy which directly affects trade will balance out in a short term. US exports are not as direly necessary to the world, and we have to be careful not to compromise them with policies that put them in jeopardy just to line the pockets of retiring export execs. such policies have to have a deeper looking objective than what lobbyists hoping to protect their client's short term interests could avail.

Antagon, yes! You get it! It subsidizes exporters of USA goods at the expense of USA purchasers of foreign goods. That’s because exports increase our GDP and imports are detrimental to our GDP.

imports are not detrimental to the GDP for the reasons which I've put forward earlier. exports do not constitute as dominant a source of employment or commerce than does retail and its relationship to improts. what you are contending is not accurate, and the proposal to support an inaccurate premise is flawed for that reason.

GDP formulas decrease or increase GDP only to the actual extent of the nation’s net global trade imbalance. It does not estimate due to the multiplier effect of production by what additional factor we should additionally adjust global trade’s net affect upon GDP. That’s why the effects of global trade within formulas calculating GDP are always understated.

its not entirely clear to me what you are saying here, but the fact of the matter is that if the GDP were stricken of activity tied to imports, it would be dramatically reduced. we would be in a depression simply by virtue of that. because of the mechanism proposed, exports are subsidized ahead of domestic supply, and such will be inflationary on top of the additional costs which will naturally arise from the more costly american products in the first place. this is a problem with our domestic oil producers as it is... foreign markets have higher qualitative demand, and domestic oil is exported while imports dominate the domestic supply.

You state that “US exports are not as direly necessary to the world ” but they are of critical importance to foreign producers of goods that are destined or could be destined for USA’s domestic market.

What do you mean by “the real focus should be about domestic business, not just exporters”? USA’s imports and exports certainly do affect USA’s economy. Our trade deficit has caused our effective loss of some segments or entire USA industries.

what i mean is that i see no reason to support exporters over importers or other businesses which dont necessarily participate in international trade. importers hire more americans than do exporters. our GDP is constituted more significantly by retail and services dependent on good from overseas. the vast majority of american commerce has nothing to do with import/export directly, and if one is looking to make a positive effect on our economy, one ought take that to heart.

lastly, general subsidies arent indicated to improve anything. without an improvement in demand, all that will happen is that the principals at exporters will hoard the revenues. this is another cap and trade trying to fix an issue which it does not fit.

 

[editec]

FREE TRADE is not free, folks.

We pay for it in the form of diminishing wages and higher unemployment.

What free trade really is is the liberation of CAPITAL from nationalist restrictions.

Note that the world's workers do NOT have such freedom of movement to take advantage of differences in economies?

ONLY capital has the ability to pass through national borders to take advantage of differences in economies.

We have liberated capital from nationalism but the workers remain serfs in their respective nations, folks.

 

[loosecannon]

FREE TRADE is not free, folks.

We pay for it in the form of diminishing wages and higher unemployment.

What free trade really is is the liberation of CAPITAL from nationalist restrictions.

Note that the world's workers do NOT have such freedom of movement to take advantage of differences in economies?

ONLY capital has the ability to pass through national borders to take advantage of differences in economies.

We have liberated capital from nationalism but the workers remain serfs in their respective nations, folks.