Trade deficits are ALWAYS detrimental to their nation’s GDPs.

[Supposn]

Trade deficits are ALWAYS detrimental to their nation’s GDPs.</SPAN></SPAN>
Nations’ net global trades’ affects upon their GDPs are generally understated.</SPAN></SPAN>

Nation’s entire production contributes to their GDPs but the entire goods and services supporting and contributing to an individual item’s production may not be entirely reflected within that item’s price.</SPAN></SPAN>

Favorable tax treatment or infrastructure or the reduced costs of research and development shifts increased expenditures to other tax payers and universities’ financial supporters. What the producers don’t pay for results in the prices of the producers’ goods being understated.</SPAN></SPAN>

To the extent that this occurs within the prices of a nation’s globally traded goods, the affects of nation’s net global trade upon their GDP’s are understated.</SPAN></SPAN>
.e. Nations’ trade surpluses’ contributions or their trade deficits’ detriments to their GDPs are understated.</SPAN></SPAN>
/////////////////////////////////////////////////</SPAN></SPAN>

Let us consider New Zealand lamb that are nurtured, butchered, packed and shipped to the USA. We contributed to the funding of New Zealand taxes, roads, schools, veterinarian colleges’ research and development programs and many other of their enterprises’ overhead expenses. We contributed to their knowledge and experience because they, (not us) were employed to perform all of those tasks.</SPAN></SPAN>

[All production supporting goods and services provided to the New Zealand’s lamb industry at reduced cost, (e.g. infrastructure, marketing expertise, veterinarian research and development) are reflected within the producing nations, (i.e. New Zealand’s) GDP. but the cost reductions enjoyed by the lamb goods producers understates the real value of the globally traded goods. It denies the portion of New Zealand’s GDP attributable to global trade and USA denied to its own GDP. USA’s trade deficit includes our net loss of additional tasks and payrolls we outsourced beyond our borders.</SPAN></SPAN>

Thus ALWAYS the net exporting nations’ GDPs are increased and the net importing nations’ GDPs are decreased more than otherwise.

Refer to
http://www.debatepolicy.com/showthread.php?39068-Reduce-the-trade-deficit-increase-GDP-amp-median-wage

Respectfully, Supposn</SPAN> </SPAN>

[fj1200]

ALWAYS

"ALWAYS," that's funny. You ignored this once already.

“Bad News” on the Trade Deficit Often Means Good News on the Economy (http://www.cato.org/publications/free-trade-bulletin/bad-news-trade-deficit-often-means-good-news-economy)
A Growing Economy, a Growing Trade Deficit
Evidence from the past 25 years directly contradicts the assumption that trade deficits impose a drag on the U.S. economy. Contrary to prevailing assumptions, “worsening” trade deficits are associated with faster GDP and manufacturing growth and more rapidly declining unemployment, while “improving” trade deficits are associated with slower GDP and manufacturing growth and rising unemployment.


In Praise Of Trade Deficits (http://www.investopedia.com/articles/economics/08/trade-deficit-effects.asp#axzz2L8Q8rRv7)
Trade Deficit Effects
There are two competing theories that have surfaced regarding the effects of a trade deficit on GDP:

Theory 1: Trade deficits drag down GDP and add to the threat of an economic crisis if foreigners dump (http://www.investopedia.com/terms/d/dumping.asp) the local currency in world currency markets.
Theory 2: Increasing trade deficits can be a sign of strong GDP. They will not create a drag on GDP, and any potential downward pressure on the local currency is actually a benefit to that country.


Who Wins?
...

Theory 1 may seem to make logical sense, but unfortunately the numbers do not support it. Throughout the 1990s and beyond, import heavy countries have run consecutive deficits frequently. For example, the United States has a massive and growing trade deficit, and so if Theory 1 held true, we should see the its GDP growth hindered. The opposite is the case however (Figure 1).

...

Theory 2 may hold much more weight as evidenced by the positive correlation between the U.S. GDP and the trade deficit. This can be easily explained by the fact that the U.S. is a demand-based consumer society with a negative savings rate. In addition, as the U.S. evolves into more of a service society, the products that individuals demand will no longer be made in the country. As more manufacturing and labor intensive products are created outside of the U.S., a trade imbalance may be inevitable.

...

Conclusion
For the most part, the media and the general public have a perception that trade deficits as we know them are bad and can drag on GDP. In reality, the trade deficit may be more pro-cyclical, moving in the same direction as local GDP. In fact, the other factors contributing to the expanding GDP can accelerate its growth.

How about the Federal Reserve?

Trade Deficits Aren’t as Bad as You Think (http://www.phil.frb.org/research-and-data/publications/business-review/2007/q1/br_q1-2007-1_trade-deficit.pdf)

SUMMARYThe current U.S. trade deficit appears unusually large when compared
with that in the postwar period. But
in the postwar period, the mobility
of capital was fairly limited. In comparison to an earlier era of fairly free
mobility of international capital, the
current U.S. trade deficits don’t look so
unusual.
Trade deficits tend to be a sign
of good things to come. Countries
tend to run trade deficits when they
are borrowing to finance productive
investment opportunities. This is a
way to shift world production toward
more productive locations. This international borrowing and lending has
played a prominent role in some of the
most significant events in U.S. history
— from the western expansion after
the Civil War to the financing of the
two world wars. Over the business
cycle, we also see that trade deficits are
often associated with strong and continued economic growth and are a sign
of good things to come.

[Supposn]

FJ1200, excerpted from post #4 of the discussion thread http://www.debatepolicy.com/showthread.php?39068-Reduce-the-trade-deficit-increase-GDP-amp-median-wage</SPAN> (http://www.debatepolicy.com/showthread.php?39068-Reduce-the-trade-deficit-increase-GDP-amp-median-wage) :</SPAN>

FJ1200, due to a trade deficit a nation’s GDP is always less than otherwise; (otherwise being the reduction of the nation’s trade deficit).

A trade deficit’s always immediately detrimental to the nation’s GDP; but if the imports are net contributors to the nation’s production, (i.e. imported tools, production machinery, raw materials for the support of production), the nation could benefit from eventual increased future production. Unfortunately In the USA that’s not the general case.

There are those that confuse causes and effects. Both our imported and domestic produced goods are sold within our domestic market places. USA’s annual trade deficits and GDPs share timing of their growth and reductions.
This leads to foolishly concluding that nations’ trade deficits are advantageous to their GDPs.
Using that same logic they could conclude that icy roads cause lower outdoor temperatures. …</SPAN>

… </SPAN>Respectfully, Supposn</SPAN></SPAN>

[fj1200]

FJ1200, due to a trade deficit a nation’s GDP is always less than otherwise; (otherwise being the reduction of the nation’s trade deficit).

Still ignoring actual data I see.

[Robert A Whit]

I am not clear what Supposn is trying to say. I understand his claims, but what is his angle?

This stuff is argued back and forth by economists and others.

Let's see if he gets it using this example.

Say any other group, country, city, state, etc, has 100 tons of gold.

They agree on a price in say dollars.

A swap is made. Dollars for Gold.

Who came out the better?

Milton Friedman said things like

Where you stand depends on where you sit.

i say the trade was even. Nobody got the better of the other.

Entity A wanted Gold and got what they wanted.
Entity B wanted currency and got what they wanted.

The human being is strange that way, they end up with what they want.

I trained sales staff on the concept that was introduced to me, so it is not my invention, that people purchase not things, but they purchase benefits.

To the entity buying the gold, they got a perceived benefit but the other party also got a perceived benefit.

This is why an argument about trade balances seems hard to argue about.

This country gets away with printing what seems to me to be an outlandish supply of currency but so long as the rest of the world does not resist, the dollar will be king.

In my opinion, such ways of thinking lasts X days. Sooner or later the tide will reverse.

We have had run ups in stocks. Who got hurt? The ones who lost or those who took profits and bailed out?

I mean, this type argument can go on forever.

[fj1200]

This stuff is argued back and forth by economists and others.

...

Who came out the better?

Argued by economists? On the Wikipedia link there was quite the dearth of information on the subject and even Buffett in his op-ed piece acknowledged his own lack of predictive success. Not much to make national policy on and create a whole new market of tradeable certificates to say the least.

And who came out better on international trade? You might like Bastiat's Economic Sophisms (free on Kindle BTW) which discusses the issue in depth. If you can get past the mid 1800's Queen's English that is.

[Robert A Whit]

Argued by economists? On the Wikipedia link there was quite the dearth of information on the subject and even Buffett in his op-ed piece acknowledged his own lack of predictive success. Not much to make national policy on and create a whole new market of tradeable certificates to say the least.

And who came out better on international trade? You might like Bastiat's Economic Sophisms (free on Kindle BTW) which discusses the issue in depth. If you can get past the mid 1800's Queen's English that is.

My entire belief is based on person A knowing his value scale buys P from B who knows his value scale and there is a net gain to each of zero.

Now, this is going to be different to each party outside the other parties.

Take a new car for instance.

Party A wants a new car.

Dealer wants the currency.

Party has a drop dead price but others drop dead prices differ.

Same between nations buyers and sellers.

Bernanke has created a lot of cash just to deal with this.

I do not believe he can do this forever.

A way to also think of it is the stock or housing markets. They do have limits but later resume the build up in prices.

But back to the car.

Say Dealer sells low end cars. Buyers often buying such cars have little cash reserve or borrowing power. They will be often forced to bargain more than the rich man will.

The rich can be expected to purchase much more expensive cars and since money is not the problem, more than likely pay a higher percent of asking price than the lesser affluent will.

This is my point.

Products sold depend not only on the buyers, but the buyers financial standing.

People buy benefits rather than products.

Say you travel to work and one way it is 50 miles. You won't walk that far. The benefit of the car is it ends the walking to work.

When one buys a kitchen stove, it is not the stove they want, but the cooked food that they eat.

[Supposn]

Originally Posted by </SPAN>Supposn</SPAN>
FJ1200, due to a trade deficit a nation’s GDP is always less than otherwise; (otherwise being the reduction of the nation’s trade deficit).</SPAN>



Still ignoring actual data I see.

FJ1200, you’re still confusing what’s cause and what’s effect.</SPAN>
Respectfully, Supposn</SPAN>

[logroller]

Originally Posted by Supposn
FJ1200, due to a trade deficit a nation’s GDP is always less than otherwise; (otherwise being the reduction of the nation’s trade deficit).




FJ1200, you’re still confusing what’s cause and what’s effect.
Respectfully, Supposn

I understand what you're saying to be true; as gdp includes net import/export, a trade deficit brings down gdp value-- but what youre ignoring is they both share a common cause- growth/retraction of the economy. Gdp growth is not due to (caused by) a reduction in the trade deficit. We're that true, we wouldn't see a positive correlation between the two.

When the trade deficit is shrinking, GDP tends to shrink too, and when it's widening, GDP widens too, even if the trade deficit comes out of GDP.

Read more: http://articles.businessinsider.com/2011-10-13/markets/30274274_1_trade-deficit-gdp-trade-balance-report#ixzz2PRgs1Kdy
http://static8.businessinsider.com/image/4e97417ceab8ea951c000005/chart-of-the-day-trade-balance-goods-and-services-october-2011.jpg

[Supposn]

I understand what you're saying to be true; as gdp includes net import/export, a trade deficit brings down gdp value-- but what youre ignoring is they both share a common cause- growth/retraction of the economy. Gdp growth is not due to (caused by) a reduction in the trade deficit. We're that true, we wouldn't see a positive correlation between the two.

Log Roller, I state that trade deficits’ are ALWAYS an immediate detriment to their nation’s GDPs.</SPAN>
Due to a trade deficit the Nation’s GDP is less than otherwise; (otherwise being no trade deficit). </SPAN>

An economy is a highly complex environment. A nation’s balance of global trade is just one of many factors within that environment.

What’s contended is regardless of the nation's economic condition, (i.e. regardless of whatever the amounts of the nation’s GDP and median wage), those amounts would have been higher if there were no national trade deficit in that particular year.</SPAN>

I can conceive of only two specific conditions where a nation should choose the less immediate economically preferable strategy.</SPAN>

In the case of all out war such as you and I remember during WW2, exporting goods frees more labor for war production. To the extent that you’re able to tie up or bid up the prices of neutral nations’ production, you deny or increase the cost for your enemy to exercise the same ploy.</SPAN>

It's justified in cases where the imported goods are vital to the nation’s survival or future economic growth. For example it would be justifiable to endure a trade deficit to import tools and materials that will enable the increase of future annual GDPs. If that were the case USA’s trade deficits would be reducing as our GDP is skyrocketing up. Unfortunately USA imports are almost entirely consumer goods.</SPAN>

Respectfully, Supposn</SPAN></SPAN>

[Supposn]

Log Roller, thank you for the graph in post #9. I never would have found it. I accepted the concept as a logical axiom.</SPAN>

Respectfully, Supposn

[Supposn]

... On the Wikipedia link there was quite the dearth of information on the subject ...

FJ1200, most, if not the majority of superior concepts in most fields, are simple. That is not to state that the thought and consideration to develop those concepts were simplistic.</SPAN>

Have any other members googled the words “wikipedia import certificate “or linked to</SPAN>
http://en.wikipedia.org/wiki/Import_Certificates</SPAN> (http://en.wikipedia.org/wiki/Import_Certificates)
Found it less than informative? What questions do any members have that Wikipedia fails to address?</SPAN>
FJ1200 what question do you have?</SPAN>

Respectfully, Supposn </SPAN></SPAN>

[Supposn]

Argued by economists? On the Wikipedia link there was quite the dearth of information on the subject and even Buffett in his op-ed piece acknowledged his own lack of predictive success. Not much to make national policy on and create a whole new market of tradeable certificates to say the least.

And who came out better on international trade? You might like Bastiat's Economic Sophisms (free on Kindle BTW) which discusses the issue in depth. If you can get past the mid 1800's Queen's English that is.

FJ1200, regarding </SPAN>dearth of information, please provide a link to the page you describe as Buffett’s “op-ed piece acknowledged his own lack of predictive success”.</SPAN></SPAN>

Economic is a social study, not a physical science such as astronomy. The planets travel in their orbits which deviate only over hundreds of thousands of years. You’re suggesting that we can with statistics predict the consequences of multi inter-related factors to predict the final consequences upon the entire economy. The man who could with any approximate consistently do that would be the world’s richest security trader.</SPAN></SPAN>

What we do is determine how a modification of a single factor would affect the economy. But there are also many other factors that are also affecting the economy during the same duration of time. Refer to Post #10 of this thread. </SPAN></SPAN>

Respectfully, Supposn </SPAN>

[logroller]

Log Roller, I state that trade deficits’ are ALWAYS an immediate detriment to their nation’s GDPs.
Due to a trade deficit the Nation’s GDP is less than otherwise; (otherwise being no trade deficit).

An economy is a highly complex environment. A nation’s balance of global trade is just one of many factors within that environment.

What’s contended is regardless of the nation's economic condition, (i.e. regardless of whatever the amounts of the nation’s GDP and median wage), those amounts would have been higher if there were no national trade deficit in that particular year.

I can conceive of only two specific conditions where a nation should choose the less immediate economically preferable strategy.

In the case of all out war such as you and I remember during WW2, exporting goods frees more labor for war production. To the extent that you’re able to tie up or bid up the prices of neutral nations’ production, you deny or increase the cost for your enemy to exercise the same ploy.

It's justified in cases where the imported goods are vital to the nation’s survival or future economic growth. For example it would be justifiable to endure a trade deficit to import tools and materials that will enable the increase of future annual GDPs. If that were the case USA’s trade deficits would be reducing as our GDP is skyrocketing up. Unfortunately USA imports are almost entirely consumer goods.

Respectfully, Supposn
what do you mean by "regardless of a nation's economic condition"...Why do you think we track gdp-- to sing Yankee-doodle? We track it as a measure of economic condition.

So I'm not sure what your point is. It seems as though I could change the equation for calculating gdp to exclude net trade and your point, that trade deficits are an immediate detriment to a nation's GDP, would cease. Yet even without doing that, the fact remains that increased trade deficits not only correlate with gdp growth, but increased trade deficits actually precede gdp growth slightly; making increased trade deficits a leading indicator of future GDP growth.

I agree that markets are complex, and I don't mean to imply that an increased trade deficit's correlation with gdp growth is evidence of causation; but your posit, that trade deficits are immediately detrimental to the GDP is irrelevant from an economic perspective. Seems like you're just nitpicking an equation. Why? I assume you've a policy agenda to push; but cherry picking economic factoids isn't going to persuade those who've already a grasp on macroeconomic behavior and metrics used.

[fj1200]

FJ1200, you’re still confusing what’s cause and what’s effect.

Nope.


Log Roller, I state that trade deficits’ are ALWAYS an immediate detriment to their nation’s GDPs.
Due to a trade deficit the Nation’s GDP is less than otherwise; (otherwise being no trade deficit).

But have not shown.


FJ1200, most, if not the majority of superior concepts in most fields, are simple. That is not to state that the thought and consideration to develop those concepts were simplistic.

Have any other members googled the words “wikipedia import certificate “or linked to
http://en.wikipedia.org/wiki/Import_Certificates
Found it less than informative? What questions do any members have that Wikipedia fails to address?
FJ1200 what question do you have?

I don't have any questions, I have challenged your premise for believing it to be a better policy; a challenge that has not been taken up. Another premise I challenge is your belief that this is a simple concept; freedom is simple, your trade machination is not.


FJ1200, regarding dearth of information, please provide a link to the page you describe as Buffett’s “op-ed piece acknowledged his own lack of predictive success”.


To begin, my forecasting record with respect to macroeconomics is far from inspiring. For example, over the past two decades I was excessively fearful of inflation. More to the point at hand, I started way back in 1987 to publicly worry about our mounting trade deficits--and, as you know, we've not only survived but also thrived.

Your Wikipedia link is woefully inadequate.


Economic is a social study, not a physical science such as astronomy. The planets travel in their orbits which deviate only over hundreds of thousands of years. You’re suggesting that we can with statistics predict the consequences of multi inter-related factors to predict the final consequences upon the entire economy. The man who could with any approximate consistently do that would be the world’s richest security trader.

What we do is determine how a modification of a single factor would affect the economy. But there are also many other factors that are also affecting the economy during the same duration of time. Refer to Post #10 of this thread.

You can't even do that with any certainty.

[logroller]

FJ1200, most, if not the majority of superior concepts in most fields, are simple. That is not to state that the thought and consideration to develop those concepts were simplistic.

Have any other members googled the words “wikipedia import certificate “or linked to
http://en.wikipedia.org/wiki/Import_Certificates
Found it less than informative? What questions do any members have that Wikipedia fails to address?
FJ1200 what question do you have?

Respectfully, Supposn
Why we need these import certs to begin with? I have an understanding of cap and trade markets that borders on expert; but the impetus for such a machination is correcting a market failure brought about by negative externalities (ie pollution) ---trade deficits don't exhibit such a failure-- in fact, the data shows they aren't detrimental to the economy in the least. If it ain't broke, don't fix it.

[Robert A Whit]

http://www.debatepolicy.com/images/debate_policy/misc/quote_icon.png Originally Posted by Supposn http://www.debatepolicy.com/images/debate_policy/buttons/viewpost-right.png (http://www.debatepolicy.com/showthread.php?p=628872#post628872)

FJ1200, most, if not the majority of superior concepts in most fields, are simple. That is not to state that the thought and consideration to develop those concepts were simplistic.

Have any other members googled the words “wikipedia import certificate “or linked to
http://en.wikipedia.org/wiki/Import_Certificates
Found it less than informative? What questions do any members have that Wikipedia fails to address?
FJ1200 what question do you have?

Respectfully, Supposn




Why we need these import certs to begin with? I have an understanding of cap and trade markets that borders on expert; but the impetus for such a machination is correcting a market failure brought about by negative externalities (ie pollution) ---trade deficits don't exhibit such a failure-- in fact, the data shows they aren't detrimental to the economy in the least. If it ain't broke, don't fix it.

Log, I agree with you.

For each imported good, currency of equal value is used to the benefit of the shipper.

Since Bernanke has jacked up the money supply, that as I see it solved the problem.

But the problem is inflation and again inflation is indeed too much money chasing too few goods.

[Supposn]

Why we need these import certs to begin with? I have an understanding of cap and trade markets that borders on expert; but the impetus for such a machination is correcting a market failure brought about by negative externalities (ie pollution) ---trade deficits don't exhibit such a failure-- in fact, the data shows they aren't detrimental to the economy in the least. If it ain't broke, don't fix it.

Log Roller, production supporting goods and services of USA’s imported goods are generally obtained from foreign enterprises. Thus when the USA outsources production of goods, it is in effect also outsourcing the labor and goods from ALL direct and indirect support granted to the producers’ of our imports.</SPAN></SPAN>

National and local governments, universities, utility and railroad enterprises often help enterprises and industries because they have a vested interest in promoting and nurturing commerce within their areas of operation or other activities.</SPAN></SPAN>

Infrastructures are often routed and built to a greater capacity than warranted for the general population but rather to entice and nurture industries within the areas of concern to those subsidizing the additional costs. They loan or permit favored industries or enterprises to use very expensive equipment and/or provide expert advice, research and development to them at very favorable cost. No cost is particularly more favorable.</SPAN></SPAN>

When the production of goods is for domestic use, the understated prices of those goods are inconsequential to the GDP because all of a nation’s production is captured by the GDP. Only the understated price of the nation’s exports is attributed to global trades’ contributions to their nation’s GDP.</SPAN></SPAN>
Similarly only the understated prices of the nation’s imports are attributed to global trades’ detriment to their nation’s GDP.</SPAN></SPAN>
The nation’s annual global trade balance is an indication of commercial activity and jobs gained due to a trade surplus or lost due to a trade deficit. In both cases those balances are to some extent understated.</SPAN></SPAN>


The benefits of production are earned by the producers of exports rather than the importers of their goods. Their production facilities, infrastructures all expand due to their increased production for export. They benefit from the economies of scale. Mass production drastically reduces costs per unit. As they manipulate tools and materials, they learn more about all of them. Knowledge derived not simply by reading and study but additionally from practice and experience has greater value. Today USA produces much less of what we use; tomorrow will we be unable to produce if the need arises?</SPAN></SPAN>

You don’t believe that trade deficits’ are detrimental to their nation’s GDPs and you make reference to data that proves your contention.
Nations’ trade balances are just one of the many factors that compose nations’ economic environments. Trade balances alone do not determine the full condition of their nation’s economies. We can logically conclude the due to trade deficits their nation’s GDPs are less and due to trade surpluses their GDPs are more than otherwise.</SPAN></SPAN>

That is a logical conclusion that cannot be proved or disproved by historical statistics. Economics is not a science but rather a social study. Unlike a physical science experiment, you cannot create a laboratory test keeping all of an economy’s factors other than trade balances as constants.</SPAN></SPAN>

Your contention that USA’s trade deficit “ain’t broke” is incorrect.</SPAN></SPAN>

Respectfully, Supposn

[fj1200]

Your contention that USA’s trade deficit “ain’t broke” is incorrect.

More assertions but this time in bold. :2up:

:rolleyes:

[Supposn]

what do you mean by "regardless of a nation's economic condition"...Why do you think we track gdp-- to sing Yankee-doodle? We track it as a measure of economic condition.</SPAN>

Log Roller, I may not have written the most simplistic sentence but it is not particularly complex. I start with the assumption that I’m writing for adults that (hopefully at minimum) are no less intelligent than myself. Why do you pretend that this sentence is beyond your comprehension?</SPAN>
I wrote, "What’s contended is regardless of the nation's economic condition, (i.e. regardless of whatever the amounts of the nation’s GDP and median wage), those amounts would have been higher if there were no national trade deficit in that particular year".</SPAN>


So I'm not sure what your point is. It seems as though I could change the equation for calculating GDP to exclude net trade and your point, that trade deficits are an immediate detriment to a nation's GDP, would cease. Yet even without doing that, the fact remains that increased trade deficits not only correlate with gdp growth, but increased trade deficits actually precede gdp growth slightly; making increased trade deficits a leading indicator of future GDP growth.

Using the expenditure method for calculating GDP, the nation's trade balance has to be known in order to calculate the GDP. Similarly all USA purchases of goods and services must be known to calculate the GDP. "Knowing is not the same as "leading".</SPAN>
These known statistics are reported upon within the GDP's expenditure formula. </SPAN>

If the USA government, or if commercial purchasers or if consumers spend more for goods and services, that increases GDP. If any of those sectors spend less, that decreases GDP.</SPAN>

If the nation’s global trade balance’s a surplus that increases GDP and if it’s a deficit, that reduces GDP. In both cases the nation’s global trade’s affect upon GDP is to some extent likely to be understated.</SPAN>


So I'm not sure what your point is. It seems as though I could change the equation for calculating gdp to exclude net trade and your point, that trade deficits are an immediate detriment to a nation's GDP, would cease. Yet even without doing that, the fact remains that increased trade deficits not only correlate with gdp growth, but increased trade deficits actually precede gdp growth slightly; making increased trade deficits a leading indicator of future GDP growth.

All of these statistics are integral to the most commonly used formula for calculating the GDP; that’s the expenditure method. If we excluded the trade balance from the formula, we would no longer be calculating the GDP.

Yes global trade balances inversely related to their nations' GDPs and all other of the nation's spending for goods and services are positively related to their nation's GDPs, but none of these statistics "lead" the GDP. The nations' GDPs are net tabulations of their nation's statistics.</SPAN>

If you desire to change the formula and exclude the nation's trade balance, that’s OK; but the GDP is the generally accepted statistic that is by definition described by this conventionally accepted formula. Your modified formula is a new statistic of your own creation.</SPAN>


I agree that markets are complex, and I don't mean to imply that an increased trade deficit's correlation with gdp growth is evidence of causation; but your posit, that trade deficits are immediately detrimental to the GDP is irrelevant from an economic perspective. Seems like you're just nitpicking an equation. Why? I assume you've a policy agenda to push; but cherry picking economic factoids isn't going to persuade those who've already a grasp on macroeconomic behavior and metrics used.

Within this, (your last paragraph), you are arguing with the conventionally accepted and used GDP definition and formula used by communities of economists and statisticians throughout the world. Your last paragraph is nonsensical.

Within the expenditure formula, trade deficits' are ALWAYS immediate detriments to their nations' GDPs.

Respectfully, Supposn</SPAN>

[Supposn]

If the reader will google “ wikipedia, balance of trade “, possibly the paragraphs entitled “Trade Balances' affects upon their nation’s GDP” will make this concept clearer?</SPAN>

Refer to the thread </SPAN>
http://www.debatepolicy.com/showthread.php?39068-Reduce-the-trade-deficit-increase-GDP-amp-median-wage</SPAN> (http://www.debatepolicy.com/showthread.php?39068-Reduce-the-trade-deficit-increase-GDP-amp-median-wage)
for a proposed remedy.</SPAN>

Respectfully, Supposn</SPAN></SPAN>

[Marcus Aurelius]

If the reader will google “ wikipedia, balance of trade “, possibly the paragraphs entitled “Trade Balances' affects upon their nation’s GDP” will make this concept clearer?

Refer to the thread
http://www.debatepolicy.com/showthread.php?39068-Reduce-the-trade-deficit-increase-GDP-amp-median-wage
for a proposed remedy.

Respectfully, Supposn

Why bring up such an old topic? And why constantly refer to that same thread? Oh, wait... it's YOUR thread. I get it now.

http://4.bp.blogspot.com/-XRGt7afntxc/TzrU7eyeMQI/AAAAAAAAARE/XlnkI3izTHs/s1600/1.jpg

[Supposn]

Why bring up such an old topic? And why constantly refer to that same thread? Oh, wait... it's YOUR thread. I get it now.

But its OUR economy!
Respectfully, Supposn

[fj1200]

If the reader will google “ wikipedia, balance of trade “, possibly the paragraphs entitled “Trade Balances' affects upon their nation’s GDP” will make this concept clearer?

Refer to the thread

So again you restate previously disproven posits without new information or counters to that which goes against your opinion. Thanks??? I guess?

BTW, I googled the second phrase of what you suggested and came up with two hits; the first being a thread you started yesterday and the second being something on Wikipedia which the cynic in me suggests that you posted. Much to my surprise the Wikipedia entry was bereft of links to more scholarly opinions.

[Supposn]

The statement (trade deficits are ALWAYS detrimental to their nation’s GDPs) is a logical conclusion that cannot be proved or disproved by historical statistics. Economics is not a science but rather a social study. Unlike a physical science experiment, you cannot create a laboratory test keeping all of an economy’s factors other than trade balances as constants.
Citing reputed authorities only attaches a name to what we’re being asked to accept on faith; we don’t all attend at the same church or temple.

That only leaves logic as the means to examine and evaluate the disputed statement and if we, this thread’s posters are not persons of good will, there will emerge no more truth than is currently emerging from our presidential primary contests.

Respectfully, Supposn

[fj1200]

The statement ...

More repetition; great. Why should government force consumers to pay more for goods?

[Supposn]

More repetition; great. Why should government force consumers to pay more for goods?

FJ1200, why are you asking me to explain the logical basis of what you imagine and write? Please explain why you imagine that government should “force consumers to pay more for goods”.

Respectfully, Supposn

[Voted4Reagan]

dear god... this thread was dead for 3 years... Let it die folks...

[fj1200]

FJ1200, why are you asking me to explain the logical basis of what you imagine and write? Please explain why you imagine that government should “force consumers to pay more for goods”.

Respectfully, Supposn

I'm trying to figure out if you understand your own topic. I've got a pretty good handle on trade issues and it's clear that the outcome of what you seek is higher priced goods for American consumers.

[Black Diamond]

I'm trying to figure out if you understand your own topic. I've got a pretty good handle on trade issues and it's clear that the outcome of what you seek is higher priced goods for American consumers.
In exchange for American jobs? Forgive me for not reading the thread and making assumption on topic....

[fj1200]

In exchange for American jobs? Forgive me for not reading the thread and making assumption on topic....

Two problems with that. First, what cost to Americans should be paid to preserve a job?


This costs of protectionism can be seen in the historic performance of the U.S. auto and steel industries, too. The United States has attempted to protect its automobile and steel industries from foreign competition through the use of voluntary restraints agreements (VRAs), a type of quota. The policies are designed to temporarily shield the U.S. industries from foreign competition thereby allowing U.S. industries to gear up or recover, and become more productive and globally competitive. The U.S. auto VRA imposed on Japan did not achieved this. Instead, the VRA effectively increased, on average, the price of Japanese autos by more than $2,000 in the U.S. market in 1984. Rather than increase market share, which was a major goal of the program, U.S. producers increased their prices by an average of $750 - $1,000. It is estimated that in 1984 this policy saved only 1,100 jobs in the auto industry at a cost to the U.S. economy $6 billion.
http://manzellareport.com/index.php/trade-finance/388-the-real-costs-of-protectionism

The cost to save each job was $5.5 million. Even if you buy the argument it isn't worth the cost. Second, I reject the argument that free trade is why we would be a net loser of jobs. We have let ourselves be noncompetitive globally.

[Kathianne]

Two problems with that. First, what cost to Americans should be paid to preserve a job?


http://manzellareport.com/index.php/trade-finance/388-the-real-costs-of-protectionism

The cost to save each job was $5.5 million. Even if you buy the argument it isn't worth the cost. Second, I reject the argument that free trade is why we would be a net loser of jobs. We have let ourselves be noncompetitive globally.

I'll not pretend to understand all the economic factors at work, but do understand enough to know that 'protectionist' policies tend to increase profit for the protected, while suppressing the needed modernization and training of the industry. It makes the industry less competitive while encouraging short term profits.

[indago]

Two problems with that. First, what cost to Americans should be paid to preserve a job?


http://manzellareport.com/index.php/trade-finance/388-the-real-costs-of-protectionism

The cost to save each job was $5.5 million. Even if you buy the argument it isn't worth the cost. Second, I reject the argument that free trade is why we would be a net loser of jobs. We have let ourselves be noncompetitive globally.

And following that logic, we should reduce our Nation to Third World Nation status to emulate our competitors.

[fj1200]

And following that logic, we should reduce our Nation to Third World Nation status to emulate our competitors.

No. Your thread-crossing ignorance and mischaracterization isn't really helpful.

[indago]

No. Your thread-crossing ignorance and mischaracterization isn't really helpful.

And your ignorant rebuttal is wanting...

[fj1200]

And your ignorant rebuttal is wanting...

You made no statement of worth that needed rebuttal. It was merely one of your carryover talking points from another thread.

[Supposn]

In exchange for American jobs? Forgive me for not reading the thread and making assumption on topic....

FJ1200, you responded to my posts by inquiring, “Why should government force consumers to pay more for goods?”.

I never advocated government should “force consumers to pay more for goods”. What you’re attributing to me is a product of your own imagination.

Respectfully, Supposn

[fj1200]

FJ1200, you responded to my posts by inquiring, “Why should government force consumers to pay more for goods?”.

I never advocated government should “force consumers to pay more for goods”. What you’re attributing to me is a product of your own imagination.

Respectfully, Supposn

No, it's the truth of the outcome you seek; the higher prices that protectionism brings. Sorry to be the one to break it to you.

[Voted4Reagan]

http://www.debatepolicy.com/attachment.php?attachmentid=8689&stc=1





http://manzellareport.com/index.php/trade-finance/388-the-real-costs-of-protectionism



The article you quote is 22 years old... I doubt the figures used have any bearing these days..

Your source may have been valid in Clintons first term... but in 2016 it is WORTHLESS.

[Supposn]

Two problems with that. First, what cost to Americans should be paid to preserve a job?


http://manzellareport.com/index.php/trade-finance/388-the-real-costs-of-protectionism

The cost to save each job was $5.5 million. Even if you buy the argument it isn't worth the cost. Second, I reject the argument that free trade is why we would be a net loser of jobs. We have let ourselves be noncompetitive globally.

FJ1200, OK, it’s good that your posts are starting to be more specific and explicit; keep going with it.

FJ1200, specifically you’re referring to what costs to what Americans?

I'm among the advocates for USA adopting a specific unilateral policy for the conducting of our global trade. Refer to Wikipedia’s article entitled “Import Certificates”.

The policy I advocate is substantially market rather than a government driven. I will not speculate as to which particular USA industries and enterprises and workers would most benefit from that trade policy.

If you consider importing and exporting as a single global trade industry, the proposal does not favor or disfavor any industry or enterprises within any industry. The nationalities of enterprises’ owners or their directors are of no consequence with regard to this trade proposal.
The proposal is of benefit to every USA producer of goods that competes or aspires to compete with foreign goods anywhere in the world.

Respectfully, Supposn

[fj1200]

The article you quote is 22 years old... I doubt the figures used have any bearing these days..

Your source may have been valid in Clintons first term... but in 2016 it is WORTHLESS.

Yes it was. Do you have an actual point or just an utter misunderstanding of economics. Economics don't change, examples change. As proof:


Economists Gary Clyde Hufbauer and Sean Lowry note that the number of Americans employed in tire manufacturing increased from 50,800 in September 2009 to 52,000 in September 2011. If all 1,200 jobs were attributed to the tariff — an exceedingly generous assumption — they calculate that Obama’s move could be credited with saving or creating $48 million of additional worker income and purchasing power.

But the tariff also forced consumers to spend $1.1 billion more on tires than they otherwise would have — or roughly $900,000 per U.S. tire industry job created. And retaliatory tariffs imposed by the Chinese further hurt our economy. In early 2010, China’s Ministry of Commerce imposed tariffs ranging from 50.3 to 105.4 percent on American poultry imports, which “reduced exports by $1 billion as U.S. poultry firms experienced a 90 percent collapse in their exports of chicken parts to China,” according to Hufbauer and Lowry.
http://www.nationalreview.com/article/432462/donald-trumps-protectionist-tariffs-would-hurt-working-class-americans

Here's another fun little ditty:

Almost Everything Donald Trump Says About Trade With China Is Wrong (http://thefederalist.com/2016/01/20/almost-everything-donald-trump-says-about-trade-with-china-is-wrong/)

[fj1200]

FJ1200, OK...

None of that disputed what I posted. And it validated my claim that all you do is rehash your same statements. :)

[Voted4Reagan]

Yes it was. Do you have an actual point or just an utter misunderstanding of economics. Economics don't change, examples change. As proof:




I majored in Economics and Labor relations at St. Francis University...

But thanks for playing troll

[Supposn]

I'll not pretend to understand all the economic factors at work, but do understand enough to know that 'protectionist' policies tend to increase profit for the protected, while suppressing the needed modernization and training of the industry. It makes the industry less competitive while encouraging short term profits.

Kathianne, I’m among the proponents of a unilateral trade policy described in Wikipedia’s article, “Import Certificates.

Any increase of foreign goods prices due to the trade policy would be passed onto their USA purchasers.
Decreases of USA exported goods prices would be passed onto foreign purchasers of USA goods. (The proposal acts as an indirect but effective subsidy of USA exported goods).
Prices of USA’s globally traded goods would be affected by federal government but they will be substantially much more market rather than government determined. Prices of USA goods sold to USA purchasers would be entirely unaffected by this trade policy.

If we consider importing and exporting as a single global trade industry, the policy treats all industries equally.
It does not discriminate between foreign nations; it treats them and all of their enterprises equally.
It does not identify or discriminate among any enterprises due to the nationality of enterprises owners, directors or shareholders.

The proposal’s only mandate upon any enterprise is importers of foreign goods into the USA are required to surrender transferable import certificates with “face values” sufficient to cover the assessed values of their import shipments. (The surrendered certificates are then cancelled).

The proposal would be of benefit to every USA enterprise producing goods that compete or aspire to compete with foreign goods anywhere in the world.
Other than an enterprise within the USA that is legally or otherwise bound not to deal with USA goods, the proposal does not hinder or favor any particular USA enterprise.

Where do you perceive this policy as tending “to increase profit for the protected”? What profits? What enterprises are being shielded from competitors?
What I perceive is the significant reduction of USA’s chronic annual trade deficits would increase USA’s GDP, numbers of jobs and median wage more than otherwise.

This proposal does not divert resources that could be dedicated to improve USA’s educational, training, and public infrastructure systems. I regret that our U.S. Congress and/or our state governments have not agreed upon even a plan to begin accomplishing those goals.

Respectfully, Supposn

[Supposn]

I'll not pretend to understand all the economic factors at work, but do understand enough to know that 'protectionist' policies tend to increase profit for the protected, while suppressing the needed modernization and training of the industry. It makes the industry less competitive while encouraging short term profits.

Kathianne, we all benefit from cheaper imports but they do not compensate USA’s employees and their families for trade deficits detriment to USA’s Numbers of jobs consequences upon USA’s median wage. The significant reduction of USA’s chronic annual trade deficits would increase USA’s GDP, numbers of jobs and median wage more than otherwise.
To that extent that improvement of USA’s economy is expected to be somewhat reflected within USA enterprises’ aggregate profits. What unjustified profits are you implying? Are they so grievously unjustified that you advocating we waive improvement of USA’s economy and our employees and their families financial conditions?

The proposed transferable Import Certificate policy is not “pure” free trade but it is certainly pure free competitive enterprise and it would increase USA’s GDP, numbers of jobs and median wage more than otherwise; (otherwise being if USA does not significantly change our global trade policies).

Respectfully, Supposn

[fj1200]

I majored in Economics and Labor relations at St. Francis University...

But thanks for playing troll

I wasn't playing, I was winning. ;) But I guess it's easier for you to try and claim some degree rather than being able to demonstrate some actual understanding of economics. You can slink away now that I provided an updated example for you though. :)