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Balances of trade understate their effects upon their nation's domestic production.
Nation's balances of international trade are determined by the total net prices of their globally traded goods and service products which contribute to trade surplus nations' and reduce trade deficit nations' gross domestic products, (GDPs).
We know productions from different enterprises can resonate with each other.
An example of a factory's units of production affecting sales volumes, (i.e. units of production) for some other enterprises would be a pizza shop nearby a factory. Both the factory and the pizza shop contribute to their nation's domestic production, and when more or fewer factory workers are employed, both enterprises' production, (i.e. their sales volumes) are more or less affected.
Both enterprises contribute to their nation's domestic production, but they do not affect each other's prices per units of production. If the factory increases their workforce to produce more export products, the increased Pizza shop sales will not be recognized and attributed as due to the nation's increased production for global trade. Trade surplus nation's positive balance of global trade contributes to their GDP, but their net trade balance to some extent understates global trades' effects upon their domestic production.
Nations' annual imports crowd their domestic products out of their nation's marketplaces and thus reduced their nation's domestic productions. Just as positive trade balances contributed to surplus trade nations' GDPs, negative trade balances reduced trade deficit nations' GDPs and their balances of trade to some extents understated their effects upon their nation's domestic production.
These leverages due to resonating productions are the major, among causes of trade balances understating their effects upon their nation's domestic production.
We know it's not unusual for governments or quasi-government entities such as universities, or utility companies providing some local producer with goods, services, or other considerations at lesser than market, or at no costs in order to promote their local economies.
Producers benefits from public infrastructures or other considerations at lesser than market costs are usually reflected as lower prices for those producers' products; regardless of this, all domestically produced goods and service products do contribute to their nation's GDP.
But to the extents that nations' entire contributions to their production of globally traded goods are not entirely reflected within the prices of their globally traded products, trade balances contributions to surplus trade nations' GDPs, and their detrimental effects upon the GDPs of trade deficit nations, all exceed the their nation's net balances of trade.
We know that production per unit costs are often affected by their volumes of production; (i.e mass production induces economies of scale). When the same production lines or tools are employed for both domestic and exported production costs, they similarly affect the per unit costs of both products produced for export or domestic markets which in turn affects the “real” values of those productions.
Trade balances contribute to surplus trade nations' GDPs. We cannot account or estimate the extent those additional production values due to global trade provided additional economies of scales to those trade surplus nations.
Similarly, trade deficits are detrimental to their nation's GDPs. We cannot account or estimate the extent of trade deficits nations reduced values of GDP beyond the extent of their negative balance of trade.
Among those inestimable gains or losses, were opportunities for economies of scale.
We're still waiting for you calculate the amount of GDP generated by imports.
Naturally, you haven't, and won't, because it totally destroys your argument.
Mircea, sorry, the typographical error is mine. The comma was missing.
Quote:
Originally Posted by Supposn
Balances of trade understate their effects upon their nation's domestic production. ...
Nations' annual imports crowd their domestic products out of their nation's marketplaces and thus reduced their nation's domestic productions. Just as positive trade balances contributed to surplus trade nations' GDPs, negative trade balances reduced trade deficit nations' GDPs and their balances of trade to some extents understated their effects upon their nation's domestic production. ...
The sentence should have been, Just as positive trade balances contributed to surplus trade nations' GDPs, negative trade balances reduced trade deficit nations' GDPs , and their balances of trade to some extents understated their effects upon their nation's domestic production.
But I assumed that you would be aware of nation's annual trade deficits are always net detrimental to their nation's domestic production and thus always reduce their nation's GDP. Imports reduce rather than increase their nation's domestic production. That's explained within the posts.
But I assumed that you would be aware of nation's annual trade deficits are always net detrimental to their nation's domestic production and thus always reduce their nation's GDP. Imports reduce rather than increase their nation's domestic production. That's explained within the posts.
Your assumptions are wrong and so is your math, and apparently, you're unable to grasp the mechanics.
If your total Domestic GDP including Exports is $16 TRILLION, and you import $600 Billion in goods which generates $2.4 TRILLION, and your Exports total $0, your total GDP is $18.4 TRILLION, and subtracting the trade deficit of $600 Billion makes your total GDP $17.8 TRILLION.
Are you better off, or worse off?
You're better off.
Specifically, you're $1.8 TRILLION better off.
If your total Domestic GDP including Exports is $16 TRILLION, and you import $600 Billion in goods which generates $2.4 TRILLION, and your Exports total $400 Billion, your total GDP is still $18.4 TRILLION, and subtracting the trade deficit of $200 Billion makes your total GDP $18.2 TRILLION.
Are you better off, or worse off?
You're better off.
Specifically, you're $2.2 TRILLION better off.
If your total Domestic GDP including Exports is $16 TRILLION, and you import $600 Billion in goods which generates $2.4 TRILLION, and your Exports total $600 Billion, your total GDP is still $18.4 TRILLION, and subtracting the trade deficit of $0 makes your total GDP $18.4 TRILLION.
Are you better off, or worse off?
You're better off.
Specifically, you're $2.4 TRILLION better off.
In every single possible case, you are better off with trade, even when there is a trade deficit.
You seem to be totally ignorant of the fact that rattan does not grow in the US. It only grows in the Philippines, Indonesia, Malaysia and a few other countries in Southeast Asia.
Many Americans demand rattan furniture for their out-door patios, decks, front porches, and even for their living rooms, dining rooms and kitchens.
Rattan is not going to fall out of the sky and land in the US. It has to be imported. And importing rattan creates jobs.
It creates jobs for longshoremen, warehouse workers, truck drivers, and since many rattan tables have glass tops, jobs for glass workers, jobs for those who make screws and washers and nuts and bolts, jobs for those who make fabric for the upholstery, and jobs for those who make padding for the cushions, and that creates even more jobs.
The purpose of trade is to import products you don't have, are unable to produce, are too costly too produce, or for which there is insufficient labor or other resources to produce.
$1 of imports does not generate $1 in GDP; it generates far more than that, which is why trade is beneficial, even when a trade deficit exists.
A plastic kitchen utensil costs $0.05 from factory floor in China to a Dollar Tree store, where it's sold for $1.00, so $1 of imports generates $20 in GDP, and that doesn't include the GDP generated by the intermediate steps of transporting those items from port to a Dollar Tree store, and all of the GDP generated in support of a Dollar Tree store.
So, why don't you learn the art of Business & Trade, and then come back and post.
Your assumptions are wrong and so is your math, and apparently, you're unable to grasp the mechanics. ... So, why don't you learn the art of Business & Trade, and then come back and post.
Mircea, "GDP" means gross domestic product. The most common conventionally employed formula for describing a nation's GDP is the expenditure formula. Unless there's some note of exception, all references to GDP among creditable economists and statistician communities in the USA are referring to GDP calculated by the expenditure formula. Similarly, that the most conventionally accepted GDP formula throughout the world.
What do you mean by domestic GDP? A nation's GDP includes their net balance of international trade, (i.e includes both their imports and their exports).
Please try to post a single explicit question. I don't doubt you have a point to make. A discussion requires that we communicate in the same language, with mutually agreed definitions of terms we're using to express ourselves. If there's no mutual respect, civil discussion is less feasible, if not entirely unfeasible.
Your assumptions are wrong and so is your math, and apparently, you're unable to grasp the mechanics.
If your total Domestic GDP including Exports is $16 TRILLION, and you import $600 Billion in goods which generates $2.4 TRILLION, and your Exports total $0, your total GDP is $18.4 TRILLION, and subtracting the trade deficit of $600 Billion makes your total GDP $17.8 TRILLION. ... So, why don't you learn the art of Business & Trade, and then come back and post.
Mircea, if the nation's net balance of international trade was negative $600 billion, and their GDP was $16 trillion, the nation's domestic production was something less than $15.4 trillion; (less because nation's balances of trade understate the actual extents of their effects upon their nation's domestic production).
Trade surplus nation's GDPs are increased, and trade deficit nation's GDPs are reduced by their balances of international trade. What's that generated $2.4 trillion and that $17.8 trillion you're referring to?
Your assumptions are wrong and so is your math, and apparently, you're unable to grasp the mechanics.
If your total Domestic GDP including Exports is $16 TRILLION, and you import $600 Billion in goods which generates $2.4 TRILLION, and your Exports total $0, your total GDP is $18.4 TRILLION, and subtracting the trade deficit of $600 Billion makes your total GDP $17.8 TRILLION. ... So, why don't you learn the art of Business & Trade, and then come back and post.
Mircea, correction of this thread's post #9:
If the nation's net balance of international trade was negative $600 billion, and their GDP was $16.0 trillion, the nation's domestic production was approximately $16.0 trillion but we spent approximately $16.6 trillion for domestic and imported products.
If the nation hadn't experienced a negative balance of trade, the nation would have spent in excess of $0.6 trillion for additional consumption of domestic products or savings which increase available credit, or investments.
Increasing available credit increases wealth available for investing or future consumption. increasing investments enable increased future production.
Trade surplus nation's GDPs were increased, and trade deficit nation's GDPs were reduced by their balances of international trade. What's that generated $2.4 trillion and that $17.8 trillion you're referring to?
Respectfully, Supposn
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