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The entrenched politicians of both parties who have some financial stake in the status quo are most likely the ones complaining...workers who have lost their jobs to companies fleeing overseas are the only ones who count. Of course entrenched politicians don't really care about Middle America as witnessed by Trump's election.
You have missed,ignored or purposely chosen not to accept the statistics that say the bulk of jobs lost is due to
automation not shipping jobs and manufacturing overseas
I’m not suggesting that that simple illustration is an economic model ... just an illustration of the misunderstanding of what income is and is not.
I understand what you are trying to say, and I am sympathetic to your aim, however....
...not really good terminology. What you are talking about is utility. Labor is not necessarily an income. The product may indeed have utility which will create a demand for it. To the extend that it is limited in supply, and has value, then it produces income.
Try this scenario:
For example I create a jar of jam. Jam has utility. However if the supply of jam is high, I may get nothing for my labor. I will have zero income. Perhaps there are 100 jars of jam , 10 each from each proprietor. However with only a few buyers, the sellers may be content to break even or incur a loss. Someone sees our situation and offers to cut our loses, and we sell out at cost. Say our cost to produce is $1. Perhaps the buyer knows or speculates that the utility of jam is quite high and that they know that 10 people will buy a jar of it. Then they buy all of them to corner the market. Say they pay $1 each for all 100 jars, our cost. in that case 0 income from labor. Why? because utility does not equal value and without value there will be no income.
Then say the sole supplier sells each jar of jam for $20 each for a profit of $100.
As before, in that case, no labor was paid income because labor only produced utility , not value. Meanwhile the market was cornered to create scarcity. Then this created value. Thus someone made an income of $100 with no labor.
Even more so lots of things have utility and they do not come from labor. Thus an income can be created with absolutely no labor at all.
The above is what debunked the so called labor theory of value. This is often abused of course, but it is strictly true. However labor is apt to create utility in an attempt to capture value. Thus it is related to some extent. However as we can see there re a lot of unnatural and natural phenomena to separate one's labor from an income.
When the current Admin rants about the trade deficit (which, BTW, was zero with Canada)...it's simply red meat for the uneducated that Trump loves so. Why do I say this?
Two simple reasons. First, even if one believes trade deficits are "bad" (many economists seem to say this is not true!), the amount is relatively small.
Take the 500 Billion.....as what we are talking about.
Now, let's look at the single most expensive item in our country - Health Care.
That's 3.3 TRILLION per year and it is well known that it is at least 50% higher than it should be. Some say 100% (twice as high), but let me be conservative and say we could "only" save 1.1 Trillion per year (1/3 less....or, put the other way, it's 50% higher than it should be)....
Well, any true business person would see that ONE problems...one line item which is almost totally within the control of the USA internally...would be a LOT easier to solve than decades of dealing with tiny amounts in tariffs and fighting with our allies over details, etc.
That's what I mean by "follow the money". The same guy who seems so concerned about 500 Billion (which, again, economists don't consider a problem) just borrowed 3X that amount for "tax-cuts". He also stated that the government will borrow at least a TRILLION more dollars each year for the foreseeable future.
But, just like brown people, Trump can dangle these things in front of his "uneducated" hordes and get a cheer. Actually solving problems is much harder.
First of all, I have already said numerous times in this very thread that trade deficit itself is not really a good or bad thing.
Countries with trade deficit can have a healthy strong economy; countries with trade surplus can have a really weak economy. So let's not focus on if trade deficit is a bad or a good thing. (sorry op)
This said, Let me explain why American trade deficit TODAY is at.the.very.least troubling.
When we keep incurring these trade deficits, year after year, we use our domestic currency (the $) to pay for those imports. This results in our trade partners getting a considerable supply of those $. What do they do with them? Ans: they buy bonds from the govt. Which is why a significant portion of our national debt is owned by foreign countries.
If you were China, you could sell those excess $ to buy the yuan - but that would make the yuan more expensive (vs. the $) and thus its exports more expensive. So, they use the $ to buy treasuries instead.because there is such a steady stream of buyers, the govt. can issue debt at very low yields (i.e. at a higher price), which encourages even more issuance as now everyone feels the debt is totally under control because there is a a ready market for it. Technically that is true as well, until that is, everyone wants their money back at once. If we were not the world's ultimate reserve currency, it would not be so easy to sell debt to those we trade with.
In that case, more and more deficits would contribute to higher and higher yields required on our debt and also a lower currency as there would be a lesser demand for the $. Since there are precious few places stable and big enough, and we still have the most best investment environment in the world, that so far has not been a problem. But having said that, there is a correlation between trade deficits and the debt. Which is where the real problems start to arise.
Have we reached to that point that we need to worry? I think so. It is kind of naive to believe we as America still have the economy we used to.
At the end of the day, it most certainly is a zero sum game. You’re either in the red or the black, no matter how much bs you inject into the conversation .... your bank account has either a + or a - sign next to the line labeled “balance”.
Someone has convinced you of some crazy stuff here pal ... but at the end of the day, just as it will be at the end of time, surplus is good, deficit is bad. That will never change.
Another example of your foolish thinking; you equate government spending to a household check book.
Take a basic 101 course in economics and then try again.
Quote:
Originally Posted by evilnewbie
Let me ask you something... it's pretty simple... you own a business and employee 50 people... then business picks up and you employ another 50 people... those 50 additional people now pay taxes and consume locally, which translates to economic growth to the region which opens up more stores and business in the area... now, what if I told you that those additional 50 people were because the company increase revenue by 1 million dollars... and in return you got an additional 50 people in the community hired (in addition to your 100 workers which pay more local taxes), 5 new business started in the local area, and millions in extra revenue for the city... now what if I told you the trade deficit was 19 BILLION... and then you look back and say "trade deficit is bad?"... duh... every dollar in trade deficit OVER TIME means you have less businesses, less growth, and less money in your pocket... There is a reason why EVERY COUNTRY on this planet works hard to NOT have a trade deficit...
Not true in the least bit. You're making a mistake GuyNTexas does: you're looking at economics as a zero sum game. It isn't.
The gold standard was foolish and there are many reasons we left that. People need to stop seeing money as money, and see it more as simply a transfer of value. Money is not finite, it is a store of value that you've created and thus been given money for (instead of direct goods).
Quote:
Originally Posted by whogo
To make it simple getting ten dollars worth of goods for eight dollars ain’t bad.
O.M.G... I think you might be on to something...
Quote:
Originally Posted by GuyNTexas
That is of course a matter of perspective, is it not? As a buyer, it may be good. Not so grand for the seller.
And often, it’s not even good for the buyer. Depends on a number of factors ... a profitable local business that charges a little more than an out of town retailer might recycle those profits back into the local community, offering greater benefits than a mere $2 one time saving.
No. It doesn't.
You import cheaper stuff and focus on higher value added goods, there is better money in that anyways. I don't make nails or cut lumber. Not enough money for me. I turn that stuff into a house and sell them that for more money.
Quote:
Originally Posted by lilyflower3191981
First of all, I have already said numerous times in this very thread that trade deficit itself is not really a good or bad thing.
Countries with trade deficit can have a healthy strong economy; countries with trade surplus can have a really weak economy. So let's not focus on if trade deficit is a bad or a good thing. (sorry op)
This said, Let me explain why American trade deficit TODAY is at.the.very.least troubling.
When we keep incurring these trade deficits, year after year, we use our domestic currency (the $) to pay for those imports. This results in our trade partners getting a considerable supply of those $. What do they do with them? Ans: they buy bonds from the govt. Which is why a significant portion of our national debt is owned by foreign countries.
If you were China, you could sell those excess $ to buy the yuan - but that would make the yuan more expensive (vs. the $) and thus its exports more expensive. So, they use the $ to buy treasuries instead.because there is such a steady stream of buyers, the govt. can issue debt at very low yields (i.e. at a higher price), which encourages even more issuance as now everyone feels the debt is totally under control because there is a a ready market for it. Technically that is true as well, until that is, everyone wants their money back at once. If we were not the world's ultimate reserve currency, it would not be so easy to sell debt to those we trade with.
In that case, more and more deficits would contribute to higher and higher yields required on our debt and also a lower currency as there would be a lesser demand for the $. Since there are precious few places stable and big enough, and we still have the most best investment environment in the world, that so far has not been a problem. But having said that, there is a correlation between trade deficits and the debt. Which is where the real problems start to arise.
Have we reached to that point that we need to worry? I think so. It is kind of naive to believe we as America still have the economy we used to.
Our economy is still the greatest on this planet and there is nothing that will change that short-term. Even our nitwit in chief. He might ding it up, but it'll survive his idiocracy.
Rome thought the same way..... I hope you are right.
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What if those deficit dollars are flowing back to our country in the form of investment dollars? Dollars that provide capital for our companies to expand and make markets for our products in the countries that sent us those dollars?
If you follow your theory to its logical conclusion you get an isolated economy producing 100% of its domestic needs and exporting nothing. Might work for a while until you start running out of raw materials etc.
What happens when China buys up the major highways, national parks, infrastructure, utility companies etc, by investing those dollars gained by selling us trinkets and Walmart garbage? You don’t see a national security threat in allowing hostile powers to use our massive trade deficit to their advantage, at our expense?
Wouldn’t it be wiser, and more direct to have profitable trade arrangements where we are not being taken to the cleaners, and instead, WE use the profits WE receive to invest in us? Why would you want to sell America off at a Chinese auction, for gods sake ?
Isolated economy? We created most of the technology that the rest of the world now enjoys, and wants to sell to us??? Who created the telephone industry .... the automotive industry .... the airline industry ... the computer industry?
Isolated economy? We created most of the technology that the rest of the world now enjoys, and wants to sell to us??? Who created the telephone industry .... the automotive industry .... the airline industry ... the computer industry?
__________________ ____________________________________________
My posts as a Mod will always be in red.
Be sure to review Terms of Service: TOS
And check this out: FAQ
Moderator: Relationships Forum / Hawaii Forum / Dogs / Pets / Current Events
First of all, I have already said numerous times in this very thread that trade deficit itself is not really a good or bad thing.
Countries with trade deficit can have a healthy strong economy; countries with trade surplus can have a really weak economy. So let's not focus on if trade deficit is a bad or a good thing. (sorry op)
This said, Let me explain why American trade deficit TODAY is at.the.very.least troubling.
When we keep incurring these trade deficits, year after year, we use our domestic currency (the $) to pay for those imports. This results in our trade partners getting a considerable supply of those $. What do they do with them? Ans: they buy bonds from the govt. Which is why a significant portion of our national debt is owned by foreign countries.
If you were China, you could sell those excess $ to buy the yuan - but that would make the yuan more expensive (vs. the $) and thus its exports more expensive. So, they use the $ to buy treasuries instead.because there is such a steady stream of buyers, the govt. can issue debt at very low yields (i.e. at a higher price), which encourages even more issuance as now everyone feels the debt is totally under control because there is a a ready market for it. Technically that is true as well, until that is, everyone wants their money back at once. If we were not the world's ultimate reserve currency, it would not be so easy to sell debt to those we trade with.
In that case, more and more deficits would contribute to higher and higher yields required on our debt and also a lower currency as there would be a lesser demand for the $. Since there are precious few places stable and big enough, and we still have the most best investment environment in the world, that so far has not been a problem. But having said that, there is a correlation between trade deficits and the debt. Which is where the real problems start to arise.
Have we reached to that point that we need to worry? I think so. It is kind of naive to believe we as America still have the economy we used to.
The fact is the dollar is the world’s reserve currency and I suggest you google the Triffen Dilemma. We are better off running trade deficits.
Rome thought the same way..... I hope you are right.
Rome had a lot of issues we don't have today.
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I think you might be on to something... 
