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Old 09-23-2018, 03:49 PM
 
1,215 posts, read 627,106 times
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The costs and benefits of producing or importing:

The expenditure formula itself only reduces or increases GDP by the nation's net trade balance which is based upon the price value of globally traded products. But there's often additional production supporting goods and services that are not fully paid for by product producers, and are not reflected within the products price valuation.

For example, it's not unusual for governments and universities to boost local economies by providing producers with valuable research and development at lesser than market value or costs; government infrastructure that favors an important producer or industries; training and education tailored to serve a particular company or industry. These all increase their nation's GDP but if they are not reflected within the prices of exported products, exports full contributions to the nation's GDP are not attributed to the nation's global trade.

OK, national trade surpluses are understated, but doesn't that mean the importing nation's getting a bargain; they're getting more than they paid for? Well yes and no.

The exporting nation is the nation that earned the benefits of production. It is their nation that gains the knowledge and experience derived from using the tools and manipulating the materials of production. It is their universities that produced the research and development. It is their nation that built and improved the infrastructures that supported their producers and also serves others.

The reduced costs of imported products rather than domestic production costs are often at some costs to our government. To the extent laid-off workers previous incomes cannot be sustained, the enterprise's costs savings are often to some extent reflected by their government's reduced tax revenues and increase unemployment costs.
When a service enterprise is displaced, other enterprises are often established elsewhere in the nation. Production of goods very often do not require close proximity to the customer and are often outsourced to lower wage rate nations.

It's unusual for a commercial enterprise not to require some products or services of other enterprises. Production moved beyond our borders, are usually supported by foreign enterprises. Even if a production supporting enterprise have other customer and/or serves other industries, their lesser production or sales volumes may increase their per-unit costs to the extent that they too cannot continue functioning within the nation.

There are benefits and costs of production; there are far fewer benefits and significant costs for nations that do not produce.
GDP cannot report what may have been produced if we did not experience a trade deficit, (i.e. a negative net balance of trade). Surplusses always increase, and trade deficits always decrease their nation's GDP more than otherwise. The extent of global trades' actual effects upon their nation's GDPs almost always, (if not always) exceeds, and is never less than the extent of their nation's net global balance of trade.

Respectfully, Supposn

Last edited by Supposn; 09-23-2018 at 03:59 PM..
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Old 09-23-2018, 03:55 PM
 
Location: Kansas City, MISSOURI
6,936 posts, read 2,070,031 times
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Quote:
Originally Posted by Supposn View Post
There are benefits and costs of production; there are far fewer benefits and significant costs for nations that do not produce.
As I've said before ... if this were actually true, it would stand that every nation would want to produce more than they consume, and thus have trade surpluses. Which, of course, is impossible, since for every nation that has $1 in a trade surplus, another nation somewhere else must have $1 in a trade deficit. It can be no other way.
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Old 09-23-2018, 04:40 PM
 
1,215 posts, read 627,106 times
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Quote:
Originally Posted by James Bond 007 View Post
As I've said before ... if this were actually true, it would stand that every nation would want to produce more than they consume, and thus have trade surpluses. Which, of course, is impossible, since for every nation that has $1 in a trade surplus, another nation somewhere else must have $1 in a trade deficit. It can be no other way.
James Bond 007, yes it is actually true and yes, every nation prefers to produce more than they consume and yes, it's impossible for all of them to do so.

I don't doubt that almost all persons prefer to be among the wealthiest and to be able to run the mile within less than 4 minutes and retain all of their teeth for their entire lives. I doubt if all persons could ever do it all.
All nations on earth cannot consistently have global net annual trade surpluses, what's the point of your post?

I'm a proponent of USA adopting the unilateral trade policy described with Wikipedia's “Import Certificates” article. I mention that in anticipation of anyone who might inquire as to the point of my post.


Respectfully, Supposn
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Old Today, 05:01 AM
 
1,215 posts, read 627,106 times
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Quote:
Originally Posted by Supposn View Post
The costs and benefits of producing or importing:

The expenditure formula itself only reduces or increases GDP by the nation's net trade balance which is based upon the price value of globally traded products. But there's often additional production supporting goods and services that are not fully paid for by product producers, and are not reflected within the products price valuation. ...
... There are benefits and costs of production; there are far fewer benefits and significant costs for nations that do not produce.
GDP cannot report what may have been produced if we did not experience a trade deficit, (i.e. a negative net balance of trade). Surplusses always increase, and trade deficits always decrease their nation's GDP more than otherwise. The extent of global trades' actual effects upon their nation's GDPs almost always, (if not always) exceeds, and is never less than the extent of their nation's net global balance of trade. ...
Believing annual reduction of domestic production due to the nation's negative balance of international trade is not greater than the nation's annual trade deficit, is logically analogous to believing total loss of life and property due to a war does not include some collateral damage. It's conceivible but unlikely.

Just as lack of collateral damage is inconceivable within a major war, its inconceivable that the reduction of of a nation's domestic production due to the nation experiencing an annual negative balance of international trade would not exceed the nation's annual trade deficit amount itself.

Annual trade deficits always reduced their nation's GDP and drag upon their numbers of jobs.
Respectfully, Supposn
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Old Today, 09:16 AM
 
Location: Planet earth
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Supposn Milton Friedman would disagree with you. Please read his book, "Free To Choose" or watch his 10 part video series by the same title at:






https://www.youtube.com/watch?v=D3N2...64ACCE6C7E9D8E

Last edited by KS_Referee; Today at 10:41 AM..
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Old Today, 01:57 PM
 
1,215 posts, read 627,106 times
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Quote:
Originally Posted by KS_Referee View Post
Supposn Milton Friedman would disagree with you. Please read his book, "Free To Choose" or watch his 10 part video series by the same title at:

https://www.youtube.com/watch?v=D3N2...64ACCE6C7E9D8E
KS_Referee, Milton Friedman is a credible economist. Can you find a single quote where he explicitly states that annual trade deficits did not reduce their nation's GDP; can you find his stating that reducing a nation's GDP is not drag upon their numbers of jobs, or that lesser numbers of jobs are not detrimental to their nation's GDP?

I believe what you'll find is that many economists contend the USA's trade deficits (in their opinions), proportional to our entire GDP, are too small to have materially affected our GDP.

All credible economists such as Milton Friedman, do not disagree with the following:
Annual trade deficits indicate their nation has purchased more goods and services than it has produced.
Annual trade deficits, ( i.e. negative balances of international trade) reduced their nation's GDP.
Reducing nations' GDP drag upon their numbers of jobs.

They do contend that USA's annual trade deficits reduction of our GDP, (i.e. of little more than 4% of the resulting GDP) isn't statistically material to our economy.

I'm among those that agree with credible economist contending USA's great chronic trade deficits' “crowding” our own products out of our marketplaces, are substantially detrimental to our domestic production; it represents a substantial reduction of jobs and reduced payrolls.

Furthermore due to “collateral damage”, a nation's trade deficit understates the nation's net international trade balance's effects upon their domestic production.

[https://www.census.gov/foreign-trade/balance/c0004.html
USA's global 20017 global trade deficit was 795.6898 billion, (almost 0.8 trillion U.S. dollars)

https://fred.stlouisfed.org/series/GDPA
USA's 2017 GDP was 19.485 trillion U.S. dollars.

In 2017 USA purchased $20,280 billion U.S. Dollars final purchases, but we only produced $19,485 billion U.S. Dollars of final goods and services. We purchased more than we produced].
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