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Trade deficits are ALWAYS an immediate detriment to their nations’ GDPs.
Principle participants of mutual agreed transactions are motivated by what they perceive to their own best interests. They are generally more motivated by their immediate interests but in all cases of duration cases they are generally not incorrect.
Enterprise benefits due to outsourcing are often due to the enterprises’ comparative advantages. In the cases of national trade deficits, (particularly with regard to numbers of jobs and median wage), the enterprises and their nation’s comparative advantages diverged; they diverged to the extent that they are contrary to each other.
People are not a commodity that can or should be stocked on shelves until it is more profitable for our nation to better employ and compensate them for their labor. Each year for more than a half century our nation has experienced a trade deficit of goods. Each year for more than a half century USA’s GDP, numbers of jobs and median wage has been less than otherwise due to our trade deficit.
After products have reached their domestic producers’ shipping platforms or imported products have been unloaded on to a USA port of entry’s dock, there is no economic difference between similar products. Prior to those moments, the entire benefits of production are earned by the producing nation.
Trade deficit’s greatest detriment to our economy is due to the under-employment of its people. The prices of globally traded goods do not reflect the goods and service products that contributed to the production of those exported good but were provided to the goods’ producers at less than full costs.
[Exported goods’ prices do not fully reflect the infrastructure, research and development, and other producing supports that were provided by governments, universities and other non-profit entities at less than full costs. These and the knowledge and the experience gained by manipulating the tool, materials, and methods to produce those exported goods were all to the benefit of the producing nations. And of course the producing nation benefited from the increased participation of their work force, commercial and intellectual activity due to the additional production for exports. The economies of scale; (i.e. the decreased per unit costs due to mass production) are not insignificant benefits].
Nation’s entire production is reported within their gross domestic product but to the extent that production supporting goods and service products are not entirely reflected within prices of their globally traded goods, global trades’ affects upon their GDPs are understated. To that extent a nations’ trade surplus’s contributions or their trade deficits’ detriments to their nations’ GDPs, numbers of jobs or median wages are understated.
To the extent that we choose not to produce today, will we be less able to produce tomorrow?
Refer to the discussion of “Reduce the trade deficit; increase GDP & median wage” posted at 1:41AM, October 18, 2012.
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