Can US companies compete in a trade war? (corporation, jobs, profit)

[lukas1973]

Originally Posted by Pub-911

The US has about one-tenth the number of manufacturing workers as China, yet the value of their manufacturing outputs is only slightly larger than ours. And that's assuming you believe the numbers they report. For years they refused to break out their total for "Mining & Manufacturing", so it's not like they have some great record for honesty in reporting. Indeed, transparency is one of the problems that relegates them to status as a second-class economy.

It's basically impossible to compare the output of manufacturing between different countries. To do so you need to compare the value of the produced products. But the price levels in different countries is completely different and it's technically impossible to find a valid scale to compare all these products. It would get even more absurd when you try to adjust the produced stuff for quality. It's even impossible to compare the manufacturing output between two very similar countries.

[lukas1973]

Originally Posted by rruff

Very true. The US is very efficient and cheap for a developed country. The idea that we need to get poorer and dirty in order to compete with the undeveloped world, is beyond absurd.

Not true. Domestically made products in the U.S. are very expensive, even when adjusted for the incomes. The reason for this: The degree of automation in the U.S. is quite low compared to most other developed countries. Employees in manufacturing are not very well skilled in the U.S. It's not uncommon in the U.S. that for example a plastic manufacturer uses the production facility of a former textile manufacturer. Absurd to think that this will lead to an efficient production. Of course many manufacturer in the U.S. are world-class, but on the other side many manufacturing sectors in the U.S. are hopefully outdated. Most modern production machinery has to be imported, that alone is a big disadvantage for U.S. manufacturing. It's so eye-opening to see how kitchen cabinets are made in the U.S. compared to how they are made in Italy or Germany.

A big advantage of the U.S. is that the overvalued USD leads to a very favorable relation of incomes to the prices of imported goods. With the exception of maybe Switzerland and Norway no other people can afford to buy more imported goods than Americans. If Trump would introduce import duties, the living standard of the average American would drop significantly.

[rruff]

Originally Posted by lukas1973

The degree of automation in the U.S. is quite low compared to most other developed countries.

You can look these things up.


https://goldstocksforex.com/2012/12/...be-misleading/

[Pub-911]

Originally Posted by lukas1973

It's basically impossible to compare the output of manufacturing between different countries.

Yet such comparisons are done all the time and taken seriously by the best economic minds. Is there an explanation for that?

[lukas1973]

Originally Posted by rruff

You can look these things up.


https://goldstocksforex.com/2012/12/...be-misleading/

All these PPP adjustments are quite nonsense, because they are from a logical standpoint impossible. You should learn how these PPP adjustments work.
First you need a basket of goods that is valid for all countries around the world. But such a basket doesn't exist. The Chinese eat a lot more rice than Americans. The Dutch buy a lot more bikes than Americans. Italy use a lot more concrete than the U.S. and so forth.
How do you want to judge the quality of certain products? How much better are German windows (in percentage terms) than American windows? How much better are American health care services than French ones? How much better is a haircut in the U.S. than a haircut in China? How much better are French houses compared to Russian houses? It's completely absurd to think it would be possible to judge all the quality differences around the world.
Let's say it would be possible to find a basket of goods that is valid for all countries around the world, and let assume that the quality is equal all around the world. Then we have still to survey the prices of all the goods of our basket. That sounds quite easy but it's very complicated. It even doesn't work within Europe. Eurostat the European statistic agency isn't able to ascertain the prices for basic products in the European Union. When it's even impossible in the EU, how should that work in so different countries like China, the U.S. and Venezuela?
How much bigger are houses in the U.S. compared to other countries? There are statistics about that, but all these statistics fail because every country uses different methods to measure the living space.
Even the most genius experts will never be able to determine the quality of the health care sector. Health care expenditures per capita are in the U.S. about 2.5 times higher than in most other rich countries. But how much better is health care in the U.S.? No one knows. It's really astonishing that the U.S. needs 17-18% of their GDP for health care compared to about 11% in other rich countries.

Something that is easily noticeable between the U.S. and for example Germany is, that most industries in the U.S. tend to be overstaffed. Whether it's the health care sector, grocery stores, amusement parks, DIY stores, schools, colleges or factories. It's kinda absurd to think that overstaffed industries will lead to a high productivity per worked hour. Why has for example the average Home Depot store almost twice as many employees than a DIY store in Germany? And the average Home Depot store is even smaller than a DIY store in Germany. Obviously that this overstaffing is one reason why Home Depot is so expensive. It's pretty unproductive.
The U.S. still has low productivity jobs that are practically almost unknown in most other rich countries. Also stores that are open 24/7 will of course have a lower productivity per worked hour. And security personnel for schools doesn't contribute to knowledge transfer.

Such GDP or other USD amount figures seem so clear, so convenient. But it's just shallow to use those figures without knowing how they are calculated and knowing that the whole concept is illogical.

This forum is full of threads where people from the U.S. are complaining that it's so difficult to make ends meet even with quite high incomes. With incomes that would mean a quite high living standard in most other rich countries. The living costs in the U.S. are much higher than those PPP figures sugest. Middle class families that are unable to save enough money, so their kids can attend college without accumulating student loans? How ridiculous.

[lukas1973]

Originally Posted by Pub-911

Yet such comparisons are done all the time and taken seriously by the best economic minds. Is there an explanation for that?

It's almost solely an American thing to make such comparisons and to rank countries. It's possible to rank countries according to their land area and it's maybe possible to rank countries according to their population (but that's already quite difficult). Basically all other rankings are quite absurd.
No serious economist would use GDP or PPP figures, at least they know about the faultiness of such figures. Most of the time that is used in economics at university for the GDP concept is used to show the deficiencies of this concept.
No serious economist would address the general public. The matter is way too complex that it would be possible to explain it to the general public.
Just look at GDP growth figures. You can find those figures almost everywhere and people think that it's possible to compare those figures between different countries. But the vast majority don't know how such figures are calculated. Almost no one mention for example that the U.S. uses for calculating the GDP deflator much more hedonic price indexes than eg European countries. That reduces the GDP deflator and makes figures for "real" GDP growth bigger. But all "economists" that address the general public uses such figures, they even doesn't seem to know about these hedonic price indexes.
In the U.S. it's quite common to use certain measurements to make things appear bigger. For example the U.S. uses for retail stores the gross floor area of the store building, whereas other countries just measure the size of the net selling space. The same for the living space of houses. Those figures are constantly used but almost no one seems to realize that different countries use different methods to measure certain things. This shallowness is shocking.
At the moment there is this discussion about the U.S. trade deficit with Germany. Here are some figures about that topic:

Figures for 2015 in million USD:

According to U.S. trade statistics:
U.S. exports to Germany: 49,970.0
U.S. imports from Germany: 124,820.5
Trade deficit: 74,849.7

According to German trade statistics:
U.S. exports to Germany: 66,743.4
U.S. imports from Germany: 126,075.1
Trade deficit: 59,331.8

The figures for the U.S. exports to Germany are quite different. Where does this difference come from? I bet that all these stupid "economists" that address the general public are unable to explain the difference. All these twaddler are way too shallow and not interested into details.

Maybe they should look at the figures for the trade between the U.S. and the Netherlands:

U.S. exports to the Netherlands: 40,196.2
U.S. imports from the Netherlands: 16,835.6
Trade surplus: 23,360.5

The U.S. has a huge trade surplus with the Netherlands. These stupid "economists" will explain this trade surplus with the Dutch love American goods. Most likely that they still don't understand.

Most of what politicians, journalists or "economists" say about economy subjects on the media is just shallow nonsense.

When the U.S. doesn't stop to take these GDP figures seriously, they will never comprehend the true reasons for their problems in manufacturing. For Trump and his buddies most problems of the U.S. seem to be caused by other countries

[ContrarianEcon]

We are the biggest importer in the world. Stop trade and we win.

[lukas1973]

Originally Posted by ContrarianEcon

We are the biggest importer in the world. Stop trade and we win.

That's one of the most silliest things I have ever read on CD.

[Hoonose]

Originally Posted by lukas1973

That's one of the most silliest things I have ever read on CD.

It is a hyperbole of a tariff. The 'we' is the preferenced production or service segment within our borders.

[Pub-911]

Originally Posted by lukas1973

The figures for the U.S. exports to Germany are quite different. Where does this difference come from? I bet that all these stupid "economists" that address the general public are unable to explain the difference. All these twaddler are way too shallow and not interested into details.

Read the respective methodologies. Differences arise from the simple nature of the beast. The US NIPA accounts include an item for "Errors and Omissions" because estimating even a mere national economy by measuring it on both an income and an expenditure basis will always produce differences. The situation between countries is of course much more complex. And as many may not realize, the US and its major trade partners engage regularly in "reconciliation" exercises in which the differences in their national presentations are identified and investigated.

Disparagement and disregard for those so much better qualified than Joe Blow to take on and grapple with such matters is what actually qualifies as twaddle.