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… But getting back on topic, the idea being put forward in this thread is that tariffs help American because trade deficits are bad. ...
SkyDog77 & Pittsflyer, the idea being put forward in this thread is NOT tariffs. Refer to post #1 and #9 of this thread.
I’m among the proponents for USA adopting the improved policy described within Wikipedia’s “Import Certificates” article,
Refer to https://en.wikipedia.org/wiki/Import certificates .
Import Certificates essentially differ from a tariff policy. Within this thread, I try not to argue the superiority an Import Certificate policy. There’s no point in discussing remedies among those that doubt the diagnoses of an illness.
The title of this thread is “A trade deficit indicates the nation consumed more than it produced”.
SkyDog77, you continue referring to finances. I doubt if any individual item of our federal budget should be essentially considered as a “trade deficit” item. USA’ chronic annual trade deficits detrimental impact upon our economy and society is the lesser than otherwise USA numbers of jobs and wages that are due to our trade deficit.
You do not actually run a trade deficit with your barber. Should your time in the barber’s chair reduced your income or prevented you from attending to your job, we might then consider that as somewhat analogous to a trade deficit’s effect upon our economy.
USA’ chronic annual trade deficits detrimental impact upon our economy and society is the lesser than otherwise USA numbers of jobs and wages that are due to our trade deficit.
No, it doesn't and continually repeating something that is false doesn't make it true (although Herr Göbbels would be proud of you).
You still haven't provided a single shred of evidence to support your pedantic musings.
No, it doesn't and continually repeating something that is false doesn't make it true (although Herr Göbbels would be proud of you).
You still haven't provided a single shred of evidence to support your pedantic musings.
Quote:
Originally Posted by Supposn
Astral_Weeks, the conventional formula for calculating gross domestic product, (aka the GDP expenditure formula) increases or reduces the nation’s net spending for products, by the net value of the nation’s international trade. The nations’ balances of international trade increased the GDP of trade surplus and reduced the GDP of trade deficit nations. …
[Excerpted from https://courses.lumenlearning.com/bo...d-nominal-gdp/
The following equation is used to calculate the GDP: GDP = C + I + G + (X – M) or GDP = private consumption + gross investment + government investment + government spending + (exports – imports).]
////////////////////////////////////////////////////
Mircea, you’ll provide a link to what you consider to be a more credible source that refutes this? you’ll provide a link to what you consider to be a more credible cite that contends lesser numbers of jobs and payroll amounts are not likely to accompany a nation’s lesser GDP? Respectfully, Supposn
SkyDog77, you continue referring to finances. I doubt if any individual item of our federal budget should be essentially considered as a “trade deficit” item. USA’ chronic annual trade deficits detrimental impact upon our economy and society is the lesser than otherwise USA numbers of jobs and wages that are due to our trade deficit.
You do not actually run a trade deficit with your barber. Should your time in the barber’s chair reduced your income or prevented you from attending to your job, we might then consider that as somewhat analogous to a trade deficit’s effect upon our economy.
Respectfully, Supposn
I spent some time reading about this concept you posted. You can't tell me that you are against tariffs. This is a tariff. It makes it more expensive to purchase goods from outside the country. The wikipedia page even calls it a form of tariff. Either you don't understand tariffs or you're being dishonest.
The vast majority of macro-economists do not believe that trade deficits are detrimental to GDP.
Yes, GDP=Consumption + Investment + Government Spending + Net Exports (Y=C+I+G+NE), but when you implement a tariff - and make no mistake what you are proposing is a tariff - you do not boost output. Several things happen when you implement a tariff:
Trading partners impose reciprocal tariffs - Net exports end up being harmed proportionally to the reduction in net imports so the Investment/Savings (IS) Curve may not shift to the right
The disruption created makes your economy less efficient and can shrink long run aggregate supply (Y)
The uncertainty created reduces the amount of capital firms are willing to invest (happening right now.) IS curve shifts left.
Also very important to note that in an open economy, if we implement a unilateral tariff (no reciprocal tariffs) and our IS curve does shift to the right as you hope it does, our interest rates will also go up compared to our trading partners. When this happens, the value of US currency compared to theirs also goes up. That, in turn, makes it cheaper for us to buy their stuff and more expensive for them to buy ours, thus offsetting the goal of the tariff. IS curve shifts back to the left.
The last model I looked at showed that the implementation of a tariff shrunk consumption, investment, exports, and imports. The trade imbalance shifted fractionally, and Real GDP also shrunk fractionally.
I actually do run a trade deficit with my barber. I pay her for something and she does not pay me for anything. I run a surplus with my tenants. They pay me rent, I don't pay them anything.
Your premise that if we were not buying from China, we would automatically boost GDP in that amount is countered by the data. I know this is a tough concept to wrap your head around, but it is not like that money magically appears here without cost. We are part of a global economy. You can't pull one lever without it affecting others.
many economists have spoken about the correlation between growth and trade deficits, but many have said faster economic growth can lead to even higher trade deficits, as a growing U.S. economy tends to demand more purchasing from abroad.
we had a huge trade surplus during the Great Depression.
two of the years with a relatively small trade deficit -- 2001 and 2009 -- were two of the three weakest years for GDP growth during that time span.
so i don't buy in to this theory
This is a great addition to what I posted above. A strengthening economy in the US compared to our trade partners would raise comparative real interest rates in the US and increase our purchasing power abroad. This would lead to an even greater trade imbalance as a result of a growing GDP.
The IS/LM Model shows this very clearly.
If you want to get rid of the trade imbalance, tank the economy and devalue the dollar.
I spent some time reading about this concept you posted. You can't tell me that you are against tariffs. This is a tariff. It makes it more expensive to purchase goods from outside the country. The wikipedia page even calls it a form of tariff. Either you don't understand tariffs or you're being dishonest. ...
SkyDog77: the title of this thread is “A trade deficit indicates the nation consumed more than it produced”. I will not quibble if you consider Import Certificates as a species of tariff policy.
Import Certificate policy has some attributes similar to tariffs and free trade policies, but in differences of manner and extents. It also has some unique attributes and if the policy would be enacted, its consequences would differ from those of tariffs or free trade.
There’s no point to discussing Import Certificate policy within this thread where some are arguing USA’s chronic annual trade deficits have not been or will be net detrimental to our economy. Respectfully, Supposn
Regarding Import Certificate policy:
Quote:
Originally Posted by Supposn
Comparisons between tariffs and the improved Import Certificate policy as described by Wikipedia.
Refer to https://en.wikipedia.org/wiki/Import_certificates .
… For a nation that otherwise expects annual trade deficits of goods, Import Certificate policy is superior to pure free trade or to tariff policy. …
…Your premise that if we were not buying from China, we would automatically boost GDP in that amount is countered by the data. ...
SkyDog77, your assumption of what you believe is my premise, Is not quite correct.
Whenever USA experienced an annual trade deficit, had we imported less, we could have had the same GDP with lesser spending and greater savings, or had a greater GDP if we purchased less imports and more domestic products.
I am not an isolationist or opposed to global trade. Respectfully, Supposn
why are these discussions even taking place when obviously you made your mind up and no matter how logical the argument is you blow it off ... i am not sure why anyone is even wasting time replying here .
SkyDog77: the title of this thread is “A trade deficit indicates the nation consumed more than it produced”. I will not quibble if you consider Import Certificates as a species of tariff policy.
Import Certificate policy has some attributes similar to tariffs and free trade policies, but in differences of manner and extents. It also has some unique attributes and if the policy would be enacted, its consequences would differ from those of tariffs or free trade.
There’s no point to discussing Import Certificate policy within this thread where some are arguing USA’s chronic annual trade deficits have not been or will be net detrimental to our economy. Respectfully, Supposn
Regarding Import Certificate policy:
Quote:
Originally Posted by Supposn
SkyDog77, your assumption of what you believe is my premise, Is not quite correct.
Whenever USA experienced an annual trade deficit, had we imported less, we could have had the same GDP with lesser spending and greater savings, or had a greater GDP if we purchased less imports and more domestic products.
I am not an isolationist or opposed to global trade. Respectfully, Supposn
My suggestion to you is to take a class in macroeconomics. Your understanding of the topic is deeply flawed and seems to be based on a few selected readings on a single topic. I’ve attempted to give you a high level explanation of why a tariff is not a good idea, but you seem to be ignoring it.
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