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A trade deficit indicates the nation consumed more than it produced. Annual trade deficits are always net detrimental to their nation's GDP and thus to their numbers of jobs.
I'm among the proponents of the improved trade policy concept as described in Wikipedia's “Import Certificates” article. It is superior to free trade, tariffs, or any other trade policy we're aware of.
Exporters of USA goods may REQUEST, (they are not required) to have the value of their export shipments assessed and they agree to pay the federal fee rate based upon that assessed value. When their goods leave the USA, They're issued TRANSFERABLE Import Certificates with a face value equal to the assessed value of their export shipment.
Importers are REQUIRED to surrender certificates of sufficient face value to cover the assessed value of their import shipment. The surrendered certificates are then canceled.
Federal assessment guidelines and fees are updated annually. The fees by law are set to only to defray all federal direct expenditures due to this policy.
Regardless of the additional cost to USA purchasers of imports, (i.e. regardless of how small of a price increase), this policy will significantly reduce, (if not entirely eliminate) USA's chronic annual trade deficits of goods.
Increased prices of imports that are beyond the costs attributable to the federal fees, (i.e. costs attributable to markets' behaviors), serve as indirect but effective price subsidy of USA's exported goods.
Goods assessment values are reduced due to eliminating the approximate values of specifically listed scarce or precious mineral materials integral to the goods.
Refer to Wikipedia's article entitled “Import Certificates”.
Trade deficits
Nations’ annual global trade balance indicates the values of their net international trade, but additionally indicates the differences between their purchases and their production. A trade surplus trade balance nation has purchased lesser, and a trade deficit nation has purchased greater net values of products than their nations’ have produced.
Participating individuals expect to gain from their international transactions, and their expectations are generally correct. It is usual for us to believe what’s in our own best interests, is also in our nation’s best interests; (as George Gershwin wrote, “it ain’t necessarily so”).
USA has experienced chronic annual international trade deficits of goods in excess of the past half century. Unless a nation has full employment, annual trade deficits are generally net detrimental to their nation’s economies. They’re particularly detrimental to their nations’ total numbers of jobs and payroll amounts.
No nation has ever economically benefitted from their annual trade deficits, but they did rather reduce their GDP more than otherwise.
Having a trade deficit does notmake an economy grow more slowly.
It is true that when a country's Gross Domestic Product (GDP) is calculated, a trade deficit counts as a negative. But this is a matter of accounting!
The (faulty) idea of a “trade deficit drag” comes from this accounting identity – if the difference between exports and imports is large, then a larger number is subtracted from what households, firms and the government consume and the resulting GDP number must be smaller as well.
But this does not mean that a trade deficit causes GDP to be smaller. The flaw in this logic is that both the trade deficit and GDP are outcomes of other, underlying factors. For this reason, there is no simple, straightforward link between the size of the trade deficit and the level of overall economic activity as measured by GDP.
As we've seen over the past two decades, we have seen the opposite of a "trade deficit drag": larger trade deficits have occurred when the economy has been growing more rapidly, and smaller trade deficits when the economy was performing poorly.
The US ran trade surpluses throughout the 1930's.....
i agree , there is no basis for this constant re posting of the same opinion which i disagree with .. a trade deficit means the world has more to offer us . end of story
Having a trade deficit does notmake an economy grow more slowly.
It is true that when a country's Gross Domestic Product (GDP) is calculated, a trade deficit counts as a negative. But this is a matter of accounting!
The (faulty) idea of a “trade deficit drag” comes from this accounting identity – if the difference between exports and imports is large, then a larger number is subtracted from what households, firms and the government consume and the resulting GDP number must be smaller as well.
But this does not mean that a trade deficit causes GDP to be smaller. The flaw in this logic is that both the trade deficit and GDP are outcomes of other, underlying factors. For this reason, there is no simple, straightforward link between the size of the trade deficit and the level of overall economic activity as measured by GDP.
As we've seen over the past two decades, we have seen the opposite of a "trade deficit drag": larger trade deficits have occurred when the economy has been growing more rapidly, and smaller trade deficits when the economy was performing poorly.
The US ran trade surpluses throughout the 1930's.....
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. Do you disagree with any of that thus far?
Annual trade deficits indicate their nation has imported a greater value of products than it has exported. They also indicate that their nation’s purchasers of products have purchased a greater value of products than it has produced within that year.
Wealthy people can well afford to use hundred-dollar bills for lighting their cigars; but it’s not a financially prudent practice.
The United States can afford to continue purchasing producing less and purchasing s greater values greater proportions of the products we consume, but the practice is net detrimental to the numbers of our jobs and amounts of our payrolls.
Regardless of whatever was the net value of our nation’s annual spending for products, our chronic annual trade deficits indicate we purchased greater values of products than we produced.
i agree , there is no basis for this constant re posting of the same opinion which i disagree with .. a trade deficit means the world has more to offer us . end of story
Mathjak, regardless of whatever was the net value of our nation’s annual spending for products, our chronic annual trade deficits indicate we purchased greater values of products than we produced. Had we been able to reduce USA’s trade deficits within our prior half century, our annual GDPs, numbers of jobs and amounts of payrolls would have all been greater during those years.
i only buy foreign products for one reason . they represent the best value to me for my hard earned dollars ...
this world is a global economy and each country excels at doing something better and more efficiently then other places ... back in the old days the world had little to offer us . we made everything here . but today world class products are offered to us from all over the world .
of course we consume more from outside this country .
Another thing about the trade deficit is it reflects goods, meaning stuff you can touch. The US is rich in intellectual currency that you can’t touch. As a “rich” country we will always have more money to spend on goods especially those produced more cheaply and perhaps efficiently somewhere else. Trade deficits in this case are a sign of success.
This thread argues annual trade deficits are always net detrimental to their nation's economy. It's futile to discuss remedies with those that do not consider the possibility of the illness’s existence.
Respectfully, Supposn
Quote:
Originally Posted by Supposn
Transferable Import Certificates:
I’m a proponent of a trade policy based upon transferable Import Certificates, (ICs). (Refer to Wikipedia’s ”Import Certificates” article; refer to https://en.wikipedia.org/wiki/Import_certificates .
IC policy is recommended for any nation that would otherwise experience great chronic annual trade deficits of goods. For such a nation It would be superior to a pure free trade or a tariff policy.
Many objections to tariffs are entirely or substantially less applicable to IC policy. Proponents of pure free trade usually disregard the differences between the two policies, rather than deal with the inconvenience of dealing with the differences between free trade and IC policy. This thread is for proponents of free trade willing to argue their case against IC policy. ...
It's futile to discuss remedies with those that do not consider the possibility of the illness’s existence.
I think you might be confusing "do not consider" with your inability convince anyone of your viewpoint, and by extension the possibility that you're just plain wrong.
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