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Income Certificates would just lead to goods become more expensive in the US, as other countries can produce these goods more cheaply and supply would be curtailed according to the ability to buy certificates. Whilst commodities used in manufacturing processes should also be imported in order to make goods cheaper and more affordable, in order to make your own industry that can utilise such commodities more competitive. Free trade is always preferable to regulation, and it should be noted that the least regulated post-war economy in Europe was Germany.
Brave New World, Germany is among the many nations with educational and training systems apparently superior to the USA which certainly contributes to their nation's global trade surplus. But in comparison to the United States, Germany and all other industrial nations are more regulated than us.
Germany's labor organizations have chairs at the table and fully participate in the development of government policies. They have a working national health insurance system. Years ago I read of their government supported solar panels on their buildings because in addition to Europe's high priced fuel, Germany appreciated the reduced cost of power transmission, when the power source is local.
What do you think Germany's doing wrong?
Quote:
Originally Posted by Supposn
Brave New World, ... Manufacturing being of lesser economic consequences or some products are of lower-value than other USA goods or service products should not be primarily, (if at all) government determining. Import Certificate policy does not tolerate its nation's experiencing chronic annual trade deficits of goods. Beyond that, all else is for the markets to determine.
“If a foreign country can supply us with a commodity cheaper than we ourselves can make it, better buy it of them with some part of the produce of our own industry employed in a way in which we have some advantage.”—Adam Smith - The Wealth of Nations.
Brave new world, Adam Smith wrote in a simpler time, when national governments could less directly and effectively govern their subjects, and all but he highest nobility had extremely little effects upon their governments.
We all benefits from cheaper imported goods, but they do not fully compensate for annual trade deficits reduction of their nation's GDP and the consequential drag on numbers of jobs and amounts of our aggregate payrolls.
Families dependent upon wages, and/or dependent upon enterprises more rather than less dependent upon the purchasing power of the median wage, are more detrimentally affected by their nation's trade deficits.
And when the next recession hits, I’m sure he won’t take credit for that either. How convenient.
Why should he or any other President "take credit" for it?
No doubt, you're totally unaware that the Business Cycle is an endless series of expansions and contractions.
There are several causes of recession, but the stock market isn't one of them.
In the modern era, the following have caused two or more recessions: structural unemployment, capital reallocation, liquidity issues and Federal Reserve policies.
The next recession is likely to be caused by Federal Reserve policies.
There are three ways to effectively combat Monetary Inflation: government can raise taxes or reduce spending (or both) or the central bank (our Federal Reserve) can raise interest rates.
The US has only experienced two periods of Monetary Inflation and in neither case did the government raise taxes or reduce spending. In fact, in the last period of Monetary Inflation government lowered taxes, although it did raise the Capital Gains tax rate from 50% to 60% in 1978, that doesn't affect businesses or workers.
Unfortunately, neither the government nor the Federal Reserve make any attempt to distinguish between Monetary Inflation, Cost-push Inflation, Demand-pull Inflation or Wage Inflation. The Federal Reserve and all government agencies report only the aggregated inflation rate.
Why is that important?
Because while raising interest rates is extremely effective against Monetary Inflation, it has zero effect on Demand-pull Inflation, Cost-push Inflation or Wage Inflation.
When the Korean War started, Americans panicked, not because of the war, but because rationing had just ended 4 years earlier (but sugar was rationed through 1947). Businesses and households started buying and hoarding everything they could, because they feared the government would start rationing again.
What happens when Demand increases while Supply remains constant? Prices rise, but only for those items in demand.
Next thing you know, the "Inflation" rate is 10.9% and rising.
The government doesn't implement rationing, but it does divert certain products for military use, and that reduces Supply even further, causing prices to rise even higher.
The Federal Reserve starts raising interest rates, but "Inflation" keeps increasing, so the Federal Reserve continues to increase interest rates and the next thing you know, the high interest rates put the breaks on the economy, and you have the 1952-1953 Recession, courtesy of the Federal Reserve.
About 30 years later, the Federal Reserve would make the same mistake again and cause another recession.
Yes, there really was mild Monetary Inflation, but over half of the "Inflation" was Demand-pull Inflation. Interest rates of 5%-6% were warranted, but not 9.5%, except when it was 11% and 13%, was totally unwarranted, and once again, the Federal Reserve's mistake put the brakes on the economy.
The Federal Reserve is making the same mistake yet again.
The "inflation" now is almost entirely Demand-pull Inflation, and higher interest rates will not stop it, but it will stop the economy.
It's already raised rates twice, with two more planned rate hikes, and then planned rate hikes for 2019.
In 1952 as now, only 3% of US businesses are publicly-traded corporations. In 1952, 97% of businesses were private corporations, which cannot sell stocks or bonds, or various forms of partnerships (remember LLPs don't exist until the State of Texas creates them in 1991 and while the State of Wyoming had created LLCs in 1977, other States didn't catch on and allow them until only recently).
Where do private corporations and partnerships get their money? From the owners, and where do the owners get money?
They borrow it from banks. Yes, they might use their own money for start-up, but for continued operation and expansion they rely on banks.
The net profit margin for grocery is about 1.2% and about 2.3% for retail. Wal-Mart's is 2.1%, but then they do both grocery and retail. Manufacturing has a median net profit margin of about 6%. Some sectors of the economy, in particular professional services, have much higher net profit margins, 20% and higher.
Increasing the cost of borrowing eats away the profit margins for a lot of companies, especially non-corporate companies that don't have deep-pockets, and that's what puts the brakes on the economy.
The current economic expansion eclipsed the second longest expansion in US history in June, and now stands at 109 months.
The longest economic expansion in US history was 120 months.
If the economy continues to expand for another 12 months, you'll set a new record.
Whether or not the economy can do that depends on the Federal Reserve, not tariffs or trade deficits.
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Quote:
Originally Posted by Supposn
Brave New World, Germany is among the many nations with educational and training systems apparently superior to the USA which certainly contributes to their nation's global trade surplus. But in comparison to the United States, Germany and all other industrial nations are more regulated than us.
Germany's labor organizations have chairs at the table and fully participate in the development of government policies. They have a working national health insurance system. Years ago I read of their government supported solar panels on their buildings because in addition to Europe's high priced fuel, Germany appreciated the reduced cost of power transmission, when the power source is local.
What do you think Germany's doing wrong?
Germany.
Quote:
Originally Posted by BBC
Imagine a country whose inhabitants work fewer hours than almost any others, whose workforce is not particularly productive and whose children spend less time at school than most of its neighbours.
Hardly a recipe for economic success, you might think. But the country described above is none other than Germany, Europe's industrial powerhouse and the world's second largest exporter.
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Quote:
Originally Posted by Supposn
Brave new world, Adam Smith wrote in a simpler time, when national governments could less directly and effectively govern their subjects, and all but he highest nobility had extremely little effects upon their governments.
We all benefits from cheaper imported goods, but they do not fully compensate for annual trade deficits reduction of their nation's GDP and the consequential drag on numbers of jobs and amounts of our aggregate payrolls.
Families dependent upon wages, and/or dependent upon enterprises more rather than less dependent upon the purchasing power of the median wage, are more detrimentally affected by their nation's trade deficits.
Adam Smiths work is still as relevant today as when it was written and is still one of the most cited works in terms of economic theory.
Trade makes no difference to manufacturing jobs it merely dictates and changes what jobs are done.
For instance the Steel and Aluminium tariffs in the US will see the end of cheap imports, in favour of more expensive US made Steel and Aluminium this will hit profit margins further down the chain and companies such as say Coca Cola may shift more production from cans to plastic bottles, and this could be replicated in other sectorts thereby shifting production away from cans to plastics.
As for import certificates they would limit imports in to the US, thereby denying cheap and plentiful produce and there would have to be decisions based on what to import.
For instance the Chinese might decide top use all their import certificates to export electronics to the US but in the process they might decide to stop importing cheap clothing and other goods and other countries might do the same. The US unable to produce such goods at the same price would thereby have to massively increase the cost of clothes and other goods, as they can't produce such goods as cheaply and the price of these goods in the shops therefore increases substantially hitting the US Consumer in the pocket and causing inflation and wage increase demands.
It also should be noted that when an economy does well demand for imports increases whether it be luxury European goods or cheap clothing, and if that demand can not be met then it will ultimately cause higher prices, whilst demand in other countries with poorer economies may not be as great in terms of US exports. You therefore restrict what poorer countries can export to the US as they can't afford to consume as much and will have less access to import certificates, thereby helping to sustain global poverty.
Ultimately the US would not be able to make a lot of imported goods anywhere near as cheaply as the poorer gobal economies with the least spending power, and it would be these countries that an import certificate would effect most.
Ultimately if countries suffer recession and US imports fall as a result then they would have less import certificates to the US which would only cause further recession and this could cause a cycle of fewer imports and thus less import certificates and less goods being supplied to the US.
However as Tim Worstall rightly points out we currently don't actually have to worry about the trade deficit, not at current levels, because the US creates wealth faster than it's selling it to finance the deficit and the dollar is already a world currency.
Last edited by Brave New World; 09-09-2018 at 04:12 AM..
Brave New World, Germany is among the many nations with educational and training systems apparently superior to the USA which certainly contributes to their nation's global trade surplus. But in comparison to the United States, Germany and all other industrial nations are more regulated than us.
Germany's labor organizations have chairs at the table and fully participate in the development of government policies. They have a working national health insurance system. Years ago I read of their government supported solar panels on their buildings because in addition to Europe's high priced fuel, Germany appreciated the reduced cost of power transmission, when the power source is local.
What do you think Germany's doing wrong?
Quote:
Originally Posted by Brave New World
Germany.
Although Germany has adopted some of the populist practices that I also advocate, you contend I'm on the wrong side of economic conceptions?
[Germany is not a trade deficit nation and is not a candidate for adopting an Import Certificate policy which is only recommended for nations that would otherwise be expected to experience chronic annual trade deficits of goods].
Germany's basic economic policies conflict with those within USA's right wing side of our political spectrum; (which I suppose you're part of)? I again inquire, what do you think Germany's doing wrong?
Brave New World, yes I have read the Forbes article you linked to, and to the writing of Jared Bernstein mentioned by The Forbes article's author, Mr. Worstall. I specifically responded to the article in posts numbers 117, 118, and 120.
You've suggest I again read “wealth of Nations” and more regarding free trade. When I first discovered and appreciated their wisdom, possibly you had not yet been born. We're very much in agreement upon those valid concepts. But in practice, those concepts often come in conflict with other, no less valid concepts.
[I particularly find discussing almost anything with libertarians. When we begin, I'm nodding in complete agreement with their writings and speech; but as they continue, I stop nodding and begin shaking my head in protest. They expand upon their concepts to the point that I cannot differentiate between libertarians and anarchists].
You're from Great Britain? You're in agreement with many USA citizens that did not live through the depression following the 1929 crash, and have not learned or fully appreciate our legacy from that depression. I wasn't then yet born, but I very much appreciated what was personally passed to me by those that experienced it, or by what I've read of it.
I'd be surprised if someone from great Britain did not appreciate their nations' policy, (which I suppose is still their current policy) of “export or die”.
USA, a portion of North America is not a comparatively small island, but similarly, isolationism is not a political or economic policy that should be recommended for our own best interests. Global trade is beneficial to us, but there can be too much of a good thing.
I'm among those that recognize chronic annual trade deficits cannot be net beneficial to their nation's economy. I'm also among the comparatively very few that are aware of the improved Import Certificate policy described within Wikipedia, and have some understanding of it.
I'm among those that consider the concept as superior to tariffs or pure free trade.
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Quote:
Originally Posted by Supposn
Brave New World, yes I have read the Forbes article you linked to, and to the writing of Jared Bernstein mentioned by The Forbes article's author, Mr. Worstall. I specifically responded to the article in posts numbers 117, 118, and 120.
You've suggest I again read “wealth of Nations” and more regarding free trade. When I first discovered and appreciated their wisdom, possibly you had not yet been born. We're very much in agreement upon those valid concepts. But in practice, those concepts often come in conflict with other, no less valid concepts.
[I particularly find discussing almost anything with libertarians. When we begin, I'm nodding in complete agreement with their writings and speech; but as they continue, I stop nodding and begin shaking my head in protest. They expand upon their concepts to the point that I cannot differentiate between libertarians and anarchists].
You're from Great Britain? You're in agreement with many USA citizens that did not live through the depression following the 1929 crash, and have not learned or fully appreciate our legacy from that depression. I wasn't then yet born, but I very much appreciated what was personally passed to me by those that experienced it, or by what I've read of it.
I'd be surprised if someone from great Britain did not appreciate their nations' policy, (which I suppose is still their current policy) of “export or die”.
USA, a portion of North America is not a comparatively small island, but similarly, isolationism is not a political or economic policy that should be recommended for our own best interests. Global trade is beneficial to us, but there can be too much of a good thing.
I'm among those that recognize chronic annual trade deficits cannot be net beneficial to their nation's economy. I'm also among the comparatively very few that are aware of the improved Import Certificate policy described within Wikipedia, and have some understanding of it.
I'm among those that consider the concept as superior to tariffs or pure free trade.
Yes I am from Britain, a country that has traded freely for centuries and which is currently seeking more free trade.
As for the Great Depression it was caused by an economic downturn, the kind of downturn which occurs when exports are hindered.
Government interference in trade will only lead other countries to trade less wth the US and will not do the US or global economy any good.
So you're happy with the status quo where Americans get screwed. Interesting.
Now it appears that the trump tariffs are only making American consumers pay a hidden tax on all the stuff they buy from China. So....yes, the average Americans are getting screwed even more under trump. They pay a higher cost to all the goods they need, and they have to fund a huge tax cut to the small number of rich folks among them. And they have to deal with a lunatic in office who has debased American election process.....so yeah, the Americans are getting screwed bigly. Morons are gutting America...
Yes I am from Britain, a country that has traded freely for centuries and which is currently seeking more free trade.
As for the Great Depression it was caused by an economic downturn, the kind of downturn which occurs when exports are hindered.
Government interference in trade will only lead other countries to trade less with the US and will not do the US or global economy any good.
Brave New World, I believe the consequences of USA adopting the Import Certificate policy would be the opposite of what you contend. I'm opposed to both tariffs and to pure free trade policy.
Regardless of yours and many other opinions supported by logically conflicting arguments, I doubt if anyone knows what actually caused that world depression that was marked by the 1929 USA stock market crash. You're aware that both the USA and Great Brittan were major participants of global trade when the crash occurred.
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