Credible economists do not refute annual trade deficits detrimental affects upon their nation's GDP. (wages, statistics)

[Supposn]

Originally Posted by Astral_Weeks

GDP = C + I + G + (X-M)

A trade deficit is just a bookkeeping entry, not a debt that has to be paid. Countries don’t engage in trade, people do. Americans are no more harmed by the trade deficit with Germany than when they have a "trade deficit" with the local grocery store. ...

Astral_Weeks, as you posted, “Countries don’t engage in trade, people do”. those individual persons and their various enterprises' that do mutually enter into global trade transactions expect and generally do benefit from their transactions.

Due to annual trade deficits, their individual nations' GDPs, numbers of jobs, and aggregate payrolls were less than otherwise. A trade deficit indicates the nation has purchased greater values of products than it has produced.

Among the reasons individual enterprises can gain from purchasing imported products is it usually enables reducing their direct and indirect costs which usually includes some direct and indirect labor costs integral to the foreign goods they purchased. Although individual enterprises usually pay taxes directly to their nation's governments, despite net unemployment being of cost to their nation, reducing their individual enterprise's costs are usually a net gain to that enterprise.

Due to annual trade deficits, their individual nations' GDPs, numbers of jobs, and aggregate payrolls were less than otherwise. A trade deficit indicates the nation has purchased greater values of products than it has produced.

Although all USA purchasers benefit from lower-priced imported goods, due to trade deficits' detriments to their nation's aggregate numbers of jobs and their payrolls, aggregate wage earning families were net financially reduced.

[Supposn]

Originally Posted by Astral_Weeks

GDP = C + I + G + (X-M) ... People should not misconstrue the impact of a trade deficit. Imports don’t lower our economic growth and any trade deficit simply means we will shortly be receiving some foreign investments like a BMW Plant or something else.

Astral_Weeks, trade deficit are detrimental to their nation's economic growth; they do not necessarily indicate foreign enterprises from which we “will shortly be receiving some foreign investments like a BMW Plant or something else”.

I would suppose that BMW had first established a USA subsidiary when they began selling their German cars to USA purchasers. I further suppose that much of those sales revenues were used as collateral to fund an additional USA subsidiary for assembling BMW's in the USA. If that were the case, that would have reduced USA's trade deficits more than otherwise?
Regarding corporate financing, my son's much more knowledgeable than I. I'll ask that he critique this explanation if he ever finds the time to do so.

More often due to trade deficits, much of those foreign sales revenues were used to purchase USA debts or shares of USA enterprises that were not directly or indirectly purchased from those USA enterprises. Those funds are not invested into USA enterprises, but both those purchased debts and shares are considered as transfers of wealth, are not factored into the calculations of their nation's GDPs because they did not increase production of any goods or service products.

[EDS_]

Originally Posted by Astral_Weeks

GDP = C + I + G + (X-M)

A trade deficit is just a bookkeeping entry, not a debt that has to be paid. Countries don’t engage in trade, people do. Americans are no more harmed by the trade deficit with Germany than when they have a "trade deficit" with the local grocery store.

It is surprising how many otherwise smart people mistakenly think that an increase in imports (which also means an increase in the trade deficit) lowers GDP! This misperception comes from a shallow understanding of the formula. Since imports (M) are subtracted in the formula, if M gets bigger, GDP must get smaller, right? Wrong!

Imported goods all end up as either C, I, or G because either consumers or the government are consuming them or the imported good is something like a big piece of machinery that ends up in a factory, thereby qualifying as investment (I). Thus, exactly offsetting the negative effect of a new import through the M term is a positive addition to one of C, I, or G.

The only reason imports are subtracted from GDP is that otherwise they would add to GDP which makes no sense since they were not produced in the U.S. The subtraction offsets a previous addition and simply serves to ensure only domestically produced goods and services are counted. After all, the D in GDP stands for domestic.

People should not misconstrue the impact of a trade deficit. Imports don’t lower our economic growth and any trade deficit simply means we will shortly be receiving some foreign investments like a BMW Plant or something else.

You and I need to hit the reset button. Much of what you wrote above is precisely correct so far as it goes. But it's incomplete.

GDP is a rearward looking measure describing domestic production of goods and services - a figure measuring what happened if you will. As M is accounted for in other portions of the formula it would indeed be absurd to effectively add that figure twice.

I've got to hop on a flight but I'll add the why and how (X-M) does matter later today.

[Supposn]

Originally Posted by SuiteLiving

Huh? What title did you give this thread? Where is the link to the “credible economists” saying what you averred in the title of this thread?

SuiteLiving, credible economists do not refute annual trade deficits detrimental affects upon their nation's GDP.
Additionally, credible economists certainly do not contend trade deficits to be net beneficial to their nation's GDP.

That's the point; there's no link to a credible economist because I'm asserting that rarely, if ever does a credible economist claim that trade deficits do not detrimentally affect their nation's GDP.

It's not my burden to find what I contend is extremely rare or doesn't exist.

Many credible economists contend trade deficit's detriment is so proportionally less than the GDP as to be immaterial to USA's economy. but I believe many of them also choose to avoid making such statements that acknowledge trade deficits' are net detrimental to their nation's.

I agree with other credible economists opposed to pure free trade because they believe tolerating USA's continuous annual chronic trade deficits is economically unjustifiable.

[lieqiang]

Originally Posted by Supposn

Many credible economists contend trade deficit's detriment is so proportionally less than the GDP as to be immaterial to USA's economy.

Then why are you unable to name one, it would be faster typing a reference than all the time you're spending demand others disprove what you brought up without proof.

[Astral_Weeks]

Originally Posted by Supposn

Due to annual trade deficits, their individual nations' GDPs, numbers of jobs, and aggregate payrolls were less than otherwise. A trade deficit indicates the nation has purchased greater values of products than it has produced.

Although all USA purchasers benefit from lower-priced imported goods, due to trade deficits' detriments to their nation's aggregate numbers of jobs and their payrolls, aggregate wage earning families were net financially reduced.

The total number of jobs in the United States is largely determined by fundamental macroeconomic factors such as labor-supply growth, changes in technology and monetary policy. Trade with other nations does not reduce the number of jobs, but it does quicken the pace at which production shifts from one sector to another. Trade, like new technology, lowers demand for some jobs while raising demand for others.

A US trade deficit is financed by a surplus of capital flows coming into the US. This could be a Chinese banks buying US Treasury bonds or a German or Japanese firm building a factory.

In the nineteenth century, the U.S. largely ran a current account deficit because the US economy was booming and was attracting capital flows from Europe to finance the building of US railroads. This long-period of a current account deficit reflected the dynamics of the stage of economic development; it didn’t mean the US was experiencing high unemployment.

As I noted in a prior post, the U.S. ran trade surpluses during the Great Depression with very high unemployment.

Here is a link to a Brookings Institution (center/left) piece supporting the idea that trade deficits do NOT reduce employment.

https://www.brookings.edu/blog/up-fr...up-nafta-will/

Here is a link to the AEI (right leaning) stating that the same thing:

Chart of the day: Trade deficits are associated with higher, not lower, levels of US employment - AEI

Finally, here is a link to a St Louis Fed report showing overwhelming support for trade among the economics profession:

https://research.stlouisfed.org/publ...rs-and-losers/

[Mircea]

Originally Posted by Supposn

Due to annual trade deficits, their individual nations' GDPs, numbers of jobs, and aggregate payrolls were less than otherwise.

No, they weren't, and you can't provide a single shred of evidence to support your silly claim.

[Mircea]

Originally Posted by Supposn

Due to annual trade deficits, their individual nations' GDPs, numbers of jobs, and aggregate payrolls were less than otherwise.

No, not ever in the history of commerce.

In spite of years of repeated drivel, you have yet to identify any country in the modern era or historically to support your ridiculous false claims.

Originally Posted by Astral_Weeks

As I noted in a prior post, the U.S. ran trade surpluses during the Great Depression with very high unemployment.

Excellent point.

That pretty much slams the door on his head.

Originally Posted by Supposn

Mircea, OK. Now the ball's in your court.

You're the one claiming credible economists support your nonsense, so name one or be done.

Originally Posted by Supposn

Mircea, I never stated that an additional dollar of the nation's imports generates an additional dollar of their GDP.

Yes, you have, and you inability to wrap your brain around the fact that $1 of Imports generates far more $ in GDP is the reason you keep spewing your nonsense.

Originally Posted by Supposn

The imports do not generate a single penny to the importing nation's

GDP.

Originally Posted by Supposn

As imported products are being produced and/or processed by foreign entities, or being shipped to the USA on foreign carriers, they contribute nothing to USA's GDP

You just lied to everybody.

Yes, they do, and the NBER repeatedly provides proof it does.

Which part of this...

GDP = C + I + G + (X-M)

...do you not understand?

There is no relationship between Employment/Unemployment and GDP.

There is no Law, Theory or Corollary of Economics that states, suggest or implies that there is a relationship between Employment/Unemployment and GDP.

If we believe your nonsense, and actually implement your stupidity, large numbers of Americans may remain unemployed.

Does the US grow rattan?

No, it doesn't. It isn't possible to grow rattan anywhere in the US.

Rattan only grows in certain areas in the South Pacific.

As I proved in a post on a different thread where you spew your nonsense:

The US imported $528 Million in rattan in 2014, and generated $4.35 Billion in sales.

I just debunked this claim here:

Originally Posted by Supposn

The imports do not generate a single penny to the importing nation's GDP.

You either intentionally lied, or you're totally clueless.

The importation of rattan does two things: creates lots of jobs, and enhances the Standard of Living for Americans, because now they have choice regarding kitchen, dining and living room furniture, as well as out-door furniture. Rattan is a superior product for out-door furniture, due to its longevity in a variety of climates.

So:

$4,350,000,000 in rattan sales

- $528,000,000 cost of rattan imports

------------------
$3,822,000,000 net gain in GDP

That $3.82 Billion net gain in GDP doesn't include other GDP created or the jobs created.

That's GDP and jobs generated by merchant marines transporting rattan, longshoremen off-loading rattan, bailsmen...

...oh, I'm sorry, and I talking over your head? 'Cause you have no idea what a bailsman is. It's an intermediary who holds goods in transit...

...jobs for truck drivers, jobs for warehouse workers, jobs for the factory that produces rattan furniture, including manufacturing laborers, accountants, clerical workers, supervisors, management, marketing, finance and advertising, including jobs for actors in the commercials, more truck driving jobs, wholesale jobs, more truck driving jobs, and jobs for retailers.

Instead of having high GDP and high unemployment, you can have higher GDP and lower unemployment by importing goods.

Coffee and tea will only grow in Hawaii or California.

But, you can only grow coffee or tea plants at the expense of citrus fruits in Hawaii, and at the expense of wine in California.

In other words, in the hope of satiating the American demand for coffee or tea, you'd have to plow under all the vineyards in California and replant them with coffee and tea plants.

There are vineyards across the US, but California is by and large the largest producer of domestic wines, and you would deprive Americans of that pleasure, because of your nonsense.

Contrary to your false claims, the importation of coffee and tea increases the GDP and creates jobs.

You fail to understand that Domestic GDP is capped largely by population, but also by available resources other than labor.

You cannot produce what you don't have, thus the need for imports.

Imports create jobs and increase GDP. Always and forever. There is no modern or historical case where it has not.

You also import those things that are too costly to produce domestically, and by doing so, you increase GDP, jobs and Standard of Living, because now consumers can afford to buy those products.

You also import those things that are unnecessary to produce.

As a mini-Hitler-like-dictator, you would force people to work jobs beneath their dignity at lower wages.

There's only so much labor available.

You can't increase the production of high tech electronics if you're making plastic kitchen gadgets.

Importing plastic kitchen gadgets frees up labor to produce high tech electronics and the workers get higher wages.

Why wouldn't you want people to get higher wages?

Your differently twisted world is truly perverse.

[psikeyhackr]

"Credible economists" don't say much about NDP, NET Domestic Product

NDP = GDP - Depreciation

That depreciation is only for Capital Goods.

How many countries have imported how much consumer trash designed to become obsolete since the 1950s? But do credible economists compute and report the depreciation of all of the junk. There were 200,000,000 cars in the US in 1994. How much wealth have the lower 80% of Americans lost on the depreciation of "goods" the bought which were added to GDP in previous years?

Economic Wargames: How the economic model is unsustainable and enslaving.

[Supposn]

Originally Posted by Supposn

Astral_Weeks, as you posted, “Countries don’t engage in trade, people do”.
... Due to annual trade deficits, their individual nations' GDPs, numbers of jobs, and aggregate payrolls were less than otherwise. A trade deficit indicates the nation has purchased greater values of products than it has produced. ...

Originally Posted by Mircea

No, not ever in the history of commerce.
In spite of years of repeated drivel, you have yet to identify any country in the modern era or historically to support your ridiculous false claims. ...

(1) to the extent that USA products were “crowded out” of marketplaces by foreign goods, effectively due to USA's chronic annual trade deficits, our nation's GDPs were less than otherwise.
(2) A nation's lesser annual GDP reflects their nation's lesser than otherwise numbers of jobs and aggregate payroll amounts.
(3) Annual trade deficits indicate the nation has purchased greater values of products than it has produced.

Mircea, rarely, if ever do credible economists refute any of these three statements and this holds true even among those economists that may be the most ardent proponents of pure free trade. Because if it ever has occurred, it's such a rare occurrence, I suppose you can try to answer my challenge by providing quotes that really do not refute any of the above three statements.

Within another group's discussion thread, MasterHawk posted an Atlantic magazine article based upon a particular question presented to a panel of credible economists.
This is a transcript of my posted reply:

MasterHawk, your interesting link to the Atlantic magazine site refers to the “IGM Economic Experts Panel”. Yes, the panelists responses were as you described them to be. I linked to the article's actual source,
www.igmchicago.org/surveys/free-trade .

[The free trade statement to be considered by a panel of highly credible USA economists selected by the University of Chicago's Booth School of Business. I do not doubt that the panelist are all credible economists, and I chose not speculate as to the impartiality of the school choosing the panelists.

The school's question we're discussing was, “Question A: Freer trade improves productive efficiency and offers consumers better choices, and in the long run these gains are much larger than any effects on employment”.

[Note the wording of the question does not refute those contending an annual trade deficit indicates its nation's annual GDP, numbers of jobs, and their aggregate payroll amounts were less than otherwise].

On a scale of 1 through 10, 35 of the responding panelists agreed or strongly agreed with the statement. Of the 6 remaining respondents, 2 were uncertain of the answer, and 4 chose not to answer the question.
Some of those experts accompanied their vote with an additional comment.
Four, (4) of those comments did not refer to any detrimental affects due to free trade.

The 13 other comments directly or indirectly referred to to segments of populations that were to some extent detrimentally affected by pure free trade.
I'm a populist that agrees with the contention that “we all do better when we all do better”. I'm among the proponents of the improved trade policy described within Wikipedia's “Import Certificates” article.