Quote:
Originally Posted by Clocker
A fair deal is one that both sides voluntarily agree to. End of story.
We do know that tariffs don't work, never have.
We lost a net 200,000 jobs when Bush imposed steel tariffs on China. Insanity is repeating the same action while expecting a different result. How can we expect Trump's tariffs to have a different result than Bush's?
Running a trade deficit by definition means running a capital surplus, which means an increase in money invested in the US instead of overseas.
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1. We have a different definition of fair. I once got a 30 ball spot from a pool player I could beat by 50 straight up. He agreed to the game. Even I know the deal wasn't fair.
2. Generally I agree that tariffs are bad UNLESS they lead to better deal soon after. However, there are already tariffs/taxes on some of our goods that help keep the math favoring our partners instead of us. That's part of why we have some of these deficits and that's part of what we need to fix.
3. You are missing why the trade deficit is bad.
If we run a trade deficit, we get goods and services (which depreciate) and they get dollars. The "capital surplus" is then invested (usually by FOREIGNERS) in US assets. It is money invested here, but US citizens often do not own those assets. Foreigners do and they get to decide what to invest in, when, at what price, and at what interest rate. If they don't like the deal, they can dump US assets and crush the economy. They keep getting richer and more powerful and we keep getting poorer than we would have been.
When you and I pay taxes, some of it goes to paying interest. If our friends owed those bonds, the wealth would stay here. If some commie or sheikh owns those bonds, more wealth flows out of the US and then back in to buy more land, bonds, US businesses etc...
Would you rather be the owner of those investments getting richer and more powerful or the purchaser of goods and services that are losing value?
The idea is to have free and fair trade that is relatively balanced so both sides benefit approximately equally. But we don't have that and haven't for a very long time. The theory turned out to be wrong because conditions were so unequal. That's why we are now a debtor country, why foreigners sometimes saber rattle about selling our bonds, and partially why standards of living are so flat in the US for so many years for so many people.
I used to be 100% hard core free trader. I still believe that 100 years from now free trade will turn out to have been right. But the trip over the last 30 years has been a disaster and there's more to come. Sometimes you have to balance the 150 year outlook with what is happening to people now.
