Bad News for US Trade Deficit

[tucker6]

Clocker,

You have done nothing but deflect with your answers. There are NO real world examples of countries in positive trade balance territory desperately trying to get into negative trade balance territory. Why? The answer is quite obvious, and I fully understand why you choose to equivocate on the matter. Again, I will point to Classy's posts on the issue.

[Clocker]

Originally Posted by tucker6

Clocker,

You have done nothing but deflect with your answers. There are NO real world examples of countries in positive trade balance territory desperately trying to get into negative trade balance territory. Why?

I answered that question, and you apparently missed it or ignored it. And you still have provided no evidence or argument to show why a trade deficit has been bad for our economy as a whole.

As I already said here, trade deficits are neither good nor bad on their own. It depends on the current economic status of the country. What is good for one country is bad for another. If trade deficits are bad for all economies, why are the US, Britain, France, etc., not desperately trying to eliminate them?

And clearly, the worst possible "solution" is for a central government to try to micromanage trade deficits or surpluses. We have a trade deficit because the efficient operation of our private sector results in that. For other countries, in the absence of central planning, the efficient operation of the private sector results in trade surplus.

I have yet to see you or anyone else here, or anyone in the current administration, demonstrate that the trade deficit is harmful to our economy. Trump's opposition to trade deficits is purely political and emotional. In any economy, there are winners and losers. Free trade is most beneficial to consumers and least beneficial to old school companies and unions that cannot compete in a global economy. For all of his talk about free trade, Trump's main goal is to protect big business and big labor. And his fan boyz are swallowing it hook, line and sinker.

[elysiantraveller]

Originally Posted by tucker6

Clocker,

You have done nothing but deflect with your answers. There are NO real world examples of countries in positive trade balance territory desperately trying to get into negative trade balance territory. Why? The answer is quite obvious, and I fully understand why you choose to equivocate on the matter. Again, I will point to Classy's posts on the issue.

Because most countries are smart enough to realize it doesn't matter? An efficient market/economy is more important than whether it results in a trade surplus/deficit.

History is also replete with examples of countries wishing to create trade surpluses... shall I list them?

[elysiantraveller]

Originally Posted by Clocker

Trump's opposition to trade deficits is purely political and emotional. In any economy, there are winners and losers. Free trade is most beneficial to consumers and least beneficial to old school companies and unions that cannot compete in a global economy. For all of his talk about free trade, Trump's main goal is to protect big business and big labor. And his fan boyz are swallowing it hook, line and sinker.

How people cannot see this for what it really is, wealth redistribution, is amazing to me.

[tucker6]

Originally Posted by elysiantraveller

How people cannot see this for what it really is, wealth redistribution, is amazing to me.

I believe we agree on that, but from opposite directions of whether it's a good thing in this case.

[elysiantraveller]

Originally Posted by tucker6

I believe we agree on that, but from opposite directions of whether it's a good thing in this case.

Well at least we can agree its socialism...

Now please explain to people like PA and others that its just socialism on a national scale...

And again history is replete with wondrous examples of this working...

[tucker6]

I sometimes wonder whether you and Clocker see yourselves on an island with your tariff/deficit views and really believe that everyone else on a website full of math whizzes can't figure out simple economic concepts. Is that what you actually believe?

[elysiantraveller]

Originally Posted by tucker6

I sometimes wonder whether you and Clocker see yourselves on an island with your tariff/deficit views and really believe that everyone else on a website full of math whizzes can't figure out simple economic concepts. Is that what you actually believe?

If by island you mean the one filled with basically every major economist of the past 250 years...?

Yes...

[Clocker]

Originally Posted by tucker6

I sometimes wonder whether you and Clocker see yourselves on an island with your tariff/deficit views and really believe that everyone else on a website full of math whizzes can't figure out simple economic concepts. Is that what you actually believe?

I haven't seen any of the math whizzes here explain why a trade deficit is supposedly harmful to the economy. Or why the Trump tariffs are a good thing, given the admission of his own people that they would increase consumer prices by 10-15%. Or why importing 25% of the steel we use, or 35% of the lumber we use, is a national security issue. Same for imported solar panels. And imported washing machines.

The problem is that "simple economic concepts" are often counter-intuitive. Trump is acting from his gut, his intuition about areas where he has no experience. And many others without experience are buying into what he says. Trump rants and raves about the lost manufacturing jobs in this country and promises to bring them back, and that sounds good if you don't know the facts. About 10-15% of the manufacturing jobs eliminated in the country in recent years went overseas. The rest were automated. Those jobs ain't coming back no matter what. Our manufacturing output in real terms hit an all-time high last quarter. But it was done with automation.

Trump's trade policy would redistribute wealth, from consumers and small businesses to big business and big labor. But no one here that is in favor of eliminating the trade deficit addresses that, or shows why that is a good thing.

[Clocker]

Originally Posted by elysiantraveller

If by island you mean the one filled with basically every major economist of the past 250 years...?

Yes...

One of the few issues that those on both sides of the political spectrum generally agree on. As do most business people, except the few, like Big Steel, that stand to profit greatly.

[elysiantraveller]

Originally Posted by Clocker

One of the few issues that those on both sides of the political spectrum generally agree on. As do most business people, except the few, like Big Steel, that stand to profit greatly.

There are very few differences between Trump and Bernie's views on international trade...

One of those differences though; Bernie's is just more honest and articulate about its aims.

[Clocker]

Originally Posted by tucker6

There are NO real world examples of countries in positive trade balance territory desperately trying to get into negative trade balance territory. Why?

Further on this; except in controlled economies, a country does not make a decision to have a trade surplus or a trade deficit. That is an outcome rather than a policy, and it is a result of the individual actions of the businesses and consumers, given the stage of development of the economy.

A growing economy in a developing country is generally going to have a trade surplus. The people do not have the income to afford imports and local capital is being invested in building businesses.

As seen from the previous lists, countries with trade deficits tend to be those with mature, well-developed economies. They have trade deficits because they can afford to. Consumers have buying choices, and can buy more imported goods. Those consumers also attract foreign investment, further developing the economy and creating even more jobs. And the more developed an economy becomes, the more likely it is to be selective and efficient about what it makes internally and what it imports. An example brought up by Trump's recent tariffs: making aluminum requires a lot of electricity. Given Canada's cheap hydro power, it is more economically efficient to import Canadian aluminum than to make it here. Who cares what it does to the trade balance?

[Clocker]

Originally Posted by elysiantraveller

Bernie's is just more honest and articulate about its aims.

Bernie is very honest and articulate about what he thinks other people should be required to do.

[Show Me the Wire]

Originally Posted by Clocker

Further on this; except in controlled economies, a country does not make a decision to have a trade surplus or a trade deficit. That is an outcome rather than a policy, and it is a result of the individual actions of the businesses and consumers, given the stage of development of the economy.

A growing economy in a developing country is generally going to have a trade surplus. The people do not have the income to afford imports and local capital is being invested in building businesses.

As seen from the previous lists, countries with trade deficits tend to be those with mature, well-developed economies. They have trade deficits because they can afford to. Consumers have buying choices, and can buy more imported goods. Those consumers also attract foreign investment, further developing the economy and creating even more jobs. And the more developed an economy becomes, the more likely it is to be selective and efficient about what it makes internally and what it imports. An example brought up by Trump's recent tariffs: making aluminum requires a lot of electricity. Given Canada's cheap hydro power, it is more economically efficient to import Canadian aluminum than to make it here. Who cares what it does to the trade balance?

To restate the above, I'm talking about my realities, don't confuse me with facts. Don't confuse me with facts like market share or that liabilities (deficits) reduce wealth of the debtor.

Instead giving us the fairy-tale version of wealth by trade deficits, explain to us how China will create wealth by eschewing trade surplus policies in favor of trade deficit policies.

You are invited to China as a trade expert. How would you convince China to thrash its trade surplus policy, and to radically increase its wealth by the magic of trade deficit policies? How would you convince China to amass large trade deficits with all of its major trading partners?

[Clocker]

Originally Posted by Show Me the Wire

You are invited to China as a trade expert. How would you convince China to thrash its trade surplus policy, and to radically increase its wealth by the magic of trade deficit policies? How would you convince China to amass large trade deficits with all of its major trading partners?

Did you read anything that has been posted here? Running a trade surplus is the correct policy for China at this point in its political and economic development. It is not the correct policy for the United States. In case you failed to notice, we and China are at greatly different stages of political, social and economic development.