Balance of trade, globalization, and unemployment

If Congress were to take an exam in Economics 101, would it pass? We are about to find out.

The issue at hand is whether Congress will give President Obama “fast track” authority to negotiate a trade deal with our trading partners in the Pacific. The bill is favored by some congressional leaders of both parties, including Senator Orrin G. Hatch, the Republican chairman of the Finance Committee, Senator Ron Wyden, the committee’s ranking Democrat, and Representative Paul D. Ryan, the Republican chairman of the House Ways and Means Committee.

House and Senate committees approved versions of the legislation last week. But with influential lawmakers like Senator Elizabeth Warren, a Democrat, opposed to the measure, final congressional approval is far from certain.

Among economists, the issue is a no-brainer. Last month, I signed an open letter to John Boehner, Mitch McConnell, Nancy Pelosi and Harry Reid. I was joined by 13 other economists who have led the President’s Council of Economic Advisers, a post I held from 2003 to 2005. The group spanned every administration from Gerald Ford’s to Barack Obama’s.

We wrote, “International trade is fundamentally good for the U.S. economy, beneficial to American families over time, and consonant with our domestic priorities. That is why we support the renewal of Trade Promotion Authority (TPA) to make it possible for the United States to reach international agreements with our economic partners in Asia through the Trans-Pacific Partnership (TPP) and in Europe through the Trans-Atlantic Trade and Investment Partnership (TTIP).”

Economists are famous for disagreeing with one another, and indeed, seminars in economics departments are known for their vociferous debate. But economists reach near unanimity on some topics, including international trade. Greg Mankiw( conservative)

 

wrong of course he's trying to get free trade deals like one he just got with South Korea. 1+1=2

 

You get free trade deals through bilateralism (even then you typically corrupt trade and harm multilateralism). This is more about peddling to right wing idiots.

 

I just told you he just got a free deal with South Korea. Let's pray for many more

 

Please don't copy and paste, pretending its your comment. Its pathetic

 

He got a deal with a big chum of America reliant on US military support? Wowsers! He's a genius

Love this comment: “I may hold it up until after a deal is made with North Korea,” Trump said in a speech. “You know why? Because it’s a very strong card. And I want to make sure everyone is treated fairly,” he added.

 

Solving simple poverty solves many other problem in our economy as well. Adam Smith's book on the Wealth of Nations, assumes full employment.

 

Smith doesn't make any detailed mention on unemployment. He certainly doesn't use the vocab full employment. You could refer to classical economics and the textbook comment that it assumed the economy is self-correcting. Even then you're in dififcult waters, given those economists would focus on aspects such as riot and social unrest.

 

Perfectly competitive markets is the assumption for any Wealth of Nations.

 

You continue to throw out terms randomly. There's no notion of perfect competition within Smith's approach.

 

Yes, there is. He was using the most liquid markets available at the time, for his model.

 

To refer to neoclassical theory and pretend that it is classical economics only informs me that you know no history of economic thought.

 

not much into labels when dealing with economics.

in any case, socialism should help ensure full capital employment of resources, in order to better provide for the general welfare.

 

ie You used the term without knowledge.

 

i didn't use either term, you did; i only explained the concepts, You labeled them.

 

Good idea to deny what you said, given the comments made make no sense.

 

One of the larger import items is automobiles. A question that few care to ask might be; Why do we import so many automobiles into the USA? Maybe better perceived quality? Maybe less expensive? Maybe to have more consumer options? My guess whatever this answer might be imposing tariffs won't change anything except to increase the cost to the consumer.

A second question on automobiles; Why do US automobile manufacturers have 30%-80% foreign content in their supposedly US made vehicles? Better perceived quality or technology? Less expensive? My guess again is adding tariffs won't change a thing except to increase the cost to the consumer.

For those who can pretend they own and operate a US automobile manufacturing business, how will adding tariffs to your imported subcomponents, which ultimately increase your prices to the US consumer, and tariffs applied to your exports, be considered a good thing? With prices of automobiles increasing due to tariffs, at what point in the future will you trigger billion$ investments to expand your output when as the president says jobs will be coming back to the USA? Lots of jobs will be coming back to the USA! Great jobs coming back to the USA? Will you spend all the time and billion$ to expand when car sales might decline due to higher prices? What happens if you spend billion$ only to find imports remain less expensive, perhaps with better quality, even when tariffs are applied?

Long before the idiots took control we had a very well functioning and economically successful global trade scenario. Businesses and consumers, foreign and local, buy and sell around the world providing consumers with best prices, best quality, and greater selection. Win some or lose some...over time this buy/sell finds equilibrium. The US wins in some areas and the US loses in some areas but in the grand scheme everyone is winning...

 

Good point! Given intra-industry trade (where there is imports and exports in the same industry), we can also expect any negative consumer effect to impact on domestic producers.

 

Companies like Amazon, and even Macy's and other retailers, are importing products from around the world, and then export these same products around the world. Balances of trade should always exist, and in those instances in which a nation feels their trade deficits are a problem, applying tariffs won't fix their problem...they need to either live with the deficits or increase exports...

 

The only issue is if there is a trade imbalance. Trade deficits aren't enough for that. It is more associated with the apparent need for a devaluation which, in the case of the US, would be destabilising. The answer? Consume less, save more.

 

lol. i am not denying anything; you are. I resort to the fewest fallacies, simply for fun and practice.

 

Imagine if you had referred to Says Law. You'd have spontaneously combusted?

 

Even Mr. Say, would Say that solving simple poverty is Good for any economy.

 

Poverty is not simple, nor easily solved. Its an example of a 'social mess'. Didn't you know?

 

No, I didn't. All I see, is a federal doctrine and State laws regarding the concept of employment at the will of either party.