Trade deficits are ALWAYS detrimental to their nations’ GDPs.

Reiver,
“It’s perhaps the only time that we have something close to supporting the OP (not quite though, as such policies ultimately are 'beggar thy neighbor' and encourage deeply damaging trade wars)”?

What’s “OP”?

Respectfully, Supposn

 

Reiver, you wrote
“It’s perhaps the only time that we have something close to supporting the OP (not quite though, as such policies ultimately are 'beggar thy neighbor' and encourage deeply damaging trade wars)”?

What is “the OP”?

Respectfully, Supposn

 

The drivel in the opening post. Keep up (although I suppose we could use this to explain why you're still peddling the mercantilist twaddle)!

 

Reiver, I’ve encountered the term “beggar thy neighbor” before and since but I always relate it to the writings of Pat Buchanan.

I’m a proponent of the Import Certificate trade proposal. It is unilateral and market rather than government driven; granting government no significant discretion of policy.

It will not induce a trade war but it’s preferable that we enact it before too many other nations overtake our economy. There’s sufficient motivation for foreign enterprises that will continue to choose dealing with USA entrepreneurs.

Respectfully, Supposn

 

Your policy is distortionary. It will assuredly lead to substantial losses (as comparative advantage is adversely effected and other nations react). You haven't even targeted the real issue: problems with savings rates and the resulting trade imbalance

 

Reiver, a USA commercial enterprise does not gain any competitive advantage by importing less expensive foreign goods that are equally available to their competitors at similar prices; but they would suffer a competitive disadvantage to their competitors that will continue to import cheaper goods.

Comparative advantage refers to the comparison between differing courses of actions. That does not always mean that either course is of net advantage those making the decisions. Often comparison advantage is determined by the choosing the least net harmful.

It’s not unusual for government policies that are to USA’s best economic and social interests converge to be equal or approximately close USA’s commercial enterprises’ best net interests. But within some situations they diverge. That is the justification of legally prohibiting some contracts and practices that we would suppose to be profitable to the single or mutually agreeing enterprises but our legislators deemed the practices to be contrary to our public interests.

In the case of our annual trade deficit of goods, USA enterprises have no problem with laying off workers, but the reduction of jobs and the lesser paying jobs available to our displaced labor is contrary to our nation’s economic and social interests. USA’s annual trade deficits of goods are detrimental to our GDP and median wage. Regardless of what amount those statistics for any specific year, they would have been greater if we had not experienced an annual trade deficit of goods. Our trade deficit of goods is contrary to our public interest.

Are you stating that if our trade deficit were reduced, USA’s saving rates would be further reduced? How did you reach that conclusion?

Respectfully, Supposn

 

Any lost producer surplus for an individual firm is dwarfed by the consumer surplus gains (plus the dynamic gains from competition, as seen for example with economies of scale issues with monopolistic competition)

It refers to differences in opportunity costs. It ensures that everything you say on this topic is clap-trap.

You've already been told this basic macroeconomics several times! A trade imbalance, as demonstrated by the macroeconomic accounting identity you abuse, reflects savings rates. As savings rates change, the trade deficit is removed (without requiring an exchange rate correction)

 

Sustained trade deficits eventually result in the selling off of capital. Instead of the wealth staying in the country, the profits go to foreign owners. Then a country will have to start exporting goods without really getting anything in return, because foreign banks own the assets (or are collecting interest on the loans).

[video=youtube;pRjpymjbytE]http://www.youtube.com/watch?v=COH7LoKf96Y[/video]

It is the draining of capital. In some cases, this capital cannot easily be replenished, because it is valuable land or natural resources that there is only a fixed quantity of.

The Asian countries know this quite well, that is why their governments will do anything they can to try to keep a trade surplus.

In recent decades, the Japanese economy has experienced prolonged trade deficits, and this has corresponded to a declining economy and higher unemployment.

 

Trade imbalances are more damaging in terms of potential exchange rate correction. This is an obvious aspect. However, it doesn't surprise me to see you supporting an economic nationalist stance. It is consistent with extreme right wing attitudes

 

It would not bother me to trade with another country that had a similar standard of living, where the trade from both sides is more equal. For example, nothing wrong with trade between USA and Japan.

 

That is an ignorant attitude given comparative advantage and how its partially created through differences in factor of production characteristics. Similar standard of living analysis is more suited to Krugman's analysis into new trade theory. Again you allow your extreme right wing attitudes to blinker you down a dead end

 

And I have already explained to you in other threads how there are other effects besides comparative advantage. Free-traders focus too much on comparative advantage and ignore wages and the draining of capital.

 

You haven't given a valid explanation for anything. Your comment was ignorant. Trade gains are necessarily created through trading with very different countries. What amuses me is that you actually only have one argument ("I is anti-immigrant") but you haven't even realised that trade supports the position that you want.

 

That's not necessarily true either. A country can have plenty of trade within its own borders, and one can question how great the gains actually are trading with foreign countries. Certainly international free trade should not be viewed as some magical solution to economic prosperity.

 

Its true by definition! There is only one occasion when its suspect: the creation of unfair trade where developing country finds trade gains are lower than resource depletion and pollution losses. Of course that one moment of rationality isn't relevant to your extreme right wing stance

 

And that's why everything you say on trade is bunkum. You deliberately hide from basic trade analysis and all you do is repeat erroneous comment over an accounting identity time after time.

Nonsense! A trade imbalance refers to deficits over time. A snap-shot cannot be used as the zero sum game is rejected.

This is just repetition of neo-mercantilist clap-trap. There is no debate here. You're just peddling garbage. As I said, you have no excuse for it as you've been educated over the matter numerous times.

 

Yeah, but that is a measure of production,, work + resources. Wealth is what you keep, not what you make. If the world sent us all their labor and resources and we sent them nothing, we would sink in GDP, and be very wealthy. The imbalance of course would correct later though,, and we would have to pay it back. Exports are the price we pay for imports. Imbalances are generally caused when people are saving abroad, and we are spending more.

 

A poor comment. Its a stock, rather than a flow.

This is drivel.

 

Oh Reviver, if only you can show your work. Otherwise I don't care what you have to say; a big government nanny state punk rocker is something so backwards I can't get involved with trying to untwist that pretzel.

 

You forgot content again! Lovers of capitalism are, by definition, supporters of big government. Interventionism is a basic requirement for ensuring the reproduction of economic rent

 

John Mayo, this was transcribed from:
http://financial-dictionary.thefreedictionary.com/GDP. Other sources will provide similar definitions; (but not precisely with exactly the same words).

I consider USA’s annual GDP/per capita’s ratio to the median wage as an indicator of the distribution of our production among our population and the along with the GDP amount per capita as indicating the financial condition of our median income earners; (i.e. the financial condition of our middleclass).
Comparisons between years should not be made until the amounts are adjusted to account for differences of the dollar’s purchasing powers within the compared years.

You write as if individuals’ or the nation’s wealth is your major concern.
I’m a populist. My major concern is our ENTIRE population’s living standard and to what extent can it be sustained and be improved in our future.

Our balance of trade may be affected by our national rate of savings or investment, but they are mutually exclusive. Our rate of savings and our trade balance are not dependent upon each other.

Respectfully, Supposn
//////////////////////////////////////////////////
From http://financial-dictionary.thefreedictionary.com/GDP

Gross Domestic Product
A measure of the value of the total production in a country, usually in a given year. Gross domestic product is calculated by adding together total consumer spending, total government spending, total business spending, and the value of net exports. GDP is considered one of the leader indicators of the health of a nation's economy. GDP growth is considered desirable and represents the fact that businesses are producing and that consumers and the government are buying. It is often used as a way to measure a country's standard of living. See also: GNP.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

 

That isn't true is it now? You want to impose protectionism and that, by definition, will benefit the minority at the majority's expense.

 

Reiver, I'm a proponent of USA adopting an Import Certificate global trade policy. It’s not pure free trade but it is pure independent competitive entrepreneurs within the markets.

All of the proposal’s direct expenses are eventually and entirely borne by USA’s eventual purchasers and users of imported goods. The proposal excludes the values of scarce or precious minerals integral to the goods being assessed.

You are opposed to protectionism but have no problem defending our trade deficits which cause USA’s lesser (than other wise) jobs and the remaining jobs’ purchasing powers are of lesser (than otherwise).

We can continue to enjoy cheaper imported goods but we cannot afford the absolutely cheapest foreign goods.

Refer to
http://www.politicalforum.com/econo...e-trade-deficit-increase-gdp-median-wage.html
or google “ wikipedia, import certificates “.

Respectfully, Supposn