As Don Boudreaux Explains
- Thread starter Ponca Dan
- Start date
So let me get this straight. If Trump continues with the 500 billion to 800 billion trade deficit, that makes him a trade genius?
500 billion to 800 billion dollars of goods being imported.
0 dollars to 0 dollars being exported.
What's being traded?
500 billion to 800 billion dollars of goods being imported.
0 dollars to 0 dollars being exported.
What's being traded?
I don't remember seeing this Boudreaux
name on the ballot when I voted for Trump.
name on the ballot when I voted for Trump.
This happened to me circa 2004.
I was at a US Representative Tom Cole town hall. I brought up this subject when called on to ask a question. My question was similar to the one above in this thread.
He got a dumb confused look on his face, as if he never thought about such a thing as the trade deficit before. In answering the question "What's being traded?" he stumbled and mumbled, "uuuuh.... corn... uuuh wheat". I invited him to come to my place of employment, a manufacturing plant that was getting ready to move to China.
The idiot signaled his assistant to move over my way and to stand over me. I guess I was a threat. My body-tag was the unknown-at-the-time T.W. Shannon. I'm pretty sure he was packing a firearm under that suit.
Haven't been a Tom Cole fan since. He's a fraud.
I was at a US Representative Tom Cole town hall. I brought up this subject when called on to ask a question. My question was similar to the one above in this thread.
He got a dumb confused look on his face, as if he never thought about such a thing as the trade deficit before. In answering the question "What's being traded?" he stumbled and mumbled, "uuuuh.... corn... uuuh wheat". I invited him to come to my place of employment, a manufacturing plant that was getting ready to move to China.
The idiot signaled his assistant to move over my way and to stand over me. I guess I was a threat. My body-tag was the unknown-at-the-time T.W. Shannon. I'm pretty sure he was packing a firearm under that suit.
Haven't been a Tom Cole fan since. He's a fraud.
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It’s like this: when a foreign manufacturer invests in property in America a sizable portion of that investment is added to the negative side of the trade deficit. Trump, ignoramus that he is, rails against the trade deficit as something harmful to our economic well being, which it is not, believes he can reduce the deficit by forcing foreign companies to invest in property in America which adds to the trade deficit. As Boudreaux points out that's pretty much the understanding only an economic ignoramus would have.
500 to 800 billion dollars are being traded for 500 to 800 billion dollars worth of products. That’s what’s being traded. Trump and his economic team of mercantilists are hoping you don’t see the “imported product” side of the equation. Apparently that has worked with you.
Wow, and Trump is the ignoramus? You're not worth a second of my time with a dumbass statement like that.
I would ask you to explain what you find to be so “dumbass” about that statement. In the meantime please read this. Perhaps it will help you to understand how things actually work in the real world, not in the fantasy world DJT hopes you’ll live in.
https://fee.org/articles/there-s-no-lost-money-in-trade-mr-president/
I was dumb enough to think this was a thread about trade talk. Turns out it’s more about you hating Trump than trade. TDS takes what was once a healthy, intelligent mind and reduces it to a blob of bubbling snot that can reason that a pile of dog poop is a gourmet meal (if Trump says “Don’t eat it. It’s poop”.
Well your remark is a fine example of substituting a rational discussion with insults and ad hominem rhetoric!
The link I asked you to read was about nothing other than trade and understanding the insignificance of terms like “trade deficit.” You apparently preferred to avoid reading the link. Oh, well, that’s your loss.
Look at it like this: Lowes buys a washing machine and dryer that had been manufactured in South Korea and shipped to the US. That’s a South Korean export and an American import, right? So let’s say Lowes paid the South Korean manufacturer $500.00 for the set. The South Korean manufacturer traded the washer/dryer it owned for $500.00 that Lowes owned. That’s the trade: dollars for a product. Both sides “profited” from the trade, both sides exchanged something it valued less for something it valued more. That’s what trade is all about.
Let’s start our conversation from there. I used an example of what you called a “dumbass statement.” Please show the error, preferably without the unnecessary insults.
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Let me get this straight. You are hell bent against MMT as an accurate description of how modern fiat currency in the US works, but you buy into this article as being factually good information? Mr. Phalen is an anti-MMTer just like you even though this article is almost 100% reflective of the principles of MMT (he has a few details wrong). We do not "borrow" money from China. China buys US Treasuries as an investment.
So letting China and the other countries continue to F us stealing technology and breaking existing trade agreements is better? Sometimes you have to experience pain to win the battles.
I have promised Pilt I would refrain from talking about MMT any more, even though I have wanted to countless times. I’ll stick to the promise this time, mainly because the topic is about trade and trade deficits not fiat money manipulation that is virtually guaranteed to lead to hyperinflation. Maybe some other time.
Oh, but let me add: virtually every economist I know of that criticizes MMT agrees its advocates explain the current use of fiat currency correctly. It’s when they say a government can print money to infinity without repercussion that MMT goes off the rails.
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The problem with Trump’s tariffs is it’s American farmers who are experiencing the pain.
As for the stolen technology I agree they ought not do that, but for the most part the technology has been stolen from companies so anxious to trade in China (manufacture their products there, for example) they have signed deals that have given their manufacturing secrets in exchange for permission to operate in China. Personally I have little sympathy for companies that are that short sighted, especially since it’s been known to be going on for years if not decades and those companies agree to the contracts anyway.
But in any case it is madness to tax American consumers (Trump’s tariffs are taxes on American consumers) as a means to get China to stop stealing technology. You may not know this but the trade deficit has grown significantly since Trump first initiated his tariffs, which is the exact opposite of what he said would happen. And now he’s doubled down with the tariffs. Isn’t that supposed to be the definition of insanity?
So in order to save farmers some pain the rest of us have to take the f'ing? The way to get the Chinese and others to play according to the rules is make them feel the pain and if some of us do too, so be it. Those screwing us are doing it now and they've shown they they have no intentions to honor their agreements. That's one of the reasons we are where we are...previous administrations have smiled while being screwed.
Here comes passive aggressive Ponca Dan. You get called out for stepping in poop but you want me to think it was actually strawberries. I get it.
It's about time you acknowledged reality. Now, say this with me. MMTers do not say a government can print money to infinity without repercussion. Quite the opposite. You constantly confuse policy proposals and their advocates with MMT and economists that describe and use MMT in analysis of our current monetary system. If you think Alexandria Ocasio-Cortez and Bernie Sanders are economists, you're worse off in the knowledge department than I thought.
Even Buzz LightYear knows it's "to infinity & beyond". FAIL
I think it's only fair to give Trump the benefit of all doubt.
Time after time he's beaten the odds, and his instincts have been correct.
The default...Trump is pushing this or that, therefore it sucks and we're all gonna die is plum worn out, and the most unsophisticated voter is seeing through that tired old mantra.
So, best get your minds right.
Trump is still president and all your whining machinations won't change that.
Get behind him or get the fvck out of his way. Your call, bitches.
(It's abundantly clear why I'm not his press secretary)
Time after time he's beaten the odds, and his instincts have been correct.
The default...Trump is pushing this or that, therefore it sucks and we're all gonna die is plum worn out, and the most unsophisticated voter is seeing through that tired old mantra.
So, best get your minds right.
Trump is still president and all your whining machinations won't change that.
Get behind him or get the fvck out of his way. Your call, bitches.
(It's abundantly clear why I'm not his press secretary)
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Ponca Dan, I want to make an apology to you. There are a thousand ways to express my opinion that your compass is pointing 180-degrees in the wrong direction on this issue, but referring to your statement as being "dumbass" isn't one of them. But I typed it and I own it. I don't want to be known as 'that' poster. I apologize.
Apology not necessary, but accepted. I try to go out of my way not to be overbearingly rude, which often gets me called passive aggressive. I’ve never known anyone to change his mind when he’s been insulted. So if I want to change another’s opinion I believe it is best to remain as civil as possible.
So now can we continue our discussion? You think my description of trade and my dismissal of fear over trade deficits as unfounded to be 180 degrees in the wrong direction. Would you please explain where I am in error?
Please tell me what f’ing the rest of us have experienced. The Chinese government has subsidized some of its industries so that their merchandise can be sold to us cheaply. It’s the Chinese taxpayers that are taking it in the shorts, since they’re the ones having to pony up the funds to subsidize the favored industries. In other words Chinese taxpayers are paying part of the cost for products we buy. We get to buy products cheaper than we ought to because Chinese taxpayers are being forced by their government to pay the balance. How do you figure we are being f’ed in this scenario?
Trump’s tariffs have so far had no effect on anything he says will be affected. The trade deficit is higher than ever, US steel companies, for example, are experiencing an unexpected downturn, and American farmers are suffering mightily from the tariffs the Chinese have slapped them with in reprisal. I posted a link awhile back showing Wisconsin dairy farmers are declaring bankruptcy in record numbers.
It reminds me of my youth in the 60’s when we had a military draft so LBJ could have his war. Some of us 18 year olds were tabbed to suffer the pain. I suppose there were people like you that didn’t have to feel the pain so their attitude was like yours: “so be it.”
The whole point of the OP, which has been ignored, is Trump rails against the trade deficit but proposes “cures” which assure the trade deficit will rise. His economic advisors are mercantilists, and mercantilism has been shown by history to be a mistake, it produces results contrary to what it wants. It’s the thinking of an ignoramus.
I know some people on this board want to believe DJT is infallible. But he makes mistakes just like the rest of us. The problem is when a president makes a mistake it damages all of us. So when you or I think a president is making a mistake it behooves us to point it out, and do our best to correct his error. Too many of the people on this board are so devoted to Trump-the-man you take it personally when someone legitimately opposes one of his policies. It’s the opposite of Trump derangement, it’s Trump adoration. And Trump adoration carries many of the same dangers to our liberty as Trump derangement.
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The Tariff Hoax Debunked (from link below)
Economists and journalists alike often assume that the price of tariffs gets passed through to consumers but neither economic theory nor data support that assumption. On Friday, the government will release the latest consumer-price index data. That is expected [it is] to show a 2.1 percent rise, slightly higher than the prior month and in-line with the Federal Reserve’s 2 percent inflation target.
But do not be surprised if the Tariffmageddon crowd keeps ignoring the data. One other lesson from the past year’s experience with tariffs is that many economists and journalists appear to be immune to facts when it comes to the effects of tariffs, preferring to endlessly repeat the mantra that tariffs raise consumer prices.
https://www.breitbart.com/economy/2...ollapsed-latest-price-data-show-no-inflation/
Alan Tonelson, U.S. Business and Industry Council Educational Foundation, who I've been following for 17 years, posted this interesting article two days ago. Yes, there is pain, but it's necessary.
https://nationalinterest.org/feature/why-further-us-china-economic-war-seems-certain-56932
Economists and journalists alike often assume that the price of tariffs gets passed through to consumers but neither economic theory nor data support that assumption. On Friday, the government will release the latest consumer-price index data. That is expected [it is] to show a 2.1 percent rise, slightly higher than the prior month and in-line with the Federal Reserve’s 2 percent inflation target.
But do not be surprised if the Tariffmageddon crowd keeps ignoring the data. One other lesson from the past year’s experience with tariffs is that many economists and journalists appear to be immune to facts when it comes to the effects of tariffs, preferring to endlessly repeat the mantra that tariffs raise consumer prices.
https://www.breitbart.com/economy/2...ollapsed-latest-price-data-show-no-inflation/
Alan Tonelson, U.S. Business and Industry Council Educational Foundation, who I've been following for 17 years, posted this interesting article two days ago. Yes, there is pain, but it's necessary.
https://nationalinterest.org/feature/why-further-us-china-economic-war-seems-certain-56932
There. See? Isn’t this more pleasant than calling each other names? I couldn’t get the second link to load. I’ll try again later. The first link is full of information that will take me awhile to ingest! It being Mother’s Day I won’t get to it this afternoon. But this is the kind of stuff I relish. I promise you I won’t abandon the discussion.
The original premise of my earlier comment is, you cannot possibly spend your way into prosperity. An individual cannot do it. A household cannot do it. A country cannot do it. It's impossible.
You must create wealth. The way you create wealth is to manufacture things.
You must create wealth. The way you create wealth is to manufacture things.
2 Issues: One is that the manufacturing playing field isn't even. First we (Americans) are a bunch of F'n NIMBY hypocrits. We pass laws and regulations regarding protecting the environment (EPA), ensuring safe workplaces (OSHA), child-labor laws, etc. Yet we'll happily buy products from the companies and countries that refuse to enact similar legislation or protections because it saves us a buck. Then we whine that our companies aren't competitive. We can't have it both ways. If we are going to enact tougher standards and increased costs, then I hope the government does help protect our industries.
Second, is that your position is short-sighted. Yes, industry subsidation lowers the costs for American's to buy goods. But it drives their competition out of of business, and will eventually allow specific Chinese industries to dictate prices. Even you can't think thats a positive trade environment or condition.
Un-mute this short MSNBC video and take a listen.
http://www.aei.org/publication/the-...higher-prices-and-reduced-income-for-the-usa/
Here’s a study that comes to a different conclusion to the one you provided that I was able to open. I suppose we could play “dueling studies,” but I doubt either of us would alter our opinions.
I have a couple of quick (but not fleshed out) reactions to the first link you provided (I still can’t open the second one for some reason).
One: the link says China has manipulated its currency in order to keep its prices low. That would partially explain the finding in your study that there has been a negligible inflationary impact up to this point. It is unlikely China will continue to devalue its currency now that Trump is threatening to lower the boom with skyrocketing tariffs.
Second: even if it is true that companies are eating the costs of the tariffs they are forced to pay rather than pass them on, it is a detriment to their bottom line. (Note the study in the link I provided says they ARE passing the taxes on to the consumers.) They will eventually have to pass the extra expense to the consumer or suffer net losses in their profits, which will resort in lower dividends to their investors. Tariffs like all taxes have a negative impact on the marketplace.
I’m way too lazy to search through Don Boudreaux’s postings to find them, but he has repeatedly pointed out that America was manufacturing products at a record pace BEFORE Trump imposed his tariffs. We had just moved on from the big-furnace-based manufacturing of the 1950s and 60s, and had progressed into more digital/computer age manufacturing, leaving the old manufacturing industries to less well developed countries. Which has had the happy effect of making us Americans richer than ever while helping other countries like China climb out of poverty.
Your argument essentially mirrors the one in the second link I posted. Money is not wealth. Products are wealth. For the last fifty years or so pretty much the whole world had come to that conclusion, abandoning the mercantilist-nationalist philosophy (which was partly responsible for repeated wars) in favor of mutual trade agreements, creating international supply chains in which each country would operate under its own unique comparative advantage
I am under the impression that Donald Trump’s idea of trade consists of the notion there are winners and losers. People only trade with others when they determine they are going to be better off by making the trade. Which means there are only winners when the trade is mutually agreed upon. Trump’s reputation as a businessman was with the understanding he screwed anybody he could get away with screwing. (That might have something to do with him being unable to find any new investors other than Russians). At any rate Trump seems to want to apply his private business practices to international trade. IMO it won’t end well for any of us. International resentments can lead to far worse impacts than when an individual like Trump screws over an associate and tells him to sue, that he’ll tie him up in court for years.
And now I apologize for the long screed. Ignore it if you want!
There is a concept in economics called “comparative advantage.” It was first developed by a fellow named David Ricardo in the early 1800’s. I’m not a wonk, have average intelligence and cannot follow the detailed nitty-gritty when economists start to talk in economist language. But I encourage you to check it out.
Maybe it will help you to understand that trade - international trade of the free market variety - lessens tensions between nation states, harbors good will between peoples and cultures. Protectionism and nationalism create the exact opposite situations. It fosters distrust and fear and resentments that sometimes can only be settled by war. I doubt you want to see any 18 year old boys get killed in a war that is supposed to protect a handful of manufacturing jobs.
I’ll try to find the link where it is said American taxpayers are paying $900,000.00 for each steel manufacturing job saved or created.
Mercantilism, protectionism, nationalism are just as harmful to a society (and the world stage) as socialism. Really they’re from the same statist tree that thinks a government meddling in the private affairs of its citizens is a desirable thing.
I know this reply is all over the place, and I apologize for that. I’m a little spaced out right now!
I understand the benefit of trade in regards to global relations. But your reply fails to address either of my reasons as to why I have limited issue with the government executing tariffs. Is your argument that "comparative advantage" is worth the "competitive disadvantage US companies face from China"?
Yeah, my comment last night was all over the place. As I understand it comparative advantage says when a person or company gains an comparative advantage over others it is in everyone's best interest to let them maximize their advantage until someone comes along to overtake them. It's immaterial how they gained the advantage. They may be sitting on top of the resources necessary to make their products, they may be in a country that has exceptionally low labor costs, they may be receiving subsidies from their government. It doesn't matter. If they can produce their product in such a way that they can sell equal quality to consumers at a lower price it is in everyone's best interest to take advantage of those lower prices. It is annoying to their competitors, but it either leaves those competitors to seek a market where they have a comparative advantage, or it entices them to innovate and regain market share. It is not a concern when a government gives subsidies because that business plan is not sustainable. Eventually even the government tires of doling out the money, or the government runs out of money itself. In the meantime consumers are enjoying the fruits of their advantage.
Now I understand it gives you pause that companies in China will use their comparative advantage (gained by government subsidy) over American companies in part because it might lead to that China company gaining a monopoly, driving out all American competition, and then gouging consumers in its wake. That is very unlikely.
In the first place such a monopoly would be short lived. Companies that have gained a monopoly through government largess are faced with many constraints their competitors escape. For one, they are most often controlled by government bureaucrats that have no idea how to run the business. Those bureaucrats tend to avoid innovation, preferring to keep everything as it was when they started regulating it. That opens the door to competitors who must innovate to survive. Innovation will be the death knell of the monopoly.
Secondly, it is not true that a monopoly faces no competition. There is a concept known as "potential competition." A monopoly understands that if it starts gouging its customers entrepreneurs and investors will see an opportunity to move in and capture market share. It faces potential competition. If it ignores that potential it will not be a monopoly for very long.
There's a whole lot more that can be said, but I've got to get to work. If you find any of this to be of interest I recommend you read David Ricardo, and the many economists that have added to his understanding of comparative advantage.
