Trump Insists We Cannot Lose a Trade War With China After It Proposes Tariffs
Remember, these are just PROPOSALS.
A possible trade war continues to brew as China proposes its own tariffs on American goods after President Donald Trump’s administration released a list of 1,300 Chinese exports it plans to target with tariffs.
Despite this action and concerns of a trade war, Trump insists we cannot lose said war because we’re already “$500 billion down.”
Trump tweeted this morning:
We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S. Now we have a Trade Deficit of $500 Billion a year, with Intellectual Property Theft of another $300 Billion. We cannot let this continue!
— Donald J. Trump (@realDonaldTrump) April 4, 2018
When you’re already $500 Billion DOWN, you can’t lose!
— Donald J. Trump (@realDonaldTrump) April 4, 2018
Trump’s administration unveiled 58 pages “of about $50 billion in Chinese electronics, aerospace and machinery products it plans to hit with steep tariffs.”
Those listed in the pages face a 25% tax, which the administration states is a penalty against China for its “discriminatory policies that the United States says put its companies at a disadvantage in the Chinese market.”
Tariffs are awful. Plain and simple. Guess who ends up paying for it? The consumers.
Trump has decided this course of action even though the U.S. Chamber of Commerce and National Association of Manufacturers opposed it. Both groups agree we must do something about China, but this is not the way to go:
“If history is any indication, these proposed tariffs will not work and will be entirely counterproductive. Tariffs penalize U.S. consumers by increasing prices on technology products and will not change China’s behavior,” said Dean Garfield, chief executive of the Information Technology Industry Council, which represents companies such as Apple, Dell, IBM and Google. “Instead, the administration should act consistent with international obligations and work with other countries to address systemic issues with China.”
It is important to remember these are just proposals and nothing has gone into effect. The affected companies have 30 days to comment on the tariffs. This will leave “an opening for the sort ofnegotiated [sic] settlement that business groups favor.”
Chief Economic advisor Larry Kudlow sought to ease fears by reminding viewers on Fox Business that nothing has actually happened yet and no one “should overreact right now” because this proposal “is a negotiation using all the tools.” From CNN:
Asked to explain the President’s tweet and if he agreed with the sentiment that you can’t lose a trade war, Kudlow replied: “I’m not sure what exactly he’s referring to.”
“You have proposals,” Kudlow said, referring the US tariffs proposed against China. “There’s no action here and you’re going to go through a process of comments and resubmitting comments and discussions.”
“You’re not likely to see any definitive actions for a couple of months,” he added.
Kudlow acknowledged that the chances that the tariffs against China might never materialize is “not zero,” but he said it would be up to Trump to decide what, if any tariffs, are levied.
In response, China proposed tariffs on 106 U.S. products that include soybeans, cars, and a few airplanes, which add up to almost $50 billion. Commerce Secretary Wilbur Ross downplayed the tariffs on CNBC this morning:
China’s tariffs “amount to about three-tenths of a percent of our GDP. So, it’s hardly a life-threatening activity,” Ross said in a “Squawk Box” interview. “It’s relatively proportionate to the tariffs we put on based on the intellectual property.”
Ross agreed with Trump that America lost the trade war with China “many years ago.” He also echoed Kudlow’s sentiments, stating that he wouldn’t be surprised “at all if the net outcome of all this is some sort of negotiation.”
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Comments
What’s the formula for GDP? Work it out then tell me who loses money in a trade war. America survived using tariffs for a long time.
Forksdad:
GDP is calculated by all spending (consumer and government) plus investment plus net exports.
So if Trump slaps on $50 billion in tarriffs and China throws down a paltry $3 billion in face saving tarrifs, Trump just increased GDP by $47 billion. WINNING!
Exactly we cannot lose this or any trade war.
If we do, you will blame it on liberals.
Stick and carrot. We’ve seen nothing but carrot when it comes to trade and international relations. How many red lines, or lines in the sand have been crossed when the US tried negotiating in the past? When everyone thinks your talk is nothing but wind you get robbed. The old fall back position of, “Well it’s only a small part of our GDP so let them have it” gets old and eventually adds up. $500 Billion is an ass kicking.
Tariffs are awful. Plain and simple. Guess who ends up paying for it? The consumers.
This has about as much intellectual rigor as a statement like
Innoculations are awful. Plain and simple. Guess who ends up being infected? The patients.
Bulldust. Tariffs are awful. They are not inoculations, they’re stabs in the stomach. By definition they hurt the general interest in order to help the special interests who demand them. The general interest is that of consumers; producers of this or that good or service are a special interest, and tariffs let them benefit at everyone else’s expense.
The purpose of an economy is consumption, not production. Production is not a benefit to us, it’s merely the price we pay so we can consume.
When all this came out I went and checked out the trade deficit…and uhhh it’s a pretty one sided relationship.
Data I didn’t check out was China to other countries. Canada will win for sure in this spat.
The other part that will be interesting is how global markets respond to the “supply” side of China’s goods no longer being “cheap” to the US.
I
They’re not “cheap”. They are not environmentally (i.e. “green”) friendly. They are not labor friendly, here or in China. They are cost-shifted through asset inflation and welfare (e.g. redistributive change) policies.
I’ll make the point again.
“Trade deficits” are a false measure of anything in economics. They are a tool of demagogues.
They measure only in currency. They make no effort at measuring the real value of trade, which is in the wealth created. FOR BOTH SIDES OF ANY TRADE!
Again, for the slow (and I’m not addressing this to Andy), you run a terrible, awful, really BAD “trade deficit” with your grocer. You give them money. You get no money back. Is that the RATIONAL, economic measure of your trading with your grocer? Hell, NO! You give them money, and you acquire wealth in the bargain.
Now, is trading with China ALWAYS a good thing? Here the question is “who gets to decide?”. Many American companies will not expose their best technology to Chinese business, for the simple reason that they are known to “expropriate” technology. Some will, as part of their bargain. Is a bureaucrat better suited to make that determination?
And there lies the cutting-edge of market economics versus planned economics. I know of no “magic” that planned economics has ever produced, except the “magic” of screwing things up, while costing EVERYONE the right to chose their own course.
Trump, like all protectionists, is operating under the economically illiterate premise that a trade deficit is a bad thing, that the ideal is to run a trade surplus, and that one wages trade wars in order to achieve this.
Tariffs, to him, are measures that primarily damage the enemy, much like military weapons; when you fire a missile at an enemy you’re down the cost of the missile, while he’s down whatever you hit. You’d rather not fire it and save the cost, but if you do fire you come out ahead of the game because his loss is greater than yours.
Thus his astonishingly ignorant statement makes sense. If “being $500 billion down” is a bad thing, then indeed you can’t lose; either you go up, which you count as a win, or you go even further down, which is not substantially worse than where you are now, so you don’t count it as a loss.
The truth, of course, is that if you’re in a trade war you’ve already lost. Tariffs are a “weapon” that is primarily aimed at yourself, not at the other side. a trade war consists of two people repeatedly stabbing themselves in order to splash blood on the other one’s clothing. and trade deficits are in themselves good things, so long as you can sustain them. Their main down side is that the people racking up the dollars may eventually want to spend them, and you’ll either have to come up with the exports they want or else see the dollar’s value fall.
Read The Wealth of Nations, people. Smith explained it all plainly 240 years ago, in very easy-to-understand terms.
Well then, we’ve already lost. Every country practises some form of trade war. The only people who win in our situation is the rent-takers.
Do the math, then show me how GDP goes down in a trade war. I’ll be back but no hurry. Please no more bloody rhetoric, simple pure numbers. An earlier poster already laid out the formula for you just plug the numbers in.
Tariffs are rent taking by special interests at the expense of the general interest.
What it does to GDP is irrelevant. Money is not wealth. again, you have to read The Wealth of Nations, or you are simply incompetent to discuss the subject.
Circular reasoning and appeals to authority is all you have? Of course the apostle of free trade says free trade works. I was waiting for an actual answer with real numbers.
If you don’t got it say so.
Anyone in this game can loose.
China already levied implicit (e.g. environmental, labor, monetary arbitrage) and explicit tariffs. This is the first visible effort to address conditions that undermine the function and purpose of free markets.
As long as our American businesses have to pay for workers comp insurance, health insurance, OSHA compliance, EPA Retirement plans, social security… They can never compete equally with Chinese businesses that don’t pay for any of these things. If we want “free trade” then we need to remove these expenses that make our companies uncompetitive. If not we need to charge tariffs equal to those costs on imported goods.
More ignorance. So what if our businesses can’t compete with the Chinese? If they can’t compete, regardless of the reason, they shouldn’t exist. If you want to save them you can do it by removing all those excess burdens, so they can compete. But if you don’t want to do that, then let them go under.
You write as if the purpose of consumers is to keep producers in business. That’s completely backwards. The only purpose of the economy is to serve consumers. Producers exist only to serve consumers, so if they’re harming consumers they should disappear.
The ideal situation for everyone is bilateral free trade. But if foreigners insist on harming themselves with tariffs then unilateral free trade is far better than harming ourselves with our own tariffs.
“More ignorance…”
What businesses have you built from scratch?
Completely irrelevant. Businesses don’t deserve to exist. If they don’t serve their customers, regardless of why, they deserve to disappear.
If the Chamber of Commerce is against tariffs, then I’m for them.
Absolutely.
So, you ARE with Bernie Sander, the AFL-CIO, and every BIG GOVERNMENT “thinker” in history.
Impressive…
I am so sick of people holding up David Ricardo’s collectivist theory of “Comparative Advantage” as if it were a crucifix; His simplistic theory proposed that since Portugal could produce wine cheaper than England, and England could produce wheat cheaper than Portugal, it would be mutually advantageous to let Portugal produce the wine and England produce the wheat.
His simplistic theory ignores a long list of factors: intellectual property, human behavior, exchange rates, government intervention, the ability to print “capital”, reciprocity, transportation costs, interest rates, mobility of the means of production, military preparedness, and more. Yes, Ricardo’s math works perfectly well as long as one has a utopian view of reality.
The late Jerry Pournelle wrote:
More BS. Jerry was a smart guy, but sometimes got lost in his own rhetoric. None of this matters. The only thing necessary for free trade is freedom. Yes, he was correct that “most free trade agreements aren’t really free trade agreements”. That’s an argument against the agreements, not against free trade. Free trade doesn’t need agreements; we can adopt it unilaterally. It’s better to have agreements, so the other side also adopts it, and thus we all benefit. But if they won’t then they won’t; we should do it anyway, because it’s the best thing for us.
“…we should do it anyway, because it’s the best thing for us.”
Right. All the other countries could put 100% tariff’s on all goods from the USA, and we have zero on theirs, and you think that is “the best thing for us”.
What do you suggest we pay them with?
Yes, even if every other country has a 500% tariff on US-made goods, our imposing tariffs on goods made in their countries would very obviously make our lives worse, not better. as the proverbial mother said, if everyone else were jumping off a bridge, would you jump too? Free trade is primarily for our benefit, not theirs.
What should we pay them with for their goods that we want to buy? Each buyer will negotiate a price and currency with each seller, of course, just like always. If they want to be paid in Yen and we haven’t got any then they’ll have to accept dollars, or else we’ll have to buy Yen on the market. This may result in a strong yen and weak dollar, so that the cost to us of their goods rises and we may end up deciding we’d rather buy local after all; if so, that’s fine, that’s the free market in action, not government intervention. Or they may realise that they have a problem, and drop their tariffs, which would be great. Or it may have some other effect instead; whatever the blind hand of the unfettered free market does is by definition the best solution available.
“whatever the blind hand of the unfettered free market does is by definition the best solution available.”
But that is the problem, we don’t have a free market, and we never have. We don’t have one now, we didn’t have one before, and we are not likely to have one in the future.
Free market “definitions” do not work in the absence of a free market.
I deal with reality. All of our trade is done by trade deals. There is simply nothing wrong with trying to make the best deal for the American people.
If you’re making nothing, you have nothing to pay with. We have a net worth, built by generations of hard working Americans. It’s like money in the bank. So, bad trade policy continues to work, we keep drawing down our reserves. Eventually the bank account is zero.
I’m not opposed to free trade, far from it. But we do not have it and never have.
“All of our trade is done by trade deals.”
In addition to all your other lies and bullshit, this is a glaring LIE.
Great Britain has no trade agreement with many nations with which the British PEOPLE trade. Freely.
Switzerland has few trade agreements with ANYBODY, and they are one of the wealthiest nations on the planet. Because of trade.
Mr. bullshit chimes in.
I was of course speaking about the USA. Who do we trade with freely? Meaning no restrictions on the trade, no tariffs, no currency manipulation.
We have managed trade deals. 2000 page trade deals are not free trade. Trade is managed, someone benefits. Some side benefits. Free trade deals would fit on a postcard.
As for your assertions about free trade between other countries, that is more BS. The countries mentioned trade with other countries that have import tariffs, manipulate currency etc. It’s not free trade just because you choose to do it.
You are FOS, as always.
There is no difference in our current trade stance and that of our past, other than the current administration believes the deals we have made are not good ones and are intent upon renegotiating them.
You poor moron.
“Free trade deals would fit on a postcard.”
Well, a few pages of contract. Yeh. They DO. All over the world.
Then you conflate a bunch of terms you don’t begin to understand, except as bogeyman terms.
The U.S. “manipulates” its currency. Pretty much every sovereign does. Several “manipulate” their currency by tying its value to ours. You moron.
Um, yes, it is. That’s what “free” means. We can have free trade simply by making it free; what other countries do is irrelevant.
“Yeh. They DO. All over the world.”
OK, point out a trade deal the USA has with anyone written on a few pages. We both know you cannot, they do not exist.
“We can have free trade simply by making it free; what other countries do is irrelevant.”
The term “Free Trade” implies free trade between two or more parties, not one party freely agreeing to do something stupid or smart. Yes, we entered into bad trade deals freely. That doesn’t remotely make it “free trade”.
Obtuse.
“OK, point out a trade deal the USA has with anyone written on a few pages. We both know you cannot, they do not exist.”
You poor moron. The “USA” does not trade. People and their entities trade.
And YES!, people in the US trade freely with people all over the globe. Often without even a formal contract as such.
I buy stuff from people in China over ebay, for instance. Or New Zealand or the UK.
You are SUCH a moron…!!!
NOBODY needs a “trade deal” to trade.
https://www.youtube.com/watch?v=eYqzcqDtL3k
People interested in the verity of this should watch this excellent presentation, which tells several stories.
Refute them, moron.
You may be the biggest idiot on the internets.
Per your usual, when challenged to put up, you deflect. Basically you make shit up.
“I buy stuff from people in China over ebay, for instance. Or New Zealand or the UK.
You are SUCH a moron…!!!
NOBODY needs a “trade deal” to trade.”
Sorry to inform you, moron, but you’re purchases from overseas are subject to the trade deals made by the US government with respect to those particular countries. Just because you violate those trade laws doesn’t make it free trade between individuals.
“When goods move from any foreign country to the United States, they are being IMPORTED. There are specific rules and regulations that govern the act of importing – and they can be extremely complex and confusing – and costly.”
https://www.cbp.gov/trade/basic-import-export/internet-purchases
So, ragspeepee, are you violating the laws of the United States with respect to being an importer?
EwwwwwHOOOOOhooo…!!!
Come get me, Mr. BIG GOVERNMENT…!!!
What a pitful phuc. Turn me in, JackBoots.
You are wrong. As I have just proven.
You’re also a liar, as I have shown.
And you’re deflecting, again. I could care less what trade laws you break, but you are subject to them in spite of the lies you’ve told here.
“Sorry to inform you, moron, but you’re purchases from overseas are subject to the trade deals made by the US government with respect to those particular countries.”
Ummmm…no, lying sack of shit. They MIGHT be regulated by BIG GOVERNMENT. But they aren’t subject to a “trade deal”.
I don’t deflect, lying POS. I gave you a specific example of free trade. You are just a lying nutter.
Anyone that reads your words, and that document, and the follow up, will know exactly what you are.
You lie, deflect, and show your ignorance with respect to the trade laws of the United States.
Mr. JackBoot, you should report me to the Stasi.
The plain fact is, I’d be delighted to break such “trade laws” and risk being prosecuted.
Punk-assed bitch.
More deflection. I have no intention of “reporting” you and you know it. It’s just you trying to change the subject from your lie’s being exposed.
Bark.
Yes. Barking mad. Fetch…!!!
EVERYbody with more brains than you needs to read up on Ricardo’s brilliant insight.
You don’t begin to understand it. What you describe is the Law Of ABSOLUTE advantage, not Ricacdo’s Law Of Comparative Advantage.
Trade ALWAYS benefits BOTH parties. IF it did NOT, they would not be trading.
And, you lying dolt, there’s NOTHING “collectivist” about Ricardo’s LAW. It is, in fact, a law of individual liberty. Being free, as individuals and as our associations, to deal with who we chose to engage in trade…on mutually beneficial terms, free from the stupid hand of “brights” who think they are our betters.
Jerry Pournelle may have been good at writing science fiction.
He understood jack-shit about economics.
Trade doesn’t happen on “sound money”. It doesn’t even really depend on money on a day-to-day basis. Anybody with a brain includes in contracts a currency they will both use as a means of valuing their WEALTH transfer, which is all currency IS. Money is just an agreed upon symbol we find has utility. But the VALUE is in the trade, not its symbols.
As an example, we Americans all AGREE to accept the dollar as a symbol of our WEALTH. We work for that symbol, expend our genius for it, and freely trade with others using it. A dollar bill HAS no intrinsic value. It’s ONLY value is in what we have agreed that it will symbolize. Which is a HUGE thing in human development!
Actually he understood quite a bit about economics. But he was wrong in this instance.
Ricardo had no way of anticipating the free movement of labor. He’s interesting but an outdated relic.
What a lode of bullshit! People were moving, and have moved, all over the globe for FLUCKING centuries.
PLUS, “labor” doesn’t HAVE to “move” for the LAW Of Comparative Advantage to obtain.
Name an economist who says that Ricardo is a “relic”. Where do you find this crap?
On the contrary, the movement of labor was a lot freer in his day than it is now. But it’s irrelevant in any event. The movement of labor doesn’t affect this. Every person, and every nation, will always have a comparative advantage over others at something. It’s a truism. It’s impossible for anyone not to have a comparative advantage at something, because that would require everyone in the world to be exactly the same in all things, which is obviously impossible.
Millhouse,
You seem to miss the point that these tariffs that we are applying are targeted to punish bad behavior. They are not just random tariffs.
If I have 3 manufacturers making the same product, 2 of them use ethical business standards, but manufacturer #3 uses currency manipulation and intellectual property theft to undermine #1 and #2. Applying a tariff on #3 really only effects #3 and the customers that would only buy based on price.
Also I don’t know what you do for a living but I have worked in manufacturing for 30+ years I can tell you books worth of stories of actions and fraud committed by Chinese companies that would cause prison terms if they were committed here in the states.
https://www.youtube.com/watch?v=nIquJ7HT9jY
Bad behavior by Chinese people in China is China’s problem, not ours. Why should we punish ourselves because of their behavior?
lets correct that statement to the reality of the situation…..
Bad behavior by Chinese people in China, that only effect people in china, is China’s problem, not ours.
Bad behavior by Chinese people in China, that negatively effect people in U.S.A., is U.S.A.’s problem, when it is caused or allowed by the Chinese government.
Why should we allow improper rewards to bad faith actors by allowing them unfettered assess to our markets?
What’s an “unfettered market”? You mean one in which I’m free to buy from who I want on terms upon which we both agree?
Where does it get to be your right to tell me how to dispose of my property?
There are some idiots here who advocate we produce everything we might consume right here in the U.S. That is EXACTLY what Gandhi proposed with his “spinning wheel”, which still is the central icon in the Indian flag. If you know ANYTHING about the history of that disastrous idea, you know the human misery it caused for decades. India is STILL climbing out of that human tragedy.
“You seem to miss the point that these tariffs that we are applying are targeted to punish bad behavior.”
You seem to miss the FACT that these tariffs are TAXES on American consumers and user businesses of the products “protected”.
They are PURE Collectivist trade policy. Ask Bernie Sanders and the AFL-CIO. There is NO distinction between their “trade policy” and T-rump’s. Both hate free markets and the freedom to chose. Both are VERY happy to force you to pay more for everything you consume. I think that is evil.
Leave it to lawyers that have probably never ventured out of their books, never ventured more than 50 miles from their home for anything other than vacations, to profess complete knowledge of a situation. Do some business in China then come talk to me. I have actual experience in the subject matter not just your theoretical B.S
Well, a personal attack won’t work, buckwheat.
I’ve been a small business person. In fact, it’s the reason I went into the law. I’ve trucked all over the 48 states, and I’ve taken one vacation in my life.
I’ve also studied economics both in and out of formal education.
You resort to authority (your own!) is stupid. You can’t deal with the arguments, so you claim “special knowledge”.
This isn’t “theory”. It’s about what economics really is; human behavior.
There is no valid question that T-rump’s tariffs are a tax on every American, a drag on our defense posture, and Collectivist policy.
Rags
There is no valid question that T-rump’s tariffs are a tax on every American, a drag on our defense posture, and Collectivist policy.
Read what I said, Show me where I said it wasn’t.
We know you are a NeverTrumper, but really do you need to be in Tom Donohue’s pocket as well?
More personal attacks?
You’re in Bernie Sander’s “pocket”.
I’m in nobody’s. I like being free to chose.
BTW, liar, I am a T-rump critic. And there’s plenty to criticize.
Can you do it? Or are you in that pocket as well?
Just a couple of points here.
First, profit from trade acts like water. It always flows to the party having the lowest production costs. And, a negative trade imbalanc means that more money is leaving the economy of a country than is coming in. We all know what happena when a persons expenses are greater than his income. Sooner or later he goes broke.
Second, Ricardo based his theory on trading between partners who were of equal, or near equal, standards of living and who all had at least one product that the other wanted and wanted in a quantity to sufficiently offset any imbalance in trade. He never considered that one of the partners could not compete with the lesser production costs in all of its industries. So, forget about Ricardo. In today’s world, you have a huge difference in standards of living.
Third, the total economy of a nation has to be taken into consideration, not just one part of it.
Let’s look at cars for a moment. An auto manufacturer, in country A, employs 20000 workers. It sells most of its cars within that country, as it has the highest standard of living. Imported cars from country B are selling, in country A, for 30% less than it cars. What can it do to make up the loss in profit” It can increase the cost of its cars. But, as the cheaper cars are already cutting into its profit, that wn’t work. It can cut overhead. But, that would reduce its level of production, making it impossible for the company to expand. It could sell cars to country B. But, the population can not pay the prices that the company would have to charge to make any money, and the cheaper cars would probably be more appealing to the underpaid workers of country b. Or, it could simply move its operations to country B produce its cars for 30% less and sell them back in country A, thereby increasing profit. Which do tyou think the company will do? Now, here is the rub. If the lions share of manufacturers move abroad to lower production costs, what happens to the standard of living in country A? Fewer people working = less money to spend = reduced sales = a lower standard of living. Eventually, just like the case of a pan holding water, the higher side will come down until it is equal with the lower side and then everyone will be equal. But, in the meantime, those people on the high side are going to suffer. And, it won’t just be a single industry. It will spread to multiple industries and the support industries and then you end up with 50% of the people being directly supported by the other 50%. Just like we have uin the USA today.
You can pay a small “tax” in tariff to protect the economiy or pay a much larger one to support those who do not have a job.
Excellent. Thanks.
This is more of your complete and utter bullshit.
I again ask where you find this crap, since you are not bright enough to generate it yourself. Step up. What are your sources?
“Second, Ricardo based his theory on trading between partners who were of equal, or near equal, standards of living and who all had at least one product that the other wanted and wanted in a quantity to sufficiently offset any imbalance in trade.”
This is actually a lie. There is no “imbalance of trade” or “standard of living” that has anything to do with the LAW Of Comparative Advantage.
Quite the opposite is the case, in fact. Trading, according to Ricardo, would inexorably benefit BOTH parties (and it does), regardless of their relative standard of living. It has done so historically, and is NOW.
The “magic” of market economics has done more in the last several decades to lift people world-wide out of poverty than ANYTHING ever dreamed up by Utopians. I just works.
There is no such thing as “an imbalance in trade” (which is measured in the false index of money) in economics. There is only the tranfer of WEALTH, which is always MUTUALLY beneficial.
As I’ve noted before, there can NEVER be a “balance of trade” between the U.S. and Norway, for the good and obvious reason that we will NEVER export to Norway’s tiny consumer base what we import into ours, absent some idiot in power telling us we cannot have what we demand as consumers.
Again, who is packing this crap into your skull?
I want you to name your “reading list”. I’ll happily supply mine.
First, read Ricky. It is implied, by him, that country A and country B will have a product which they both produce and which one can produce more cheaply. His theory is that each country would voluntarily suspend production of the product which the other can produce more cheaply and fill the vacuum with the cheaper product. Now, if all other trade is in balance [equal] the value of these two products have to offset each other equally OR one country loses money.
We know from historical fact that unequal trade doe NOT benefit both parties equally. If it did, then we would have unfettered free trade with no tariffs and EVERYBODY would be getting rich. Unfortunately, in the real world, this does not happen.
“The “magic” of market economics has done more in the last several decades to lift people world-wide out of poverty than ANYTHING ever dreamed up by Utopians. I just works.”
It sure does work, if you are living in poverty. But, it does nothing for those with a high standard of living except reduce their standard of living. This might be nice if you are a socialist, but it is a little hard on those who enjoy a high standard of living.
“There is no such thing as “an imbalance in trade” (which is measured in the false index of money) in economics. There is only the tranfer of WEALTH, which is always MUTUALLY beneficial.”
Wow, this is the economic theory of armed robbery and burglary. Were did you get your PhD in economics? Sing Sing? Giving your money to someone else, or allowing them to take it, without equivalent compensation results in you living in a homeless shelter. The only person who benefits from that economic theory is the thief.
There may never be an equatable balance of trade between the US and Norway. This is largely because Norway is a regional exporter, with 80% going to Europe and 5.4% going to all of North America. Norway can obtain its import needs from sources other than the US. But, then, the US comprises 27% of the consumer market while Norway comprises .5%. Interestingly, Norway does have tariffs on products, such as clothing [5.5-10.7%] and various meat and poultry products [anywhere from 60%-400%], which directly competes with domestic products. So, even little Norway
But, in order to remain a viable international trading partner, our balance of trade has to be at least equal across the spectrum of trading partners or the US is sending more money out of the country than is coming in. This is simple economics, which every housewife learns quickly. If you spend more money than you make, you end up destitute and living on welfare.
“First, read Ricky.”
You mean Ricardo, the genius?
“It is implied, by him, that country A and country B will have a product which they both produce and which one can produce more cheaply. His theory is that each country would voluntarily suspend production of the product which the other can produce more cheaply and fill the vacuum with the cheaper product.”
No. First, you…like the dolt above…don’t BEGIN to even state the proposition correctly. Like that moron, you recite a case of the Law Of Absolute Advantage. And nobody with a brain disputes this because it is intuitive.
Richardo “implies” nothing you intimated, you poor liar.
A lot of economics is NOT intuitive, and you have to learn how to think before you can begin to comprehend it. You have not.
The LAW Of Comparative Advantage considers that a nation may have an ABSOLUTE advantage in producing…say two things…over a potential trading partner. But it considers that rational market players (NEVER a government bureaucrat, BTW) will look at what they are MOST advantaged by producing. They will shift their resources to producing that, and they will benefit by the WEALTH transfer of trading with another producer of the second thing they have an advantage in. The other producers (though disadvantaged in ABSOLUTE terms) will very gladly enter into the trade, because it makes them WEALTHIER. They, in turn, are able to afford the products produced by others, regardless of ABSOLUTE advantage.
The person who understands economics knows that the wealth of nations…or individuals…is not a pie. It isn’t a pan of water. I don’t have to take your’s to become rich. The pie is expansive.
Now, put up your reading list.
“The LAW Of Comparative Advantage considers that a nation may have an ABSOLUTE advantage in producing…say two things…over a potential trading partner. But it considers that rational market players (NEVER a government bureaucrat, BTW) will look at what they are MOST advantaged by producing. They will shift their resources to producing that, and they will benefit by the WEALTH transfer of trading with another producer of the second thing they have an advantage in. The other producers (though disadvantaged in ABSOLUTE terms) will very gladly enter into the trade, because it makes them WEALTHIER. They, in turn, are able to afford the products produced by others, regardless of ABSOLUTE advantage.”
Notice the last sentence, “They, in turn, are able to afford the products produced by OTHERS [caps mine]”.
Once you expand the trade market, then the balance of trade between country A is no longer restricted solely to country B, but now includes country C-P. And, unless country A is now making more on its lone export to country B, than it is paying country B for its import to country A, country A has no additional money to pay to countries C-P for its imports from them. Again, if country A is paying more for imports than it is being paid for exports, it has a negative cash flow.
This does not even begin to address what the laying-off of all of country A’s workers and the closing of its factories or farms, which produce the product now being imported from country B, will do to the buying power of country A. Product B, from country B, might now be cheaper, but there might be less demand due to unemployment and production suspension.
Now, I think that I gave you a pretty good illustration of c omparative advantage in the case of Norway and the US. Even though Norway has an absolute advantage over the US, it still uses tariffs to protect domestic producers from imports. And, the US is not making up the negative balance of trade with Norway over the entire spectrum of its trading partners as it has a total balance of trade of -$812 Billion in goods alone and -$566 Billion in goods and services. So, the US had a trade balance in services of +$250 billion dollars, 1/4 of the trade deficit in goods. But, we still payout over twice what we take in in trade. So, where do we get the money to pay the grocer? Oh yeah, the trees.
“Now, I think that I gave you a pretty good illustration of c omparative advantage in the case of Norway and the US. Even though Norway has an absolute advantage over the US, it still uses tariffs to protect domestic producers from imports.”
No. None of this is penetrating the crap pack in your skull.
You are using terms you don’t begin to understand, and the concepts are WAY beyond you.
If trading was the zero-sum game you seem to be in love with, how come people now enjoy a standard of living everywhere…even in poor nations…that would be the envy of anybody just a few generations ago? Americans are not “poorer” in relation to the wealth generated by the rest of the world. If things worked that way, we’d be in the dirt many decades ago.
The pie grows. I don’t get poor because you get rich. Not when markets are allowed to work.
Why was Malthus so gob-smackingly wrong?
Why are we not at “peak oil”?
Where’s the list of criminal minds who did this to you?
But, Americans ARE poorer than they were even 50 years ago. We, the American people NOW have $21 trillion in government debt. That is debt that each person living in the US owes to someone else. On top of that consumer debt, non-government debt is now 192% of the GDP. Our debt is now TWICE what this country produces each year. The GDP of the US in 2017 was $18.5 TRILLION dollars and our consumer debt alone is $37 TRILLION. That is an immense nut to crack. Can you imagine how long it would take to pay off a debt of $100,000 which has a apr of 20% on a %50,000 a year salary? Don’t forget that you have other expenses and will probably accumulate more debt on a regular basis.
It doesn’t seem like this country has an economic crisis, until you realize that this country, and a lot of its people, has been living on deficit spending for decades. But, sooner or later, that debt has to be paid off. And, money does not grow on trees.
Now you’re conflating our standard of living with the national debt.
This is really WAY too hard for you.
I didn’t want to hurt your brain too badly, so this is the second chunk of the profile of the (very simplified) LAW Of Comparative Advantage.
The nation that has an ABSOLUTE DISADVANTAGE relative to its trading prospects DOES have a thing it produces better than the second thing. Still, not as good as the country with the ABSOLUTE ADVANTAGES, but better in the one than the other of its own production.
What Ricardo’s insight taught us is that the disadvantaged nation would STILL find it beneficial to go ahead and produce optimally that thing it COULD produce COMPARATIVELY well, and trade in that thing with others.
Reading your latest junk, I’m not writing this for you. You’d need a lot of background before you did anything more than my Golden when we discuss the theory of insurance. Maybe someone will benefit.
Here is the obvious problem with the Comparative Advantage theory. It contradicts the Absolute Advantage theory. If a country produces two products and another company produces one of the products at an absolute advantage, then the country with the inferior cost to produce that product would stop production of that product. This leaves the first country with only one product. But, if that product can be produced more cheaply by any other country, then the first country would simply stop producing that product as well. This leaves the first country essentially importing all of its needs or, at least, not exporting anything.
As I said, Ricardo’s assumption in his theories was that some parity existed between the trading partners, which allowed specialization to offset lack of profit by cheaper competing goods. Otherwise, sooner or later some country will experience a catastrophic trade imbalance where that country’s economy is operating at a loss.
“As I said, Ricardo’s assumption in his theories was that some parity existed between the trading partners, which allowed specialization to offset lack of profit by cheaper competing goods.”
Again, that’s simply a lie. Where did you get this shit?
“This is more of your complete and utter bullshit….”
Time to step back from that mirror.
FU, SwineReports.
“Wow, this is the economic theory of armed robbery and burglary. Were did you get your PhD in economics? Sing Sing? Giving your money to someone else, or allowing them to take it, without equivalent compensation results in you living in a homeless shelter. The only person who benefits from that economic theory is the thief.”
This is so stupid it burns.
You can’t think outside of “money”. When you trade with your grocer, are you JUST giving it money? Are you really THAT stupid?
“…the US is sending more money out of the country than is coming in. This is simple economics, which every housewife learns quickly. If you spend more money than you make, you end up destitute and living on welfare.”
No. It is a transcendentally, incandescently STUPID argument. It isn’t “economics” at all. It’s MAYBE budgeting, if even that.
Now, back to your “reading list”. Step up.
When you give $20 to your grocer for food, where did that $20 come from? Did it come from the grocer? It might have, if you are a mechanic and the grocer gave you that money for fixing his car. But, unless you fix this guy’s car every time you need $20 worth of groceries, you have to have another source of income. So, you are obviously fixing a number of people’s cars. And, the money which you are paid for doing those repairs has to equal what you are paying out for groceries, utilities, housing, etc. OR you end up not being able to pay for something. When that happens, you go hungry, lose your house, have your water and electricity turned off, have your car repossessed, etc. However, in YOUR world, this would never happen. Because money grows on trees, I suppose.
Now, back to your argument that the transfer of wealth [without qualifiers, as you failed to stipulate any in your original post] is MUTUALLY beneficial, I would suggest that this is stupid. If you are robbed of your wealth, you gain nothing in return. So, this can not be said to be mutually beneficial, as you get nothing in return for your wealth. Unless the weight of your wealth was making it impossible for you to walk down the street. Then, not having to carry the bag of money around might be beneficial. Otherwise, you have just lost all of your life span that you sacrificed to obtain that wealth for no tangible return. You expect a return for your labor and the wealth that labor produced. People even expect some tangible return for the taxes they pay.
I don’t got to show you no stinking reading list. All you have to do is to prove my position is wrong through unassailable logic and fact.
Well, I thought you’d pegged the stupid-0-meter, but here you topped yourself.
You can’t think without money.
Try this; you grow vegetables. I fix cars. We agree to a trade…so much vegetables for a new fan belt. That is a wealth transfer, and no money was exchanged. We are BOTH BENEFITED, or we wouldn’t do the trade.
Now, same scenario, but we both agree to keep score on our WEALTH transfer using lead fishing weights (whatever). Same effect. Still no “money”, which is only a symbol we’ve found very useful for such transactions.
How is that different than being robbed? Well, completely, ya moron.
Tell us who packed this shit in your head. They deserve to be exposed for this!
Ah, the barter system. Good try. However, you are now adding the condition that we have a mutually agreed upon transfer of wealth, something that you did not stipulate before. See, originally, you stated, quite unequivocally [in caps I believe] that the transfer of WEALTH was MUTUALLY beneficial. Nothing was said about negotiating any mutually agreeable return for your property. This is, of course a different kettle of fish.
However, the same basic laws of economics apply. If the farmer gives the mechanic half his crop for the fan belt, and even with the fan belt he does not end up with enough vegetables to pay for his electricity, his food, water, clothing, business supplies or home, then some of those things will not be given to him and he will be negatively affected. It is even possible that he will have to trade his house for food. If he continues to have less vegetables than he needs to pay for these things that he needs to survive, he will eventually perish from lack of these necessities. Or the farmer can take out a loan to be paid back by future production of vegetables. Now he has to produce more than before in order to break even as he has an additional expense. This increases the chances that he will fail to meet his expenses and will end up destitute, homeless and with no way to grow vegetables for a living. Same rabbit hole.
I’ll just leave that admission right where it is…
What admission? That you change the nature of the debate to your advantage?
Pretending that trade deficits are not harmful is just incredibly ignorant.
Sorry, but that’s just the fact of the situation.
How can you be so comprehensively uninformed?
Why would you post on a topic you clearly haven’t got a clue on?
Why not just read other people’s comments and learn something?? Or, better yet, go do some research on how trade deficits are harmful??
You only ever seem to care about hearing yourself speak. No matter how idiotic your comments…
One of us knows something about economics. And liberty.
That would be me.
I HAVE done research on the question of trade deficits. What that research has taught me is that it is a bogus concept used by demagogues on fools like you.
http://www.jewishworldreview.com/cols/williams052505.asp
https://www.youtube.com/watch?v=zv5SiQpG6sg
“Why would we NOT start using the leverage we have to pressure China to open its markets to our products, and end its unfair trade practices against us?
And, if they refuse to compromise, just keep hammering them with ever higher Tariffs.”
You should follow your own advice and STFU until you BEGIN to understand this picture.
Tariffs are a TAX on US, stupid.
They HURT our competitiveness world-wide.
They act to make every defense dollar worth LESS.
They are BIG GOVERNMENT central planning.
They are ANTI-conservative and ANTI-liberty.
Now YOU put up YOUR reading list on economics.
What you wrote in support of your bullshit is embarrassingly ignorant.
“There’s really no downside to pressuring them, as Trump is with these tariffs, to end these abusive practices.”
There’s NOTHING BUT DOWNSIDES unless you happen to be in a labor union or have an interest in the “protected” business.
You, Duh Donald, and Bernie Sanders all agree. A troika of idiots.
Jeeebus, people.
Which just shows your ignorance. Go read something on economics, because your statement shows you’ve never done so. TRADE DEFICITS ARE NOT HARMFUL. AT ALL.
We’ve got nothing to lose, and enormous benefits to gain.
Why would we NOT start using the leverage we have to pressure China to open its markets to our products, and end its unfair trade practices against us?
And, if they refuse to compromise, just keep hammering them with ever higher Tariffs.
China’s economy, and the existence of its form of government, are entirely dependent on trade with us. We, on the other hand, would be far better off if we simply made the products we import from them ourselves or, at a minimum, import them from any of a variety of other countries.
China requires US companies exporting to them to sell first to a Chinese company, essentially at cost, and that company then retails our product there and makes the profit. China manipulates its currency, engages in intellectual property theft, and uses government subsidies of its own businesses so they can dump their products in foreign countries at well below cost in order to destroy competition and gain market share.
There’s really no downside to pressuring them, as Trump is with these tariffs, to end these abusive practices.
As Trump clearly points out: we lost our trade war with China long ago. Hitler in the bunker badly. So, why not try something that will allow us to engage in FAIR trade with them, and profit from it as we should?
https://youtu.be/KkXI-MNSb8Q
Maybe this will help the awful, groaning ignorance displayed here.
These points need repeating again and again:
MONEY IS NOT WEALTH. This is what Smith wrote Wealth of Nations to demonstrate. Mercantilists of his time thought that the more gold a country has the richer it is, so we should try to prevent gold leaving the country and encourage gold to come in. Smith pointed out that Spain was awash in gold, and yet desperately poor, while Poland had almost no gold and yet was prosperous. Trade deficits are all about the net flow of MONEY, and Smith showed that this simply does not matter.
COMPARATIVE ADVANTAGE. Milton Friedman illustrated this by supposing that he could type twice as fast as his secretary, but was ten times as good an economist as she was. Even though he was a better typist than her, it still made sense for him to pay her to do his typing. In other words, although she had no absolute advantage at anything, she had a COMPARATIVE advantage at typing while he had a comparative advantage at economics, so they were both better off if he spent all his time on economics and left the typing to her. In the same way, so long as there are any differences between people or countries, each one will have something they can do comparatively better than anyone else.
And for good measure: IT DOESN’T MATTER WHO OWNS OUR INFRASTRUCTURE. Back when the US canal system was being built with European money, and thus owned by European interests, some silly people worried what would happen if there were a war. Smarter people pointed out that if that were to happen, we had the canals, and they had worthless paper. It’s not as if they could pack the canals up and take them away. The same applies to mines; it makes no difference if Rosatom owns uranium mines in the US, since the US controls the production, and can prevent the ore from being exported, if we like.
http://www.aei.org/publication/some-timeless-wisdom-about-free-trade-and-protectionism-from-milton-friedman-in-1978/
Milton Friedman, the man who first taught me that economics was really all about people (and he loved people and their liberty), on the idea of free trade. Because of this wonderful man and his wife, Rose, I began a study of economics that has spanned over 50 years. One of the great men of the 20th Century.
All those lies they told us in Shool in the ’60’s, 70’s and 80’s are complete drivel.
Free Markets and open borders, they drove it into out heads every day.
Common sense will prevail.
Total nonfarm payroll employment edged up by 103,000 in March, and the unemployment rate was unchanged at 4.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in manufacturing, health care, and mining.
In March, the unemployment rate was 4.1 percent for the sixth consecutive month, and the number of unemployed persons, at 6.6 million, changed little.
——————————————-
Huh. I wonder why…???
“Huh. I wonder why…???”
Is that supposed to qualify as some great insight?
Or is it just a scare tactic?
Do you even have a clue? (no, you don’t)
Arguing the plus or minus of the US trade deficit (with China or anyone else) and the Presidents proposed tariffs is an exercise in futility. As President and Chief of the Executive Branch He has (exclusive) authority to negotiate agreements subject to some review by the Senate. The status quo is unacceptable and everyone knows what not to do about it but nobody offers a solution. All proposals are beaten down by the Democrats who want continuation of a totally imbalanced situation (with many countries). So, no matter what is proposed, people will always complain. I say that we elected the man and we will evaluate his failure or success at the end of his term instead of Monday morning. I am sure that you will agree.
“The time to evaluate the actions of the helmsman who’s steering TOWARD the iceberg is at the close of the journey.”
Em, no. When someone is doing something you know is stupid, counter-productive, and an affront to basic liberties, you tell then THEN.