Why Both Sides Support The U.S Trade Imbalance

If you're new to politics then don't believe whatever it is you hear. The left claims that the reason why this country is doing so bad is because of income inequality. On the other side of the aisle the right-wingers believe it's because of government spending. They claim that the government is spending more than it should and that they need to balance the budget. I have an independent mind which is why I have a tendency to switch sides every now and then. But sometimes "common sense" kicks in and I realize that both arguments don't make any sense.

When you take a really close look, you realize that both parties are missing the REAL PROBLEM that this country is facing. It's called the U.S TRADE DEFICIT or TRADE IMBALANCE. The U.S. economy is losing over $500 billion dollars every year due to trade deals that NEVER favor the American people. In other words, the countries that we're trading with are making money and we're losing money. To make up for our losses, the U.S. government BORROWS hundreds of billions of dollars. This money is then distributed through Social programs and wasteful government spending. The main goal of the government is to inject the borrowed money into the economy as quickly as possible to prevent an economic collapse.

The reason why the right-wingers don't give a squat about our trade imbalance is because they believe in FREEDOM. And freedom comes with allowing large corporations to do whatever it is they want. Back in the day large corporations used to HELP our economy by going into other countries and sending all of that wealth back into this country. We manufactured everything you could think of and sold OUR PRODUCT to the American people. We also exported our quality goods to other countries and everything worked in the favor other America. Today the idea of FREEDOM doesn't seem to work in the favor of Americans. If Libertarians were to take over they would escalate our problems by increasing our trade deficit.

Some people on the left are wondering why the Democrats allow the U.S. to have such a large trade imbalance. The answer is quite simple. They believe in LIBERALISM. But liberalism doesn't just apply to Americans. It applies to the ENTIRE WORLD. They see our trade deficit as a way to spread American wealth around the world. If countries like China do better then somehow the world will become a better place. I can't wait for the day when we have a GLOBAL CURRENCY and all of our borders are open to everyone! But until then our economy is slowly going to go downhill and more and more people are going to turn to Socialism as the answer to all of our problems. This is another benefit of global liberalism. Obviously both parties are more concerned with winning. Impoverishing this country with a massive trade deficit ensures that the Democrats will remain in power for years to come. The further this country goes into a hole, the further right most conservatives will go. Hard-right conservatism doesn't appeal to the masses and some Republicans will turn to Socialism once they can't find a job.

 

Just want to ask, is the Ron Paul picture supposed to mock the man? As he would never advocate this.

Nor would you, if you understand that economies by their very nature are inter-dependent.

Also, American production has never decreased, we're still the #1 producer of goods. What killed the jobs you're focusing on wasn't the worker in China, it was automation.

 

What is your opinion on the U.S. trade deficit?

 

It's falling. And if our currency wasn't manipulated by our Federal Reserve, it would balance itself out. Might do so anyway, seeing as how China and others are becoming more consumer oriented themselves, it'll just take longer is all.

It's also small potatoes. $38.8 Billion? You really should pay more attention to the $1.1 Trillion were spending each year that we don't have, as much of it is financing that trade deficit in the first place.

 

A microcosm of the problem.

After Erin Brockovitch's little adventure, regulations were promulgated for disposal of hexavalent chromium. Now nobody thinks people should be dumping chromic acid on the ground or in the water but the regulations were so stringent that the price of hexavalent chrome plate would have had to quadruple, just in regulatory costs. But the market would not bear quadrupled cost. So, to stay competitive the platers had to move offshore. the only hard chrome operations left in the US are hydraulic cylinder makers - who can pass on the costs.

Hexavalent ("hard") chrome is generally considered superior to trivalent chrome. Trivalent chrome does not stick well to metals. One of the things that endeared generations of mechanics to Snap-On, Proto, and Craftsman hand tools was that fabulous hard chrome finish that never rusted and would stand up to the hard use of a working mechanic. After the "Erin Brockavitch" regs came along, the tools either got too expensive (Proto) or they tried to make do with trivalent chrome of parkerizing tools. The parkerized (black phosphate) and the trivalent chrome do not wear as well in hard use and the customers abandoned them. So now all the hand tools are made offshore.

...and the US balance of payments suffers because of mad-dog regulaions.

 

$38.8 billion? Our trade deficit last year was over $500 billion dollars. Look in my signature if you don't believe me.

 

It's in my link, and yours. $38.8 billion is the deficit for March.

Small potatoes, but if you want it to stop, stop the deficit spending, and stop keeping interest rates at 1%... in fact, just stop whatever the Federal Reserve was doing just now.

 

For March? Add everything up at the end of the year. That's not counting the interest that we have to pay to the bond holders who are buying our debt. Add another $227 billion dollars. That equals almost $800 billion which is our current budget deficit. I believe this is the real reason why the United States government is running a budget deficit.

 

Typically, when the Government runs a deficit the trade deficit should go down, as it devalues our currency, appreciating those of other nations, and making their goods more expensive.

There are exceptions to this where the deficit and trade deficit rise together, but that's what they are, an exception. For right now, it's following the expected trend, our deficit is growing, and our trade deficit is shrinking.

 

What we really need is reciprocal trade policy. Open up trade only as much as your partners do. If they slap a tariff on something, retaliate with an exactly equal response.

Retaliation is the only way to eventually encourage trade partners to open up. If they don't have anything to fear by screwing us, they'll just keep doing it.

 

I think an "agreement" with our trading partners to BALANCE TRADE would be the best approach. Not an exact trade war. We could agree to raise tariffs on certain imports and leave others alone until everything balances out.

 

It was $500 billion dollars last year. By the end of next month it's going to equal $250 billion. That's a little over $40 billion a month. By the end of this year it's going to be about the same as it was last year.

By the way I don't think you're reading the chart right. The deficit that they're showing for each month is just for that month. So basically, if the trade deficit for the month of March is $40 billion, we lost $40 billion just for that month.

 

Protectionism is wrong. Let individuals trade all they like, no matter the consequences.

 

Protectionism isn't wrong. A trade war is wrong. You can raise tariffs on certain imports without offending your trading partners. You can also demand that your trading partners open up their market to other goods and services. All you need is an agreement on both ends. Right now India is talking to the Chinese to discuss ways to fix their trade imbalance. It's only about $60 Billion a year. The U.S. trade deficit with China is over $300 billion. Why doesn't the U.S. consider this to be a problem? Is it because of our seemingly unlimited credit card?

http://economictimes.indiatimes.com...ddress-trade-deficit/articleshow/20334304.cms

 

If you want to stop myself and another individual from trading goods/services then I'm against you, no matter what. It's our property, not our governments'. If we decide we want to voluntarily trade then you have no business stopping us.

It's not your concern. If I grow a bunch of vegetables and decide to trade them for money, and another individual decides he wants to buy my produce, then we're both trading our property. It's our property. The government has nothing to do with it. The imbalance between what goes out and what comes into the country makes no difference to me. If I decide it's in my interests to sell my property then I will, if not then I won't. I don't need the government to "protect" me by taking away my property rights.

 

The last time I checked the U.S. government is "by the people for the people". When I see my government making bad decisions it becomes a huge concern for me. I believe other Americans should also be concerned with this problem. Unfortunately, most Americans don't even know it exists.

 

Don't care. It's my right to trade my property to whatever extent I decide upon, and with whoever I choose - so long as they are also willing.

 

Today's impediment to competitiveness: The Federal Register ran 196 pages of new regulations. How many new regulations were promulgated in China or Germany today?

 

It was also the right of the banks to rate risky investments "as they please". There are areas where government regulation makes sense. And there are other areas that government should keep their hands off of. One of those places is the internet.

 

Companies aren't moving to China just because of government regulations in the United States. I think dirt cheap labor is far greater incentive.

 

"Companies aren't moving to China just because of government regulations in the United States. I think dirt cheap labor is far greater incentive."

Taxcutter says:
If you are talking high-labor-content products like clothing, I'd agree.

If we discuss capital and energy intensive products like Portland cement, petrochemicals, or steel; the labor savings is more than offset by the transportation cost.

If we discuss products that have to react to a market quickly - such as pharmaceuticals or consumer electronics - the Chinese advantage becomes insurmountable.

What kind of competitive economy can you expect when a US manufacturer has to wait years to get a government permit to paint lawn mower decks and that permit forces him to use a low-quality high cost substitute?

 

Why? Why is the internet immune to regulation? I completely agree that it should be, but it makes no sense to differentiate between the internet and real life. Seems to me that the reason is because the internet is made up of fairly low income individuals, while with business it's easy to just dismiss them as the rich who can afford regulation. But if it's wrong then it's wrong, no matter who you do it to.

The problem with the banks was not that they took risks, it was that they took risks off the back of billions upon billions of dollars in printed Fed money. The government (and the taxpayer) has a large interest in ensuring that banks don't fail because they've bet so bloody much on them. If we moved to a system where property rights were well defined this problem would largely disappear.

Sorry if none of this makes sense, it's 6:30am after a 10 hour shift. Urgh.

 

Take a look around your house. What do you see? Probably tons of consumer good such as cooking utensils. microwaves, televisions, computers and so on. All of those products were manufactured in other countries. About 20 or 30 years ago that wasn't the case. Those products aren't manufactured in other countries because of strict regulations in the United States. Ask any company that gets their product manufacturers overseas and they'll tell you that American employees couldn't work for "pennies on the dollar".

 

Like I said: For high labor content products, I'd agree.

For low labor content products, where the low labor cost is lost to transportation cost, what's Chinese labor cost got to do with it?

Further, as automation makes direct labor cost less and less relevant, why does production stay in China, Mexico, et al?

 

The biggest factor in the Trade Deficit is Oil.
8.3 million barrels/day, at $100/barrel, that $830 million a day, times 365, that's 302 billion.
Now that will improve because of the latest discoveries, and fracking, but there is plenty of room for improvement by policy.