Nope, this is a mercentalist talking point, and it ignores how trade actually functions. You need realize why this doesn’t matter:
"*I buy more from my grocer than he buys from me. That means I have a trade deficit with my grocer. My grocer buys more from his wholesaler than his wholesaler buys from him. But there is really no trade imbalance, whether my grocer is down the street, in Canada or, God forbid, in China.
Here is what happens: When I purchase $100 worth of groceries, my goods account (groceries) rises, but my capital account (money) falls by $100. For my grocer, it is the opposite. His goods account falls by $100, but his capital account rises by $100. Looking at only the goods account, we would see trade deficits, but if we included the capital accounts, we would see a trade balance. That is true whether we are talking about domestic trade or we are talking about foreign trade.*"
If it’s for the same reason a “trade imbalance” between the States doesn’t matter. An inter-state imbalance doesn’t leave Americans in certain states impoverished and others rich; it just decides who has more goods and who has more capital.
It’s surprising how much people overlook this simple detail.
LOL, straight out of the far left book of economics. Under your idea we don’t need to bother to trade at all then, we can just import goods and get rich.
What you forget is that your money, in your city, town, state and the USA remains in the system, the trade imbalance is money that has LEFT the system and therein lies the rub. Which is why we strive to achieve a balance of payments to keep the money in our system. When you have large imbalances its because the money has left the system. A key item that is watched closely is the money multiplier. So you buy from your crack supplier a $100 bag, he takes that $100 you gave him and buys more product, and combines it with other purchases and gets a gold watch and a new car, a couple of guns and invests in a crack house. Each time he is multiplying the power of that money at the car dealer, jewelry store, gun store and real estate company.
When you move money outside the system you reduce the money supply and its not as simple as the Treasury just printing more bills to make up for it, because that REALLY causes inflation.
Your idea is fine, its far left phony economics I heard back in the 60’s when I studied economics. Like socialism, good idea, but just does not scale!
Tariffs applied for political pressure are not the same as Tariffs applied for economic protectionism, no economy can thrive with a weak government that is trampled on by all the others.
In a vacuum it is true that imposing Tariffs can only harm the nation that imposes them, this is simple math that always concludes that the Tariff imposing nation subsidies the economy of the nation they choose to place the Tariff on; but economy’s don’t exist in a vacuum and there are more forces at play in economies than just filling the demand in the cheapest possible way.
One of those forces is the circulation of existing currency, another is the job market and another is the respect/fear that any given government inspires in the others.
If our currency is utilized worldwide (and it is) then our currency can make other economies fluid while leaving our own starved for capital.
If the reason why our products cannot compete in price is because our government imposes artificial expenses that other governments do not, the artificially “cheaper” imports are not really “cheaper” and our ensuing job losses do not serve as springboards to better jobs.
If other governments Capitalize on our draconian efforts to punch ourselves in the face by expanding their markets in areas where we are crippling our own, we become the subsidizing nation with or without tariffs.
Economic theory must be implemented in a real world environment, attempting to focus on only one element like filling the demand as cheaply as possible as if that element exists outside the realm of corruption by all the other economic forces at play is juvenile ignorance.
Creating fake market forces to decimate your own economy and infuse strength into other economies that could not compete otherwise does not help us, removing the self imposed albatross from our own necks and pressuring our trade partners to stop infusing artifical forces into the market as well is a sustainable economic reality where sound economic theory will shine.
Oh boy, I see you popped up out of a wormhole somewhere, ok, then I am playing whack-a-mole and your understanding of economics is on par with my understanding of brain surgery only I don’t claim to know anything about it. In order to say I was wrong you would have to know something or anything about it and if economics were water you could not pour it out of a boot with the directions written on the heel…
RET, is that tariff in place yet? Will you even feel an impact from the tariff it at this point? That was just two months ago.
War is a stick too. It doesn’t mean it’s appropriate or wise or even effective. Governments should not apply sticks or carrots to the trade decisions we make, yes, you and I individually. Every tariff, every subsidy is an anti-capitalist attack on individual traders, like you and me.
Do you incur a trade deficit when you trade with your local grocery store? Or does the grocery store? Of course not. Trade does not create deficits. All this crying about trade deficits is an excuse for Bernie Sanders, Hillary Clinton and Donald Trump to impose their will on our business. Trade deficits don’t matter. No actual trade deficit is created by trading. If I sell you a car for $1,000 and you buy it, we both win. Wealth is created. I win, you win. It was worth at least $1,000.01 to you and a minimum of $1,000 to me.
The difference between me trading with you and me trading with a China-man for a battery, something I do frequently, is zero. You and I are not obligated to trade our property and our labor with each other or anyone else – which means neither you nor I have a right to interfere in our trading with other people.
When I buy a battery from China, which I do frequently, I win. I have a product. The Chinese has currency he can use. No deficit. And you don’t lose. That’s the bottom line.
Straight out of the capitalist book of economics, from Adam Smith and David Ricardo to Milton Friedman and Thomas Sowell. You should be clear that this is not even remotely leftwing ecomnomics. Protectionism is.
No need to call capitalists leftwing. That’s just silly.
You have to have something to trade in order to trade. We must be exporting *something *in exchange for what we import, which means we must be producing something the other traders want. No we cannot just import goods and get rich. If we did just that, we wouldn’t receive any more imports. We have to do something in exchange for them, and we do. The proof *is *that “trade deficit.” It clearly demonstrates that we’re trading.
The money supply doesn’t change. You have a real good or service in exchange for your private interactions with foreign trade partners. They have American currency. They cannot spend in their country of origin. They must exchange it. Ultimately, it lands right back in the United States where it is an acceptable form of currency through investments or additional trading, and you have that very same multiplier effect.
I hear this on a local level all the time. We have to keep our money in our town because multiplier. Taking my dollars out of town to a giant box store is the biggest local economic sin I can commit. The locals say they can’t compete on prices. Maybe true. They can always compete on service, but sometimes, they choose to be as terrible as some of the large chains. Yet, I doubt you would support negotiations with carrots and sticks to force me to even if the neighboring town offers ridiculous subsidies to said box stores to build there. In fact, that’s prohibited among the states. Why? Because it’s harmful to trade among the individuals of our nation. The only difference is scale, local versus international.
Socialism is not a good idea. Free trade and opposition to tariffs is not far left. It is considered by many to be “far right,” and folks I suspect you admire greatly (presumably people like Milton Friedman, Thomas Sowell and Adam Smith) disagree with you on this subject.
Political pressure is not economics. I have my doubts here, but I suppose it can be justified the same way as war. Then it’s not an economic prescription. Donald Trump since at least 1979 has consistently advocated imposing large tariffs to apply economic pressure, to help keep jobs at home. He and Mike Pence offered subsidies to Carrier to stay here. Wouldn’t the dollars in those tax incentives be better used in the hands of their rightful owners to purchase the goods and services they want?
In the same way a subsidy to Carrier harms U.S. citizens, subsidies in other nations harms them. They come with their own consequences, ones that are visible in the United States, Canada and Europe. They’re self-punishing – although they fill the pockets of certain individuals
It comes home through a long tangled web of economic interactions that is literally impossible for central planners to control without creating many unintended consequences.
It’s a good time for self-reflection. Our economic sins do not justify further attacks on American consumers.
We really should stop imposing artificial expenses on our businesses that other governments do not. It’s silly to hold individuals abroad responsible for our own actions.
Yes. We should choose not to implement tariffs. We should focus on returning our economy to a more natural state. We should focus on all of them (yet tariffs are the discussion in this thread), including the reduction in expensive regulation and control by our local, state and federal governments. I am certain that I, and AS and J. and you and Oaks are focused on a wide variety of economic elements in most of our discussions.
We cannot become more natural by imposing more artificial elements, like tariffs. Capitalism is the natural state of economics. It is economics without a system. It is the economics of liberty. It is the mechanism by which we thrive. We know that we cannot really control all of its variables. We know that no central planning committee can. We should question ourselves deeply every single time we think we can impose a policy to make things “better” in some way.
I do understand economics. I can even manage a lot of the math – slowly. I’m saying the same things J. and AS are. They’re firing on all cylinders. They are correct. They are clearly well-informed and thoughtful – as you and RET usually are. They’re firing on all the same cylinders as economists Thomas Sowell and Milton Friedman. They use actual experts to support their arguments. While they’re reasoning is sound, they don’t simply rely on their own reasoning to make their arguments.
You are wrong. You know you’re wrong on the tariffs – you’re generally against them – and yet you still defend what Trump may do. You are also wrong to attack J. or AS on their expertise. Their expertise is irrelevant if they are correct. Right-wing and conservative economists agree with them. You agree with them except apparently in this one special set of circumstances where Donald Trump is president and has been talking about protectionist tariffs since he was a young man. It seems kind of weird to me really.
Hong Kong has an offset to their trade balance…TOURISM! Almost 60 MILLION people a year visit Hong Kong. It is also a very small island with few resources and most have to be imported. But its also one of the most free market economies in the world.
Hong Kong is successful because it has to be, they are a capitalist dream. You would do well to spend some time studying them and why they are along with how they achieved their success.
I have NEVER called capitalists leftwing, that is a fabrication.
IF you believe Socialism is Right Wing there is little to discuss past this point. Socialism is a good idea, that does not mean it works well as it does not and does not because it does not scale, but you have to understand it to know that.
I know Thomas and have dialogued with him for many, many years, very sorry to see him retire, maybe one of the smartest economists of the past 50+ years IMO.
Your understanding of economics is simply faulty as is your understanding of the Process of Negation.
Generally against tariffs, no I am against them, but when our trading partner slaps tariffs on our imports to the point we cannot even sell our products in their country we need to LEVEL the playing field, something you nor AS nor J have a grasp of.
If J/AS had not attacked, I would not have had to punch back. In fact J had nothing to say or even add, he just attacked from his wormhole…
When you resort to fabrications, accusations, and attacks you have lost your basis to further discuss the subject…
No I grasp it, I just know through real world examples, that this is bad logic.
Brazil crippled its own electronics industry by doing this. By protecting its firms, it blocked the importation of innovation, resulting in tech development being severely throttled. It also kept cost of market entry and training of relevant skilled-labor very high.
If a country wants to do that; let em, it makes the whole of their economy weaker on the world stage. This is not a reason for us to copy their idiocy. They pay for their mistake, no reason for us to pay for it with them.
When all of the effects are measured, there is never a reason to use tariffs. Unless you’re in a war, it is never worth it.
You are making a false argument for the sake of argument, you know EXACTLY where I stand and yet you continue with your fabrications over and over again.
Like I said when you resort to fabrications, and attacks you have lost your basis for the discussion; you purpose is disruptive, your contributions are nothing but phony arguments to support your dodging, weaving and lack of facts or knowledge. Each post is just a repeat of the last one with a different spin, nothing new to see here…
You bring the level of this forum down to the level of most of the other political forums, you have no positive contribution and leave nothing but a destructive wake where you have posted. Every post of your is based upon an argument, never a discussion and you are just barely clever enough not to step over the mods boundary lines to far.
Yes, and it’s wrong; there is never a reason to embrace a tariff in peacetime.
A country artificially creating an advantage is not good enough. Using a tariff to “level the playing field” is not a valid reason.
Why is it not valid? Because the tariff damages industries far beyond the one it’s placed on. When we tally that damage, we realize that the tariff isn’t worth it. It simply causes more damage than it tries to avert.
Let the country in question who applies a tariff be stupid. They suffer for that decision far more than we ever suffer for whatever business of theirs we don’t get.
AS and J. are capitalists. They are presenting capitalist ideas.
The following are things you said to one or both of them:
So, you didn’t call *them *leftwing, but you did call their ideas leftwing. I stand corrected, but you still called capitalism leftwing.
I see that I had a problem with my pronouns there. That was a long post. The “it” there refers to the free trade principles AS, J. and I have been promoting in this thread. I have corrected the paragraph.
Socialism is a terrible idea. No one should ever be confused by this. It denies personal liberty by definition when the means of production are owned by the state. I don’t think it looks or sounds like a good idea, and I don’t care what the scale is. The Marxist communist end state (not the socialist evolution Marx claimed was required to reach it) looks terrific on paper, but it’s a fantasy the same way anarcho-capitalism is a fantasy. Stateless communism ends in people trading with each other voluntarily and freely because that’s what people do.
Indeed. I’m very jealous to hear this
My understanding of economics is just fine. I’m sure my understanding of the Process of Negation is faulty. I have no idea what you’re talking about.
Then you support tariffs in some circumstances based on the trade policy of others.
What we keep saying, and conservative economists tend to agree with us, is that retaliatory tariffs don’t really help. A capitalist economy corrects itself and levels the playing field. See, from the link J. referenced, below:
> MP: Here’s a formula summarizing Milton Friedman’s insights:
You didn’t punch back very well if you’re attacking their understanding of economics. They understand economics. They understand free trade. They understand capitalism. They epitomize conservative economics pre-Trump, and they echo conservative economists. They are not fabricating anything. They are arguing a traditionally conservative position. See what Milton Friedman has to say. Call Mr. Sowell and chat with him. It would be amazing to have him drop in here and correct us.
Absolutely, lumber is milled to order and based on immediate projections; if you try to mill softwood too far in advance it curls to the point of uselessness by the time it is delivered.
Our Market matters far more to Canada than their timber matters to us.
It is absolutely appropriate, wise and effective if used as a political tool correctly; and this is a very good example of that.
Trump picked a Market that has little effect on us but that matters greatly to the Trade Partner that is playing games in a Market that does matter to us, it also follows the strategy that Trump has employed since becoming President; to act first and talk about later.
In business this tells everybody that you are not going to play games, it keeps them on pins and needles regarding how much integrity they decide to act with in the future because they “I assure everyone that there will be consequences” speech that basically means nothing will happen is not going to be the policy of the United States.
I watched everybody melt down when Trump bombed that Syrian air base, all the babble about how we are now going into another war or going to try “regime change” or acting hastily so as to get us into a war with Russia; I was laughing the whole time.
Trump let the whole world know that breaking a universally agreed upon pact like using chemical weapons will get you bombed, not added to the UN schedule for a bunch of “talks” that have already happened long ago; then Trump started talking after the base was bombed.
No war, no regime change, no consideration for what Russia would think; just a clear message that if you use chemical weapons we will bomb something you care about. If they did not care about that base they at least know that using chemical weapons again will earn them something else getting bombed, and sooner or later Trump will find something that they do care about.
Trump is handling Canada’s subsidies the same way, he is making a very clear point and using a Market that will have no significant effect on us; this is just capitalizing on an opportunity that will make all of our Trade Partners think twice before they try to strong arm us.
NONE of those men wrote about the political realities as evidenced by your use of the term “protectionism”, if Trump ties to employ protectionism then I will oppose him but he has not done this yet; he is applying political pressure to a close ally so the rest of the world will not wonder if he will play hard ball with Trade Partners who we have a mediocre political relationship with.
So far this is just a smart strategy, a message that will precede every trip to the bargaining that Trump makes for the next 4 years.
This is simply not true, United States currency is accepted worldwide and is the standard in many global Markets; it will purchase land and commodities around the world and flow freely without ever needing to return to the United States.
Our currency may be the only currency that this is true about but it is true, any economic safety net that is based on our currency needing to return here at some point is a net full of holes.
No, but Foreign Trade is politics and economics exists in the context of foreign trade; the two cannot be separated accept in the classroom where everything can be discussed as if it exists in a vacuum.
Yes he has, and he was wrong for 35 years about that.
But there is no indication yet that he is employing those ideas or that he has not expanded his understanding of these issues since he has been working with people far bettered versed in economics than he is.
What he is showing so far is that he knows how to use circumstances to his advantage, he does not miss opportunities to send a message and he knows how to send messages.
Is it a subsidy to remove artificially placed expenses from businesses in your own country that were levied on these companies by our own government? How can any Market find a legitimate equilibrium if we define reducing the amount of artificial burdens we beat them up with as a “subsidy”?
Other Nations take actions that encourage their job creators while we chase ours out of the country, then the first sign that we are repenting from that idiocy we start screaming that our companies are getting a subsidy?
As long as there is a net of 1 dollar paid in taxes there is no “subsidizing” going on, and we are the highest tax Nation in the industrialized world.
If we are talking about an actual subsidy then yes, but removing regulatory burdens and confiscatory taxation does not harm any individual in the Nation that is wise enough to do it; it helps every citizen in that Nation.
As soon as I see a policy that harms our consumers I will condemn it, so far I have seen only actions that LONG overdue like reducing the burdens domestically and scaring the crap of Trade Partners that have been ignoring their trade agreements with us or that bulldozed the morons who entered those trade agreements on our behalf.
Trump is doing that and you are calling it a “subsidy”?
He is fighting the Obama EPA regs with his appointments and in court as our corrupt judiciary tries to salvage the Obama destruction; and he is winning a little at a time.
But that does not mean he must ignore other Nations who have picking through the bones of our struggling companies by violating the trade agreements that they signed; Trump is just multitasking.
In the real world you use the tools you have to apply pressure to others whom you want the benefits of trade with but who you also want to adhere to those agreements, business people look for leverage to accomplish this and a well placed tariff that does not harm you but pressures your trade partner into keeping their word is a perfectly sound strategy.
Yes, but this was not a tariff levied as an economic element; it was a political punch in the face as opposed to the yawn inspiring “shots across the bow” that Obama always babbled about but never did anything about.
We absolutely can, no trade agreement that is designed to allow free trade at Market prices is worth the paper it is written on if the political leaders see no consequence in violating them; when that happens the options are limited.
1)We can cease to trade with them, harming ourselves.
2)We can tolerate them polluting the Market, costing everyone the benefits of natural Market forces.
3)We can go to war, kick their ass and just take all their stuff; short term benefit with long term consequences.
4) Or we can use the politics of a well placed tariff that will bring political pressure from their own citizens upon their heads to change.
I like number 4, and I am sick and tired of number 2.
Holding your trade partners to their trade agreements is not “central planning”, having trade agreements is not “central planning” and trade agreements are the only possible way to trade with places where we have no voice in the governance; which means that good trade agreements which are enforced definitely make things “better”.
They are selectively citing sound economic theory with zero regard for the political realities that exist in the actual world that these economic theories must be implemented in, simply thinking that the lowest cost is the most beneficial course without considering whether the lowest cost is actually as low as it should be or if it is MUCH higher is not an economy that any of those educated minds would endorse.
If we raise the cost the cost of a 2x4 from 1 dollar to 3 dollars with government burdens, then a foreign country sells us 2x4’s for 2 dollars we have not “won”; we are just paying a dollar more for a 2x4 and losing the jobs that put those 2x4’s in the hardware store to boot.
2 dollars is better than 3 dollars but if our own Market could meet the demand for 1 dollar if we just left them alone it is not economically defensible to call the 2 dollar imported lumber a “benefit” to our now unemployed citizens. This dynamic is even more harmful when the imported Lumber is only 2 dollars because the foreign Market artificially lowers the cost by 50 cents per board to keep the gap as wide as possible, this harms them as well as us because now BOTH Markets have been polluted artificially.
Chopping off one of my fingers is certainly better than chopping off my whole hand but not nearly as good as just leaving my hands alone entirely.
Neither of them has expertise, they are arguing concepts that they only are familiar with via hearsay without considering all of the factors involved or even having any understanding of how these concepts destroy Markets when applied partially.
I am defending Trump in this because this is a smart play in the long game, not a coffee shop discussion where all of the inconvenient variables can be ignored.
WHATEVER gave you the idea that people in China cannot use American dollars in their own economy? The same thing was said about MPC (Military Payment Certificates) used to pay our troops in Korea, Japan and Vietnam and it was BS. A THRIVING black market developed within 24 HOURS of the imposition of MPC.