July 30, 2016 at 7:49 pm #22150
I find Trump’s position on trade to be very depressing. Frankly, I hope it’s just a political ploy and would never materialize if he becomes president. NAFTA is good. Free trade is good for everybody.
This is not a deal-breaker for me. I’m still voting for Trump for other reasons.
Virtually all economists support free trade and oppose protectionism. For example, a 2014 University of Chicago survey found that 93% of the country’s top economists agreed with the statement “Past major trade deals have benefited most Americans” and none disagreed (7% were uncertain).
Despite that consensus, Sen. Bernie Sanders proudly proclaims that he has voted against every United States trade agreement starting with the North American Free Trade Agreement. Donald Trump tells us routinely that we’re getting “ripped off,” “absolutely crushed” and “killed” on trade with China, Japan and Mexico — countries that are “laughing at us” as they are “beating us economically.”
We also hear from Trump that we’re “going to lose $500 billion in terms of trade” to China, $58 billion to Mexico and more than $100 billion to Japan. Oh dear. Those figures aren’t even correct. Our trade deficits last year were $366 billion with China, $58 billion with Mexico and $69 billion with Japan.
Let’s start with two basic economic principles. First, countries don’t engage in trade with each other — only businesses and consumers do. Second, when individuals engage in a voluntary market exchange, both parties — the buyer and the seller — are almost always made better off, because both parties get something they want. Trade is win-win, not win-lose as so many politicians these days would have us believe.
To understand how economically backward Trump’s position is on trade, imagine him standing in the parking lot of a Walmart, Home Depot or Best Buy and shouting to Americans as they leave with their merchandise, “Hey, you just got absolutely crushed by those merchants who sold you cheap products made in China, Japan and Mexico. People overseas are now laughing at you.” That’s ridiculous. Consumers who voluntarily purchased those products, and who probably said “thank you” to the cashier as they left, did so because they valued the merchandise they selected more than the dollars they left behind.
For Trump and the media to constantly lament America’s trade deficit is to lament the fact that foreigners are … investing hundreds of billions of dollars in America every year.
When American businesses and consumers voluntarily purchase more products from China than Chinese businesses and consumers buy from us, it does lead to a U.S. trade deficit with China. But the trade deficit can’t accurately be referred to a “loss,” because it’s based on millions of mutually agreeable individual exchanges that took place between a willing seller and a willing buyer.
In fact, you could make a strong case that China “lost” last year on trade with America, not vice versa. After all, we acquired $482 billion of merchandise made in China and they acquired only $116 billion of merchandise made in the U.S., for a net merchandise surplus of $366 billion in our favor. China “lost” a net amount of $366 billion of goods that ended up being consumed and enjoyed by Americans.
It would also be accurate to say that China gained a net amount of $366 billion worth of U.S. currency, the exact amount of the trade deficit. But what happened to those dollars? They aren’t sitting idly somewhere. On the contrary, they quickly came back into the U.S. as a capital inflow to purchase America’s financial assets like corporate stock and bonds, real estate, bank deposits and Treasury securities, and as foreign direct investment in America’s factories and businesses.
What Trump and the general public don’t seem to understand is that once we account for all of the cash inflows and cash outflows every year for both merchandise and financial assets, America’s trade deficit is offset by a corresponding “foreign investment surplus,” and there is no net loss.
To paraphrase economist Don Boudreaux, for Trump and the media to constantly lament America’s trade deficit is to lament the fact that foreigners are eagerly investing hundreds of billions of dollars in America every year. We shouldn’t think of trade deficits as losing to countries such as China, but rather as “inflows of foreign investment capital that strengthen America’s economy.”July 30, 2016 at 9:57 pm #22151nosignalallnoiseParticipant
You really need to get out more often.July 30, 2016 at 10:11 pm #22152Radio RuminatorParticipant
nosignalallnois, please stop being a troll.July 30, 2016 at 10:13 pm #22153
He’s right.July 30, 2016 at 11:59 pm #22156nosignalallnoiseParticipant
Yeah, ‘cuz it’s only on here that a 2-day old total n00b (3 posts so far) thinks they can tell an established member for the past 12 years or so to “stop being a troll”. *rolleyes*
Radio Ruminant = F’n’Bacon.July 31, 2016 at 1:58 am #22160Alfredo_TParticipant
Despite the new handle, you say that you are “an established member for the past 12 years.” Would you care to explain?July 31, 2016 at 12:49 pm #22161Radio RuminatorParticipant
nosignalallnois, you definitely are a troll on this thread. You have made two troll statements using your current handle. You did make a very vulgar and offensive posting two days ago. Would you like to apologize?July 31, 2016 at 1:18 pm #22162Andy BrownParticipant
As stated in a post in another thread, S0/∞n is gouge.
Yes, RR, gouge has been around here for a long time under several handles.
In addition, making a comment like “you need to get out more often’ is not trolling.
Trolling is what dork and Bacon do. They do this in two ways:
1. Start a thread with an often non newsworthy article link and say nothing about it. That is trolling in most cases, especially if there is absolutely no way of knowing what the point of posting the link is. dork is more frequently guilty of this than Pope Bacon.
2. Post in the middle of an ongoing thread a totally non relevant off topic statement with or without link. This is Bacon’s favorite ploy usually used when he does not have the ability to answer a direct question raised by another poster in response to an earlier post by Bacon. It is usually referred to as trying to hijack the thread.
So RR get it straight. S0/∞n (no signal all noise aka gouge) is not a troll. In general, a witticism or acerbic critique posted in response to a posting that includes a long tedious series of paragraphs that states the obvious (i.e. donald’s trade policy is an unformed gelatinous glop of tom foolery) is inviting such comments. In this case, Pope Bacon did put up an opinion first but IMO should have only linked the long body of text or written a brief overview of the points he doesn’t like and made it part of his first paragraph.
No trolling in this thread. Sorry. Also, keep in mind that just because someone starts a thread doesn’t make the thread worthwhile reading. Those threads tend to sink fast and sometimes only get negative responses or one word type posts like “Again?”July 31, 2016 at 1:29 pm #22163
I appreciate your attempt RR.
You were correct, but there is definitely a double standard as far as what some say “trolling” is. Basically a liberal here can get away with anything including trolling and personal attacks, but just about anything a conservative says is “trolling.”
But that’s how it goes on an nonmoderated board. I suggest you trust your instincts and not pay too much attention to self-appointed board bosses.
Does anyone want to discuss free trade?
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