a negative trade imbalance is not masked but rather reported by govt and seen and measured in the reduction of wealth creation. Free trade is good but it does not mean America cant grow poorer and poorer while engaging in free trade.
If less wealth is being created then more imports might be purchased to make up for the reductions in lower priced imported goods. Of course the US economy can go through periods of reduced growth which free trade will not alleviate. The Obama economy is proof of that despite the benefits of NAFTA. By reducing the tax and regulatory burdens on US businesses and renegotiating trade agreements to remove restrictions on US imports by various foreign governments economic growth can be restored to Reagan numbers of ~ 4% rather than the Obama numbers of ~ 2% with a 2016 run rate of ~1%.
well TPP some say is the gold standard in that regard but I"ve never read consistent reviews of it so don't know what to make of it. What do you think?
I don't have an informed opinion although I'd say that anything that reduces tariffs or other trade restrictions is net beneficial regardless of which way those go. From what I understand there are a myriad of country specific details in which the devil lives. The US is complicit in both directions - the sugar industry protectionism results in US consumers paying more than they should for foods containing sugar to protect the sugar industry. Neither party has the integrity to stop this policy which does net harm to the US economy.
and we protected our light truck industry so the Japanese would not walk away with it but on balance they say TPP makes many countries as open as our is. If so it great for us but I don't know why others would sign up for it.
And in the process net harm was done to the US economy because those who bought small trucks either paid too much or bought lower quality trucks - or at least did not have the option to make a decision based on a level playing field. The US is always better off with zero trade restrictions on imports regardless of how many restrictions are on our exports. Of course the better situation which Trump identifies is zero restrictions on US exports with regard to our respective trading partners. He may use the threat of import tariffs to negotiate the removal of export tariffs.
in a technical theoretical sense you are correct but in the real world saving a industry with great strategic value and saving 100's of thousands of jobs was probably a good thing. Perhaps the best idea would be to reduce the import duties 10% a year until they are gone.
What is so strategic about the small truck sector of the US automotive industry? The same argument was made for the steel industry in the early '00's. A steel tariff was passed and implemented resulting in a net loss of ~ 100K jobs in the US. The tariff was quickly rescinded. Let the law of comparative advantage work. The US small truck sector would be forced to improve to compete and the US consumer would benefit as well as the US economy. Better still implement US tax and regulation policy to reduce the production costs of small trucks in the US.
The US GDP is currently ~ 12% of GDP. Manufacturing jobs disappear because of technology. This is not unique to the US. The decline in manufacturing as a percentage of GDP also indicates that as standards of living increase year by year that services become a greater percentage. We need less of the wealth created to fill basic needs and thus can allocate more wealth to services. https://www.uschamberfoundation.org...phenomenon-and-it-s-something-celebrate/34261
and because of liberal policies like unions, taxes, and deficits that drive jobs to disappear offshore to lower wage countries.
Certainly - but the general trend has been driven by the replacement of manufacturing jobs by technology.
The rise of China is a good thing with respect to the US. They have comparative advantages in certain areas and as their economy and standard of living grow/increase the Chinese market is a growing market place for US goods. Our trade policies and domestic tax and regulations however can be reformed to allow US businesses to be more competitive.
They haven't. What the Chinese have provided is goods that the US consumers purchase at very low prices resulting in more discretionary income for those consumers. The problems with the US economy have nothing to do with China - it is gov policy which is holding our economic growth down.
It's not in the paper everyday because it is true - it is a populist belief that free trade (comparative advantage) results in US job losses. But that is simply not true. Jobs in the US are not being created (they are not leaving) because of US gov policies and technology. What happens to the US economy if we impose a 100% import tariff on all Chinese products ?? What harm did Smoot Hawley do to the US economy in the early 30's - stock market crash and recession.
obviously, if you globalize and thus add 2 billion folks to the labor force who are happy to work for $1/hr it results in job losses for those with comparable skills who work at $20/hour. A child could grasp this.
What workers with comparable skills are willing to work for $1 per hour ?? Are you claiming that there are 2 billion of those in the world ?? Here is how comparative advantage works: if workers in developing countries who have large amounts of unskilled labor produce shoes, clothing, and toys for very low prices the US economy benefits from that because there is more discretionary income available to spend on services in the US. Transitioning to a service economy is a sign of economic success and not failure as many believe. The key to the US success in all this is for the labor force to transition to training in those service industries and of course for those holding elected office to implement pro growth economic policies aka supply side economic policies. The key to understanding economics is not to focus only on the short term effects on a small number of people but to also and more importantly focus on the long term effects on the general population. You are not doing that. The early 00's steel tarrif is an example of not considering the long term effects on the general population and it was very quickly removed.
Agreed. The problem with the US economy began at least four decades ago when Nixon took the US off what remained of the gold/silver standard (Remember when silver dimes were replaced by coated copper dimes?) and declared "we are all Keynesians now," opening the door to unlimited spending, "quantitative easing," and a 20 trillion dollar debt. Then in 1978 when Jimmy Carter (Great human being, lousy economist) was creating the monstrous Departments of Education and Energy bureaucracies, the communist establishment of China was picking free market advocate Deng Xiaoping to lead them out of economic stagnation. Deng's free market policies worked, and although politically correct Keynesian economists like Robert Reich and Paul Krugman have been saying that the Chinese economy is "overheated" and about to collapse about every week for the last forty years, the Chinese people continue to create more and more wealth for themselves and the world while the US economy continues to stagnate.
nice contradiction!! China and USA have massive govt involvement in economy and significant free markets too. Do you understand? - - - Updated - - - car makers, steel makers , textile workers etc etc. Do you understand now?
