Reducing import purchases 50%

Yes...but I'm not going to ignore the consumption potential of 7 billion people outside of the USA. Further, it's not clear to me if Americans can consume themselves into economic prosperity? Unless most Americans again abuse credit purchases and greatly increase their personal debt, and knowing most Americans live pay-check to pay-check, if we wish to increase GDP by $2-$3 trillion, I'm thinking exports must be part of the plan...

 

Again, this is true, however, all public companies are under constant scrutiny to increase profits and provide the best possible short and long term return on investment from millions of Americans and pension funds, etc. Right or wrong, stock price and profit history can determine whether management keeps their jobs and if investors buy or sell stock. Myopic or not, it is the situation that is working for the moment...

 

Again, all up to the entrepreneur. Any focus on "we must focus more" has the stink of mercantilism to it.

They already have. Trade historically is a minor element of US GDP. The only problem is that the prosperity is so heavily skewed in favour of the minority

- - - Updated - - -

It isn't though. Look at the high working poverty rates. Also look at how wages have lagged behind productivity growth. These were key elements of neo-liberalism and the perfect ingredients for economic crisis

 

It's not about the 'stink'...it's about identifying potential growth. It's not clear to me how much we can expand exports? If there is huge demand for products offshore then most of the production will probably be offshore...no big gains in US job creation and GDP. But those products and services which will be produced domestically, and can have export potential, should not ignore those other 7 billion consumers.

How can we truly analyze the US economy when between stimulus spending, and QE, and other government debt spending, perhaps $10+ trillion has been pumped into the US economy over the last few years? And even with $10+ trillion forced into the economy, the US economy remains quite iffy! We spend inordinate sums of money on imports (nearly every American retail store), tobacco, alcohol, lotteries, and casino gambling, and yes all of this does energize the economy, but not so much in job creation and tax revenues. If all workers in the lower and middle classes suddenly were to receive an extra $100 per pay check, will this money actually be spent on stuff which creates large quantities of US jobs...what percentage would be spent at Walmart?

I agree that trade is a minor element of GDP, however, if we can't increase our domestic consumption then we must look at what expanded trade might offer.

Looking at this data; http://en.wikipedia.org/wiki/List_of_countries_by_average_wage the US wages are at the top of all categories. What is not shown is the relative purchasing power in each country or some cost of living index.

 

And it shouldn't be. Why do you think you can 'think' like the thousands (and millions if you have socialism) entrepreneurs? You can't. Everything you've said is "yeah but mercantilism matters". You need to clean out your rhetoric

 

Nothing wrong with that idea, we oughta be ramping up our production of liquid natural gas and selling it to the Europeans so they have an alternative to Russian heating oil to heat their homes in the winter. And whatever else we can export, fine and dandy. However, the cost to the end-user cannot be too high or you price yourself out of the market. Do you realize how much higher and rising the costs of shipping are these days?

 

Resource exploitation can have unfortunate knock-on effects. See, for example, the Dutch disease whereby manufacturing further suffers because of the 'resource curse'

 

It's not clear to me if we can expand exports because we have not done so...we have a trade imbalance. And while exporting represents 7 billion potential consumers only a fool would ignore this potential. How many years now that on average the lower and middle classes basically live paycheck to paycheck...do you actually believe these tens of millions are going to suddenly consume more stuff? Fuel in my area is $1/gallon higher today than it was a few months ago...do you think the masses are going to give up fuel or other consumption? The person in front of me this morning at Starbucks used their VISA card to buy a $2.49 drink...my guess this person is living on credit and accumulating debt. This is not rhetoric...this is reality!

 

In many areas the US has been priced out of the markets for some time now...hence imports and outsourcing and offshore US facilities, etc. This is one of the reasons why I wonder if we can even grow exports? We only have a few choices to energize the US economy; personal consumption, government consumption, foreign consumption; if personal consumption is tapped out, and if government is deep in debt and lacks political clout, then increasing foreign consumption where possible is certainly one of the options of growing the economy...

 

Trading imbalances just reflect high imports because of low savings. Typically they're easily eliminated through an exchange rate correction (less so mind you with the dollar)

Nothing to do with trade though. The US economy is structurally flawed, given its high reliance on low wage labour and the extreme inequalities it maintains

 

Trade imbalance is not just because of 'low savings'; it depends on the resources of the nation and how much they can produce domestically no matter the costs.

If we look at the overall US economy as one big lump of stuff, it represents what we are producing plus what we can sell. The consumers can only afford so much expense so this limits the sales and price of the goods produced. Business can only survive if they have sustainable profits. Consumers demand lower costs while in parallel demand higher ROI on company stock and more and higher paying jobs...this alone is a double-standard. So when a consumer won't pay more than $1.00 for a handkerchief, and business cannot sustain profits on a $1 retail handkerchief, there will be no handkerchief industry in that country. If the demand remains for $1 handkerchiefs, then other businesses outside of the US will produce and export to the US. The consumers are happy because they get their $1 handkerchiefs but are also unhappy because there are fewer jobs. IMO this economic system demands the involvement of imports...

 

It is, by definition. Take the income accounting identity (Y=C+G+I+X-Z) and rearrange. There's no debate in it. The only debate is over the solution.

 

How can you have production and/or investment in something a nation might not have...like oil or corn or timber, etc.?

 

You're merely referring to the usefulness of imports. That can't be used to describe a trading imbalance. Its an identity, there's is no debate about it

 

95% of the crap in every retail store in the USA is imported...175 million Americans all believe this is 'usefulness of imports'.

The more 'usefulness' that is imported which is not offset by exporting leads to the problem we have today in the USA...we no longer manufacture much for the mass consumers! Perhaps this is about $3 trillion which represents about 30 million jobs lost to imports. If the USA could expand exports by $1.5 trillion this would create about 15 million jobs...this solves most of the unemployment issues and huge chunks of government welfare and increases the government revenues.

But we have shown over the past few years that we cannot increase exports enough to balance the loss of jobs, etc.

 

And still the US import rate is relatively low

Deindustrialisation is natural in a mature economy. Comparative advantage certainly says the US should manufacture less product reliant on relatively low skilled labour.

Trade isn't a zero sum game. Suggesting lost jobs is a red herring as trade creates jobs.

The US's problem is underemployment. Nothing to do with trade.

 

The import rate is low as a ratio to GDP however it does represent about 30 million lost US jobs minus the jobs created to distribute/sell the imports. I have no problem with imports; they bring innovation and less costs and competition and more selections, etc.

You can't increase employment without increasing GDP. If you can't increase GDP from personal consumption then how can it be done; exports.

Perhaps relative in the world, however, I'm not sure you can define the US economy as 'mature'?

 

Garbage! You're treating it like a zero sum game. Imports do not translate into lost jobs. They translate into better product, lower costs and specialisation according to comparative advantage. Trade is an employment creator.

 

You've just repeated my previous comments about 'better product, lower costs and specialisation'.

I specifically said imports do create jobs so don't know where you get your zero-sum comment?

Imports in many cases are lost jobs if the products and services were once produced in the USA. Makes no difference why the products became imported. But they definitely are lost jobs.

Import trade imbalance is a big deal because we're not offsetting it with equal exports...thereby a loss of jobs.

 

No, you confused yourself and continued tyo support neo-mercantilist nonsense.

You refer to imports losing jobs. That is Mercantilism 101

Repeating drivel! The trading imbalance is something quite distinct from "imports boo hoo hoo"

 

I own a business...build everything in my facility...then find out I can buy 50% of my materials and sub-assemblies from an offshore business for a considerable savings...so I release 50 of my employees who were building this stuff in my facility...out in lala land someone else hires a couple of new employees to handle and distribute the imports I now buy offshore.

Now I believe in this scenario we lost 50 employees from my facility and hired a couple outside of my facility...you believe this was not a net loss of American jobs? If so, then please explain why outsourcing is considered so evil?

 

You've compared the economy to your business. That isn't credible. You can't understand the positive impact of specialisation according to comparative advantage, for example, by referring to your business

 

The economy is my business and all other business combined.

I'm not interested in hearing what 'you' believe I understand or not...

 

You cannot understand the economy by referring to your business. Simply can't be done. I gave you an example of that: specialisation according to comparative advantage. If your company isn't producing in that area of specialisation you could moan about lost jobs. We know, however, that its simply a shift of resources to another area of the economy (such that there is an increase in economic efficiency)

 

Without my business and all other businesses...there is no economy.

Please explain why you believe outsourcing is a good thing and how it provides net-positive jobs?

I support outsourcing but I don't see outsourcing creating US jobs...