Trade Wars versus Trade Deficits

I continue to say trade deficits are not typically a problem. A trade deficit is not much more than a data point. Consumers place demands and ALL companies on Earth have the option of filling this demand. If local companies refuse this demand, or there are difficult barriers, or they simply are not competitive, consumers can do without or seek imports. The very reasons why today US companies are not producing products to compete with imports is a clear signal that they're not viable business ventures. So most all of this dialogue is politically based. Sure, expanding business in the US is a good thing, and creating more jobs is a good thing, but short-term policy like tariffs and other bullying, is not an answer to anything. As you say, why don't we have the same amount of dialogue to greatly expand exports?

Regarding engineers, trying to remember correctly, but Apple answering why production is done off-shore, stated they needed about 500,000 production workers and 75,000 engineers to support production. Simply put...the US does not have these quantities of workers and certainly never within the location of one or more facilities. I live north of SF and although the economy here is great, so is the cost of living at horrific rates, so what company can afford to buy/lease real estate, hire and/or fight for expensive labor, dealing with infrastructure problems, etc. etc. to build current imports? Yet these same companies have equally difficult time locating to rural USA, where cost of living is less, but little else exists!

Trade is great! It gives consumers more selection, better quality, lower prices, and creates a competitive spirit which gives consumers new technology and innovation. Eliminate trade and all of this goes away...PLUS...so does our exports. Everyone is a loser!

This discussion is like so many others in which the total picture is much more complex, and political, and strategic, etc. so soundbites like 'tariffs' become political banter but never solve problems. Job wages are basically a supply and demand discussion...not a political policy which claims to greatly increase wages. Higher paying jobs is more political BS if US workers refuse to obtain higher skills and education. US companies will never produce replacements for imports if the business model is not viable for the long term...

 

Yes they do. The U.S. has lots of unemployed engineers, even more who've had to switch to other careers.
It's a matter of paying them much less money in other countries.

I've personally talked to two of them.

Go talk to an engineer (one who's not here on an H1-B visa) and ask them what they feel about tariffs. If they're even still able to find a job as an engineer, many of them are working in other jobs now with lower pay than they were making before.

 

Would our exports go away if we demanded from other countries our imports more closely match our exports?

Are they only allowing our exports into their country because they know they're getting a huge trade surplus?
Time for some renegotiation.

 

They are not competitive because of the far lower wages and lack of workplace/environmental regulations in other countries. Is that really "fair" competition? (Not to mention lower tax rates, and the Chinese government essentially subsidizing exports through their currency, and discounted electric power, which is dirty and comes from low-grade sulfurous coal, by the way)

 

You cherry-picked my words and deleted the fact that wherever the facility might be located is where the engineers must be available...and they are not!

Logic tells me that when US companies are begging government for more green card workers, more engineers from abroad, the reason for this is two-fold; first, there definitely are not enough workers in the USA, and second, the workers that do exist are not desirable.

IMO if a fully qualified engineer is unemployed for the long-term, there's something wrong with them. Short-term unemployment or under-employment is not a big deal. And location remains a huge issue when employers can't find employees in one area while other employees in another area can't find employers...both business and workers need to be where the jobs/workers are located.

As I said, it was Tim Cook speaking...not me...

 

If you stop imports why do you believe the same nations will allow US exports? That would be a unilateral trade deal?

Most could care less about trade imbalances in either direction. Consumers just care about consuming. There is no conspiracy in the US or offshore to create trade imbalances?

 

Who cares why they are not competitive? Can you force/change the wages and regulations in other nations? Can you force/change other nation's tax rates? You're going to stop any government from subsidizing products or industries? US companies have no problem going offshore for less expensive labor and materials yet you say imports are unfair? Why doesn't a US company produce pencils in China so they can compete with Chinese company pencils? US companies are going to produce what they're good at and not chase crappy imported items...

 

That has nothing to do with what we're talking about. Of course if an American company wanted to produce pencils in China to sell to China, nobody in America would have a problem with that.

We wouldn't stop imports altogether. We'd just cut them back to a level where they matched US exports.
(maybe not matched exactly, but came closer)

If those nations still don't want to allow in imports from the U.S. after that it's obvious they don't really want to trade with the U.S.

 

You obviously are not aware of the situation. Many U.S. companies are intentionally passing up hiring U.S. engineers to hire cheaper foreign engineers on an H1-B visa. There's almost discrimination against American-born engineers because they know they'd have to pay more.

A lot of these companies just lie and say they can't find American engineers.
That's the only way they'll be granted H1-B visa access to bring in somebody else.
Some companies intentionally advertise a position with a pay amount $10 or $20,000 below what they know an American engineer would work for. This is designed to help weed them out.

 

Easy to avoid capitalist 'race to the bottom' from worker mobility: socialism.

 

Of course it has a lot to do with what we're discussing? My point is if US companies wished to produce all of this imported crap then what are they waiting for? And it's not selling pencils in China...it's selling pencils in the US to compete with Chinese imported pencils by using the same labor rates, etc. This is without even talking about the significant increase in consumer prices, inflation, should a US company try to produce pencils in the US. You can further guess on most imported stuff, like pencils, that huge portions of the production are automated, therefore, even trying to produce pencils in the US won't create many jobs. IMO, in a free market scenario, producers and consumers, will find an economic equilibrium that generally works for everyone. If you try to micro-analyze this process, without looking at long term effects, both positive and negative, it's easy to cherry-pick and politicize...

 

So...you actually believe if two workers are performing the identical job description, and both have nearly identical job skills, and let's say this is Apple Corp, you think one of them on a work visa will be paid significantly less than a US citizen?

https://www.glassdoor.com/research/h1b-workers/

 

Econ 101:
1) trading is always good so you don't have to make everything yourself. Do you want to make your own car, clothes?
2) trade deficits are always 100% self-correcting. We buy from China, they burn the dollars or spend them here. Guess which they do??

did you ever think of college???

 

It always has a direct benefit for the individuals involved in the trade.
Do you know what the fallacy of composition is? How about extraneous effects ?

I wasn't aware there was actually a "rule" in economics that trading is always good. Maybe you made an erroneous assumption??

You're now making a different argument from the one we were talking about.

Saying that no trade is bad (which is obvious) isn't an argument for all trade being good.

Already been addressed. It's obvious you didn't bother to read through the thread.

It's not a good trade if we get China's exports and they get our assets.​

 

Drawing that assumption is, to a certain degree, a logical fallacy.
The current pay gap between foreign engineers and American engineers isn't going to be as great as the gap between what American engineers would be earning.

 

There will be administrative jobs in the factories, and of course those higher paid engineering jobs.
What your argument is on this point is pretty weak, because if they wouldn't create many jobs, they wouldn't cost all that much, now would they?

Why does the U.S. have to compete with another country in its own market?
What your argument here essentially boils down to here is "It can't be because it isn't."

I applaud you for trying to put up a defense for your position, but it seems the bulk of both your arguments are as chocked full of as many logical holes as Swiss cheese.

 

I would contend that there has actually been a great deal of inflation, but it has just been masked by cheap foreign imports.
I would also submit that, if these foreign imports are indeed something which is not sustainable, then the reality is that inflation has already taken place, in a sense, and is just biding its time before it manifests.

 

I agree with the perspective of economic equilibrium, but I would submit that if a nation's assets/capital are being drained that economic equilibrium could take a long time to reach parity, and there's nothing that says an equilibrium is generally going to work for everyone.

 

Yes, admittingly there's truth to that.
However, consider this. If government doesn't intervene in this way, it's much more likely it will end up intervening in even more intrusive other ways.
Really quick example to illustrate: Imagine a scenario where international trade increases total wealth a little bit but also increase the level of inequality. Government can redistribute some of that wealth to compensate, but in so doing those taxes would hurt wealth creation to a greater extent than the benefit of the trade.
In such a case the government would be better off intervening, even if it gets political and the exact policy decisions may not be the most well-informed, because otherwise there will be political forces clamoring for something else that will end up intervening in the economy even more.

I suppose in some sense the question is really which is more efficient, trade protectionism or socialism?

If you believe socialism is more efficient, then you will advocate for free trade to generate wealth and then socialism to redistribute that new wealth that has been created.

If you believe socialism is even less efficient than trade protectionism, then you might advocate for some trade restrictions to try to address some of the issues that socialism is being touted as a solution for, knowing that, as much as you may not like it, those trade restrictions are not as damaging to total economic efficiency as socialism would be.

Or we could just have the usual both sides refusing to compromise, with free marketers demanding no protectionism and those on the Left demanding socialism and nothing else.
That usually involves one side not getting what they want (or both sides).
One could see this as a sort of Prisoner's Dilemma paradox.

 

You do like to ask spectacularly naive questions. We know that protectionism is inefficient for all developed nations. We do know, however, that there is a case for interventionism in support of the infant industry hypothesis. That's the amusing reality of capitalism: it is built on government planning.

Might be the case, if we were extreme right wingers without any knowledge of economics. That isn't the case though, is it?

 

yes, trading is always good, if not people don't trade. 1+1=2

 

all trade is good if not it does not take place

 

why??? if they get a $1 and I get a trinket from China that's good or we would not trade. 1+1=2 Do you want a Nazi govt to tell people what they can buy and sell??

 

I gave you factual evidence of compensation and you're still arguing??

 

because Americans want to get as rich as possible by shopping as widely as possible, and because we don't want to be left out of international trade so that our production in not world class and our nation is not world class 1+1=2.