US trading away their ASSETS

you missed the point. there is no point in buying American car factories if American cars are junk. Notice how I defeated you with 5% of the words?

 

james M, you're still trapped in the 70s, when America really was losing market share to Japan because their cars were higher quality at a competitive price point.

That's no longer the case today. America isn't losing market share because its competitors have higher quality.

Exception of car imports from Germany, but those tend to be more at luxury price points, but most German company cars sold in the U.S. are actually manufactured in the U.S. or Mexico.

I personally don't see a big problem if the U.S. imports things from Germany because Germany has similar labor costs and regulatory environment to the U.S. It's not like they have an unfair advantage in keeping costs down.

And you're talking about cars, there are a lot of other manufactured goods.

 

so you now understand why trade deficits don't matter and are self-correcting in a free economy?
PS: nice try at changing subject

 

They are ultimately, in the long-term, self-correcting, but not in a good way.

 

why not? What would you do about it?

 

The OP nails it.

 

You do realize that Chinese nationals and companies are coming in and buying up some of this real estate? Like for an extra vacation house, or setting up plush lives for their adult children to live abroad in another country.
The value of the land isn't just based on the goods and services that Americans are getting.

Or they just buy it out and rent it to Americans, and then those Americans end up having to pay more.

 

Yes, it's the only thing they can do with all the Dollars.

So they buy capital goods. Companies, houses, ports etc.

 

That's true, but foreign corporations are even more reliant on American markets than the other way around.

In other words, all those layoffs in other countries = potential American jobs

Also, a huge amount of export commodities from American corporations mostly don't actually involve the employment of actual Americans. Look at the corporate agricultural sector. Are those Americans in the fields?
More likely than not those layoffs are going to involve a huge number of undocumented workers in the U.S. having to go back to Mexico rather than Americans being laid off.

 

Exactly.

So while some in the economy prosper from this, more lose from it.


This also provides a great amount of leverage for trade manipulations. Tariffs etc.
America's rivals have more to lose than America does.

 

benefit of trade is survival so it far outweighs anything especially trivial deficits

 

Reference to the 'costs of trade deficits' doesn't make sense. That deficit includes, for example, intermediate inputs into US product. The cost, if there is one, refers to any economic correction (e.g. macroeconomic crisis created through exchange rate volatility)

 

yes it assumes there is a cost and that deficits are not self correcting in a free market.

 

well if more lose from trade than we can make trade illegal and each state in the USA will have to make its own cars and shoes, etc . Does that really makes sense, even to a liberal?

 

so what?? do you want to make trade illegal??

 

capital goods are of no value if our industries are of no value. Houses eg are valued relative to value of GDP. If our industries suck so will values of our houses.

"Most important thing for a liberal to understand is that trade deficits are self correcting and should be ignored."

What must not be ignored are fat lazy liberal American workers who make high priced American junk that no one wants to buy.

 

???? what does that mean?? whenever a free market corrects it is very good since then supply equal demand. Are you a communist?

 

I remember when China was buying closed steel mills. They would take the facility drawings home, pour all the footings and foundations while the ship was being loaded, unload the ship, bolt everything down, and be up and running in a matter of weeks. I thought the US government was totally nuts to allow that, because while you couldn't pay union scale and make money with an old mill, you could pay bare subsistence in China and make plenty of money, plenty of cheap steel, and plenty more closed mills in the US.

Total nuts were running the US government.

 

Not quite, but you've put the fascist to shame!

 

worthless comment and still afraid to defend market socialism. Why waste your time here?

 

Your post didn't achieve sense as you referred to a free market. It doesn't exist, nor would it be wanted.

 

Milton Friedman was huge supporter of free market so he definitely wanted it. Do you understand?

 

Friedman didn't support free markets. He celebrated the myth, as illustrated by his interaction with Chile.

 

We have to understand how we came to have these perpetual trade deficits, to begin with.

I can remember their beginnings, in the discussions of academics. The theorists were not shy about openly stating their ideas.

They believed that most of the world was too poor, and that America was too rich. Their goal was to, both, raise the standard of living in the third-world countries, and lower the standard of living in the USA.

That the average American was/is so helpful toward those goals, must have come as a tremendous surprise.

 

That is drivel! You're corrupting the Heckscher-Ohlin model and how it predicts how global income differentials narrow. It predicts that by saying developing countries benefit more from trade. ALL benefit mind you.