Reducing import purchases 50%

If every American were to reduce purchases of imports 50%, that would come close to solving the foreign debt problem.

The Buy American campaign a bit over a decade ago didn't work because people didn't respond. However, at that time, few people except myself and those who read posts on message boards I posted on, realized that the trade deficit was a danger. If the public were informed about just how serious the danger of the foreign debt is, they might be willing to reduce their purchases of foreign made products to 50% below what they are buying now, and wait to buy things they didn't need immediately until manufacturing were restored in the United States. With that potential for sales out there waiting, businesses could set up restored American production quite quickly.

At the same time, buying only half as much in imports would leave enough foreign jobs intact that nations could adjust by expanding internal markets somewhat. It is vitally important that we make sure citizens in other nations end up, after a temporary period of extra effort better of than now. Being a world leader does not mean bossing other nations around to pressure them into doing what America wants for itself. Being a leader means finding good outcomes for all those one is leading. Notice that other nations could make use of some of the other ideas I have presented on the message board.

 

It isn't. A trading imbalance is easily fixed with changes in savings rates.

 

There is no way to know what is or is not imported. Even American cars are filled with imported parts. Americans just need to consume less.

 

Pretty much this.

How would you even know if the gasoline you buy is domestic or foreign produced?

I have no problem with anyone who wants to buying what they think is American, just for anything much more complex than a wrench, it is unlikely to be all American.

 

Why bother with neo-mercantilism at all? It creates perverse incentives (e.g. "we don't have to bother to offer the best as the mugs will buy our goods no matter what")

 

What other consumption will make up the import sales 50% losses?

I suspect if any of the imported products could be produced in the USA at a sustainable profit American business would be doing so...but in most cases they cannot. And this cannot be solved by doubling/tripling the consumer prices!

Imports, both products and technology, are great competition which ultimately provides better quality products and competitive prices.

If we consider that large-box stores like Home Depot, Lowe's, Sear's, Target, Kmart, all clothing and shoe stores, Ace Hardware, and the millions of smaller businesses who compete with similar products, etc. etc. etc. might have 50% to 95% foreign content products, it's interesting to imagine what a 50% reduction in foreign content would do to the US economy...

 

Here's your problem: if you only buy American made products, you are going to pay a higher price. Which means you can only buy say 10 items instead of 15 or 20. Which in turn means your standard of living goes down. A lot. AND, those companies and industries that produce those 5 or 10 items you can't buy any more may have to go out of business, or at least reduce their costs to make profit. That means fewer workers, which is the wrong direction to go in.

 

Not when corporations control what us available in stores. Corporations now manufacture most of their products overseas, and giant chains like Walmart often carry only foreign made manufactured products.

The savings rate change isn't going to change what the corporations decide as long as the public is passive and just buys what is put in front of them.

 

Sorry, its Macroeconomics 101: a trading imbalance merely reflects savings rates (take the income accounting identity and rearrange to confirm). The important point is that exchange rate devaluation is likely to be destabilising, ensuring that savings rates are key. Indeed, as China switches from export-led growth to consumption-led growth, half the battle will already be achieved.

 

It would take some effort and cooperation, but with that, people could find out.

If low income Americans spent less, they would have to stop eating an adequate diet. Given high rents, there is no give in the budgets of low income Americans. People can't just give up cars because it's not possible to get to most places of employment without a car. Middle class Americans would have to give up sending their children to collage, and would have to skimp on medical care, and so forth.

I have a personal bias, however. As much as possible, I want to figure out how to get people what they want. Since people don't want a monastery level standard of living, I am trying to think up ideas which would provide people with the income they want, yet in an economy safe for the environment.

There is also a demographic wrinkle. The birth rate decreases as the standard of living goes up. Part of that is that in a poor nation, only one's children can provide for one in old age. As part of reducing consumption, conservatives want to do away with old age pensions. If we dropped people's standard of living and did away with old age pensions, people would again have large families in order to have someone to support them in old age, and we would therefore have terminal population explosion.

 

One can't simplify that much in ones analysis. What you are talking about doesn't include corporations being able to partly shape the economy to their own wishes. It doesn't include an immense debt to foreign lenders.

 

If you have noticed over the years, usually a company is making a profit with American workers when they export the jobs.

As imports have increased, quality has declined.

It would be a bit of a struggle for the American economy. However, austerity imposed by foreign creditors would be quite a lot worse.

 

You can't dismiss an identity. You've made an error which merely encourages a false neo-mercantilist outlook.

Corporations merely follow the profit motive. That will include taking advantage of gains from comparative advantage. That can't be used to explain a trading imbalance.

 

Actually, people just believe that imported goods are cheaper, because the price tags in the stores are lower. However, imported goods are much more expensive than their price tags. After a customer buys an import. the United States still owes on the loan for the money used to import the product. So, as part of America, customers still owe money on the purchase after they take it home from the store. Then, like a credit card, the share of the debt of America requires interest payments, so one still owes money for the product one purchased for decades, and every year has to pay a share of the loan to bring the import to America. Therefore, in the long run, buying imports greatly reduces everyone's standard of living.

 

This is continued use of neo-mercantilism. It is bogus comment. There is no 'additional loss' from importing.

 

Economics is still a rather primitive science. For example, just keep track of how well future projections by economists of what will happen to the economy actually work out. Economics is still a very poor predictor of future economic activity, even with sophisticated supercomputer models. At present, the ideas and math in economics aren't at all accurate.

You are talking theory about corporations;

I am talking about what is actually happening.

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Are you saying that a debt isn't a loss/obligation?

 

We are certainly going to reduce our import purchases. Not out of choice but out of necessity. As the buying power of the average wage earner decreases they will learn to live without certain luxuries.

The US is actually producing many of the components within products or the design and programming of the robots used to produce them and so on. Everything that takes a lot of human labor is done elsewhere, so products seldom earn the made in the USA seal, but they could not exist without US production. And the world economy is moving along nicely, new consumer markets open everyday and US produced goods are being used more and more worldwide.

US companies are doing fine. Its the American consumer that is, at least temporarily, out of business.

 

There's no debate in it: you can't dismiss an identity. Your argument makes no economic sense.

I'm saying that your position is wrong because it is nothing more than mercantilism. There are no additional losses from imports. There are only issues with trading imbalances which, by definition, refer to savings rates

 

This is nonsense. It appears you have confused the balance of payments with the national debt.

" United States still owes on the loan for the money used to import the product. So, as part of America, customers still owe money on the purchase after they take it home from the store. "

Patently bogus. There's no loan involved here, you need to educate yourself about how the balance of payments works.

" Then, like a credit card, the share of the debt of America requires interest payments, so one still owes money for the product one purchased for decades, and every year has to pay a share of the loan to bring the import to America. Therefore, in the long run, buying imports greatly reduces everyone's standard of living. "

Ridiculous. I assume you are now talking about the national debt, which has nothing to do with the balance of payments. When the gov't spends more money than it takes it, a deficit is created for which the US Treasury has to issue debt instruments, some of which is bought by foreign gov'ts. It matters not at all whether or not the American people have purchased more foreign products than US items, or whether the rest of the world has purchased more of our stuff or not.

 

Buy a pre-1970 auto. Japanese imports increased US auto quality from, the car is crap at 50K miles to 150K miles. Better mileage, better handling (today full size pick up truck can run a slalom faster than a 65 Corvette), etc.

The low cost American clothing of the 60's looked good on the rack, but you couldn't wear it after the first wash.

Why stop trade at the US border? Does you state need more tax revenue? Buy everything in state. Maybe your city's unemployment rate is high, buy only products built in your city - or maybe only from your neighbors - hey, why not make everything yourself? Think how much you'll save if you melt down that "spare" bicycle rim to make new rings for you car:

Total self sufficiency, a sure fire path to poverty.....

 

Depends on the evaluation method. Given the abundance of low wage labour demand, one could argue that US companies are suffering from myopia

 

I continue to advocate greatly expanding exports...after all, the US only has 315 million consumers (although they do spend like they're on steroids) while outside of the US there are ~7 BILLION consumers...many of which are industrializing and developing...

 

Why? You need only to advocate entrepreneurial activity. The extent of exporting should not be a primary concern, except in the case of export-led development

 

Businesses don't have any conspiracy plans to 'export jobs'?? Too bad you don't understand that these businesses do what is necessary to sustain and maximize profits and growth. They owe you nothing! They ask for employees and services and pay for both in order to do business. In my corporate experience dating back to the late 70's and 80's we were outsourcing electronic components, sub-assemblies, final assemblies, metal stamping, injection molding, printed circuit boards, etc. etc. because it was the ONLY way to compete and stay in business. And, we actually had better quality products as a result. If we didn't compete then we would need to close the doors...and I suppose you believe this was a good option? Open your mind to the FACT that we have been operating in a global economy for decades now and it's not going to change! We want to sell our stuff as exports which means we must allow imports...this is TRADE. All businesses, whether they are located in the USA, or around the world, have the identical mandate...grow the business and maximize profits and provide quality products and competitive pricing and service...this is universal! Are the global playing fields equal...of course not but the choice is to throw in the towel or figure out how to compete. US workers need to pay attention to the global marketplace and instead of always demanding more and more and more to work with corporations to find how US companies can better compete in order to tap more into those 7 billion worldwide consumers...

 

The key word there is 'demand'. The problems inherent in the US labour market (e.g. divorce of productivity and wages) have nothing to do with worker behaviour. They aren't supply orientated. They reflect labour demand. US companies have been allowed, through neo-liberalism (i.e. right wing policy), to become myopic as they seek short term profit to the detriment of long term well-being