I've always liked the articles at zerohedge, but if you are going to tackle a problem, you need to understand the problem. the surprising thing is "Tyler Durden" usually has his facts straight...
not this time.
When the trade deficit increases, it means that even more wealth, even more jobs and even more businesses have left the United States.
Not necessarily. I run a trade deficit with Recreational Equipment (REI). In fact I've been running one since about 1967. I buy from them, but they have never bought from me. Same with my tailor in Hong Kong. But in both instances, I believe I am better off, what I bought was worth more to me than my money. There are plenty of times in the mere tenure of USA that we were growing and running a trade deficit. They are not necessarily bad.
Well, one of the primary ways that they did it was by selling us far more stuff than we sold to them. If we had refused to do business with communist China, they never would have become what they have become today. It was our decisions that allowed China to become an economic powerhouse.
See, this is mixed up. It sounds like Durden is making a pitch for protectionism. But to continue, yes, "selling us far more stuff than we sold them" is the definition of trade deficit. To repeat it means he is flogging an idea. And note "communist China" when in fact that country is far more free market than USA. But true and true, by our decisions we offered the opportunity for China to become what it is today.
But wait, Tyler, you are unhappy about what is happening in USA... this really isn't China's problem that they did well given USA policy. Isn't your objection with USA, not China?
We fill up our shopping carts with lots of cheap plastic trinkets that are "made in China", and they pile up gigantic mountains of our money which we beg them to lend back to us so that we can pay our bills.
Who is winning that game and who is losing that game?
I agree we are losing the game, but it is a game we rigged and the Chinese merely spotted how it was played, and then played to win. We should not complain when the people we wanted to sucker outsmarted us. Perhaps we ought never have tried to sucker them. And you will never be credible if you talk cheap plastic junk from China, since that is less than 3% of what we import. In fact, most of what we import his very high value, and that is where the problem is...
China Exports to USA, 2013:
| 1 | 85.--electrical machinery and equipment and parts thereof; sound recorders and reproducers, television recorders and reproducers, parts and accessories | $110,562.0 | $116,276.8 | 26.538 | $9,387.6 | $9,227.3 |
| 2 | 84.--nuclear reactors, boilers, machinery and mechanical appliances; parts thereof | $99,154.3 | $100,231.8 | 22.876 | $8,222.7 | $8,516.6 |
| 3 | 94.--furniture; bedding, cushions etc.; lamps and lighting fittings nesoi; illuminated signs, nameplates and the like; prefabricated buildings | $22,430.9 | $24,095.9 | 5.499 | $2,134.5 | $2,460.7 |
| 4 | 95.--toys, games and sports equipment; parts and accessories thereof | $21,984.8 | $21,626.7 | 4.936 | $1,595.9 | $1,557.5 |
| 5 | 64.--footwear, gaiters and the like; parts of such articles | $17,026.3 | $16,875.5 | 3.852 | $1,712.6 | $1,597.2 |
| 6 | 61.--articles of apparel and clothing accessories, knitted or crocheted | $14,947.6 | $15,519.6 | 3.542 | $1,161.8 | $1,284.8 |
| 7 | 62.--articles of apparel and clothing accessories, not knitted or crocheted | $14,654.6 | $14,799.1 | 3.378 | $1,401.7 | $1,426.8 |
| 8 | 39.--plastics and articles thereof | $12,074.2 | $12,805.6 | 2.923 |
World exports:
Electronic equipment: $561,703,550,000 (25.4% of total exports)
Machinery: $383,310,504,000 (17.3%)
Knit or crochet clothing and accessories: $96,810,372,000 (4.4%)
Furniture, lighting , signs and prefabricated buildings: $86,435,683,000 (3.9%)
Optical, technical and medical apparatus: $74,689,712,000 (3.4%)
Non-knit and non-crochet clothing and accessories: $68,271,919,000 (3.1%)
Plastics: $61,775,281,000 (2.8%)
Vehicles excluding trains and streetcars: $58,588,779,000 (2.7%)
Iron or steel articles: $57,368,576,000 (2.6%)
Footwear: $50,766,207,000 (2.3%
The problem is back in the 1980s the smart boys on Wall Street said we can make China a low cost source, launder profits and avoid taxes by outsourcing. USA manufacturers threw in the towel. Wall Street transferred USA technology to China, and look at world exports to see what China is exporting to the rest of the world, and we are not. Since we are in a fascist economy, that is to say big business and big government are one, and the regulators are captured by the regulated, there is nothing to be done except to await the inevitable war and out defeat, and our elite
scurrying off to their overseas holdings, like the top nazis after WWII.
It has been estimated that the U.S. economy loses approximately 9,000 jobs for every 1 billion dollars of goods that are imported from overseas, and according to the Economic Policy Institute, America is losing about half a million jobs to China every single year.
Now those numbers look right, but imports is not a zero sum game. It is very possible to have open borders, free trade, large imports and growing employment. But that is only possible in a free market. It is not possible in capitalism, or as some people express tautologically, crony capitalism, as if there is any other kind (or crony communism), but as long as we have a system designed to screw the Chinese, which the Chinese can plainly see, and then judo-flip us, well, our worker lose while the 1% gets richer.
Overall, the United States has accumulated a total trade deficit with the rest of the world of more than 8 trillion dollars since 1975.
Yes, and it is well known we can repudiate it today, and clear our credit score back tomorrow to 100, as people will flock to lend to us again. That is not the problem. The problem is we are not making things for ourselves that we could. And that means we have less to sell. And more unemployment.
For a long time, U.S. consumers attempted to keep up their middle class lifestyles by going into constantly increasing amounts of debt, but now it is becoming increasingly apparent that middle class consumers are
tapped out.
Right, those credit cards, which were rare circa 1970, exploded in the mid-1970s when usury was unleashed, and then exponentially when banks learned to lend their credit in the 1980s.
You want to fix this problem in less than three years? Make interest payments (usury) non-enforceable contracts. Right now our economy is organized around FIRE (finance, investment, real estate), and that on lending credit at usury. Don't outlaw, just don't protect it. It is our achilles heel, it promises there is no end to the free stuff.
If we could start reducing the size of our trade deficit, that would go a long way toward getting the United States back on the right economic path.
Very mixed up. We can grow employment and a trade deficit, because it is possible for our workers and small businesses to be making so much they import even more. The problem is not imports, it is USA impoverishment by our policies.
U.S. workers are being merged into a giant global labor pool where they must compete directly for jobs with people making less than a dollar an hour with no benefits.
Nonsense, the component cost of labor is less than a couple of percent of the price of an item. It is cheaper management and money laundering and tax avoidance that drives this practice. Using the word "cheap labor" blames the victim. The #1 problem in China industry today is labor shortage. But our owned politicians are getting big re-election bucks ruining small business and buying estates in the south of France for when it all comes crashing down.
At one time, the city of Detroit was the greatest manufacturing city on the entire planet and it had the highest per capita income in the United States. But today, it is a rotting, decaying hellhole that the rest of the world laughs at.
Hang on, there was no place on earth where more subsidies, "intellectual" "property" "rights", government intervention, social programs, etc were heaped on. There is not a politician anywhere, at any level, in USA who is not advocating we do for the rest of the country what we did for (to?) Detroit. yes, truly, Detroit is our future.
Is there a simple fix? yes, deregulate something, anything... banking, the internet, medicine... anything... that will give us a quick growth industry, and then make usury non-enforceable in contracts, that will avoid misallocation and malinvestment.
We really need to form a Hong Kong here in USA where we can do these things, as USA slips into the much and mire.
Feel free to send this to three of your friends.
