Reduce the trade deficit; increase GDP & median wage

[Supposn]

Originally Posted by rruff

China would not have been able to grow nearly that fast without a massive trade surplus. It simply isn't possible. Else they would have needed to expand consumption at the same rate as they expanded production, and that has historically always been a slow process.

But the "development of China" wasn't really the point anyway. The oligarchs make a lot more money via the rapid export surplus approach. Enter the very accommodating US policy to make that a reality. It's no accident that all of this happened in concert to acheive this result... namely a massive increase in wealth by the powerful few in both the US and China.

R Ruff, we certainly agree that a nation’s annual trade surplus is certainly beneficial and a trade deficit is certainly detrimental to their nations’ economies.
Furthermore the nation’s trade balance to some extent usually (if not always) under-states their trade balances effect upon their economies.

Excerpted from the “Trade Balances' effects upon their nation’s GDP” within Wikipedia’s article entitle “Balance of trade”:
“Producers often benefit from some production supporting goods and services at lesser or no cost to the producers.
For example, governments may deliberately locate or increase the capacity of their infrastructure, or provide other additional considerations to retain or attract producers within their own jurisdictions. The curriculum of a nation's schools and colleges may provide job applicants specifically suited to the producer’s needs, or provide specialized research and development. All national factors of production, including education, contribute to their GDP, and unless globally traded products fully reflect those goods and services, these other export supporting contributions are not entirely identified and attributed to their nations’ global trade”.

I try to be respectful to all participants within discussion threads but that’s difficult to maintain when corresponding with persons believing a nation’s annual trade deficit can be other than net detrimental to their nations’ economies.

Respectfully, Supposn

[rruff]

Originally Posted by Supposn

R Ruff, we certainly agree that a nation’s annual trade surplus is certainly beneficial and a trade deficit is certainly detrimental to their nations’ economies.

After what has happened to the US vs our developing trading partners, and the situation in Europe, this should be obvious. And yet few are aware of it. It's taboo. Mention that our trade deficit is at the root of our ~35 year long economic decline is met with cries of "Protectionism! Bad!" Or even "what decline?". It's amazing how well the propaganda works.

Free trade theory works under the assumption that currency values will adjust to balance trade. This didn't happen in the US because oligarchs manipulated policy to force high trade deficits, so they could make massive profits from foreign development and production exported to the US. It couldn't happen in Europe because they were all stuck with the same currency.

"But aren't we getting real goods in return for worthless fiat paper?" That would be a good trick, except that "worthless paper" is the same thing my paycheck and all my assets are valued in. And China can and does use that "worthless paper" to buy anything they want. We lost production and went into debt to keep consumption up. That can't go on forever.

However we do it, our trade deficit needs to close and fast, else the next 35 years will be worse for the middle class than the last 35.

[Supposn]

Originally Posted by GeoffD

Actually, it closely mirrors what I've been reading in The Economist for the last 25 years.

The problem is that economic theory has no answer for the continued erosion of the middle class. Automation and global competition have seriously reduced the value of unskilled and semi-skilled labor in the United States. Robin Hood tax policy causes capital flight. Trade barriers and tariffs hurt everybody. Slashing taxes on the wealthy and reducing regulation does not cause "trickle down" benefits. The rich keep getting richer and everyone else gets poorer. I've concluded that there is no solution. The best we can do is slowly drift more towards a European-style Social Democracy. Just enough Robin Hood tax policy where we don't start seeing capital flight. Some kind of bare-bones single payer health care system. Address pre-K to 12 public education and day care so working class couples can work without having their children roaming the streets. Policy for affordable housing. Make sure transportation to work is affordable for the working class. Make sure the top-10% of the population that drives the economy is trained properly and isn't restrained too much by over-government.

GeoffD, Each of the multiple topics you touched within your 15Aug2015 post are deserving of their own discussion thread. You made no effort to do little more than mention them.
You touched continued erosion of USA’s middle income earners, value of USA’s unskilled and semi-skilled labor, U.S. tax policy relative to alleged capital flight from our nation, progressive tax rates economic consequences, increasing or reducing government regulations (regarding what?), USA’s proposed and/or alleged trade barriers and tariffs possible detriment to USA’s economy, disparity of income among individuals, the total national benefits or disadvantages of a welfare state, national healthcare policy, our systems for education and training, latch-key children, affordable housing, and mass-transportation.

I have posted to threads regarding many, if not almost all the topics you touched but I devoted this thread to arguing the net benefits or net detriments of a specific Import Certificate proposal for USA’s practices of our global trade of goods.
Within this thread I’m pleased to discuss all aspects of that proposal.

I’m playing catch-up now. My computer has been fried and I still need to replace it. I also had difficulties with the passwords for my Email accounts.

Respectfully, Supposn

[Supposn]

I’m among the proponents of a specific proposed global trade policy for adoption by the USA. The proposal’s described in Wikipedia’s “Import Certificate” article.

The proposed unilateral policy is substantially market driven and all of its direct net costs are passed onto USA purchasers of foreign goods. USA’s adoption of this transferable Import Certificate policy would our goods to compete with marginally under-priced products of low-wage nations. It would also serve as an indirect but effective subsidizer of USA’s exported goods.

Respectfully, Supposn