Is the Donald right to get riled up about our balance of trade with China and Mexico?

[sleestak]

@Voyager

Not just low prices. They can make products more efficiently than we can, so buying from them and using our resources on things we can be more productive on improves US productivity and our economy in the long run.
This means we have to work at being more productive and more competitive, but no one ever said competition was easy.

Do you have a cite for China being more efficient? I highly doubt it.

Slee

[Voyager]

@sleestak

Do you have a cite for China being more efficient? I highly doubt it.

Slee

Efficient in the sense of making equivalent products for less money. Not more efficient in the sense of optimizing the manufacturing process. If your labor is cheap enough, and your machines are expensive enough, that sometimes isn’t even a good strategy.

[Voyager]

@BrainGlutton

Oh, it’s easy, all right, our corporations just need to do what the Chinese manufacturers do – use what amounts to slave labor, and ignore environmental impacts. In fact our corporations do that now, but they do it by outsourcing/offshoring. Which is one of the things Donald seems to be complaining about . . . it is a puzzlement.

I agree. And that is where politics and regulation come in. Companies are happy to transfer costs to their workers (slave labor) or the general population (pollution) until the cows come home. When the workers and the general population have had enough manufacturing costs go up and things get fairer globally. (Fair is not a moral judgement here, just the same rules.)
That’s the difference between left and right. The left wants to transfer these costs into the product, while the right wants to move costs which we’ve build into the product back to the environment.

But I was saying that puddleglum was right in that China has a competitive advantage in product costs because they transfer costs to their population/environment.

[WillFarnaby]

@BrainGlutton

Oh, it’s easy, all right, our corporations just need to do what the Chinese manufacturers do – use what amounts to slave labor, and ignore environmental impacts. In fact our corporations do that now, but they do it by outsourcing/offshoring. Which is one of the things Donald seems to be complaining about . . . it is a puzzlement.

Slave labor and cheap labor are not synonymous despite leftist rhetoric. I’m sure there is some labor that is forced in China, but if there is there have been no reports that lead me to believe that is a pervasive problem.

To be clear, if poor Chinese are choosing to work in a factory for very cheap and in terrible conditions, this means they see it as the best of all available opportunities for them. If successful, Left wing and Trump-like demagogues, would only succeed in taking the best available opportunity from these poor individuals.

There is no reason to be concerned with the balance of trade, ever, in any circumstance.

[PhillyGuy]

@BrainGlutton

Oh, it’s easy, all right, our corporations just need to do what the Chinese manufacturers do – use what amounts to slave labor, and ignore environmental impacts.

China is now a middle-income nation with wages higher than Mexicos:

Mexico: The World’s New China - Investing Daily

I’m not saying Chinese wages are good, but I don’t see them amounting to slave labor.

As for them ignoring environmental impacts, I wouldn’t say they are ignoring them:

China's Xi Jinping announces climate-change pact

Sometimes, though, what they do is worse than ignoring:

http://www.bloomberg.com/news/articles/2015-03-07/china-pollution-film-vanishes-as-xi-makes-pledge-on-environment

[LinusK]

@sweeteviljesus

Given that just about everything else he says is a lot of bullshit, I am inclined to write this off as more of the same. That said, I would like to understand the concerns of a trade deficit. I know part of the deficit is because China keeps the Renminbi or Yuan or whatever it’s called artificially low.

Thanks,
Rob

No.

A trade deficit means we’re exporting dollars and importing goods and services. It’s good people want dollars so much, but the truth is we (meaning the government) can make as many as we want, whenever we want.

The only threat is if our government fails to replenish the dollars that go overseas.

In order for the US economy to grow, it needs money. If too many dollars go overseas - and don’t come back - it hurts the US economy. Especially people who work for a living.

[septimus]

I’d suggest to OP that he make clearer OP’s in future. Does he want to talk about Trump or to talk about the trade deficit? The idea that just because Trump says something, it is likely to be wrong is absurd. Indeed, many moderates including myself are much closer on the issues to Trump than we are to other GOP candidates. It does not follow that we agree with Trump about Megyn Kelly or that we think he’d make a good President. :smack:

@sweeteviljesus

I think what I don’t really understand is the idea that a trade deficit is effectively a debt. The way I read it years ago in an article in the Atlantic was that everyone in America owes everyone in China X where X was over $1000. Do I have that right?

When America (i.e. American people) buys goods from China, China gets something in return: American goods, American real estate, American stock or American bonds. Or American dollars which can be traded for American goods, real estate, or stocks at some future date.

If you’re asking whether the net U.S. debt that China’s government holds divided by the U.S. population exceeds $1000, the answer is Yes; indeed it’s closer to $4000. China recently passed Japan’s institutions collectively as the largest foreign holder of U.S. Treasury debt, I think.

Does this affect your personal finances? Not directly. Gradually American capital will increasingly be owned by Chinese interests rather than rich Americans. When you sell your 50 shares of Apple Corp., do you care whether they’re bought by Huang Li or by Joseph Walton?

[sweeteviljesus]

@septimus

I’d suggest to OP that he make clearer OP’s in future. Does he want to talk about Trump or to talk about the trade deficit? The idea that just because Trump says something, it is likely to be wrong is absurd. Indeed, many moderates including myself are much closer on the issues to Trump than we are to other GOP candidates. It does not follow that we agree with Trump about Megyn Kelly or that we think he’d make a good President. :smack:

My apologies for making you wait until post #7 to understand what I was on about.

My instincts are anti-protectionist. I also think it’s an unmade case (and certainly by Trump) that these trade deficits are something to be worried about. I think LinusK’s post made an interesting point.

I also am not trying to hang supporting Trump on every issue around your or anyone else’s neck.

Thanks,
Rob

[handsomeharry]

@puddleglum

The reason we import goods from China and Mexico is that they are able to provide those goods at a cheaper price than we can in America. The way Trump is proposing to end the trade deficit is to add tariffs to goods coming from those countries. This would make those countries’ goods more expensive. This would help domestic competitors while harming consumers.
If you think high prices for products are good then what Trump is saying makes sense, if you think low prices are good than what he is saying makes no sense.
When I go shopping I look for low prices so I think this makes no sense.

You’re being unfair to the Donald. Of course, no tariff is good for consumers, but, there is also the fact that the production and profits are lining the pockets of another nation. This works both ways, and you should know that.

Of course, there was something in the late 20s, I can’t remember what it was called, maybe “Smoot Hawley? Taft Hartley”? Blamed for fucking the US in the Depression. The US passed a tariff, and I think it turned into a regular Hatfield and McCoys tariff war, which helped screw the world up, Mid-Depression. Can’t remember the specifics, tho.

[Rune]

The USA also have a large trade deficit with Europe. And with Canada. Is there anybody the USA does not have a trade deficit with?

[Really_Not_All_That_Bright]

Australia. And while our year-to-year trade balance is generally negative, over time it’s close to even in most cases because we sell so much gigantic stuff: commercial aircraft, military hardware, shipping, nuclear reactors and the like. The US is never going to have a positive balance of payments, though, because of our (essentially unique) currency.

@puddleglum

The way Trump is proposing to end the trade deficit is to add tariffs to goods coming from those countries. This would make those countries’ goods more expensive. This would help domestic competitors while harming consumers.

You and I both know that putting tarriffs on Chinese goods won’t move manufacturing here. It will just provide an added incentive to move it someplace cheap that’s not China. India, Africa, South America, other parts of Southeast Asia, etc.

Arguably, China is more of a worry than those places because the Chinese government is large and unfriendly and spends lots of our trade dollars on planes and tanks and so on. So there’s more than just our overall balance of trade to think about.

[carnivorousplant]

@puddleglum

When I go shopping I look for low prices so I think this makes no sense.

I too, but I do wish my neighbor Leroy who is unemployed and on the dole had a job making coffee pots or I-phones.

[Giles]

@septimus

When America (i.e. American people) buys goods from China, China gets something in return: American goods, American real estate, American stock or American bonds. Or American dollars which can be traded for American goods, real estate, or stocks at some future date.

This suggests that the world trade system just involves two countries, China and the US. However, it involves other countries. For example, if China gets American dollars, it can use those to buy coal and iron ore from Australia, and in turn Australians can buy goods and services from the US.

In fact, Australia maintains a trade surplus with respect to China because of the sale of raw materials, but that does not mean that Australia is doing better than the US (as the sliding down of the Australian dollar will tell you).

[carnivorousplant]

Yes, but Leroy is still on welfare, not making I-phones.

[glowacks]

1. The name of the Chinese currency is Renmibi. The name of the unit is the Yuan. It’s a bit weird. I think pretty much everywhere else the name of the currency is the same as the name of the unit.

2. World trade is about relative efficiency, not absolute efficiency. Each nation is going to produce what they are best at producing to sell on the world market, even if they can’t do it as well as someone else. Other countries will buy the product at inflated prices compared to what they would pay if they made it themselves because they will be able to change production into things that they make more relatively efficiently compared to the rest of the world and make up the difference.

The US compared to other countries is more efficient in research and development, with major corporations and universities constantly being on the leading edge of technology, fueled by an education system that is able to pick out the brightest and best and turn them into top-notch scientists (at least, compared to other places). Due to our higher standard and living and care for the environment, we are not more efficient at mass-producing things, so anything that can be easily manufactured and shipped at not too great of a cost will tend to be produced elsewhere. We invent things, other places make them.

[clairobscur]

@glowacks

1. The US compared to other countries is more efficient in research and development, with major corporations and universities constantly being on the leading edge of technology, fueled by an education system that is able to pick out the brightest and best and turn them into top-notch scientists (at least, compared to other places). Due to our higher standard and living and care for the environment, we are not more efficient at mass-producing things, so anything that can be easily manufactured and shipped at not too great of a cost will tend to be produced elsewhere. We invent things, other places make them.

China now has more patents filed every year than any other country, USA included. And the number of patents increases every year at an absurdly high rate. You’re deluded if you think Chinese are still just copying US technology, let alone will keep doing so forever.

[Mijin]

@carnivorousplant

Yes, but Leroy is still on welfare, not making I-phones.

Obviously you meant this tongue-in-cheek but I’ll nevertheless take the opportunity to point out that amidst all the howls of jobs going overseas, the US unemployment rate remains the envy of the developed world. And further, the rate now is pretty much the same as it’s always been, temporary economic booms and crashes notwithstanding.

[Really_Not_All_That_Bright]

@clairobscur

China now has more patents filed every year than any other country, USA included.

Well, sort of. China’s patent offices processes more applications than any other country’s, but many (not most) of those are filed by foreign nationals/corporations. If you take into account foreign patent filings in foreign markets (i.e. a German-issued patent owned by a US corporation) the US is still substantially ahead. For some reason, the Chinese don’t seem keen to protect their intellectual property outside China.

[carnivorousplant]

@Mijin

Obviously you meant this tongue-in-cheek but I’ll nevertheless take the opportunity to point out that amidst all the howls of jobs going overseas, the US unemployment rate remains the envy of the developed world. And further, the rate now is pretty much the same as it’s always been, temporary economic booms and crashes notwithstanding.

It is okay to beat my Wifeas long as I do it less frequently than Leroy does?

[Really_Not_All_That_Bright]

That fallacy, I do not think it means what you think it means.