Reduce the trade deficit; increase GDP & median wage

Aug 7, 2010
211
40
Cliffside Park, NJ
#1
Warren Buffett?s concept to significantly reduce USA?s trade deficit
I?m a proponent of a proposal that was introduced to the Senate in 2006. Trade deficits are always detrimental to a nation?s GDP. Trade deficit?s detriment to the GDP exceeds the amount of the deficit itself. The GDP bolsters the median wage.

The basic concept is for exporters who choose to pay the federal fees acquire transferable IMPORT Certificates for the assessed value of their goods leaving the USA. Importers would be required to surrender IMPORT Certificates for the assessed value of their goods entering the USA. Surrendered certificates are cancelled.

This trade policy would decrease USA?s trade deficit of goods and increase the aggregate sum of USA?s imports plus exports. It can be drafted to be completely self funding. It would not require any additional federal spending, taxes or debt. It would be a permanent stimulant that would increase our GDP more than otherwise.

Refer to: www.USA-Trade-Deficit.Blogspot.com
and
http://en.wikipedia.org/wiki/Import_Certificates

Respectfully, Supposn
 

myp

Site Founder
Jan 14, 2009
5,841
50
#2
1. GDP is not always a good measure of utility or a strong economy.
2. Trade deficits don't necessarily hurt GDP if the goods traded for end up increasing net domestic production.
3. There is a cost to this- the bureaucracy (certificates, etc.) as well as opportunity costs.
4. Trade deficits are not always a bad thing. Take the example of an economic downturn with a high savings rate. A trade deficit effectively trades paper for goods including food and things that consumers need, which might bring down prices and help fuel recovery or at least hold them over.
 
Aug 7, 2010
211
40
Cliffside Park, NJ
#3
1. GDP is not always a good measure of utility or a strong economy.
2. Trade deficits don't necessarily hurt GDP if the goods traded for end up increasing net domestic production.
3. There is a cost to this- the bureaucracy (certificates, etc.) as well as opportunity costs.
4. Trade deficits are not always a bad thing. Take the example of an economic downturn with a high savings rate. A trade deficit effectively trades paper for goods including food and things that consumers need, which might bring down prices and help fuel recovery or at least hold them over.
MVP,

#1
It my opinion that the GDP is the best generally accepted objective indicator available to us that indicates our nation?s ?production.

The relative proportion of GDP per capita and the median wage indicates the extent of that production?s wealth being distributed throughout the nation?s population.

#2
You didn?t read the referenced sites. The trade proposal I?m a proponent of eliminates the values of specifically listed scarce or precious minerals integral to goods being assessed. The nation would not lose any benefits to be derived from the import or export of such scarce or precious materials.


#3

All the proposals net costs are fully paid by U.S. purchasers of foreign goods.



#4

You?ll have to further explain this one to me. I?m not going to guess what you mean by this. I?m particularly by ?an economic downturn with a high savings rate? and high prices, (i.e. inflation?)?





Respectfully, Supposn
 
Last edited:

myp

Site Founder
Jan 14, 2009
5,841
50
#4
MVP,

#1
It my opinion that the GDP is the best generally accepted objective indicator available to us that indicates our nation’s ’production.
That is fine, but it is by no means a perfect measure of utility- surely you agree with that?

#2
You didn’t read the referenced sites. The trade proposal I’m a proponent of eliminates the values of specifically listed scarce or precious minerals integral to goods being assessed. The nation would not lose any benefits to be derived from the import or export of such scarce or precious materials.
I glanced over the main things in the proposal (mostly from wiki), but even then who is to decide what is scarce or precious? Even goods like plastic forks could potentially increase production if someone has a great comparative advantage in making said forks.


#3

All the proposals net costs are fully paid by U.S. purchasers of foreign goods.
Well that is a cost. And the bureaucratic enforcement costs still stand as well.



#4

You’ll have to further explain this one to me. I’m not going to guess what you mean by this. I’m particularly by “an economic downturn with a high savings rate” and high prices, (i.e. inflation?)?





Respectfully, Supposn
It is quite simple really. If we have a bunch of paper lying around (money), there are most definitely times when trading that paper for real goods would be beneficial- a recession comes to mind, especially if said trade would reduce the prices of essentials. The "trade deficit" is really only a deficit in paper money- we still get something in return (the goods) and based on the subjective theory of value, those goods are worth more to those who buy them when they buy them than the money was. That being said, if you account for goods, you can argue that today's monetary trade deficit is in fact a trade surplus in terms of value.
 
Aug 7, 2010
211
40
Cliffside Park, NJ
#5
GDP

That is fine, but it is by no means a perfect measure of utility- surely you agree with that?............................................
MVP, the GDP is an economic indicator that?s readily available, generally accepted and it includes nations? global trade imbalances as a factor of their calculation formula.

If any such formulas have any validity, they DO NOT indicate any more than otherwise improvement of a nation?s economy due to its trade deficit and they do indicate economic benefits due to the nation?s trade surplus.

Trade deficits are NEVER a net contributor and generally are detrimental to their economy. Trade surpluses are ALWAYS net contributors to their nation?s economy.

The GDP per capita and the median wage are in my opinion the two most superior generally available economic indicators.

It is the GDP?s formula?s very objectivity that most displeases me and many others. To maintain that objectivity, the dollars paid for a lap dance or a police patrolman?s protection all equally contribute to the GDP. But we don?t have a generally accepted superior economic indicator to replace the GDP.

Respectfully, Supposn
 

myp

Site Founder
Jan 14, 2009
5,841
50
#6
Unless you want to address my points and/or provide some backing for your claims, there is nothing to discuss here. I do not need to hear your opinions ad nauseum.
 
Aug 7, 2010
211
40
Cliffside Park, NJ
#7
U.S. global trade policy; assessment adjustments.

....................I glanced over the main things in the proposal (mostly from wiki), but even then who is to decide what is scarce or precious? Even goods like plastic forks could potentially increase production if someone has a great comparative advantage in making said forks. .....................
MVP, when the law?s drafted it would be the U.S. Congress that would determine which minerals would be specifically mentioned on the list of scarce or precious minerals. It?s expected that crude oil, precious and semi-precious gems, gold, silver, platinum, and radium would be on that list.

Regarding the assessment of plastic forks, only the value of the petroleum integral to the goods would be eliminated from the assessed value of the goods. You?re ?splitting hairs? over something inconsequential.

Respectfully, Supposn
 

myp

Site Founder
Jan 14, 2009
5,841
50
#8
MVP, when the law’s drafted it would be the U.S. Congress that would determine which minerals would be specifically mentioned on the list of scarce or precious minerals. It’s expected that crude oil, precious and semi-precious gems, gold, silver, platinum, and radium would be on that list.

Regarding the assessment of plastic forks, only the value of the petroleum integral to the goods would be eliminated from the assessed value of the goods. You’re “splitting hairs” over something inconsequential.

Respectfully, Supposn

I am absolutely not "splitting hairs" considering that non-commodity goods can increase production. You are really just forgetting comparative advantages here.

As for the petroleum in forks- are you saying they would deduct the petroleum cost in the forks and not count that in this program? If so, that is even more bureaucracy and government cost- in just figuring that out.
 
Aug 7, 2010
211
40
Cliffside Park, NJ
#9
USA's global trade policy.

.................... Well that is a cost. And the bureaucratic enforcement costs still stand as well.
MVP, every expense is a cost to someone. What?s your point?

My point?s the manner in which this proposal would significantly decrease USA?s trade deficit more than otherwise. That deficit?s reduction increases USA?s GDP by an amount that significantly exceeds the trade deficit?s reduction. The GDP bolsters the median wage. The proposal acts as an export subsidy which increases USA?s aggregate imports plus exports more than otherwise.

Purchasers of foreign goods bear the proposal?s entire expenses. The proposal does not increase or compromises public credit and there are no net government expenditures.

Respectfully, Supposn
 

myp

Site Founder
Jan 14, 2009
5,841
50
#10
MVP, every expense is a cost to someone. What’s your point?

In the first post you said "It would not require any additional federal spending, taxes or debt."

My point’s the manner in which this proposal would significantly decrease USA’s trade deficit more than otherwise. That deficit’s reduction increases USA’s GDP by an amount that significantly exceeds the trade deficit’s reduction. The GDP bolsters the median wage. The proposal acts as an export subsidy which increases USA’s aggregate imports plus exports more than otherwise.

Purchasers of foreign goods bear the proposal’s entire expenses. The proposal does not increase or compromises public credit and there are no net government expenditures.

Respectfully, Supposn

1. I do not agree that a reduction in the trade deficit would necessarily increase GDP.
2. The purchasers of foreign goods are Americans too.
3. There IS government expenditure as I noted above in the bureaucracy and enforcement of this policy.
 
Aug 7, 2010
211
40
Cliffside Park, NJ
#11
I am absolutely not "splitting hairs" considering that non-commodity goods can increase production. You are really just forgetting comparative advantages here.
MVP, by “non- commodity goods”, I supposed you’re referring to goods that that could be described as finished goods rather than materials. Would you consider a component of a finished product as non-commodity goods even it is itself a finished product?

Under this Import Certificate, (IC) trade proposal importers of all goods, (i.e. from raw materials up to finished products) entering the USA must surrender transferable ICs covering the adjusted assessed values of their goods.

If Toyota imports a vehicle into the USA, the vehicle’s price within the USA would reflect Toyota’s expenses of acquiring the ICs for the entire vehicles assessed worth.

If Toyota imports any components into the USA, the vehicle’s price within the USA would reflect Toyota’s expenses of acquiring the ICs only for those components entire assessed worth.

And of course Toyota (which has a USA manufacturing plant) would be entitled to request their vehicles or other goods exported from the USA be assessed and choose to pay the federal fees which defray all federal expenses, and after their goods have left the USA the transferable ICs will be issued and delivered to Toyota.

Respectfully, Supposn
 
Last edited:
Aug 7, 2010
211
40
Cliffside Park, NJ
#12
Trade deficits are ALWAYS detrimental to their nations' GDPs.

.....................1. I do not agree that a reduction in the trade deficit would necessarily increase GDP.
MVP, within the expenditure method of GDP calculation, exports are ALWAYS added to, and imports are ALWAYS deducted from their nations? expenditures? expenditures for goods and services.

Thus exports ALWAYS contribute and imports NEVER contribute to their nations? GDPs.
Thus a trade surplus ALWAYS contributes and trade deficit is ALWAYS detrimental to their nations? GDPs.

These are logical facts rather than opinions. Although they?re based upon the expenditure method of calculating GDP, all other accepted formulas logically treat imports and exports in a logically similar manner and thus their affects upon the calculation of GDP is logically similar.

To the extent that any exported goods do not fully reflect the value of any goods or services that supported or contributed to the export?s production, (although those unidentified goods and services all contributed to their producing nations? GDPs, the exports of the nation are understated.

Nation?s imported goods may not fully reflect the value of all goods or services that supported or contributed to the import?s production, although those unidentified goods and services all contributed to the GDP of their producing nations.

Imports are deducted from nations? GDP calculation because if that expenditure was not used to purchase domestically produced goods or services. All expenditures purchase goods and services or are wealth transfers which in the future can only be further transferred or until they?re spent for domestic or foreign goods or services.

I believe the logical conclusion that to some extent trade imbalances affects upon their nations? GDPs are understated. You believe that?s an opinion that?s logically faulty in some manner that you have yet to divulge.

Respectfully, Supposn
 

myp

Site Founder
Jan 14, 2009
5,841
50
#13
MVP, within the expenditure method of GDP calculation, exports are ALWAYS added to, and imports are ALWAYS deducted from their nations? expenditures? expenditures for goods and services.

Thus exports ALWAYS contribute and imports NEVER contribute to their nations? GDPs.
Thus a trade surplus ALWAYS contributes and trade deficit is ALWAYS detrimental to their nations? GDPs.

These are logical facts rather than opinions. Although they?re based upon the expenditure method of calculating GDP, all other accepted formulas logically treat imports and exports in a logically similar manner and thus their affects upon the calculation of GDP is logically similar.

To the extent that any exported goods do not fully reflect the value of any goods or services that supported or contributed to the export?s production, (although those unidentified goods and services all contributed to their producing nations? GDPs, the exports of the nation are understated.

Nation?s imported goods may not fully reflect the value of all goods or services that supported or contributed to the import?s production, although those unidentified goods and services all contributed to the GDP of their producing nations.

Imports are deducted from nations? GDP calculation because if that expenditure was not used to purchase domestically produced goods or services. All expenditures purchase goods and services or are wealth transfers which in the future can only be further transferred or until they?re spent for domestic or foreign goods or services.

I believe the logical conclusion that to some extent trade imbalances affects upon their nations? GDPs are understated. You believe that?s an opinion that?s logically faulty in some manner that you have yet to divulge.

Respectfully, Supposn

You aren't looking at the whole picture. If we are looking at just the effect of the export-import term on GDP, then sure. But, in reality, said imports and exports can also affect all three other terms in the GDP calculation- private consumption, gross investment, and government spending. And because of that, a trade deficit does not necessarily mean a reduction in net GDP.
 
Aug 7, 2010
211
40
Cliffside Park, NJ
#14
In the first post you said "It would not require any additional federal spending, taxes or debt."........................................
3. There IS government expenditure as I noted above in the bureaucracy and enforcement of this policy.
MVP, within this trade proposal transferable Import Certificates, (i.e. ICs) are only issued to exporters of goods from the USA that agree to pay the federal fees which defray all federal expenses due to this trade policy. The face value of the IC is the assessed values of the goods exported from the USA. Exporters? motivation is too profit from the global market value of these ICs.

Importers of goods entering the USA are required to surrender IC?s with face values covering the assessed values of their goods. Surrendered ICs are then cancelled.

The importers expenses of acquiring the transferable ICs are expected to be passed onto importers? customers. Eventually all federal expenses due to this trade policy are borne by the U.S. purchasers of imported goods.

With regard to enforcement expenses:
Counterfeiting of ICs or presenting false affidavits to federal assessors is federal crimes whose enforcement expenses should not be attributed to this trade policy. Similarly with regard to this policy there is no profit to be derived from concealing goods exported from the USA.

It is now the federal government?s duty to be aware of everything and everyone entering the USA. That?s not an expense attributable to this trade policy but this trade policy certainly gives the government a greater inducement to properly secure our nation?s borders.

Respectfully, Supposn
 
Aug 7, 2010
211
40
Cliffside Park, NJ
#15
........................................................................

2. The purchasers of foreign goods are Americans too. .........................
MVP, the purchasers of imported goods are directly responsible for our trade deficits. Trade deficits are ALWAYS detrimental to their nations? GDP. It is reasonable that the expense to mitigate the extent of this detriment to our economy be borne by those most directly responsible for that detriment.

USA wage earning families benefit from cheaper imported goods but they are dependent upon their USA wages every day of every year. They are proportion to their incomes the most harmfully affected by lesser jobs and median wage due to our trade deficit. Under this proposal U.S. purchasers would enjoy cheap but no longer the absolute cheapest prices of foreign goods. We can?t afford the absolute cheapest.

This proposal would significantly decrease our trade deficit of goods and it also serves as an export subsidy. It would increase our aggregate imports plus exports more than otherwise.

Respectfully, Supposn
 
Aug 7, 2010
211
40
Cliffside Park, NJ
#16
....................................... ... It is quite simple really. If we have a bunch of paper lying around (money), there are most definitely times when trading that paper for real goods would be beneficial- a recession comes to mind, especially if said trade would reduce the prices of essentials. The "trade deficit" is really only a deficit in paper money- we still get something in return (the goods) and based on the subjective theory of value, those goods are worth more to those who buy them when they buy them than the money was. That being said, if you account for goods, you can argue that today's monetary trade deficit is in fact a trade surplus in terms of value.
MVP, we?re told a ?recession? is I?m still employed but my neighbors ain?t; within a ?depression? we?re all unemployed. In both cases prices are arrested or depressed and we need increased production of goods and services more than further inhibiting prices.

Regarding to monetary policy, among trade policies this proposal is significantly lesser susceptible (than free trade or tariffs) to any monetary mischief perpetrated by foreign or domestic entities including the U.S. Federal Reserve Board.

Respectfully, Supposn
 
Aug 7, 2010
211
40
Cliffside Park, NJ
#17
GDP & the nation's trade imbalance.

You aren't looking at the whole picture. If we are looking at just the effect of the export-import term on GDP, then sure. But, in reality, said imports and exports can also affect all three other terms in the GDP calculation- private consumption, gross investment, and government spending. And because of that, a trade deficit does not necessarily mean a reduction in net GDP.
MVP, to argue trade deficits are not detrimental to their nations? GDP, you?ll have to be more explicit. Writing ? imports and exports can also affect all three other terms in the GDP calculation- private consumption, gross investment, and government spending? won?t do.

Respectfully, Supposn
 

myp

Site Founder
Jan 14, 2009
5,841
50
#18
MVP, to argue trade deficits are not detrimental to their nations? GDP, you?ll have to be more explicit. Writing ? imports and exports can also affect all three other terms in the GDP calculation- private consumption, gross investment, and government spending? won?t do.

Respectfully, Supposn
I have been explicit. Let me be clearer: imports and exports affect real activity in the market. Real activity change changes the calculated figures of private consumption, government spending, and gross investment among other things- that is NOT deniable. That means that the import-export term in the GDP equation does not happen in a vacuum and for that reason, a trade deficit does not necessarily reduce GDP. Some imports might spur domestic activity and increase one or more of the other 3 terms in the GDP equation- potentially to the point where said increase is greater than the decrease in the import-export term.
 
Aug 7, 2010
211
40
Cliffside Park, NJ
#19
Trade deficits are ALWAYS detrimental to their nation?s GDP.

I have been explicit. Let me be clearer: imports and exports affect real activity in the market. Real activity change changes the calculated figures of private consumption, government spending, and gross investment among other things- that is NOT deniable. That means that the import-export term in the GDP equation does not happen in a vacuum and for that reason, a trade deficit does not necessarily reduce GDP. Some imports might spur domestic activity and increase one or more of the other 3 terms in the GDP equation- potentially to the point where said increase is greater than the decrease in the import-export term.
MVP, within the expenditure method of GDP calculation, exports are ALWAYS added to, and imports are ALWAYS deducted from their nations? expenditures for goods and services.

Thus exports ALWAYS contribute and imports NEVER contribute to their nations? GDPs.
Thus trade surpluses ALWAYS contribute and trade deficits NEVER contribute to their nations? GDPs.

These are logical facts rather than opinions. Although they?re based upon the expenditure method of calculating GDP, all other accepted formulas logically treat imports and exports in a logically similar manner and thus their affects upon the calculation of GDP is logically similar.

To the extent that any globally traded products do not fully reflect the value of any goods or services that supported or contributed to their production, (although those unidentified goods and services all contributed to their producing nations? GDPs, their affects to GDPs are not attributed to global trade. Thus to some extent nations? global trade imbalances?? affects upon their GDPs are generally understated.

Imports are deducted from nations? GDP calculations because those expenditures purchased foreign rather than domestic goods and services. The nation cannot in the future re-spend their expenditures for goods and services to purchase anything else.

Import production only contributes to the producing nations? GDPs. T here?s no economic difference between imported products after unloading upon the entry port?s dock and similar domestic products after they?ve reach their producers? shipping docks. The economic differences all occur prior to those moments.

To the extent that production of goods and service products were not reflected within the prices of USA?s imports, we additionally denied ourselves of the additional production integral to the infrastructures, the research, development and experience that supported and/or were derived from the production of USA?s imports.

I believe the logical conclusion that to some extent trade imbalances affects upon their nations? GDPs are understated. You believe that?s an opinion that?s logically faulty in some manner that you have yet to divulge.

Respectfully, Supposn
 
Aug 7, 2010
211
40
Cliffside Park, NJ
#20
Trade deficits and GDP.

I have been explicit................................. Some imports might spur domestic activity and increase one or more of the other 3 terms in the GDP equation- potentially to the point where said increase is greater than the decrease in the import-export term.
MVP, import production only contributes to the producing nations’ GDPs.

There’s no economic difference between imported products after unloading upon the entry port’s dock and similar domestic products after they’ve reach their producers’ shipping docks. Any economic differences between imported and domestic goods all occur prior to those moments.

Within the Import Certificates trade proposal, you provide extremely little or no examples of instances where the import of a product is likely to be discouraged and the import of that product otherwise would be of net benefit to the nations’ GDP.

That being the case, y ou cannot have provided any such significant examples where an annual trade deficit would not be a net detriment to the USA.

Respectfully, Supposn
 
Last edited:

Similar Discussions