"Trade Deficit = Slower Economy = Fewer Jobs = Baltimore"

[RiverLover]

Trade Deficit = Slower Economy = Fewer Jobs = Baltimore
Dave Johnson
5/1/15



If you make things and sell them, you do better over time than if you borrow to buy things. If you send jobs and factories out of the country, you end up with devastated cities like Baltimore.

Sure, a few people get rich from that, but 99 percent of us get poorer. How hard is it to see that?

You may have heard that gross domestic product growth was dismal in the last quarter. You may have heard that there were riots in Baltimore. You may not have heard that these are both at least partly caused by our enormous, humongous and continuing trade deficit.

A trade deficit is when we import more than we export. It means that there is a certain level of demand in our economy, but some of that demand is leaking out to other countries. When this deficit is significant and goes on for a while it means that jobs are lost, factories close and we get poorer.

We started having trade deficits in the late 1970s with the ascension of free-market, free-trade ideology. We have continued to have trade deficits every single year since, and they have grown into the hundreds of billions. So … millions of jobs, tens of thousands of factories, trillions of wealth … gone.

You can see the result in Detroit, Cleveland, the “Rust Belt,” towns full of boarded-up houses and empty storefronts – and the economic devastation and desperation that leads to what we see playing out this week with riots in Baltimore.

Here is a chart of our trade deficit over time:



Continue reading~
http://ourfuture.org/20150501/trade-deficit-slower-economy-fewer-jobs-baltimore

[Hoyt]

1. Actually, not all economists agree that trade deficits are bad.

Those who think trade deficits are bad, or just follow what someone playing politics says, already know, or think they know, why trade deficits are bad.

Others consider views like the following:

". . . . . . . Economists who consider trade deficits good associate them with positive economic developments, specifically, higher levels of income, consumer confidence, and investment. They argue that trade deficits enable the United States to import capital to finance investment in productive capacity. Far from hurting employment, they believe that trade deficits financed by foreign investment in the United States help to boost U.S. employment.

"Some economists see trade deficits as mere expressions of consumer preferences and as immaterial. These economists typically equate economic well being with rising consumption. If consumers want imported food, clothing, and cars, why shouldn't they buy them? That range of choices is part of a successful economy.

"Perhaps the best view of trade deficits is the balanced view. If a trade deficit represents borrowing to finance current consumption rather than long-term investment, or results from inflationary pressure, or erodes U.S. employment, then it's bad. If a trade deficit fosters borrowing to finance long-term investment or reflects rising incomes, confidence, and investment—and doesn't hurt employment—then it's good. If a trade deficit merely expresses consumer preferences rather than these phenomena, it is immaterial. . . . . . ."

Read more: International Finance: Trade Deficits: Bad or Good? http://www.infoplease.com/cig/economics/trade-deficits-bad-good.html#ixzz3Z7AFOAt4


Fact is, most calculations of how many jobs a trade deficit costs are simply multiplying the trade deficit amount by 7500 or so jobs, and diving the results by 1 Billion. That of course, is a gross simplification and assumes elimination of the trade deficit would produce more jobs here, and that consumers would be happy paying more for their goods. I doubt it.


Definitely, agree that lack of jobs and training causes things like Baltimore. Don't agree it's a trade deficit's fault. Going to take a lot more than eliminating trade deficits to solve that problem, and candidates who say eliminating deficits will solve the problem are playing politics with gullible people.

[Major Hogwash]

4. You might also notice that some websites pump out a lot of bullshit.

And that's not all bad, for the bullshitters on this forum!

Dave Johnson must be the new economics genius, for some here.
For others, not so much.

[pampango]

2. Can't argue with cutting the trade deficit. It's a great idea for many reasons.

The tough question is "How do we do it?" We already import less (less than 17% of GDP) than any country on earth.

Compared to our 17%:
Germany - 40%
Mexico - 32%
Canada - 32%
France - 30%
Sweden - 39%
UK - 31%.

Our export levels are way below these countries:
US - 13.5%
Germany - 51%
Mexico - 32%
Canada - 30%
France - 28%
Sweden - 44%
UK - 30%.

https://www.quandl.com/c/economics/exports-as-share-of-gdp-by-country

We import about 1/2 as much as any other country. That would not seem to be our problem. Exporting is 1/3 to 1/4 what it is in other countries. Why is that?

I suppose we could try to reduce imports even more. But we are already at a world low and much higher levels do not seem to hurt really progressive countries.

Canada, France, the UK and many other progressive countries have trade deficits. They don't have "Baltimores" for other reasons having nothing to do with trade. High and progressive taxes funding strong safety nets, effective unions and better-funded public infrastructure do wonders for the health of cities and their residents.

[RiverLover]

3. I'm no expert, but Economic Policy Institute is & here is what they say~

Reducing U.S. trade deficits will generate a manufacturing-based recovery for the United States and Ohio
Ending currency manipulation by China and others is the place to start

Manufacturing has played a leading role in the nation’s economic recovery, adding 504,000 jobs between February 2010, when manufacturing employment fell to its lowest point, and October 2012. These 504,000 jobs constituted 11.1 percent of the 4.5 million jobs created in that period. However, this relatively recent manufacturing boom comes on the heels of more than a decade of sharp declines in manufacturing employment. Between March 1998 and October 2012, the United States lost 5.7 million manufacturing jobs, nearly a third (32 percent) of manufacturing employment; most of these job losses were due to the growing U.S. trade deficit. Taken together, these trends highlight the manufacturing sector’s importance to the U.S. economy and recovery, as well as the role of trade deficits in eliminating U.S. manufacturing jobs.

This paper argues that reviving U.S. manufacturing requires eliminating a jobs-destroying U.S. trade deficit in goods by ending currency manipulation and investing in a series of coordinated manufacturing policies. It also estimates the economic benefits of ending currency manipulation on trade, jobs, and public budgets in the United States and in Ohio, one of the nation’s preeminent manufacturing states.

Global currency manipulation1 is one of the most important causes of growing U.S. trade deficits, and of unemployment and slow economic growth in the United States and Europe. Currency manipulation distorts international trade flows by artificially lowering the cost of U.S. imports and raising the cost of U.S. exports. This leads to goods trade deficits that displace U.S. jobs, particularly in the manufacturing sector. The U.S. goods trade deficit could be reduced by between about $190 billion and $400 billion over the course of three years (modeled in this paper as having started in 2011)2 by eliminating global currency manipulation. Without any increase in federal spending or taxation, the United States would reap enormous benefits.

As this paper explains, over three years a reduction in the U.S. goods trade deficit of this magnitude would:

*Create between 2.2 million and 4.7 million U.S. jobs (equal to between 1.4 percent and 3.0 percent of total nonfarm employment)
*Reduce the national unemployment rate by between 1.0 and 2.1 percentage points
*Create about 620,000 to 1.3 million manufacturing jobs (27.5 percent of all jobs created by eliminating currency manipulation)
*Increase U.S. GDP by between $225.0 billion and $473.7 billion (an increase of between 1.4 percent and 3.1 percent)3
*Shrink the federal budget deficit by between $78.8 billion and $165.8 billion (reductions that would continue as long as the trade balance remained stable), as growth in output expands tax receipts and reduces safety net payments

Read more~
http://www.epi.org/publication/bp351-trade-deficit-currency-manipulation/

The TPP does NOT address currency manipulation.

Just another reason we don't want to be saddled with it for infinity. Once its signed, it can't be changed unless all countries agree on the changes...