Political Crossfire Forums

Excerpted from Wikipedia’s “Balance of Trade” article:
“Trade balances effects upon their nation's GDPs.
Exports directly contribute and imports directly reduce their nation's balance of trade (i.e. net exports). A trade surplus is positive net balance of trade, and a trade deficit is a negative net balance of trade. Due to balance of trade being explicitly added to the calculation of their nation's gross domestic product using the expenditure method of calculating gross domestic production (i.e. GDP), trade surpluses are contributions and trade deficits are "drags" upon their nation's GDP”. …
… Refer to:
“http://www.investopedia.com/terms/e/expenditure-method.asp
http://www.bea.gov/methodologies/index. ... ional_meth
http://www.britannica.com/topic/gross-domestic-product”.

///////////////////////////////////////////////////////////////////////////////////////////////////////////
Is there any net economic benefit to a nation’s chronic annual trade deficits of goods?

If a nation experienced an annual negative balance of global trade, (i.e. a trade deficit), that nation’s GDP was less than otherwise. A lesser GDP reflects upon, and is reflected upon by the nation’s lesser numbers of jobs during that same year. I’m unaware of any nation that enjoyed full employment while experiencing an annual trade deficit.

Proving trade deficits are beneficial or not detrimental to nations’ GDPs by statistical “proofs” are based upon specious reasoning.
[Within a nation’s markets, both their domestic and imported goods are sold. (We have no general rules applicable to aggregate types of goods and the proportional volumes between domestic and imports sold within each nation’s domestic markets during each of their markets differing conditions].
Generally, we expect that during a nation’s periods of improved GDP, the sales volumes of their domestic markets similarly improve; when their GDPs are stagnant or declining. we expect those sales volumes to similarly be stagnant or decline.

Demonstrating trade deficits are reduced during times of lesser national GDPs only indicates that less imports are sold within the nation’s domestic markets during those periods.

Respectfully, Supposn

I wonder what they will do when 90% of the workforce is automated? They will sell their products to ____________ who?

John Galt, referring to my explanation within this thread’s first, 10:06 AM, 13Mar2017 post:
“Proving trade deficits are beneficial or not detrimental to nations’ GDPs by statistical “proofs” are based upon specious reasoning. ...
... Demonstrating trade deficits are reduced during times of lesser national GDPs only indicates that less imports are sold within the nation’s domestic markets during those periods”.

and your 11:30 PM, 14Mar2017 response to it:
You refer to “theory 1” as my theory, and you support what you describe as “theory 2”.

I respect and try to understand markets’ behaviours. I believe it’s easier to devise policies compatible to what motivates people rather than to try to motivate people to conform with the policies we devise.

Due to lesser costs, and/or faster, and/or more feasible communication and shipping, service products not requiring geographic proximity to their delivery points have already begun being delivered globally and in larger volumes; they’ll soon be much more commonly traded globally.
I do not share your certainty “as the U.S. evolves into more of a service products society”, the products that individuals demand for services will continue to done here in the USA. I do believe that our current global trade practices are and will continue (as you predict) USA’s chronic trade deficits will increase; but we will be importing both goods and service products.

lesser priced labor will continue to be of competitive global advantage. product quality is just another facet of lesser priced labor. nations of lower wage purchasing powers can provide less expensive common labor and less expensive higher quality labor. They can better afford to devote more hours of labor per unit if that’s what’s necessary to assure quality.

Significantly reducing our chronic trade deficits would be of great economic benefit but any improvement of our educational and training systems would be no less reflected upon our social and economic well-being.

Respectfully, Supposn