Printable Version of Topic

Click here to view this topic in its original format

America's Debate _ Economy and Business _ USA goods could be more price competitive.  

Posted by: Supposn Feb 10 2017, 04:33 AM

USA goods could be more price competitive.
 
Refer to Wikipedia’s “Import Certificates” article:
Regardless of the trade policy’s entire costs which are passed on to USA purchasers of imported goods, (i.e. regardless of how small of price increases) due to this unilateral policy, it would entirely or almost eliminate USA’s chronic annual trade deficits of goods while increasing our GDP and numbers of jobs more than otherwise.

All increases of imported goods’ prices to USA purchasers that are beyond federal direct value assessments and administrative expenditures, (i.e. increases due to market behaviors), effectively serve as subsidies for USA’s exported goods at no additional expenditures to others.
 
Respectfully, Supposn

Posted by: Julian Feb 10 2017, 06:37 PM

QUOTE(Supposn @ Feb 10 2017, 04:33 AM) *
USA goods could be more price competitive.
 
Refer to Wikipedia’s “Import Certificates” article:
Regardless of the trade policy’s entire costs which are passed on to USA purchasers of imported goods, (i.e. regardless of how small of price increases) due to this unilateral policy, it would entirely or almost eliminate USA’s chronic annual trade deficits of goods while increasing our GDP and numbers of jobs more than otherwise.

All increases of imported goods’ prices to USA purchasers that are beyond federal direct value assessments and administrative expenditures, (i.e. increases due to market behaviors), effectively serve as subsidies for USA’s exported goods at no additional expenditures to others.
 
Respectfully, Supposn


https://en.wikipedia.org/wiki/Import_certificates

Questions for Debate

Would import certificates be effective at shifting the American economy from one dependent on imported goods to one that was export-led?

Please give reasons for your answers


Fixed that for ya

Posted by: akaCG Feb 10 2017, 09:25 PM

Dear "Supposn":

In the interest of saving time, let me say that my take on things (the merits of the concept of "import certificates" itself, as well as the validity of your premises/arguments/reasoning, etc.) hasn't changed since the last time you introduced this topic, about 2 and half years ago, in the following thread:

http://www.americasdebate.com/forums/index.php?showtopic=22878

Be well.

"akaCG"


Posted by: Supposn Feb 11 2017, 07:33 PM

QUOTE(Julian @ Feb 10 2017, 01:37 PM) *
Questions for Debate

Would import certificates be effective at shifting the American economy from one dependent on imported goods to one that was export-led?
Please give reasons for your answers[/b]


Julian, the Import Certificate policy does not promise to be a panacea for any nation's entire economy and it’s not a suitable trade policy for a nation that’s not experiencing and/or likely to experience chronic annual trade deficits of goods.

Generally, we deal with few absolutes and certainties rather than what we expect to be greater or lesser improvements or detriments. We have good reason to suppose that USA’s adoption of the Import Certificate policy would increase the purchasing powers of our GDPs and the numbers of jobs more than otherwise. Increasing the purchasing powers of our GDPs supports increases of jobs which in turn supports increases of our annual GDPs. These increases in turn tend to boost the purchasing power of our median wage.

USA is not now DEPENDENT upon imports and it’s not proposed that we should be DEPENDENT upon exports.

Naturally sudden and radical changes in an economy, (similar to such changes within any other complex organism or environment), can be shocking.
When the Import Certificate policy is being seriously considered by the U.S. congress, that news would be of some warning to interested parties. If the policy becomes federal law, its hoped that the federal administration had previously made plans for the value assessment of shipments that pass-through USA borders. That’s the major task required to enact the trade policy. There are of course many administrative tasks required for the policy’s enactment. The federal government could not commence issuing Import certificates until such a system is up and running.
USA’s international trade agreements require participants to provide all other participants with six months’ prior notice of their intention to resign from the agreement. Our state department would have begun negotiating for the necessary modifications of those agreements required by USA’s adoption of the Import Certificate policy. We would have then made it clear that if the policy has begun to be enacted by our nation, we intend to resign from the agreements if we have not successfully negotiated modified provisions to retain our compliance to those agreements.

The USA will have provided proper notification to other nations at least six months prior to our requiring that Importers surrender certificates covering the assessed values of their goods prior to those goods being permitted to exit a USA port of entry.

Respectfully, Supposn

aka CG, regarding the proposed unilateral, substantially market driven proposal for USA adopting the Import Certificate policy: I retain compete confidence in the merits and validity for of the proposal.

Respectfully, Supposn

Posted by: Julian Feb 13 2017, 12:09 PM

QUOTE(Supposn @ Feb 11 2017, 07:33 PM) *
QUOTE(Julian @ Feb 10 2017, 01:37 PM) *
Questions for Debate

Would import certificates be effective at shifting the American economy from one dependent on imported goods to one that was export-led?
Please give reasons for your answers[/b]


Julian, the Import Certificate policy does not promise to be a panacea for any nation's entire economy and it’s not a suitable trade policy for a nation that’s not experiencing and/or likely to experience chronic annual trade deficits of goods.

Generally, we deal with few absolutes and certainties rather than what we expect to be greater or lesser improvements or detriments. We have good reason to suppose that USA’s adoption of the Import Certificate policy would increase the purchasing powers of our GDPs and the numbers of jobs more than otherwise. Increasing the purchasing powers of our GDPs supports increases of jobs which in turn supports increases of our annual GDPs. These increases in turn tend to boost the purchasing power of our median wage.

USA is not now DEPENDENT upon imports and it’s not proposed that we should be DEPENDENT upon exports.

Naturally sudden and radical changes in an economy, (similar to such changes within any other complex organism or environment), can be shocking.
When the Import Certificate policy is being seriously considered by the U.S. congress, that news would be of some warning to interested parties. If the policy becomes federal law, its hoped that the federal administration had previously made plans for the value assessment of shipments that pass-through USA borders. That’s the major task required to enact the trade policy. There are of course many administrative tasks required for the policy’s enactment. The federal government could not commence issuing Import certificates until such a system is up and running.
USA’s international trade agreements require participants to provide all other participants with six months’ prior notice of their intention to resign from the agreement. Our state department would have begun negotiating for the necessary modifications of those agreements required by USA’s adoption of the Import Certificate policy. We would have then made it clear that if the policy has begun to be enacted by our nation, we intend to resign from the agreements if we have not successfully negotiated modified provisions to retain our compliance to those agreements.

The USA will have provided proper notification to other nations at least six months prior to our requiring that Importers surrender certificates covering the assessed values of their goods prior to those goods being permitted to exit a USA port of entry.

Respectfully, Supposn

aka CG, regarding the proposed unilateral, substantially market driven proposal for USA adopting the Import Certificate policy: I retain compete confidence in the merits and validity for of the proposal.

Respectfully, Supposn



Respectfully, I'm not participating in the debate, I was merely re-phrasing your original post so that it complies with the http://www.americasdebate.com/?page=rules (specifically, Rule II, that there was no clear question to be debated).

You're free to argue that I misinterpreted your original post in that re-phrasing, of course, but then you could always frame a question for everyone else to debate with you on your preferred topics yourself, rather than just posting a set of unsupported assertions.

Posted by: Supposn Feb 13 2017, 03:40 PM

QUOTE(Julian @ Feb 13 2017, 07:09 AM) *
Respectfully, I'm not participating in the debate, I was merely re-phrasing your original post so that it complies with the http://www.americasdebate.com/?page=rules (specifically, Rule II, that there was no clear question to be debated).
You're free to argue that I misinterpreted your original post in that re-phrasing, of course, but then you could always frame a question for everyone else to debate with you on your preferred topics yourself, rather than just posting a set of unsupported assertions.


What would be the superior global trade policy for a nation experiencing chronic annual trade deficits of goods?

I’m among the advocates of USA adopting the unilateral trade policy proposal described in Wikipedia’s “Import Certificates” article.
Regardless of the policy’s entire costs which are passed on to USA purchasers of imported goods, (i.e. regardless of how small of price increases) due to this unilateral policy, it would entirely or almost eliminate USA’s chronic annual trade deficits of goods while increasing our GDP and numbers of jobs more than otherwise.

All increases of imported goods’ prices to USA purchasers that are beyond federal direct value assessments and administrative expenditures, (i.e. increases due to market behaviors), effectively serve as subsidies for USA’s exported goods at no additional expenditures to others.

Respectfully, Supposn


Posted by: Julian Feb 15 2017, 07:12 PM

QUOTE(Supposn @ Feb 13 2017, 03:40 PM) *
QUOTE(Julian @ Feb 13 2017, 07:09 AM) *
Respectfully, I'm not participating in the debate, I was merely re-phrasing your original post so that it complies with the http://www.americasdebate.com/?page=rules (specifically, Rule II, that there was no clear question to be debated).
You're free to argue that I misinterpreted your original post in that re-phrasing, of course, but then you could always frame a question for everyone else to debate with you on your preferred topics yourself, rather than just posting a set of unsupported assertions.


What would be the superior global trade policy for a nation experiencing chronic annual trade deficits of goods?

I’m among the advocates of USA adopting the unilateral trade policy proposal described in Wikipedia’s “Import Certificates” article.
Regardless of the policy’s entire costs which are passed on to USA purchasers of imported goods, (i.e. regardless of how small of price increases) due to this unilateral policy, it would entirely or almost eliminate USA’s chronic annual trade deficits of goods while increasing our GDP and numbers of jobs more than otherwise.

All increases of imported goods’ prices to USA purchasers that are beyond federal direct value assessments and administrative expenditures, (i.e. increases due to market behaviors), effectively serve as subsidies for USA’s exported goods at no additional expenditures to others.

Respectfully, Supposn


Well, for starters, it is overly simplistic to only look at the trade defecit in goods and assume that's the only measure of the success or otherwise of the American economy (or anyone else's). Not least because, in the case of the US economy, it completely ignores the substantial trade surplus in services (but not - yet - so substantial that it outweighs the trade defecit in goods). Here's a link to a https://www.aei.org/publication/america-has-large-and-growing-trade-surpluses-for-services-q-do-those-result-from-our-unfair-trade-practices/ on the subject.

The assumption foundational to 'economic Trump-ism' if there is such a thing is that US jobs have been exported overseas to cheap labour economies (most particularly China and Mexico) and that changing the trading relationship with those countries, among others, will bring all those jobs back 'onshore'.

That assumption is factually incorrect - [url="http://fortune.com/2016/11/08/china-automation-jobs/"]more American jobs have been lost to increasing automation than to offshoring since 2000[//url]. From business' point of view, that's great - all that productivity improvement. Compare that to, say, the UK economy where industry investment in automation has been aneamic at best (at least outside the automotive industry, though that's all been foriegn investment since we don't own any volume automotive businesses any more), and where hosts of jobs have been lost to be replaced by cheaper workers in other countries, and look at our productivity, which has been stagnant over the same time period, and lagged that of the USA to begin with. That's how an economy looks when "foreigners steal 'our' jobs". And we don't even have a trade defecit on the scale of the USA.

Import Certificates are a fine idea. Good luck with them, but don't be amazed when your successful services sector - a net exporter, and growing - complains that they are being hamstrung by the same thing.

Posted by: Supposn Feb 16 2017, 05:05 AM

QUOTE(Julian @ Feb 15 2017, 02:12 PM) *
QUOTE(Supposn @ Feb 13 2017, 03:40 PM) *
What would be the superior global trade policy for a nation experiencing chronic annual trade deficits of goods?
Respectfully, Supposn


Well, for starters, it is overly simplistic to only look at the trade defecit in goods and assume that's the only measure of the success or otherwise of the American economy (or anyone else's). Not least because, in the case of the US economy, it completely ignores the substantial trade surplus in services (but not - yet - so substantial that it outweighs the trade defecit in goods). Here's a link to a https://www.aei.org/publication/america-has-large-and-growing-trade-surpluses-for-services-q-do-those-result-from-our-unfair-trade-practices/ on the subject.

The assumption foundational to 'economic Trump-ism' if there is such a thing is that US jobs have been exported overseas to cheap labour economies (most particularly China and Mexico) and that changing the trading relationship with those countries, among others, will bring all those jobs back 'onshore'.

That assumption is factually incorrect - [url="http://fortune.com/2016/11/08/china-automation-jobs/"]more American jobs have been lost to increasing automation than to offshoring since 2000[//url]. From business' point of view, that's great - all that productivity improvement. Compare that to, say, the UK economy where industry investment in automation has been aneamic at best (at least outside the automotive industry, though that's all been foriegn investment since we don't own any volume automotive businesses any more), and where hosts of jobs have been lost to be replaced by cheaper workers in other countries, and look at our productivity, which has been stagnant over the same time period, and lagged that of the USA to begin with. That's how an economy looks when "foreigners steal 'our' jobs". And we don't even have a trade defecit on the scale of the USA.

Import Certificates are a fine idea. Good luck with them, but don't be amazed when your successful services sector - a net exporter, and growing - complains that they are being hamstrung by the same thing.


Julian, it was never contended that balance of trade determines USA’s economy or that eliminating our global trade deficits of goods is a panacea for all economic ills.

USA has a net trade deficit of globally traded aggregate goods and service products.

Due to technological advancements, faster and reduced cost of transportation and communication, geographical proximity becomes less necessary and a nation’s lower wages’ purchasing power is of greater advantage to them. We may as you wrote, still enjoy annual trade surpluses of service products; I haven’t given attention to USA’s balance of service products in global trade because other than improving our nation’s schools, I don’t know what we could do to deal with a trade deficit of service products.
Improvements of the nation’s education and training practices are reflected by no less improvement of the nation’s economic and social well-being.
The Import Certificate policy is self-funding. It’s entire net costs are passed onto USA’s purchasers of imported goods. The funds that would be spent to continue the policy would not otherwise be expected available for supporting USA’s education and training industries.

[Your comments regarding automation are not germane to the Import Certificates purpose and consequences. It will not create jobs that were lost here or abroad due to automation. Automation improves products and/or reduces the per unit costs of products. Automation has been and will continue to be to our nation’s net benefit].

Regardless of how many or how few people are directly required to produce a product, the producing enterprises require some service enterprises or they directly employ labor to maintain and repair their production facilities, (which in turn have somewhat similar needs). Producers generally require parts and/or components and/or materials, which are often sourced from within the the nation of the final product's producer.
There's a symbiotic relationship between production and technical knowledge. As we produce we gain experience and insight as to what we’re doing and how we’re doing it. We learn about the tools and materials we’re manipulating.

Your posts directly or by implication are referring mainly to manufactured products and industries. The Import Certificate policy is only applicable to tangible products, rather than services or legal “rights”. It does not discriminate among foreign nations, or among industries or enterprises; (but assessments of goods are reduced by approximate values of mineral materials integral to the goods, if those minerals appear on a list of minerals identified as scarce or precious).
I would suppose USA manufacturing industries would most benefit from this trade policy, but that’s to be a market rather than a government determination.

Respectfully, Supposn



Jullian, regarding your link to the American Enterprise Institute:

The question of ‘fairness” of nation’s trade policies are inconsequential.
USA purchasers perceive that imported goods are the best value for their money. In most cases I believe their perceptions are correct. Nation’s wages of lesser purchasing power enable their producers to employ more qualified labor and/or devote more labor hours per unit and price their products very competitively.
Under these circumstances imported products are at competitive advantage to our made in USA products.

I’m opposing to compromising the best interest of USA employees for the benefit of any other nation or its people. If the United States Congress determines that an altruistic USA trade policy is to the best interest of world, at least let the cost be borne from our entire national budget and paid for by all USA taxpayers.

USA’s chronic annual trade deficits of goods “drag” upon our GDP and numbers of jobs. They are particularly detrimental to the aggregate incomes of employees and their dependents which are the majority of our nation’s middle income families. Additionally, this policy is more detrimental to individuals more dependent upon enterprises that themselves are more dependent upon the conditions of USA’s middle income earners, (i.e. more dependent upon the purchasing power of USA’s median wage).

Respectfully, Supposn

Posted by: Julian Feb 16 2017, 01:33 PM

QUOTE(Supposn @ Feb 16 2017, 05:05 AM) *
USA’s chronic annual trade deficits of goods “drag” upon our GDP and numbers of jobs. They are particularly detrimental to the aggregate incomes of employees and their dependents which are the majority of our nation’s middle income families. Additionally, this policy is more detrimental to individuals more dependent upon enterprises that themselves are more dependent upon the conditions of USA’s middle income earners, (i.e. more dependent upon the purchasing power of USA’s median wage).


No, it isn't 'particularly detrimental to the aggregate incomes of employees and their dependents which are the majority of our nation's middle income families", because the majority of US employees (and a big majority at that - ovr 80% of all jobs) work in the service industries, which we have already established is not in deficit at all as a sector overall, but in surplus. Here's my source for this assertion, your own https://www.bls.gov/emp/ep_table_201.htm.

The net effect of import certificates is most likely, in the short term, to produce price inflation in imported goods, at least until domestic manufacturing capacity catches up. Which will hit the consumption of the majority of your nation's middle income families, and I doubt they'll thank you for it.

Not just the cap ex in plant and equipment, but hiring and training employees who are mostly - 80% of them - used to working in services. Given relatively low levels of unemployment and overall low economic inactivity, the likelihood is that this putative recruitment drive will have to entice existing workers away from existing service sector jobs, which will use increased wages - relative to existing service sector jobs as a factor - in attracting them. Which will make US manufacturing costs go up, and make them even less internationally competitive, so the traded value of the import certificates will go up. So will prices in the services sector, since they aren't just going to sit back and watch their labour force disappear, and will have to increase wages to compete (and pass those wages on to customers, because we can't have stockholders getting lower returns, now, can we?)

It'll reach equilibrium eventually, and that situation may well be beneficial to the US economy, but it'll cause enormous pain and hardship in the short to medium term (under a decade, I'd say), hitting middle income families in their wallets, and they'll vote out whichever schmuck implemented the policy the first chance they get, probably at least one electoral term before any of the notional benefits become visible.

So, good luck selling that one.


Posted by: Supposn Feb 16 2017, 08:33 PM

Jullian, I’m not the least concerned about jobs lost due to automation has been and will continue to be to be net beneficial globally and within the USA. I’m not concerned about the lesser proportion manufacturing jobs due to automation. We cannot directly remedy greater or lesser availability of natural resources within geographical locations.
I understand that some USA jobs are lost due to some foreign nation’s superior educational and training practices. I regret our less than successful practices and our thus far failure to remedy our own practices.

USA uses and consumes more rather than less “things” and our domestic markets have more rather than less demand for such products. USA products are at price disadvantage within and beyond our domestic markets due to the lower wage purchasing powers that exist within other nations. Reducing USA’s median wage’s purchasing power by reducing the U.S. dollar’s value or by any other method would be to our net detriment.

You contend that our trade deficit of goods is of no significant importance because 4/5 of our nations jobs are within service industries. The fewer numbers of non-service jobs are not due to USA’s lesser demand for tangible products, but rather due to the price disadvantage of USA products.

The economic leverage effect of manufacturing is as great or greater than that of any other industry family of producers. Producers of products require (beyond their own labor forces), the products and services of other goods and service products’ producers.

It’s willful ignorance to state that non-service jobs or manufacturing jobs are of little economic significance because they’re a much lesser proportion of USA jobs. Their lesser numbers are not entirely due to automation and certainly not due to lesser demand for manufactured goods; they are due to the price advantages of foreign produced goods.
More labor hours or higher skilled labor devoted to production of goods are related to the quality of goods. Wage scales of lesser purchasing powers enable improved quality and/or lesser priced goods.

The loss of jobs to producers beyond our borders reduce our GDP and numbers of jobs more than otherwise. Due to the leveraged effect of production, the loss of GDP due to our trade deficit of goods is much greater than what’s indicated by our chronic annual trade deficits of goods.

The prices of goods do not fully reflect the entire costs contributing to their production. Producers often do not pay, or fully pay for their benefits derived from access to public infrastructures, public or publicly assisted financing of infrastructures, utilities, and educational enterprises. government and educational institutions often provide specialized educational curriculums, expert consultations, basic scientific and/or specific types products’ research & development.
Production support that’s not reflected within the prices of globally traded goods, are not attributed to global trade. But the tasks were performed by their nation’s labor and contributed to their GDP.

The extent of production support GDP and numbers of jobs lost due to goods and services not reflected within prices of globally traded goods are not reflected within a nations balance of trade. The value of knowledge and experience due to using and manipulating tools, materials, and methods for production of goods are not reflected within a nation’s balance of trade. The loss of USA’s GDPs are UNDERSTATED by our chronic annual trade deficits. Our trade deficits cannot fully even indicate their consequential reduction of USA jobs.

Respectfully, Supposn

Posted by: Julian Feb 17 2017, 05:51 PM

OK Supposn you're a bit scattershot here so I'll try to engage with each point you make as you make it (if i can keep track of the formatting tags...)

QUOTE(Supposn @ Feb 16 2017, 08:33 PM) *
Jullian,


Just the one 'l', please

QUOTE
I’m not the least concerned about jobs lost due to automation has been and will continue to be to be net beneficial globally and within the USA.


OK, but you do realise that if even if you could bring all the offshored manufacturing business back onshore, the fact of that automation will axiomatically mean that fewer jobs are created than were originally lost by going offshore. If you're not concerned about that, neither am I.

QUOTE
I’m not concerned about the lesser proportion manufacturing jobs due to automation.


Fine. Manufacturing jobs (as we have already established) are less than 10% of jobs overall, so if a proportion of them continue to be lost due to further automation I guess they could be offset by further relocation of manufacturing back within US borders.

QUOTE
We cannot directly remedy greater or lesser availability of natural resources within geographical locations.


That's very true. It's also one of the big reasons that you have a balance of trade defecit - you import more natural resources (through mineral extraction) than you produce domestically. Until fracking came along, that was true for oil and gas (though it no longer is).

QUOTE
I understand that some USA jobs are lost due to some foreign nation’s superior educational and training practices. I regret our less than successful practices and our thus far failure to remedy our own practices.


No argument there.

QUOTE
USA uses and consumes more rather than less “things” and our domestic markets have more rather than less demand for such products.


Ok, here you've lost me a little - uses and consumes more rather than less things compared to what? Your domestic markets have more rather than less demand for such products compared to what? Than you used to? Than other countries do? What?

QUOTE
USA products are at price disadvantage within and beyond our domestic markets due to the lower wage purchasing powers that exist within other nations.


Now you've completely lost me. If you'd said US products are at a price disadvantage because of lower wages abroad, which would lower costs for producers there, meaning they could undercut prices, that would make sense. But you said it's because of lower wage purchasing powers of other nations. So, because their wages cannot buy as much, that implies that their domestic prices (for food, etc.) are higher, not just that their wages are lower. Purchasing power parity is a measure of the standard of living in different countries, which cancels out the idea that if your wages are lower in country X than country Y, it doesn't automatically follow that country Y has a lower standard of living, because if the prices of goods and services in country Y are MUCH lower than in country Y, their purchasing power might be rather greater than in country X. A dollar a day sounds like a terrible wage, but if you can buy everything you could possibly want or need on a daily basis for 50 cents, the rest is all gravy. Did you just mean "lower wages" or did you really mean to introduce the curveball of purchasing power?

QUOTE
Reducing USA’s median wage’s purchasing power by reducing the U.S. dollar’s value or by any other method would be to our net detriment.


Yes, it would, and this goes back to the bulk of what I was saying in my last post. If you introduce trade certificates as a means to stimulate the domestic manufacturing sector, how long do you think it would take for the full effects are felt? Boosted manufacturing employment with wages retained within the domestic economy through consumption, a decreasing deficit in traded goods eventually leading to a surplus, that kind of thing. What do you think, a year? Five years? Ten? Twenty?

Let's split the difference and say it might be ten years.

OK. Ten years from now (during which time there are another two Presidential elections), everything comes up rosy.

What happens in the meantime?

You introduce trade certificates now, and Apple starts laying the foundations for a new factory so they don't have to keep paying the market rate for trade certs on every single iPhone, iPad, iEverything they sell, all of which are made by Foxconn in China. And, they have to wait for all the suppliers of the semiconductors and capacitors and diodes and transistors and resistors and printed circuit boards; all the machined metalwork and moulded plastics and special glass and iridium wires to make the cases and touchscreens - all the component parts that go into making just an iPhone. (My job is in a subcontract electronics manufacturer - albeit not consumer electronics and nothing like the scale of Foxconn; and, I've never jumped out of a window make it stop, not least because I work in a single-storey building - so I know whereof I speak.)

And there would still be a need to import raw materials from abroad. Coltan, which is essential in making the superminiaturised microcircuitry of modern smart phones, doesn't come from anywhere except Central Africa. As you say, different nations have different resources. The volume of coltan imports to the USA would shoot up. So you'd need to restrict the use of trade certificates for critical materials and compete with the Chinese for friendly contacts in exporting countries in Africa. Don't worry, the Chinese only have a 20 year head start. With superior American ingenuity, you won't have to spend more than half that time building free hydroelectric damns, water treatment plants, freeways and housing projects before getting the kind of preferential prices the Chinese are used to on their raw materials, while American foreign policy has been dancing around the Middle East trying to get the same kind of influence and preferential treatment from oil producers. Except the Chinese have managed to do it without ticking anyone off, much less invading anyone. I'm sure you'll figure it out, though.

Electronics component manufacturing jobs mostly left the USA in the 1970s - they are the kind of dirty, smelly, polluting factories handling dangerous and toxic substances that have all but disappear all over the "developed" world. To the point where,almost nobody inside the continental United States will have the expertise needed to work in a factory that makes them. I say 'almost nobody' because, quite sensibly, the US military insists not only on domestic sourcing of most defence equipment but also US-based supply chains for the critical components. The few people that have any direct experience will have it in making components that use plated through hole technology, not the more recent (but now ubiquitous, at least in consumer electronics) surface mount components. Military equipment usually uses plated through-hole components on their circuit boards, because it is a lot more robust than surface mount. Trouble is, it is - of it's very nature - less easy to miniaturise.

In consumer tech, you'd be back to cell phones the size of house bricks and TV's the size of a sofa if you only source within the USA from existing manufacturing capacity, and you'd have rocketing prices and waiting lists because the existing capacity is geared to the low production volumes and high ticket prices needed for military equipment, and not the high volumes and (relatively) low value of consumer products.

I digress. The salient points are that it would take several years for Apple to tool up to the point where they could make their own products inside the USA from US-sourced components, and that the supposedly simple and self-regulating trade certificate system will - because of simple geology in some cases, and strategic decisions in others - need to me more complex and nuanced than just "all exports get credits, all imports have to buy credits from them, and the market will set prices at which credits get traded" of a Wikipedia page. Before you know it, different sectors will be squabbling about it and demand a level playing field and within one electoral cycle you'll have a shiny new Department of Trade Certification with its very own Secretary of State, because while markets are great at reaching equilibrium eventually, they are worse than awful at doing it quickly and uniformly. That's why states take over economic planning in wartime - if you left it to the market you'd be living in a bombed out husk before breakfast.

But, assuming it goes ahead anyway, what do you suppose might happen while all the manufacturing infrastructure is being set up? Not just the factories making the products that foreign and domestic consumers want to buy, mind you, but the factories and supply chain infrastructure of their now-US-based suppliers, and the employee training and recruitment of all the people now needed to work in those sectors.

That's what I was trying to answer in my last post. There'd be a lag of at least several years. There'd be boom in construction, to being with. And a lot of those low-end service sector employees that work in fast food, retail stores, gas stations, or waiting tables might be tempted away into better-paid construction jobs. That's good, right? But who's going to work in the vacancies they leave behind them.

Who's going to sit a till in WalMart, at the counter in Exxon, or in a call centre in Austin for Sprint? We can't hire some cheap immigrant labour any more, cos Trump is building a wall. Unemployment is historically low, so we can't just hire someone else on the same deal. We're running on thin margins already, so we can't increase wages to attract new people without increasing prices. Ok, let's do that. Let's increase prices in the services sector, to maintain profit margins in a jobs market where we are trying to maintain staffing levels against the new, better paid jobs springing up to set up the newly expanding US manufacturing sector.

And the consumer goods that the people who still have jobs (in any sector) want to buy are still being imported, at least for the time being, because the manufacturers aren't geared up to build inside the USA yet. They're still building the factories and installing the plant and equipment and training the staff. There's therefore huge demand from importers to buy trade certificates to service what is, at root, a consumer economy in the USA. And - because you're starting from a point where there's a huge trade deficit in goods - there's a much more limited supply of them. Tell me, what happens when demand exceeds supply in a market where the price is free-floating? Do prices go up, or down? They go up. A lot.

Hence the inflationary pressures I talked about in my last post. Not only is there inflationary pressure within the services sector, driven by wage competition from the newly-expanding manufacturing base. But there is a much larger inflationary pressure coming from the existing consumer demand for products (including iPhones and XBoxes - both made by Chinese subcontract manufacturers for US companies). Prices for these goods, and any other imported manufactures (assuming you've taken my hint about coltan and exempted raw materials that cannot be sourced or substituted domestically) - go up fast. Which means wages have to go up fast too, to keep pace, unless you don't want to be a consumer economy any more, in which case you'd be going the right way about it.

That puts even more pressure on businesses that rely on low wages to trade at all. So, let's automate the tills and have self-checkouts in WalMart, card-only fuel pumps at Exxon and an automated call centre for Sprint. This isn't a new idea - it's already happening/happened. It boosts productivity, that's good too, right? And the jobs haven't gone, they've just moved into construction of the new iPhone/BluRay/XBox factory.

Except all those disappearing jobs are spread all across the country, and the prices for consumer goods have shot up all over the country, but the new factory/construction/manufacturing/supply chain jobs are in a relatively few new locations, simply for economies of scale.

And Diane on the counter at Exxon and Luanne on the WalMart till both have kids in schools they like, and elderly parents who need looking after two streets away. They don't feel able to uproot themselves and move six states away to work in a factory with people they don't know in a job they don't understand.

They both still have a vote, though. Who are they going to vote for? The guy who promised that trade certificates wouldn't hurt them (and wasn't factually wrong to say so, given they didn't directly do that all by themselves)? Or the one who said all along that they were a dumb idea, even though he really only thought they were a dumb idea in the short and medium term?

You've just had an election where the winner campaigned based not on anything so old-fashioned as dry economic facts, but instead tapped in to the emotions of people who felt they had been treated unfairly. See if you can guess how people who lost their jobs - for any reason at all - after the introduction of trade certificates, would feel about trade certificates, and whether they would vote for someone who told them, with academic detachment "trade certificates* are not the problem"? Or someone who said, without irony, "trade certificates are terrible. Just terrible. And horrible people like them. No, they do, they really do."

Tell me, in that scenario, are trade certificates going to last long enough to be perfected so that they genuinely add value to the US economy?

*for which read "immigration" or "globalisation" in the 2016 campaign

QUOTE
You contend that our trade deficit of goods is of no significant importance because 4/5 of our nations jobs are within service industries.


I have contended no such thing. What I did contend was that less than 10% of jobs are in manufacturing and 80% are in services. The US service sector already has a trade surplus, one which is only likely to increase as the world economy increases to specialise. I also contended that if the US manufacturing sector is going to grow enough to give the USA a trade surplus in goods, they are going to have to compete with the much larger services sector to attract workers, unless birth and maturation rates are going to grow to the extend you have another 15 million US-born adult workers within the next five to ten years on top of those you already have, or the Trump administration screeches into reverse on their immigration policy to get them from abroad.

While I'm thinking of services in the USA, and national specialisms, here are a few pertinent questions. How many Chinese management consultancies have major contracts in the USA? What are the big Nigerian and Indian law firms that dominate international trade? Which Malaysian or Taiwanese banks or insurance companies bestride the global financial sector? Which Brazilian retailer owns stores chains in every mall and high street in the USA and Europe? Short list, isn't it?

QUOTE
The fewer numbers of non-service jobs are not due to USA’s lesser demand for tangible products, but rather due to the price disadvantage of USA products.


Maybe. Maybe, also, people prefer to work in jobs they can do sitting down in a quiet, clean environment.

QUOTE
The economic leverage effect of manufacturing is as great or greater than that of any other industry family of producers. Producers of products require (beyond their own labor forces), the products and services of other goods and service products’ producers.


Yes, they do. And if the products they require are themselves manufactured, which by implication they must be, trade certificates will be a barrier to the rapid growth in manufacturing that will have to start before the trade surplus begins to appear, for simple reasons of capacity. And you're back to the core point I'm making, which is that it will cause more pain in the short and medium - and, most critically, in the electoral - term than it will relieve in the long term.

QUOTE
It’s willful ignorance to state that non-service jobs or manufacturing jobs are of little economic significance because they’re a much lesser proportion of USA jobs.


That would be why I haven't said that they are of little economic significance. Read what I actually wrote.

QUOTE
Their lesser numbers are not entirely due to automation and certainly not due to lesser demand for manufactured goods; they are due to the price advantages of foreign produced goods.


Yep. And do you know what? Eventually, what globalisation will do is bring wages up in the foreign countries, narrowing their price advantage AND raising their standards of living. Over the past 20 years, more people in what used to be called the Third World have been lifted out of poverty than in the 100 years before that, because they now have good well-paid jobs. Sure, it causes great pain and hardship and hurt pride where the jobs used to be (largely, the USA and Europe - especially within Europe, the UK). Lofty insistence that globalisation is doing good things in poor countries doesn't play well because, well, they're furriners. Far-sighted visionaries that explain it'll all work out for the best eventually get short shrift, as ivory-tower 'experts' who aren't in touch with 'the real world'.

Put simply, "eventually" is too far away to prevent the people getting the fuzzy end of the lollipop from voting with their feelings, for the guy who says he can do something NOW that'll help NOW. Globalisation has caused the US trade deficit. Lower foreign costs (in wages, mostly) has been the proximate cause, but globalisation is what has allowed the free movement of capital that built the factories in China or wherever in the first place. You can't move a job to an empty space, and you can't build on the empty space without capital. That's what capitalism is, after all.

I'm no cheerleader for globalisation, here, but I see a strong parallel between the short term pain, long term gain that globalisation theoretically produces for everyone, and the short term pain, long term gain I believe trade certificates would produce. But then, I only have one rather short Wikipedia article to teach me about them. And I had to Google that myself...

QUOTE
More labor hours or higher skilled labor devoted to production of goods are related to the quality of goods.


Yup. Which is why the remaining US manufacturing is mostly low volume, high value goods, not consumer goods (which are low price, to sell in volume, and low margin, so not very interesting unless you're operating at huge scale). American, being a consumer economy, therefore has a trade deficit in goods - you simply cannot make them cheaply enough within the USA's borders to be able to sell them cheaply enough to be bought by US consumers in the volumes that they want stuff in.

Unless, of course, you think US consumers should be consuming less, full stop, there being finite material resources on the planet. But, if you do think that:
a. It's a whole other thread topic and
b. you haven't mentioned it yet.

QUOTE
Wage scales of lesser purchasing powers enable improved quality and/or lesser priced goods.


What? Back on purchasing power again? And how do lower wages (or "lesser purchasing powers"?) enable improved quality of lesser price goods. By the way, all through my posts on this thread and elsewhere where I have engaged with you on these forums, I have assumed your first language is English (if only the meagre version of it spoken outside these hallowed shores.) *Ahem* If your first language isn't English, I heartily apologise for any frustration or bemusement and congratulate you on communicating more clearly in a language that does not come naturally to you than many people manage in the one that does.

QUOTE
The loss of jobs to producers beyond our borders reduce our GDP and numbers of jobs more than otherwise. Due to the leveraged effect of production, the loss of GDP due to our trade deficit of goods is much greater than what’s indicated by our chronic annual trade deficits of goods.


Intuitively, that sounds right, but what evidence do you have for it?

QUOTE
The prices of goods do not fully reflect the entire costs contributing to their production. Producers often do not pay, or fully pay for their benefits derived from access to public infrastructures, public or publicly assisted financing of infrastructures, utilities, and educational enterprises. government and educational institutions often provide specialized educational curriculums, expert consultations, basic scientific and/or specific types products’ research & development.


Damned straight. We should be increasing business taxes so they do pay for the government-provided services they benefit from, instead of cutting business taxes and the services that provide them with what they say they want.

QUOTE
Production support that’s not reflected within the prices of globally traded goods, are not attributed to global trade. But the tasks were performed by their nation’s labor and contributed to their GDP.

The extent of production support GDP and numbers of jobs lost due to goods and services not reflected within prices of globally traded goods are not reflected within a nations balance of trade. The value of knowledge and experience due to using and manipulating tools, materials, and methods for production of goods are not reflected within a nation’s balance of trade. The loss of USA’s GDPs are UNDERSTATED by our chronic annual trade deficits. Our trade deficits cannot fully even indicate their consequential reduction of USA jobs.


No indeed, but then one Wikipedia article on an abstract concept (trade certificates) that has never been successfully piloted, much less adopted in practice, anywhere in the world throughout history, doesn't even fully indicate the consequential reduction of the trade defecit nor the consequential increase in GDP or domestic manufacturing employment either, nor does it consider the potential pain of implementation I keep banging on about, or the electoral consequences of such pain on any candidate dumb enough (ok, far-sighted enough) to propose them.

Posted by: Supposn Feb 17 2017, 07:29 PM

Julian, regarding currencies purchasing powers:
you wrote “because their wages cannot buy as much, that implies that their domestic prices (for food, etc.) are higher, not just that their wages are lower”.

Julian, Governments have often tried to establish their own “official” exchange rate or their own purchasing power of one or many commodities. This is futile. The purchasing power of a currency at any moment or anyplace is not definite, but it’s real.

The indefinite reality of a currencies purchasing power is the most real attribute and possibly the only meaningful attribute of national currencies.

You can X and Y yourself forever. If a nation’s currency has poor purchasing power in their own nation, it’s global exchange rate can be expected to similarly for less U.S. dollars; When USA dollars purchase less products in the USA, the value of our dollars within global exchanges are similarly reduced.

If my referring to purchasing powers rather than exchange rates or some other gauge of currency evaluation annoys you, ignore it; unless governments’ try to “game” the currency exchange markets for their own purposes, the U.S. dollar’s exchange rate or it’s purchasing power are similar descriptions of the U.S. dollar’s value.

Respectfully, Supposn

Posted by: akaCG Feb 17 2017, 07:38 PM

QUOTE(Julian @ Feb 17 2017, 12:51 PM) *
...
... We should be increasing business taxes so they do pay for the government-provided services they benefit from, instead of cutting business taxes and the services that provide them with what they say they want.
...

Businesses don't actually pay the taxes, anymore than they actually pay, say, the rent on their premises. It's their customers who do. Raising corporate tax rates would have the same effect as raising said rents:

1. To the extent that they can, businesses will raise the price of their goods/services. Bad for consumers.

2. To the extent that they can't raise their prices, their profits will suffer. Bad for businesses, including start-ups.

3. If they can, they'll move offshore to maintain their profit margins. Bad for job-seekers.

But that's really off-topic, so I'll leave it at that.


Posted by: Supposn Feb 18 2017, 08:10 PM

Jullian, within the 3:33 PM, 16Feb2017 post, I contended that some indirect production supporting goods and services are not always totally reflected within the prices of the finally produced goods. I supported that statement with two paragraphs of explanation.
Although all direct and indirect production supporting goods and services of globally traded goods were attributed to the producing nation’s GDP, they are not entirely attributed to the nation’s balance of trade.
Thus, global trade’s contributions to the GDPs of nations with annual trade surpluses or reductions of GDP for nations with annual trade deficits are both understated to the extents that the prices of their globally traded goods do not reflect the entire indirect goods and services integral to their globally traded goods’ production.

That’s the logical rather than an intuitive argument.

Respectfully, Supposn


Julian, you wrote “because their wages cannot buy as much, that implies that their domestic prices (for food, etc.) are higher, not just that their wages are lower”.

Governments have often tried to establish their own “official” exchange rate or their own purchasing power of one or many commodities. This is futile. The purchasing power of a currency at any moment or anyplace is not definite, but it’s real.

The indefinite reality of a currencies purchasing power is the most real attribute and possibly the only meaningful attribute of national currencies.
You can X and Y yourself forever. If a nation’s currency has poor purchasing power in their own nation, it’s global exchange rate can be expected to similarly for less U.S. dollars; When USA dollars purchase less products in the USA, the value of our dollars within global exchanges are similarly reduced.

If my referring to purchasing powers rather than the national naming of their currency, ignore it; unless governments’ try to “game” the currency exchange markets for their own purposes, the U.S. dollar’s exchange rate or it’s purchasing power are similar descriptions of the U.S. dollar’s value.

Similarly, if my referring to wage’s purchasing powers bothers you, consider those words to be as “wages” or “wages’ amounts” if that makes you more comfortable.

Currency and wages purposes and values our dependent upon their ability to transfer wealth or the benefits of wealth. Please let’s not discuss this purchasing power” phrase again. I’m not willing to proof read everything I have or do write to remove the phrase to better accommodate you. I don’t want to be overly involved with semantics.
Respectfully, Supposn

QUOTE(Julian @ Feb 16 2017, 08:33 AM) *
QUOTE(Supposn @ Feb 16 2017, 05:05 AM) *
USA’s chronic annual trade deficits of goods “drag” upon our GDP and numbers of jobs. They are particularly detrimental to the aggregate incomes of employees and their dependents which are the majority of our nation’s middle income families. Additionally, this policy is more detrimental to individuals more dependent upon enterprises that themselves are more dependent upon the conditions of USA’s middle income earners, (i.e. more dependent upon the purchasing power of USA’s median wage).


No, it isn't 'particularly detrimental to the aggregate incomes of employees and their dependents which are the majority of our nation's middle income families", because the majority of US employees (and a big majority at that - ovr 80% of all jobs) work in the service industries, which we have already established is not in deficit at all as a sector overall, but in surplus. Here's my source for this assertion, your own https://www.bls.gov/emp/ep_table_201.htm.

The net effect of import certificates is most likely, in the short term, to produce price inflation in imported goods, at least until domestic manufacturing capacity catches up. Which will hit the consumption of the majority of your nation's middle income families, and I doubt they'll thank you for it.

Not just the cap ex in plant and equipment, but hiring and training employees who are mostly - 80% of them - used to working in services. Given relatively low levels of unemployment and overall low economic inactivity, the likelihood is that this putative recruitment drive will have to entice existing workers away from existing service sector jobs, which will use increased wages - relative to existing service sector jobs as a factor - in attracting them. Which will make US manufacturing costs go up, and make them even less internationally competitive, so the traded value of the import certificates will go up. So will prices in the services sector, since they aren't just going to sit back and watch their labour force disappear, and will have to increase wages to compete (and pass those wages on to customers, because we can't have stockholders getting lower returns, now, can we?)

It'll reach equilibrium eventually, and that situation may well be beneficial to the US economy, but it'll cause enormous pain and hardship in the short to medium term (under a decade, I'd say), hitting middle income families in their wallets, and they'll vote out whichever schmuck implemented the policy the first chance they get, probably at least one electoral term before any of the notional benefits become visible.

So, good luck selling that one.


Julian, Import Certificate policy’s entire net costs are passed on to the adapting nation’s purchasers of imported goods. Beyond USA’s federal direct expenses due to the Import Certificate policy, this proposed policy is COMPLETELY market driven. All additional costs to Importers of goods into the USA are effectively price subsidies of USA’s exported goods at no additional cost to any entities.

[Importers of goods into the USA are required to surrender transferable certificates covering the assessed values of their import shipments.
Exporters of goods are entitled (rather than required) to agree to pay the federal fee rates based upon the assessed values of their export shipments and receive transferable Import Certificates with face values based upon those assessments.
Exporters requests are motivated by the market value of the transferable certificates they will acquire. If there’s no request, there’s no assessment or issuance of certificates based upon their exported shipments.]

Regarding this trade proposal, the government need not and should not involve itself with what enterprises do that’s lawful. This proposed policy for USA’s global trade would be to our net economic advantage even from the first year of its enactment.

You seem to lack confidence in enterprises and consumers acting in their own best immediate interests and longer term interests. Organisms adapt to their environments.
USA present federal laws and policies indirectly determine that we should have chronic annual trade deficits of goods. Regardless of what you believe, those trade deficits of goods are a drag upon our nation’s GDP and reduced numbers of jobs due to lesser production (than otherwise) of goods. USA’s GDP and numbers of jobs both effect and are effected by each other.

Almost or entirely eliminating USA’s annual trade deficits of goods by enacting the Import Certificate policy will not significantly (more than otherwise) reduce the amount or the manner of our nation’s spending; thus, it will increase our GDP and numbers of jobs more than otherwise.

Respectfully, Supposn

Powered by Invision Power Board (http://www.invisionboard.com)
© Invision Power Services (http://www.invisionpower.com)