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Full Version: Trade deficits are ALWAYS detrimental to their nations’ GDPs.
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Supposn
How does balance of trade affect their nation's economy?

Annual trade deficits are always immediately detrimental to their nations’ GDPs.

Domestic production for domestic or export markets contribute to their nations’ gross domestic production and balance of trade are components of their nations’ gross domestic products, (GDPs). Their balance of trade, (i.e. trade surpluses or deficits) increase or decrease their GDPs.

[Production support provided at lesser or no cost to producers, (e.g. infrastructure or universities technical support) all contribute to the producing nations’ GDPs but they’re not reflected within the prices of products; thus to those extents trade surpluses contributions and deficits reductions of their nations’ GDPs are understated].

The benefits of production are entirely earned by the producing nation. From the point of time that imported products enter USA’s jurisdiction and are handled by USA labor but the benefits of production are entirely earned by the producing nation. The detrimental effects of USA’s half century of annual trade deficits of goods have been reflected by lesser than otherwise numbers of jobs and median wages. It is USA employees that proportionally bear the greatest financial burden due to our trade deficits of goods.

Refer to the paragraphs entitled “Trade Balances' effects upon their nation’s GDP”
within Wikipedia’s article entitled “Balance of trade”
also
refer to the Wikipedia’s article entitled Import Certificates
or
refer to the discussion thread
Entitled “Reduce the trade deficit; increase numbers of jobs and median wage”
http://www.americasdebate.com/forums/index...showtopic=22837
.
Respectfully, Supposn
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Hobbes
How does balance of trade affect their nation's economy?

Inconclusively, and perhaps having a negative balance of trade is even positive.

QUOTE
Annual trade deficits are always immediately detrimental to their nations’ GDPs


No, they aren't. Unless you have some data to show indicating they do? Since the impact always happens and is immediate, then surely there is data that demonstrates this. You would see a clear, linear link between GDP and trade deficits, where GDP goes up when trade deficits go down, and visa versa. Except that you don't. Meaning one can declare this statement 'false'.
JohnfrmCleveland
QUOTE(Supposn @ Oct 4 2014, 06:10 AM) *
The benefits of production are entirely earned by the producing nation. From the point of time that imported products enter USA’s jurisdiction and are handled by USA labor but the benefits of production are entirely earned by the producing nation. The detrimental effects of USA’s half century of annual trade deficits of goods have been reflected by lesser than otherwise numbers of jobs and median wages. It is USA employees that proportionally bear the greatest financial burden due to our trade deficits of goods.


Consider China and America. China runs a trade surplus with the U.S., and U.S. dollars flow to China. China sits on a lot of those dollars, basically in perpetuity, and doesn't spend them. If those dollars are not spent or traded, they have no effect on the U.S. economy. So dollars that cost nothing for our government to produce can bring back useful imports, basically for free, as long as a trading partner is willing to trade goods for dollars.

If those dollars make their way back to our domestic economy, great, our businesses will welcome the income. But if they don't, we have traded paper for useful items.

China can feel safe knowing that they have dollars and euros in reserve, but they aren't doing them any real good unless and until they spend them. And in the meantime, China's central bank is running large deficits of renminbi in order to accommodate their export economy. China's businesses don't want dollars or euros, they want renminbi, so it's up to China's central bank to make that happen.
Hobbes
QUOTE(Supposn @ Oct 4 2014, 05:10 AM) *
The benefits of production are entirely earned by the producing nation.


No, they aren't. Why do people buy things? Because it benefits them, too. Both consumers and producers benefit in the transaction, which is a fundamental principle of trade of all types. This false statement seems to be the entire basis for your thesis, hence the thesis can be rejected. You can't look at it purely from the production viewpoint...you need to consider the consumer viewpoint as well. Dollars saved buying cheaper foreign goods are dollars available to be spend elsewhere. Conversely, and directly to your proposed remedy, dollars spent on goods made more expensive through your proposed regulation are dollars not available to be spent elsewhere, on other goods, indicating it may actually REDUCE GDP.
Supposn
QUOTE(Hobbes @ Oct 6 2014, 06:39 PM) *
How does balance of trade affect their nation's economy?

Inconclusively, and perhaps having a negative balance of trade is even positive.

QUOTE
Annual trade deficits are always immediately detrimental to their nations’ GDPs


No, they aren't. Unless you have some data to show indicating they do? Since the impact always happens and is immediate, then surely there is data that demonstrates this. You would see a clear, linear link between GDP and trade deficits, where GDP goes up when trade deficits go down, and visa versa. Except that you don't. Meaning one can declare this statement 'false'.


Hobbes & JohnFrmCleveland, if outsourcing enables enterprises to acquire suitable goods at lesser costs and furthermore reducing their costs by reducing their labor force, they should and will do so. They will do so without regard for the national sources of the purchased products.

There’s no doubt of the general immediate financially benefits to the individual participants within global trade and all purchasers and users of imported products but the immediate financial benefits due to imported goods do not fully compensate for trade deficit’s financially detrimental effects upon those dependent upon USA’s wages and salaries or for the those effects impact upon our nation’s entire economy.
Regarding the link provided, (i.e. Investopedia’s article entitled “In Praise of Trade Deficit”): the author Michael Scmidt makes no mention of trade deficit’s consequential net reduced numbers of jobs and median wage. The interests of commercial entities and that of the entire nation usually, but not always converge. Due to the annual global trade deficits USA has experienced every year for the past half century, the financial and the economic best interests of the nation diverge from the economic best interests of both the nation’s immediate and longer term durations.

Hobbes, it is beyond our abilities to parse and quantify the effect of trade deficits upon their nations’ economies, similar to our inability to quantify many single ecological factors’ effects upon their entire ecological environments. But that does not negate that those effects occur. Many if not most economic concepts cannot be proven or disproven to the standard of proof that you demand. It’s your contention that economics or those economic concepts are not worthy of consideration because they cannot be proven or disproven by statistics or demonstrated by laboratory experiments? Many if not the majority of logically valid economic concepts cannot pass your standards of substantiation.

Respectfully, Supposn



QUOTE(JohnfrmCleveland @ Oct 6 2014, 10:05 PM) *
QUOTE(Supposn @ Oct 4 2014, 06:10 AM) *
The benefits of production are entirely earned by the producing nation. From the point of time that imported products enter USA’s jurisdiction and are handled by USA labor but the benefits of production are entirely earned by the producing nation. The detrimental effects of USA’s half century of annual trade deficits of goods have been reflected by lesser than otherwise numbers of jobs and median wages. It is USA employees that proportionally bear the greatest financial burden due to our trade deficits of goods.


Consider China and America. China runs a trade surplus with the U.S., and U.S. dollars flow to China. China sits on a lot of those dollars, basically in perpetuity, and doesn't spend them. If those dollars are not spent or traded, they have no effect on the U.S. economy. So dollars that cost nothing for our government to produce can bring back useful imports, basically for free, as long as a trading partner is willing to trade goods for dollars.

If those dollars make their way back to our domestic economy, great, our businesses will welcome the income. But if they don't, we have traded paper for useful items.

China can feel safe knowing that they have dollars and euros in reserve, but they aren't doing them any real good unless and until they spend them. And in the meantime, China's central bank is running large deficits of renminbi in order to accommodate their export economy. China's businesses don't want dollars or euros, they want renminbi, so it's up to China's central bank to make that happen.


JohnFrmCleveland, U.S. dollars do not perpetually sit in China’s or any other nation’s vaults. They are converted into debt instruments or commercial stocks or portions of USA’s enterprises. The benefits of those transfers of wealth are earned by those who own those financial instruments. There’s no free lunch.

Federal debt reduces the purchasing power of the U.S. dollar and to some extent is detrimental to our nation’s economy. We benefit somewhat from federal investment into our economy both annual trade deficits are always (more than otherwise) immediately net detrimental to their nations’ economies; otherwise being if the nation had not suffered an annual global trade deficit.

Respectfully, Supposn
Hobbes
QUOTE(Supposn @ Oct 7 2014, 02:57 PM) *
Hobbes & JohnFrmCleveland, if outsourcing enables enterprises to acquire suitable goods at lesser costs and furthermore reducing their costs by reducing their labor force, they should and will do so. They will do so without regard for the national sources of the purchased products.


Ok. And...???

QUOTE
There’s no doubt of the general immediate financially benefits to the individual participants within global trade and all purchasers and users of imported products but the immediate financial benefits due to imported goods do not fully compensate for trade deficit’s financially detrimental effects upon those dependent upon USA’s wages and salaries or for the those effects impact upon our nation’s entire economy.


As evidenced by... ?


QUOTE
Regarding the link provided, (i.e. Investopedia’s article entitled “In Praise of Trade Deficit”): the author Michael Scmidt makes no mention of trade deficit’s consequential net reduced numbers of jobs and median wage.


What evidence is there of that? There is no reason to mention things that don't occur. Why would jobs be reduced and median wage reduced when GDP is growing? Further, he invalidates the stance that trade deficits are related to GDP in general, so going into specific results when the general thesis is disproven is pointless.

QUOTE
In fact, the economic growth from 1980-2000 tended to grow in years in where the trade deficit grew compared to those years in which it declined. This provides even more evidence that an imbalance of trade in the form of a deficit did not drag the economy.


and in his conclusion:

QUOTE
For the most part, the media and the general public have a perception that trade deficits as we know them are bad and can drag on GDP. In reality, the trade deficit may be more pro-cyclical, moving in the same direction as local GDP. In fact, the other factors contributing to the expanding GDP can accelerate its growth.


QUOTE
Hobbes, it is beyond our abilities to parse and quantify the effect of trade deficits upon their nations’ economies, similar to our inability to quantify many single ecological factors’ effects upon their entire ecological environments.


You wouldn't need to parse anything. You could start by showing aggregate data, along with the corresponding amount and times of trade deficit increases and decreases. You will find, as Michael Schmidt did, that there is no correlation.

QUOTE
But that does not negate that those effects occur.


No, it doesn't. But it doesn't mean they do occur either. Further, the lack of supporting evidence definitely does drastically weaken the case that they do. Finally, it certainly means that you can't make the absolute statements about their occurrence that you seem to always do.

QUOTE
Many if not most economic concepts cannot be proven or disproven to the standard of proof that you demand.


Ironic, as the standard of proof I am asking for is 'any'. So, if most economic concepts can't be proven at all, then there is no reason to either believe or follow them.

QUOTE
It’s your contention that economics or those economic concepts are not worthy of consideration because they cannot be proven or disproven by statistics or demonstrated by laboratory experiments? Many if not the majority of logically valid economic concepts cannot pass your standards of substantiation.


No, it is my contention that they actually could be proven, but the data doesn't back them up, indicating they clearly aren't nearly as absolute as claimed, and that perhaps they don't occur at all. In order to change that, you would need to provide some evidence indicating they do. I don't know what you have against evidence, other than that none of it seems to back up your cases. That's not a problem with the evidence, or those asking for it: that is a problem with your theses.

Have you stopped to consider that if they aggregate data doesn't show the change you prophesy, that at best the change is so insignificant that taking any action against it would likewise be insignificant? ie, in this particular case, if trade deficits show don't show any correlation with GDP, then any changes in trade deficit would likewise show no change in GDP, indicating that at best your proposed changes would be insignificant?

You really do need to get over your aversion to data and evidence. Many things in the real world don't happen the way they do in theory. If data shows that that is case, you don't hide from the data---you modify your theory. Data is essential, and as I keep saying, its not as if the data doesn't exist. It just never seems to back up your contentions.
JohnfrmCleveland
QUOTE(Supposn @ Oct 7 2014, 03:57 PM) *
JohnFrmCleveland, U.S. dollars do not perpetually sit in China’s or any other nation’s vaults. They are converted into debt instruments or commercial stocks or portions of USA’s enterprises. The benefits of those transfers of wealth are earned by those who own those financial instruments. There’s no free lunch.


A good hunk of them do sit around, doing nothing. Specifically, those dollars exchanged for U.S. bonds sit around and do nothing. Some of China's dollar earnings get spent, some get reinvested in American businesses, but the largest share is simply converted into U.S. bonds. Its not a free lunch, it's a lunch that they aren't eating yet - and if those bonds are never cashed in and spent, where is the cost to us?

QUOTE(Supposn @ Oct 7 2014, 03:57 PM) *
Federal debt reduces the purchasing power of the U.S. dollar and to some extent is detrimental to our nation’s economy.


These are very arguable ideas. Our federal debt has risen quite a bit, yet inflation remains very low. There is no correlation between the two. And the idea that the federal debt is detrimental to our economy was put forth by Reinhart and Rogoff, but soon debunked.

QUOTE(Supposn @ Oct 7 2014, 03:57 PM) *
...We benefit somewhat from federal investment into our economy both annual trade deficits are always (more than otherwise) immediately net detrimental to their nations’ economies; otherwise being if the nation had not suffered an annual global trade deficit.


I'm not nearly as concerned about a trade deficit as I am about full employment and a high standard of living. A trade deficit does not prevent full employment, and it certainly doesn't hurt our standard of living.

America's large trade deficit allows the rest of the world (taken as a whole) to run a trade surplus. Surpluses must equal deficits. If we ran a trade surplus, somebody would have to run a trade deficit. So, who do you want to be, the country that ships goods and materials overseas and collects foreign currencies, or the country that gets those goods and materials in return for the currency they can create for free? (Keep in mind that if you spend those foreign currencies, you are no longer running a surplus.)
Supposn
QUOTE(Hobbes @ Oct 7 2014, 04:13 PM) *
... No, it is my contention that they actually could be proven, but the data doesn't back them up, indicating they clearly aren't nearly as absolute as claimed, and that perhaps they don't occur at all. In order to change that, you would need to provide some evidence indicating they do. I don't know what you have against evidence, other than that none of it seems to back up your cases. That's not a problem with the evidence, or those asking for it: that is a problem with your theses.

Have you stopped to consider that if they aggregate data doesn't show the change you prophesy, that at best the change is so insignificant that taking any action against it would likewise be insignificant? ie, in this particular case, if trade deficits show don't show any correlation with GDP, then any changes in trade deficit would likewise show no change in GDP, indicating that at best your proposed changes would be insignificant?

You really do need to get over your aversion to data and evidence. Many things in the real world don't happen the way they do in theory. If data shows that that is case, you don't hide from the data---you modify your theory. Data is essential, and as I keep saying, its not as if the data doesn't exist. It just never seems to back up your contentions.


Hobbes, I did not and would not speculate as to what USA’s would have been if USA had not experienced a global trade deficit of products for any year within the past half century. Although we can logically conclude that trade deficits reduce their nations’ numbers of jobs and median wage (more than otherwise), there’s no creditable method to estimate to what extent the USA’s numbers of jobs and median wage would have been increased if we had practiced an Import Certificate trade policy during that year.
[The purpose of the Import Certificate trade policy is to significantly reduce USA’s global trade deficit of goods and to subsidize USA’s exports. Refer to Wikipedia’s article entitled “Import Certificates” or to the discussion thread of
http://www.americasdebate.com/forums/index...#entry100028438 ].

Again I point out that agreements upon historical statistics are meaningless if we disagree upon causes and effects or other logical relationships between those statistical facts. There’s often disagreement as to which statistics are or are not germane to the discussed topics or how the data was collected or how it was used in calculations.

Is it your contention that it’s illogical to contend that trade deficits do not affect their nations’ numbers of jobs and median wage. If that is your contention, than how would you prove it with statistics? Certainly there are other factors that affect nations’ numbers of jobs and median wage. How can you parse each of those factors affects upon job numbers and median wage?
If y logically arrived at conclusions lacking supporting historic statistics are insufficient, many if not most of what’s generally considered as valid economic concepts have absolutely no credibility.

Respectfully, Supposn



JohnFrmCleveland, I did not imply that federal debt to foreign entities are a significant contributor to decreasing purchasing power of the U.S. dollar but federal debt certainly undermines U.S. dollar’s exchange rate and foreign interest expenditures paid to foreign entities certainly contribute to federal debt service expenditures.

Both annual federal disbursements and disbursements paid upon the maturity of federal bonds contribute to total federal expenditures for debt services. The point is that lesser rather than greater federal debt is of advantage to our nation’s economy. Your posts seem to be implying otherwise.

Respectfully, Supposn
JohnfrmCleveland
QUOTE(Supposn @ Oct 7 2014, 11:37 PM) *
JohnFrmCleveland, I did not imply that federal debt to foreign entities are a significant contributor to decreasing purchasing power of the U.S. dollar but federal debt certainly undermines U.S. dollar’s exchange rate and foreign interest expenditures paid to foreign entities certainly contribute to federal debt service expenditures.

Both annual federal disbursements and disbursements paid upon the maturity of federal bonds contribute to total federal expenditures for debt services. The point is that lesser rather than greater federal debt is of advantage to our nation’s economy. Your posts seem to be implying otherwise.


Well, if something undermines the exchange rate, isn't that the same as decreasing the purchasing power?

My point is this: fiat dollars cost nothing to create - no real resources are used or tied up when a government creates some of its own currency. So interest is not only free, but the amount created today does not affect the government's ability to create more dollars in the future. Debt service is not a burden on the government.

Can a government put too many dollars in play? Sure. The risk is demand-pull inflation. Too many dollars chasing too few goods. But that has not happened, because so many of those dollars are not getting spent. Rather, they are exchanged for U.S. bonds. Those dollars are not going to affect anything unless and until they get cashed in and spent.

Is less debt better for the economy than a larger debt? Maybe, but the evidence is inconclusive at best. But since government spending accounts for such a large percentage of our GDP, it would probably not be wise to start lowering the federal deficit anytime soon.
Supposn
QUOTE(JohnfrmCleveland @ Oct 8 2014, 03:13 AM) *
QUOTE(Supposn @ Oct 7 2014, 11:37 PM) *
JohnFrmCleveland, I did not imply that federal debt to foreign entities are a significant contributor to decreasing purchasing power of the U.S. dollar but federal debt certainly undermines U.S. dollar’s exchange rate and foreign interest expenditures paid to foreign entities certainly contribute to federal debt service expenditures.

Both annual federal disbursements and disbursements paid upon the maturity of federal bonds contribute to total federal expenditures for debt services. The point is that lesser rather than greater federal debt is of advantage to our nation’s economy. Your posts seem to be implying otherwise.


Well, if something undermines the exchange rate, isn't that the same as decreasing the purchasing power?

My point is this: fiat dollars cost nothing to create - no real resources are used or tied up when a government creates some of its own currency. So interest is not only free, but the amount created today does not affect the government's ability to create more dollars in the future. Debt service is not a burden on the government.

Can a government put too many dollars in play? Sure. The risk is demand-pull inflation. Too many dollars chasing too few goods. But that has not happened, because so many of those dollars are not getting spent. Rather, they are exchanged for U.S. bonds. Those dollars are not going to affect anything unless and until they get cashed in and spent.

Is less debt better for the economy than a larger debt? Maybe, but the evidence is inconclusive at best. But since government spending accounts for such a large percentage of our GDP, it would probably not be wise to start lowering the federal deficit anytime soon.


JohnFrmCleveland, a currency’s exchange rate and its purchasing power generally, (but not always) move in unison. Generally the U.S. dollar’s inflation is indicated by the reduction of its purchasing power and a weaker position upon currency exchange markets. But it is conceivable that the extents of the U.S. dollar’s purchasing power and its foreign exchange rates can move in opposite polarity.

To further complicate the issue, one of those factors does not simply have an effect upon the other; the two factors affect each other. Additionally the U.S. dollar’s purchasing power is not only affected by it rate of exchange within global currency markets but it is also affected by the U.S. federal accrued debt and that accrued debt’s rate of change,

We can logically conclude that increased federal debt will reduce the U.S. dollar’s purchasing power and will weaken the dollar’s currency exchange rate (more than otherwise), but the term more than otherwise is a critical qualifier. Despite the fact that increased federal debt is detrimental to the U.S. dollar’s purchasing power, it is conceivable that despite increased federal debt, the purchasing power of the U.S. dollar may not necessarily be reduced and it’s additionally conceivable that its purchasing power could actually increase in such circumstances.

The problem is we are unable to parse all of the differing factors that affect the purchasing power of the U.S. dollar. I’m unaware of any credible method to quantify the federal debt’s relationship to the purchasing power of the U.S. dollar.
All of the historic statistics that you may muster could not quantify what the vast majority of economist accept as a creditable concept, [i.e. the vast preponderance of economists accept that increasing the federal debt weakens the U.S. dollar (more than otherwise)]].

Respectfully, Supposn

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JohnfrmCleveland
QUOTE(Supposn @ Oct 8 2014, 09:55 PM) *
JohnFrmCleveland, a currency’s exchange rate and its purchasing power generally, (but not always) move in unison. Generally the U.S. dollar’s inflation is indicated by the reduction of its purchasing power and a weaker position upon currency exchange markets. But it is conceivable that the extents of the U.S. dollar’s purchasing power and its foreign exchange rates can move in opposite polarity.

To further complicate the issue, one of those factors does not simply have an effect upon the other; the two factors affect each other. Additionally the U.S. dollar’s purchasing power is not only affected by it rate of exchange within global currency markets but it is also affected by the U.S. federal accrued debt and that accrued debt’s rate of change,

We can logically conclude that increased federal debt will reduce the U.S. dollar’s purchasing power and will weaken the dollar’s currency exchange rate (more than otherwise), but the term more than otherwise is a critical qualifier. Despite the fact that increased federal debt is detrimental to the U.S. dollar’s purchasing power, it is conceivable that despite increased federal debt, the purchasing power of the U.S. dollar may not necessarily be reduced and it’s additionally conceivable that its purchasing power could actually increase in such circumstances.


You are basing your argument on an assumption here, and calling it "fact." It's bubbling underneath everything you are saying.

QUOTE(Supposn @ Oct 8 2014, 09:55 PM) *
The problem is we are unable to parse all of the differing factors that affect the purchasing power of the U.S. dollar. I’m unaware of any credible method to quantify the federal debt’s relationship to the purchasing power of the U.S. dollar.
All of the historic statistics that you may muster could not quantify what the vast majority of economist accept as a creditable concept, [i.e. the vast preponderance of economists accept that increasing the federal debt weakens the U.S. dollar (more than otherwise)]].


The vast majority of economists have always been wrong. That's the problem with a field of study where there is nothing resembling a consensus. If you are not willing to question what economists think, it's not going to be much of a discussion. It's not like I'm questioning the positions of the vast preponderance of chemists, mathematicians, or physicists here. The track record of economists is probably no better than the track record of palm readers.
Supposn
QUOTE(JohnfrmCleveland @ Oct 8 2014, 11:51 PM) *
QUOTE(Supposn @ Oct 8 2014, 09:55 PM) *
JohnFrmCleveland, ...
...
we can logically conclude that increased federal debt will reduce the U.S. dollar’s purchasing power and will weaken the dollar’s currency exchange rate (more than otherwise), but the term more than otherwise is a critical qualifier. Despite the fact that increased federal debt is detrimental to the U.S. dollar’s purchasing power, it is conceivable that despite increased federal debt, the purchasing power of the U.S. dollar may not necessarily be reduced and it’s additionally conceivable that its purchasing power could actually increase in such circumstances.


You are basing your argument on an assumption here, and calling it "fact." It's bubbling underneath everything you are saying.

QUOTE(Supposn @ Oct 8 2014, 09:55 PM) *
The problem is we are unable to parse all of the differing factors that affect the purchasing power of the U.S. dollar. I’m unaware of any credible method to quantify the federal debt’s relationship to the purchasing power of the U.S. dollar.
All of the historic statistics that you may muster could not quantify what the vast majority of economist accept as a creditable concept, [i.e. the vast preponderance of economists accept that increasing the federal debt weakens the U.S. dollar (more than otherwise)]].


The vast majority of economists have always been wrong. That's the problem with a field of study where there is nothing resembling a consensus. If you are not willing to question what economists think, it's not going to be much of a discussion. It's not like I'm questioning the positions of the vast preponderance of chemists, mathematicians, or physicists here. The track record of economists is probably no better than the track record of palm readers.


JohnFrmCleveland, I’ve been arguing that economics as one of the social studies cannot be held to the same standards of proof that we require of the “hard sciences” such as physics or chemistry. I’m not in disagreement with your post that I’m quoting from but it is contrary to the arguments of Hobbes and AKA CG.

It’s been pointed out that even within the hard sciences, much of what’s written concurs with what’s currently fashionable rather than what’s based upon logical arguments. But unlike social studies, the advantage of the hard sciences’ concepts can very often be tested by controlled laboratory experiments.
Statistical social study evidence is often subject to disagreement of how the data is collected, how the factors are mathematically related, and the interpretations or conclusions based upon those statistics. Your post induces me to recall two quotes:
(1) The punch line of an old joke which is “Sure I know the roulette wheel is “fixed” against me but it’s the only game in town”
(2) The quote attributed to John Kenneth Galbraith; “The only function of economic forecasting is to make astrology look respectable”.

Excerpted from this tread’s post of Oct 7 2014, 11:37 PM: "Is it your (i.e. Hobbes contention that it’s illogical to contend that trade deficits do not affect their nations’ numbers of jobs and median wage. If that is your contention, than how would you prove it with statistics? Certainly there are other factors that affect nations’ numbers of jobs and median wage. How can you parse each of those factors affects upon job numbers and median wage?
If logically arrived at conclusions lacking supporting historic statistics are insufficient, many if not most of what’s generally considered as valid economic concepts have absolutely no credibility”.

Respectfully, Supposn

JohnfrmCleveland
QUOTE(Supposn @ Oct 9 2014, 01:57 AM) *
JohnFrmCleveland, I’ve been arguing that economics as one of the social studies cannot be held to the same standards of proof that we require of the “hard sciences” such as physics or chemistry. I’m not in disagreement with your post that I’m quoting from but it is contrary to the arguments of Hobbes and AKA CG.

It’s been pointed out that even within the hard sciences, much of what’s written concurs with what’s currently fashionable rather than what’s based upon logical arguments. But unlike social studies, the advantage of the hard sciences’ concepts can very often be tested by controlled laboratory experiments.
Statistical social study evidence is often subject to disagreement of how the data is collected, how the factors are mathematically related, and the interpretations or conclusions based upon those statistics. Your post induces me to recall two quotes:
(1) The punch line of an old joke which is “Sure I know the roulette wheel is “fixed” against me but it’s the only game in town”
(2) The quote attributed to John Kenneth Galbraith; “The only function of economic forecasting is to make astrology look respectable”.

Excerpted from this tread’s post of Oct 7 2014, 11:37 PM: "Is it your (i.e. Hobbes contention that it’s illogical to contend that trade deficits do not affect their nations’ numbers of jobs and median wage. If that is your contention, than how would you prove it with statistics? Certainly there are other factors that affect nations’ numbers of jobs and median wage. How can you parse each of those factors affects upon job numbers and median wage?
If logically arrived at conclusions lacking supporting historic statistics are insufficient, many if not most of what’s generally considered as valid economic concepts have absolutely no credibility”.


I'm all for logical arguments. I understand the limitations of evidence here, too. But when you put forth something as fact that cannot be clearly demonstrated by the data, you are going to build your future arguments on top of that shaky piece. I prefer to break it down further, going with what is clearly demonstrable (which often boils down to accounting), and building my logical walls up from there. That does mean that I discard most of the economics people consider "valid." Like I said before, if economists can't come to a clear consensus on a particular point, or if they reach the same conclusion with totally different logic, there is no sense in declaring something a "fact." This is most commonly a problem when discussing federal deficits and/or the national debt. Both are taken to be terribly negative things by almost everybody, but I have yet to come across a solid explanation of why they are negatives. There was a thread about that very subject on this site. http://www.americasdebate.com/forums/index...showtopic=20318

That all being said, I am not declaring your original argument to be incorrect. I'm just pointing out that it's not built on a solid foundation, because I can poke holes in it with logic alone, just by coming up with plausible scenarios in which it does not hold true.
akaCG
QUOTE(Supposn @ Oct 4 2014, 06:10 AM) *
...
Refer to the paragraphs entitled “Trade Balances' effects upon their nation’s GDP”
within Wikipedia’s article entitled “Balance of trade”
...

You mean the section that was added to the Wiki "Balance of trade" article on August 25, 2013 by a user named ... "Supposn"?

http://en.wikipedia.org/w/index.php?title=...oldid=570174995

QUOTE(Supposn @ Oct 4 2014, 06:10 AM) *
...
also
refer to the Wikipedia’s article entitled Import Certificates
...

You mean the sections of said Wiki "Import Certificates" article that have been busily edited and re-edited by a user named ... you guessed it ... "Supposn"?

http://en.wikipedia.org/w/index.php?title=...;action=history

Boy, I gotta say, you got some chutzpah!

ps:
For Wiki "Chutzpah" article, click here.

Supposn
QUOTE(JohnfrmCleveland @ Oct 9 2014, 12:14 PM) *
...
...
That all being said, I am not declaring your original argument to be incorrect. I'm just pointing out that it's not built on a solid foundation, because I can poke holes in it with logic alone, just by coming up with plausible scenarios in which it does not hold true.


JohnFrmCleveland, it’s argued that nations’ annual trade deficits are always (more than otherwise) immediately detrimental to their nation’s net numbers of jobs and median wage; thus annual trade deficits are(more than otherwise) immediately net detrimental to their nations’ economies.

Please do present your logical opposing arguments without resorting to statistical evidence that are themselves subject to questions of their validity or to their interpretation.

Respectfully, Supposn
JohnfrmCleveland
QUOTE(Supposn @ Oct 9 2014, 01:45 PM) *
QUOTE(JohnfrmCleveland @ Oct 9 2014, 12:14 PM) *
...
...
That all being said, I am not declaring your original argument to be incorrect. I'm just pointing out that it's not built on a solid foundation, because I can poke holes in it with logic alone, just by coming up with plausible scenarios in which it does not hold true.


JohnFrmCleveland, it’s argued that nations’ annual trade deficits are always (more than otherwise) immediately detrimental to their nation’s net numbers of jobs and median wage; thus annual trade deficits are(more than otherwise) immediately net detrimental to their nations’ economies.

Please do present your logical opposing arguments without resorting to statistical evidence that are themselves subject to questions of their validity or to their interpretation.



1. GDP $10 billion, trade surplus $1 billion. Your economy is producing $10 billion worth of goods, enjoying $9 billion worth of goods, and exporting $1 billion worth of goods. We collect $1 billion worth of foreign currency. Our government creates $1 billion new dollars to exchange for the foreign currencies, then they sit on those foreign reserves.

2. GDP $10 billion, trade deficit $1 billion; the difference in domestic demand is made up for by federal deficit spending of $1 billion. Your economy is again producing $10 billion worth of goods, but now enjoying $11 billion worth of goods, and $1 billion flows into foreign hands, where they sit on it.

Since your economy is producing the same amount of goods, we can assume that labor is earning the same wages. In scenario 1, somebody holds $1 billion in savings. In scenario 2, somebody enjoys $1 billion in imported goods. It's all a matter of other countries being willing to trade their goods for our dollars.
Supposn
QUOTE(JohnfrmCleveland @ Oct 9 2014, 02:53 PM) *
1. GDP $10 billion, trade surplus $1 billion. Your economy is producing $10 billion worth of goods, enjoying $9 billion worth of goods, and exporting $1 billion worth of goods. We collect $1 billion worth of foreign currency. Our government creates $1 billion new dollars to exchange for the foreign currencies, then they sit on those foreign reserves.

2. GDP $10 billion, trade deficit $1 billion; the difference in domestic demand is made up for by federal deficit spending of $1 billion. Your economy is again producing $10 billion worth of goods, but now enjoying $11 billion worth of goods, and $1 billion flows into foreign hands, where they sit on it.

Since your economy is producing the same amount of goods, we can assume that labor is earning the same wages. In scenario 1, somebody holds $1 billion in savings. In scenario 2, somebody enjoys $1 billion in imported goods. It's all a matter of other countries being willing to trade their goods for our dollars.


JohnFrmCleveland, in response to your post of October 9, 2014, 1:45 PM:
(1) If the USA should experience an annual trade surplus:
The U.S. Federal Reserve Board attempts to regulate the supply of U.S. money. To the extent that it is actually able to do so, there’s no reason to believe that those determinations are influenced by USA’s balances of trade.
Who (as you wrote) sits upon what foreign reserves? Can you be more explicit? Who’s holding what savings?

(2) When the USA experiences an annual trade surplus:
How do you relate the federal budget to USA’s balance of trade? They are mutually exclusive. What foreign entities are “sitting” upon their global trade revenues? It is not generally the practice anywhere in the world for enterprises or governments to “sit” upon their revenues. Who’s holding what savings?
What did you mean when you wrote of the nation producing “the same amount of goods”?


Respectfully, Supposn
JohnfrmCleveland
QUOTE(Supposn @ Oct 9 2014, 11:37 PM) *
JohnFrmCleveland, in response to your post of October 9, 2014, 1:45 PM:
(1) If the USA should experience an annual trade surplus:
The U.S. Federal Reserve Board attempts to regulate the supply of U.S. money. To the extent that it is actually able to do so, there’s no reason to believe that those determinations are influenced by USA’s balances of trade.


The Fed does not try to regulate the supply of money. Most money is bank-created credit, and the Fed accommodates the banks. If the demand for loans is high, the Fed accommodates the banks and the amount of bank-created credit goes up, in response to demand. The Fed does not try to stop that.

What the Fed does is tinker with the interest rate and reserves. We have seen that lowering the interest rate can only do so much, and increasing reserves didn't have the effect everyone thought it would have (more loan activity). Before QE they used to keep excess reserves at a minimum with bonds, but the new policy of excess reserves hasn't really changed much.

QUOTE(Supposn @ Oct 9 2014, 11:37 PM) *
Who (as you wrote) sits upon what foreign reserves? Can you be more explicit? Who’s holding what savings?


China, for example, exchanges much of their earnings for U.S. bonds, then holds the bonds. Bonds are just a place to safely park dollars. They run a large deficit in renminbi in order to accommodate the exchange (dollars - renminbi) for their own economy.

QUOTE(Supposn @ Oct 9 2014, 11:37 PM) *
(2) When the USA experiences an annual trade surplus:
How do you relate the federal budget to USA’s balance of trade? They are mutually exclusive. What foreign entities are “sitting” upon their global trade revenues? It is not generally the practice anywhere in the world for enterprises or governments to “sit” upon their revenues. Who’s holding what savings?
What did you mean when you wrote of the nation producing “the same amount of goods”?


Assuming we were to run consistent trade surpluses (like China), we would be accepting foreign currencies in exchange for our goods. Companies that export don't want renminbi, yen, or euros, they want dollars - so off to the FOREX market to make the exchange. But there must be enough dollars available for trading, and only the U.S. government can enable that.

Who holds the foreign currencies? That would probably be our central bank. Why do they sit on them? Because otherwise, we wouldn't be running a trade surplus.

Governments with fiat currency regimes do not need to raise revenues in order to spend/operate. They can (and do) simply run deficits in their own currency in order to spend. China, for example, earns enough foreign currency from their trade surpluses to buy a ton of stuff from around the world - but they find it more beneficial to get as much as possible from their own country. When a country bases its economy around exports, like China or Japan, it's all about maximizing domestic production, not about keeping prices down with imported goods. So those governments take in the foreign reserves, create more of their own currency in exchange, and allow those foreign reserves to pile up. Not all of them, of course - dollars are used to buy oil, and everybody does that - but the excess is parked in bonds.

As for my example where the country produces the same amount of goods in both scenarios, that was merely meant to illustrate how running a trade deficit would not necessarily affect employment or output.
Hobbes
QUOTE(Supposn @ Oct 9 2014, 12:45 PM) *
Please do present your logical opposing arguments without resorting to statistical evidence that are themselves subject to questions of their validity or to their interpretation.


I still do not understand your aversion to data.

I saw this in Super Freakonomics, cowritten by, of course, an economist, talking about how Robert McNamara was using data to show how Ford could make their cars safer.

"One reason McNamara was so maligned was that he tended to make decisions based on statistical analysis rather than emotion or political considerations. In other words, he behaved like an economist."

There is nothing foreign about applying economical theory to the real world, and seeing how it fits. That is, as they state, in fact precisely what economists do.

It is also worth noting that in several of the things that McNamara studied, the data didn't show the expected results, at all. For example, car seats don't protect infants nearly as well as expected, and they didn't really protect toddlers at all, although states keep making the age range for which they are required higher and higher. Which gets to why seeing how real data fits is so important---things don't always behave as expected.


They also explain, in the foreward to this book, that the unifying theme is that people respond to incentives, although not necessarily in ways that are predictable or manifest. Which again is why one needs to look at data to validate any theory---because the predicted outcomes often don't occur. What you seem to think are reasons NOT to apply data are in fact the very reasons one NEEDS to apply data. If the data doesn't back up the theory, it isn't generally the data that is in question, but rather the theory. The data won't change, but the theory can.
Supposn
QUOTE(Hobbes @ Oct 15 2014, 04:13 PM) *
QUOTE(Supposn @ Oct 9 2014, 12:45 PM) *
Please do present your logical opposing arguments without resorting to statistical evidence that are themselves subject to questions of their validity or to their interpretation.


I still do not understand your aversion to data.

I saw this in Super Freakonomics, cowritten by, of course, an economist, talking about how Robert McNamara was using data to show how Ford could make their cars safer.

"One reason McNamara was so maligned was that he tended to make decisions based on statistical analysis rather than emotion or political considerations. In other words, he behaved like an economist."

There is nothing foreign about applying economical theory to the real world, and seeing how it fits. That is, as they state, in fact precisely what economists do.

It is also worth noting that in several of the things that McNamara studied, the data didn't show the expected results, at all. For example, car seats don't protect infants nearly as well as expected, and they didn't really protect toddlers at all, although states keep making the age range for which they are required higher and higher. Which gets to why seeing how real data fits is so important---things don't always behave as expected.


They also explain, in the foreward to this book, that the unifying theme is that people respond to incentives, although not necessarily in ways that are predictable or manifest. Which again is why one needs to look at data to validate any theory---because the predicted outcomes often don't occur. What you seem to think are reasons NOT to apply data are in fact the very reasons one NEEDS to apply data. If the data doesn't back up the theory, it isn't generally the data that is in question, but rather the theory. The data won't change, but the theory can.


Hobbes, a soft cover copy of that book was a birthday gift from one of my sons. I keep it in the bathroom and often reread some of the chapters. I’m also favorably impressed with the authors’ narrations.

Correct decisions are reached by correct interpretation of understanding of what can be derived from the statistical data. Are you familiar with Hoover’s re-election just as the Literary Digest predicted based upon “sound” statistical data? Remember when Dewey was elected president exactly as almost all credible statisticians and public opinion pollsters predicted? How about respecting the opinions of the world’s most eminent experts regarding issues of scientific principles? Aren’t we fortunate that Edison’s expert opinion was accepted and we did not waste valuable resources trying to electrify the USA with Teller’s impractical alternating current?

There’s an adage in the computing and data processing industry; GIGO, garbage in/garbage out is applicable to almost all human endeavors.

The principle reason that many if not the majority of social study concepts are not subject to proof by historical statistical data is that too often we cannot isolate the effect due to a single factor from the effects due to all other factors contributing to aggregate consequences reached at some particular moment of time.
I’m among those stating our logical conclusion that the nation’s annual trade deficits reduce the nation’s numbers of jobs (more than otherwise). The qualifier “more than otherwise” is due to trade deficits being one of many other “mutually exclusive” factors that affect nations’ numbers of jobs. If under some circumstances a nation’s numbers of jobs should increase rather than decrease despite the nation’s trade deficit, That does not negate the validity of the statement that annual trade deficits are (more than otherwise) immediately detrimental to the nation’s numbers of jobs.
If you believe in competitive markets, you would logically conclude that anything that net reduces jobs (more than otherwise) would also reduce the median wage (more than otherwise).

Even if there’s agreement upon the statistical facts, people interpret those facts differently can be expected to reach different conclusions.
I haven’t had a chance to start reading Levitt and Dubner’s “Think Like a Freak”. I picked up the book from the library on the 6th of October. Many, many years ago, (possibly before you were born), I read “How to lie with statistics”. I recommend you read that book.

Respectfully, Supposn


QUOTE(JohnfrmCleveland @ Oct 10 2014, 01:15 AM) *
QUOTE(Supposn @ Oct 9 2014, 11:37 PM) *
JohnFrmCleveland, in response to your post of October 9, 2014, 1:45 PM:
(1) If the USA should experience an annual trade surplus:
The U.S. Federal Reserve Board attempts to regulate the supply of U.S. money. To the extent that it is actually able to do so, there’s no reason to believe that those determinations are influenced by USA’s balances of trade.


The Fed does not try to regulate the supply of money. Most money is bank-created credit, and the Fed accommodates the banks. If the demand for loans is high, the Fed accommodates the banks and the amount of bank-created credit goes up, in response to demand. The Fed does not try to stop that.

What the Fed does is tinker with the interest rate and reserves. We have seen that lowering the interest rate can only do so much, and increasing reserves didn't have the effect everyone thought it would have (more loan activity). Before QE they used to keep excess reserves at a minimum with bonds, but the new policy of excess reserves hasn't really changed much.

QUOTE(Supposn @ Oct 9 2014, 11:37 PM) *
Who (as you wrote) sits upon what foreign reserves? Can you be more explicit? Who’s holding what savings?


China, for example, exchanges much of their earnings for U.S. bonds, then holds the bonds. Bonds are just a place to safely park dollars. They run a large deficit in renminbi in order to accommodate the exchange (dollars - renminbi) for their own economy.

QUOTE(Supposn @ Oct 9 2014, 11:37 PM) *
(2) When the USA experiences an annual trade surplus:
How do you relate the federal budget to USA’s balance of trade? They are mutually exclusive. What foreign entities are “sitting” upon their global trade revenues? It is not generally the practice anywhere in the world for enterprises or governments to “sit” upon their revenues. Who’s holding what savings? ...


Assuming we were to run consistent trade surpluses (like China), we would be accepting foreign currencies in exchange for our goods. Companies that export don't want renminbi, yen, or euros, they want dollars - so off to the FOREX market to make the exchange. But there must be enough dollars available for trading, and only the U.S. government can enable that.

Who holds the foreign currencies? That would probably be our central bank. Why do they sit on them? Because otherwise, we wouldn't be running a trade surplus.

Governments with fiat currency regimes do not need to raise revenues in order to spend/operate. They can (and do) simply run deficits in their own currency in order to spend. China, for example, earns enough foreign currency from their trade surpluses to buy a ton of stuff from around the world - but they find it more beneficial to get as much as possible from their own country. When a country bases its economy around exports, like China or Japan, it's all about maximizing domestic production, not about keeping prices down with imported goods. So those governments take in the foreign reserves, create more of their own currency in exchange, and allow those foreign reserves to pile up. Not all of them, of course - dollars are used to buy oil, and everybody does that - but the excess is parked in bonds. b]...[/b]


JohnFrmCleveland, the accommodation of banks that you wrote of, is the Federal Reserve banks' credits granted to their district's other banks. I think the Federal Reserve board of governors of individual Federal Reserve district banks determine their own rates for each of three types of credit they grant to their district’s other banks; (that’s the accommodation to banks that you wrote of). All such credits granted by the Federal Reserve boards are fully collateralized.
Primary credit is granted at the least rate of credit usually for very short durations such as overnight. Banks not qualified to apply for primary credit may apply for secondary or for seasonable credit. Secondary and seasonable credit may be granted to “depository institutions” that are not eligible for primary credit. The secondary credits are for resolving credit difficulties for short terms or for seasonal cash flow problems. Credit rates may differ for those two secondary types and each district’s federal bank sets their own rates for the credit they grant to their district’s banks.
I believe that it’s the Federal Reserve Bank of New York, (i.e. the main Fed. bank) rather than the U.S. Treasury department that determines the amount of currency to remain in circulation. Regardless of which one, (FRB or Treasury) does make the actual decision, it’s a federal decision.

The rates for federal issued debt securities are determined by the U.S. Treasury itself and by U.S. Treasury auctions. After their initial public sale, the rates for individual security issues are thereafter market determined.

No entity simply “sits on cash”. Large amounts of cash on hand are transferred into marketable debt securities that earn interest. Debt service expenditures are significant items of the U.S. federal budget and accrued federal debt indirectly and directly affects the purchasing power of the U.S. dollar. All other nations behave in a similar manner.

Do you and I disagree upon what should be USA’s economic goal?
I’m a populist and am of the optimum national economy grant employees and their families the greatest sustainable quality of life. I do not believe that is achieved by “trickle down” “supply side” economic policies. All USA purchasers benefit from cheaper foreign imports but those benefits do not fully compensate those dependent upon USA wages and salaries for annual trade deficits detrimental affects due to the consequential detriments to USA’s numbers of jobs and median wage. That’s why I’m a proponent of an Import Certificate policy for USA’s global trade.

Of course the rates of currency exchanges affect foreign trade transactions conducted with currency rather than by bartering but the exchange rates do not directly determine nations’ balances of trade.
Currencies exchanged in the world’s markets are not considered as goods or services that constitute nations’ balances of trade.

Respectfully, Supposn

QUOTE(JohnfrmCleveland @ Oct 9 2014, 02:53 PM) *
... 1. GDP $10 billion, trade surplus $1 billion. Your economy is producing $10 billion worth of goods, enjoying $9 billion worth of goods, and exporting $1 billion worth of goods. We collect $1 billion worth of foreign currency. Our government creates $1 billion new dollars to exchange for the foreign currencies, then they sit on those foreign reserves.

2. GDP $10 billion, trade deficit $1 billion; the difference in domestic demand is made up for by federal deficit spending of $1 billion. Your economy is again producing $10 billion worth of goods, but now enjoying $11 billion worth of goods, and $1 billion flows into foreign hands, where they sit on it.

Since your economy is producing the same amount of goods, we can assume that labor is earning the same wages. In scenario 1, somebody holds $1 billion in savings. In scenario 2, somebody enjoys $1 billion in imported goods. It's all a matter of other countries being willing to trade their goods for our dollars.


JohnFrmCleveland, transfers of wealth between entities, [deposits, payments, withdrawals between entities do not themselves affect nations’ GDPs. The most commonly employed and simplest method for tracing nations’ trade balances and measuring GDPs, are expressed in terms of a monetary currency that are the “chips” by which we conveniently measure a nations’ imports and exports and GDPs, but exchanges currency itself are not goods or services that contribute or reduce nations’ balances of trade or their GDPs.

In the two scenarios’ you present, assuming they’re both expressed as GDP’s of 10 Billion U.S. dollar’s of equal purchasing powers:
and (1) a trade surplus of 1 Billion dollars eventually paid by foreign purchasers of USA product.
or
(2) A trade deficit of 1 billion dollars.

Where did you believe that 1 billion dollars came from? Those 1 billion dollars is no longer USA wealth that can potentially purchase addition goods or service products contributing to future USA annual GDPs. Additionally the future spending of those dollars would not be for consumers but rather for production support, it would further increase USA’s future GDPs.
There’s no free lunch. The trade deficit to some extent reduces USA consumers and enterprises wealth available to increase future GDPs (more than otherwise). This reduction of future GDPs would be mitigated to the extent that USA imported production supporting rater than consumer products; but that’s generally what the USA actually does.

USA’s trade deficits’ greatest detrimental economic effect is the reduction of USA’s numbers of jobs and median wage (more than otherwise). USA's annual trade deficits’ net economic detriment are almost entirely borne by those dependent upon USA wages and salaries; its almost entirely borne by USA’s lowest through middle income earners and their families. Those that can least afford it are paying almost the entire cost of USA’s trade deficit.

Respectfully, Supposn
Hobbes
QUOTE(Supposn @ Oct 16 2014, 04:42 AM) *
Correct decisions are reached by correct interpretation of understanding of what can be derived from the statistical data. Are you familiar with Hoover’s re-election just as the Literary Digest predicted based upon “sound” statistical data? Remember when Dewey was elected president exactly as almost all credible statisticians and public opinion pollsters predicted? How about respecting the opinions of the world’s most eminent experts regarding issues of scientific principles? Aren’t we fortunate that Edison’s expert opinion was accepted and we did not waste valuable resources trying to electrify the USA with Teller’s impractical alternating current?


Predicting elections is a lot different than looking at actual past data, and applying the models to it.

QUOTE
There’s an adage in the computing and data processing industry; GIGO, garbage in/garbage out is applicable to almost all human endeavors.


Which is why you would want to make sure that the decisions being made aren't being made on garbage. The best way to do that is look at past data and see if the predicted outcomes were what occurred. Garbage is a lot easy to propograte if it comes without any proof or evidence of actually working.

QUOTE
The principle reason that many if not the majority of social study concepts are not subject to proof by historical statistical data is that too often we cannot isolate the effect due to a single factor from the effects due to all other factors contributing to aggregate consequences reached at some particular moment of time.


True. But this doesn't preclude looking at macro data to see what the impacts were. Take Trade Deficits and GDP. If indeed trade deficits always reduced GDP, that would tend to show up in the GDP data, would it not? Yes, lots of other factors, but over time, within a single economy, one can assume those other factors to average out unless there is strong evidence that isn't the case. So, as our trade deficits have steadily increased, has our GDP steadily declined? No. The opposite in fact. Can you trace interim rises and falls in the trade deficit to either GDP or employment changes? No. Hence, the logical conclusion to draw would be that trade deficits do NOT immediately and always cause reductions in GDP and employment.

Also, FWIW, social sciences have been evolving towards statistical data for the last 30 years or so. The problem you mention doesn't preclude using statistics; it just changes how you use them.

QUOTE
I’m among those stating our logical conclusion that the nation’s annual trade deficits reduce the nation’s numbers of jobs (more than otherwise). The qualifier “more than otherwise” is due to trade deficits being one of many other “mutually exclusive” factors that affect nations’ numbers of jobs. If under some circumstances a nation’s numbers of jobs should increase rather than decrease despite the nation’s trade deficit, That does not negate the validity of the statement that annual trade deficits are (more than otherwise) immediately detrimental to the nation’s numbers of jobs.

Stating it does NOT make it true....otherwise I could simply state the opposite, and then that would have to be true, too, right? And it isn't a matter of 'some circumstances'...the data consistently does NOT show a negative correlation. ie, it seems to be ALL circumstances, not just some. So, the level of proof that your contention is then true despite the data showing otherwise rises, and it certainly well above the threshold of you simply stating it.
QUOTE
If you believe in competitive markets, you would logically conclude that anything that net reduces jobs (more than otherwise) would also reduce the median wage (more than otherwise).


Yes, I would. But you have not shown, at all, that trade deficits DO reduce net jobs.

QUOTE
Even if there’s agreement upon the statistical facts, people interpret those facts differently can be expected to reach different conclusions.
I haven’t had a chance to start reading Levitt and Dubner’s “Think Like a Freak”. I picked up the book from the library on the 6th of October. Many, many years ago, (possibly before you were born), I read “How to lie with statistics”. I recommend you read that book.


Yes, you can lie with statistics (you will find, if you peruse this board, that I point out errors in statistics quite often, as well as errors in concepts and assumptions, even in published scientific journals---crap gets published all the time). But it is certainly much easier without them, when one can simply say whatever they want with no proof at all. Which takes us back to our problem here. You state that trade deficits always immediately reduce net employment and GDP. The natural question to follow would be 'what evidence do you have that this is the case?'. So far, there is none. Hence, the status quo wins, by default, and no change in policy is required. Further, data showing it doesn't occur has been presented, with no refutation. So, the ball is in your court....come up with some evidence, or consider the contention disproved. At the very least, you would need to indicate why the data showing it doesn't happen is incorrect. Simply stating 'well, it's complicated' doesn't do that. What specific factors do you think cause the data to show something else, and what evidence do you have that those factors are causing the discrepancy? Your entire premise here is based on your assumption that trade deficits reduce net jobs and GDP, yet you haven't presented any evidence at all that that is the case. The argument is then difficult to take seriously. I could just as easily claim that raising purple unicorns always immediately increased net jobs and GDP (think of all the tourism!). Does that mean we should immediately adopt policies encouraging the raising of purple unicorns? I mean, who isn't in favor of more jobs and GDP, right?
Supposn
QUOTE(Hobbes @ Oct 16 2014, 12:04 PM) *
Predicting elections is a lot different than looking at actual past data, and applying the models to it.


Hobbes, to a substantial extent the basis of conclusions arrived at due to public opinion polling are based upon analysis of historic statistical data applied to public current public opinion polling. Predicting actual elections is often done by studying actual past and/or re recent statistical data then applying the models to it.

A great proportion of logical conclusions cannot be validated or invalidated by statistical data if we’re unable to quantify the extent that individual factors contributed to the consequential conditions or results. We often cannot concur upon which factors are the causes and which are the effects even when we agree that those factors are meaningfully related.

You believe that economics is a science while I believe that it’s one among the social studies. Even mathematics is not a science; it’s the most exacting system of thought; (i.e. mathematics is the most exacting of philosophies).

Respectfully, Supposn
Hobbes
QUOTE(Supposn @ Oct 16 2014, 10:21 PM) *
You believe that economics is a science while I believe that it’s one among the social studies. Even mathematics is not a science; it’s the most exacting system of thought; (i.e. mathematics is the most exacting of philosophies).

Respectfully, Supposn


I don't care if it is a science OR a social study (and social studies are now social sciences anyway)....you still need evidence to back up your assertions, and you need to counter evidence contrary to it. Neither has happened here so far.

If you want to stick to just thought discussions....lowering the trade deficit will raise prices, lowering people's spendable income, lowering their purchases of other things...and thereby lowering GDP and perhaps reducing jobs. So, we have two differing theories. How can we tell which one seems to be better at describing how things really work? Well...we look at data.

QUOTE
A great proportion of logical conclusions cannot be validated or invalidated by statistical data if we’re unable to quantify the extent that individual factors contributed to the consequential conditions or results. We often cannot concur upon which factors are the causes and which are the effects even when we agree that those factors are meaningfully related.


A great proportion of logical conclusions cannot be validated by data simply because the logical conclusion isn't actually true in real life, too. Recall the example of the toddler seats in SuperFreakonomics. It seems logical to conclude that toddler seats would be safer, and that we should expand their use---but the data says otherwise. In reality, they aren't safer, and can even be dangerous...yet their use is being expanded by law, simply because no one is bothering to look at the data. The analogy applies here. You think we should embark on a massive policy change because you believe it to be beneficial. But the data shows that your desired outcomes don't occur. We seem to have the data at end to avoid making a similar mistake. At the very least, you would need to explain why the data showing effects contrary to your hypothesis (and it IS just a hypothesis) are something we should just ignore, and proceed with your plan anyway. Otherwise, one can only conclude that the hypothesis is false.
Supposn
QUOTE(Hobbes @ Oct 16 2014, 12:04 PM) *
... Stating it does NOT make it true....otherwise I could simply state the opposite, and then that would have to be true, too, right? And it isn't a matter of 'some circumstances'...the data consistently does NOT show a negative correlation. ie, it seems to be ALL circumstances, not just some. So, the level of proof that your contention is then true despite the data showing otherwise rises, and it certainly well above the threshold of you simply stating it. ...


Hobbes, the data does not indicate any particular correlation between trade balances and job numbers because we do not have a “handle” upon all factors other than trade balance which affect numbers of jobs; but it’s illogical to conclude that trade deficits do not affect numbers of jobs..

USA’s production for export to some extent increases USA’s numbers of jobs. Foreign produced USA imports do nothing, or almost nothing to increase USA’s numbers of jobs. Beyond the moment that USA products have left the their domestic producer’s loading platforms, or foreign imported products are being handled or serviced by USA rather than foreign labor, both domestic and imported similar products will similarly contribute to USA’s numbers of jobs.; the net benefits of production are earned by the producing nations.

The logical conclusion is that trade deficits represent wealth that the USA in aggregate cannot again spend. Trade surpluses represent wealth that was spent for domestic production or transfers of wealth which will eventually spent in an unknown manner. If that wealth is spent in the future for the purchase of imports, it will at that future date do little or nothing to increase USA’s jobs but if it is eventually spent for domestic products, it will then increase USA’s numbers of jobs.

It is logical to conclude USA’s numbers of jobs are to some extent affected by our annual trade balances, trade surpluses. Trade surpluses are net contributors and trade deficits leave lesser amounts of remaining wealth that could contribute to increasing USA’s productions and numbers of jobs or be transfers of wealth that will eventually be spent for goods or services. Because net benefits of production are earned by the producing nations, it is logical to conclude annual trade deficits (by omission) to some extent reduce our numbers of jobs (more than otherwise).

Because we cannot isolate and quantify trade balances affects upon their nation’s numbers of jobs we cannot validate or disprove this conclusion with historical statistical data. This if the case for many if not most economic concepts.

Respectfully, Supposn


akaCG
"Supposn":

If you believe that trade deficits are always detrimental to a nation's GDP (and employment levels, and median wages, etc.), and that trade surpluses are always beneficial to a nation's GDP (and employment levels, and median wages, etc.), then you must necessarily believe that a nation should reduce its imports to zero.

Do you?

Supposn
QUOTE(akaCG @ Oct 17 2014, 08:33 AM) *
"Supposn":

If you believe that trade deficits are always detrimental to a nation's GDP (and employment levels, and median wages, etc.), and that trade surpluses are always beneficial to a nation's GDP (and employment levels, and median wages, etc.), then you must necessarily believe that a nation should reduce its imports to zero.

Do you?


AKA CG, no, I am a populist and not opposed to USA’s participation within global trade. I do not want to deny our nation the best available products regardless of their national source; I’m opposed to trade deficits because they’re detrimental to their nation’s jobs.

Those dependent upon USA wages and salaries bear the overwhelming aggregate financial burdens due to their nation’s annual trade deficits; that segment of our population is by far the greatest proportion of USA’s population; the financial detriments of that population segment are employees and their families’ dependent upon less than the median wage rate. That subset bears the greatest (proportional to their individual incomes’) burdens due to their nations annual trade deficits.

Respectfully, Supposn

LoneWisdom
Trade Freedom: How Imports Support U.S. Jobs

QUOTE
It is a common misperception that importing goods to America comes at the cost of American jobs. In fact, imports contribute to job creation on a large scale. The increased economic activity associated with every stage of the import process helps support millions of jobs in the U.S. This Heritage Foundation analysis shows that over half a million American jobs are supported by imports of clothes and toys from China alone. These jobs are in fields such as transportation, wholesale, retail, construction, and finance.


The size of the US trade deficit is dwarfed by the size of the US GDP...

United States Current Account to GDP



QUOTE
The United States recorded a Current Account deficit of 2.30 percent of the country's Gross Domestic Product in 2013. Current Account to GDP in the United States averaged -2.67 Percent from 1980 until 2013, reaching an all time high of 0.20 Percent in 1981 and a record low of -6 Percent in 2006.


...and the US GDP dwarfs all other nation's...

List of countries by GDP (nominal)



If the US economy was closed, I expect many imported products would not be manufactured at all since they would be deemed unnecessary.


JohnfrmCleveland
QUOTE(LoneWisdom @ Oct 17 2014, 01:18 PM) *
Trade Freedom: How Imports Support U.S. Jobs

QUOTE
It is a common misperception that importing goods to America comes at the cost of American jobs. In fact, imports contribute to job creation on a large scale. The increased economic activity associated with every stage of the import process helps support millions of jobs in the U.S. This Heritage Foundation analysis shows that over half a million American jobs are supported by imports of clothes and toys from China alone. These jobs are in fields such as transportation, wholesale, retail, construction, and finance.


The size of the US trade deficit is dwarfed by the size of the US GDP...

United States Current Account to GDP



QUOTE
The United States recorded a Current Account deficit of 2.30 percent of the country's Gross Domestic Product in 2013. Current Account to GDP in the United States averaged -2.67 Percent from 1980 until 2013, reaching an all time high of 0.20 Percent in 1981 and a record low of -6 Percent in 2006.


...and the US GDP dwarfs all other nation's...

List of countries by GDP (nominal)



If the US economy was closed, I expect many imported products would not be manufactured at all since they would be deemed unnecessary.


Supposn is correct, in an "all else being equal" kind of way. Production equals income, and when some of that domestic income is lost to net imports, domestic production will contract for loss of demand. But this does not consider the role of federal deficit spending, which can make up for the lost demand.

And the Heritage Foundation is wrong - all of those jobs that they claim are supported by Chinese imports would still be there, only this time to support the distribution and sale of American goods. China's cheapo textile industry, for instance, has destroyed too many jobs in too many countries to claim that it's a net plus.
Supposn
QUOTE(Hobbes @ Oct 17 2014, 01:25 AM) *
... If you want to stick to just thought discussions....lowering the trade deficit will raise prices, lowering people's spendable income, lowering their purchases of other things...and thereby lowering GDP and perhaps reducing jobs. So, we have two differing theories. How can we tell which one seems to be better at describing how things really work? Well...we look at data.

A great proportion of logical conclusions cannot be validated by data simply because the logical conclusion isn't actually true in real life, too. Recall the example of the toddler seats in SuperFreakonomics. It seems logical to conclude that toddler seats would be safer, and that we should expand their use---but the data says otherwise. ...


Hobbes, yes reducing imports is to some extent inflationary. USA purchasers of imported goods certainly benefit from their cheaper prices.
but that does not compensate USA employees and their families for their financial detriments due to annual trade deficits’ detriments to numbers of jobs and their consequential effects upon USA’s median wage.

I’m a proponent of an Import Certificate trade proposal that significantly reduces if not entirely eliminates USA global trade deficit of goods while subsidizing exports at no net expenditures to our governments’ budgets.

It is expected that due to the benefits of a USA adoption of an Import Certificate global trade policy, eventual greater participation of USA goods which currently cannot compete in global markets or are subject to foreign governments' deliberate targeting USA’s goods enterprises may want to import into their nations, USA exports will increase to reduce our trade deficit of goods and the reduction of imports will be lesser significant.

Within an Import Certificate environment, foreign nations' attempts to mischievously hinder USA trade balance would do themselves much greater harm while not being of any significant harm to USA's economy. This is in great contrast to USA's current global trade experiences and would be effectively achieved by the behavior of markets rather than any explicit activity of USA's federal government.
Refer to:
Wikipedia’s articles entitled “Import Certificates” and the paragraphs entitled “trade Balances’ effects upon their nation’s GDP” within the article entitled “Balance of trade”;
or to http://www.americasdebate.com/forums/index...#entry100028592 .

I have read “Freakonomics”, “Super Freakonomics”. On some occasions I’ve reread portions of that second book. You did nOt read chapter 4 of Levitt and Dubner’s book carefully.

The authors suggest that great deals of incorrectly interpreted statistical data regarding children’s car seats are in parts due to peoples’ subjective narrations that are the much of the data’s raw sources. People are among our globe’s least consistent and least dependable creatures. Their perceptions are that often very subjective. You have forgotten or have not fully considered all of the authors’ contentions within that book.
They do not contend that the statistical data were always ignored but rather they are suggesting valid questioning of the concepts and methods for of the data’s collection and analysis.
I have not found anything within that book that substantially opposes any of my posts.

Respectfully, Supposn

Hobbes
QUOTE(Supposn @ Oct 17 2014, 01:24 PM) *
Hobbes, yes reducing imports is to some extent inflationary. USA purchasers of imported goods certainly benefit from their cheaper prices.
but that does not compensate USA employees and their families for their financial detriments due to annual trade deficits’ detriments to numbers of jobs and their consequential effects upon USA’s median wage.


As I keep asking....as evidenced by .... ????

QUOTE
I’m a proponent of an Import Certificate trade proposal that significantly reduces if not entirely eliminates USA global trade deficit of goods while subsidizing exports at no net expenditures to our governments’ budgets.


...as evidenced by... ???

QUOTE
Refer to:
Wikipedia’s articles entitled “Import Certificates” and the paragraphs entitled “trade Balances’ effects upon their nation’s GDP” within the article entitled “Balance of trade”;
or to http://www.americasdebate.com/forums/index...#entry100028592 .


Referring someone to an unsupported statement that you made in Wikipedia does not constitute evidence of any kind.

QUOTE
I have read “Freakonomics”, “Super Freakonomics”. On some occasions I’ve reread portions of that second book. You did nOt read chapter 4 of Levitt and Dubner’s book carefully.


I would love to hear who you know how carefully I read or did not read....anything.

QUOTE
The authors suggest that great deals of incorrectly interpreted statistical data regarding children’s car seats are in parts due to peoples’ subjective narrations that are the much of the data’s raw sources. People are among our globe’s least consistent and least dependable creatures. Their perceptions are that often very subjective.


An ironic statement from you, given your proposition that polls were a good example above, when polls entirely consist of not just the above, but also the polls' providers subjective questions.

QUOTE
You have forgotten or have not fully considered all of the authors’ contentions within that book.


Again, would love to know how you not what I have forgotten, or not considered, about .... anything. You are claiming you have some sort of device that reads and interprets people's minds, even though you have never met them, don't know anything about them, and don't even know where they are, and therefore where to aim said device? Interesting.


QUOTE
They do not contend that the statistical data were always ignored but rather they are suggesting valid questioning of the concepts and methods for of the data’s collection and analysis.


You haven't presented anything that anyone could perform valid questioning of, and requests for you to perform said valid questioning of data presented have gone unheeded. Perhaps it is you who might want to consider how to apply what is in those books.
QUOTE
I have not found anything within that book that substantially opposes any of my posts.


Of course not, it doesn't seem you have ever found anything that substantially opposes any of your posts, regardless of how much they might actually do it. But, for what it's worth, the statement I initially provided from the book does apply, and does contradict your theory that economists can't be bothered with nasty little things like data and statistics.
Further, in the car safety seats example, they cited how seats were implemented without any analysis of data, and that doing so seemed to be based on invalid assumptions about projected results. Which does oppose your contention that we should simply proceed forward based on your assertions, despite any lack of data or evidence to support them.

FWIW, on that topic, and from your favorite site (Wikipedia, in the article entitled 'Economic data')

QUOTE
Many methods can be used to analyse the data. These include, e.g., time-series analysis using multiple regression, Box-Jenkins analysis, seasonality analysis. Analysis may be univariate (modeling one series) or multivariate (from several series). econometricians, economic statisticians, and financial analysts formulate models, whether for past relationships or for economic forecasting.[8] These models include both partial equilibrium microeconomics aimed at examining particular parts of an economy or economies, or they may cover a whole economic system, as in general equilibrium theory or and in macroeconomics. Economists use these models to understand past events and to forecast future events, e.g., demand, prices and employment. Methods have also been developed for analyzing or correcting results from use of incomplete data and errors in variables.


Not only CAN analysis be applied to data using economic models, but there are many methods of doing so, and it is a robust and well developed methodology. Statements, therefore, that such analysis is not possible are, quite frankly, bogus, and should be treated as such. Which is, fwiw, again why I brought up the quote from Superfreakonomics which says essentially the same thing. Economics is not about hiding from data, but rather just the opposite. It is data based perhaps moreso than any other field of study.
Supposn
QUOTE(LoneWisdom @ Oct 17 2014, 01:18 PM) *
Trade Freedom: How Imports Support U.S. Jobs

It is a common misperception that importing goods to America comes at the cost of American jobs. In fact, imports contribute to job creation on a large scale. The increased economic activity associated with every stage of the import process helps support millions of jobs in the U.S. This Heritage Foundation analysis shows that over half a million American jobs are supported by imports of clothes and toys from China alone. These jobs are in fields such as transportation, wholesale, retail, construction, and finance. ... [/i]


LoneWisdom, I question the sincerity of the Heritage Foundation if they profess to believe that USA labor and other resources devoted to processing, transporting and otherwise distributing domestically produced products are less economically advantageous to that of similar imported products.

Entities purchase imported products due to their reasonable determination of their own net financial advantages. Determinations of individual’s financial advantages usually converge with our society’s aggregate net advantages but it is not rare or particularly unusual for them to diverge from each other.

That’s why we have examples within all levels of USA governments’ jurisdiction of private individual’s activities or agreements between private individuals being recognized as sufficiently adverse to our society’s interest as to be legally deemed illegal. That is the justification of Import Certificates trade policy proposal.

The net benefits of production are entirely earned by the producing nation. The proportional nationality of products are determined by the nationality of the labor, materials and facilities that produced those products and brought them to be further handled by USA labor and/or facilities under USA’s jurisdiction. During those periods of time and/or within those locations there are no economical differences between similar domestic or foreign produced products.

Heritage Foundation’s statement within their link's "abstract” paragraph pretends that due to USA jobs involved with the “transportation, wholesale, retail, construction, and finance of import products, USA trade deficits are not a net detriment to USA’s numbers of jobs. That is nonsense. The entire economic differences between foreign and USA products occur prior to those imported products being handled or processed by USA labor and or within USA facilities under USA jurisdiction.

Imports certainly do not generally support USA jobs; they are generally of absolutely no net benefit to USA's economy.
The detrimental effects of USA annual trade deficits upon our numbers of jobs and median wage are mitigated to the extent that imported products support USA production. Unfortunately the overwhelming portions of our imported products are for consumers rather than producers of USA products.

Respectfully, Supposn


QUOTE(LoneWisdom @ Oct 17 2014, 01:18 PM) *
... The size of the US trade deficit is dwarfed by the size of the US GDP...


LoneWisdom, fortunately the size of the US trade deficit is dwarfed by the size of the US GDP. Otherwise our trade deficits detriment to our numbers of jobs and median wage would have been greatly increased, but our trade deficit continues to grow.

Respectfully, Supposn
akaCG
QUOTE(Supposn @ Oct 17 2014, 11:47 AM) *
QUOTE(akaCG @ Oct 17 2014, 08:33 AM) *
"Supposn":

If you believe that trade deficits are always detrimental to a nation's GDP (and employment levels, and median wages, etc.), and that trade surpluses are always beneficial to a nation's GDP (and employment levels, and median wages, etc.), then you must necessarily believe that a nation should reduce its imports to zero.

Do you?

AKA CG, no, I am a populist and not opposed to USA’s participation within global trade. ...
...

Reducing a nation's imports to zero doesn't mean that said nation can't participate in global trade. It still can, via ... exports.

QUOTE(Supposn @ Oct 17 2014, 11:47 AM) *
...
... I do not want to deny our nation the best available products regardless of their national source; ...
...

You may not want to, but your beliefs regarding the effects of trade deficits ("always detrimental") and trade surpluses ("always beneficial") necessarily require you to also believe that NO products (including even those that fit the definition of whatever you mean by "the best") should be imported.

Otherwise put, ...

You may want to have your cake ("the best available products regardless of their national source"), but you've already eaten it ("trade deficits are always detrimental").
JohnfrmCleveland
QUOTE(akaCG @ Oct 17 2014, 05:38 PM) *
QUOTE(Supposn @ Oct 17 2014, 11:47 AM) *
...
... I do not want to deny our nation the best available products regardless of their national source; ...
...

You may not want to, but your beliefs regarding the effects of trade deficits ("always detrimental") and trade surpluses ("always beneficial") necessarily require you to also believe that NO products (including even those that fit the definition of whatever you mean by "the best") should be imported.

Otherwise put, ...

You may want to have your cake ("the best available products regardless of their national source"), but you've already eaten it ("trade deficits are always detrimental").


That doesn't follow. You can run a trade surplus and still import the items you want.
Supposn
QUOTE(Hobbes @ Oct 17 2014, 03:42 PM) *
... As I keep asking....as evidenced by .... ????
... as evidenced by... ??? ...


Hobbes, you do not accept what I believe is a logical argument supporting the concept of annual trade deficits always (more than otherwise) being immediately detrimental to their nation’s numbers of jobs and thus also to their nation’s median wage because we are unable to validate or disprove that concept with historical statistical data.

We cannot validate or disprove the stated relationship between an annual trade deficit and the nation’s job numbers with historical statistical data because we are unable to segregate and quantify trade deficits affects from that of all other factors that also affect their nation’s numbers of jobs. Due to this, historical statistical data cannot support or undermine the stated relationship between trade balances and their nation’s numbers of jobs.

Respectfully, Supposn

[quote name='Hobbes' date='Oct 17 2014, 03:42 PM' post='100028599'] ...

I would love to hear who you know how carefully I read or did not read....anything. ... [quote]

Hobbes, I read and believe I understood “Super Freakonomics” authors’ reasoning and their conclusions.

My understanding in regard to children’s car seats the authors did not contend that the statistical data were always ignored, but rather they suggested valid questioning of the concepts and methods for of the data’s collection and analysis.

This leads me to question if you also read the book carefully or is one of us mistaken. Due to my unjustifiable adequacy complex particularly in regard to this book, I believe it is you rather than I who is incorrect.

Respectfully, Supposn
akaCG
QUOTE(JohnfrmCleveland @ Oct 17 2014, 08:29 PM) *
QUOTE(akaCG @ Oct 17 2014, 05:38 PM) *
QUOTE(Supposn @ Oct 17 2014, 11:47 AM) *
...
... I do not want to deny our nation the best available products regardless of their national source; ...
...

You may not want to, but your beliefs regarding the effects of trade deficits ("always detrimental") and trade surpluses ("always beneficial") necessarily require you to also believe that NO products (including even those that fit the definition of whatever you mean by "the best") should be imported.

Otherwise put, ...

You may want to have your cake ("the best available products regardless of their national source"), but you've already eaten it ("trade deficits are always detrimental").

That doesn't follow. You can run a trade surplus and still import the items you want.

Not if you subscribe to the "Supposn"ist Theory of Trade, which says:

A. Imports > Exports is ALWAYS detrimental (to GDP, employment, wages, etc.), period.
B. Imports < Exports is ALWAYS beneficial (to GDP, employment, wages, etc.), period.

The logical ("Supposn" says he's a big champion of employing logic, as I'm sure you've noticed) implication of said theory is that ANY product/service that is imported, as opposed to made/provided domestically, is detrimental (to GDP, employment, wages, etc.). Period. Otherwise, the entire theory crumbles into fine dust. For the simple reason that, once one starts making allowances for the "goodness" of imported products/services, one must then reject the notion that trade deficits are ALWAYS detrimental (since, after all, they can be the result of importing "good" products/services).

Having just made such allowances, "Supposn" is now faced with the following options:

1. Accept that the "Supposn"ist Theory of Trade is invalid.
2. Refer us (for the umpteenth time, in circular logic fashion) to his own writings in the "Trade Balances' effects upon their nation's GDP" section of the Wikipedia article on "Balance of Trade".

Any bets?

Hobbes
QUOTE(Supposn @ Oct 18 2014, 03:12 AM) *
QUOTE(Hobbes @ Oct 17 2014, 03:42 PM) *
... As I keep asking....as evidenced by .... ????
... as evidenced by... ??? ...


Hobbes, you do not accept what I believe is a logical argument supporting the concept of annual trade deficits always (more than otherwise) being immediately detrimental to their nation’s numbers of jobs and thus also to their nation’s median wage because we are unable to validate or disprove that concept with historical statistical data.

We cannot validate or disprove the stated relationship between an annual trade deficit and the nation’s job numbers with historical statistical data because we are unable to segregate and quantify trade deficits affects from that of all other factors that also affect their nation’s numbers of jobs. Due to this, historical statistical data cannot support or undermine the stated relationship between trade balances and their nation’s numbers of jobs.


Yes, you can. You just need to look at what a chart of trade deficit vs employment. According to your statement, employment would drop as trade deficits went up, and go up and trade deficits go down. Except they don't. That isn't because of a flaw in the data. It is because your theory is wrong, for whatever reason. You can assume ALL other factors remain the same in that analysis, as they would tend to cancel out over time You don't need to segregate the data...that is the flaw in your thinking. This isn't an experiment, where you need to isolate the variable being studied. All those other factors aren't going away...so the change you want made is going to take place in the macro environment with them all there. So, the results should show up in that environment, but, again, they don't.

AT BEST, what the data shows is that the change in employment due to trade deficit is completely insignificant, as it is washed out by all those other factors to the point of being unnoticeable, in which case there is still no need to change policy.

The data definitely makes your absolute statement (always, immediately) false. It certainly isn't always, and it certainly isn't immediate...or it would show up in the data. So if it certainly isn't always....when does it happen? That would be for you to demonstrate. If it certainly isn't immediate, when does it occur? That would also be for you to demonstrate. And if it doesn't show up at all when looking at the data, yet you continue to claim your theory is true...then it also for you to demonstrate why it is true even though the data show it is not.

As for your general statement...no, I don't accept logical arguments when the data shows the real world behaves differently. No one should

QUOTE
Due to my unjustifiable adequacy complex particularly in regard to this book, I believe it is you rather than I who is incorrect.


'unjustifiable adequacy complex' .... I like that! smile.gif
Supposn
QUOTE(Hobbes @ Oct 17 2014, 03:42 PM) *
... Again, would love to know how you not what I have forgotten, or not considered, about .... anything. You are claiming you have some sort of device that reads and interprets people's minds, even though you have never met them, don't know anything about them, and don't even know where they are, and therefore where to aim said device? Interesting. ...

...
Of course not, it doesn't seem you have ever found anything that substantially opposes any of your posts, regardless of how much they might actually do it. But, for what it's worth, the statement I initially provided from the book does apply, and does contradict your theory that economists can't be bothered with nasty little things like data and statistics.
Further, in the car safety seats example, they cited how seats were implemented without any analysis of data, and that doing so seemed to be based on invalid assumptions about projected results. Which does oppose your contention that we should simply proceed forward based on your assertions, despite any lack of data or evidence to support them. ...

Hobbes, because our analyses of the statistics you introduce are not in agreement, it does not indicate that I’m indifferent to statistics.

Your analysis of your provided data has led you to draw conclusions that cannot be logically supported or disproved by your data; your data lacks critical accompanying information.
We are unable to determine the quantity or proportional contribution of trade balance’s effects upon their nation’s numbers of jobs or median wage because we are unable to isolate trade deficit’s affect from all other factors that also affect numbers of jobs and median wage.
We can only logically conclude how trade deficits’ (more than otherwise) effects numbers of jobs and median wage but we cannot quantify the extent or the portion of trade balance that comingled among all factors affecting numbers of jobs and median wage.

You have correctly noted (within the book entitled “Freakonomics” there’s mention of not seeking or not considering statistical data with regard to children’s car seats. You make no mention of the authors describing what they considered as questionable or incorrect conclusions regarding children’s’ car seats due to the logic and/or methods applied when collecting, processing or analyzing the data that when the statistics were actually considered.

Respectfully, Supposn
Hobbes
QUOTE(Supposn @ Oct 18 2014, 10:59 AM) *
Your analysis of your provided data has led you to draw conclusions that cannot be logically supported or disproved by your data; your data lacks critical accompanying information.


Yes, it can. Again, you just look at a chart of trade deficit vs. employment.

QUOTE
We are unable to determine the quantity or proportional contribution of trade balance’s effects upon their nation’s numbers of jobs or median wage because we are unable to isolate trade deficit’s affect from all other factors that also affect numbers of jobs and median wage.


Again, you don't need to isolate trade deficit's affect from all other factors. You simply assume them to remain constant. Which, over time, and absent any data showing they aren't, is a good assumption, at least to start with. In essence, you logically isolate it.

Again, AT BEST, the data says the impact is insignificant, rendering any argument for change moot.

QUOTE
We can only logically conclude how trade deficits’ (more than otherwise) effects numbers of jobs and median wage but we cannot quantify the extent or the portion of trade balance that comingled among all factors affecting numbers of jobs and median wage.


No, you can't only logically conclude things when the data shows otherwise. Arguing that something occurs when the data shows it does not is NOT logical, it is illogical. Further, you are arguing for a policy change that would happen amongst all those other factors. So, if the data shows that trade deficits don't impact employment in any noticeable way, there is certainly nothing there to support changing our policies in that area. Also, trade deficits probably interrelate with many of those other factors. Taking them out of the analysis, even if one could, would be wrong to do, as it would provide misleading answers. The reality is that the ultimate experiment has already been conducted, in the global economy, with everything included. And the data doesn't support your contention.

Here is the question in a nutshell. You claim that trade deficits always and immediately reduce jobs. The data shows otherwise. Logical arguments as to why that is have been presented by JfC. So, why should we (or anyone else) believe you, when the data says it doesn't occur, and there are logical arguments explaining why that is? That is the question you need to address. So far, the answer seems to be 'because I said so'. That is woefully insufficient. Why shouldn't we believe the data? Why shouldn't we believe the logical arguments against? You need to answer those questions, and do so with a lot more than simply repeating your theory.
Dingo
How does balance of trade affect their nation's economy?

Annual trade deficits are always immediately detrimental to their nations’ GDPs.


Others have made the point that trade deficits don't necessarily extract from the GDP according to the data. Two reasons might account for that.

1. A powerful monetary marker like the dollar takes on the character of a commodity, kind of a free lunch for the money producer. You give me product and I give you dollars or dollar promissories.

2. What appears to be effected is the changing ownership of the debtor nation, to wit foreign investments in us by the holder of surpluses is greater than foreign investment held by the debtor nation, again us. Since 1985 our foreign investments have fallen behind.

http://i.cfr.org/content/publications/atta...of%20assets.png

Of course if the foreign nation is shoveling surplus money into this country as is China, which is buying up among other assets The Waldorf and the biggest pork producer in this country, then jobs aren't necessarily being lost; just the boss is changed.
Supposn
QUOTE(akaCG @ Oct 17 2014, 05:38 PM) *
If you believe that trade deficits are always detrimental to a nation's GDP (and employment levels, and median wages, etc.), and that trade surpluses are always beneficial to a nation's GDP (and employment levels, and median wages, etc.), then you must necessarily believe that a nation should reduce its imports to zero.


You may not want to, but your beliefs regarding the effects of trade deficits ("always detrimental") and trade surpluses ("always beneficial") necessarily require you to also believe that NO products (including even those that fit the definition of whatever you mean by "the best") should be imported.

Otherwise put, ...

You may want to have your cake ("the best available products regardless of their national source"), but you've already eaten it ("trade deficits are always detrimental").


AKA CG, why do you assume my beliefs are “necessarily required” to suit your specifications. If I had any opinions as to what specific products should or should not be permitted to be imported into the USA, I’m unaware of ever explicitly or by implication expressing that within any posts. You are assuming my opinions should conform to your imagination?

What did you have in mind when you wrote of:
. “making allowances for the "goodness" of imported products/services, one must then reject the notion that trade deficits are ALWAYS detrimental (since, after all, they can be the result of importing "good" products/services).
Having just made such allowances, "Supposn" is now faced with the following options’”?

Your description of my stated opinions’ essences in this matter has modified to suit your own opinions.
If you replaced your word “period” with the qualifying words “(more than otherwise)” you would be expressing the essence of my position. Employing your style of prose that would be:
Annual Imports > Exports are ALWAYS immediately detrimental (to GDP, employment, wages, etc. more than otherwise).
Annual Imports < Exports are ALWAYS immediately beneficial (to GDP, employment, wages, etc. more than otherwise).
Annual Imports = Exports are ALWAYS immediately economically neutral (to GDP, employment, wages, etc. more than otherwise).

“Otherwise” being the conditions of all other than trade balance factors that are generally mutually exclusive to trade balances and also affect GDP, employment, wages, etc.

Respectfully, Supposn
JohnfrmCleveland
QUOTE(akaCG @ Oct 18 2014, 09:59 AM) *
QUOTE(JohnfrmCleveland @ Oct 17 2014, 08:29 PM) *
QUOTE(akaCG @ Oct 17 2014, 05:38 PM) *
QUOTE(Supposn @ Oct 17 2014, 11:47 AM) *
...
... I do not want to deny our nation the best available products regardless of their national source; ...
...

You may not want to, but your beliefs regarding the effects of trade deficits ("always detrimental") and trade surpluses ("always beneficial") necessarily require you to also believe that NO products (including even those that fit the definition of whatever you mean by "the best") should be imported.

Otherwise put, ...

You may want to have your cake ("the best available products regardless of their national source"), but you've already eaten it ("trade deficits are always detrimental").

That doesn't follow. You can run a trade surplus and still import the items you want.

Not if you subscribe to the "Supposn"ist Theory of Trade, which says:

A. Imports > Exports is ALWAYS detrimental (to GDP, employment, wages, etc.), period.
B. Imports < Exports is ALWAYS beneficial (to GDP, employment, wages, etc.), period.

The logical ("Supposn" says he's a big champion of employing logic, as I'm sure you've noticed) implication of said theory is that ANY product/service that is imported, as opposed to made/provided domestically, is detrimental (to GDP, employment, wages, etc.). Period. Otherwise, the entire theory crumbles into fine dust. For the simple reason that, once one starts making allowances for the "goodness" of imported products/services, one must then reject the notion that trade deficits are ALWAYS detrimental (since, after all, they can be the result of importing "good" products/services).



That doesn't follow, either.

If every American is employed in a high-value job, and we are even exporting goods and services, there is nothing to be lost (and goods to be gained) by spending some or all of that surplus. In that situation, there is nothing to be gained by an American worker producing low value stuff, like the cheap Chinese trinkets one would find in the Oriental Trading Company catalog. Importing items doesn't lower our GDP.
akaCG
QUOTE(Supposn @ Oct 18 2014, 02:30 PM) *
QUOTE(akaCG @ Oct 17 2014, 05:38 PM) *
If you believe that trade deficits are always detrimental to a nation's GDP (and employment levels, and median wages, etc.), and that trade surpluses are always beneficial to a nation's GDP (and employment levels, and median wages, etc.), then you must necessarily believe that a nation should reduce its imports to zero.


You may not want to, but your beliefs regarding the effects of trade deficits ("always detrimental") and trade surpluses ("always beneficial") necessarily require you to also believe that NO products (including even those that fit the definition of whatever you mean by "the best") should be imported.

Otherwise put, ...

You may want to have your cake ("the best available products regardless of their national source"), but you've already eaten it ("trade deficits are always detrimental").

AKA CG, why do you assume my beliefs are “necessarily required” to suit your specifications. ...
...

It's not my "specifications" that necessarily (a.k.a. inevitably, automatically, by definition, etc.) require you to believe that NO products/services (including even those that fit the definition of whatever you mean by "the best") should be imported. What does, necessarily (a.k.a. inevitably, automatically, by definition, etc.), require you to believe that is your very own belief that trade deficits are ALWAYS detrimental, trade surpluses are ALWAYS beneficial, and that "the benefits of production are entirely earned by the producing nation".

IOW, ...

... it is your very own belief that ...

A.
Annual Imports > Exports are ALWAYS immediately detrimental (to GDP, employment, wages, etc. more than otherwise),
Annual Imports < Exports are ALWAYS immediately beneficial (to GDP, employment, wages, etc. more than otherwise),
Annual Imports = Exports are ALWAYS immediately economically neutral (to GDP, employment, wages, etc. more than otherwise), ...

... AND that ...

B.
"[T]he benefits of production are entirely earned by the producing nation", ...

... that necessarily (a.k.a. inevitably, automatically, by definition, etc.) require you to also believe that ...

C.
NO products/services should be imported (including "the best available products[/services] regardless of their national source", since, according to you, the benefits of producing them are also entirely earned by whatever their "national source" happens to be).


Summarized:

It is your very own belief that A and B are True that necessarily (a.k.a. inevitably, automatically, by definition, etc.) requires you to believe that C is also True. To believe that C is False while believing that A and B are True would violate the rules of ... logic. And you wouldn't want to do that, would you?
Hobbes
QUOTE(JohnfrmCleveland @ Oct 18 2014, 04:53 PM) *
That doesn't follow, either.

If every American is employed in a high-value job, and we are even exporting goods and services, there is nothing to be lost (and goods to be gained) by spending some or all of that surplus. In that situation, there is nothing to be gained by an American worker producing low value stuff, like the cheap Chinese trinkets one would find in the Oriental Trading Company catalog. Importing items doesn't lower our GDP.


I agree that it doesn't follow, JfC, but it is what the Supposns proposition would say, as Akacg points out. His proposition makes no allowances, and once it does, then everything within in would need to be re-examined (ie, what imports are detrimental? what are not? which ones are we currently importing (ie, if what we're currently importing are things that aren't detrimental, then there is no need to change anything, etc etc). So, the fact that it doesn't follow is further logical evidence that the underlying proposition here (that net changes in trade deficit are immediately detrimental to GDP) doesn't follow, either.
Supposn
QUOTE(akaCG @ Oct 19 2014, 04:10 PM) *
... it is your very own belief that ...

A.
Annual Imports > Exports are ALWAYS immediately detrimental (to GDP, employment, wages, etc. more than otherwise),
Annual Imports < Exports are ALWAYS immediately beneficial (to GDP, employment, wages, etc. more than otherwise),
Annual Imports = Exports are ALWAYS immediately economically neutral (to GDP, employment, wages, etc. more than otherwise), ...

... AND that ...

B.
"[T]he benefits of production are entirely earned by the producing nation", ...

... that necessarily (a.k.a. inevitably, automatically, by definition, etc.) require you to also believe that ...

C.
NO products/services should be imported (including "the best available products[/services] regardless of their national source", since, according to you, the benefits of producing them are also entirely earned by whatever their "national source" happens to be).

Summarized:
It is your very own belief that A and B are True that necessarily (a.k.a. inevitably, automatically, by definition, etc.) requires you to believe that C is also True. To believe that C is False while believing that A and B are True would violate the rules of ... logic. And you wouldn't want to do that, would you?


AKA CG, as you wrote, I am a proponent of A and B; I am opposed to USA annual trade deficits of goods.

Your referal to "C", as to what is “inevitably, automatically, by definition, etc.” attributable or required of me in regard to this thread is based upon your own imaginative opinion.

Similarly regardless of any preferences between differing products, I have never advocated that nations’ governments rather than their markets should determine which products should or should not be imported. I am a proponent of national sovereignty and each nation determining their own policies. (What I’m a particular proponent of is a proposal for USA policy that does not determine preference between products).

Respectfully, Supposn


QUOTE(Hobbes @ Oct 20 2014, 12:42 PM) *
... I agree that it doesn't follow, JfC, but it is what the Supposns proposition would say, as Akacg points out. His proposition makes no allowances, and once it does, then everything within in would need to be re-examined (ie, what imports are detrimental? what are not? which ones are we currently importing (ie, if what we're currently importing are things that aren't detrimental, then there is no need to change anything, etc etc). So, the fact that it doesn't follow is further logical evidence that the underlying proposition here (that net changes in trade deficit are immediately detrimental to GDP) doesn't follow, either.


Hobbes, within this thread I argue trade deficit’s detriment to their nation’s numbers of jobs and thus their detriment to the median wage. I understand your opposition to those contentions.

Within the thread http://www.americasdebate.com/forums/index...showtopic=22837
I advocate a specific version of an Import Certificate policy to entirely or at least significantly reduce our nation’s chronic annual trade deficits of goods.

There is no point in considering a remedy for a problem you do not believe exists; but I find frequent references within thread’ that speculate upon what I propose as a remedy.
Those speculations regarding my opinions are more or less incorrect. I have never advocated that nations’ governments rather than their domestic markets should determine which products should or should not be imported.

Refer to http://www.americasdebate.com/forums/index...showtopic=22837
or google Wikipedia’s article entitled “Import Certificates”.

Respectfully, Supposn
Hobbes
QUOTE(Supposn @ Oct 20 2014, 01:11 PM) *
Hobbes, within this thread I argue trade deficit’s detriment to their nation’s numbers of jobs and thus their detriment to the median wage. I understand your opposition to those contentions.


Good. FWIW, it's not even that I'm necessarily opposed, just that I find the data doesn't support it, therefore it calls the argument into contention.

QUOTE
I advocate a specific version of an Import Certificate policy to entirely or at least significantly reduce our nation’s chronic annual trade deficits of goods.


Which is why the above is important. Without some evidence that a problem actually exists, and further that the proposed remedy would help....there isn't much to debate. The problem with the data not really backing up the proposition is also that it then also doesn't back up the proposed solution, in that there also isn't evidence that reducing the trade deficit would increase GDP or add jobs.

QUOTE
There is no point in considering a remedy for a problem you do not believe exists; but I find frequent references within thread’ that speculate upon what I propose as a remedy.
Those speculations regarding my opinions are more or less incorrect. I have never advocated that nations’ governments rather than their domestic markets should determine which products should or should not be imported.


I agree, but what Akacg is pointing out, I believe, is that that follows from other statements you have made. Ie, you haven't said C, but you have said A and B, and A and B lead to C, that type of thing. Personally, I'm not that worried about it, although it does indicate a conceptual/logical discussion that probably needs to happen. That being that as you have stated that net trade deficit leads immediately to net loss of GDP and jobs, it does then follow that ANY importation of items means a reduction of GDP and jobs, and should be eliminated (ie, we want to maximize jobs and GDP, don't we?). I also think you should consider the info that JfC put forward, as it also calls into question whether the problem really exists or not. Within the concept of Modern Monetary Theory, sovereign nations are more free to deficit spend, and you can trace the trade deficit back to the Federal deficit, so they are linked. Within that theory, governments can deficit spend to create demand, thereby filling the gap that you also seek to address.

akaCG
QUOTE(Hobbes @ Oct 21 2014, 12:32 PM) *
...
... what Akacg is pointing out, I believe, is that that follows from other statements you ["Supposn"] have made. Ie, you haven't said C, but you have said A and B, and A and B lead to C, that type of thing. ...
...

Yes, that is exactly what I'm pointing out.

QUOTE(Hobbes @ Oct 21 2014, 12:32 PM) *
...
... as you ["Supposn"] have stated that net trade deficit leads immediately to net loss of GDP and jobs, it does then follow that ANY importation of items means a reduction of GDP and jobs, and should be eliminated (ie, we want to maximize jobs and GDP, don't we?). ...
...

Exactly. Otherwise, one would have to believe that, for instance, imported Korean cars or French wine or New Zealand lamb don't cost any domestic jobs during years with a trade surplus or balance, but they suddenly start costing domestic jobs during years with a trade deficit. Which would be absurd.

Supposn
QUOTE(akaCG @ Oct 21 2014, 05:13 PM) *
...Otherwise, one would have to believe that, for instance, imported Korean cars or French wine or New Zealand lamb don't cost any domestic jobs during years with a trade surplus or balance, but they suddenly start costing domestic jobs during years with a trade deficit. Which would be absurd.


AKA CG, I’m among those recognizing nations’ global trade deficits (more than otherwise) detriment to their numbers of jobs and median wage.
I also recognize global trade’s economic benefits to participating nations and trade deficits are not a requirement for their participation.

I am a proponent of a specific Import Certificate policy that would significantly reduce if not entirely eliminate USA’s annual global trade deficits of goods while subsidizing our exported goods. All direct federal expenditures due to this proposal are eventually passed on to USA purchasers of imported goods.

Assessments of goods are based upon approximate USA market values expressed in U.S. dollars of current purchasing power. If there are no significant annual trade deficits, how significant would any accrued trade deficits be?

It is Hobbes and your opinions that my positions are logically incompatible with each other; I believe otherwise.

Respectfully, Supposn

Mrs. Pigpen
QUOTE(Supposn @ Oct 21 2014, 10:04 PM) *
AKA CG, I’m among those recognizing nations’ global trade deficits (more than otherwise) detriment to their numbers of jobs and median wage.
I also recognize global trade’s economic benefits to participating nations and trade deficits are not a requirement for their participation.

I am a proponent of a specific Import Certificate policy that would significantly reduce if not entirely eliminate USA’s annual global trade deficits of goods while subsidizing our exported goods. All direct federal expenditures due to this proposal are eventually passed on to USA purchasers of imported goods.


That sounds like your basic protectionist tariff on imports. And the idea of (and reality of) tariffs on imports has existed a long, long while. The disadvantage being when one nation sets up protectionist tariffs the other nations tend to do as well in reciprocity.

(not saying I'm against tariffs, necessarily, just throwing out that this is not a linear cost/gains equation…I haven't read this entire thread yet so someone likely brought this up already)
Supposn
QUOTE(Mrs. Pigpen @ Oct 22 2014, 08:53 AM) *
That (Import Certificates) sounds like your basic protectionist tariff on imports. And the idea of (and reality of) tariffs on imports has existed a long, long while. The disadvantage being when one nation sets up protectionist tariffs the other nations tend to do as well in reciprocity.

(not saying I'm against tariffs, necessarily, just throwing out that this is not a linear cost/gains equation…I haven't read this entire thread yet so someone likely brought this up already)


Mrs. Pigpen, I’ve responded within my post of 12: 02 PM, October 22, 2014 of the thread
http://www.americasdebate.com/forums/index...#entry100028647

Respectfully, Supposn
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