Basic International Economics Ideas On Which You Can Read A Wiki, with Your Host, Supposn - Page 4 - Politics and Economics

Well I'm challenging the idea that trade deficits lower the GDP. Well I guess I'm challenging the meta issue of whether it's inherently bad that trade deficits lower GDP. It's not. It depends.

HueHueCoyotl, can we agree that USA's purchasers of goods and service products do not have infinite wealth and they are or should be subject to some self-discipline or budget restrictions enforced by their circumstances? Individual purchasers deliberately or casually determined what proportion of their spending went for their purchases throughout the year, but there were some restraints upon how much they annually spent?

A nation's annual gross domestic product, (i.e. GDP) is the aggregate value of goods and service products domestically produced by the nation during the year.

The nation's consumers', governments, and investments' expenditures for final goods and service product are calculated; (transfers of wealth are excluded from those calculations).

The values of the nation's exports are added to that subtotal because the final purchasers were foreigners accepting delivery beyond our borders.

The values of the nation's imports are subtracted from that subtotal because the products were not domestically produced.

So the conventional expenditure method for calculating the nation's GDP is the nation's final spending for products, plus or minus the nation's net balance of international trade.

If the nation experienced an annual trade deficit, that's a negative balance of the nation's international trade. Due to a trade deficit, the national spending was diverted to net purchase imported products.

If we had spent 2 billion less for imports and 2 billion more for domestic products, our GDP would have been more than 2 billion dollars greater, because the balance of trade understates global trades' effects upon their nation's domestic production.

If we had spent 2 billion less for imports and reduced our national debt, I suppose that would likely have been an improvement of our economy and our annual GDP would have been somewhat more because balance of trade understates global trades' effects upon their nation's domestic production.

If we spent 2 billion less for imports and reduced our private debts, I suppose private financial futures would have been improved and our annual GDP would have been somewhat more because balance of trade understates global trades' effects upon their nation's domestic production.

WhosNext, are you really an economist that's refraining from commenting? I don't find it any great effort to remain respectful. I would suppose you would enjoy a “busman's or buswoman's holiday” by entering this discussion?

Respectfully, Supposn

02-17-2019 , 10:04 PM

#77

Supposn

centurion

Join Date: Dec 2013 Posts: 195

Quote:

Originally Posted by microbet

I didn't read it at all. If you take that line far enough you'll exclude the import of all items and services for which become part of the goods or services in the importing country for which they can add value and that value adding is more productive economically than obtaining or creating the goods or services were for the exporting country. It'll pretty much reduce the whole thing to imports which lower GDP lower GDP.

And, lowering a rich country's GDP while raising a poor one's the same amount or more is good anyway.

MicroBet, maybe it's the fault is mine. I don't understand your first paragraph of this post I'm responding to. Could you rewrite it?

No less than others, I do understand terms such as “poor” or “poorer” are comparative descriptions, and I don't wish to appear as wrapping myself in our flag.
The cost of any USA altruistic foreign relations and our economic policies on behalf of other nations' poor should be borne by our federal budget and passed on to all USA taxpayers. That's how the Marshall Plan was funded.
I'm opposed to sacrificing the best interests of only USA's wage earning families on behalf of other nation's poor.

Respectfully, Supposn

02-17-2019 , 10:15 PM

#78

Huehuecoyotl

Carpal \'Tunnel

Join Date: Sep 2009 Posts: 29,257

Quote:

Originally Posted by Supposn

I understand the equation that makes up the GDP but it's an descriptive formula. It can't tell you whether any situation is inherently good or bad.

Quote:

Here is the issue.

Gross domestic product (GDP) is meant to measure the dollar value of everything produced in the United States. To calculate GDP, you take everything the government purchases (G for government purchases), then add everything households purchase (C for consumption), then add everything businesses buy but don’t sell to customers (I for investment). That gives you a picture of everything that was*bought*in America. But then you need to adjust for the fact that Americans buy some foreign-made stuff (imports) and sell some stuff to foreigners (exports) — so you add that together and get net exports (NX), which need to be added or subtracted from the total.
That’s written down as an equation:*GDP = G + C + I + NX.
But this is an*accounting procedure,*not a causal theory. The accounting procedure says that government purchases are an element of GDP — higher G means higher GDP, and absolutely everyone agrees on that. But whether increasing government spending will boost or harm the economy is obviously a hot topic of political debate. A sensible high-level take would be “it depends.” It matters what you spend the money on; it matters how you raise the revenue and what the larger economic situation is.

The net exports situation is just the same. If America’s net exports grow because America becomes a fashionable tourist destination and sales of Boeing airplanes surge, then that will boost the economy. But if America’s net exports grow because new Trump-imposed taxes cause the price of imported goods to surge, then the economy is going to shrink.

It is reasonably common for people to make the kind of mistake that Ross and Navarro are making here, which is why professors generally make it a point of emphasis when introducing the GDP concept to students.*

https://www.google.com/amp/s/www.vox...ion-down-tweet

02-17-2019 , 11:35 PM

#79

fxwacgesvrhdtf

Guest

Posts: n/a

Quote:

Originally Posted by Supposn

(1) To the extent that USA products were “crowded out” of marketplaces by foreign goods, effectively due to USA's chronic annual trade deficits, our nation's GDPs were less than otherwise.
(2) A nation's lesser annual GDP reflects their lesser than otherwise numbers of jobs and aggregate payroll amounts.
(3) Annual trade deficits indicate the nation has purchased greater values of products than it has produced.

JMan220 and OtaTop, rarely if ever, do credible economists refute any one of these three contentions and this holds true even among those economists that may be the most ardent proponents of pure free trade.
It's unreasonable to require that I cite rare occurrences, that I believe may not have ever actually occurred.
///////////////////////////////////////////

OtaTop, USA's chronic annual international trade deficit's effective detriments to their nation's GDP are ALWAYS net net detrimental to their GDP.

Although annual international trade deficits refer to particular years, The qualifier, “chronic” refers to our experiences within more than the past half century. This is particularly true for our trade deficits of product goods. The statements referring to USA's aggregate annual balances of trade are without regard for particular USA transactions or USA's trade with any particular nation.

I've chosen to defend a very broad position; I invite my critics to find some credible economists anywhere, any time, that have publicly refuted any of the three statements I've provided.
Some of my critics question my sincerity because I employ the qualifier “credible”. It would be a simple manner to test your own doubts, by choosing an some economists that you consider to be credible. My critics' task is finding any serious challenge to any of the three statements.

Respectfully, Supposn

Supposn, the title of your thread was:

Quote:

Credible economists do not refute trade deficits detrimental effects upon their nation's

you have failed to put forth a single citation despite repeatedly being asked to do so and instead respond by trying to get others to cite your negative. Posting broad generalizations with no data to back them up is not useful, or interesting, nor does it lead to an interesting debate. Therefore, per my warning earlier, this thread has earned a lock.

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