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stratozyck
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08 Feb 2023, 12:27 pm

Mikah wrote:
goldfish21 wrote:
Wut? :?

Americans are selling those to buyers. Some of their buyers are foreigners who have US dollars that they earned selling manufactured items to Americans.

It's as simple as that.


You should have been an economist. The consumer is always right.


Exactly, the foundation of economics is the idea that the individual knows how to maximize their own utility and not an outsider. You can argue "they are misinformed" but thats about it.

Its why I favor a much broad based drug legalization than just pot. You can do it in such a way to minimize the harms. People should be able to check into a hotel and get legal heroin/meth/cocaine. The profits are so high on those drugs that you can supervise people medically and still charge them less than they get it on the black market. Instead we got the worst of everything, they get random stuff and the harms aren't monitored because they fear the authorities.

However I should note you can still argue for them to be illegal and have it still be a valid argument. You have to argue that the negative externalities of the behavior is so strong that it even the costs incurred from a ban are worth it. I think prostitution should remain illegal but not punished all that harshly. The evidence from Europe is that legal prostitution leads to sex trafficking and men tend to go to prostitutes over trying to get a woman without paying. I think men need to self improve. Same with gambling, gambling should not be broadly legal.



Texasmoneyman300
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09 Feb 2023, 3:37 am

:twisted:

stratozyck wrote:
https://www.morningstar.com/news/marketwatch/20230207184/us-trade-deficit-climbs-to-record-9481-billion-in-2022

Hello, I wanted to just highlight how typical news stories lie. A trade deficit is actually impossible.

What they are reporting is a "current account" deficit. Current account + financial accounts always balance out.

The larger the current account deficit, the larger the financial account surplus.

What does this mean in practice?

When we use US dollars to purchase foreign goods, those foreigners have some choices:

1. Keep the dollars

2. Convert the dollars in the foreign exchange market

3. Use the dollars to buy things in the US.

Generally, what has happened over the decades is we are using our dollars to buy manufactured goods from foreigners and those foreigners are taking those dollars and purchasing US assets such as land and stocks.
The way the media reports the story, they act like its cash leaving the country never to return, as if its a bad thing that will lead to our demise or that its a debt that must be repaid. It is repaid, instantly - in the financial accounts.

Thanks for reading!

I dont see why the trade deficit has to be a big problem like I have a "trade deficit" with Academy because I buy things from them but they never buy anything from me....We both benefit from the transaction.I get the sporting goods I want and they can use my money for whatever.....its mutually beneficial and voluntary.Trade between countries I dont think is zero-sum both countries benefit.



naturalplastic
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09 Feb 2023, 8:40 am

Its true that economists dont "judge" what we spend money on. If we work hard to earn the money to buy it then...it must be valuable. But that doesnt mean that even an economist can make value judgments off the job.

Be that as it may...

Lets move on. Do some thought experiments. Dont know myself where this is going.

If we didnt import stuff from China, or from where ever, we would have to make all of our own stuff right here. Whether its junk or not is beside the point.Our stuff would be more expensive. Our standard of living would be lower. So we out source the making of stuff...the cheaper stuff... to other countries. And we pay for the stuff ...a number of ways. Raw materials, farm products (US and Canada produce a lot of grain and soybeans), and high end stuff (airliners, MRI machines), and with pop culture (movies, pop music). "Micheal Jackson, and soybeans" are the only things we export nowadays my dad lamented once. Slight exaggeration.

And the Chinese need to make a living too. So outsourcing spreads prosperity around the globe. The Chinese industrialize. And get jobs. So they then can afford to...buy from America. But if America doesnt sell anything then they have to put that money into ...buying America itself...real estate. So that bids up rent, and housing? So that in effect reduces our standard of living. Since we Americans get steeper rent, and houseing.

This means that we should...not import stuff, but...go back to making all of our own stuff...so that we will be like the Amish and have...a lower standard of living?



kraftiekortie
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09 Feb 2023, 8:43 am

I believe "outsourcing" has caused a lot of problems for people who work in manufacturing, especially.

It's capitalistically understandable that companies are seeking to lower costs through "outsourcing." But they don't consider the human toll.



stratozyck
Deinonychus
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09 Feb 2023, 10:49 pm

kraftiekortie wrote:
I believe "outsourcing" has caused a lot of problems for people who work in manufacturing, especially.

It's capitalistically understandable that companies are seeking to lower costs through "outsourcing." But they don't consider the human toll.


Yes, it was underestimated what the impact would be on rural America in the 1990s. The textbook says that if the US capitalists make more from it, we should tax them more.

What the globalists underestimated was that the rich would instead use that windfall to buy lobbyists to avoid higher taxes.

Outsourcing is not the problem at all. Its the lack of higher taxes on the winners in this arrangement.

Here's some more depressing news:

They've (other economists) have found that up and coming economies like India and China start to "max out" on manufacturing at earlier and earlier times in their development.

The previous mindset was that countries like US would ship low value manufacturing jobs overseas, and those countries would develop stronger service sectors off of the manufacturing.

But what has happened is the manufacturing sectors of the countries the rich countries outsource to have grown slower than expected and even peaked out. India for instance stopped growing its manufacturing and is already skipped to service sector as its growth area. It's fine for your Indian with a Masters in Statistics but it leaves out the hundreds of millions that can't get that.

The reason is that manufacturing has gotten so productive, it doesn't need people as much anymore. They aren't moving the jobs to India to throw thousands of workers at it, they are doing it to throw a few hundred plus some machines.

An insane percentage of the worlds microchip manufacturing is done in little Taiwan. Basically an economy of a few million can produce all the world's microchips.