Korea-U.S. Trade Agreement Has Cost About 50,000 Jobs So Far [View article]
DQJS24,
You are correct that U.S. "free trade" pacts with currency manipulating countries cause GDP growth in the partnering countries. Both South Korea and Mexico are examples of that.
In contrast, when free trade is balanced, both parties benefit. Canada-U.S. trade is an excellent example of that.
Korea-U.S. Trade Agreement Has Cost About 50,000 Jobs So Far [View article]
timemachinist,
You ask why we advocate a scaled tariff, rather than Warren Buffett's Import Certificates (IC) plan, to balance trade. The answer is that a scaled tariff would do the job effectively without violating WTO rules and without requiring the creation of a new bureaucracy.
We discuss the advantages of each method in our journal article. Click on the "scaled tariff" link to read it. Don't get me wrong, I think ICs would be a tremendous improvement over what we have now!
Rep. Kaptur's Balancing Trade Bill Is On The Right Track - But It Needs Teeth [View article]
jyard01,
You are quite astute. The boom-bust cycle has been largely the result of the trade deficits.
In fact, I would go further: The perceived need for a budget stimulus has also been largely the result of the trade deficits. The perceived need for a huge expansion in the money supply has largely been the result of the trade deficits.
If you want to keep the economy on an even keel, just keep trade and budgets in balance and money supply growing as fast as GDP grows.
Rep. Kaptur's Balancing Trade Bill Is On The Right Track - But It Needs Teeth [View article]
sethmcs:
You asked who would really pay the scaled tariff. Since the tariff balances trade, the producers in the mercantilist countries pay it.
By the way, you are correct about many things:
1. People will demand raises and get them. In other words, the scaled tariff would end the decline in median U.S. incomes.
2. Interest rates would rise. It would be important for the federal government to move budgets toward balance to counteract this effect.
3. Inflation will occur. If we ever get prosperity again, inflation will come back with a vengence due to the Federal Reserve's huge increases in money supply over the last few years.
I don't think you are correct that shortages would occur. Shortages are the outcome when there are price ceilings. The scaled tariff is not a price ceiling.
I also also don't think you are correct that a recession would occur. The boom in Aggregate Demand would cause the economy to expand at a 3-6% pace, other things being equal.
Uncle Sucker's Trade Deficit Worsened In November [View article]
Ba1k3es,
I agree. R&D follows our factories abroad. We shouldn't be letting China steal our Intellectual Property.
My father, son and I have invented a solution which could solve these problems. It's a tariff whose rate is scaled to our trade deficit with each country. It's rate goes up with each country as our trade deficit with that country goes up, down when our trade deficit goes down, and disappears when trade approaches balance.
China would have to take down its barriers to our exports and start paying for our Intellectual Property in order to maintain market share in our markets.
Obama Asking For More Balanced Trade With China [View article]
Actually, sometimes countries do win trade wars. Take Great Britain in he early 1930s. It won its 1930s trade war with the U.S. and got right out of the Great Depression.
The United States was the China of that era. We had experienced the roaring 20s at Britain's expense by pegging the dollar at a low exchange rate and enacting the high Fordney McCumber tariff of 1922.
Fiscal Cliff Negotiation Failure Could Be The Best Option [View article]
Lovermann,
Yes you are correct that if the dollar collapses that would be very good for those companies that produce in the United States, especially those that can produce exports. But don't underestimate the ability of big government to prevent a recovery.
Fiscal Cliff Negotiation Failure Could Be The Best Option [View article]
Guardian3981,
Your thinking that 350 billion could be the break-even point is logical, but is missing the trade-budget interaction factor, which is very strong for countries like the US that have large trade deficits.
Just as the 800 billion of the Obama recovery didn't reduce unemployment much, because it caused the trade deficit to expand, the 502 billion of the fiscal cliff wouldn't increase unemployment much, because it would cause the trade deficit to shrink.
Fiscal Cliff Negotiation Failure Could Be The Best Option [View article]
CostaBrava,
You are so right! It's just as phony as the Y2K scare!
It's just as phony as the TARP scare, also promulgated by Bernanke!
The real danger occurs 5-10 years down the line if we don't bring the federal budget toward balance.
By the way, the CBO's estimate that the fiscal cliff would cause unemployment to surge to 9.1% by the fourth quarter of 2013 is based upon an incorrect model of the economy, as my father, son and I pointed out in our American Thinker piece about the fiscal cliff.
Fiscal Cliff Negotiation Failure Could Be The Best Option [View article]
Tony,
Good quote from Milton Friedman, my father's dissertation advisor. But keep in mind that his advocacy of budget deficits in your quote stood in contrast to his general advocacy of balanced budgets and balanced monetary growth in order to maintain economic stability.
My father, son and I have argued that Friedman just left one key ingredient out of his economic stability equation. Balanced trade is also needed. In our opinion economic stability would be achieved if governments simply kept budgets, trade and monetary growth in balance.
The Shrinking Labor Force - More Important Than 7.8% Unemployment [View article]
Muoio,
This isn't "comparative advantage," it's "mercantilism."
Under comparative advantage, there is balanced trade. We produce what we produce with comparative advantage for products that our trading partners produce with comparative advantage. Everyone benefits.
Mercantilist countries produce what they produce with comparative advantage as well as what we produce with comparative advantage and trade both to us in return for ownership of our financial assets (modern version) or for our gold (16th Century version).
The goal of mercantilism is to sacrifice some consumption in the short term in order to get more consumption and power in the long term. The victims of mercantilism get more consumption in the short term followed by less consumption and power in the long term.
Korea-U.S. Trade Agreement Has Cost About 50,000 Jobs So Far [View article]
You are correct that U.S. "free trade" pacts with currency manipulating countries cause GDP growth in the partnering countries. Both South Korea and Mexico are examples of that.
In contrast, when free trade is balanced, both parties benefit. Canada-U.S. trade is an excellent example of that.
Korea-U.S. Trade Agreement Has Cost About 50,000 Jobs So Far [View article]
You ask why we advocate a scaled tariff, rather than Warren Buffett's Import Certificates (IC) plan, to balance trade. The answer is that a scaled tariff would do the job effectively without violating WTO rules and without requiring the creation of a new bureaucracy.
We discuss the advantages of each method in our journal article. Click on the "scaled tariff" link to read it. Don't get me wrong, I think ICs would be a tremendous improvement over what we have now!
Rep. Kaptur's Balancing Trade Bill Is On The Right Track - But It Needs Teeth [View article]
You are quite astute. The boom-bust cycle has been largely the result of the trade deficits.
In fact, I would go further: The perceived need for a budget stimulus has also been largely the result of the trade deficits. The perceived need for a huge expansion in the money supply has largely been the result of the trade deficits.
If you want to keep the economy on an even keel, just keep trade and budgets in balance and money supply growing as fast as GDP grows.
Rep. Kaptur's Balancing Trade Bill Is On The Right Track - But It Needs Teeth [View article]
You asked who would really pay the scaled tariff. Since the tariff balances trade, the producers in the mercantilist countries pay it.
By the way, you are correct about many things:
1. People will demand raises and get them. In other words, the scaled tariff would end the decline in median U.S. incomes.
2. Interest rates would rise. It would be important for the federal government to move budgets toward balance to counteract this effect.
3. Inflation will occur. If we ever get prosperity again, inflation will come back with a vengence due to the Federal Reserve's huge increases in money supply over the last few years.
I don't think you are correct that shortages would occur. Shortages are the outcome when there are price ceilings. The scaled tariff is not a price ceiling.
I also also don't think you are correct that a recession would occur. The boom in Aggregate Demand would cause the economy to expand at a 3-6% pace, other things being equal.
Howard
Rep. Kaptur's Balancing Trade Bill Is On The Right Track - But It Needs Teeth [View article]
The scaled tariff would help you achieve one of your goals. It would likely open the mercantilist countries's markets to your products.
It would not prevent you from achieving your other goal, of buying anything you wanted from anybody.
It would, however, charge you a duty when you buy Hansel and Gretel gingerbread from the witch that is trying to destroy you economically.
Howard
Uncle Sucker's Trade Deficit Worsened In November [View article]
I agree. R&D follows our factories abroad. We shouldn't be letting China steal our Intellectual Property.
My father, son and I have invented a solution which could solve these problems. It's a tariff whose rate is scaled to our trade deficit with each country. It's rate goes up with each country as our trade deficit with that country goes up, down when our trade deficit goes down, and disappears when trade approaches balance.
China would have to take down its barriers to our exports and start paying for our Intellectual Property in order to maintain market share in our markets.
Uncle Sucker's Trade Deficit Worsened In November [View article]
How do you explain it? Almost all economists know how monetary mercantilists do it. Yet no balanced-trade requirement in the Korea trade agreement?
Obama Asking For More Balanced Trade With China [View article]
The United States was the China of that era. We had experienced the roaring 20s at Britain's expense by pegging the dollar at a low exchange rate and enacting the high Fordney McCumber tariff of 1922.
Fiscal Cliff Negotiation Failure Could Be The Best Option [View article]
Yes you are correct that if the dollar collapses that would be very good for those companies that produce in the United States, especially those that can produce exports. But don't underestimate the ability of big government to prevent a recovery.
Howard
Fiscal Cliff Negotiation Failure Could Be The Best Option [View article]
By collapse I mean the dollar falling drastically and rapidly in currency exchange markets due to a rush to convert dollars to other currencies.
Howard
Fiscal Cliff Negotiation Failure Could Be The Best Option [View article]
Balanced monetary growth works pretty well, but it also needs balanced budgets and balanced trade.
Howard
Fiscal Cliff Negotiation Failure Could Be The Best Option [View article]
Your thinking that 350 billion could be the break-even point is logical, but is missing the trade-budget interaction factor, which is very strong for countries like the US that have large trade deficits.
Just as the 800 billion of the Obama recovery didn't reduce unemployment much, because it caused the trade deficit to expand, the 502 billion of the fiscal cliff wouldn't increase unemployment much, because it would cause the trade deficit to shrink.
Howard
Fiscal Cliff Negotiation Failure Could Be The Best Option [View article]
You are so right! It's just as phony as the Y2K scare!
It's just as phony as the TARP scare, also promulgated by Bernanke!
The real danger occurs 5-10 years down the line if we don't bring the federal budget toward balance.
By the way, the CBO's estimate that the fiscal cliff would cause unemployment to surge to 9.1% by the fourth quarter of 2013 is based upon an incorrect model of the economy, as my father, son and I pointed out in our American Thinker piece about the fiscal cliff.
Howard
Fiscal Cliff Negotiation Failure Could Be The Best Option [View article]
Good quote from Milton Friedman, my father's dissertation advisor. But keep in mind that his advocacy of budget deficits in your quote stood in contrast to his general advocacy of balanced budgets and balanced monetary growth in order to maintain economic stability.
My father, son and I have argued that Friedman just left one key ingredient out of his economic stability equation. Balanced trade is also needed. In our opinion economic stability would be achieved if governments simply kept budgets, trade and monetary growth in balance.
Howard
The Shrinking Labor Force - More Important Than 7.8% Unemployment [View article]
This isn't "comparative advantage," it's "mercantilism."
Under comparative advantage, there is balanced trade. We produce what we produce with comparative advantage for products that our trading partners produce with comparative advantage. Everyone benefits.
Mercantilist countries produce what they produce with comparative advantage as well as what we produce with comparative advantage and trade both to us in return for ownership of our financial assets (modern version) or for our gold (16th Century version).
The goal of mercantilism is to sacrifice some consumption in the short term in order to get more consumption and power in the long term. The victims of mercantilism get more consumption in the short term followed by less consumption and power in the long term.
Howard