NationStates Jolt Archive

I don't understand what the trade deficit is, really, but I've heard of it a lot of times. I understand that it's when imports exceed exports, but I'm not sure how the imports and exports are calculated. How would one (theoretically) solve it?

Not a good thing.

In simple terms:

We are spending more money than we are making.

Of course, this is the most simple explanation I can come up with.

Solving it? Decrease trade embargoes and such on countries that we have no reason(anymore) to have embargos on may help.

This may have the opposite effect, though, as they would also be able to trade with us.

Or, perhaps, increase the quality of our goods would be a good start.

In simple terms:

We are spending more money than we are making.

Of course, this is the most simple explanation I can come up with.

Would you be willing to explain in more depth? I'd like that very much.

Think beer. To get those fancy imported German beers, someone in the US has to pay for it. That's US money, that leaves the country for German brewery hands. However, whenever we manage to offload Coors Light to some daft fool in a foreign country, their money enters the US system.

Basically, its a trade defecit when more money leaves the country for other countries, than the other way around. A trade surplus when enough people buy our shitty beer to make up for how much we spend on Schnapps.

There is no easy way to correct it, other than by incouraging US businesses by allowing them freedom to market and sell their products and grow their businesses.

There's also the matter of import quotas and tarrifs, but thats basically the same thing only from the government side.

Think beer. To get those fancy imported German beers, someone in the US has to pay for it. That's US money, that leaves the country for German brewery hands. However, whenever we manage to offload Coors Light to some daft fool in a foreign country, their money enters the US system.

Basically, its a trade defecit when more money leaves the country for other countries, than the other way around. A trade surplus when enough people buy our shitty beer to make up for how much we spend on Schnapps.
.

And the problem with that is that who in their right mind would buy our terrible beer, when they can buy higher quality beer from home(and at the same, if not cheaper, price)? American consumer products tend to be on a farely low-grade end of the market, making it difficult to compete on a global level.

Right now, there is little incentive for most American manufacturers to make higher quality products, because it costs far to much to enter the world market(with embargoes and tariffs and such), but they can still peddle their crap in America, and make a good amount of money off of it. Unfortunately, when taken as a whole, we are still losing money in a sense.

Oh well... enough rambling.

And the problem with that is that who in their right mind would buy our terrible beer, when they can buy higher quality beer from home(and at the same, if not cheaper, price)? American consumer products tend to be on a farely low-grade end of the market, making it difficult to compete on a global level.

Right now, there is little incentive for most American manufacturers to make higher quality products, because it costs far to much to enter the world market(with embargoes and tariffs and such), but they can still peddle their crap in America, and make a good amount of money off of it. Unfortunately, when taken as a whole, we are still losing money in a sense.

Oh well... enough rambling.

Heh... I agree. Though in some areas our low-grade crap really does compete. McDonald's for example. Now if only other nations took to enjoying low quality beer, like I do...

I don't understand what the trade deficit is, really, but I've heard of it a lot of times. I understand that it's when imports exceed exports, but I'm not sure how the imports and exports are calculated. How would one (theoretically) solve it?
US companies are selling less overseas than US customers are buying from overseas. This means that hard currency is flowing out of the US at a faster rate than it's flowing in. There's your trade deficit.

So is it because of high tariffs against the US that are our exports are low? Does it matter which country lowers its tariffs against US goods that the exports from the US would go up?

http://en.wikipedia.org/wiki/Balance_of_trade

So is it because of high tariffs against the US that are our exports are low? Does it matter which country lowers its tariffs against US goods that the exports from the US would go up?
It's mainly because China and various third world countries can produce items much cheaper than US factories. Go to you local walmart. Don't buy anything, just check random items for their country of origin. I'll bet you won't find one made in the USA.

The best way to solve this problem is to tell those countries that they must pay their workers a living wage, and establish the same rights to unionize and strike as American workers have. Also make them enact good worker safety rules, like OSHA does in the US and pollution controls equivalent to US standards if they want to sell their products here. Nations that fail to do so get hit with high tarrifs on their products. That'll make trade more fair and protect workers overseas as well.

Not a good thing.

Not necessarily.

"Very few issues in economics are misunderstood by the politicians and the public as much as the trade deficit. The metaphor of trade as some kind of battle, where surplus countries win and deficit countries lose, ignores the observation that trade is based on regional specialization. The long term theoretical push is toward equilibrium, for trade deficits and surpluses can only exist when there is an excess or lack of demand for a country's investment assets."
-- "Balance of Trade," Wikipedia, http://en.wikipedia.org/wiki/Balance_of_trade

In true mercantilist spirit, countries will often try to employ protectionist trade measures in order to create a trade surplus. Of course, all this accomplishes is to inflate prices leading to further economic problems.

It's mainly because China and various third world countries can produce items much cheaper than US factories. Go to you local walmart. Don't buy anything, just check random items for their country of origin. I'll bet you won't find one made in the USA.

The best way to solve this problem is to tell those countries that they must pay their workers a living wage, and establish the same rights to unionize and strike as American workers have. Also make them enact good worker safety rules, like OSHA does in the US and pollution controls equivalent to US standards if they want to sell their products here. Nations that fail to do so get hit with high tarrifs on their products. That'll make trade more fair and protect workers overseas as well.
Wow! First post I've read where you actually sound slightly socialist :eek:

But wouldn't it be better to adopt the best laws concerning these things, instead of just the American ones? Better for workers in all our countries.

Wow! First post I've read where you actually sound slightly socialist :eek:

But wouldn't it be better to adopt the best laws concerning these things, instead of just the American ones? Better for workers in all our countries.
I would like to see that, but I don't think it would be fair to hold other countries to a higher standard than ours.

So is it because of high tariffs against the US that are our exports are low? Does it matter which country lowers its tariffs against US goods that the exports from the US would go up?

Tariffs are not the only factor involved. It is a simple fact that the United States economy has moved, and is continuing to move, away from industry and production to become a service or information-based economy. See also: Comparative Advantage (http://en.wikipedia.org/wiki/Comparative_advantage)

I would like to see that, but I don't think it would be fair to hold other countries to a higher standard than ours.

It's due to greed. The best laws are the ones that make the most of their money. Frankly there is more profit when workers have less paid, and still more output.

I don't understand what the trade deficit is, really, but I've heard of it a lot of times. I understand that it's when imports exceed exports, but I'm not sure how the imports and exports are calculated.We are not working enough to pay for what we consume...Chinese/Indian//Brazilian/Mexican/workers are willing to work longer hours for less pay...eventually That fact is going to affect the bottom line...Eventually we are going to be pwned by China or IndiaHow would one (theoretically) solve it?we have to work harder/smarter and consume according to our productivity.