Displaying items by tag: trade deficit

If you think the American economy is booming now, just think what it would be like if American collegians had an extra $1.5 billion to spend—especially with President Donald Trump’s tariffs set to raise the prices of imported consumer goods despite he and his administration saying the tariffs won’t result in price hikes.

 

Well, if prices aren’t increasing, tariffs aren’t working. The point of a tariff is to make locally produced products more attractive to local consumers by raising the price of imported alternatives. This, in theory, would result in more local production and fewer imports. But a tariff is paid by the importer of a product, not the exporter. So the 25-percent tariff Trump recently leveled on Chinese imports is transferred to the American consumers of those goods, not the Chinese producers.

 

The trade war isn’t taking money out of the pockets of Chinese manufacturers; it’s taking money out of the pockets of American consumers of Chinese products and Chinese consumers of American products. And since the United States runs a $375 billion trade deficit with China, the only way Trump can “win” his trade war is if Chinese economists can’t do the math to match Trump’s tariffs dollar-for-dollar. It’s even becoming more likely trade with China ends altogether. China has already cancelled planned trade talks with Trump.

 

It is impossible for America to run a trade surplus with China because China produces more products Americans consider essential than America produces for the Chinese, including car, computer and mobile phone components. It’s lower labor costs and Americans’ addiction to consumption allow China to perpetually have the upper hand in a trade war. If an iPhone were made entirely in America, it would cost as much as a brand new car, so while Trump might be making some American-made products more attractive to American consumers, he’s doing so at the expense of American consumers who can’t do without many of the Chinese imports found in their technology and automobiles. Even the Tesla Model 3 can only be 95-percent American-made at most.

 

Since Americans will be paying more for computers, mobile devices and cars, it’s not entirely unreasonable to forgive the $1.5 billion in student loan debt and allow those accepted into college two years of college education free of charge. Students and parents are going to pay more for the devices required to attend college, and colleges are going to pay more for them as well, which will be reflected in tuition costs, which will further increase student loan debt while decreasing consumers’ available income for spending in the American economy, potentially sinking the stock market.

 

There are other reasons besides boosting the economy for the government to payoff student loan debt. First, today’s Associate’s degree, usually obtained in two years at a community college, is the equivalent of a 1980s high school diploma. Advances in technology have made working in what is now a global economy much more complicated and necessitates further education be obtained. Students are not leaving high school with the education necessary to provide for themselves let alone a family, and it’s not their fault.

 

Secondly, with 17 states offering tuition-free college programs, the trend seems to be students at least delaying the accumulation of student loan debt for two years, potentially lowering accrued interest as well as principal loan balances. In short, future college students in the United States will be saddled with considerably less student loan debt than current and past college students. Meanwhile, entire generations (and student loan debt does span generations), are suffering student loan debt and unable to stimulate the American economy by spending money on anything but debt and living expenses.

 

Finally, the collective credit rating of American college students, past, present and future, would receive a boost that could spur entrepreneurial growth and investment in businesses as a whole. America was the land of opportunity, where you could go from “rags to riches” with enough hard work. America used to be the best place to start a small business and be your own boss. That isn’t the case these days because despite incomes increasing for middle-class Americans, their purchasing power has barely budged since 1965. You can’t grow an economy in which most consumers have hardly more purchasing power than their grandparents did over 50 years ago, and consumer confidence in the stock market can’t increase if consumers have no means to express their confidence by purchasing stocks.

 

Lifting the $1.5 billion in student loan debt owed by 44.2 million American borrowers would allow 44.2 million Americans to spend their student loan payment, averaging $351 per month, stimulating the American economy instead of simply paying off interest. Lenders can’t be the only ones making money if the American economy is going to grow.

 

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If you like this, you might like these Genesis Communications Network talk shows: The Costa Report, Drop Your Energy Bill, Free Talk Live, Flow of Wisdom, America’s First News, America Tonight, Bill Martinez Live, Korelin Economics Report, The KrisAnne Hall Show, Radio Night Live, The Real Side, World Crisis Radio, The Tech Night Owl, The Dr. Katherine Albrecht Show   

Published in Opinion

While thawing glaciers release explosive methane that destroys the ozone and icebergs the size of Vermont threaten to increase sea levels by inches, Donald Trump kept his promise to withdraw America, the world’s second-leading producer of carbon emissions, from the Paris Agreement on climate change. Apparently, Trump’s America is too good or too greedy to care for the Earth we all call home.

Thanks to Trump’s uninformed decision, he’s actually made China and the European Union look good. Despite China and the EU ranked first and third in carbon emissions, respectively, they intend to form an alliance to further lower global carbon emissions. Both are still committed to the terms negotiated in the Paris Agreement, and the EU has even offered China $11.2 million to support China’s plan to cut carbon emissions.

So America is becoming imperial China, and communist China is becoming America, and not just when it comes to climate change. This sudden love of American nationalism is simply the American version of Chinese sinocentrism. But believing you are the center of the world does not make it so, and there are plenty of disadvantages associated with that arrogance.

Trump’s nationalism is making it more difficult for America to do business overseas everyday. He hopes to create American jobs but shrinks the market for American goods every time he does something like leave the Paris Agreement or Tweets about the North American Free Trade Agreement (NAFTA) or any other trade agreement. If you don’t think trade partners take notice of that and act accordingly, you’re as ignorant as you are arrogant.

The things Americans perceive to be necessities are not made in America. Computers, televisions, mobile phones, handheld devices and their components are mostly made in Asia. As of 2011, China produced over 90 percent of all personal computers, 80 percent of all air conditioners, 80 percent of energy-saving light bulbs, 74 percent of solar cell production, and over 70 percent of all mobile phones. Do you think the prices of those items will increase or decrease as a result of China spending to limit carbon emissions while America does nothing to curb climate change?

Think we can build those things here in America? Think again. An American-made iPhone would cost $2,000 because Apple pays a little over $5 to construct a $600 phone. The whole idea of bringing back American production jobs is preposterous, which is why Trump’s nationalistic words and actions are so dangerous. Unlike China, America doesn’t have the production-based economy to back up its nationalism. If the things Americans needed were actually made in America by Americans, then sinocentrism would make sense. But that’s not the case at all. In fact, America depends on its trade agreements like NAFTA, and those agreements are not the reason for decreasing production jobs. NAFTA has been particularly good to farmers and ranchers and those in the automotive industry. Yet many of these farmers and ranchers and automotive workers supported Trump for uninformed or misguided reasons.

America made its bed with foreign automakers long ago, offering deep tax cuts and free money to build giant plants to put Americans to work building foreign cars. That’s not a recipe for success if one of your nation’s cornerstone industries is automobiles. That also can’t be undone, so bitching about the lack of auto exports because America doesn’t have the same deals in place with those automakers who fleeced the U.S. will get us nowhere. Building an automobile that everyone in the world wants will, however, allow for increased auto exports, and I fully expect the Tesla Model 3 to be that automobile. Hell, if Americans could get over their uninformed or misguided opinion that American cars aren’t as reliable or “nice” as foreign cars, there’d be little reason to bitch about the state of the auto industry. Frankly, if you’re an American driving anything but American, we should ship you overseas, not the cars.

America can also take pride in decreasing petroleum imports. The Tesla Model 3 should continue contributing to this decline, as will the Tesla Solar Roof and the fastest growing industry in America -- renewable energy. When America’s strongest industry’s mission is quite literally curbing climate change, there’s no need to risk relations with trade partners by withdrawing from a climate change agreement. It’s oxymoronic, but that’s what we’ve come to expect from Trump.

Cutting yourself off from the world and doing whatever the hell you please doesn’t mean you’re the only place in the world. You still have neighbors to whom you have to placate, and whether you acknowledge their existence or not, that doesn’t mean they don’t have a way of fighting back. I fully expect America’s imports of Chinese products to increase from the current $462.8 billion figure specifically due to a raise in cost and not in quantity. That’s what I would do to a trade partner who said he was going to help me do something and then didn’t.

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If you like this, you might like these Genesis Communications Network talk shows: The Costa Report, Drop Your Energy Bill, Free Talk Live, Flow of Wisdom, America’s First News, America Tonight, Bill Martinez Live, Korelin Economics Report, The KrisAnne Hall Show, Radio Night Live, The Real Side, World Crisis Radio, The Tech Night Owl, The Dr. Katherine Albrecht Show

Published in News & Information