EPTI'm kind of puzzled about the conversation on trade deficits. I'll admit that it's been a while since the macroeconomics courses I took, but I don't understand why you place 'freedom of trade' as the leading variable when it comes to causes and tools to fix trade deficits. What about exchange rate policy, fiscal policy, domestic economic policy, heck even foreign policy (like when the US was trying to get China to stop manipulating its currency; pr when some were pushing Germans to consume more)? See, the problem I have is with the relationship 'free trade -> trade deficits -> problems for debtor countries'. Which cases have we seen where there was a clear relationship of that happening?
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warding
Portugal2396 Posts
I'm kind of puzzled about the conversation on trade deficits. I'll admit that it's been a while since the macroeconomics courses I took, but I don't understand why you place 'freedom of trade' as the leading variable when it comes to causes and tools to fix trade deficits. What about exchange rate policy, fiscal policy, domestic economic policy, heck even foreign policy (like when the US was trying to get China to stop manipulating its currency; pr when some were pushing Germans to consume more)? See, the problem I have is with the relationship 'free trade -> trade deficits -> problems for debtor countries'. Which cases have we seen where there was a clear relationship of that happening? | ||
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JonnyBNoHo
United States6277 Posts
On April 11 2015 02:25 WhiteDog wrote: I said something specific, I said trading can lead to desequilibrium, and I specifically pointed out AN EVIDENCE, which is the existence of global desequilibrium in the balance payment at the international level, showing that EMPIRICALLY there are indeed stable (and huge) desequilibrium in global trading (with countries having long term excedent, and countries having long term deficit). Those desequilibrium are, of course, very dangerous : if the countries in excedent reinvest what they gain in capital (debt, household or firms) in countries in deficit and not in their own internal demand, it can lead to situations where countries with excedent gradually own part of the countries in deficit (which is exactly what has been happening with China, Saudi Arabia or Germany). So now, unless you prove me that global trading does not lead to desequilibrium and thus permit equal development of every country participating (which contradict reality) or unless you prove to me that those desequilibrium that we see are only temporary (which contradict reality again), or unless you find me institutions, laws or whatnot that permit to prevent those desequilibrium at the global level (like Keynes proposed in his time in the Bretton Woods negotiations), then I guess the discussion is over ? Yes problems can arise from trade, but problems car arise from not trading as well. On balance what you gain from trade far outweighs anything. As for trade imbalances specifically they are something that can be addressed. The US trade deficit spiked markedly in the mid 2000's only to come back down to realistic levels. On paper there aren't any imbalances either. If you take both trade accounts (current and capital) they balance out. Market forces help to regulate those balances and keep them from sane, and government rules seek to do the same. Neither work perfectly, but you don't get perfect harmony when it comes to domestic economic activity either. Moreover, foreign trade can help smooth out domestic imbalances. A country that is expecting a large segment of the population to retire can buy more assets abroad today to finance consumption tomorrow in retirement. That would help alleviate the burden of a greater dependent population. | ||
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WhiteDog
France8650 Posts
But saying that there are no imbalances is just a complete misunderstanding. If you think there are no imbalance, you just cannot explain germany and china. Current and capital does not balance out, they combine in both of those exemple : investing in China is very difficult, for obvious reasons (development of the financial system, place of the government, corruption, etc. Alibaba using the US financial market is a good exemple of that) meanwhile China's capitalists can easily invest in foreign economy. Germany is similar, altho for very different reasons. Moreover, foreign trade can help smooth out domestic imbalances. A country that is expecting a large segment of the population to retire can buy more assets abroad today to finance consumption tomorrow in retirement. That would help alleviate the burden of a greater dependent population. Funny, you just said something that you consider positive when I wrote it as a negative point a post before. On April 11 2015 03:28 warding wrote: Aren't these two different discussions? I had more of a problem with your assertion that free trade did nothing for the people. What you describe here is the main reason as to why inequalities between countries rarely resorb themselves, in contradiction with what most economist of growth thought from 60s to 90s. I'm kind of puzzled about the conversation on trade deficits. I'll admit that it's been a while since the macroeconomics courses I took, but I don't understand why you place 'freedom of trade' as the leading variable when it comes to causes and tools to fix trade deficits. What about exchange rate policy, fiscal policy, domestic economic policy, heck even foreign policy (like when the US was trying to get China to stop manipulating its currency; or when some were pushing Germans to consume more)? See, the problem I have is with the relationship 'free trade -> trade deficits -> problems for debtor countries'. Which cases have we seen where there was a clear relationship of that happening? You didn't read my post. I said global trading can lead to global and stable imbalance, which mean that it can benefit some more than others, and can be detrimental to others. And it seem pretty obvious that protectionism is a really easy way to fix imbalance, and thus to permit specific production to grow without competition. Fiscal policy actually become very difficult in an open international market (Competiting for capital in a lumpy world, fiscal competition and economic geography, etc. all those are very famous work on economic geography that explain the problem). Foreign policy barely work (all the work on the war of currency is a good exemple of that), exchange rate is largely inefficient (a 10% appreciation of the currency is basically equivalent to an increase of 1% of the tariff, so what about a tariff at 40% ?), etc. As for global trading not doing anything for the people, it is also a result of that : the competition between countries force those countries to go for fiscal dumping, social dumping, environmental dumping, which is exactly what is going on right now, I don't really need to discuss further the point. If your point is just that "but it lower consumption price", you'll admit it's pretty poor. | ||
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JonnyBNoHo
United States6277 Posts
On April 12 2015 00:04 WhiteDog wrote: The US is not relevant, because their trading deficit is the result of a strategy, which is invest in capital in other countries and not producing in their main country to then export (which is the reason why both trade account balance). But saying that there are no imbalances is just a complete misunderstanding. If you think there are no imbalance, you just cannot explain germany and china. Current and capital does not balance out, they combine in both of those exemple : investing in China is very difficult, for obvious reasons (development of the financial system, place of the government, corruption, etc. Alibaba using the US financial market is a good exemple of that) meanwhile China's capitalists can easily invest in foreign economy. Germany is similar, altho for very different reasons. Funny, you just said something that you consider positive when I wrote it as a negative point a post before. You didn't read my post. I said global trading can lead to global and stable imbalance, which mean that it can benefit some more than others, and can be detrimental to others. And it seem pretty obvious that protectionism is a really easy way to fix imbalance, and thus to permit specific production to grow without competition. Fiscal policy actually become very difficult in an open international market (Competiting for capital in a lumpy world, fiscal competition and economic geography, etc. all those are very famous work on economic geography that explain the problem). Foreign policy barely work (all the work on the war of currency is a good exemple of that), exchange rate is largely inefficient (a 10% appreciation of the currency is basically equivalent to an increase of 1% of the tariff, so what about a tariff at 40% ?), etc. As for global trading not doing anything for the people, it is also a result of that : the competition between countries force those countries to go for fiscal dumping, social dumping, environmental dumping, which is exactly what is going on right now, I don't really need to discuss further the point. If your point is just that "but it lower consumption price", you'll admit it's pretty poor. Yeah we probably just have a different perspective. I think trade is good because, historically, a lot of awesome crap has come of it. Therefore any problems that arise, like persistent trade imbalances, are just obstacles you need to overcome to do good. Trade, particularly with Hong Kong and the PRD, is something I studied long ago and so trade is pretty cool. Anyways, technically trade imbalances absolutely exits. The US typically runs a very persistent current account deficit and capital account surplus. And I do worry about it, though I don't think attacking trade affects the root issues, so I think our differences lie in our solutions and biases rather than our analysis of the situation. | ||
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Yurie
12118 Posts
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Maenander
Germany4926 Posts
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lastpuritan
United States540 Posts
Murder of Olof Palme is again under investigation, but i could not translate what is the new evidence? | ||
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Yurie
12118 Posts
On April 12 2015 17:12 lastpuritan wrote: http://www.aftonbladet.se/nyheter/article20609436.ab Murder of Olof Palme is again under investigation, but i could not translate what is the new evidence? They don't say. They just say they are once again investigating the PKK and South Africa theories after some tip that they aren't disclosing. | ||
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CuddlyCuteKitten
Sweden2834 Posts
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phil.ipp
Austria1067 Posts
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Nyxisto
Germany6287 Posts
On April 12 2015 16:13 Maenander wrote: It's funny that WhiteDog thinks protectionism is a solution, considering he comes from a country which mainly established (and profited most from) a pan-European agricultural protectionism that keeps African countries from competing in their one area of strength. A country that was more than happy to exploit African countries (and in some cases is to this day, think Areva in Niger). I guess the state of the rest of the world is not so important if everything is fine in labour paradise France. It's a somewhat self contradictory problem of the new Left. On the one hand there's a lot of criticism of the exploitation of the third world and on the other they're demanding an economic policy that is even more ruinous for developing countries by excluding them from the markets. | ||
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WhiteDog
France8650 Posts
On April 12 2015 16:13 Maenander wrote: It's funny that WhiteDog thinks protectionism is a solution, considering he comes from a country which mainly established (and profited most from) a pan-European agricultural protectionism that keeps African countries from competing in their one area of strength. A country that was more than happy to exploit African countries (and in some cases is to this day, think Areva in Niger). I guess the state of the rest of the world is not so important if everything is fine in labour paradise France. It's funny that you think I believe protectionnism is the solution. And the rest of your post is the biggest joke considering that you come from a country that basically put every other european country in the shit every ten to thirty years. To explain a little further, saying that free market lead to desequilibrium (and various problems) does not mean i'm for closing all borders. Maybe nuance is hard to grasp for many people, but you can both agree that international trading have benefit, and still believe it needs some restrictions. More specifically, we need institutions and laws to prevent stable desequilibrium in the balance of trade, we also need laws that permit specific countries to protect specific industries to help them toughen up and be prepared for international competition (localised and temporary protectionnism), and finally we need some kind of mecanism to limit to a certain extent the mobility of capital at the international level (like bretton woods used to). Those three things do not, at all, prevent international trade to flourish. On April 13 2015 00:52 Nyxisto wrote: It's a somewhat self contradictory problem of the new Left. On the one hand there's a lot of criticism of the exploitation of the third world and on the other they're demanding an economic policy that is even more ruinous for developing countries by excluding them from the markets. It's only a contradiction if you put aside the fact that the "third world" is actually very open to international trade. For most leftist economists, international trade is not a medium for the third world to grow, but a medium for the developped countries to perpetuate their domination on the third world (through capital investment for exemple). Permitting developped countries to protect their assets to a certain extent wouldn't be bad for the population. Do you really believe that germany's car exports is beneficial for Greeks at this point ? Such hypocrisy. | ||
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maartendq
Belgium3115 Posts
On April 13 2015 17:45 WhiteDog wrote: It's funny that you think I believe protectionnism is the solution. And the rest of your post is the biggest joke considering that you come from a country that basically put every other european country in the shit every ten to thirty years. To explain a little further, saying that free market lead to desequilibrium (and various problems) does not mean i'm for closing all borders. Maybe nuance is hard to grasp for many people, but you can both agree that international trading have benefit, and still believe it needs some restrictions. More specifically, we need institutions and laws to prevent stable desequilibrium in the balance of trade, we also need laws that permit specific countries to protect specific industries to help them toughen up and be prepared for international competition (localised and temporary protectionnism), and finally we need some kind of mecanism to limit to a certain extent the mobility of capital at the international level (like bretton woods used to). Those three things do not, at all, prevent international trade to flourish. It's only a contradiction if you put aside the fact that the "third world" is actually very open to international trade. For most leftist economists, international trade is not a medium for the third world to grow, but a medium for the developped countries to perpetuate their domination on the third world (through capital investment for exemple). Permitting developped countries to protect their assets to a certain extent wouldn't be bad for the population. Do you really believe that germany's car exports is beneficial for Greeks at this point ? Such hypocrisy. Why the anti-german sentiment? Because the country managed to pull through even though the odds were stacked agaisnt them, especially after uniting West and East Germany in the late 80ies and early 90ies? Germany's "rise to economic greatness" is a relatively novel phenomenon. It used to be called the sick man of Europe not even fifteen years ago. What Germany did and does now is as impressive as the sacrifices they had to make, and still make, to get where they are now. I do agree with you that developing countries need protectionism in order to develop. Protecting its own industries and focussing on exports (in addition to actually combatting clientelism and corruption that threatens economic development) is basically how the Asian Tigers managed to become the economic powerhouses they are now. Although honestly, what assets would you have Greece protect? I cannot think of a single thing Greece's private sector produces that would put the country back on the map if it could have a 'monopoly' on it. I'm saying produces because Germany's Wirtschaftswunder is based mainly on its manufacturing prowess and the reputation of those manufactured goods abroad. To put it really bluntly, Germany's reputation is one of efficiency and quality whereas Greece's is one of untrustworthiness and corruption (and lately also increasingly unwillingness to do something about it). Also, how would you have the EU protect certain domestic markets? If Greece got to protect its olive market for instance, I don't think Italy would be very happy, and would in turn start boycotting Greek products. France could also start protecting its own car market because "seriously, who needs German cars when you can buy a French one?" etc etc. I don't think anyone would stand to gain anything from this, even though the current race to the bottom is far from ideal either. It seems as if: Protectionism: bad for consumers since prices will be higher due do a decrease in choice and competition; Free market: bad for wage earners because worker rights and pay are in the way of profits in a "race to the bottom"-style market environment. There needs to be some kind of middle ground, and in that sense the EU is not doing that bad of a job, actually. Of course, the basics of trade do apply: you need to produce stuff the world actually wants, and preferably in large quantities. Simplistically put, and correct me if I'm wrong, but Ireland, and Spain crashed because of a housing bubble (i.e. money was basically put into non-productive things), Ireland crashed because all its wealth was based on Banks (something Singapore might have to deal with too one day) and Greece crashed because it could no longer repay the loans it used to pay its oversized public sector. Neither of those countries are known for producing goods that have both a large international appeal and bring in lots of money. What would you propose? Genuine question here, since your replies are usually very interesting, even though I do not always agree with you. | ||
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WhiteDog
France8650 Posts
Why the anti-german sentiment? Because the country managed to pull through even though the odds were stacked agaisnt them, especially after uniting West and East Germany in the late 80ies and early 90ies? Germany's "rise to economic greatness" is a relatively novel phenomenon. It used to be called the sick man of Europe not even fifteen years ago. What Germany did and does now is as impressive as the sacrifices they had to make, and still make, to get where they are now. So it's okay to argue that French profit from the poor africans, but not to simply point out that Germans are not better ? Although honestly, what assets would you have Greece protect? I cannot think of a single thing Greece's private sector produces that would put the country back on the map if it could have a 'monopoly' on it. I'm saying produces because Germany's Wirtschaftswunder is based mainly on its manufacturing prowess and the reputation of those manufactured goods abroad. Agriculture, boat industry, that's it. Those WERE Greece assets, now there's nothing, most poductive assets have been sold to foreign capitalists. You see the point about capital assets ? To put it really bluntly, Germany's reputation is one of efficiency and quality whereas Greece's is one of untrustworthiness and corruption (and lately also increasingly unwillingness to do something about it). Putting aside the fact that it's a useless comment, it says more about you than about germans or greeks. | ||
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phil.ipp
Austria1067 Posts
the export surplus means that other countrys, like greece and other small countrys have a deficit. and now you can guess who pays the most to pull these countrys out of the hole. exactly germany. so germany made money with the export on the back of its own population (low wage sector), and now it spends all that money to save the countrys who they need to export to. | ||
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puerk
Germany855 Posts
On April 13 2015 20:22 phil.ipp wrote: germany has an extrem export surplus, which is bought with a big low wage sector - so i dont know about "rise to economic greatness". the export surplus means that other countrys, like greece and other small countrys have a deficit. and now you can guess who pays the most to pull these countrys out of the hole. exactly germany. so germany made money with the export on the back of its own population (low wage sector), and now it spends all that money to save the countrys who they need to export to. the low wage sector is mostly services... export oriented manufacturing actually pays pretty decent | ||
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maartendq
Belgium3115 Posts
On April 13 2015 19:50 WhiteDog wrote: Germany made europe pay for the reunification, what are you talking about ? So it's okay to argue that French profit from the poor africans, but not to simply point out that Germans are not better ? Agriculture, boat industry, that's it. That WERE Greece assets, now there's nothing, most poductive assets have been sold to foreign capitalists. You see the point about capital assets ? Putting aside the fact that it's a useless comment, it says more about you than about germans or greeks. It is not a useless comment if Germany's and Greece's history and developmental path are anything to go by. Those two countries are shockingly different in how their states developed throughout history. I'd give you some chapters to read up on, but you will probably dismiss them right from the bat because the author does not fit your ideological framework. | ||
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maartendq
Belgium3115 Posts
On April 13 2015 20:22 phil.ipp wrote: germany has an extrem export surplus, which is bought with a big low wage sector - so i dont know about "rise to economic greatness". the export surplus means that other countrys, like greece and other small countrys have a deficit. and now you can guess who pays the most to pull these countrys out of the hole. exactly germany. so germany made money with the export on the back of its own population (low wage sector), and now it spends all that money to save the countrys who they need to export to. I don't get it. Germany's producing of goods the world wants and wants to pay for is to blame for the poverty in Greece and similar countries, so Germany should hurry up and make itself less competitive so other countries also stand a chance? Doesn't this way of thinking make the mistake of seeing economic activity as something that happens in a vacuum and is not at all affected by government policy or cultural factors? Isn't Greece's main creditor Finland instead of Germany, though? Of course, it's a bit more difficult to accuse Finland of wanting a fourth economic "Reich". | ||
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phil.ipp
Austria1067 Posts
i just wanted to point out that in the end you cant be an economic WINNER and everybody else is a LOSER. thats not possible. If you have an export driven economy, you are depended on other countrys buying your products. they can only buy it if they have money. or they lend it from you, and 20 years later you never get the money back. i dont know who is the biggest creditor of greece, there is a european stability fond, who provides money to all european countrys that are in trouble. germany pays of course the most into this fond. what worked the last 20 years doesnt have to work the next 20 years, there is no golden strategy for economic that works everytime, everywhere. right now steps are made in germany to fight the low wage sector, "Mindestlohn" ! obviously that will hurt the export. i just wanted to say, that right now at this moment it feels pretty stupid to be happy about germanys "rise to economic greatness". cause left and right countrys are in trouble, and everytime germany has to pay the money to save them. | ||
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RvB
Netherlands6290 Posts
http://www.bloombergbriefs.com/content/uploads/sites/2/2015/01/MS_Greece_WhoHurts.pdf | ||
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