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Discussion (68 Comments)Read Original on HackerNews
A better analogy for the trade deficit would be sitting on the couch slamming potato chips and observing the shift in our body away from muscles and towards fatty tissue. Should we be excited to see this example of specialization in action? Is it wrong to want to fix our diet and push our body composition in the opposite direction?
https://yalebooks.yale.edu/book/9780300261448/trade-wars-are...
They're explicitly pointing out that the US (and most of the western world) has abandoned the manufacturing sector of their economy, outsourcing work that used to employ millions of people to the developing world.
This is a trade-off that can benefit both countries, but, it is wise to consider both WHO benefits from this, and what the LONG-TERM implications of this entails. It's great for an investor class in America that has the capital to create factories in China, and it's great for China to take USD and start to employ their workforce. But, the question is whether or not this is actually a good thing for the American worker.
The rust-belt would certainly have an opinion on this. My father was a factory worker that was able to support a family on a single income, and when that manufacturing plant closed, it absolutely destroyed the finances of my family.
"Destroy American affluence so that we can't pay with assets instead of exports" is probably the worst conceivable way to unwind the exorbitant privilege of the American Economy. We could have spent that money helping people, instead we spent it on wars and tax breaks for billionaires. We could have spent that money on targeted industrial policy (the IRA and CHIPS acts under Biden were examples of this done right, just not at the scale we needed) but instead we are doing it the hard way. Sigh.
https://en.wikipedia.org/wiki/The_Belly_and_the_Members
Oof.
This is a bit peculiar, because it ignores the whole "the money we are spending is being exchanged for goods that come back to the US" part of the trade. I.e. it's not a problem that I have a "trade deficit" with the grocery store, because I have my groceries.
https://finance.yahoo.com/economy/policy/articles/trump-brag...
My point is that reducing it entirely to "did I gain or receive cash-money from this?" isn't a particularly useful framing.
You need to trade your labor for money, and you need to trade your money for food. I would argue that there isn’t a huge difference in the fundamental nature of those two trades. Framing them in terms of “trade deficits” is pointing out which direction money is moving in each instance, but fundamentally they’re both just trades.
Unfortunately the feedback loop in nations is much slower than in bodies.
You would expect the US industry to silently absorb his trade policies and only break decades after he leaves. Somehow, they aren't healthy enough for that.
Everyone has been optimizing to increase profits for decades. A 1950's US economy would have taken a lot longer to collapse.
The Biden admin went after Canada repeatedly for unfair trade practices, and issued a blanket 10% tariff on Chinese goods.
The only difference is to what degree they wield the tariff hammer, and in which direction it is swung.
The one thing the current admin does have a point on is non-tariff meddling. Numerous countries make it almost impossible to sell goods in their countries while the same is not true in reverse, or they levy a high price in garbage regulatory fees (see the EU's new packaging identification directive that completely destroys small business), or in completely made-up fines for vague behaviors not even they can define (see the EU's DSA which is exclusively used against monopolizing American companies while completely ignoring monopolist and predatory EU ones like Booking.com).
You are ignoring a massive difference. Trump wants balanced trade with each individual country. Pretty much everyone else who wants the US to reduce or eliminate its trade deficit just wants that to apply to total trade, not to each individual country.
The main reason money was invented was so you don't have to have balanced trade with each individual trading partner.
What is booking.com doing that violates DSA?
Despite qualifying for DSA thresholds, the EU pretends it doesn't exist and is not a monopoly. Because it's not American.
It's also not the only European company to be designated as VLOP, as you'll find some EU-based adult content sites on that page as well, but if you really want a European company that is inexplicably missing from this list, I'd go with Spotify.
What were these practices?
Citation needed, I'm in the EU and there is small business
The EU has recognized this and they are scrambling to fix it in legislation due later this year.
This regulation forces very small businesses to pay thousands and thousands of dollars to comply and register in EACH EU country (what the hell's the point of the union, exactly?). Even if they sell only 10 widgets to Belgian buyers, they need to register in Belgium and pay the fee. Insane.
So a small business selling 5-10k of widgets in EU now has to pay 2-5k in business destroying regulatory compliance fees, putting them out of business. Incredible incompetence from the people who brought you ineffective cookie nag screens.
It's not possible to exist as a small business in the EU because they create regulations to destroy you.
Try creating a business in Germany. You need 25,000 euros to create a GmbH! In the US you can walk into the office in New York City and have an LLC for $9 per 2 years.
The EU is a nightmare hellscape of over-regulation. This is why there are essentially zero EU unicorns. EU bureaucrats support ONLY large and entrenched businesses.
https://en.wikipedia.org/wiki/Plaza_Accord
The United States proposed a deal to France, Germany, Japan, and Britain (the G5): you buy up your own currencies, the dollar falls, and in return we reduce our budget deficit, meaning you no longer have to effectively finance U.S. development.
The United States agreed to reduce its budget deficit and lower interest rates. The other parties to the agreement committed to raising theirs. In addition, West Germany agreed to cut taxes, while Japan agreed to allow the yen to appreciate. As a result, over the following two years the U.S. dollar fell by 46% against the German mark and by 50% against the yen. However, the U.S. government ultimately failed to reduce its budget deficit. Meanwhile, the sharp appreciation of the yen made Japanese exporters less competitive in foreign markets. In the United States, by contrast, the period following the agreement saw substantial economic growth and low inflation.
A classic American move: promise the world — we’re all in this together, we’re marching toward a brighter future — and then screw everyone over.
Protecting workers from that kind of competition seems fair. Tariffs aren't bad in itself. They are just a tool.
Unfortunately fools wielding a tool like this can cause a lot of damage, but that's true for any tool.
[0]: <https://chomsky.info/secrets03/>
Does the same hold for going from 5 days to 7 days or 8 hours to 16 hours?
A reasonable person should agree at some point adding more time will make people less productive due to lack of breaks, rest, etc.
Is it obvious where the line is? if so, where?
In, say, China a worker doing 996 will make 720 items. Te average working hours in the Netherlands are 36 hours or so per week. Making 360 items.
As long as there is free trade the Chinese factory will simply outproduce the Dutch one since they utilise their capex better.
Obviously European workers can't be reasonably asked to compete in an open market when labour laws, salary, health inspection etc... in China are at a 1920 Dutch level.
This was worked out by David Ricardo 200 years ago. You still benefit from trade even if (granting the argument) you are worse at producing everything.
At second approximation, the <Dutch> factory in that example might net make a larger number of items per hour because the workers are more alert and concentrated and make less mistakes. So the <dutch> factory and the <chinese> factory might actually be producing the same number of items.
Of course then there's more steps to this, and you need to start actually looking at systems and what you're optimizing for etc etc.
And, not everything is factories. For instance, if your operator (at eg. Smit or Mammoet) is operating a large crane that's lifting a 100 ton oil platform, maybe you'd prefer them to be wide awake and on the ball, regardless.
If your factory workers spend twice as long working, it's likely that more widgets will get made. I'm not certain you can generalize too far from that, though.
(edit: And only if you don't fall asleep at the controls and destroy the factory first. 12 hour shifts are brutal. At least one place I know bans you the next day if you exceed 11h, for your own protection if nothing else)
(edit2: This was documented in the 1st world war when munitions factories that tried to ramp up by increasing shift durations past a certain point ended up hardly improving productivity, but did increase accident and sickness rates to the point that it was starting to hurt the war effort. )
Yes, because it's a one-panel comic.
It seems I've 'stung the wasps nest' on HN by not denouncing them outright it seems.
A scalpel is one thing.
Dynamite is something else.
Like, "other countries pay the tariffs."
No. They don't.
How can we have nuanced conversation about the trade-offs, if the leader of one political party blatantly lies about a fundamental detail of how tariffs work?
600% reduction in the price of drugs?
We can't even start a discussion with people who believe this. At all. They reject any information, even their own knowledge of how numbers work.
Given the timing and the metaphor of blood being sent to and from a limb, this is almost surely a reference to the tariff threats against Canada.
Sorry, I'm European and can't keep up with the erratic US Gov. I read a summary at the end of the week.
Tariffs are a way of warning other countries "don’t take us for a ride." They help American workers, factories and towns that were hurt when jobs went overseas.
Tariffs shouldn't feel like hurting yourself for no reason. They are an important tool for standing up for yourself when other countries (to say nothing of bad trade deals) want to take advantage of you
The main reason we have open-ish border for people and goods is to reduce the risk of war. You are not going to wage war with a country that do business with.
This undermines this idea.
Open borders can be GREAT, but they can also be a point of vulnerability if we lose control of them