'Buy American' Hurts Americans

[Peter1469]

We agree on that aspect.

[Chris]

A community should do what it thinks best of course.

The OP is really just a rebuttal against the nationalist populism of Trump and Sanders.

[JohnfrmCleveland]

I've presented this argument many times, namely, that US dollars usd to purchase foreign goods and services must come home to roost in purchase of US goods and services--or investments in US productivity and innovation.

As context, he's talking about the Lindell of My Pillow Inc. who advertises "Every part of my product is made in the USA."

'Buy American' Hurts Americans

But U.S. dollars do not "come home to roost." Foreign holders use them for international trade, and/or they simply sit on them. That's why we call it a trade deficit - more dollars go out than come in. There are trillions in foreign hands right now, and they aren't being spent on American goods.

The problem with trade deficits is that they are a demand leakage; the problem with large trade deficits is that the resulting demand leakage is larger than normal growth and business investment can cover, so we need significant deficit spending to fill the demand gap.

International trade has its advantages; certainly, things are cheaper. But large imbalances in trade mean that one country (normally the U.S.) is losing domestic demand to buy imports, to the point where we have an unemployment problem, even though we consume a tremendous amount of goods and services.

[Mac-7]

But U.S. dollars do not "come home to roost." Foreign holders use them for international trade, and/or they simply sit on them. That's why we call it a trade deficit - more dollars go out than come in. There are trillions in foreign hands right now, and they aren't being spent on American goods.

The problem with trade deficits is that they are a demand leakage; the problem with large trade deficits is that the resulting demand leakage is larger than normal growth and business investment can cover, so we need significant deficit spending to fill the demand gap.

International trade has its advantages; certainly, things are cheaper. But large imbalances in trade mean that one country (normally the U.S.) is losing domestic demand to buy imports, to the point where we have an unemployment problem, even though we consume a tremendous amount of goods and services.

I hope you have better luck arguing with chris on this topic than I did.

Chris a stubborn free trade, open borders anarchist with only one redeeming quality - he does not vote.

[Ethereal]

I hope you have better luck arguing with chris on this topic than I did.

Chris a stubborn free trade, open borders anarchist with only one redeeming quality - he does not vote.

Free trade promotes peace and prosperity, so most reasonable people support it.

In fact, even you support free trade. You just make arbitrary distinctions between free trade when it occurs within the USA as opposed to without.

Because one of the primary purposes of the US Constitution was to turn America into a big free trade zone where people and capital could move freely across state lines without tariffs and other barriers to trade.

And we benefit immensely from this arrangement.

[Ethereal]

But U.S. dollars do not "come home to roost." Foreign holders use them for international trade, and/or they simply sit on them. That's why we call it a trade deficit - more dollars go out than come in. There are trillions in foreign hands right now, and they aren't being spent on American goods.

The problem with trade deficits is that they are a demand leakage; the problem with large trade deficits is that the resulting demand leakage is larger than normal growth and business investment can cover, so we need significant deficit spending to fill the demand gap.

International trade has its advantages; certainly, things are cheaper. But large imbalances in trade mean that one country (normally the U.S.) is losing domestic demand to buy imports, to the point where we have an unemployment problem, even though we consume a tremendous amount of goods and services.

Dollars go out and goods come in. That's how trade works whether it happens between California and New York or the USA and China. And both sides benefit. If they didn't benefit, then they wouldn't trade.

[JohnfrmCleveland]

Dollars go out and goods come in. That's how trade works whether it happens between California and New York or the USA and China. And both sides benefit. If they didn't benefit, then they wouldn't trade.

Right. The benefit is to the American consumer and the Chinese producer, but there is a detriment as well - the American producer loses demand when the balance of trade is so uneven.

[Mac-7]

Free trade promotes peace and prosperity, so most reasonable people support it.

In fact, even you support free trade. You just make arbitrary distinctions between free trade when it occurs within the USA as opposed to without.

Because one of the primary purposes of the US Constitution was to turn America into a big free trade zone where people and capital could move freely across state lines without tariffs and other barriers to trade.

And we benefit immensely from this arrangement.

I do support free trade as an academic concept and as a goal.

but even good ideas on paper can have bad consequences if not done properly.

free trade with comparable economies is a good thing.

The US, Western Europe, Japan, and now S Korea and Brazil are examples of comparable economies.

very similar wages, labor laws, environmental regulations, ect give workers in those countries a fighting chance to compete.

And by compete I mean earn that "living wage" that liberals are always crying about that allows the middle class to exist and maintain itself.

But simply shouting FREE TRADE OR DIE and then trying to merge the advanced economies where workers expect $20 or more an hour with backward economies where the workers are happy to get $1 a day is bad for the middle class workers in the advanced countries.

[Ethereal]

Right. The benefit is to the American consumer and the Chinese producer, but there is a detriment as well - the American producer loses demand when the balance of trade is so uneven.

Everyone is a consumer.

[Ethereal]

I do support free trade as an academic concept and as a goal.

but even good ideas on paper can have bad consequences if not done properly.

free trade with comparable economies is a good thing.

The US, Western Europe, Japan, and now S Korea and Brazil are examples of comparable economies.

very similar wages, labor laws, environmental regulations, ect give workers in those countries a fighting chance to compete.

And by compete I mean earn that "living wage" that liberals are always crying about that allows the middle class to exist and maintain itself.

But simply shouting FREE TRADE OR DIE and then trying to merge the advanced economies where workers expect $20 or more an hour with backward economies where the workers are happy to get $1 a day is bad for the middle class workers in the advanced countries.

How is having more goods and services at more affordable prices bad for the middle class?