Hacker Newsnew | past | comments | ask | show | jobs | submitlogin

The U.S. balance of goods and services trade is one component of a complex economy. Of course it matters, but the simple balance does not imply that it's a bad thing, or that it will harm the U.S. economy in the short term or long run.

> Yes, but I do not have a trade deficit on the whole as well.

Presumably you mean that you add net value to your wealth each year, despite having a "trade deficit" on most economic relationships. Well, so does the U.S. The net change in the national income is called GDP growth and it is mostly positive in spite of the negative balance of trade.

Why? Because the U.S. economy is primarily internally driven; trade is only about 15% of GDP. So more important than the balance of trade is how that trade impacts the domestic economy.

Would we experience even more economic growth if we had a positive balance of trade? Maybe. If we kept imports the same and grew exports, that would be great, but that will either happen or not based on private industry. The government does not have a magic lever to create new exportable goods and services.

But the government does have a variety of levers to reduce imports, some of which it is pulling right now. To predict the economic effects, it's not enough to just look at the balance. You would need to untangle the domestic effects of reducing imports that may be inputs to domestic economic growth. It's certainly possible to use trade restrictions to create a positive balance of trade, and create negative GDP growth at the same time.



> Because the U.S. economy is primarily internally driven; trade is only about 15% of GDP. So more important than the balance of trade is how that trade impacts the domestic economy.

That's almost scarier, really. It's a big shell game with money just moving in circles.


Not at all (inherently). Most economies have traditionally been internally driven with a lot of wealth production from agriculture, raw material gathering and the finishing of those materials - it's only in the industrial era that we saw the export of goods for finishing in other countries emerge as a thing that could occur. But, if some rare earth minerals are imported into Fakistan and then turned into an iPhone - then the labour exchange to add that value would be within the "internally driven" header mentioned above... as that's value that's been created domestically and can either be used to exchange for new goods abroad (where it becomes a trade deficit) or else just consumed domestically.




Guidelines | FAQ | Lists | API | Security | Legal | Apply to YC | Contact

Search: