ARRA News Service
ARRA News Service facebook page  
News for social, fiscal & national security conservatives who believe in God, family & the USA. Upholding the rights granted by God & guaranteed by the U.S. Constitution, traditional family values, "republican" principles / ideals, transparent & limited "smaller" government, free markets, lower taxes, due process of law, liberty & individual freedom. All content approval rests with the ARRA News Service Editor. Opinions are those of the authors. While varied positions are reported, beliefs & principles remain fixed. No revenue is generated for this site - no paid ads accepted - no payments for articles. Fair Use doctrine is posted & used.
Editor/Founder: Bill Smith, Ph.D. [aka: OzarkGuru & 2010 AFP National Blogger of the Year]
Contact: editor@arranewsservice.com (Pub. Since July, 2006)
    Home Page

One of the penalties for refusing to participate in politics is that you end up being governed by your inferiors. -- Plato (429-347 BC)

Tuesday, April 12, 2016

$8,700,000,000,000 in Economic Growth LOST . . .

. . . To Trade Deficits Since 2000!

Editorial Cartoon by William Warren
by Robert Romano: “We do not get to add 16 years of deficits and then add that to one year of Gross Domestic Product (GDP), which is what is being done there. If we close the trade deficit then ceteris paribus … we might be able to add one year’s trade deficit back into GDP. That $500 billion, making current year GDP $18.7 trillion, not the $27 trillion stated.”

That was Forbes.com contributor Tim Worstall disputing a piece by this author, “China and the world’s trade war against the U.S. — and why we’re losing,” where I wrote that if “$8.7 trillion [of trade deficits since 2000] had never been shifted overseas, the Gross Domestic Product (GDP) would be nearly $27 trillion today.”

Let’s assume for a moment that Worstall is correct, and that the only thing that would have happened if the trade deficit had been balanced in 2000, all other things being equal, was you’d be looking at a stimulus of only $500 billion above today’s current dollar $18.2 trillion GDP, and not $8.7 trillion, the actual number for trade deficits since 2000.
To have balanced that deficit would have been no easy task. It would have required dramatically increasing domestic production of crude oil, manufacturing more products here in the U.S. by investing in the factories of the future and foreign countries suddenly stopping the devaluation of their currencies with the aim of boosting their own exports. This in turn would have helped boost U.S. exports and reduced U.S. demand for certain imports.
In short, hell would have had to freeze over.

But let’s say charitably we had gotten all those things by 2000, when the GDP was $10.3 trillion. Could it have achieved a $27 trillion GDP? To get there would have required robust growth of a little more than 6 percent nominally a year. So I say, yes, it was very much doable.

Without reservation.

Primarily, because from 1945 to 2000, the U.S. actually averaged 7.18 percent nominal growth a year with just ban average annual trade deficit of about $50 billion, according to data compiled by the Bureau of Economic Analysis and the U.S. Census Bureau. Comparatively, after 2000 — the same year Congress granted permanent normal trade relations with China — our average annual nominal growth rate has only been 3.8 percent with average trade deficits of more than $500 billion.

To say we could not have accomplished 6 percent nominal growth annually with no trade deficit when we killed that number throughout the entire postwar dataset fails to recognize the compounding nature of economic growth. To say nothing of any additional inflation that might have occurred, which would have technically also added to nominal economic growth as well.

All we needed was an extra 2.2 percent of nominal growth each year. Guess what the trade deficit was in 2000? $372 billion, constituting 3.6 percent of the then $10.3 trillion economy. Don’t think balancing that deficit would have had a compound growth effect on the economy? Think again.

If anything, a $27 trillion economy might have been conservative estimate, since, given the above premises — energy independence, factories of the future to offset lower labor costs overseas and no currency manipulation — it is conceivable the U.S. economy would have become a net exporter almost overnight, with trillions of dollars of trade surpluses over those same 16 years instead of the $8.7 trillion of deficits we experienced.

The point was to consider what if the same growth we helped create overseas in emerging markets by running the $8.7 trillion of trade deficits since 2000 had occurred here instead. If it had, the economy would be much larger and it would have created millions of jobs. And whatever did not flow to job creation might have been put into new companies or infrastructure or health and retirement systems or upgrading our missile defense or expanding into space economization or all of the above.

Having the $8.7 trillion of trade deficits “all invested back into the U.S. economy,” in Worstall’s words, into U.S. government treasuries, mortgage-backed securities, corporate debt or equities, which are then owned by foreign governments and investors is not the same as the alternative. Which is, profits in companies earned by Americans offering jobs to Americans, rising incomes and additional demand for labor.

Having the rest of the world buy U.S. dollar-denominated assets may help boost asset prices and debt here — that is to say, they create asset bubbles — but they do not add to growth per se. If that’s the best we can offer, is it any wonder more and more Americans are calling our trade policies into question? In the meantime, the $8.7 trillion of trade deficits unquestionably boosted production overseas, increasing foreign economic growth. Somehow they gained trillions of dollars of GDP but we didn’t lose any. Yeah right.

To be fair, Worstall acknowledged that balancing the trade deficit might have increased investment in the U.S. after all: “Well, yes, OK, we can see that point. If we’d not been spending all our cash on Chinese [trinkets] then maybe the money would have been invested in interesting companies, by government into infrastructure and so on. It’s certainly possible that this would have happened.”

Certainly possible, indeed. It’s the whole reason I wrote the piece.

Particularly, it would have been possible to increase investment here, I would add, if we had been running surpluses instead of deficits, which itself is not beyond the realm of possibility considering the stimulative effect of increasing production here. Instead the U.S. is acting like a majority shareholder of a company that no longer generates any revenue on a net basis and in the meantime offsets the losses by borrowing money and selling more shares, all the while pretending he or she is coming out ahead.

We can get away with it — for now — because we can rely on the Federal Reserve’s printing press and the dollar’s reserve currency status. But how long do we suppose that will last? All we’re doing is making the dollar overvalued as a medium of exchange, shipping production overseas and hollowing out our economy, in the process losing potential growth to the tune of trillions of dollars.

At some point, the world will view the U.S. as adding little to no value, and when that happens, watch out.
In the meantime, to suggest that the U.S. economy could not have grown at a nominal 6 percent or better after 2000 with no trade deficit to get to a $27 trillion GDP — when we nominally grew above 7 percent from 1945 to 2000 with far smaller trade deficits and only at 3.8 percent from 2001-2015 with $8.7 trillion of trade deficits — is preposterous.
----------------
Robert Romano is the Senior Editor of Americans for Limited Government. His article was first shared on the ALG's NetRight Daily blog.

Tags: Robert Romano, Americans For Limited Government, $8,7 Trillion, ecominc growth lost, trade deficits, since 2000, To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. and "Like" Facebook Page - Thanks!
Posted by Bill Smith at 2:00 PM - Post Link

1 Comments:

Anonymous Kenneth Snyder said...

SAD ASS STATE OF AFFAIRS !

4/12/2016  

Post a Comment

<< Home



national debt
Don't miss anything!
Subscribe to the
ARRA News Service
It's FREE & No Ads!

You Receive One Email Each Morning
With Prior Days Articles / Toons / More


Also, Join us at:
Facebook.com/ARRANewsService


Recent Posts:
Personal Tweets by the editor:
Dr. Bill - OzarkGuru
Married 48yr #Conservative #Constitution #NRALife #GunRights #USAF 22yr #military #veteran #Christian #CCOT #ProLife #TEAParty #GOP #TCOT #SGP #schoolchoice



Action Links!
Arkansas State Senators
AR State Representatives
Arkansas Governor Office
Arkansas Attorney General
Bankrupting America
US House of Representatives
US Senators
Family Research Council
GrassFire
NumbersUSA
Ballotpedia
Judgepedia
Sunshine Review


Facebook Accts - Dr. Bill Smith
Pages:
ARRA News Service
Arkansans Against Big Government
Alley-White Am. Legion #52
Baxter County Republicans, AR
Catholics & Protestants United Against Discrimination
End Taxpayer Funding of NPR
Overturn Roe V. Wade
Prolife Soldiers
Project Wildfire
Republican Liberty Caucus of Arkansas
The Gold Standard
Twin Lakes Republican Women
US Atty Gen Loretta Lynch, aka Eric Holder, Must Go
Veterans for Sarah Palin
Why Vote for Hillary (Satire)
FB Groups:
Arkansas For Sarah Palin
Arkansas Conservative Caucus
Arkansas County Tea Party
Arkansans' Discussion Group on National Issues
Blogs for Borders
Conservative Solutions
Conservative Voices
Defend Marriage -- Arkansas
FairTax
FairTax Nation
Arkansas for FairTax
Friends of the TEA Party in Arkansas
Freedom Roundtable
Let's Mine AR Lignite NOW!
Personhood Initiative
Pro-Life Rocks - Arkansas
Republican Network
Republican Liberty Caucus of AR
Reject the U.N.

Patriots
Exchange
Links

Links to ARRA News
A Patriotic Nurse
Agora Associates
a12iggymom's Blog
America, You Asked For It!
Americans for a Free Republic
America's Best Choice
America's Whatchtower
An Ol’ Broad’s Ramblings
AR Republican Assembly
ARRA Twitter
As A Matter of Fact
As The Crackerhead Crumbles
Baaad Media!
Baxter Co. GOP Assembly
Baxter County Republicans
Benton Co. GOP Assembly
Black & Right
Blogs For Borders
Blogs for Palin
Blow the Trumpet Ministry
Boot Berryism
Cap'n Bob & the Damsel
Chicago Ray Report
Chuck Baldwin - links
Citizen Pamphleteer
Common Cents
Conservative Hideout
Conservative Observer AZ
Conservative Voices
Conway Real Deal
Defeat Obama's Agenda
Diana's Corner
eGOP News
Florida Pundit
Franklin Online Outreach
Freedom For US Now
Free Zone Media Center
For God and Liberty
Garland County Republicans
Greater Fitchburg For Life
Guns and Religion
Lasting Liberty Blog
Liberal Isn't Amy
Liberty's Lifeline
Maggie's Notebook
Marathon Pundit
Monkey in the Middle
NASA Satellites
No Runny Eggs
Okie Campaigns
Our Voices Arkansas
Patriot's Corner
ProLifeBlogs
Publius Forum
Randy's Roundtable
Real Debate Wisconsin
Religion and Morality
Right on Issues that Matter
Right Reason
Rocking on the Right Side
Saber Point
Saline Watchdog
Secure Arkansas
Sentry Journal
Teresamerica
Stop Obama Satire & Cartoons
The Arkansas Patriot
The Audacity of Logic
The Blue Eye View
The Bobo Files
The Born Again Americans
TEA Party Cartoons
The Conservative Citizen
The Foxhole | Unapologetic Patriot
The Liberty Republican
The Lid
The Looking Spoon
The Maritime Sentry
The O Word
The Path to Tyranny Blog
The Real Polichick
TOTUS
Truth About Obamacare
Twitter @ARRA
Warning Signs
Women's Prayer & Action
WyBlog

Editor's Managed Twitter Accounts
Twitter Dr. Bill Smith @arra
Twitter Arkansas @GOPNetwork
Twitter @BootBerryism
Twitter @SovereignAllies
Twitter @FairTaxNation


Editor's Recommended Orgs
Accuracy in Media (AIM)
American Committment
American Enterprise Institute
American Family Business Institute
Americans for Limited Government
Americans for Prosperity
Americans for Tax Reform
American Security Council Fdn
AR Faith & Ethics Council
Arkansas Policy Foundation
Ayn Rand Institute
Bill of Rights Institute
Campaign for Working Families
Center for Individual Freedom
Center for Immigration Studies
Center for Just Society
Center for Freedom & Prosperity
Citizens Against Gov't Waste
Citizens in Charge Foundstion
Coalition for the Future American Worker
Competitive Enterprise Institute
Concerned Veterans for America
Concerned Women for America
Curtis Coleman Institute for Constitutional Policy
Declaration of Am. Renewal
Eagle Forum
FairTax
Family Research Council
Family Security Matters
Franklin Center for Gov't & Public Integrity
Gingrich Productions
Global Incident Map
Great Americans
Gold Standard 2012 Project
Gun Owners of America (GOA)
David Horowitz Freedom Center
Institute For Justice
Institute for Truth in Accounting
Judicial Watch
Less Government
Media Reseach Center
National Center for Policy Analysis
National Right To Work Foundation
National Rifle Association (NRA)
National Rifle Association (NRA-ILA)
News Busters
O'Bluejacket's Patriotic Flicks
Open Secrets
Presidential Prayer Team
Religious Freedom Coalition
Renew America
Ron Paul Institute
State Policy Network
Tax Foundation
Tax Policy Center
The Club for Growth
The Federalist
The Gold Standard Now
The Heritage Foundation
The Leadership Institute
Union Facts



Blogs For Borders

Reject the United Nations

Adopt Our Troops in Prayer


Thousands of Deadly Islamic Terror Attacks Since 9/11

FairTax Nation on FaceBook
Friends of Israel
Blog Feeds
Syndicated - Get the ARRA News Service feed Syndicated!
ARRA Blog Feed

Add to Google Reader or Homepage

Add to netvibes

Add to Bitty Brouser

Add to The Free Dictionary

Powered by Blogger

Politics Blogs
Politics blog


  • How To Exchange Links!
  • Comments by contributing authors or other sources do not necessarily reflect the position the editor, other contributing authors, sources, readers, or commenters. No contributors, or editors are paid for articles, images, cartoons, etc. While having reported on and promoting the beliefs associated with the ARRA, this blog/site is not controlled by nor funded by the ARRA. This site/blog does not advertise for money or services nor does it solicit funding for its support.
  • Fair Use: This site/blog may contain copyrighted material the use of which has not been specifically authorized by the copyright owner. Such material is made available to advance understanding of political, human rights, economic, democracy, and social justice issues, etc. This constitutes a 'fair use' of such copyrighted material as provided for in section Title 17 U.S.C. Section 107 of the US Copyright Law. Per said section, the material on this site/blog is distributed without profit to readers to view for the expressed purpose of viewing the included information for research, educational, or satirical purposes. Any person/entity seeking to use copyrighted material shared on this site/blog for purposes that go beyond "fair use," must obtain permission from the copyright owner.
  • © 2006 - 2016 ARRA News Service
Creative Commons License
Creative Commons Attribution Noncommercial Share Alike 3.0 Unported License.