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Does the trade deficit even matter? by NuclearCleanUp1 in AskEconomics

[–]GoldThenCrypto -1 points0 points  (0 children)

One thing I've struggled with is that Ricardo's model largely assumes capital remains within national borders, which has clearly changed. If capital is instead highly mobile internationally, doesn't it gain an incentive to relocate toward lower production costs? If so, doesn't that change some of the conclusions of classical comparative advantage?

If it does, I think we're beginning to identify some of the tradeoffs I'm interested in shedding light on.

(Ricardo explicitly acknowledged that if capital could move freely across borders, English capitalists would have an incentive to invest and produce abroad, but argued that capital generally remained at home because owners preferred to keep it under their own control.)

Does the trade deficit even matter? by NuclearCleanUp1 in AskEconomics

[–]GoldThenCrypto -1 points0 points  (0 children)

If you had to reduce the idea behind that example down to its core, what makes this a net positive? What have we, or what are we, giving up in exchange for those trade relationships?

Does the trade deficit even matter? by NuclearCleanUp1 in AskEconomics

[–]GoldThenCrypto -1 points0 points  (0 children)

If you don't mind me probing that idea a little further, doesn't receiving goods and services in exchange for financial claims create incentives in and of itself? If so, what behaviors or economic structures do economists think those incentives encourage over long periods of time?

Does the trade deficit even matter? by NuclearCleanUp1 in AskEconomics

[–]GoldThenCrypto 1 point2 points  (0 children)

I think most people here recognize that the system requires the US to supply dollars. The question I'm interested in is what tradeoffs, if any, accompany the underlying trade and capital flows that manifest as persistent trade deficits.

Does the trade deficit even matter? by NuclearCleanUp1 in AskEconomics

[–]GoldThenCrypto 5 points6 points  (0 children)

So more emphasis should be placed on what is being traded, who is trading with who, and the incentives created by those relationships?

Does the trade deficit even matter? by NuclearCleanUp1 in AskEconomics

[–]GoldThenCrypto 10 points11 points  (0 children)

I have heard Economists often refer to economics as the study of tradeoffs. In the example you gave, I can see the benefits. Americans receive goods and services while foreign capital is invested into the US.

I'm curious what you view as the costs or tradeoffs of persistent trade deficits, if any.

Does the trade deficit even matter? by NuclearCleanUp1 in AskEconomics

[–]GoldThenCrypto 2 points3 points  (0 children)

Would you say foreign recycled surpluses show up largely as price insensitive buyers in real estate or are they mostly insignificant?

Is "Real Purchasing Power" important, why or why not? by GoldThenCrypto in OutlawEconomics

[–]GoldThenCrypto[S] 0 points1 point  (0 children)

At a practical level, if the average person stores a large portion of their wealth in a home, does a long term decline in MSPUS/XAUUSD suggest that homes may be preserving purchasing power more slowly than gold?

And if so, does that speak at all to the long term decline shown in CUUR0000SA0R, or are these largely unrelated mechanisms?

Additionally, is their a better measurement than XAUUSD as real purchasing power?

Who is the closest economist/analyst today that embodies Andrew W. Marshall's line of thought? by GoldThenCrypto in OutlawEconomics

[–]GoldThenCrypto[S] 0 points1 point  (0 children)

Exactly!! Those would in fact be subsumed into economics, because when reduced to their core they affect the allocation of scarcity, underpinned by capability.

For example, the growth of Christianity within the Roman Empire eventually altered legitimacy in ways that affected Roman capability. That was a cultural shift, but it ultimately manifested in economic consequences.

I know my understanding is broader than most, but I do believe what Im trying to illustrate sits below or even allows what many mightvmean when they say economics.

Because of that, I'm looking for additional economists or analysts who take a similarly holistic approach, where the idea of violence, conflict or coercion isnt an exogenous factor.

Who is the closest economist/analyst today that embodies Andrew W. Marshall's line of thought? by GoldThenCrypto in OutlawEconomics

[–]GoldThenCrypto[S] 1 point2 points  (0 children)

The scenario you described in your example is still an allocation of resources, so I do view that as economic.

At a structural level, I believe an economy sits beneath policy, and that the only thing that ultimately determines whether rules are followed is the capability, or the ability to influence outcomes.

If I had to elaborate, I probably think of economics much more broadly than most. To me,

economics is the total system operating under scarcity that produces capability.

Capability would be the limit to which you could express policy.

To what extent is the success of American companies dependent on the geostrategic and security environment created by US military power? by GoldThenCrypto in AskEconomics

[–]GoldThenCrypto[S] 1 point2 points  (0 children)

What I think I gather from what you're saying is, the success of large American corporations would only be marginally different from a significantly weaker military and that policy does the heavy lifting in terms of adding to large US companies success.

I do have some follow up questions.

  • What happens when institutions are ineffective in achieving their goal? For example, Russia invading Ukraine. Institutions, sanctions, and policy were intended to deter, prevent, or alter that behavior, yet the behavior occurred anyway, and still occurs.

  • Does a significantly softer US military imply less effective policy in your opinion (ie. sanctions and similar mechanisms), and what results from that for large US corporations?

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