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Forum Post: Can We Have Fair Trade......Yes.

Posted 2 years ago on Oct. 31, 2011, 4:41 p.m. EST by puff6962 (4052)
This content is user submitted and not an official statement

It's really rather simple, and the plan was put forth by Warren Buffett in 2003.

You simply require that imports match exports. You do this by issuing export certificates for each dollar of product that we ship oversees. Exporters can sell these certificates to importers, who must produce the amount of certificates equal to the value of goods that they wish to import.

Soon, these certificates will be traded upon an exchange and a simple and equitable system will develop. Exports will be encouraged. Our currency will be strengthened. China will no longer be rewarded for weakening it's own currency. America will no longer be trading away it's birthright.

97 Comments

97 Comments


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[-] 2 points by notaneoliberal (2269) 2 years ago

Not the worst idea, but tariffs are simpler, historically proven, and effective.

[-] 1 points by ddiggs690 (277) 2 years ago

I say this in all sincerity and please don't take offense to this. Please people, tariffs are not simpler and are proven to be ineffective. Whether or not you are importing or exporting, the net sum is zero. By imposing tariffs, more money is pumped into unproductive use to check imports at our ports and placing duties. Those expendatures are absorbed directly by you and I, not the country we are trying to protect ourselves from. I know our world is getting out of control, but tariffs will only make things worse. I know we can't be masters of everything but, please, if you don't know the market inside and out, do not give advice. While you might have good intentions, if you don't know what you are taking about, it will only make the situation worse.

[-] 1 points by notaneoliberal (2269) 2 years ago

Well ,let's start with your assertion that tariffs "are proven ineffective". Take a look at the chart in the link below starting with the tariff rate of 15.1% in 1792 up to the present. Do you think the US made any gains toward becoming the top manufacturer and the top economy during this period? In 2010, the US lost the status of top manufacturer to China. Notice any trend from, say, 1975,in the tariff rates? You know, the same period of time when US wages started to stagnate. http://en.wikipedia.org/wiki/Tariffs_in_United_States_history

[-] 1 points by ddiggs690 (277) 2 years ago

There are a lot more that go into your assessment than tariffs. Prior to the mid 1800's, income wasn't taxed at all. Also, before 1913, the government had complete control over it's money and could set it's value with respect to other currencies. In 1971 the U.S. went off the gold standard and had massive inflation. You have to look atthe whole picture and not just one aspect of the economy. I am telling you, holding everything else equal, tariffs will cause waste, dead weight losses and increased prices.

[-] 1 points by notaneoliberal (2269) 2 years ago

Well, if you prefer, let's just take 1850 through 1970. Still high tariffs. The gold standard is a non-starter for me. Don't see the relevance. Increased prices relative to what. Not relative to income. Keeping the real income produced by manufacturing within our economy can only raise our real wealth. It tends to distribute more to the working class and less to to top in a higher cost labor environment, but it's more wealth staying home. Many of us think this would be a good thing. .

[-] 1 points by ddiggs690 (277) 2 years ago

The only part of your arguement I can agree with is that tariffs will have a tendancy to keep more jobs at home. With that being said, prices will rise since the lower priced items will not be sold here. And if you think that real wages will rise with the prices you are wrong there too. The producers will always try to get the highest price per unit and if foreign competition is taken away, the domestic producers will just increase prices relative to wages.

With the offsetting prices compared to wages, the GDP will be net zero. But overall, this will net negative growth because of the additional waste trying to enforce the laws. Please think a little more about this, but don't take my word for it. This has been proven through theory and has been well accepted for at least 150 years. Tariffs worked well in America when we were a developing nation but they don't work for developed countries. I respect you and you are well intentioned, but I urge you to read more about this topic.

[-] 1 points by notaneoliberal (2269) 2 years ago

Take a look at this.http://www.onlinetes.com/fileuploads/file/Trade%20Balance%20Matters%20~%20Print%20Media%20FINAL%203%2011%2009.pdf

[-] 1 points by notaneoliberal (2269) 2 years ago

It is not net zero GNI. You are mistaken sir. The real increase in value obtained through the manufacturing process can be paid to a Chinese factory and its' employees or to an American factory. It has not been proven through history. Do not confuse free market propaganda with fact. There are those that wish you to believe what you are saying but that does not make it so. Study Kenynsian economics. Trade imbalances can destroy a nation, economically Those that sell you on the free market myth have an agenda. Statistically, labor cost does not co-relate with price.

[-] 1 points by puff6962 (4052) 2 years ago

No!!!! Tariffs pick winners and losers based on the whims of politicians, they offend trading partners, and there is never an underlying clarity to the system.

The import / export certificate system is different in that, if a trading partners do not buy our exports, the relative price of the import certificates will go up (they are balanced against export certificates which, if reduced in number, become more rare causing a rise in the price in the associated import certificate). This is a de facto tariff during times of reduced American exports (relative to imports) that abates when exports balance imports. Fair trade.

Easy, clear, and no room for political meddling or corruption.

[-] 2 points by notaneoliberal (2269) 2 years ago

I advocate a general tariff. "They offend our trading partners"? Probably having to buy certificates would also. I'm offended by our trade deficit. ( I assume you are also) If we had no trading partners, we would be better off at this point.

[-] 0 points by puff6962 (4052) 2 years ago

You really have to basis for that assertion. Fair trade helps all sides, we just have never seen it.

[-] 2 points by looselyhuman (3117) 2 years ago

There's more to fair trade than the deficit. We shouldn't be cost-competing with workers that have no labor, health, safety, environmental protections, etc. Those differentials should be accounted for. I think intelligent tariffs that are not targeted at nations but at compensating (and not necessarily at 100%) for these differences, including allowing exemptions and discounts on a case-by-case basis (a factory in China that implements good standards, for example), make a lot of sense.

[-] 1 points by notaneoliberal (2269) 2 years ago

loosley, I seldom really disagree with anything much I have seen you say, and it would be nice to raise work standards globally. My problem is that in real world scenarios, monitoring is a big problem. We don't even do a good job of enforcing civil rights or safety issues in our own country, let alone trying to check up on Asia, India and South and Central America. Another point to consider, if anywhere near wage parity where to be reached with, let's say China and the US, I think trade in manufactured goods would grind to a halt. Not to confuse the issue too much, but trade is also an environmental issue. 16 of the worlds largest cargo ships create more pollution than all cars. http://www.surlytrader.com/16-cargo-ships-worse-than-the-worlds-automobiles/

[-] 1 points by looselyhuman (3117) 2 years ago

a.) We can put the burden of demonstrating good practices on the producer, b.) You seem to be arguing that trade would grind to a halt, then arguing that because cargo ships are polluters, maybe that would be a good thing?

[-] 1 points by notaneoliberal (2269) 2 years ago

Yes, guess you could say I am arguing it would be a good thing. If Chinese workers were paid decently, China would have its' own consumer market, and would not need ours. Conversely, without the "slave wage advantage", the motivation to manufacture in Asia, then add the cost of shipping across the Pacific, would largely disappear, imo.

[-] 3 points by looselyhuman (3117) 2 years ago

I don't disagree at all. I think trade would lessen under either plan. My idea would hopefully make good trade have an advantage over bad. That's the idea anyway. I expected opposition from free traders yelling protectionism...

[-] 3 points by notaneoliberal (2269) 2 years ago

All the Presidents on Mt. Rushmore were protectionist. But yes the free traders would yell.

[-] 0 points by puff6962 (4052) 2 years ago

Yes, but we live in a different world.

[-] 2 points by notaneoliberal (2269) 2 years ago

I'm hesitant to even wade back into this debate with you. I have seen many of your posts on various forums, and I generally agree with most of your ideas. On this one I'm a little perplexed. For one thing, the phrase, "we live in a different world today", or some variation of that idea, is often used by the "free traders" who wish to retain the status quo. Yes, there are differences in the world today, but it doesn't necessarily follow that tariffs would no longer work. I thought we had agreed that your plan was also , as you said, a de-facto tariff. The original intent of tariffs in the US was to allow for the development of an industrial base that at the time, was was not yet really existent, and never had been existent here. Today, the goal would be to redevelop what was once here, but has been lost. There are several nation that have used trade barriers to favor their domestic manufacturing in far more recent times, and have been very successful at that goal. China itself is a prime example, as is Germany and Japan. To simply dismiss a system that has accomplish the desired goals by making an absolute statement starting with the word "always" does not make sense to me. Perhaps you could also expound on what you think, considering the trade deficit, the US has to lose as a result of a trade war. I know we have an issue with oil, but if we restrict the issue to manufactured goods, it seems to me the worst we could expect is to recover our own domestic market, which would be a huge gain in both jobs and GNI.

[-] 0 points by puff6962 (4052) 2 years ago

China is developing a consumer base, but the Asian mindset is weighted heavily towards saving.

The only way to achieve fair trade overcoming all of the current barriers placed by foreign governments and bureaucracies is the plan that I have outlined.

Simple tariffs always lead to political corruption and trade wars.

[-] 0 points by puff6962 (4052) 2 years ago

A system of import certificates that were matched to exports from this country would mean that the incentive to dump stuff in our markets, while not buying products from this country, would rapidly dampen.

The required import certificates would be traded on an exchange and their price would vary. If there were a surplus of American exports, the certificates created to match these exports (and required by importers) would lessen in value.

On the other hand, when imports dwarfed American exports, these certificates would become more rare on the exchange and would rapidly go up in value.

This would be, in fact, an adjustable tariff and would encourage foreign countries to enact fair trade policies quickly. It would remove politicians from a corrupting ability to impose selective tariffs and it would be a clear, simple, policy that ANY foreign country could follow.

[-] 1 points by notaneoliberal (2269) 2 years ago

Look, Puff, I don't really want to argue against this idea. As you have stated, this is a de-facto tariff. It beats what we have now. However, I read one of your posts here where you say 500 years of history show tariffs don't work, unless I misunderstood. I strongly disagree with that assertion. In any case, the "Free Market is the Holy Grail" crowd, will oppose either plan.

[-] 1 points by puff6962 (4052) 2 years ago

I think that the Free market is a lie that must be overturned. Nothing is free in this world. When we buy products from overseas producers because they're cheap.....we're saving a few bucks while at the same time selling off a little bit of America. The only difference is that the latter change is not apparent until a manufacturer has lost his job, his company, and his America.

[-] 1 points by notaneoliberal (2269) 2 years ago

Well said.

[-] 0 points by puff6962 (4052) 2 years ago

No system of monitoring will be perfect. But that is not a reason to not have a system of monitoring. That is like throwing away a Bentley because it has a dent.

International trade would go through a phase of disruptions following instituting the plan. But, the system would eventually circumvent the Chinese manipulation of the juan. It would lead to a self correcting system of parity that would strongly encourage American exports.

If service centers and technical centers were treated as a product, and in some way monetized in value, the system would also provide a structure to discourage outsourcing.

[-] 1 points by notaneoliberal (2269) 2 years ago

I don't wish to appear dismissive of this idea. As I said previously, I would prefer it to what we have now. However, I'll ask you to think this through. I'm focusing on manufacturing here. If wages in Asia are raised to even somewhere close to US levels it is no longer cost effective to ship across the Pacific. So the equalization of labor cost would essentially end trade with Asia in manufactured goods, The one "comparative advantage" that Asia has is cheap labor. Call centers fall into a different category.

[-] 0 points by puff6962 (4052) 2 years ago

China, like America in the 1950 ad 60's, will grow primarily from the growth of trade internal within the country. Wages there are already increasing and the Chinese have adopted policies that will encourage internal growth. They do not want to end up like Japan who has a very hollow economic system of exports far stripping internal consumption.

The rest of Asia will see similar trends and the Asian bloc of nations will increase trade within themselves.

Because these certificates are, like money, open to monetary type adjustments; and because they are traded upon an exchange; the disruptions that occur could be gradual.

In the end, however, the goal is to develop a system that DOES put trading partners on a more level playing field. The certificates represent a de facto tariff whose level depends upon the balance of imports to exports.

[-] 0 points by puff6962 (4052) 2 years ago

I think that requiring labor, safety, and environmental standards is a prerequisite for any foreign manufacturer and importer.

[-] 2 points by looselyhuman (3117) 2 years ago

Is that in our current treaties, or in the system you propose? I must have missed it.

[-] 0 points by puff6962 (4052) 2 years ago

Every trade pact that we have or will make, or whatever system we employ to insure fair trade, should have such provisions.

[-] 1 points by looselyhuman (3117) 2 years ago

Agreed.

[-] 0 points by puff6962 (4052) 2 years ago

Don't try and sound smart by putting icing on a cake you didn't make.

Of course, there are those issues, but it would actually help foreign workers and work standards to have a system where there wasn't a direct incentive to race to the bottom on these issues, dump products on the US market, and then move onto the next low wage country when the previous one's workers started to wise up.

[-] 1 points by looselyhuman (3117) 2 years ago

Do you think I'm arguing against Buffett's idea? I'm not. I'm arguing against your outright dismissal of tariffs. I think there's still a direct incentive to race to the bottom even if we balance the deficit. Goods can still be produced cheaper....

[-] 0 points by puff6962 (4052) 2 years ago

All a tariff does is allow politicians, lobbyists, and trade groups to corrupt the system and pick winners and losers.

A system relying upon supply / demand (in this case, for the import phase of the certificates) is clear and responsive to the invisible hand of the market.

It avoids the complexities of rules that, again are open to political corruption, and will only cause foreign nations to enact punishing tariffs of their own. The result would be no trade rather than free trade.

[-] 1 points by looselyhuman (3117) 2 years ago

I don't think you've entirely thought it through. Tariffs in the past have either been blanket or targeted nations or industries. That is picking winners and losers. Tariffs directly tied to specific differentials in standards would provide a framework that's not as easy to exploit. This opposition feels very neoliberal. It's like every solution we get from free marketers. Cap & trade vs. carbon tax, vouchers vs. public schools, insurance mandates and subsidies instead of single payer...

[-] 0 points by puff6962 (4052) 2 years ago

You are actually, despite 500 years of economic knowledge saying otherwise, advocating protective tariffs?

[-] 1 points by looselyhuman (3117) 2 years ago

Have you ever seen Charlie Rose's interview with Sir James Goldsmith, from 1994? He basically predicted the present.

http://video.google.com/videoplay?docid=5064665078176641728#

[-] 0 points by puff6962 (4052) 2 years ago

Many did. Read Kevin Phillips, "Bad Money." The problem was that nobody listened.

[-] 1 points by looselyhuman (3117) 2 years ago

http://occupywallst.org/forum/can-we-have-fair-tradeyes/#comment-256022

40 years of free trade has worked out so well?

[-] 1 points by notaneoliberal (2269) 2 years ago

Can you clarify that post?

[-] 0 points by puff6962 (4052) 2 years ago

Tariffs inherently reduce trade. They invite manipulation of and by politicians. They cause countries to retaliate against each other in their trade policies and that effects foreign policy and produces instabilities in economies.

Read about the history of tariffs....they only work when you are able to tax importers more than other countries tax your exports. The world has become to open, flat, and sophisticated in their interactions and you just can't get away with that over the long run.

[-] 1 points by notaneoliberal (2269) 2 years ago

First, let me say, if the Buffett proposal were up for a vote and I was in Congress, I would vote for it. It would certainly be an improvement over what we have now. It does. however, strike me as re-inventing the wheel. I have read quite extensively on the history of tariffs. I have made the same suggestion to numerous people on this site as well as posting links. Assuming you have read the same information I'm missing how you see it as all that complex. The US employed protectionist throughout about 200 years and became the no.1 manufacturer,and the no.1 economy in the world. The mad rush to dismantle that came with the Reagan gang. Maybe I should clarify to say a general tariff on manufactured goods. I don't want stop importing bananas or pomegranates (things we cannot produce here).

[-] 1 points by puff6962 (4052) 2 years ago

You rail against corruption but you ignore the inherent corruption produced by tariff policies. You tax incoming corn, the other countries retaliate by creating a tax against your airplane manufacturers. Your airplane industry hires the best lobbyists and donate incredibly to your campaign (what's a couple of million in donations when they have billions at stake). Soon, your political system is....well, what we have now....only on steroids.

The result is a trade war and no imports.

If you want to see corruption in politics, use tariffs as a core method of driving economic equality.

[-] 2 points by notaneoliberal (2269) 2 years ago

Uh, there is no incoming corn. We export corn in huge quantities. Also I specified manufactured goods, not corn. A general tariff does not favor special interests unless you want to consider all manufacturing a special interest. That's one reason I specified a general tariff. We have nothing to fear from a trade war. That would be one war we couldn't lose.

[-] 0 points by puff6962 (4052) 2 years ago

I'm sorry this is useless.

A system of import certificates balanced against export certificates is the only fair, self correcting, and uncorrupt mechanism that will work in the modern world. When imports exceed exports, the import side of the certificate trades at a premium on an exchange thereby creating a de facto tariff.

[-] 0 points by puff6962 (4052) 2 years ago

from, "onemansopinion":

The reality is that the average household spends $12800 a year on consumer goods. 80% of these purchases are for overseas goods.

You might as well put $10240 and mail it off to China. Not sure what that figure looks like nationally but its a lot.

Global competition is a tool used by Anti American countries to wage an economic war against America. These countries have "closed economic systems" that don't play by the same rules as western countries.

They can print as much money as they want.

* Labor costs nothing since its bought with the printed money.
* Resources cost nothing since they are bought with printed money.
* Technology costs nothing since western countries have outsourced it willingly to get cheap labor.

The vast majority of consumer goods are now made in China. To fuel the growth China takes the revenue from the vast goods exported to buy resources around the world.

Enters the "China Investment Corporation". The China Investment Corporation was established with the intent of utilizing these reserves for the benefit of the state.

http://en.wikipedia.org/wiki/China_Investment_Corporation

The unfair advantage in acquiring resources is carefully engineered.

"The low cost of capital of CIC leads to contentions that its investments are effectively subsidized by the Chinese government therefore creating an unfair advantage for CIC versus others seeking to compete for the same acquisition targets."

http://en.wikipedia.org/wiki/China_Investment_Corporation

This is not free enterprise, the purchases are always well thought out strategic purchases.

This allows China to trade goods for foreign currencies and then invest these currencies in resources globally to fuel their strategic objectives.

China is counting on the greed of their more than capable army of industrialists willing to partner with any Western business. Every one of these partnerships has ended in disaster. But the Chinese would have us believe that these individual investment disasters are isolated incidences of personal greed by Chinese profit takes.

However, this is a contrived methodology of partnership failure that ends in the Western company transferring technology and skills. Eventually these rebranded products will compete for sale globally on store shelves.

As much as China plays the capitalist role, the real goal is destabilization of competitive world economies with a future eye to economic and military superiority.

The thinking is that a economically collapsed America will no longer be able to project itself militarily because it will simple not be able to afford to do so.

Lets be clear. The economic collapse has been engineered in the war rooms of Americas enemies. This imbalance of trade and the willingness for China to loan more and more money is a clear methodical tactic.

To ensure that other countries can not change this balance of trade all foreign goods sold in China have a 30%+ import tax.

The good news is that there is a simple solution to this crisis.

1.

  Insist that the government legislation country of origin labels on products. If 1% of the product is made overseas then it must be labeled foreign with the appropriate flag.

2.

  After this is done American consumers must vote with their dollars.

3.

  Spread the word and make it socially unacceptable to buy from countries that are not solid allies of America.

4.

  Encourage your Government to create free trade deals with its Allies and make membership impossible for countries that would sell technology outside of these alliances.

The rest of the world is lining up against America. In a recent meeting of the SCO "Shanghai Cooperation Organization" which includes member states of China, Russia, and several other former Soviet satellite nations voted to add Iran and Pakistan.

http://tribune.com.pk/story/288792/pakistan-seeks-full-member-status-in-shanghai-grouping/

China stated gaols of the SCO are a counterbalance to NATO for security (militarily) and economic trade.

These two goals in China's mind are the same. The lines are drawn amongst America's enemies while American businesses continue to transfer technology and skills blindly to the east.

[-] 1 points by notaneoliberal (2269) 2 years ago

Good information.(You are of course, preaching to the choir.) It is indeed a national security issue.

[-] 1 points by zoom6000 (430) from St Petersburg, FL 2 years ago
[-] 1 points by slogan505 (2) 2 years ago

Gold is a bad investment based on greed it does not have interest don't be fooled by the sellers Gold should be at $400 USA dollars do not find yourself paying $2,000 in gold for a hot dog in bad time people wake up to "GEED" lets undo the unjust

[-] 1 points by slogan505 (2) 2 years ago

Gold is a bad investment based on greed it does not have interest don't be fooled by the sellers Gold should be at $400 USA dollars do not find yourself paying $2,000 in gold for a hot dog in bad time people wake up to "GEED" lets undo the unjust

[-] 1 points by Innuendo (2) 2 years ago

Yes-Thomas Jefferson's spirit should live in this movement. We must level the playing field with importers who pay their workers $20.00 a week. "The selfish spirit of commerce knows no country, and feels no passion or principle but that of gain." Thomas Jefferson

[-] 1 points by Innuendo (2) 2 years ago

Yes-Thomas Jefferson's spirit should live in this movement. We must level the playing field with importers who pay their workers $20.00 a week. "The selfish spirit of commerce knows no country, and feels no passion or principle but that of gain." Thomas Jefferson

[-] 1 points by invient (360) 2 years ago

Never heard of this. Sounds great and is IMO more politically feasible than tariffs and uses market principals which should give gopers a boner.

[-] 1 points by MJMorrow (419) 2 years ago

I am with you. There was a Bill, S. 3899, titled, "Balanced Trade Restoration Act of 2006," that did not make it to being passed. The Bill is still available on the Internet and it can be examined, as a model of how, Senators Dorgan and Feingold, tried to wrestle with the very concept of Import certificates, as suggested years earlier, by Warren Buffett.

[-] 0 points by puff6962 (4052) 2 years ago

Thank you. I have never heard of this bill. I am embarrassed to admit that, but thank you. If you want to start a new forum topic on this bill, please do. Otherwise, I will study it and place one tomorrow.

[-] 1 points by MJMorrow (419) 2 years ago

No problem. We need to work together; anytime Puff! S! MJ

[-] 1 points by OneVoice (153) 2 years ago

It's Warren Buffett's idea of a globalized workforce. He's got some other great ideas but it is kind of funny how he never talks about defined retirement plans or affordable health care. Since Buffett controls approx. 90% of all carpet sold in the United States I guess the man just want to carpet the world.

[-] 1 points by puff6962 (4052) 2 years ago

I think the Koch brothers control most of the carpet sold here.....Stainmaster.

Buffett has made comments regarding health care. His partner, Charlie Munger, actually gave a reporter a "tip" for an excellent article describing how outcomes in our health care system bear little relationship to costs.

Buffett has an underlying theory of capitalism. It is the best system for aggregate wealth. But, there are always winners and losers. Those who do not benefit from capitalism are often the progeny of those who didn't benefit from capitalism. Buffett believes in effective social programs and a safety net for those who are in need.

He states that he is a Democrat mostly in his opinions. He is probably the smartest man I have ever studied and it would interest me greatly to see what he thinks will be the outcome of OWS.

[-] 1 points by technoviking (484) 2 years ago

what's stopping importers from hoarding these certificates, causing an imbalance?

[-] 0 points by puff6962 (4052) 2 years ago

Importers have to buy the export certificates that are issued when American companies sell items overseas. I am calling them "import certificates," but they are really just these same export certificates. The exporter then owns these certificates and sells them to importers wishing to bring products in. Once that transaction is complete, and products have been imported, then these certificates are canceled.

Thus, there is a circuit from exporter, new certificate, export, sale of certificate to importer on an exchange, import, canceled certificate.

[-] 1 points by technoviking (484) 2 years ago

what if there not enough importers wishing to bring products in? what if we run out of importers to sell these certs to?

[-] 0 points by puff6962 (4052) 2 years ago

Do you really believe that would happen?

[-] 1 points by technoviking (484) 2 years ago

where do you think the trade imbalance is coming from, if there are as many exporters as importers?

[-] 1 points by puff6962 (4052) 2 years ago

Not worth it.....

That's the point, there are not enough exporters as compared to importers. It is easy for companies to import to this country, but it is often a minefield for exporters here to get their products into foreign markets.

[-] 1 points by GeorgeMichaelBluth (402) from Arlington, VA 2 years ago

What's Americas birthright?

[-] 1 points by puff6962 (4052) 2 years ago

All of the infrastructure, system of learning, and socioeconomic investments of past generations of americans.

[Removed]

[-] 0 points by Febs (824) from Plymouth Meeting, PA 2 years ago

Fair trade is free trade.

[-] 1 points by puff6962 (4052) 2 years ago

What is the definition of "fair." If one side manipulates its currency....if one side uses child labor.....if one side dumps waste behind its factories, then free trade would not be fair.

[-] 0 points by Febs (824) from Plymouth Meeting, PA 2 years ago

Force and fraud aren't part of free trade for force and fraud mean coercion which is the antithesis of free.

[-] 1 points by puff6962 (4052) 2 years ago

Then you present a utopian explanation for your utopian notion of free trade.

[-] 0 points by Febs (824) from Plymouth Meeting, PA 2 years ago

A nation that resorts to protectionism or damages its own natural resources (and ignores the damage to the private property of others) harms itself in the long run which will make it uncompetitive.

[-] 0 points by CCD (17) 2 years ago

The budget deficit in August was $46 billion. More than $26 billion of that was for crude oil and liquid fuels. This has nothing to do with China since they are an importer of oil. Want to tell me how this plan will work since there is no way we can produce most of the oil we consume? As usual conventional wisdom is never checked.

[-] 0 points by puff6962 (4052) 2 years ago

It's not my wisdom, it's Warren Buffett's. We would be free to import all the oil that we are now, but the Saudi's would have to purchase certificates upon the exchange in order to sell us that oil. This would add some cost to imported oil, but the result would be a focusing upon the resources we have here, namely natural gas.

[-] 0 points by CCD (17) 2 years ago

First Canada, not the Saudi's are the biggest exporter to the US. Secondly Crude Oil is a commodity freely traded on the World's exchanges. If oil is $90 on the open market then no one is going to sell it to the US for $85 just to add the purchase of the certificate.

The conventional wisdom I was challenging is that somehow "the experts" are right and the other that "China is to blame for the huge deficit." Clearly, these statements need to be challenged. There is no proof that Buffet's idea is carefully thought out or could easily work.

Finally, as usual Americans do not want to adapt to the world around them are accept prevailing economic trends at face value. Learn to concentrate on what you do best instead of handicap others and you will export more.

[-] 0 points by puff6962 (4052) 2 years ago

I do not see a flaw in the plan. Imported oil would become more expensive....domestic oil and natural gas would be encouraged. The Saudi's buy their certificates and gripe, we absorb the added cost. Or, the Saudi's, Chinese, Japan, Eurpope, and India could import more from us so that the matched certificates would be easier to acquire on the exchange.

It truly is a wonderfully simple system that lessens what seems like unsolvable problems.

[-] 0 points by CCD (17) 2 years ago

"It truly is a wonderfully simple system that lessens what seems like unsolvable problems." A system never before implemented ... pretty arrogant remark.

It is no wonder you people are in deep trouble. I am a commodities trader and worked at an oil company for 7 years. Basically commodities like oil are essentially auctioned to the highest bidder. In your "wonderful system" the consumer pays more. The Canadians (again Canada is the chief energy exporter to the US; guess you missed that) would get the going rate and US Refineries would end up paying for the certificates. So now you have exporting subsidized by the US consumer.

Want a system that works - look at Hong Kong and Singapore. Two countries with one of the highest sustained growth rates in 60 and 45 years respectfully. HK was once a manufacturing center. Now it is not. It priced itself out of the market. Guess what? They adapted to the world around them. Singapore as well has shifted to more high skilled and service industries instead of bucking an overwhelming trend.

Warren Buffet once spoke out in favor of the death tax saying he wanted his children to achieve for themselves. Now he apparently falls short of his principals advocating handing people a subsidized advantage. And why not since in the end his children will end up inheriting a few Billion (yes not his whole fortune but more than thy will ever need). Perhaps it is better to choose your heros more carefully.

I will agree with you on one thing. The US should be moving forward on Natural Gas and other home sources of alternative energy. Unfortunately though nothing is done there. But it will take a bit more than certificates. Your energy problems are going to be one of the things that end up eating you alive.

[-] 0 points by puff6962 (4052) 2 years ago

Every trade pact ever enacted has "never before (been) implemented." So, there is nothing intrinsically different about adopting a new system of foreign trade.

Oil was asked about by another poster, and that one is difficult. The middle eastern countries take oil revenues and generally distribute some percentage of those dollars to their people and invest the rest. They do not buy enough of our products to generate sufficient import certificate demands by themselves. Therefore, for them to import their oil, they would have to buy these certificates on the open exchange. This would increase the price of oil and the costs of others who wished to import to the United States.

But, over the decades that it would require for the system to truly mature, an excess of import certificates could be placed upon the exchange and this surplus gradually lessened, so that the transition would be more smooth.

In the final analysis, exporters and natural gas would be favored here. The system, being guided by the exchange, would be free from political manipulations. And, foreign nations and international corporations would cease their attempts to influence our trade policies.

Selective tariffs never work in the long run. A better system is one whose relative rate is determined by the market via the balance of exports to imports.

[-] 0 points by CCD (17) 2 years ago

It is like you never read my previous post. The Saudi's or any other county do not have to do anything. The going rate for oil is the going rate. If you will not buy it for todays market price someone else will. Again oil is auctioned. This is oil not cars. You seem to have no idea how things actually work in the real world.

It is funny you never responded about Singapore or Hong Kong both of which have free markets; few if any tariffs; and successful economies. These economies have learned to focus on what they do best instead of populations asking for the government to come in and regulate an advantage. You never hit on the issue of people adapting and improving to circumstance instead of asking for help.

I hardly see your system as fair since it basically coerces people to buy US products instead of make their own choice. It is funny you bring up the Saudis. I lived and worked there for 7 years. Saudi's are great consumers of US products (a lot of American cars there) but in the last 10 years they have called for boycotts due to US support for Israel and animosity about having US troops there.

[-] 0 points by puff6962 (4052) 2 years ago

First, if you are a commodities trader on this page then you must be a rather shitty one. The price of oil is the price of oil. But, the surcharge import certificate would be required for that dollar amount of oil to enter this country. It would be no different than a tariff.

Are you really comparing this nation to Singapore or Hong Kong? The plethora of differences between our countries, our cultures, our locations, and our economics are so fantastically great that I'm just laughing that you would bring it up twice.

We are a nation of red necks and smart people. The one things the two have in common is that both like to spend more than they make. And, what do they do with that money? Buy cheap stuff from Asian countries, drive inefficient automobiles, leverage their credit, and use television to babysit their kids. I'm being satirical here, but you sound like you could use a good laugh.

[-] 0 points by CCD (17) 2 years ago

To the first paragraph. You wish. I support myself with my trading and employ people to boot. You are the one that knows nothing about oil. If you go back and read my earlier post (7 hours before this one) I said "the oil refiner would end up paying for the certificate." And this cost would be passed onto the consumer.

Paragraph 2. A sorry and stupid excuse. If someone does better than they are different. People are people and respond pretty much the same to economic incentives and suffer from the same weaknesses. The People's Republic of China was a dismal failure from 1949 to 1979 while HK and Singapore wore doing great. Funny since it is the same people, culture, etc. At least I have lived in these places, worked at oil companies and know how things are bought and sold.

[-] 0 points by puff6962 (4052) 2 years ago

Then the cost should be passed on to the consumer. They are the ones who are, by allowing continued large trade deficits, selling off a part of our society's accumulated wealth anyway. With either the new system, or with the one in place, consumers are paying more than for just a barrel of oil.

Most commodities traders, the vast majority, end up loosing a great deal in the long run. So, hang in there skippy, you're going to be one of the 99 soon enough.

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[-] 0 points by CCD (17) 2 years ago

" They are the ones who are, by allowing continued large trade deficits, selling off a part of our society's accumulated wealth anyway."

So I take it that you do not have a car, do not eat, have no plastic products of any kind. That all takes crude oil. Otherwise you are one of the people selling societies accumulated wealth.

It seems like many on this board you hate to give people a free choice. If I make a living and decide to spend my money on gasoline or a Chinese made toy for my kids that is my money, not yours and not societies'.

As for the way I make my living. I have been doing this for 7 years. Most people fail in the first few months. It is difficult and stressful. However, I don't need to depend on anyone else - a boss, clients.

But regardless of how much money I make I will never be one the 99 that is for sure. Most of the people on this board have no new ideas at all. It is just the same government should take care of me economically and the world owes me a living BS. Certainly, allowing things to run their course naturally and normally, allowing individuals to learn how to adapt on their own is not a popular notion. According to you Hong Kong People and Singaporeans are a special group with these rare capabilities.

I never became a successful trader by following the crowd. "Think different" to steal a line from Apple. But most people don't.

[-] 0 points by puff6962 (4052) 2 years ago

You need to read Nassim Taleb. You're making a little money every day taking greater risks than you understand. Beware the "fat tails." They will bring a trader like you to their knees.

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[-] -1 points by Joeschmoe1000 (270) 2 years ago

Er... Those certificates are used today...

The are called dollar bills

[-] 1 points by puff6962 (4052) 2 years ago

No. Today, you can import as much as you want without a necessary export counterbalance. That is why we are said to run a "trade deficit."

Each time we do this, we sell off a bit of America. Much like a landed estate, Americans are selling off an acre at a time in order to pay for a lifestyle that we cannot afford. Eventually, we will end up as renters on an estate we once owned.

[-] 1 points by Lockean (671) from New York, NY 2 years ago

This.

[-] 0 points by puff6962 (4052) 2 years ago

Yes.

[-] 0 points by technoviking (484) 2 years ago

if you are chinese and you buy american goods from american exporters, you buy us dollars from the market. and you sell chinese rmbs. you then use the us dollars to buy the goods and sell them in china.

so now someone in the world has chinese rmbs, because you just sold him some. he has to sell these chinese rmbs to someone else. maybe he'll sell it to walmart, who will use these chinese rmbs to import cheap knockoffs goods.

there! balance of trade

[-] 1 points by puff6962 (4052) 2 years ago

Yes, and the Chinese have somewhere around 1.7 trillion in excess reserves balanced against our past history of unbalanced trade.

Those 1.7 trillion dollars represent "claim checks." They may buy corporations, US land, US technology, and US influence.

Just because they hold them in treasuries, does not mean that there is some self-correcting, equilibrating, system in existence. The Chinese just have no idea what to do with that many dollars.

If the current system remains unchanged, the Chinese will one day begin dumping dollars or will demand much higher interest rates for their treasury holdings. In either event, that is when you will see the ramifications of this imbalance.

[-] 0 points by technoviking (484) 2 years ago

indeed. and this is where i am coming from.

chinese hold dollars today. for all we know they may choose to 'hoard' these export/import certs you talk about.

the us dollar has been overvalued for far too long. in a perfectly functioning economy, the dollar will become cheaper, american goods will become more affordable to foreigners, and we will start exporting more goods again, and manufacturing may finally start hiring locally once again.

but none of this is happening. the us dollar needs to fall drastically for the economy to recover.

[-] 0 points by puff6962 (4052) 2 years ago

If the Chinese wish to buy up these certificates, they would do so at a high price.....the certificates are traded on an exchange. Imagine if you tried to buy up all of the shares of Apple. You would start at par and, when the shares became more scarce upon the open market, the price of each incremental share would skyrocket.

That is why the system is self-correcting. If there's a surplus of exports, it becomes easier to import. If foreign nations shut us out, then the price of the certificates necessary for imports goes soaring.

[-] 1 points by technoviking (484) 2 years ago

unless of course, the demand for imports is so strong that the american importer and exporter is willing to bear the cost of the certificates as a result of the imbalance to convince the chinese to sell to us.

which, as i said, is what has been happening. the imbalance has been at the expense of local manufacturing. it is not immediately apparent, but the manufacturing industry have been bearing the cost of a trade imbalance for the past decade.

[-] 0 points by puff6962 (4052) 2 years ago

Of course it has and, when there is an imbalance of American exports to imports, then the price of the import certificate goes up. It is a de facto tariff that adjusts with the trade balance.

[-] 1 points by technoviking (484) 2 years ago

so the dollar exchange rate has been doing what this certificate has been doing all along.

[-] 1 points by puff6962 (4052) 2 years ago

Except that there has been an imbalance of 1.7 trillion on the American side. Again, these are future claim checks that the Chinese government can apply in any manner we see fit. You can, of course, just devalue your currency.....which would hurt the Chinese in the short term....but the resulting effect would be skyrocketing interest rates for American corporations and government to borrow.

The system of trade certificates is different, and separate, in that it attempts to prevent this imbalance of currency reserves from developing.

It is a de facto tariff that adjusts with the balance of exports to imports.

[-] 0 points by puff6962 (4052) 2 years ago

And, no, the dollar has not behaved as an import/export certificate because the Chinese manipulate their currency in order to maintain their export advantages.