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Forum Post: The Most Brilliant Plan For Fair Trade Ever Devised.....Brought To You By Warren Buffett!

Posted 3 years ago on Nov. 28, 2011, 3:27 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 on an exchange to importers, who are then required to produce an amount of certificates equal to the value of goods they wish to import.

These certificates will be traded upon an exchange and a simple and equitable system would develop where exports would be strongly encouraged. Our currency will be strengthened. China will no longer be rewarded for manipulating its own currency. America will no longer be trading away it's birthright.

The certificate system would, effectively, be a variable tariff. When there was an excess of exports over imports, the certificates would be plentiful and cheap. When there was a great excess of imports over exports, their prices upon the exchange would rise precipitously. This would then raise the price of all eimports somewhat and would encourage domestic producers and our exports.

It is rather ingenious, and I wish that I could say it was my idea. But, it comes from the mind of Warren Buffett.

It was actually proposed as legislation in 2006, and could be again as soon as tomorrow.

Read the bill here:

http://www.govtrack.us/congress/bill.xpd?bill=s109-3899

Here's more about the plan:

http://www.usa-trade-deficit.blogspot.com/

and here is Buffett's original 2003 article:

http://money.cnn.com/magazines/fortune/fortune_archive/2003/11/10/352872/index.htm

89 Comments

89 Comments


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[-] 2 points by aahpat (1407) 3 years ago

This does nothing to address the underlying socio-economic disparities causing the problems with trade.

Buffett is brilliant at churning billions of dollars while skimming off the easy cream at the top.

Buffett is an idiot when it comes to solving social justice problems.

[-] 0 points by puff6962 (4052) 3 years ago

I'm sorry, but there are just little traces of intelligence in that comment upon which to build a conversation.

The system described would represent an adjustable tariff that would be protectionist when foreign countries provided barriers to American goods. It would maintain an equilibrium between imports and exports. It would provide what has never existed, a rational system of exchange between nations.

It would do more to protect American jobs than all previous trade legislation in our history......COMBINED.

And, yes, it was devised by a very shrewd businessman who understands how to allocate capital in order to reap the maximal return. But, so what?

Would you turn down a hundred dollar gift certificate just because it was printed in pink? What difference does it make if Buffett proposed and ingenious system or if Elizabeth Warren proposed it?

On the issue of social justice, are you prepared to give away your entire fortune.....or live in the same modest home for over 50 years.....or shun the excesses of impossible wealth? Buffett will go down in history as one of the most unique individuals to have inhabited our little planet. He has written a great deal on social justice.....he has championed intervention during an "Economic Pearl Harbor," and he has given more to charity than any one man in history.

Who are you to denounce him? It's simply amazing what happens when you give the smallest ant a bullhorn.

[-] 1 points by aahpat (1407) 3 years ago

"there are just little traces of intelligence in that comment "

I have been analyzing investments, economics and finances for three decades. Go fuck yourself you myopic arrogant asshole!

[-] 1 points by debndan (1145) 3 years ago

Whoa whoa aaphat, don't get angry, relax, reason. If you need something to smile at just go here....

http://occupywallst.org/forum/why-libertarianism-is-so-wonderful/

I think you'll enjoy it : }

[-] 1 points by aahpat (1407) 3 years ago

I did enjoy it.

Thanks. (;^>)

Arrogant butt-holes impress me, in all the wrong ways....

[-] 1 points by debndan (1145) 3 years ago

KEWL, then this will really make you smile

http://occupywallst.org/forum/atlas-shat-and-excerpt/

[-] -1 points by puff6962 (4052) 3 years ago

I bet all butt-holes impress you and I bet you impress on all butt-holes.

[-] 0 points by puff6962 (4052) 3 years ago

Explain to me what you think are the three most important variables to assess before investing in a company? I would like to understand your investment philosophy.

[-] 1 points by aahpat (1407) 3 years ago

Don't play pseudo intellectual games with me.

Investment philosophy has nothing to do with trade issues.

[-] 0 points by puff6962 (4052) 3 years ago

That isn't much of an investment philosophy from someone who has managed investments for three decades. My money guy could spit them out in about 8 seconds. I don't suffer fools or frauds and you, little man, are a fraud.

[-] 1 points by aahpat (1407) 3 years ago

WHEN you ever learn to read for comprehension my response will have better meaning.

Now kiss off you arrogant tissue of snot!

[-] 0 points by puff6962 (4052) 3 years ago

Still waiting for that investment strategy little man. No wonder our financial system collapsed with little idiot cogs such as yourself.

[-] 0 points by puff6962 (4052) 3 years ago

No reply at all.....So, I will give you the answers. Number one, pricing authority. Number two, a high return on equity. And....da da da da ....number three, a durable competitive advantage.

Now tell me your three little man.

[-] 2 points by thomasthetank (41) 3 years ago

The 6269 troll is back.

[-] 1 points by demcapitalist (977) 2 years ago

It's better than what we do now with our trade deficits buy crap products from China and balance out the trade by selling them debt. We have enough debt. I like it.

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

Ya, Buffett is a genius.

[-] 1 points by opensociety4us (914) from Norwalk, CT 3 years ago

It's not and never was about "Fair" trade.

[-] 0 points by puff6962 (4052) 3 years ago

And, then what was it about? I can't tell what you are responding to....

[-] 1 points by BlueRose (1437) 3 years ago

Does this help minority women get a fair shake?

[-] 0 points by puff6962 (4052) 3 years ago

A rising tide lifts all boats.

[-] 1 points by BlueRose (1437) 3 years ago

Like trickle down lifts all boats? Seriously. I'll go through that material, but a fundamental problem is the boat leaks when it comes to treatment of women, children, workers, animals, minorities, non-Christians, the planet.

[-] 0 points by puff6962 (4052) 3 years ago

The main difficulties with those groups you mentioned is that they either do not vote or they do not vote as a block.

But, the poor and minorities are always hardest hit by a downturn and very little has been paid to their specific plight in the Great Recession.

[-] 1 points by FreedomIsFree (340) 3 years ago

Very interesting, Puff. I agree we have a significant balance of payments issue. The bill itself is awfully crude, though. It attempts to prevent the massive increase in the price of oil by treating it differently, but I would think the other raw materials that we must import from elsewhere ( say lithium, for example) would see incredible price increases.

I'll let this cook for a while before I pass judgment. Thanks for posting.

[-] 0 points by puff6962 (4052) 3 years ago

thanx for reading.

here's more about the plan:

http://www.usa-trade-deficit.blogspot.com/

and here is Buffett's original article:

http://money.cnn.com/magazines/fortune/fortune_archive/2003/11/10/352872/index.htm

[-] 1 points by nKoch (2) from Spokane, WA 3 years ago

Sounds like Cap n Trade on crack. No thank You...

[-] 0 points by puff6962 (4052) 3 years ago

Perhaps you are right.....but aspirin also sounds like ass. And, whereas ass may not be beneficial during a heart attack, an aspirin might.

We are trying to solve the issue of our trade deficit and the gradual selling of our birthright and you bring up some Fox news red meat for comparison.

Shameful and beneath your intellect.

[-] 0 points by puff6962 (4052) 3 years ago

No, it sounds like truly equitable free trade.

When you buy your little trinket at Hobby Lobby and pay a dollar less for it that if it were created by adults making more than 45 cents per hour, you're saving money. But, not as much as you think. Every one of those purchases results in a displacement of a small portion of our manufacturing base. Subtract out the mulitpliers of that capital and you are playing with real money.

I think that is a scurrilous comparison. The idea is more of a market sensitive tariff than a means of regulating carbon emissions.

[-] 1 points by nKoch (2) from Spokane, WA 3 years ago

My comparison speaks to how they will operate. Which are creepily similar. The government needs to get out of the business of business. We need less government involvement in our economy, not more. Much like separation of church and State, we need a strong Separation of Business and State. Screw corporate bailouts, corporate tax breaks/loopholes, and our progressive tax system. Call them what they truly are, kickbacks and payoffs. ALL Laws should apply to ALL people EQUALLY, ALL the time... Without exception.

[-] 1 points by opensociety4us (914) from Norwalk, CT 3 years ago

Your distinction between Business and State is superficial. A democratically elected non-corrupt government should be involved in regulating business as it's the only check we have to keep the "race to the bottom" from killing people. Regulating business and conducting business are not the same thing and each needs the other to exist.

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

Without government, most businesses could not function.

Think very hard, trolls, before you respond to this blanket statement.

[-] 0 points by puff6962 (4052) 3 years ago

Why would you choose that name as a moniker?

[-] 0 points by puff6962 (4052) 3 years ago

Yes, but the value of these certificates is market driven. The government has nothing to do with their valuation.

If we actually exported more than we imported, then these certificates would be in surplus and their value minimal.

If imports far outstripped exports, their value would adjust up and American producers would be somewhat shielded.

I have not studied cap and trade (I will). But, from what I have studied on the history of tariffs, it is vital to get the politicians as far away as possible.

[-] 1 points by Jellow (5) 3 years ago

This does sound good. You have to get all the nations together to agree. Then you have to get out "do nothing" congress to agree. You have alot of work to do.

I say we just impose a tariff on all incoming goods. This way if other countries want to sell here they will agree automaticly. Of course you also have to get that through the congress.

Now the founding fathers intended for most of our taxes to be paid this way. Then China wound stop sucking our businesses and money away. China has sucked away so much of our money that now they are lending to us. Like the Bible says, "The borrower is a slave to the lender." Unless we change this trade imballance, China will dictate the terms. You will bow to Chinese businessmen.

My son just got back from Afganastan. He said our troops are guarding Chinese business as they set you mining opperations to take Afganastan's resources.

My take on this is that the Rothchild banks are financing China and the US military is protecting the transfer of wealth to China

[-] 1 points by alexrai (851) 3 years ago

I agree, the simpler system is an import tariff on goods and appropriate taxation on services.

Personally I only support tariffs on goods produced by exploiting cheap third world cost of labour, because if companies want to compete on quality, that fosters innovation and should be fair game.

For services, I think if a company dismantles a 400 person call center and contracts to a third world country to save on labour costs, they should get slapped with an export tax on that contract which is sufficient to minimize the difference between domestic and foreign labour; that would either change the incentive, or at least offset the increased cost of social programs and reduction of tax revenue caused by outsourcing. (If there is actually a legitimate reason to outsource like better technology, expertise, or service, then they will do it anyway... but it shouldn't be simply because of labour savings.)

Just 'cause I don't want to post twice, here is also my thoughts on Buffet's idea while I'm at it:

Its a very interesting idea but from a practical perspective the up and down variation in pricing would make it impossible to plan ahead and price appropriately for businesses which depend on imports.

You could set up a derivative exchange so that you could hedge with option contracts I suppose, but that has its own problems and associated costs; or alternatively purchase in advance during a slow season and hold them until you need them, but that has leaves large sums of money tied up doing nothing.

Another problem would be firms purchasing massive amounts of import certificates and holding them for re-sale like stock markets.

It also does not address the issue of exported services, it only addresses goods.

[-] 0 points by puff6962 (4052) 3 years ago

Yes, that is a good point....services are more difficult to monetize. But, a system imperfect in execution is usually better than a system imperfect in it's conception.

Our current system of trade is selling off America on dollar at a time. Free trade is a LIE. Those cheap products are not cheap....they result in the loss of a portion of our manufacturing base.

In the end, the middle class or poor bargain shopper is actually selling off part of the goose and China will get the Golden Egg.

[-] 0 points by puff6962 (4052) 3 years ago

I think that each nation would probably copy it to some extent.

There would be the potential for other countries, and ours, to game the system somewhat.

[-] 0 points by puff6962 (4052) 3 years ago

Actually, you don't have to get any other nation to agree and, if they want to mirror the program, then they can set up their own exchanges and begin issuing export>>>>import certificates.

[-] 1 points by Daennera (765) from Griffith, IN 3 years ago

So the price of things we import skyrockets, thereby reducing the standard of living for everyone. Awesome plan ~ sarcasm.

[-] 2 points by puff6962 (4052) 3 years ago

Your standard of living will gradually drop and income producing assets in this country are sold off to foreign entities.....

What do you think happens with the trade surpluses of our competitors? Here's a clue.....they have to wash that excess in dollar denominated items such as treasuries, land, companies, etc.

Currently, treasuries....upon which mortgage rates are based and our government debt is financed....are purchased largely by this foreign excess dollar capital. If our trading "partners" wished to stop buying them, interest rates and the cost of servicing our national debt would skyrocket.

So, the first thing we have ceded in the current system is the ability to be firm with our competition.

The second point is that, very soon, there will be an excess of foreign trade surpluses that can be poured into treasuries and that is when foreign entities will begin buying up American companies like their candy in the checkout line. They didn't in 2008-2010 because they were afraid that our companies might falter and.....why should they buy up American companies when they are already kicking their asses using their native cheap labor? But, again, this will change.

I'm sorry you find it so important to buy your granny panties for 49 cents each....instead of paying 54 cents for a better pair to be made here. But, with either system, you are truly paying 54 cents each. With continuing trade deficits, it will simply take you longer to realize that you were dripping away other American assets so that you could save that nickel today.

That was not sarcasm.

[-] 0 points by puff6962 (4052) 3 years ago

So your GRANNIE PANTIES cost you an extra nickel and you get to change the world. I would rather watch Beavis and Butthead than bother with someone who would say something so inane.

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

First Power, Then Change.

[-] 0 points by puff6962 (4052) 3 years ago

What is Libitertarian Socialism?

[-] 0 points by MVSN (768) from Stockton, CA 3 years ago

You really are an operative for the Republicrats.

[-] 0 points by puff6962 (4052) 3 years ago

No, my politics would fall very close to what was once called "progressivism."

I have two organizing ethos:

What works in practice cannot be wrong in theory.

and

Where there is the duty to act and the ability to act, then the failure to act is an abuse of power.

It may seem crazy, but I feel it is my duty (sometimes dudie) to be on this forum spouting out what I think can and should be achieved while devising a way to make it occur. That last part is the tough one.

[-] 0 points by puff6962 (4052) 3 years ago

No, I'm just not currently dropping acid.

[-] 0 points by puff6962 (4052) 3 years ago

Do you realize that a bill was submitted on this legislation......it was S. 3899: Balanced Trade Restoration Act of 2006. It was sponsored by a Democrat in the Senate, Byron Dorgon and was co-sponsored by Senator Russ Feingold.

If you are unaware, those were two very pragmatic and progressive voices in the Senate for a number of years.

This bill had very little chance in a body controlled by the Republicans, but should become part of the lexicon of post-financial America.

[-] 0 points by MVSN (768) from Stockton, CA 3 years ago

And that bill was not passed in Obamas first two years because? Every time you post I see more and more who you really are..

[-] 0 points by puff6962 (4052) 3 years ago

I fault the Democrats and Obama for not pushing it.....but, I think that they were rightfully fearful that the adoption of this measure could be viewed as the Smoot–Hawley Tariff Act of 2009.

In the future, no matter who is in control of our government, three things will inevitably occur.....taxes will have to be raised, entitlements cut, and this Buffett plan for trade will be adopted.

Foreign holdings of our treasuries will be converted to the purchase of income producing assets here in the states and, as in the 1980's with Japan, this will be the wake-up call.

[-] 0 points by MVSN (768) from Stockton, CA 3 years ago

Pushing it? They could have passed it on there own just like they did Health Care.

[-] 0 points by puff6962 (4052) 3 years ago

Yes, and the adjustments in international trade could have sent ripple effects across the world economy at a time that credit markets were frozen or severely limping.

When your cancer patient is having a heart attack, do you treat him for cancer or do you give him CPR?

[-] 0 points by shoozTroll (17632) 3 years ago

If the Democrats introduce it the republicans will filibuster.

Sad, isn't it?

[-] -1 points by puff6962 (4052) 3 years ago

Maybe. But, good ideas sometimes take on a life of their own.

The fact is that we are like a wealthy family selling off, gradually, pieces of our estate in order to support a lifestyle that we cannot afford. In the end, we will become tenants upon the land we once owned.

Only a systematic program of fair trade regulation.....one that is dynamic and outside of political meddling.....can prevent the wholesale mortgaging of our country.

I don't speak Chinese and I have no desire to be owned by them. I'm sure they're nice people....and those Saudis too....but I would prefer for America to be owned by Americans.

[-] 2 points by ZenDogTroll (13032) from South Burlington, VT 3 years ago

Some of the Chinese people are simply quite brilliant - but I can't read their pictures either . . .

[-] -1 points by puff6962 (4052) 3 years ago

I was being a little sarcastic with that last part.

[-] 2 points by ZenDogTroll (13032) from South Burlington, VT 3 years ago

and I was applauding your wry sense of humor, however cynical it may be.

[-] -1 points by puff6962 (4052) 3 years ago

Sorry, but sometimes I say stuff like that and people take it quite literally.....which kinda scares the hell out of me. You walk a fine line being a wry humorist.

[-] 1 points by ZenDogTroll (13032) from South Burlington, VT 3 years ago

it's the white space. sometimes people get lost in it. I don't mind. I come from snow country.

[-] 0 points by puff6962 (4052) 3 years ago

Ya, I'm snowblind.

[-] 1 points by ZenDogTroll (13032) from South Burlington, VT 3 years ago

LoL!

[-] 0 points by michael4ows (224) from Mountain View, CA 3 years ago

Oh... this sounds like a worthy idea to me!

[-] 0 points by puff6962 (4052) 3 years ago

Thank you.....pass it on.

[-] 0 points by puff6962 (4052) 3 years ago

See. This is why you don't place serious posts on this forum. Lost in the noise.

[-] 1 points by gnomunny (6885) from St Louis, MO 3 years ago

That is a problem. That is an ingenious idea though. Say what you will about the Oracle but he sure is one smart mofo. I've bookmarked that link to post elsewhere in cyberspace so it wasn't a total loss.

[-] 0 points by puff6962 (4052) 3 years ago

Please ping pong this with me so that it stays on the radar of the this forum. Thanks for your comment.

[-] 1 points by gnomunny (6885) from St Louis, MO 3 years ago

Personally, although I don't know a hell of a lot about him, I've always liked Buffett. At least he's made a goodly portion of his money without outright ripping people off. Sure wish I could've bought a few shares of Berkshire Hathaway twenty or thirty years ago when it was still publicly traded.

[-] 0 points by kingscrosssection (314) 3 years ago

He was an ingenious man who started off working himself and grew his money.

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

I can't find the exact quote, but he said recently that he thanks society for his wealth. Basically pointing out that most of the dollars he has reflect costs that were externalized. No man is an island.

[-] 0 points by kingscrosssection (314) 3 years ago

True but have you ever read a biography of the man? Incredible

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

The best book about him is "The Snowball."

The best book about his investment history is called "Of Permanent Value."

The best book about his investment strategy is titled....I hate this title...."How to Pick Stocks Like Warren Buffett." This one is by Timothy Vick and, if you memorize one book during your life, this is the one.

[-] 1 points by gnomunny (6885) from St Louis, MO 3 years ago

Thanks for that input. I've heard a number of people badmouth him over the last couple years which made me begin to doubt my initial admiration of him. It's good to hear something positive about him.

[-] 0 points by kingscrosssection (314) 3 years ago

Have you ever read one of his biographies?

[-] 2 points by gnomunny (6885) from St Louis, MO 3 years ago

Not yet. Any suggestions? I'm planning a trip to the library in the next week or so and would certainly check one out.

[-] 1 points by kingscrosssection (314) 3 years ago

I'd just find one that starts in his childhood. Any of those that go that f ar back are normally a go a head. There are several it all depends on what your preferences are.

[-] 1 points by gnomunny (6885) from St Louis, MO 3 years ago

Thanks. I'll check a couple out.

[-] 1 points by kingscrosssection (314) 3 years ago

The Snowball was good although I don;t remember how biographical it was.

[-] 0 points by puff6962 (4052) 3 years ago

The best book about Buffett also has the worst title....."How to Pick Stocks Like Warren Buffett," by Timothy Vick.

If you want a readable explanation of how this genius works, and perhaps make some better investments, I would suggest this book.

[-] 0 points by puff6962 (4052) 3 years ago

Yes, and if you want to understand him, you have to read two books.....

One is titled, "The Essays of Warren Buffett," and the other one is,

"How To Pick Stocks Like Warren Buffett." The author of the second book is Timothy Vick and it's obviously more a book about investing than philosophy.

[-] 0 points by puff6962 (4052) 3 years ago

Ya, I would have liked to have been in his original 100k investment pool back in the 1950's.

I will try to post some other Buffett inspired initiatives.

[-] 2 points by gnomunny (6885) from St Louis, MO 3 years ago

Yeah, I'll bet $1000 invested with him back then would probably be worth millions by now.

[-] 0 points by puff6962 (4052) 3 years ago

Ya, he once spoke about the 2500 dollars he once invested in a gas station as a young man. He said that it would be worth 250 million today. Not a bad rate of return.

[-] 1 points by gnomunny (6885) from St Louis, MO 3 years ago

I wonder how he did that math. That's a hell of a return. 10,000%.

[-] 0 points by puff6962 (4052) 3 years ago

The most powerful force in the world is compound interest.

Albert Einstein.

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

I have time for a bump. :)