Ideal Taxes Association

Raymond Richman       -       Jesse Richman       -       Howard Richman

 Richmans' Trade and Taxes Blog



Trump Gets It Right: Trade Was a Loser For All Except the Most Wealthy Americans
Raymond Richman, 8/24/2016

Robert B. Zoellick, wrote an opinion piece entitled “Trump Gets It Wrong: Trade Is a Winner for Americans” (WSJ, 8/8/2016).  Mr.Zoellick is a lawyer with a J.D. degree from Harvard. From 2001to 2005, he was the United States Trade Representative under President GW Bush. Prior to that, from 1993 through 1997, he served under Pres. Bill Clinton as an Executive Vice President at Fannie Mae for two years.  He served as the lead State Department official in the negotiations of the North American Free Trade Agreement and the Uruguay Round which created the World Trade Organization. He helped launch the Asia Pacific Economic Cooperation group.  From 1985 to 1988, under Pres. Reagan, he served in the Department of the Treasury in various positions, including Counselor to the Secretary, Executive Secretary and Deputy Assistant Secretary for Financial Institutions Policy. He served as the Chairman of International Advisors at The Goldman Sachs Group, Inc., from June 2006 to 2007  He actively supported Romney in 2012. He was rewarded by Pres. G. W. Bush with a five year stint as the head of the World Bank at about $800,000 per year. He is clearly a guy who knows how to ingratiate himself with politicians of both parties.

He writes that “55% of registered voters think free trade is good for America because it opens up markets for U.S. goods”. Citing other polls, the writes that “Republicans would be prudent not to assume voters will join Mr. Trump’s retreat on trade.”  Unfortunately, he may be right on that; we shall see. He declares that American manufacturers have benefitted from the free trade deals through lower costs and so have American consumers through lower prices, averaging savings according to one study of about $10,000 per household. U.S. multinationals make about “57 % of U.S. capital investment, and are the source of 83% of private R&D.” “Americans are not losers. But some Americans lose out because economic forces and misfortunes can overwhelm them. Whoever becomes the next President should help people adjust to change, not pretend that change can be prevented.”

Zoellick is not an economist and unfortunately does not display how much economic knowledge he lacks. If he were to look at the Gross Domestic Product data published by the U.S. Department of commerce, he would know that the U.S. trade deficits have been increasing for more than two decades and have diminished total GDP by an average of 3% a year, so that our economy could be growing at double the rate we actually experienced for two decades. Here is the data he should be aware of:

 Gross Domestic Product and Net Exports (1996 – 2015)

[Billions of chained (2009) dollars]

Year 

1995

1996

1997

1998

1999

2000

Gross domestic product

10174.8

10561

11034.9

11525.9

12065.9

12559.7

Net exports of goods and services

---

---

---

---

-377.1

-477.8

Net exports as percent of GDP

---

---

---

---

-3.12534

-3.80423

             

Growth of GDP over previous year %

 

3.80

4.49

4.45

4.69

4.09

Growth of GDP over previous year if

           

            net exports were zero %

 

3.80

4.49

4.45

7.81

7.90

             
 

2001

2002

2003

2004

2005

2006

Gross domestic product

12682.2

12908.8

13271.1

13773.5

14234.2

14613.8

Net exports of goods and services

-502.1

-584.3

-641.9

-734.8

-782.3

-794.3

Net exports as percent of GDP

-3.95909

-4.52637

-4.83683

-5.33488

-5.49592

-5.43527

             

Growth of GDP over previous year %

0.98

1.79

2.81

3.79

3.34

2.67

Growth of GDP over previous year if

           

            net exports were zero %

4.93

6.31

7.64

9.12

8.84

8.10

             
 

2007

2008

2009

2010

2011

2012

Gross domestic product

14873.7

14830.4

14418.7

14783.8

15020.6

15354.6

Net exports of goods and services

-712.6

-557.8

-395.4

-458.8

-459.4

-447.1

Net exports as percent of GDP

-4.79101

-3.76119

-2.74227

-3.1034

-3.05847

-2.91183

             

Growth of GDP over previous year %

1.78

-0.29

-2.78

2.53

1.60

2.22

Growth of GDP over previous year if

           

            net exports were zero %

6.57

3.47

-0.03

5.64

4.66

5.14

             
 

2013 

2014 

2015 

     

Gross domestic product

15612.2

15982.3

16397.2

     

Net exports of goods and services

-404.9

-425.7

-540

     

Net exports as percent of GDP

-2.59348

-2.66357

-3.29325

     
             

Growth of GDP over previous year %

1.68

2.37

2.60

     

Growth of GDP over previous year if

           

            net exports were zero %

4.27

5.03

5.89

     
             

Source: BEA, U.S. Dept. of  Commerce

           
             
             
             

As the foregoing table shows, GDP growth would have been more than double that actual growth rate every year if our international trade had been international trade had been in balance each year since 1996. The ills of our economy, slow growth, loss of manufacturing jobs, stagnant incomes for the lower middle class, movement of millions out of the labor force were largely caused by the trade deficits. And government officials like Mr. Zoellick and global-oriented Congressmen, Senators, and  Presidents, as candidate Trump suggests, are largely responsible. 

Your Name:

Post a Comment:


Comment by Steve Talbot, 9/29/2016:

While I agree with your conclusion, you haven't really proven your point.  You simply state an unsupported conclusion.  You leave readers hanging on the question, "How do you know this?"  or "Why should I believe this?"




  • Richmans' Blog    RSS
  • Our New Book - Balanced Trade
  • Buy Trading Away Our Future
  • Read Trading Away Our Future
  • Richmans' Commentaries
  • ITA Working Papers
  • ITA on Facebook
  • Contact Us

    Archive
    May 2017
    Apr 2017
    Mar 2017
    Feb 2017
    Jan 2017
    Dec 2016
    Nov 2016
    Oct 2016
    Sep 2016
    Aug 2016

    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013
    April 2013
    March 2013
    February 2013
    January 2013
    December 2012
    November 2012
    October 2012
    September 2012
    August 2012
    July 2012
    June 2012
    May 2012
    April 2012
    March 2012
    February 2012
    January 2012
    December 2011
    November 2011
    October 2011
    September 2011
    August 2011
    July 2011
    June 2011
    May 2011
    April 2011
    March 2011
    February 2011
    January 2011
    December 2010
    November 2010
    October 2010
    September 2010
    August 2010
    July 2010
    June 2010
    May 2010
    April 2010
    March 2010
    February 2010
    January 2010

    Categories:
    Book Reviews
    Capital Gains Taxation
    Corporate Income Tax
    Consumption Taxes
    Economy - Long Term

    Economy - Short Term
    Environmental Regulation
    Real Estate Taxation
    Trade
    Miscellaneous

    Outside Links:

  • American Economic Alert
  • American Jobs Alliance
  • Angry Bear Blog
  • Economy in Crisis
  • Econbrowser
  • Emmanuel Goldstein's Blog
  • Levy Economics Institute
  • McKeever Institute
  • Michael Pettis Blog
  • Naked Capitalism
  • Natural Born Conservative
  • Science & Public Policy Inst.
  • TradeReform.org
  • Votersway Blog
  • Watt's Up With That


    Wikipedia:

  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]