The USA Is Not Very Import-Dependent

[Kurt_and_Hunter]

The USA Is Not Very Import-Dependent

One response to my proposal to stimulate demand with a helicopter drop of money is the idea that the benefits will somehow all flow to Asia:

So, you give me an envelop full of cash, I go and buy a pair of shoes made in China, and a TV set made in Korea. That will certainly stimulate China and Korea; though it’s not quite clear to me what they are going to with that cash.

I think this reflects a widespread misunderstanding about the impact of trade on the United States economy. Not misunderstanding about the merits of trade even, just misunderstanding about the extent of trade. The United States is a very big country and consequently we’re actually a country that doesn’t trade all that much compared to most developed nations. You can see this if you look at imports as a share of GDP in the top ten economies (GDP calculated at market exchange rate levels here because we’re talking trade):

As you can see, we do less importing than ever country on this list except Japan and Brazil. Importing is an important part of American economic life, but it’s not that important. The vast majority of US demand for goods and services is met domestically and the United States is more reliant on the internal market to meet its demand than are China or Canada or Germany or what have you.

http://yglesias.thinkprogress.org/2010/10/the-usa-is-not-very-import-dependent/

[gmoney]

1. Uh, maybe

But China imports lots of raw materials and turns them into finished goods, which promotes manufacturing and processing jobs. The US imports finished goods, which really only benefits retailers, who pay their workers about the same as Chinese sweatshops.

[peacebird]

2. i know most "stuff" i look at in the store says made in chine, even frozen veggies

i have to look hard to find "made in the USA"

Not that is am disagreeing, the author undoubtably knows more than me, and i DO hope he is correct! but it does "appear" like most of what is on the shelves comes from other countries...

[Kurt_and_Hunter]

4. True, but those consumer goods aren't everything

All our roads and bridges and houses are made in the USA even if some of the raw materials are imported.

We have some huge mineral and resource industries -- timber, coal... probably gypsum. Silver and gold.

Even oil. e use more than we produce but we produce a lot.

I think we are still the world's top producer of food. (Maybe China has puled ahead there, given its size)

[Gravel Democrat]

26. The SF Bay Bridge: Made in China and Costing a Fortune

The bridge (eastern span) is being manufactured in China, and that's not going so well. There have been murmurings of quality concerns.

http://motherjones.com/mojo/2009/12/why-bay-bridge-going-cost-you-and-your-children

Why a Big Piece of New Bay Bridge Is From China

Why China? The ability to build such a span, and price. Only Shanghai’s Zhenhua Port Machinery Co. (ZPMC) had the manufacturing capacity to do such a big structure; if such forging and construction was to be done domestically, a new facility would have to be built. And that had an effect on price. Panorama concluded: "Chinese steel and labor was $400 million cheaper than it was for domestic steel fabrication.

http://www.nbclosangeles.com/blogs/prop-zero/Why-A-Big-Piece-of-New-Bay-Bridge-Is-From-China-102836519.html

"...Only Shanghai’s Zhenhua Port Machinery Co. (ZPMC) had the manufacturing capacity to do such a big structure;..."

for shame

[Fumesucker]

3. But so much of our GDP is created by essentially useless paper shuffling..

I'm not sure this is a good comparison, the economies of the countries you have listed vary a great deal, ours is heavily dependent on the financial sector, something that doesn't make up such a large portion of the economy in many other nations.

[Junkdrawer]

9. +1

[PSPS]

5. This person must have learned economics through a correspondence course

The fact is that the USA is largely "de-industrialized" now. We import almost everything and most of the "made in USA" products are labeled that way solely because the finished product is assembled here using parts manufactured elsewhere.

The only reason that most of this isn't reflected in the author's "statistics" is because material manufactured in an offshore sweatshop owned by a multi-national with an office here isn't considered "imported." In other words, an HP printer is manufactured in HP's Chinese sweatshop and shipped here isn't counted as an import because HP is an "American company." (The US taxpayer subsidized, through direct funding and tax breaks, HP moving its manufacturing operation offshore.)

[rgbecker]

6. The key is look at the total GDP for America.

Most of these other countries haven't moved to be the huge service economy that America is. We pay for everything and do little for ourselves. Take a look at your personal budget and you'll see little of it goes to buying manufactured goods...it mainly goes to service items. Here's a typical list.

Insurance
Health care
Utilities, cable, phone, electric
Taxes for security, roads, schools, government administration.
Mortgage/Rent
dining out, entertainment
Travel
Then comes some American made Food.
Your Car might be made elsewhere and a few of your household furnishings, but these are probably at the 10-15% of your budget level. More for some than for others.

This post isn't that far off.

That isn't to say America hasn't lost millions of Manufacturing jobs that should have stayed right here.

[Primitive Mind]

12. China is losing manufacturing jobs as well

A lot of it is due to the automation of processes. More automation means more humans are going to have to find other means to make a living. That isn't necessarily a bad thing.

[FarCenter]

7. Consider our imports of crude oil.

In July we were importing crude oil at the rate of about 12.6 million barrels per day, which at current prices of about $80 / barrel would be about $1 billion / day or about $370 billion / year.

Furthermore, you should look at the trade deficit -- imports minus exports. Gemany, for example, runs a significant trade surplus, so it can support it level of imports.

[Kurt_and_Hunter]

8. Consider our exports of Harry Potter movies

The "consider one thing" approach to intellectual life is less than useful.

[Kurt_and_Hunter]

10. The replies to this thread are all to typical of DU today

A series of replies that

a) bluster inflexible ideas formed without evidence and that cannot be challenged

or

b) seek to refute the OP by refuting things not said in the OP

or

c) take an emotional approach to the question, seeking to diminish the OP's value as propaganda in some imaginary struggle.


What Matt Yglesias wrote was, as plainly stated, an answer to the widespread but jaw-dropping ignorant view, which I have read 100 times on DU, that direct stimulus of consumer demand in the US is a bad idea because it would primarily benefit China.

[Fumesucker]

14. Eh, you didn't reply to my point that much of our GDP is based on paper shuffling..

A far higher percentage of our GDP is involved with "finance" than many of the other economies named in your OP.

And then you have the gall to talk about "bluster inflexible ideas".

It is quite true that the majority of our consumer spending is on goods made in places other than the USA, it's to the point now that trying to find a consumer good (other than agricultural products) made in the USA is damn near as frustrating as Diogenes' search for an honest man.

[Kurt_and_Hunter]

16. I like you so I won't get snarky

The OP says what it says. It is specific and sensible.

I do not disagree with what you say. I disagree that it has a blessed thing to do with the OP.

The argument that stimulating demand in the US would merely benefit China is incorrect. And that's the topic of the OP.

When I want to post that the US has an ideal mix of services, fiance and manufacturing I will do so, but I don't have any plan to because I don't think that at all.

[Fumesucker]

19. I like you too..

Stimulating consumer spending will create plenty of jobs here in the USA but I suspect that most of them will be sales jobs or service jobs (low paying in other words), few of them will be manufacturing jobs and that portion of the consumer spending that goes to manufactured items will mostly go to nations other than the USA (except for the sales and service jobs incidentally created).

And this point goes directly to one of the claims in the OP, that our percentage of GDP devoted to imports is lower than that of many other countries, if such a large percentage of our GDP was not involved with monkey motion paper shuffling in the financial sector then the statistic in the OP would be more meaningful than it actually is.

[Kurt_and_Hunter]

21. Consider if all national boundaries were sealed.

We could become energy self-sufficient, which many could not. (Japan would go belly-up in a week.)

We would be food self-sufficient. We make most of our own construction materials.

Clothes, shoes, big-screen TVs... we would have no trouble making these things if we had to. They would cost more is all. But we could do it.

Of the world's top ten economies we are probably the most self-sufficient.

It's a fairly vanilla statement and I don't understand the vehement response it engenders.

To me it's just kind of interesting.

[Fumesucker]

23. The skills and equipment to do a lot of those things have left the USA..

If you were to seal the borders the economy in the US would take a nose dive that would make the Great Depression look like nap time at the preschool, it would be a horrendous crash if only because our energy usage would have to be cut by at least half.

We are also not self sufficient in a fairly large number of raw materials needed for modern technology, rare earths for example.

[Kurt_and_Hunter]

24. It would be a disaster for everyone

I doubt any major economy is self-sufficient.

But we probably import a smaller percentage of total energy than Germany or China, and certainly Japan.

I am not suggesting closing the borders, or that it wouldn't wreck every modern economy (it would) but that we could survive it better than most.

The skills and equipment for basic manufacture would have to be rebuilt, but everyone everywhere would have to create new industries.

I would rather have to figure out how to make pants and shoes than have to build an aviation industry from scratch.

And the countries who are net food importers would be the ones who really had to scramble!

[SmileyRose]

11. I call bullshit on that article

Most of our GDP is dependent upon the financing and trading of the stuff produced elsewhere. Turn off the flow of imports and we collapse. We are utterly incapable of producing our own stuff anymore - with the exception of food.

[Kurt_and_Hunter]

13. That's silly

We are quite capable of producing anything.

We chose to not produce many things because it is cheaper to import them than it is to make them here.

[Kalun D]

20. The Corporate Elite

""We chose to not produce many things because it is cheaper to import them than it is to make them here.""

Cheaper is the wrong word, it's more profitable for a small minority of corporate elites.

It's more expensive for the vast majority of the working class, who's standard of living has gone down ever since the start of the trend toward trade imbalance initiated by the Raygoon revolution.

[SmileyRose]

27. It would take at least one year to gear up again.

Are Americans CAPABLE of producing our own stuff? Well, of course. But the infrastructure is long gone and the lag time to rebuild that would not be pretty on our way of life.

[rucky]

15. How do we have a trade deficit?

[Kurt_and_Hunter]

17. That is a combination of imports and exports

The fact that we do not export enough does not mean that we import an unusual amount.

I means we don't export enough.

[Kalun D]

18. Your Chart is Bullsh*t

It shows percentage of GDP instead of real numbers.

GDP is a bogus figure to use because it's artificially inflated by the bullsh*t wallstreet bankers and their flim flam.

It doesn't show export numbers.

[Greyhound]

22. We are one of the very few nations that could be completely self sufficient.

We have all the natural resources we require to exist. It would require significant restructuring and conversion, but everything requires can be done within our borders.

Just because we do import so much crap doesn't mean that we have no alternative.

[Kurt_and_Hunter]

25. Correct. It would be deeply disruptive...

...but we could.

Most could not.