Saturday, November 24, 2012
Reduce the trade deficit; increase GDP & median wage
Warren Buffett’s concept to significantly reduce USA’s trade deficit.
It is not our global trade but our trade deficits’ that are a significant net detriment to our economy. Trade deficits’ are ALWAYS detrimental to their nations’ GDPs.
I’m a proponent of a proposal to reduce USA’s trade deficit of goods that was first introduced to the Senate in 2006. The market driven proposal does not favor or discriminate between foreign nations, or between manufactured, agricultural or any other industries’ products. It is self funding; eventually all net federal expenses are borne by U.S. purchasers of foreign goods.
The basic concept is exporters of USA goods may request to have their goods assessed and pay the federal fees.
The fees defray all direct net federal expenses due to this policy. Assessments exclude the values of specifically listed scarce or precious minerals integral to the assessed goods.
Exporters are motivated to acquire Import Certificates; (ICs) which are only issued to exporters for the assessed values of their goods leaving the USA.
Importers would be required to surrender ICs for the assessed value of their goods entering the USA. Surrendered certificates are cancelled.
These transferable Import Certificates are an indirect but effective subsidy of exported USA goods.
This market driven trade policy would significantly decrease USA’s trade deficit of goods and increase the aggregate sum of USA’s imports plus exports and our GDP more than otherwise. The increased domestic production would be reflected within an increasing median wage.
Wage earning families benefit from cheaper imported goods but every day of every year they’re dependent upon their U.S. wages. Regardless of how small the additions to imports’ prices due to Import Certificates, (unlike tariffs) USA’s assessed imports could never exceed that of our exports. USA consumers will be able to purchase cheap, (but not the absolute cheapest) imported goods. We cannot afford the absolute cheapest.
Google: “wikipedia, import certificates “.
Refer to the blog “Nations’ trade deficits are always immediately detrimental to their GDPs”.