IMPORTant Statistics: The Value of Value-Added Metrics

Nob Akimoto

Nob Akimoto

Nob Akimoto is a policy analyst and part-time dungeon master. When not talking endlessly about matters of public policy, he is a dungeon master on the NWN World of Avlis

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19 Responses

  1. Avatar Scott says:

    Just keep ignoring china’s currency manipulation and their dumping of items like solar panels and tires. Nope, nothing to see here.Report

    • Nob Akimoto Nob Akimoto in reply to Scott says:

      Can lead a horse to water, but I suppose one can’t make it drink.Report

      • Avatar Scott in reply to Nob Akimoto says:

        Nob:

        If you want to re calculate the trade deficit using this or that method I’m sure you can find a way to shrink it. That won’t change real structural problems like currency manipulation or dumping. Then again you can lead a horse to to water, but I suppose one can’t make it drink.Report

        • Nob Akimoto Nob Akimoto in reply to Scott says:

          The question is whether or not those are legit structural problems or whether they only appear to be structural problems based on faulty metrics.

          As noted in the Xing and Detert piece, the impact of currency appreciation on the trade deficit would actually be quite negligible, particularly for things like the iPhone. (In fact their original piece was intended primarily to determine what response would actually reduce the structural trade imbalance)Report

        • Avatar Jon Rowe in reply to Scott says:

          Currency manipulation means China ends up investing in American dollars that are not worth as much as China pays for them. So who is getting the better of whom here? They give us goods and we give them paper (or electronic representations thereof) not worth as much as the goods they send to us?Report

  2. Avatar DensityDuck says:

    Are you sure that you read the report correctly? If I read the top of Page 5 correctly, the authors take US-supplied components into account when they calculate the $1.9 billion imbalance.

    Also, while not all of the $1.9 billion imbalance is staying in China, it’s still not being spent in the USA.Report

  3. Avatar KatherineMW says:

    Does the fact that the iPod was invented in the US and most of Apple’s designers and such presumably work in the US and China have any significance for the trade deficit? How good are current accounts generally at measuring quaternary (knowledge-based) industries?Report

  4. Avatar James Hanley says:

    Global trade means global supply chains.

    Hallelujah! Preach it, brother!Report

  5. Avatar Roger says:

    “More widespread adoption of trade in value-added, by academics and policy-researchers (nevermind the popular press) would go a long way in improving the public’s understanding about trade and how the global economy works. And that would be the first step toward a saner approach to trade policy.”

    Good article, Nob. The second step toward a saner trade policy is getting those in the media and politics to have the courage and intellect to reject mercantilism. The eight hundred pound gorilla in the room is that the average American’s views on economics, trade, the effects of currency manipulation and deficits is wrong.

    ABC news has a regular piece on how we can “Buy American” and it makes viewers feel good. Both presidential candidates pander to the belief that trade is a zero sum game, like some kind of economic warfare, and that we need to beat the Chinese by selling the fools more than they sell us.

    Pandering to (and promoting) ignorance is wrong in so many ways.Report

  6. Avatar Citizen says:

    Argentina didn’t effectively close their wounds until they treated their trade deficts. I would say the average americans point of views is not far from the mark. Randomly pickup any product off the shelf and you get a no BS assessment.

    This race to the bottom wage has destroyed nations, now the destruction can be global. Invariably the gaming of the system leads to the same destination. Even China is now seeing areas rise and collapse in record time.

    The other ugly facet of the game is planned obsolescence which is seldom discussed any more. Value to a consumer rides second fiddle to profit.Report

    • Avatar Roger in reply to Citizen says:

      Citizen,

      Your worldview seems contrary to recorded history. People have never been as prosperous as right now. This is the best era ever for human prosperity. Indeed, they have basically never been prosperous as a group at all except where free enterprise has been allowed to reign.

      The “race to the bottom” in wages is one dimension of what is known as productivity or efficiency. It is a measure of the efficiency of producing solutions for consumers aka humans. When we seek solutions to life’s problems and needs, it behooves us to find the most efficient solution. I want transportation, energy, entertainment, security, food and so forth to be as good as possible for as little as possible. This sets up an arms race where prospective producers compete with each other to cooperate with me in solving my problems. This is the engine of progress. It isn’t a bug, it is a feature. It is a feature which we owe your lives, prosperity and existence to.Report

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