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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Amy J who wrote (28344)3/20/2005 11:01:11 AM
From: GraceZRead Replies (1) of 306849
 
Part of the problem, if you see it as a problem, with the trade deficit has to do with the fact that the US is just so much bigger and more advanced than it's trade partners. The US is the largest exporting country in the world. Our exports would be the 6th or 7th economy if they were an economy by themselves. We also have the largest and the fastest growing economy of the largest economies. The people in Malaysia can't use all the goods they produce in their own economies because they don't have the necessary capital base and wealth to employ them. We can use almost all the goods we produce and a large portion of the output of the rest of the world. The incremental additions to our economy each year are larger than some of the economies of the countries we import from. In other words, our growth increment is equal or larger than their whole.

In dollar amounts, California has a gross state product which is equal to the entire gross domestic product of China. The output of one state equal to the entire product of a country with 1.3 billion people....that is if you believe that is all it is worth. Obviously some of this is due to currency but a lot of it comes from the extreme difference in values given to first level consumer goods and that of third, forth and fifth level goods. If you walk into any biotech lab you will see machines which are made of parts entirely manufactured elsewhere, but whose product has no market outside of the five most developed countries. The countries we buy the parts from have to develop far enough to fill their basic needs before the more sophisticated products find a market there.

I'd venture to guess for every dollar of goods imported we produce at least 10 times it's value in our own economy.
Contrary to the hyperbole here on the thread the US isn't becoming third world, the third world is becoming more US. Eventually these various countries will use the income we send them to build up their own capital base and they will develop internal economies like our own, where GDP can be generated by selling their goods internally rather than from strictly exporting their goods. As they become richer they will have to develop less export dependent models or they will suffer the way Japan has suffered for the last ten years.
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