Facts About Free Trade, China, and the Economy

First there was the “iPod Paper.” That now-iconic study found that Chinese inputs amount to only $6 of the $150 cost of producing an Apple iPod, yet the entire $150 is chalked up as an import from China.
. . .
Despite globalization, the U.S. economy “actually remains relatively closed.” (By “relatively closed,” the authors mean that imports are puny compared to the size of the economy—not that U.S. policies are relatively restrictive of imports.)

The vast majority of goods and services purchased by U.S. consumers (88.5%) is produced in the United States.

When accounting for the value of foreign content in final U.S. production of goods and services, 86.1% of U.S. consumer purchases of goods and services is produced in the United States.

Of the 11.5% of total U.S. consumer spending on imports, 64% accounts for the goods and services produced abroad and 36% accounts for transportation, wholesaling, retailing and other activities performed in the United States.

Only 2.7% of U.S. consumer spending is devoted to goods labeled “Made in China.”

Of the 2.7% of U.S. consumer spending on imports from China, only 45% is for the foreign-produced good and 55% goes to transportation, wholesaling, retailing, and other activities performed in the United States. In other words, $.55 of every dollar spent on imports from China directly supports economic activity in the United States.

Here. The bottom line is that most of the debates about the economy, China, jobs, trade you hear, watch, and read about are wrong. 

The problem with the economy is that politicians have been trying to buy votes with your tax dollars and by offering a free lunch.  It turns out that meal is laced with poison and its taking effect.

For example, just because a politician offers a tax credit for having children or buying green energy does not mean its a wise investment.  A wise investment provides a positive return.  Politicians have been getting negative returns on their “investments” — i.e. tax credits  and other lures — and we have seen the monthly statement.


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