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The Korean chickens are coming home to roost
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mindmetoo

Joined: 02 Feb 2004

Posted: Thu Oct 16, 2008 7:14 am Post subject:

mises wrote:

It isn't because it is another multi billion dollar addition to various American deficits.

Which deficit? A trade deficit is not the same as a budget deficit. As someone in Korea you must be aware it's very hard to spend American dollars in Korea. Koreans like to take Won. The money we send to Korea comes right back. There's no deficit.

Forcing people to buy more expensive cars, on the other hand, contributes to personal deficits.

Gopher

Joined: 04 Jun 2005

Posted: Thu Oct 16, 2008 7:21 am Post subject:

South Korea exports far more than cars. It also exports consumer electronics: cell phones, computers, televisions, etc. LG and Samsung. Note that just as American cars are rare in South Korea, so are American consumer electronics.

Check out "Scarlet," for example

On the other hand, South Korea, as I said, above, does not represent that big of a deal per se to the United States. Note South Korea's favorable balance of trade overall and with the United States.

State.gov wrote:

Trade (2007): Exports--$379 billion f.o.b.: electronic products (semiconductors, cellular phones and equipment, computers), automobiles, machinery and equipment, steel, ships, petrochemicals. Imports--$349.6 billion f.o.b.: crude oil, food, machinery and transportation equipment, chemicals and chemical products, base metals and articles.

Major markets (2007)--China (25.7%), U.S. (12.3%), Japan (6.8%), Hong Kong (4.5%).

Major suppliers (2007)--China (16.7%), Japan (16.4%), U.S. (10.5%), Saudi Arabia (6.3%), U.A.E. (4.2%).

mises

Joined: 05 Nov 2007
Location: retired

Posted: Thu Oct 16, 2008 7:24 am Post subject:

I am not in Korea. Notice "various". Trade, current account, consumer. Take your pick. What contributes to personal deficits in America is that they consume more than they produce. The remedy is to consume less and produce more. Cheap cars are not an economic Pancia, but actually cause people to make irrational choices with their income. North east Asia has subsidized American consumption by financing their own exports to the United States. This is called Bretton Woods 2, or is at any rate an element of. This global monetary regime is coming to an end, with the Chinese and Europeans recently calling for a rewriting of the global financial architecture. The era of consumption as growth is ending. Best prepare. Fair'ish trade with Korea is part of this preparation.

mises

Joined: 05 Nov 2007
Location: retired

Posted: Thu Oct 16, 2008 7:35 am Post subject:

Gopher wrote:

State.gov wrote:

And apparently the iPhone is being blocked with non-tariff barriers. The jerks.

Anyways, (generalizing ahead) Korea exports high-value finished manufactured goods to the United States, Canada etc. North America exports raw materials, foods and some very, very high value things like nuclear technology and airplanes.

But America is, less the small % that is ultra high value, is playing the role of Africa to China. Raw materials to a major manufacturing powerhouse.

Milton Friedman wrote in Capitalism and Freedom (paraphrase) that there are two ways to produce a car. The first is to build it in Detroit. The second is to put grain on a boat to Japan and when the boat comes back there will be a car on it. Fair enough, and true when surrounded with utopian assumptions.

The reality now is that Asia sends both the capital and the car to America and America is sending back grain and interest payments. The car is disposable consumption and the interest is simply lost money. For the betterment of the North American economy, we need to produce more and consume less. We need to save and focus on home. Trade is good, on balance, of course. But trade has to be financed with production, and not debt.

Adventurer

Joined: 28 Jan 2006

Posted: Thu Oct 16, 2008 8:02 am Post subject:

Gopher wrote:

His position is good here, as are several of his positions. But this is campaign talk, specifically intended to influence population groups X, Y, and Z's vote. Also, the Clinton Administration went into office highly, highly committed to its agenda -- "investing in the American people," "universal healthcare," "gays in the military," among other things. Clinton pledged to focus on domestic issues and leave foreign adventuring out of governance. Clinton's people, including his highly motivated wife, could not pass these initiatives, even over the military, for example, where the President, in theory, simply issues executive orders from the top down. And foreign affairs have a way of coming to the United States, whether it wants them or not.

In any case, B. Obama's supporters are setting themselves up for massive disappointment once he, probably at this point, wins the election, enters office, and starts governing (which means, alliance-building and compromising, all geared, primarily, toward winning that second term in 2012).

Taking these campaign pledges and neat-sounding debate positions at face-value is a bad idea.

It is easy for politicians to make all kinds of promises. Frankly, I would rather Obama focus on a few things he can definitely accomplish and do well. I think he should focus on paying the deficit, increasing oversight over Wall Street and bringing in some more bankng regulations. I am not sure what he could do about increasing social programs. However, the expectation is that he will spend money on social programs. Frankly, more and more people want health care, but the priority should be the health of the economy.

mindmetoo

Joined: 02 Feb 2004

Posted: Thu Oct 16, 2008 11:48 am Post subject:

mises wrote:

Trade, current account, consumer. Take your pick.

But you left off capital account. Odd that. All those dollars we send to Korea, where do you suppose they go? Surely, you've been in Korea and are aware dollars are not being traded on the street for goods and services.

Quote:

The remedy is to consume less and produce more.

Which is what trade does. It allows nations to produce more by consuming less. Trade makes nations more efficient. Korean cars are cheaper and more efficient to operate. That allows people to produce more by consuming less.

Let me quote Don Boudreaux:

Quote:

Taking Steven Landsburg to task for showing no "compassion" for those "who have fallen victim to the deleterious side of free trade," Alan Ross completely misses Mr. Landsburg's point (Letters, January 20). Free trade, as Mr. Landsburg eloquently explains, has no victims. In the long run, it benefits everyone - even those who today lose their jobs to foreign rivals. The vitally important insight is that almost every job that Americans today worry about losing was made higher-paying, and even possible, by trade. For any worker to complain that he is victimized by trade would be akin, say, to Elvis Presley complaining that he was victimized by radio because that medium did so much to make the Beatles more popular than him.

See January 20, 2008 item
http://cafehayek.typepad.com/hayek/myths_and_fallacies/index.html

Quote:

Cheap cars are not an economic Pancia, but actually cause people to make irrational choices with their income.

A claim. Any evidence?

Quote:

North east Asia has subsidized American consumption by financing their own exports to the United States.

You'll need to expand on this.

The Bobster

Joined: 15 Jan 2003

Posted: Thu Oct 16, 2008 12:33 pm Post subject:

mindmetoo wrote:

And I think anyone who teaches ESL should not complain about this so called trade deficit. Where you do think Koreans get the money to pay your salary?

I think it might be true that many of us might view attitudes in Washington toward S Korea through a prism of how it might affect our own lives as we are living them here. To that extent, it's likely we are being just as parochial as we often like to accuse Koreans as being.

Mr Obama is not concerned about the health of the S Korean economy, nor should he be. He's not even concerned about whether an FTA is "fair" to Korea or a benefit to American workers - I'd say he's more concerned about whether it's a detriment to the American economy as a whole, and it seems a lot of people thinking about this have decided that, despite the marching in the streets around City Hall in Seoul this summer, it's a far better deal for Korea than it is for America.

Personally, I think the impulse toward freeing trade barriers around the world has probably peaked, and most countries are going to take things on a case-by-case basis, protecting some of their own industries and encouraging imports in other areas - just enough, perhaps, so that those other countries will continue trading.

But, referring back to the quote in the OP, it does seem to me that most of us are focusing on the second half of what was said at the expense of the first part, which I think might be more important to larger-picture view of things - that's the part where Obama talks about alternative energy and the kind of cars that will reflect a future where fossil fuels are going to be just too damn expensive to warrant a trip to the corner just for a six-pack of beer.

What requires in innovation and risk-taking on new business models - fortunately, these things have always been part of America's strong suit.

Government had a role to play in encouraging and assisting the growth of railroads, the auto industry and the oil companies in earlier centuries in America - laissez-fairre conservatives who wish govt to remove itself from the business of business are either ignorant of history or disingenuously wishing only to remove regulatory functions - and I think in the coming decades, government will have a role to play in financing and encouraging the kind of research and infrastructure that's going to shape the economies and technologies of the coming decades.

The key difference Obama can make is to see that the kind of shepherding of the business community that the government engages in is the kind that benefits all the workers in a company, not just the stockholders and the six-figure golden parachute top execs.

The middle class has been slowly strangling in America, pretty much since the day Ronald Reagan killed the unions as a force for ensuring that wealth gets spread around in the economy - we are going to need a government that encourages business to share their profits so that the economy as a whole can thrive and America can keep the preeminent place in world affairs it has had for so.

mises

Joined: 05 Nov 2007
Location: retired

Posted: Thu Oct 16, 2008 1:37 pm Post subject:

Quote:

Not odd, if you understand what these things are. The current account is the other side of the capital account coin. A current account deficit is a capital account surplus. The capital account surplus means the country is being sold to foreigners who then collect rents.

What you are doing is arguing that the problems that created our current financial crises don't exist. Don't you think this is absurd?

If you ran your own personal finances by these rules you would have us believe to be true, you would be in serious financial trouble, much like is America.

http://www.kitco.com/ind/schiff/jan032007.html

Quote:

To rationalize why trade deficits can be a good thing, Wall Street is pointing to the seemingly positive benefits of the "capital account surplus" that mirrors the deficit. On the surface this seems to make some sense, as most people have positive associations with �surpluses.� The thinking goes that our trade �deficit� is O.K. because it is balanced by a �surplus� somewhere else. However, having a surplus of bad things, such as poverty, hunger, crime, etc, is not a good thing. A capital account surplus is really a surplus of liabilities. This is not a good thing.

When a nation enjoys a trade surplus it accumulates foreign currency that it uses to purchase foreign assets, such as real estate, stocks, and bonds. These assets represent future sources of income in the form of rents, dividends, and interest. These foreign investments constitute a capital account deficit, which balance their current account surplus. However, the capital account deficits are actually the positive result of the current account surpluses. Alternatively, when the U.S. runs current account deficits, it is forced to accumulate capital account surpluses. These surpluses reflect the sale of American assets, such as real estate, stocks and bonds, to foreigners, that intern represent future obligations in the form of rents, dividends, and interest. In other words, the �surplus� refers to the accumulation of foreign liabilities.

If our capital account surplus is good then by extension Japan�s capital account deficit must be bad. The difference between creditor and debtor nations is that debtor nations derive their status by running capital account surpluses while creditor nations achieved theirs by running capital account deficits. Does Wall Street really expect us to believe that a nation is better off being a debtor than a creditor?

The largest part of our current account deficit is the trade deficit. Because Americans cannot afford to pay for all their imports with exports, they in effect buy them on credit. The resulting accumulation of liabilities is recorded as a capital account surplus. However, such surpluses are nothing to brag about. They merely constitute the debts we incur in order to finance our current account deficits.

The situation is analogous to a consumer justifying his purchase of a big screen TV on credit because it is offset by his rising debit balance. The bill the consumer eventually gets is in effect a statement of his capital account surplus. By running a trade deficit with the electronics store, the consumer simultaneously runs a capital account surplus with the retailer as well. He gets their big screen without paying for it (his trade deficit) and the retailer gets his IOU in exchange (his offsetting capital account surplus.)

Quote:

If that is the case, then why is America borrowing 100$ for every 18$ of GDP growth. Or, if this should lead to more efficient production, then why hasn't it?

http://ap.google.com/article/ALeqM5hHpNa8qOs7JTsna5fGkhisdkKP9QD93RJV3G0
http://www.clusterstock.com/2008/10/industrial-production-craters-jobless-claims-high-but-low-inflation-

Quote:

Let me quote Don Boudreaux:

Quote:

See January 20, 2008 item
http://cafehayek.typepad.com/hayek/myths_and_fallacies/index.html

I stopped reading Cafe Hayek a long time ago. It became very clear to me that Don did not understand that bubbles were forming, or why. The above it an example of snake-oil economics which operate from utopian assumptions being applied to a real world that is altogether different. Notice that there is no data in his post, no evidence. Merely assertions formulated from doctrinaire libertarian economics. These docterinare libertarian economics were until recently the basis of my economic worldview. But I've been smacked by reality and see that the real-world doesn't use utopian and clean assumptions.

But even if we assume that "everyone benefits" from free trade, this is meaningless, though probably true. We. Don't. Have. Free. Trade. Not one country on earth has free trade.

I said:

Quote:

Cheap cars are not an economic Pancia, but actually cause people to make irrational choices with their income.

Quote:

A claim. Any evidence?

Sure. Go find you the figures for aggregate American consumer indebtedness. Credit and goods were made cheap via Asian manipulation of their and American currency values and the American consumer responded by going on a consumer binge of historical proportions.

Economics then started asserting that consumption was really production and anyways, it is all trade, so it is all good. But we didn't pay for our goods. We borrowed them, or the money to pay from them, from Asia.

Have you missed the problems of the last year?

I said:

Quote:

North east Asia has subsidized American consumption by financing their own exports to the United States.

Quote:

You'll need to expand on this.

Jesus Christ. You need me to explain this? Really?
http://w4.stern.nyu.edu/news/news.cfm?doc_id=6484

Quote:

These two developments have led to the creation of what has been called a "vendor financing" relationship between the two sides. A large proportion of goods produced in Asia are sold to the American market. But because America has such a large current account deficit - it is consuming more than it is producing - it has to borrow money from abroad to finance its purchases of Asian imports. Often it is Asian central banks themselves that are financing American purchases of Asian goods.

There is widespread agreement that this relationship has helped give considerable resilience to the global economy in recent years. It is also widely accepted that this relationship is unsustainable over the long term. The outside world cannot continue to give such a large subsidy to burgeoning American consumption.

Here is the assumption of the modern American and global economy.

Quote:

Suppose six castaways are stranded on a deserted island, five Asians and one American. Further, suppose that the castaways decide to divide the work load among them in the following manner: (for the purpose of simplicity, the only desire the castaways work to satisfy is hunger) one Asian is put in charge of hunting, another in charge of fishing, and a third in charge of finding vegetation. A fourth is put in charge of preparing the meal, while a fifth is given the task of gathering firewood and tending to the fire. The American is given the job of eating.

So, on our island five Asians work all day to feed one American, who spends his day sunning himself on the beach. He is employed in the equivalent of the service sector, operating a tanning salon which none of the Asians on the island utilize. At the end of the day, the five Asians present a painstakingly prepared feast to the American, who sits at the head of a special table, built by the Asians specifically for this purpose.

Realizing that subsequent banquets will only be forthcoming if the Asians are alive to provide them, he allows them just enough scraps from his table to sustain their labor for the following day.

Modern day economists would say that this American is the lone engine of growth driving the island�s economy and that without his ravenous appetite, the Asians on the island would be unemployed. The reality, of course, is that the best thing the Asians could do to improve their lots would be to vote the American off the island. Without the American consuming all of their food, there would be a lot more available for them to eat.

http://www.europac.net/externalframeset.asp?id=1554

This is unwinding. Creditors will have to increase domestic consumption and debtors will have to increase domestic production.

Kuros

Joined: 27 Apr 2004

Posted: Thu Oct 16, 2008 1:52 pm Post subject:

I believe the KORUSFTA is a reciprocal agreement which offers advantages to each side and was negotiated over several sessions and at arm's length.

As a consumer, I want the best car possible. I don't want corporate assistance or competitive barriers protecting either Detroit or Wall Street. If KIA wants to give us green cars and wants to innovate, I don't want a tariff hindering it.

The Bobster wrote:

I think in the coming decades, government will have a role to play in financing and encouraging the kind of research and infrastructure that's going to shape the economies and technologies of the coming decades.

It is going to have to. But I don't see why foreign corporations cannot have a stake when their countries are allowing American corporations to have a stake in their country.

Bobster, remember that America's railroads, auto industry, and oil companies all thrived under the largest free trade network of the time: the United States Constitution's Dormant Commerce Clause.

mindmetoo

Joined: 02 Feb 2004

Posted: Thu Oct 16, 2008 2:27 pm Post subject:

mises wrote:

The capital account surplus means the country is being sold to foreigners who then collect rents.

A Korean attitude. Not a problem, however, if you're selling condos in Seattle tor foreigners or selling property in Manhattan to foreigners or selling shares you own in Microsoft to a foreigner. If a foreigner (the highest bidder) wanted to buy your home, earning you a profit, would you reject that offer?

Quote:

What you are doing is arguing that the problems that created our current financial crises don't exist. Don't you think this is absurd?

I'm arguing trade didn't cause it, even "unfair" trade.

Quote:

If you ran your own personal finances by these rules you would have us believe to be true, you would be in serious financial trouble, much like is America.

We all do. I have a horrible horrible trade deficit with the grocery store. I give them a lot of money and they buy very very little from me. But that's okay. Because they give that money to someone else who gives it to someone else who eventually gives it to the software company I work for who gives it to me.

Quote:

A capital account surplus is really a surplus of liabilities. This is not a good thing.

I can't see how someone giving you money for your home is a liability.

Quote:

If our capital account surplus is good then by extension Japan�s capital account deficit must be bad.

No. It implies if you're not making it in popcorn you're making it in peanuts.

Quote:

If that is the case, then why is America borrowing 100$ for every 18$ of GDP growth. Or, if this should lead to more efficient production, then why hasn't it?

But it has. Measures of American efficiency have climbed for decades.

But even if we assume that "everyone benefits" from free trade, this is meaningless, though probably true. We. Don't. Have. Free. Trade. Not one country on earth has free trade.

Quote:

It seems to me the American consumer has the choice whether or not to borrow money. It's like saying the gun shop owner is responsible for murder because he sells bullets.

Quote:

So, on our island five Asians work all day to feed one American, who spends his day sunning himself on the beach.

Not true at all. America is still the leading manufacturer in the world. You don't have a $13 trillion economy unless you're producing a lot of something of value.

Ya-ta Boy

Joined: 16 Jan 2003
Location: Established in 1994

Posted: Thu Oct 16, 2008 2:31 pm Post subject:

One illustration of the role the government played in helping the railroads along was to give the Union Pacific & Central Pacific alternate sections (1 mile square) of land on each side of the line from Council Bluffs to the Pacific Ocean. To me, that always put a different spin to the word 'free' in free market. This concept of the public footing the bill while private owners reap the profits is not new.

mises

Joined: 05 Nov 2007
Location: retired

Posted: Thu Oct 16, 2008 2:52 pm Post subject:

Wow. You sound like a 18 year old who just finished the first week of a macro-econ class taught by an ideologue.

Here we go:

Quote:

A Korean attitude. Not a problem, however, if you're selling condos in Seattle for foreigners or selling property in Manhattan to foreigners or selling shares you own in Microsoft to a foreigner. If a foreigner wanted to buy your home, earning you a profit, would you reject that offer?

Again, you take doctrinaire libertarian assumptions and apply them to the real world. Americans have not been selling tangible assets for cash, but trading them for consumption. This isn't like me selling my house to a Saudi for a good price. It is me selling my house to a Saudi for the privilege of using it plus a flat screen TV. Not a good deal.

Quote:

I'm arguing trade didn't cause it, even "unfair" trade.

Well, here is the thing. You don't have a clue as to what you are talking about. About 6 weeks ago you posted a thread about how the credit crises was over. Do you remember that?

Look, I do not participate in the evolution threads cause I know nothing about it. Sure, I could copy/paste from blogs and act like I know what I'm talking about, but that would be silly and kinda pathetic.

Quote:

Again, taking doctrinaire libertarian assumptions and applying them to the real world. You are equating your relationship with a store to the United States relationship with Korea. This is stupid. Very, very stupid.

For the first reason that it is stupid, if the example were to hold, the grocery store would first have to lend you the money to shop at their store. You would then pay that store debt with your Chinese Visa and the debt for your Chinese Visa with your Saudi Mastercard. Every time you pay debt with debt, this would then be considered "production". You could put "financial services industry" on your CV. You would then pay 18$ on every 100$ of debt, and consider yourself 1) wealthy and 2) entirely consistent with your economic ideology.

Quote:

I can't see how someone giving you money for your home is a liability.

You do not understand what a liability is (the state of being legally obliged and responsible).

Quote:

But it has. Measures of American efficiency have climbed for decades.

What has increased is the FIRE economy (finance, insurance and real estate). Dude, catch up. The world is blowing you by. Manufacting has only increased at a pace similar to the FIRE economy when it is heavily subsidized by the government (aerospace, pharm, agriculture).

Quote:

It seems to me the American consumer has the choice whether or not to borrow money. It's like saying the gun shop owner is responsible for murder because he sells bullets.

You are so far behind the times.
http://www.theatlantic.com/doc/200810u/consumption-compromise

Wages have not budged in any meaningful way since Nixon. In place of rising wages, Americans and other Western citizens have been given greater access to credit. This way they could spend like incomes were rising. This caused savings to disappear and indebtedness to skyrocket.

This worked while the house of cards stood tall. With credit unwinding, consumers can no longer meet their debts. The income isn't there, but the debt still is. And it is now owed to Asia.

Quote:

Not true at all. America is still the leading manufacturer in the world. You don't have a $13 trillion economy unless you're producing a lot of something of value.

The FIRE economy is about 20-25% of the total economy. Paul Krugman said it best:

"China sends us tainted milk and we send them fraudulent securities".

The FIRE economy is dieing right now. The only way to replace "production" as borrowing to purchase depreciating assets with production is to produce more actual, physical things.

johnriley007

Joined: 25 Jun 2004

Posted: Thu Oct 16, 2008 3:26 pm Post subject:

Quote:

I believe the KORUSFTA is a reciprocal agreement which offers advantages to each side and was negotiated over several sessions and at arm's length.

Not to mention the fact that US import taxes are already so low on Korean cars that this agreement really does not give Korean companies a significant gain. Further, the service industry as well as others could see significant gains.

[/quote]As a consumer, I want the best car possible. I don't want corporate assistance or competitive barriers protecting either Detroit or Wall Street. If KIA wants to give us green cars and wants to innovate, I don't want a tariff hindering it.

Quote:

Exactly. Further, who is it that has been building plants in the US? Ford, GM, Chrysler? Hyundai, Kia, Honda, Toyota? If the gov't wants to give money to develop new battery technology and the like, fine, but don't limit consumer choices.

As for Obama bringing up the unfair trade balance between US - Japan/Korea automakers, who in their right mind would by a Ford SUV with Korea/Japan-like gas prices? With gas prices hitting above $4 in the States, the Big3 have certainly see huge losses in domestic sales. That's why this argument makes no sense, IMO.

mises

Joined: 05 Nov 2007
Location: retired

Posted: Thu Oct 16, 2008 3:39 pm Post subject:

Quote:

As for Obama bringing up the unfair trade balance between US - Japan/Korea automakers, who in their right mind would by a Ford SUV with Korea/Japan-like gas prices? With gas prices hitting above $4 in the States, the Big3 have certainly see huge losses in domestic sales. That's why this argument makes no sense, IMO.

When you go to McDonalds in Turkey, you can get a Big Mac, or a McTurko. In Korea, it is the Kimchi burger. In Canada, the McRib. Firms differentiate their supply to match market demand.

Or, the cars that are sold in Korea would not necessarily be the ones sold in America. GM exports extremely fuel efficient autos to Europe that are not available in America. This because the French consumer doesn't want an SUV.

Global business is able to solve silly little problems like varying consumer preferences in differing geographic regions.

mindmetoo

Joined: 02 Feb 2004

Posted: Thu Oct 16, 2008 4:37 pm Post subject:

mises wrote:

Wow. You sound like a 18 year old who just finished the first week of a macro-econ class taught by an ideologue.

You sure you're not EFL? You've copped his "having an opinion different from me is the greatest sin" attitude.

Quote:

I disagree. It's exactly like selling your house to a saudi for the highest price possible.

Quote:

Look, I do not participate in the evolution threads cause I know nothing about it. Sure, I could copy/paste from blogs and act like I know what I'm talking about, but that would be silly and kinda pathetic.

In both threads I'm willing to admit I'm wrong and learn something. I'm waiting until January to concede defeat on "ah, this banking thing won't be in the news by January." I'll be happy then to admit I was wrong. Hey, who knows. You issue many claims, claim I want to see hard data for but you, yourself, seem content to post blogs. For someone who was supposedly educated in economics, you seem unable to lay your hands on hard data from primary sources.

Quote:

I can't see how someone giving you money for your home is a liability.

You do not understand what a liability is (the state of being legally obliged and responsible).

I do. My point stands.

Quote:

But it has. Measures of American efficiency have climbed for decades.

Data?

Quote:

You are so far behind the times.
http://www.theatlantic.com/doc/200810u/consumption-compromise

Your magazine article doesn't seem to cite sources for its claim.

Quote:

Not true at all. America is still the leading manufacturer in the world. You don't have a $13 trillion economy unless you're producing a lot of something of value.

The FIRE economy is about 20-25% of the total economy. Paul Krugman said it best:

"China sends us tainted milk and we send them fraudulent securities"

You've not actually addressed the point. Your parable was Americans consume and produce nothing. But a 13 trillion economy and the fact the USA leads the world in manufacturing output belies that parable.

http://www.nationmaster.com/graph/ind_man_val_add_cur_us-manufacturing-value-added-current-us

These stats are a little old (2004) but I'm happy to find newer stats if you wish. My connection is kind of crap right now.

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