Ford Moving to Mexico; Trump Says He’ll Stop It

September 15, 2016

http://money.cnn.com/2016/09/15/news/companies/donald-trump-ford-ceo-mark-fields/index.html

The above link will take you to an interview conducted by CNN’s Poppy Harlow with Mark Fields, Ford CEO.  If you have the patience to watch it all the way through, it will be immediately followed by further discussion of Trump’s plans to raise tariffs and bring manufacturing jobs back to the U.S.

Trump has long predicted that Ford would be announcing its move to Mexico.  Fields responds that they are only moving its small car production – the Focus and the C-Max (both made at Ford’s Dearborn, MI plant) -to Mexico.  Other models will continue to be made in the U.S.

Ford actually sells six car models:  Fiesta, Focus, C-max, Fusion, Mustang and Taurus.  The Fiesta and the Fusion are already built in Mexico.  Ford’s announcement about the Focus and C-max leaves only two of its six car models that are still made in the U.S. – Mustang and Taurus.  The former is built at its Flat Rock, MI plant and the Taurus is built in Chicago.  Most of its SUVs and trucks are built in the U.S.  There’s a good reason for this.  The U.S. continues to maintain a 25% tariff on all imported light trucks.

The Transit Connect is an interesting exception.  Until 2013, Ford imported the Transit Connect, a vehicle it markets as a commercial van/truck, from Turkey, trimmed out as a passenger van.  It then strips out the passenger interior, removes the windows, and replaces them with metal panels, converting it into a commercial vehicle.  It did all of this to escape paying the 25% import tariff.  In 2013, the U.S. ordered Ford to stop this practice.  Ford still does it, but now it pays the tariff.  It “eats” the cost of the tariff.  It doesn’t pass it on to the consumer.

If elected, Trump has vowed to essentially tear up most trade deals – particularly NAFTA, and will raise tariffs to force companies to re-establish their manufacturing operations in the U.S.  In the case of Mexico, he has suggested a 35% tariff.  During the linked interview, Ms. Harlow asked Mark Shields directly whether he would still move manufacturing to Mexico if that were to happen.  Shields side-stepped the question.  But the answer is obvious.  Of course Ford would not move more production to Mexico if that were to happen.  Quite the opposite.  Production of the Fiesta and Fusion would also return.

Late in the interview, Shields cited the huge savings in labor costs for the move to Mexico, saying that it needed to be done to remain competitive in that segment of the market.  Ms. Harlow failed to follow up with the obvious question:  “So you’ll be reducing the price of the Focus once production has moved to Mexico?”  I would have loved to see him squirm and see the smirk run away from his face when he replied that the price wouldn’t change a bit.

Has any company ever cut the price of any product once its production was moved overseas?  Of course not.  They pocket the extra profit.  Which brings us to one of the arguments employed by economists (and cited in the 2nd CNN segment which starts immediately after the Mark Shields interview) that prices will rise and consumers will be forced to pay the tariffs, hurting the economy and cutting deeply into consumer spending.

That’s absolute nonsense.  Consumers don’t pay the tariffs.  The importing companies pay the tariffs.  Whether or not they elect to pass that extra cost along to the consumer is entirely up to them.  As we saw above with the Transit Connect, Ford doesn’t pass it along.  Sure, that would cut deeply into profits.  By far, the smarter alternative is to move manufacturing back to the U.S.

During the course of the interview, Ms. Harlow repeats a myth about tariffs and their role in the Great Depression.  “… the last time a big tariff was instituted in the United States back during the Great Depression, all the economists agree that it made the Great Depression worse.”  I’ve said it many times but it bears repeating here:  that’s factually false and is absolute nonsense.  First of all, no new, big tariff was implemented during the Great Depression.  The Smoot-Hawley Tariff Act of 1930 was a very slight tweaking of the  Fordney-McCumber Tariff Act of 1922, raising tariffs overall from 38.5% to 41.4%.  Following enactment of Fordney-McCumber, the economy boomed during the “roaring ’20s.”

By the time Smoot-Hawley was enacted, the Great Depression had already been underway for a year.  During the Great Depression, America’s balance of trade declined by less than $1 billion while GDP fell by $33 billion.  To blame tariffs for the Great Depression is ludicrous.  But that didn’t stop economists from doing it, eager to make a case for their new, untested theory about “free” trade.

In the CNN piece following the Mark Shields interview, CNN reports on dire warnings by economists that Mr. Trump’s tariffs would have disastrous consequences for the economy, cutting GDP by up to $1 trillion and would result in the loss of 4 million jobs.  Such claims are really puzzling, given the fact that economists know very well that a trade deficit is actually a subtraction in the calculation of GDP.  It’s impossible that bringing back manufacturing would do anything other than boost GDP dramatically.  Merely balancing trade in manufactured goods would be an $800 billion boost to the economy.  That would be a 4% jump in GDP which, not coincidentally, is what Trump has targeted for economic growth.  Any further surplus in trade in manufactured goods would boost the economy even more.  And instead of cutting 4 million jobs, it would actually create approximately 10 million jobs.

Free trade advocates claim that manufacturing jobs don’t matter any more, that most manufacturing is automated and there are few jobs there to be had.  If that’s true, then why do so many badly overpopulated nations with huge, bloated work forces cling so desperately to the manufacturing that they do for the American consumer?  Certainly, automation has improved productivity in manufacturing, but not nearly to the extent that free traders would have you believe.  Consider the production of the supposedly high-tech cell phones like the i-phone.  Their manufacture is about as low tech as you can get – thousands of people assemble the circuit boards by hand in China.

During one of the CNN segments, the reporter comments that “cars aren’t really built from scratch any more.  They’re assembled.  Those plants in Mexico will be assembling them from American-made parts.”  As if the process of assembly requires no effort, and as if cars haven’t been built that way since Henry Ford invented the assembly line.  I can tell you from personal experience, having toured the Dearborn plant where Ford builds the Focus, that it takes a lot of workers to make an assembly plant “tick.”  Watching a stack of sheet metal being turned into a finished automobile in less than 24 hours is truly awe-inspiring.  Having toured both auto assembly plants and electronics manufacturing, I can tell you that an auto assembly plant is far more “high-tech” than electronics production.

Trump’s plans to use tariffs to return manufacturing back to the U.S. is exactly what the American economy needs – and is exactly the thing that globalists fear the most.


Labor Market Sputtering

September 9, 2016

Following two months of impressive gains, the employment report released a week ago by the Bureau of Labor Statistics was rather unremarkable.  According the the establishment survey, private payrolls added only 126,000 jobs in August, while government employment rose by 25,000 to bring the total job gains to 151,000.  According to the household survey, the employment level rose by 97,000.  These figures are just enough to keep pace with the growth in population.  So unemployment held steady at 4.9% for the third month in a row – a figure held artificially low by the “vanishing work force” trick used throughout the Obama administration.  Otherwise, the figure would be 8.0%.

It wasn’t a bad report, but there are some causes for concern:

  • The average work week fell by 0.1 hours.  For manufacturing workers, it fell by 0.2 hours.
  • Average hourly earnings rose by only 3 cents.  That’s an annual rate of gain of just over 1%.  It had been running at 2.4%.  It lagged the rate of inflation in August, meaning that American workers grew slightly poorer.
  • Hiring gains were led by restaurants and bars, a segment of the economy that may be built to over-capacity and is ripe for some contraction, especially as the economy begins to slow.
  • Manufacturing employment was flat again and is down by 37,000 compared to a year earlier.
  • Health care employment rose by only 14,000 – well below the average monthly gain of 39,000 for the prior twelve months.

That last item could be an early indication that the economic boost from Obamacare has just about run its course.  Obama has avoided the economic funk that typically plagues administrations as they near their end.  Typically, an administration begins to rein in the deficit spending that was driven by stimulus programs enacted early on, as pressure builds to cut the deficit.  But “Obamacare” was a whopper of a stimulus program, continuing to pour trillions of dollars into the economy.  But the process of scaling up the health care industry to meet the new demand fueled by that program may now be nearly complete.  We’ve even heard of insurers exiting the program, citing unexpected losses.

So far this year, job gains have averaged 181,000 per month, down from 229,000 in 2015, which was down from 251,000 in 2014.  August gains lagged the average for 2016.  The labor market is clearly slowing.  Obama’s adminstration may catch the late-term economic flu yet.

 


Deficit Spending Holding Recession at Bay

August 26, 2016

It’s been a long time since I posted on this subject – about a year and a half.  Some discussion about the national debt jogged my memory, and I was curious to see how my chart would look now.

The following chart tracks the growth in the national debt vs. the “cumulative trade deficit.”  It’s an important metric because the trade deficit siphons money from the economy – money that is subsequently pumped back into the economy by federal deficit spending.  Countries who run a trade surplus with the U.S. repatriate those dollars primarily through the purchase of U.S. government bonds – bonds that are used to finance deficit spending.

Over the years, these two metrics have tracked very closely together, but not perfectly.  Sometimes deficit spending outpaces the trade deficit.  Sometimes it lags.  But any time that deficit spending lags the trade deficit, a recession is always right around the corner, since the net effect is a drain of money from the economy.

Typically, toward the end of a president’s administration – especially if it’s been a 2-term administration, deficit spending begins to decline as stimulus programs implemented at the beginning of a new administration expire and as pressure builds to rein in the deficit.  It happened at the end of the Clinton administration and at the end of the George W. Bush administration.  For this reason, I’ve been predicting that the Obama administration would end the same way.

It doesn’t look like it will.  Take a look at the chart:  growth in nat’l debt vs cumulative trade deficit.   Clearly, the Obama administration has felt no compulsion to rein in deficit spending like his predecessors.  When it comes to deficit spending, President Obama has kept his foot on the throttle like no other before him, pouring money into the economy.  In light of this, it’s not surprising that the economy has managed to hang on by its fingernails to avoid another plunge into recession.

Where has all the concern about fiscal restraint gone?  In the early ’90s, during the George H.W. Bush administration, deficit spending raced ahead of the trade deficit.  By the time Clinton took office, there was a lot of concern about the exploding national debt, so Clinton worked with Republicans to rein in the spending and actually balance the budget (on paper, at least).  He could afford to do it.  Thanks to the explosion in personal computer and cell phone technology and manufacturing, the economy hummed along at a brisk pace.  But by the end of his administration, the tech bubble burst, the trade deficit began to explode (thanks to NAFTA and China’s admission to the WTO – both of which were Clinton’s progeny), and there was little deficit spending to pick up the slack.  His administration ended in a bad recession.

So what’s different now that makes Obama immune to the exploding deficit?

  • Interest rates have fallen to near zero.  So interest payments on the national debt have actually declined in spite of a growing debt.  Zero percent of any amount, no matter how large or small, is still zero.  In fact, there’s even some talk of the possibility of interest rates going negative, as they have in Japan.
  • Perhaps because of the above or, for whatever reason, all political pressure for fiscal restraint has vanished.  No one – not even Republicans – even mention it any more.  No one seems to care.
  • Central banks around the world – and that includes the U.S. – are getting very skittish about the potential for another recession at a time when their recession-fighting ammo is all spent.  They’re pressuring governments to actually step up deficit spending.

In light of this, it’s not surprising that the recession I’ve been predicting hasn’t yet taken hold.  What is surprising is that the economy isn’t doing better than it is.  Twenty years ago, if you had told economists that the federal government would be running a $1 trillion/year deficit, that interest rates were near zero, that the Federal Reserve would have a $4.5 trillion balance sheet, and that the result of all of this was GDP growth of only 1%, they’d have told you that you were crazy – that it was impossible.  Yet here we are.

It’s surprising to many, perhaps, but not to those of us who understand the inverse relationship between population density and per capita consumption, and that all of our efforts to prop up the economy with rampant immigration-fueled population growth are actually eating away at consumption as fast as we can add new “capitas.”  The end of growth is at hand.  It has often been said in the corporate world that “if you aren’t growing, you’re dying.”  The day may be coming when even a “no growth” economy might look good.

 


July Employment Report

August 11, 2016

It’s difficult to know what to make of the July employment report, released on Friday, in which the Bureau of Labor Statistics (BLS) announced that the economy added 255,000 jobs (on the heels of a gain of 292,000 in June), while the employment level rose by 420,000.  Considering the following, these numbers are hard to believe:

  • GDP (gross domestic product) rose by only 1.2% in the 2nd quarter, and by only 0.8% in the first quarter.  In per capita terms, that’s zero growth – perilously close to a recession.  Yet we’re to believe that the economy is adding jobs at more than double the rate of population growth, a rate more characteristic of far higher GDP growth?  Seems a stretch.
  • The “Labor Market Conditions Index” – a broader measure of the labor market (of which the BLS data is just one part) used by the Federal Reserve to assess labor market conditions, turned positive for the first time this year in July, but barely.  That index paints a picture of a flat, weak labor market at best.
  • Two days before the release of the BLS report, payroll processing firm ADP estimated that 179,000 jobs were created in July.  This was the 2nd month in a row that the BLS data far exceeded the ADP data.

On the other hand, there are reasons to believe the BLS data.  On the same day that ADP released its estimate, polling firm Gallup’s “Job Creation Index” held steady at a record-high level for the third month in a row.  First time unemployment claims have been running at historically low levels, although it should be noted that not getting laid off isn’t the same thing as getting hired, and the low rate of claims may have as much to do with the changing nature of jobs, making fewer people eligible for unemployment when their work slows down.

On Tuesday, the BLS announced that non-farm productivity fell for the third quarter in a row.  This is consistent with an economy that’s adding jobs in the face of weak demand.  But why?  Why would employers be piling on workers in a flat economy that’s teetering on recession?  Corporate earnings have been declining for several quarters now.  Companies are usually in full-blown, head count-cutting cost control mode by now.  Instead they’re hiring at a healthy clip?  It’s possible.  Given the political climate surrounding the income inequality issue, there seems to have been a collective effort by corporations to blunt some of the criticism by raising entry-level wages and, possibly, to continue hiring long past the point at which they would normally have begun laying people off.

But that won’t last forever.  Shareholders are growing impatient for companies to begin showing actual earnings growth again instead of just slowdowns in the rate of decline.  I have my doubts about how much longer the factors that are putting downward pressure on employment and wages – especially falling per capita consumption and population (labor force) growth – can be held at bay.

 

 


Globalism Establishment Starts to Sweat as their Regime Begins to Crumble

July 26, 2016

These three articles appeared in the news a couple of days ago almost simultaneously in the wake of the Republican convention.

In this first article, finance ministers and central bankers from the G20 nations pledge to “share the benefits of global growth more broadly.”  The article focuses on concerns surrounding “Brexit,” Great Britain’s vote to pull out of the European Union over dissatisfaction with the EU’s open border policies and with being fleeced to prop up the economies of other EU nations.  But the article also takes note of Trump’s vow to pull out of trade agreements.  The G20 is starting to sweat.

In the 2nd article, U.S. Treasury Secretary Lew is reported as saying that it’s time to “redouble our efforts to use all of the policy tools that we have to boost shared growth.” Why is it time to do that now?  Why weren’t we doing this all along?  It’s because it’s now clear that “free trade” policy is becoming more widely opposed, with the political left now opposing the Trans Pacific Trade Partnership (TPP) and with the right going further, vowing to pull out of all existing free trade deals.  The globalist Obama administration is also starting to sweat.

And further evidence comes in this 3rd article about a meeting on Friday between President Obama and his Mexican counterpart.  Don’t be fooled.  This wasn’t just a meeting designed to stress the importance of the relationship between these two countries.  Both are beginning to sense the very real possibility that their trade regime is nearing it’s end.  I predict that, sometime between now and the election, there will be an announcement of some deal, a deal that had its genesis in this meeting, that will move some token manufacturing back from Mexico to the U.S. in an effort to blunt some of the trade anger.

I have written occasionally about cracks that were beginning to appear in globalization – like more and more economists beginning to openly question whether donor countries like the U.S. and Britain were really seeing any benefit at all from these trade agreements and whether they have been, in fact, a net drag on their economies.  The globalization story has been very much like the annual reports that emanated from the now-defunct Enron Corporation.  We were told by Enron that their business was very complicated – too complicated for analysts outside the company to understand.  As it turned out, it wasn’t really complicated.  It was a scam.  People will only buy into such scams for so long.  And so it is with globalization.  The British people could no longer take it.  Nor can Americans.

Without the support of its donor nations and the continued subservient acquiescence of its citizens, the globalization scheme is doomed.  Good riddance.

 


Trump

July 22, 2016

So disillusioned was I with Obama’s broken promises to address the problems with our trade policy, his broken promise to double exports in five years, his signing of the awful trade deal with South Korea and, more recently, his pursuit of bigger, more expansive trade deals with Pacific rim nations and with Europe, I vowed to myself that I would stay out of politics on this blog going forward.  However, as discoverer of the inverse relationship between population density and per capita consumption, as author of the book Five Short Blasts that explains the relationship and its ramifications and, consequently, as an advocate of policies that would restore a balance of trade and move us toward a stable population, and in the wake of Donald Trump’s acceptance speech at the Republican National Convention last night, I feel I can no longer ignore the elephant in the room.

Now more than halfway through my seventh decade on this planet, I have spent my whole life watching our country being sucked into the vortex of “globalism” in which the United States has evolved from a beacon of hope and prosperity into a host upon which overpopulated nations, unable to sustain themselves, could feed and thrive.  Our political parties evolved into one “Republicrat” party, supporting the trade and open-border policies that are central to making “The New World Order” tick.  The “hope and change” that Obama spoke of, especially his promise to fix our trade policy, I thought, might be our last chance to stop that madness.  In the wake of his betrayal, I figured that was it – that I’d never live to see an America again that was something other than the hollowed-out shell we’ve become.

On more than one occasion, I have called Donald Trump a “buffoon.”  We’ve seen him dip his toe into politics before, only to self-destruct through outlandish pronouncements and behavior.  He got my attention with his vow to “build the wall,” but I figured the same thing would happen again.  He’d soon self-destruct.  I thought that those who gave him a 1% chance of winning the nomination were being generous.  He was just grand-standing and having fun, enjoying another brief stint in the spotlight like he’s done before.

Then he vowed to rip up our trade deals and start over on trade, making new deals that actually worked for us.  He got my attention again.  I wanted to get my hopes up, but figured that, surely, his antics during the primary race would sink his chances.  To my amazement, they didn’t.  He was saying the right things about illegal immigration and about trade, but I was dismayed with the personal attacks.

Finally, last night, I saw the Trump I’d been wanting to see.  He was still Trump and, defying predictions that he’d back away from earlier promises in order to broaden his support, he actually doubled down on each one.  But gone were the personal attacks.

Trump was exactly right when he pointed out that our trade and immigration policies have done more harm to the poor, to the inner cities, to blacks and Latinos than to anyone else. I hope the folks from these demographics paid attention and kept open minds.

Unlike the Trump I’ve seen in the past, he seems truly sincere in his desire to turn the country in a very different direction.  At least that’s the way he came across last night.  It’s hard to imagine that a man 70 years old would subject himself to everything that goes with winning this nomination and waging the campaign to follow unless he really has a fire in his belly to do what he says.

But can he?  Can he get the political establishment to go along with with his plans – plans that seem radical and dangerous to many of them?  Can he back us out of trade deals in the face of threats from these other countries that will probably scare the hell out of people?  I have said that restoring a balance of trade would not be without pain, driving up the cost of goods until our own domestic manufacturing can get re-established.  Can he, a total Washington outsider, do this without mucking it up and perhaps forever sinking any hope that it will ever be tried again?   Will he be brain-washed into joining the ranks of the globalists as Obama was?  (That would seem unlikely with Trump.)  Does he really have the energy and drive to make all this happen?

Or am I just being suckered again?  I hope not.  As one who understands that the effects of our enormous trade deficit and our immigration policies on our economy dwarf all other factors – including currency valuations, Fed policy, stimulus programs, and so on – I have to at least give the benefit of the doubt to candidates who are at least claiming that they’ll tackle these issues.  Only time will tell.

In the meantime, I’ll keep doing my small part to convince you and others of the perils of our free trade and open border policies.

 


Racism(?) in America

July 11, 2016

In the wake of the events of the past week – the seemingly inexplicable killing of blacks by police and the slaughter of innocent policemen in Dallas, it’s important to draw attention to a dimension of all of this that has gone completely unnoticed.  As a white guy who has spent the better part of seven decades living in America, I feel I can attest with some authority to the progress that has been made in race relations, at least in regards to the attitudes of whites toward blacks.

As a kid I heard racial slurs all the time, from other kids and from adults alike.  Today, I virtually never hear such things.  As a kid, I witnessed all sorts of discriminatory practices – segregation in housing and schools, discrimination in hiring practices, etc.  But in the decades since the civil rights movement, virtually all of these practices have been purged from society.  Back then, you never saw blacks in professions or in positions of authority.  Today, you hardly give it a second thought.

Some years back, I was cured of cancer by a black doctor.  The color of his skin sure as hell didn’t matter to me in that circumstance.  Today, I live in an association of 135 homes, only one of which is occupied by a black family.  Why not more?  I don’t know, but I can tell you this:  I’ve never heard one word of ill will toward that family.  They’re nice people.  They maintain their property as well as any of the other homeowners, and that’s all we really care about.

While traveling through Mississippi last month, my wife and I stopped for dinner at a Chili’s restaurant in Jackson – an island of relative prosperity, thanks in large part to a massive Nissan plant there – in what is otherwise the poorest and the blackest state in the union.  The restaurant was virtually all black – black waiters, black kitchen staff and, with only a couple of exceptions, black patrons.  But those patrons were predominantly families, nicely dressed and no one seemed to even take notice of this white couple that had just walked in.  Our waiter was probably one of the better waiters we’ve had at a restaurant in some time.  My wife and I felt totally comfortable there.

That being said, I can also tell you that exactly the opposite is true on those rare occasions when I need to venture out of the suburbs into the heart of Detroit.  Like most major cities, downtown Detroit has come a long way, but venture a few blocks beyond the center, beyond the sports arenas, convention centers and hotels, and you’ll quickly find yourself in the midst of the worst urban blight you can imagine – a place that’s downright scary.  The great Motor City, America’s arsenal in World War II is now a hollowed-out shell, a bankrupt black enclave that plods through a zombie-like existence, too poor to educate its children and to provide basic services to its residents.

I’m ashamed to say that I’m scared to be in Detroit, and breathe a sigh of relief when I cross 8-mile Road on northbound I-75.  I’m ashamed because what I’m feeling seems to smack of racism.  Then again, I’m not ashamed because I know that it’s not racism that I’m feeling.  Rather, it’s something I’ll call “poverty-ism.”  America has made great strides in improving race relations.  But we fear poverty as much as ever, and all that goes with it – drugs, gangs, car-jackings, drive-by shootings and more.  The evening news can barely keep pace with the body count.  As I continue north and breathe that sigh of relief, I can’t help but think of all of the poor people – good people too, most of them – who are trapped in that environment.

In my previous post, I wrote of some “ugly” statistics buried in the June jobs report.  Here’s another one that I didn’t mention.  While the unemployment rate for whites was 4.4%, it’s 8.6% for blacks – by far the highest of any racial minority.  For young blacks, the rate is far higher.  We’re all aware of the toll this has taken in the black community – especially in the inner cities where unemployment is rampant:  the hopelessness, despair, anger, drugs, crime, the destruction of family values, and so on.  Who can blame the people forced to live in these conditions if they’re angry at their plight and feel victims of racism?  I’d be mad as hell too.

There are a lot of reasons for this situation and I won’t pretend that there aren’t still some remnants of racism at play here.  But a big factor that no one is talking about is the fact that the middle rungs of the economic ladder, the rungs that people need to climb out of poverty, have been cut away and used by proponents of globalization to improve the economic plight of the people of other nations.  I’m talking about the millions and millions of well-paying manufacturing jobs that have been shipped overseas thanks to misguided trade policy.

One of the reasons that I voted for Barack Obama in 2008 was the fact that he was black and promised to fix our trade policy.  As a black man, I figured he’d be eager to follow through and make real, meaningful improvement in the plight of black Americans by breathing life back into the middle class sector of the economy.  Without those manufacturing jobs, even whites are struggling.  What chance does a black man have?

Instead, Obama quickly fell in line with the free trade globalists and has only made matters worse with his trade deal with South Korea and the Trans Pacific Partnership deal he’s now pushing so hard.  He had a huge opportunity to help black America.  Instead, his eight years have been wasted.

Making matters worse, black Americans are even pushed off of the lowest rungs of the economic ladder by a tidal wave of illegal immigrants.  Why pay black Americans a minimum wage and benefits when you can pay an illegal immigrant who’s eager to do the job for even less?  The president seems far more concerned with the plight of illegal immigrants than that of his fellow black Americans.

Over the past few decades, virtually every public policy has been scrutinized for its effect on racial minorities, and those found to impact minorities in a negative way have been deemed discriminatory and have been banned.  Where is the same scrutiny of our trade policy and immigration policy?  These have clearly hurt blacks more than whites.  One could make the case that if there is any racism that still persists in the U.S., it’s racist trade policy that forces blacks in disproportionate numbers to bear the economic brunt of the loss of manufacturing jobs, and racist immigration policy that gives a break to illegal immigrants in spite of the harm to the black community.

Trade and immigration policy have divided this nation into two classes of “haves” and “have-nots,” the very income inequality that has gotten so much attention, but which also grows worse with each passing day.  While great strides have been made in eliminating racism, the “poverty-ism” that this divide has fostered is getting worse.  The group of people charged with maintaining order in this divide – the police – are not immune to poverty-ism.  They know all too well the risks they face when they try to maintain order in poverty-stricken inner city areas.  I won’t deny that some police are probably racist and some of the killings we’ve seen have been racially motivated, but I suspect the majority are more a matter of the police fearing for their own lives and, consequently, erring on the side of caution for their own safety.

The main thrust of my theory, my book and this blog has been to emphasize that poverty will grow worse along with worsening overpopulation and as trade with overpopulated nations persists.  Economists and government leaders can try to mask this with statistical gimmicks that make things look better than they are, but they can’t hide the effects.  The result is an electorate that grows ever more dissatisfied with the direction of our country and with our political leaders, and worsening anger and lawlessness in the hardest-hit areas of our inner cities.

Instead of addressing these root causes, we get more “programs” to try to paper over the problems.  Just this week Hillary Clinton proposed more federal money to provide for better training for police.  This is a perfect example.  Trade away our jobs, sell bonds to draw the dollars back to the U.S., and then put that deficit spending to work in more “programs” – more welfare, more government-subsidized health care, more job training programs, more federal aid for schools, more federal aid for police and fire departments – “better training for police.”

Until we stop trying to portray this problem as a racial divide instead of the poverty-fueled class divide that it really is, no amount of talk, hand-holding and hugging are going to make a bit of difference.