On Tariffs, Indications are Trump Means Business!

December 22, 2016

http://www.reuters.com/article/us-usa-trump-navarro-idUSKBN14A27N

http://www.cnn.com/2016/12/21/politics/donald-trump-tariffs/?iid=ob_homepage_deskrecommended_pool

I’ve provided links above to two articles reporting on some very important developments in the Trump transition that have taken place over the last two days.  First of all, Trump has chosen a real trade hard-liner, Peter Navarro, University of California economics professor and author of Death by China: How America Lost its Manufacturing Base, as head of a newly formed White House National Trade Council.  The second article reports that the Trump team is planning to slap up to 10% tariffs not just on imports from China, but across the board on all imports.

These developments are an indication that, instead of merely pandering to populist sentiments during the election, Donald Trump was deadly serious when he made trade the centerpiece of his plan to “make America great again.”  Never mind threatening to label China a currency manipulator, complaints about unfair trade practices, enforcement actions taken up with the World Trade Organization, or any of the other mamby-pamby “actions” taken by previous administrations.  It now appears likely that Trump will go right for the jugular.  A 10% across-the-board tariff on all imports would be a death blow to globalization.

To put such a tariff in perspective, in 2015 the U.S. imported $2.76 trillion worth of goods and services.  A 10% tariff would raise $276 billion per year in federal revenue.  Opponents say that this is actually a huge tax on American consumers.  They’re lying.  Tariffs are paid by the companies who ship the products to the U.S.  Those companies then have a choice.  They can try to maintain their profit margin and pass it along to consumers, but that opens the door to domestic manufacturers who could undercut them on price.  Or they can “eat” the tariff and not raise prices, maintaining their market share but eroding their profits.  Either way, there’s a huge incentive to shift manufacturing to the U.S.

Consider another benefit.  That increase in federal revenue can be used to fund an equally large cut in income taxes for American taxpayers.  So, even if the importing companies pass along the cost of the tariff, you’ll have that much more money in your pocket to cover the higher cost.  Essentially, the tariff takes the money right out of the pockets of the global corporations and puts it into the pockets of walk-around Americans.  For all of you who have railed against the worsening income disparity between the top 1% and the rest of us, this is exactly the right way to go about addressing that problem.

For those who doubt the effectiveness of tariffs in boosting domestic manufacturing, consider this:  in spite of the fact that U.S. automakers lost half of the domestic market to imports, nearly every truck on American roads is still built in the U.S. Why?  Because trucks are one category of product on which the U.S. still maintains a 25% tariff.   Without that tariff, it’s likely that most trucks would now be imports and the “Big Three” automakers may not have survived.

Brace yourself, folks.  All hell is going to break loose on January 20th!  It’s been a long time coming and it’s going to be fun to watch.  I can’t wait.

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Obama and Democrats are Utterly Clueless

December 19, 2016

http://www.cnn.com/2016/12/19/politics/president-obama-npr-interview/index.html

Almost as amazing as Trump’s victory in the election is the inability of the entire Democratic Party, from the very bottom to the very top – President Obama himself – to grasp the reasons behind their loss.  In a recent interview, detailed in the above-linked CNN article, President Obama blamed the Democrats’ stunning loss on their failure to “show up” in the states that swung from Democrat in the previous two elections to Trump in this election.  The problem, claims the president, is not the message but the messenger.  Hillary should have campaigned harder in the midsection of the country.

Seemingly lost on the President is that West Virginia – a state where Hillary did campaign more than once – made the biggest swing  from Democrat to Republican of any state in history, losing by 69% for Trump vs. 27% for Clinton.

Why did she lose so badly there?  She came right out and said that she was going to put the miners there out of work.  In a subsequent attempt at damage control, she promised “retraining” for laid off mine workers.  Retraining to do what?  She had nothing.

The message she gave West Virginians, though more pointed and targeted to that particular demographic, was consistent with the globalist message that both the Democrats and Republicans have been selling for decades – that your manufacturing jobs are never coming back, that this is somehow in your best interest and if you’re just patient enough you’ll come to understand, and that we’ll retrain you to do some other job – a job that doesn’t exist.

The problem for Democrats is that nobody believes it any more.  Their message has been proven to be a load of crap.  Along comes Donald Trump and, in spite of his many flaws, immediately seizes the spotlight with a new and very simple message:  I’ll slap tariffs on those imports.  Your jobs are coming home. We’ll make America great again!  (Not to mention his message about putting a halt to the illegal immigration that both parties embraced in an effort to pander to the Hispanic vote.)

Republicans shouldn’t be smug.  They too fought Trump tooth and nail every step of the way, clinging to the same globalist message.  Only because Trump chose to identify himself in this race as a Republican do they now find themselves in control of so much of the political landscape.

The Democratic Party used to be the party of working-class Americans, but has morphed into a money-grubbing carnival barker for the New World Order.  But they don’t see it.  They still want to believe that if they had just polished that turd a little brighter and sold it a little harder they’d have won the election.


U.S. Life Expectancy Declines in 2015 as Death Rates Rise

December 13, 2016

http://www.usatoday.com/story/news/nation/2016/12/08/has-us-life-expectancy-maxed-out-first-decline-since-1993/95134818/

As reported in the above-linked article last week, the National Center for Health Statistics  (NCHS) reported that the average life expectancy for Americans born in 2015 actually fell by one month – from 78.9 years to 78.8 years.  Here’s a link to the full report:  https://www.cdc.gov/nchs/data/databriefs/db267.pdf

This was the first decline since 1993 when the average life expectancy fell from 75.8 to 75.5 years – the only other decline since record-keeping of this statistic began in 1980.

One year does not make a trend, so one may question the significance of the decline.  However, there is a trend evident in the data.  Prior to 2o15, the longest stretch of flat life expectancy was three years, from 1984 to 1986, when the average life expectancy held at 74.7 years.  The decline in 2015 brings life expectancy to the same level it was at four years ago in 2012.  And it’s not as though human life expectancy is reaching some sort of limit at that level.  Thirty nations have a higher life expectancy – extending well into the 80’s.

Average life expectancy is a function of the death rate.  The NCHS lists the top ten leading causes of death in the U.S.  Among these top ten causes, the death rate rose for all but one – cancer.  But in spite of the fact that cancer and heart disease are far and away the two leading causes of death, the rise in every category except cancer was enough to more than offset the decline in the death rate due to cancer.  It seems that there may be something at work that crosses all categories of death rate.

It’s very likely that that underlying cause is worsening poverty.  Though poverty is never considered a cause of death, being an outside factor instead of a medical factor, it is far and away the number one killer in the world.  Consider this:  among those nations with a longer life expectancy than the U.S., the average “purchasing power parity” (or “PPP,” a measure of income) is over $41,000, the thirteen nations who rank at the bottom in terms of life expectancy (less than 50 in some cases) have an average PPP of less than $3,000.  It takes money to live a long life.  It takes money to pay for health care, to eat a healthy diet, to maintain vehicles in a safe condition, to hold depression at bay, and so on.

The U.S. ranks right up there (19th) with the top nations in terms of PPP.  However, the median household income peaked in the U.S. in 1999 at $57,909.  By 2012 it had slipped to $52,666.  It should come as no surprise, then, that average life expectancy since that time has been flat or, as in 2015, actually declining.

This is precisely the outcome, the inescapable collision between a growing population density and declining per capita consumption, that I warned of in Five Short Blasts.  Relying on population growth as a crutch for economic growth, the U.S. has continued to grow its actual population and has dramatically exacerbated the effect by exploding its “effective” population by engaging in free trade with badly overpopulated nations.  The manufacturing sector of our economy has been gutted and the supply-demand equation for labor has been thrown out-of-balance, driving down incomes.

The Obama administration can fool itself all it wants with its gimmicked statistics on jobs and unemployment, but they can’t alter the real world consequences of its failed trade and immigration policies.  Poverty is the very mechanism by which nature will eventually correct the problem of human overpopulation.  The 2015 life expectancy data may be the first indication that that process has begun in America.

 


Manufactured Exports Fall to 5-1/2 Year Low

December 7, 2016

Almost seven years ago, in the wake of his disastrous visit to Mexico to address our trade deficit – which resulted in a sharp rebuke from the Mexican president and even higher tariffs on American goods – President Obama decided to turn his focus on exports.  “Why can’t we have an export-driven economy like Germany,” he challenged his economic team.  Evidently, none of them responded that there is no other United States out there to serve as our trade patsy as we’ve done for Germany.  So, in January of 2010, the president proclaimed that, within five years, the United States would double its exports.  This would be the centerpiece of his economic agenda.

Yesterday the Bureau of Economic Analysis released its monthly report of International Trade in Goods and Services.  The overall trade deficit came in at $42.4 billion in October, right in the range where it has been throughout the Obama administration.  There isn’t another economic report that chronicles America’s economic demise as clearly as this one does, yet the reaction was the same as it’s always been:  ho-hum.  Unbelievable.

To get to the real heart of the problem – the siphoning of jobs out of our economy – you have to strip away the “noise” – the trade in services, oil and food.  What’s left is trade in manufactured products, and the picture there grows worse with each passing month.  The deficit in manufactured products was $57.9 billion in October, not far from the record of $62.5 billion set in March of last year.  Check out this chart:  manfd-goods-balance-of-trade.

Especially pathetic is the contribution of declining exports to the increase in the deficit.  In October, manufactured exports fell to $104.3 billion, the lowest level in over 5-1/2 years.  (Exports of manufactured goods were $104.9 billion in March, 2011.)  Manufactured exports have fallen by $10.3 billion since peaking at $114.6 billion exactly two years ago.  To reach Obama’s goal, exports would have had to rise to $171.7 billion.  They never even came close.  Here’s a chart showing both manufactured exports and imports since Obama made his vow to double exports:  manfd-exports-vs-goal.  A complete failure, and no surprise.  The U.S. has no control over exports.  But at least deflecting attention away from the steady growth in imports – and the corresponding steady decline in manufacturing jobs – made things more pleasant for Obama around the punch bowl at G20 meetings.

Frankly, I’m sick of tracking this statistic under the Obama administration, watching it get predictably worse.  Only two full months of data remain – November and December.  Then things get interesting again.  This deep hole that’s been dug under the (lack of) leadership by Obama becomes Trump’s baseline.  How far and how fast can he whittle down this deficit?  Could he even turn it into a surplus, like we used to enjoy forty years ago?  Time will tell.  A deficit of $60 billion in manufactured goods represents a loss of ten million manufacturing jobs, and probably an equal number of jobs in ancillary industries.  Such a demand for labor would mop up every last unemployed person in the country and send wages soaring.  If Trump accomplishes even half of this, people will be stunned at the effect on the economy.