Trump on Trade with China: Media Misses the Point

November 10, 2017

http://www.cnn.com/2017/11/08/politics/donald-trump-xi-jinping-statement/index.html

As was widely reported yesterday morning, Trump emerged from two hours of a meeting with Chinese premier Xi Jinping and had this to say:

I don’t blame China. “After all, who can blame a country for being able to take advantage of another country for benefit of their citizens? I give China great credit.”
The above-linked article goes on:
Instead of pointing the finger at Beijing for exacerbating trade disputes, Trump blamed past US administrations “for allowing this trade deficit to take place and to grow.”  It was a notable shift in tone from a President who was elected to office partly for his tough talk on holding other countries accountable for practices that disadvantage US workers.
Trump went on:
We want a vibrant trade relationship with China.  We also want a fair and reciprocal one. Today, I discussed with President Xi the chronic imbalance in our relationship as it pertains to trade and the concrete steps it will take to solve the problem of massive trade distortion.
A “notable shift in tone?”  Maybe a shift in tone, but the media is completely missing the not-so-subtle and huge shift in U.S. trade policy that this represents.  Previous presidents have chided China for unfair trade practices like currency manipulation, theft of intellectual property, subsidizing their exports, and manufacturing in sweat shops that also pollute with reckless abandon.  They used to put all of the onus on China for helping to correct our enormous trade imbalance.  The Chinese must have been rolling in the aisles with laughter when our trade negotiators left.
Not this time.  What Trump is saying is that the time has come for the U.S. to take the matter of restoring a balance of trade with China into our own hands.  Trump has been itching to begin levying tariffs on imports from countries that have large trade surpluses with the U.S. and, though he made no mention of tariffs in this speech, his vow to take matters into our own hands should send chills down the spine of Xi.  Restoring balance with China by slowing their exports with the use of tariffs would practically collapse the Chinese economy.
But so far it’s just talk.  What is Trump waiting for?  It seems clear that he’s biding his time with China in the hope that their help with reining in “Little Rocket Man” in North Korea will lead to his demise.  Probably a smart move but, if it doesn’t work by the time North Korea has the ability to put a nuke on an ICBM, the U.S. will have to act and the Chinese will lose whatever leverage holding the North Korean attack dog at bay has afforded them.
In the meantime, our trade deficit in manufactured goods grows worse.  Here’s the latest chart, gleaned from the trade data for September that was released on last Friday:  Manf’d Goods Balance of Trade.  Nothing has changed since Trump took office, and nothing will until he stops dithering with pointless negotiations and begins applying tariffs to these countries with bloated labor forces and emaciated markets.  My sense is that that time is growing nearer, but time will tell.
Advertisements

America’s Best Trading Partners in 2016

July 12, 2017

In my previous post we found that the list of America’s worst trade partners in 2016 – those with whom the U.S. has the biggest trade deficit in manufactured goods – in terms of both total dollars and in per capita terms – was dominated by nations whose population densities were far above the world median.  Only two of the twenty worst nations had population densities below the world median.

So what about the other end of the spectrum – the nations with whom the U.S. enjoyed trade surpluses in manufactured goods in 2016?  If there is a relationship between population density and trade imbalance, we should see the opposite effect – that the list is dominated by nations with low population densities.  Here’s the list of America’s twenty biggest trade surpluses in manufactured goods in 2016:  Top 20 Surpluses, 2016

It isn’t as clear as you might expect, and here’s why.  The fact that all oil around the globe is priced in U.S. dollars makes oil exporters float to the top of the list, regardless of population density.  Those nations with whom the U.S. has a trade deficit in oil are high-lighted in yellow.  Of these twenty nations, eleven were net exporters of oil to the U.S.  Why does this matter?  Because American dollars, aside from being legal tender for purchasing oil anywhere in the world, can only be used as legal tender in the U.S.  That means that all those “petro-dollars” have to be used to buy something from the U.S. – primarily two things:  U.S. government bonds and products made in the U.S.  While eleven net oil exporters appear on this list, only one appeared on the list of our top twenty worst trade deficits – Mexico.

Still, the population density effect is in play, even among these net oil exporters.  Believe it or not, Canada (not Saudi Arabia or some other Middle Eastern country) is our biggest source of imported oil.  With Canada, our trade surplus in manufactured goods is bigger than our deficit in oil by about $6 billion per year.  With Saudia Arabia, trade in oil and manufactured goods was almost perfectly balanced.  The same with New Zealand.  With Norway, our surplus in manufactured goods exceeded the deficit in oil by over $3 billion.

In addition, there are two very densely populated nations that appear on this list who are not oil exporters – the Netherlands and Belgium.  There’s a reason for this also.  Both are tiny European nations who happen to share the only deep water port on the Atlantic coast of Europe.  They use this to their advantage, buying American exports and then re-selling them to the rest of Europe.  Taken as a whole, the trade deficit with the European Union in 2016 was $138 billion, which would rank it 2nd on the list of our worst trade deficits, just after China.  The population density of the EU is 310 people per square mile – a little less than China.  And, in per capita terms, our trade deficit in manufactured goods with the EU was $274, a little worse than China.

Now let’s look at a list of our top twenty trade surpluses in per capita terms in 2016:  Top 20 Per Capita Surpluses, 2016.  This results in some small nations floating up onto the list:  Brunei (an oil exporter), Iceland, Belize, Guyana (an oil exporter), the Falkland Islands, Suriname, Oman and Equatorial Guinea (the latter two also being net oil exporters).  But in terms of population density, both lists are pretty similar.  The average population density of the nations on both lists are 213 people per square mile and 197, respectively.  Compare that to the lists of nations with whom we have the largest trade deficits where the population densities were 729 (our largest deficits in dollar terms) and 522 (our largest deficits in per capita terms).  But let’s look at those lists another way.  Let’s calculate the overall population density (the total population divided by the total land area) for the nations with whom we had the twenty largest per capita trade deficits vs. the nations with whom we had the twenty largest per capita surpluses.  Those figures are 372 people per square mile vs. 20 people per square mile.

Oh, and by the way, look at the purchasing power parity of both lists.  They’re remarkably the same.  Clearly, wealth (or wages) play no role in determining the balance of trade whatsoever.

The data couldn’t be more clear.  While other factors may come into play in trade, their effects are dwarfed by the role of population density in determining the balance of trade.  Free trade with densely populated nations is almost assured to yield terrible results for the U.S. – a huge trade deficit in manufactured goods, the loss of manufacturing jobs, and the ruination of the manufacturing sector of our economy.  Because of the role of over-crowding in eroding per capita consumption, those nations consume little but are very bit as productive.  So they come to the trade table with a bloated labor force hungry for work, and a wilted market, unable to consume our exports in equal measure.  Free trade with more sparsely populated nations, on the other hand, is likely to yield the opposite result.  Any trade policy that doesn’t use tariffs to maintain a balance of trade with densely populated nations is doomed to failure, as decades of America’s free trade policy has proven.

We’ll look at even more data from 2016 in upcoming posts.  Stay tuned.

 


Student Visas

February 24, 2017

The subject of student visas aggravates me as much as illegal immigration (although we’re finally getting some great news on that front).

Why?  “What’s the problem with student visas?” you might ask.  For most, the topic probably conjures up images of foreign exchange students coming to the U.S. to experience life here and return home to spread the news about what a great place the U.S. is and to help spread our value system around the world.  Or maybe you envision students coming here for an education that can be put to work back home in some underdeveloped country, helping to raise living standards there.  But the reality of the situation is nothing like this.  The student visa program boils down to money.  It’s a system designed to suck trade dollars back into the U.S. economy and to prop up inflated tuitions.

Let’s begin with some data.  Here are the statistics for non-immigrant visas issued from 2011 through 2015.  (The data for 2016 is not yet available.)  Student visas are primarily “F” visas.  “M” visas are for vocational students.  Taken together, they totaled nearly 700,000 in 2015.  These are “non-immigrant” visas, but don’t be fooled.  A large percentage of these students receive immigrant visas (leading to permanent status) almost automatically upon graduation.

Where do these students come from?  About 280,000 came from mainland China.  75,000 came from India.  28,000 came from Saudi Arabia.  27,000 came from South Korea.  17,600 came from Vietnam.  An equal number came from Mexico.  17,000 came from Japan.  The rest are spread across the remaining nations of the world.  The significance of this list will be discussed later.

To get an idea of what the student visa program is really about, take a look at this web site, which provides information for foreign students for how to apply:

https://www.studyusa.com/en/a/33/how-to-get-your-u-s-student-visa

What it boils down to is this:  you have to explain why you want to study in the U.S. and, more importantly, you have to prove that you can pay for it.  There’s no student loan program here, at least not through U.S. agencies.  If you can get scholarship money from your native country, fine, but regardless of how you get the cash, you have to be able to pay your way.  You must also declare your intent to return to your home country when you’re finished with your studies.  But that’s a formality, one easily skirted when you actually get your degree.

In 2015, over 677,000 “F” visas were issued.  223,000 applicants were refused.  In other words, about three quarters of all applicants are accepted.

Now, let’s take a look at some interesting findings about the student visa program published in a study by the Brookings Institution in 2012.  Here’s the link:

https://www.brookings.edu/interactives/the-geography-of-foreign-students-in-u-s-higher-education-origins-and-destinations/#/M10420

“From 2008 to 2012, 85 percent of foreign students pursuing a bachelor’s degree or above attended colleges and universities in 118 metro areas that collectively accounted for 73 percent of U.S. higher education students. They contributed approximately $21.8 billion in tuition and $12.8 billion in other spending—representing a major services export—to those metropolitan economies over the five-year period.”

Got that?  They paid full tuition and living expenses, bringing over $33 billion into the economy.  And that was through 2012.  In 2015, when 25% more visas were issued than in 2012, that figure rises to over $42 billion.

Two-thirds of foreign students pursuing a bachelor’s or higher degree are in science, technology, engineering, mathematics (STEM) or business, management and marketing fields, versus 48 percent of students in the United States.

Remember how tech companies claim that they depend heavily on immigrants to provide the advanced skills that they need?

Forty-five (45) percent of foreign student graduates extend their visas to work in the same metropolitan area as their college or university.

In other words, these students then go on to become the H1-B visa workers that the tech industry (and many others) claim that they need.  So the “non-immigrant” nature of student visas, and the declaration of intent to return to their home country, is truly a joke.  Here’s further evidence that student visas are used as the pipeline for H1-B visas:

http://www.h1base.com/content/f1visa

These companies who claim that they’re dependent on immigrants for the skills they need are trying to pull the wool over your eyes.  What they need are STEM graduates and they get them from American universities.  They like the fact that foreign students contribute to a glut of labor that helps to keep their payroll costs suppressed.  When Apple claims that, if immigrants aren’t allowed to travel freely to work in the U.S., then they might need to relocate to where they can have easier access to immigrant labor, that’s a “crock” and they know it.  Go ahead, Apple, move to Yemen or  Iran or Libya or one of those other countries, and let’s see how successful you can be there.  What you really need are the STEM graduates of American universities.  You won’t find them in those other places.  But what you will find are poverty, illiteracy and oppressive governments.  But you say you can do better there.  So prove it.  Just leave.  Go ahead.  Go.

There’s a mind-numbing amount of information in these links.  Let’s boil it all down:

  • Immigrants currently fill 1.2 million of the seats available in American universities.  That’s a significant percentage of the seats available.
  • Approximately three quarters of foreign students who apply are accepted.  Compare that to the acceptance rate for American students at most prominent universities, where only 10% or fewer attain admission.
  • Why the preference for foreign students?  Because they pay full tuition, propping up the ridiculous rate of tuition increases.
  • Foreign students are given preference over American students because of their ability to pay.  This effectively shuts American students out, especially from STEM curricula.
  • The influx of foreign students actually counts as an export of services.  Can you believe that?  It’s one of the tricks used by the government to draw trade dollars back into the U.S. economy and to keep our trade data from looking even worse than it does.
  • University sports teams have also gotten in on the act, now recruiting foreign students through the “student” visa program, denying athletic scholarships to deserving American athletes.  When it comes time for the Olympics, those athletes, trained in America, compete for their home countries, leaving the American teams thin.
  • Almost half of foreign students then go on to work in America, shutting American students out of those jobs as well.
  • The student visa program feeds into the H1-B visa program, which then begins to feed many of the other immigrant categories such as immediate relatives and family-sponsored preferences.

OK, remember the above list of countries that send the most students?  Did you notice anything about that list?  Did you notice that it includes the countries with whom America has the biggest trade deficits?  That should give you a clue as to where these foreign students are getting the money they need for tuition.  Their parents are getting rich on manufacturing for export to the United States.  What this means is that, in addition to taking your job, they then use your money to pay for their kids to come over here and take your kids’ jobs too!  Can this scheme possibly get any more outrageous?

If you’re an American student who hasn’t been able to get accepted into the school or program of your choice, the student visa program is probably the main reason.  If you’re a recent graduate and find yourself now saddled with crushing student loan debt, you can blame the student visa program for propping up ridiculous tuition rates.  And if you now find yourself struggling to find a job, you can once again blame the student visa program.

The student visa program is an outrage perpetrated on unsuspecting parents and students, depriving them of opportunities to help America out of its trade-created cash crisis, to help greedy universities prop up inflated tuition rates and to help corporations suppress wages with a labor glut.  It has to stop.  No foreign student should be admitted until every last American kid who wants a college education has gotten a seat in a university.  President Trump … please … take a close look at the student visa program and rein it in.


U.S. Immigration – A Little Perspective

February 18, 2017

A lot of claims are made about immigration, especially by those supportive of high rates of immigration into the U.S., no more so than recently.  “We are a nation of immigrants.”  “Our high tech industry needs the special skills that immigrants provide us.”  “Immigrants are ambitious and innovative; 25% of all small businesses are started by immigrants.”  “Immigration boosts our economy through diversity.”  And so on.

Are these claims true?  Do immigrants possess some sort of mystical economic powers lacking in the native-born American population?  Or are these claims mostly hyperbole designed to support some other agenda?

First of all, let’s look at the evidence.  The claim that “we need immigrants to have a viable, vibrant economy” is similar to the claim that “we need free trade in order to have a viable economy.”  Both statements fail the most basic test of logic.  If these statements were true, then it would be impossible for humankind to have a viable economy since we have no trade with or immigrants from other planets.  Think about it.  In order for such a statement to be valid, it has to hold true regardless of how big you draw the circle around any given group of people.

If immigration is critical to a vibrant economy, how does one explain that, of the five largest economies in the world, three rank near the bottom in terms of migration rate?  China, the largest economy in the world and ranking in the top seven percentile in terms of its rate of economic growth, ranks in the bottom half in terms of migration rate.  India, with the fourth largest and seventh fastest-growing economy in the world ranks 84th in terms of migration rate.  And Japan, with the fifth largest economy in the world (but among the slowest-growing economies in the world) ranks 86th in terms of migration rate, with a rate of zero per 1,000 people.  In fact, of the 222 nations on earth, 151 nations have a net migration rate of zero or less.  (Less indicating that they have a net outflow of people.)  Clearly, immigration is no factor at all in determining the health of an economy.  That’s not to say that there aren’t instances where immigrants do, in fact, provide some special skills that are needed by companies and other institutions, but to extrapolate that to mean that more is better simply doesn’t stand up to the data.

There has also been a recent trend in holding up Europe as a shining example of tolerance toward immigration while berating the U.S. for its efforts to reign it in.  If we are to believe the news reports, the European Union (EU) has welcomed an absolute tidal wave of immigrants from the Middle East and Africa, while the U.S. deports and talks of building a wall.  Let’s look at the facts.  In 2014, approximately 284,000 “refugees” arrived in the EU, which has a population comparable in size to the U.S.  In 2015, that number exploded to 1.82 million.  In 2016, the EU began “closing the door” and the number of refugees fell back to below the 2014 level, for a total of about 2.3 million over the course of three years.

Compare that figure to the U.S. where over a million illegal immigrants have crossed our southern border year in and year out for decades, while the U.S. admitted legal immigrants at about the same rate – a million per year – for a net influx of two million immigrants per year for as long as most of us can remember.  The fact is that Europe’s rate of immigration is dwarfed by what the U.S. has accommodated for far, far longer.  Yet, we are to see the EU as a shining example of tolerance for immigrants while the U.S. is depicted as intolerant and bigoted?  Give me a break!

This is a good time to take a closer look at legal immigration into the U.S.  Here’s the State Department’s statistics on visas issued for the 2012 – 2016 time frame.  As you can see, the number of immigrant visas issued has grown by about 50% over the past four years to nearly 618,000.  But take a look at the “non-immigrant category,” which is visas issued for temporary stay.  These are running close to eleven million per year – 13 million when you include “B1/B2 Border Crossing Cards.”  That sounds alarming at first, but let’s take a look at what these are.  Here’s a listing of the non-immigrant visas, broken down by category.  (The data for 2016 isn’t available yet.)  The vast majority of non-immigrant visas are for temporary visits for  business and pleasure.  However, there are a couple of categories that we do need to be concerned about:  F and M visas for students, which totaled nearly 700,000 in 2015, and H visas for “temporary workers.”  We’ll come back to that.

Let’s take a look at where most of the people migrating to the U.S. originate.  In 2016, of the 617,752 immigrant visas issued, 249,000 were immigrants from Asia.  Most of these were people from China, the Philippines, Vietnam and India, in that order.  222,000 were from North America, predominantly Mexico, followed by the Dominican Republic.  Most of the remainder were from Africa, spread across most African countries.  If you’re interested, here’s the complete breakdown from the State Department.

As you can see, the vast majority of people who immigrated to the U.S. in 2016 came from rather poor nations.  So how are we to believe that they possess some kind of mystical economic powers, or come to the U.S. with skills and education that just can’t be found among native-born Americans?  When you look at all the facts, such claims are clearly nonsense.

The fact is that immigrants bring nothing more to the table than do native-born Americans.  They are just people – no different than the rest of us.  As such, in the final analysis, there is only one real effect of immigration, and that is to grow the population.  And if that is the only effect of immigration, then any discussions of the merits of immigration that don’t begin and end with questioning the wisdom of growing our population are ruses, meant to confuse us in the hope of advancing some other agenda.  Like what?  Like using population growth to prop up economic growth, to drive consumer demand, to suppress wages and to fatten corporate bottom lines, just to name a few.

Putting a halt to illegal immigration and deporting those who have already entered illegally is a no-brainer.  A country that doesn’t control its borders is no country at all.  The real question is whether our current rate of legal immigration is appropriate.  Do we need to be growing our population?  In light of the relationship between population density and declining per capita consumption and rising unemployment, do we really need more people?  In light of the seemingly insurmountable challenge posed by global warming, do we really need more carbon emitters?  Is it appropriate for the U.S. to function as a population relief valve for other overpopulated nations?  Or are we merely exacerbating all these problems?

The time has come to begin scaling back the rate of influx of immigrants.  But where do we begin?  Legal immigration is like a pipeline that the longer the tap stays open, the faster the flow becomes.  Believe it or not, the place to start is not by trying to close the tap, but by slowing the source that fills the pipeline.  What I’m saying is that we need to begin with a hard look at student visas.  In my next post, we’ll take a close look at how student visas are driving all of the other classes of immigrants and the harm being done to our young people and our workers.  Stay tuned.

 

 

 

 


2017 Predictions

January 2, 2017

I just posted my annual predictions for 2017.  I usually do this in November but, in the wake of the election, I decided to wait and see whether Trump would provide any clues as to how his presidency will unfold.  He did, and the clues were pretty consistent with his campaign promises.  It’s going to be a wild year – potentially a very good one for Americans, but with some scary stuff on the horizon.  Check it out:  https://petemurphy.wordpress.com/more-good-stuff/predictions/2017-predictions/.


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.