Capitol Building Riot: an attack on democracy? What democracy?

January 12, 2021

The democracy that our founding fathers envisioned, one where the people had the ability to choose our destiny by selecting from candidates with competing visions of how to improve our lives, has been gone for a long time. On the surface, that seems like a ridiculous statement, given how polarized our country is and how our candidates seem to be drifting toward the liberal and conservative extremes. However, exactly the opposite has happened. On the critical issues that have real impact on our standard of living, there is absolutely zero difference between the parties, while both use fringe issues to drive a wedge between us, making a show of offering a choice.

What are the critical issues? Two are chief among them – trade policy and immigration policy. Both parties have for decades been ardent supporters of “free” trade and open borders. Oh, they’ll each make a show of how they differ on minor details of how those policies are executed. The end result, however, is exactly the same – more jobs lost to globalist “free” trade policy, and more immigrants flooding the country to hold down wages for what jobs remain.

If there’s one issue that crosses party lines, it’s that Americans are nearly unanimous in opposition to the destruction of the manufacturing sector of our economy. Most everyone cringes when they look at the “made in China” or “made in Mexico” labels on everything we buy, and hate the fact that they can’t buy American. It’s a glaringly obvious opportunity for a candidate to win election in a landslide. Yet, at least until Trump came along, not a single candidate would touch the issue. Instead, Republicans and Democrats – the “Republicrat” party – told us, “too bad.” “Those jobs are gone forever.”

How the hell did this happen? I would argue that the demise of American democracy is rooted in a fatal flaw in our constitution. Back in the 18th century, when the Constitution was written and the U.S. was made up of only thirteen states, Article V of the Constitution, which spells out the procedure for amending it, may have seemed reasonable. It requires that a proposed amendment must first pass both houses of Congress by a two-thirds majority. Then it must be ratified by three-quarters of the states. In 1776, that was 10 states. Today it would require ratification by 38 states. In essence, it’s now impossible (and has been for a very long time) to amend the Constitution. That leaves it up to the Supreme Court to interpret how this antiquated document applies to the complicated issues of our modern times.

The very first words of the Constitution are “We the people … ” Seems pretty straightforward, right? Yet nothing has been more contentious than the meaning of the word “people.” It took a long time for it to be interpreted to include blacks and women, which now seems obvious. But what about corporations? They’re made up of people. Do corporations have the same rights as individual people? Click here for a good history of how the Supreme Court’s interpretation of that issue has evolved over the centuries.

It came to a head with the “Citizens United” decision in 2010. Click here for a good explanation of what that was and what it’s done to our democracy. This incredible decision gave corporations – even global corporations – all of the same rights as individuals. Even worse, it also equated money with speech. Now there are virtually no limits to how much corporations can spend to influence elections, because it would infringe on their right to free speech. Free speech is now a commodity, for sale to the highest bidder. Global corporations can run ads in the national media promoting their causes. You can’t because you can’t afford it. Your opinion has been priced out of the market.

To quote the above-linked American Promise web site: “… corporations, for which changes in regulatory policy may equate to billions of dollars’ difference to their bottom lines, have unique motivations to support or dispute policy and election outcomes, which may not align with the well-being of the American people. Indeed, corporate interests are often contrary to the interests of the general public, and studies find that elite interests are much more likely to be reflected in policy outcomes than those of the general public.”

With money comes influence. Who do you think wields more influence, a corporation who donates $100,000 to a campaign, or you with your $10 donation? You? Don’t make me laugh. The end result of all of this is that the candidates of both parties are literally bought and paid for by corporations. And corporations hedge their bets by donating to both candidates so that, regardless of who wins, the president and members of Congress are deeply indebted to them. You? They don’t give a rat’s ass about you! Your plight is irrelevant to them. You think your vote matters? Each candidate will tell you anything in the hopes of getting 50.1% of the vote. Once in office, you find out who they’re really working for. It’s not the American people.

If, somehow, a rogue candidate emerges who isn’t aligned with their globalist agenda, as Trump did, they kick their media campaign into high gear to destroy them. Easy to do, since they own the media. Freedom of the press? Gone. All employees of media companies do exactly what their bosses tell them and brainlessly read the script from their teleprompters. Facts are presented selectively to skew public opinion. Even “fact-checkers” are bought-and-paid-for employees of their corporate owners.

There’s actually little difference between our “democracy” and what masquerades as a democracy in other places, like Russia, for example. It’s a foregone conclusion that Putin will win election by something like 95% of the vote. In the U.S., it’s a foregone conclusion that the bought-and-paid-for Republicrat party will win. Which Republicrat candidate makes no difference.

For years I’ve been warning of the economic consequences of ever-worsening overpopulation – how it erodes employment and how trade with overpopulated nations accelerates the effects. For decades the world has been locked in an ever-escalating global war for jobs – jobs that have been steadily pirated from the American economy, facilitated by global organizations like the World Trade Organization, the United Nations, and others – organizations to which the U.S. has gradually and foolishly been ceding control of its economy. The global war for jobs has intensified and finally arrived in America, where it’s had the most devastating effect, and has manifested itself in the riot at the Capitol building.

America’s democracy has been gutted through decades of misinterpretation of its constitution. Global corporations didn’t like it. No problem. Just change the definitions of words until the whole document is unintelligible. Corporations are now people. Money is speech. Hell, thanks to Bill Clinton, now we’re not even sure “… what the definition of the word ‘is’ is.” We can’t clarify the constitution to make it work again for the America people, because it’s impossible to amend. We can’t change the amendment process because, well, that would require an amendment.

I don’t know where we go from here. It’s hard to see how this can possibly turn out well.


Capitol Building Riot “Unthinkable?”

January 10, 2021

Many political pundits and people in the media have described the riot at the Capitol building on Wednesday as “unthinkable.” Was it “unthinkable?” Actually, it was “thought” a long time ago when the issues were different and, politically, the shoe was on the other foot. The “thought” was expressed in the following song lyrics. It’s eerie just how prophetic these lyrics seem today.

“Come gather ’round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You’ll be drenched to the bone
If your time to you is worth savin’
Then you better start swimmin’ or you’ll sink like a stone
For the times they are a-changin’

Come writers and critics
Who prophesize with your pen
And keep your eyes wide
The chance won’t come again
And don’t speak too soon
For the wheel’s still in spin
And there’s no tellin’ who that it’s namin’
For the loser now will be later to win
For the times they are a-changin’

Come senators, congressmen
Please heed the call
Don’t stand in the doorway
Don’t block up the hall
For he that gets hurt
Will be he who has stalled
There’s a battle outside and it is ragin’
It’ll soon shake your windows and rattle your walls
For the times they are a-changin’

Come mothers and fathers
Throughout the land
And don’t criticize
What you can’t understand
Your sons and your daughters
Are beyond your command
Your old road is rapidly agin’
Please get out of the new one if you can’t lend your hand
For the times they are a-changin’

The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is rapidly fadin’
And the first one now will later be last
For the times they are a-changin’”

The Times They Are A-Changin’, Bob Dylan, 1963


The Driving Force Behind America’s Drift Toward Socialism

December 10, 2020

One clear message that emerged from the election as the Democratic Party suffered significant losses in the House – and even Democrats agree with the conclusion – is that Americans overwhelmingly loathe the notion of socialism taking root here. Though the number of true socialists amongst the Democrats is small, Republicans’ constant labeling of the whole party as such was effective. Americans want nothing to do with socialism.

However, there has been a slow drift toward socialism over the decades as one social safety net program after another has been added. The Covid-19 pandemic has dramatically accelerated the trend with stimulus checks provided to all, unemployment bonus checks that make it signifcantly more lucrative to remain unemployed, eviction moratoriums and others. Socialists are now emboldened to demand more, things like universal minimum incomes provided by government, universal healthcare, college debt forgiveness and free college tuition among many other things.

Ask anyone about the cause of the drift toward socialism and most will blame the Democratic Party, home to a few hard-core socialists like “The Squad” in the House and many more progressives and liberals who don’t quite merit the socialist label. However, most people would be shocked to learn that Republicans and conservatives in general are just as culpable for the drift toward socialism, for both parties alike have fostered a policy that increasingly makes Americans dependent on the government nanny-state. I’m talking about the “free trade” policy that both parties have happily and eagerly embraced to the delight of their corporate benefactors.

America’s embrace of free trade, which began in the wake of World War II, has transformed us from the world’s richest economy and preeminent industrial power into the world’s skid row bum. How? Here’s how it works. Every dollar spent on an imported product is a dollar taken out of the economy. If not offset by a dollar spent on an American-made product by someone in a foreign country, then it’s a dollar lost from our economy forever, leaving us a dollar poorer and with one dollar’s worth of a manufacturing job gone.

The only way to make the economy whole again is for the government to put a dollar back into the economy. The only way it can do that is by selling a bond. To whom? To that foreign country where you spent that dollar on one of their goods. How does the dollar get put back into the economy? Through a government program: funding unemployment, welfare, health care for those who can’t afford it, etc. In essence, every dollar’s worth of our trade deficit is an investment by an American consumer in socialism.

Every dollar of our trade deficit further divides our society into the “have” and “have-not” classes as the erosion of the manufacturing sector of our economy worsens, driving people who once earned high wages and benefits into the unemployment line, where they have no hope of returning to the quality of life they once enjoyed. It’s only natural that this “have not” class of society would turn to socialism to make them whole again.

It doesn’t seem like a big deal until you understand the enormity of the problem. Last week, the Commerce Department released the trade data for the month of October. Our trade deficit for just that month was $63 billion. But that’s not the worst of it. That figure includes a surplus in “services,” much of which is nothing more than paperwork transactions. The real concern is goods – manufactured goods, to be precise – since that’s where the jobs are and that’s where a deficit does real damage to the economy. The deficit in manufactured goods in October was $81.3 billion, just shy of the record set only two months earlier. Annualized, that’s a deficit of $976 billion. And it’s rapidly getting worse. Here’s a chart of the data: https://petemurphy.files.wordpress.com/2020/12/manfd-goods-balance-of-trade.pdf.

Think about that. Almost a trillion dollars per year must be injected back into the economy by the government in the form of socialist programs. The United States has been running an ever-growing trade deficit for forty-four consecutive years, since our last trade surplus in 1976.

If America wants to avoid becoming a socialist country, it’s imperative that Americans wake up to the fact that it’s our enormous trade deficit that’s pushing us fast and hard in that direction. As long as the U.S. pursues “free trade,” the worse matters will get. History has shown that only the use of tariffs can assure that a balance of trade is maintained.


Reflections on Trump’s Presidency and the Election – Part 2

November 11, 2020

I closed my last post with the question: was this a rigged – legally rigged – election? Let’s begin with a look back at how the election unfolded.

Throughout the campaign, from the moment Biden won the nomination, polls consistently showed that Biden was ahead by a 10-12 point margin. That’s a big margin – discouraging for Trump supporters and stirring enthusiasm among encouraged Biden supporters. New polling data that continued to show Biden leading by that large margin was often the daily lead story across the whole spectrum of media. Did the media knowingly publish false polling data? Were the polling organizations providing the media with falsified data? It smacks of voter suppression.

I received my ballot sometime in September, if I recall correctly. I noticed that, for every race – from president to dog-catcher – the Democratic party candidate was listed first, followed by the Republican candidate, followed by the lesser party candidates – Green Party, Libertarian Party, etc. Why, I wondered? I found that curious. The parties weren’t in alphabetical order, since the Republican candidate would appear much further down, nor were they in alphabetical order by the candidates’ names. (Again, Trump would have been at the bottom of the ballot.) That had to be some kind of advantage – being listed first on the ballot – however small. There are those people who will simply check the first name they see.

I filled out the ballot and signed it. It occurred to me that my signature was no proof whatsoever that it was I who had filled out the ballot. I could have signed a blank ballot and sold it for a hundred bucks. If I was incapacitated in some way, my caregiver could have filled it out and instructed me to sign it.

I put the ballot in the official drop box at the township office weeks ahead of the election to be sure it arrived on time, and not wanting to get the ballot back two weeks after the election marked “insufficient postage.”

Election night finally arrived. As polling closed in the Eastern time zone, early results showed Biden winning by a wide margin. However, we were cautioned that these early results were skewed by mail-in ballots, which were the first to be counted, and mail-in ballots are heavily Democratic. Huh?

Sure enough, as in-person ballots were counted, Trump pulled into the lead, by substantial margins in some cases. I stayed up until midnight and finally went to bed happy, knowing that the “Make America Great” program was on track for another four years.

The next morning, I awoke to a new reality. Trump’s leads were nearly evaporated. The media commentators and analysts explained that the mail-in ballots were the last to be counted, and that mail-in ballots were heavily Democratic. Now I was totally confused. Last night they said they were the first ones counted!

As more ballots trickled in, Trump’s leads in Wisconsin and Michigan were flipped. Five states remained – Pennsylvania, North Carolina, Georgia, Nevada and Arizona. (Well, six, when you include Alaska.) In each case, 10-15% of the ballots remained uncounted. A day passed with virtually no update to the tallies. Another day passed. Nothing still. Something was beginning to smell fishy.

After a couple of days of this, we learned the truth about the delay. Ballots weren’t being counted, because there were no remaining ballots. The delay was simply a waiting game for more “expected” ballots to arrive. Then, more truth: in Georgia, there was a “ballot-curing” process underway, where activists were going door-to-door giving voters a chance to fix problems on ballots that had been rejected. (One can’t help being suspicious that they were also rounding up new ballots. It’d be easy to do. “Oh, Mrs. Jones, we also noticed that your husband didn’t return his ballot. Would you like to fill this one out now?”) We were assured it was all perfectly normal and legal, but it didn’t pass the smell test. It sure seemed for all the world that, once the vote tally was in after the polls closed and it was known how many more votes were needed to flip the results, Democratic party activists were given an opportunity to go out and round up the votes they needed. Maybe that’s not what happened, but it sure as hell smelled rotten.

And it was all legal. Some states did it right. Signatures on mail-in ballots had to be notarized to prove who filled them out. Ballots had to be received by the close of the polls to be counted. Florida is an example.

Other states, however, in their zeal to provide voters a safe option for voting during the Covid crisis, liberalized mail-in balloting with little or no regard for the integrity of the results. Your ballot might not arrive in time if mailed? No problem, we’ll give it 3 days, or a week, or 10 days to arrive after polls close. Don’t know how much postage to put on it? No problem. Don’t put any on it. It’ll get delivered anyway. That means it won’t have a postmark? No problem. We don’t care.

Like in Pennsylvania. No postmark was necessary. They could magically arrive up to ten days late and, unless it could be proven that they were submitted fraudulently after the polls had closed on election day, they were considered legal ballots.

Then we learned that, following a judge’s order for the post office to search for missing ballots, the post office simply rounded up 300,000 ballots and turned them in without scanning them, leaving them with no postmark to prove when they had been mailed.

As I write this, three states – Arizona, Georgia and North Carolina – are still rounding up ballots.

And can someone help me understand the rationale that says mail-in balloting is favored by a wide margin by Democrats over Republicans? That defies logic. There are no political factors involved. People would choose to use mail-in ballots for various reasons:

1. The voter may be out-of-town on polling day.

2. The voter may want to vote absentee just for the sake of convenience.

3. The voter may be a shut-in.

4. The voter may have wanted to avoid exposure to Covid.

None of these factors would cause more voters to favor one candidate over the other. The fact that the results from mail-in ballots differed from the results of in-person voting by a significant margin is clear evidence of some kind of malfeasance.

Then there’s the matter of the high percentage of mail-in ballots that were returned – reportedly 90% or more. Anyone who has ever done a mass mailing – no matter how important, how clearly the envelope is marked as containing important information, and how much the recipients have been advised of the importance of the mailing and to watch for its arrival – knows that you’re lucky to get a 75% response. The other 25% were never read, were tossed on a pile of mail, and buried the next day under a new pile of mail – all eventually to be thrown out. A 90% return rate is clear evidence that someone intervened to round up the missing ballots. Illegal? No, but when only certain demographics are targeted for such follow-up, it becomes an effective tool for legally “rigging” the election results, especially if it’s allowed after the close of the polls. Now that’s a plausible explanation of why mail-in ballots may have heavily favored Biden over Trump.

This is ridiculous. One can’t help being suspicious about an election process so lacking in controls but, then again, it’s all perfectly “legal” this year. It’s got to change if voters are to have any confidence in the integrity of our election process. State laws that allow such sloppy control over ballots need to be challenged all the way to the Supreme Court if necessary. The shoe may very well be on the other foot in the next election.

Here’s what needs to be done to restore the integrity of and faith in our election process:

  1. Measures must be taken to assure that the person casting the ballot by mail is, in fact, the voter to whom the ballot was sent. Requiring notarized signatures is one way to accomplish that.
  2. Mail-in ballots must be received by the close of the polls on election day. Voters had PLENTY of time to mail those ballots well ahead of the election.
  3. The counting of mail-in ballots should begin when the polls open on election day and no results should be released until after polls.
  4. Organizations that publish polling data prior to the election should be held accountable and subject to fines and investigation if the election results fall outside their published margins of error.
  5. The publishing of exit polling data prior to the close of the polls on election day should be banned.

A “stolen” election? Maybe. It was easy enough to do it “legally.”


Reflections on Trump’s Presidency and the Election

November 10, 2020

I was never a fan of Trump before the 2016 election. As the Republican candidates began their campaigns for the primaries, I gave him zero chance of winning the nomination. He was too acerbic, mean-spirited, brash and bully-like – to the point of being self-destructive – for many voters to get behind his candidacy. However, as American workers and their families continued to reel from the economic damage wrought by the “Great Recession” of 2009, his “Make American Great Again” program caught on like wildfire.

Trump came right out and laid the blame for America’s problems squarely on those factors that every American knew was to blame – the factors that no other Republicrat would even utter for fear of alienating their global corporate benefactors: trade policy that had destroyed the manufacturing sector of our economy, and out-of-control immigration that was being used to keep our labor force in a constant state of over-supply in order to suppress wages. After decades of these policies that turned America – once the world’s preeminent industrial power and the richest nation in the world – into a skid row bum, begging the rest of the world to buy up our ever-growing mountain of debt, the American people were fed up and more than willing to overlook Trump’s issues in the hope of restoring America to the greatness we remembered.

From the outset, Trump faced challenges like no other. The proponents of globalism immediately kicked into overdrive in an effort to destroy him, cooking up a phony Russian influence narrative and then, when that didn’t work, impeaching him over the Ukrainian phone call without proving any “quid pro quo.” Beyond that, it took him a couple of years to weed out of his cabinet people who were supposedly the best in their field, but who proved to be nothing more than globalists bent on sabotaging his America First agenda.

In spite of all that, he made huge strides toward actually “Making America Great Again.” He cut both legal and illegal immigration dramatically. He got Mexico and Central American countries to cooperate in stopping the immigrant caravans. He made big cuts in quotas for refugees and H1-B visas (that steal jobs from Americans) and eliminated the “diversity” category of immigration altogether.

He got rid of the North American Free Trade Agreement and replaced it with an agreement designed to shift more production from Mexico back to the U.S. He slapped 25% tariffs on half of all Chinese imports, reducing the trade deficit with that country. He raised GDP growth above 3% and sent unemployment to record low levels while wages rose at their fastest pace ever.

He stood up to China. He got North Korea to halt their saber-rattling. He pulled us out of the horrible agreement with Iran that virtually guaranteed them a path to a nuclear weapon. He defeated ISIS. He forced NATO countries to begin paying their fair share of their defense costs. The rest of the world began treating us with respect again instead of playing us for fools and treating us like chumps.

He quickly pulled us out of the “Paris Climate Accord.” If you don’t see that as a positive thing, then I challenge you to tell me the mission statement of the Accord. You can’t do it, can you? I doubt that one person in a thousand – maybe one in a million – could tell me what it is. Most people think its mission is to protect the environment, to stop global warming through drastic cuts to greenhouse gas emissions. You’d be very wrong and shocked to learn that its actual mission is to reinvigorate “sustainable development” – the very concept whose practice over the last four decades has led to climate change – focusing on development of third world countries using fossil fuel technology, and all paid for by the U.S.

He did a hell of a lot in spite of the push-back from Democrats and the media. So what went wrong? Sadly, Trump could never get out of his own way. As someone close to me said, “if he’d just kept his mouth shut and stayed off of Twitter, he’d have won the election easily.” Trump just couldn’t stop himself from making over-the-top attacks on anyone who disagreed with him. To vehemently disagree with opponents wasn’t enough for him. He had to destroy them. Voters elected him to put the globalist establishment in its place, but what he did to some people was beyond the pale. The best example I can think of is how he denigrated John McCain. There were many other examples.

And he was a poor communicator. He did a poor job of making Americans understand what he was accomplishing and how it’d make their lives better. Pulling out of the Paris Climate Accord is a good example. Did you ever hear it explained to you as I did above? Instead, the media dictated the message, while Trump focused on trashing his enemies.

Then there was Covid. His initial approach was right on target, but he quickly grew impatient with its effect on the economy. He could have advocated for reopening the economy while doing everything we could to do it safely. Instead, he tried to minimize and even deny the problem. His approach resonated with a lot of people, but angered many more who are terrified of this disease.

Trump will soon be gone from the White House. But there are still a hell of a lot of people who fervently believe in the movement he started to “Make America Great Again.” There are three kinds of voters in America: those who believe America never stopped being great, those who believe that it’s not as great as it once was and needs to be made great again, and those who are fine with seeing America in decline. The biggest group, by far, is that group in the middle. The first group is in denial or detached from reality. The latter group is tiny, but very real and active, and a threat.

Trump started a movement that can and should live on, and will live on with any candidate or party that takes up its banner. Trump could play a huge role in keeping it alive, but that would require fundamental changes in his approach that I doubt he’s capable of. Maybe Mike Pence? Maybe Nikki Haley who did an outstanding job as Trump’s UN ambassador. Or maybe Mike Pompeo, his Secretary of State, who took no crap from any foreign country, to put it in coarse terms. It could even be a Democrat, if one were able to see its potential to restore the party’s image as the party of the working man. Biden? No.

Covid and the daily drumbeat of negativity from the media were a lot to overcome but, in the final analysis, Trump may have been his own worst enemy in his election defeat. Though he’s making a valiant effort to continue to fight with a myriad of court challenges, he won’t prevail. Few believe there was rampant fraud. I agree with those who say that every legal vote should be counted.

But was the election rigged? An election can be rigged through entirely legal means. Consider gerrymandering, the perfectly legal (in some states, not all) of redrawing congressional district boundaries to virtually assure that, once elected, it’s virtually impossible for the incumbent to be defeated. That’s rigging an election and it’s perfectly legal. It’s not a factor in the presidential election – at least not directly – but there are other ways to legally rig that election. I can’t help but have my suspicions. But this has gone on long enough for now. More on that in my next post.


Biden would consult “allies” on trade policy

October 30, 2020

https://www.reuters.com/article/us-usa-election-biden-china-exclusive/exclusive-biden-if-elected-would-consult-allies-on-future-of-u-s-tariffs-on-china-advisers-idUSKBN27E07R

As reported in the above-linked article, Biden would consult with “allies” to use “collective leverage” to “strengthen his hand” in conducting trade policy with China. It seems that Biden has no clear ideas of his own on the matter. And Biden fails to understand that we have no allies when it comes to trade policy. The rest of the world, especially those so badly overpopulated that they’re heavily dependent on exporting to the U.S. to sustain their bloated labor forces, are allies not to the U.S. but to the concept of “free trade” which, thanks to the relationship between population density and per capita consumption, virtually guarantees that they’ll enjoy a surplus of trade with the U.S. It is they, including China, who are exercising “collective leverage” against the U.S.

What does Biden expect that these “allies” will tell him? Does he think that they’ll support the U.S. in its use of tariffs to restore a balance of trade with China? Of course not. They don’t want the U.S. to realize that tariffs are an effective tool for correcting lopsided trade imbalances because they know that they’ll be next. Our “allies” will quickly lecture Biden about the evils of “protectionism” and the benefits of “free trade.” They care nothing about the damage done to the American economy because it works to their benefit.

It would be like a mangy, flea-bitten dog asking for the fleas’ help in dealing with one particularly nasty flea that’s been biting the hell out of him. The fleas will first look at each other in disbelief and then, with a wink, advise the dog that they actually do him a service, protecting him from some other imaginary malady. The big flea high-fives the other laughing fleas. The dog eventually succumbs and dies.

Perhaps he’s not interested in trade at all. Maybe he just likes the optics of appearing to be a “statesman.”

America needs a leader with a clear-eyed vision of how to restore a balance of trade and stop America’s economy from hemorrhaging a trillion dollars a year. Judging by this report, it doesn’t appear that Biden is that guy.


A Perfect Example of Why Token Tariffs Aren’t Enough

October 11, 2020

https://www.fidelity.com/news/article/top-news/202010090706RTRSNEWSCOMBINED_KBN26U161-OUSBS_1

Never mind the fact that Reuters, a champion of globalism, is eager to post negative stories about the use of tariffs by the U.S., especially when they relate to a battleground state like Michigan, and ignoring the distortion of the statistics due to the pandemic, the above-linked article makes a valid point.

The effects of Trump’s tariffs on steel offers a perfect example of why token tariffs, applied to one industry, can have the opposite effect of what was intended. Here’s the situation in a nutshell. The tariffs helped the steel industry at first. Steelmakers were able to thrive while getting higher prices for their steel. Before long, however, the increased costs for steel customers – most notably the auto industry – hurt their competitiveness with foreign auto makers. Sales slumped, reducing demand for domestic steel, which ultimately led to steel mill closures.

This is why you can’t take a piecemeal approach to trade policy. If tariffs are necessary to restore a balance of trade – which they obviously are for the U.S. – then they have to be applied across-the-board to every single manufactured product from every country that’s over-populated to the point where they are dependent on exports. Anything less is guaranteed to produce a trade deficit and a loss of manufacturing jobs.

Although I used a whole book, Five Short Blasts, to explain the concept, it’s fairly simple, really. People living in crowded conditions have low per capita consumption of products. After all, there’s not enough space to use and store them. They don’t use much, so there’s not much for people to do. Unemployment is high.

People living in less crowded conditions, on the other hand, enjoy high per capita consumption, requiring “all hands on deck” to produce what’s needed. People in that society enjoy full employment.

If these two societies try to trade freely with each other, a host-parasite relationship is established. The high population density / high unemployment state begins to feed on the market of the other, sapping it of its manufacturing jobs. It’s inescapable. The only thing the latter society can do is to halt the free-trade relationship.

As the Reuters article points out, the tariffs on steel helped the steel industry. Then why in the world wouldn’t you apply tariffs to all other industries?


August Trade Results: Another Record Trade Deficit, Another Month of China Thumbing Its Nose at “Phase 1” Trade Deal

October 7, 2020

The trade results for August are in and they couldn’t be any worse, though given the current trajectory, they may very well be worse in September.

The overall deficit soared to $67.1 billion, beating the record set only one month earlier by $3.7 billion. More importantly, the deficit in manufactured products continues to explode, jumping $2.9 billion from the previous month’s record to $83.2 billion – an annualized rate of almost exactly one trillion dollars. Here’s a chart of the deficit in manufactured goods: Monthly trade deficit in manufactured goods.

China didn’t help a bit. If they lived up to the agreement they made in the “Phase 1” trade deal, the deficit in manufactured goods would have been lower by $4.5 billion. They didn’t. Not even close. Not only did they not meet the goal in any category of goods, they even fell behind the 2017 baseline by a half billion dollars. In two of the four categories – energy and agriculture – they did import more than the 2017 baseline, but barely. They’ve made no progress at all toward meeting the goals set for 2020 in the deal. Here’s the chart: Monthly “Phase 1” trade deal results.

The deficit with China did drop slightly, falling to $29.8 billion from $31.6 billion in July. But it was of no benefit to America. The big winners from the success that Trump has had in reducing the deficit with China – thanks to the tariffs enacted before the “Phase 1” deal – have been Mexico and Vietnam. The monthly trade deficit with Mexico has quadrupled since Trump took office, soaring to a new record of $12.8 billion in August (beating the previous month’s record by a whopping $2.1 billion), compared to $3.8 billion when Trump took office in January of 2017. The deficit with Vietnam also blew past the previous month’s record, rising $0.8 billion to $7.6 billion, more than double when Trump took office.

To be fair, the trade deficit in manufactured goods was dropping nicely until the pandemic hit. It had fallen to $59.9 billion in February, but has risen dramatically since. Blame the pandemic. All of the money that Americans used to spend on dining out, travel, gym memberships and entertainment is now being spent on goods. Much of the stimulus money meant to help Americans is now in the hands of foreign manufacturers.

Though Trump has done far more than any president in decades to address the trade deficit and to bring manufacturing jobs back to America, he still needs to be much more aggressive with imposing tariffs on a wide range of countries who feed off of the American market to sustain their bloated labor forces. If he had, he’d be a shoo-in to win the election instead of finding himself the underdog. America will never be “great again” until store shelves are stocked with products “Made in the USA.”


U.S. Fails to Enforce “Phase 1” China Trade Deal

August 27, 2020

https://www.fidelity.com/news/article/top-news/202008242045RTRSNEWSCOMBINED_KBN25L023-OUSBS_1

As reported in the above-linked article, with six months of results from the “Phase 1” trade deal with China now in, the U.S. has “rolled over” for China yet again, ignoring the Chinese snub of the deal.  The picture that accompanies the article, showing the flag of Red China flying above that of the U.S., is appropriate.  Red China dominates the U.S. in trade because it dominates the U.S. in terms of its willingness to stand up for itself.

In spite of the fact that China has not made one inch of progress toward meeting the goals of the deal – in fact, it’s not even measuring up to the 2017 baseline for purchasing American goods – the U.S. Trade Representative’s office had this to say following a phone discussion with Chinese trade leaders:

“Both sides see progress and are committed to taking the steps necessary to ensure the success of the agreement,”

Red China has won again.  It’s tactic of making trade deals and then completely ignoring them, knowing that the U.S. never follows through on anything, has worked again, just as it has for decades.  The Chinese are once again rolling in the aisles with laughter.

Is Trump on board with this?  Is this a move calculated to avoid roiling the markets just ahead of the election?  Is he saving a tough response, like imposing the new tariffs that this deal delayed, until just ahead of the election, calculating that it will win him votes before anyone even takes notice of a market decline?

I don’t know, but I do know that the lack of progress in cutting the trade deficit and bringing back American manufacturing jobs is a major reason behind the decline in enthusiasm for his re-election.  Revitalizing the manufacturing sector of the economy is the key ingredient needed to “Make America Great Again” and it’s difficult to see any progress at all on that front.


U.S. Balance of Trade in 2019 vs. Population Density

May 1, 2020

So far we’ve looked at the two ends of the spectrum of America’s 2019 balance of trade – our worst trade deficits and our best trade surpluses.  We found that the list of our worst trade deficits is heavily dominated by nations with a high population density.  Conversely, we found the list of trade surpluses is dominated by two groups of nations – low population densities and net oil exporters.  Now let’s look at the whole 2019 trade picture, which includes 165 nations.  (The CIA World Fact Book lists a total of 229 nations in the world.  Not included in my study are tiny island nations and city-states which, combined, account for less than 1% of trade.)  Here’s a chart of America’s balance of trade with all nations that are more densely populated than the U.S. vs. all nations that are less densely populated, from 2005 through 2019:  Balance of Trade Above & Below U.S. Pop Density.

The difference in the results couldn’t be more stark.  With those nations that are less densely populated than the U.S., we enjoyed a small surplus of $111 billion in 2019 – down slightly from $119 billion in 2018 and essentially flat for the past ten years.  With those nations that are more densely populated than the U.S., we suffered an enormous deficit of $941 billion in 2019 – a deficit that has exploded over the past decade, more than doubling from $428 billion in 2009.

There are 114 nations more densely populated than the U.S., and 51 nations that are less densely populated.  So, you might think, maybe the uneven distribution of countries was a factor in skewing the results.  Fine.  Let’s divide the countries evenly – 82 nations that are more densely populated vs. 83 that are less densely populated.  The results are little different.  With the half of nations more densely populated, the U.S. suffers an enormous trade deficit of $842 billion, vs. a trade surplus of $129 billion with the 83 nations that are less densely populated.  By the way, the median population density is 193 people/square mile – about double that of the U.S.

I should point out that, divided around the median population density, the half of nations that are above the median account for 5.6 billion people, while the half of nations below the median population density account for only 1.7 billion people.  One might argue that, to be a fair analysis, there should be an equal number of people on each side, and not an equal number of nations.  OK, let’s look at it that way.  In order to do that, because it has such a large population, China has to be divided, allocating 59% of its population to the more densely populated half, and 41% of its population to the less densely populated half.  The deficit with China will be divided proportionately.  If we do that, the U.S. has a trade deficit of $557 billion with the half of the world’s population that lives in more densely populated conditions vs. a trade surplus of $273 billion with the half of the population living in less densely populated conditions.

But splitting the population evenly, as we did above, results in a huge discrepancy in the land surface area of the world in one half of the analysis vs. the other – 5.2 million square miles vs. only 0.7 million square miles.  If we divide the world evenly in terms of surface area, the U.S. has a trade deficit of $924 billion vs. a trade surplus of $94 billion with the more densely populated half of the world’s surface area vs. the less densely populated half.

No matter how you look at it, population density is consistently the biggest driving force in determining the balance of trade.  So if the U.S. wants to achieve a balance of trade with the rest of the world, it’s only logical to employ a mechanism aimed at population density – a tariff structure, for example, that’s indexed to a nation’s population density.  Applying tariffs on any other basis isn’t fair.  Should a nation be punished because it’s big instead of little?  Developed vs. undeveloped?  “Free trade” is an example of an unfair tariff system – unfair to the U.S.  It applies a tariff of zero to everyone on no basis whatsoever – without any justification – and the results speak for themselves.  The U.S. is being killed with a huge trade imbalance that has destroyed its manufacturing sector.

Who would (or should) be hit hardest by a population density-indexed tariff structure?  We’ll look at that next.