Tariffs on China!

September 19, 2018

https://www.reuters.com/article/us-usa-trade-china-tariffs/china-says-trump-forces-its-hand-will-retaliate-against-new-u-s-tariffs-idUSKCN1LX2M3

Monday evening, President Trump took the first meaningful step to extricate the U.S. from its decades-long trade policy nightmare that has wreaked havoc on the American people and economy.  He imposed a 10% tariff on $200 billion worth of imports from China, adding to the similar tariff he imposed earlier this year on $50 billion worth of Chinese imports.  His goal is to eliminate America’s massive trade deficit with China and restore a balance of trade.  When the Chinese failed to respond to the initial round of tariffs with voluntary measures to re-balance trade, the president was left with no choice but to take steps to assure that it happens.

Chinese reaction, and reaction by pro-trade lobbying organizations, has been predictable.  China threatened retaliation and yesterday announced small tariffs on $60 billion of U.S. exports.  Why only $60 billion?  Because that’s all that’s left after they already imposed tariffs on U.S. exports in response to Trump’s first round of tariffs.  In essence, they’re already out of ammo in the trade war.  Commerce Secretary Wilbur Ross said as much yesterday and Trump warned China that any retaliation against our farmers or industries would immediately result in tariffs on all remaining imports from China.

As reported in the above-linked Reuters article:

… Foreign Ministry spokesman Geng Shuang told a news briefing later that the U.S. steps have brought “new uncertainty” to talks between the two countries.

“China has always emphasized that the only correct way to resolve the China-U.S. trade issue is via talks and consultations held on an equal, sincere and mutually respectful basis. But at this time, everything the United States does not give the impression of sincerity or goodwill,” he added.

I can’t let that pass.  Let’s get one thing straight.  Red China is not America’s equal in any respect.  (I refer to them as Red China because their annointing of Chairman Xi as chairman for life proves that they are still nothing more than the totalitarian, communist regime that they were under Mao Tse Tung.)  Such regimes aren’t worthy of American respect.  Red China’s economy – formerly an economic backwater – has been propped up by dumb American trade policy.  It’s time to kick away that prop.

Business groups warned of disruptions to their supply chains.  Funny.  They had no problems with disrupting their long-standing American supply chains when they moved them to China in the first place.

Others warned of economic harm to American consumers:

“President Trump’s decision … is reckless and will create lasting harm to communities across the country,” said Dean Garfield, president of the Information Technology Industry Council, which represents major tech firms.

Seriously?  Recently, Trump was criticized for denying the death toll in Puerto Rico in the wake of hurricane Maria last year.  That death toll figure was arrived at by comparing the death rate in Puerto Rico to the death rate preceding the hurricane.  OK, let’s apply that same logic to American trade policy.  In the wake of engaging in free trade with China, Americans’ life expectancy has actually declined and death rates have risen as despair set into communities where one factory after another closed.  So, applying that same death toll methodology to U.S. trade policy, it’s clear that previous administrations are responsible for not a few thousand deaths, but millions.  And as the economy continues to recover in response to Trump’s trade policies, he can be credited with saving millions of lives.  Anyone with a brain can see that it was the export of American jobs to China that did “lasting harm to communities across the country.”  Reversing that process, as Trump is doing, can only be a huge boon to American communities.

One group has been conspicuously silent during this whole process and no one has reported on it.  For decades, American trade policy has been paralyzed by fear of the World Trade Organization.  Now we can see what an irrelevant, toothless tiger that organization is.  In Five Short Blasts, I pointed out that the WTO was actually powerless to do anything that nations weren’t already free to do before the organization existed.  Why have we waited all this time to take our trade policy back in our own hands and impose tariffs to restore a balance of trade?  Why have we stood idly by and racked up trillions of dollars of debt and devastated our communities out of fear of this organization?  Stupid.  There’s just no other word to describe it.

I honestly thought I’d never live to see the day when America would stand up for itself again.  It seemed that the sappy globalist mentality, reminiscent of the ’70s Coca Cola ad where everyone held hands and sang “I’d like to teach the world to sing in perfect harmony,” had condemned America to live out the rest of its existence as a sick host, lying helplessly as it’s fed upon by a horde of trade parasites.  But that day that I thought I’d never see came on Monday.  America has stopped being a trade chump.  There’s much more to be done.  The European Union has been as much of a trade parasite as China and needs to be dealt with in the same way.  So too does Mexico.  But this is a good start.

 

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Analysis of Trade with Red China

April 2, 2018

I’ve just finished my annual analysis of U.S. trade with virtually every country and have begun compiling the results.  It’s no small task, tallying the results for hundreds of end-use codes for approximately  160 countries.  But before I present those results for the world as a whole, I want to highlight the results of a few key trade partners.  Our biggest deficit is with Red China, so let’s begin there first.

After improving slightly in 2016, our trade deficit in manufactured goods with Red China worsened again to a new record – a deficit of $405 billion.  Here’s the chart of trade with Red China, dating back to 2001:  China balance of trade.  Imports from Red China totaled $505.6 billion, almost all of which – $493.4 billion – was manufactured products.  These imports were offset slightly by U.S. exports to Red China totaling $130.4 billion, of which $88.2 billion was manufactured products.

Here’s a list of the top ten imports from Red China (using the Census Bureau’s 5-digit end-use code descriptions):

  1. Other household goods:  $70.4 billion
  2. Computers:  $45.5 billion
  3. Telecommunications equipment:  $33.5 billion
  4. Computer accessories, peripherals and parts:  $31.6 billion
  5. Toys, shooting and sporting goods, and bicycles:  $26.8 billion
  6. Apparel and household goods – other textiles:  $24.2 billion
  7. Furniture, household items, baskets:  $20.7 billion
  8. Auto parts and accessories:  $14.4 billion
  9. Household and kitchen appliances:  $14.1 billion
  10. Electric apparatus and parts:  $14.1 billion

That’s just the top ten.  Imports from Red China actually comprise 141 different 5-digit end-use codes.

And here are America’s top ten exports to Red China:

  1. Civilian aircraft, engines, equipment, and parts:  $16.3 billion
  2. Soybeans:  $12.4 billion
  3. Passenger cars, new and used:  $10.5 billion
  4. Semiconductors:  $6.1 billion
  5. Industrial machines, other:  $5.4 billion
  6. Crude oil:  $4.4 billion
  7. Plastic materials:  $4.0 billion
  8. Medicinal equipment:  $3.5 billion
  9. Pulpwood and woodpulp:  $3.4 billion
  10. Logs & lumber:  $3.2 billion

The trade deficit in manufactured products with Red China represents a staggering loss to the manufacturing sector of our economy – a loss of approximately eight million manufacturing jobs.  Why is this happening?  Why is a huge nation like Red China – a nation with four times as many people as the U.S. – unable to import from the U.S. as much as we import from them?

Some say that such trade deficits are caused by low wages – that manufacturers move their plants to low wage countries.  Take a look at this chart:  China PPP vs deficit.  This is a chart of Red China’s PPP (purchasing power parity – roughly analogous to wages) vs. the U.S. trade deficit with Red China.  If there is any merit to this claim – that low wages cause trade deficits – then the trade deficit should moderate as wages in Red China rise.  That’s not what we see happening.  Though wages in Red China are more than six times what they were in 2001, instead of shrinking, our trade deficit with them is now almost five times worse.  Clearly, the low wage theory holds no water.

Others say the trade deficit with Red China is due to currency manipulation by Red China, keeping its value low so that its people can’t afford to buy imports, forcing them to buy domestically-made goods.  OK, so let’s take a look at the trade deficit vs. the value of the Chinese yuan against the U.S. dollar:  China Xch rate vs deficit.  The value of the yuan has weakened by 11% in the past two years, and our trade deficit got worse by 5%.  But taking a longer look, since 2001 the yuan has appreciated in value vs. the dollar by 18% but, instead of the trade deficit improving in response, it’s now almost five times worse.  The currency manipulation theory isn’t supported by the data.

Undoubtedly, the trade barriers that China maintains on American imports – barriers that are fully sanctioned by the World Trade Organization – have had some effect.  But as we’ll see when we look at trade with the rest of the world, the effect is pretty minimal and, when plotted on a chart of trade imbalance vs. population density, China falls right along the curve.

The real reason for the huge and worsening trade deficit with Red China is the fact that their severe over-crowding has rendered them incapable of consuming goods at anywhere near the rate of Americans.  It’s the inverse relationship between population density and per capita consumption that I wrote about in Five Short Blasts.  While Americans, on average, live in decent-sized single family homes with yards and drive to work, the Chinese live in tiny apartments and use mass transit or bicycles to commute.  There’s little room for furniture and appliances, no use for lawn and gardening equipment, no garages to park their cars and the roads are too crowded for driving them anyway.

There is no free trade path to restoring a balance of trade in these circumstances.  The only remedy is the use of tariffs to incentivize manufacturers to remain in the U.S. and provide American consumers with domestically-manufactured choices.

 


Thank you Sheriff Joe. Thank you President Trump

August 27, 2017

http://www.reuters.com/article/us-usa-trump-arpaio-idUSKCN1B600O

As reported in the above-linked Reuters article, President Trump has pardoned Joe Arpaio, former sheriff of Maricopa County in Arizona.  Sheriff Joe was famous for his relentless round-up of illegal aliens and for his tough, but not brutal, treatment of all criminals.  As reported in the article:

He reinstated chain gangs, made inmates wear uniforms that were pink or old-fashioned black and white stripes and forbade them coffee, salt and pepper.

That’s it?  No beatings or torture?  He just made them wear uniforms, do real work and took away their coffee?  What an animal!  Seriously, we need a lot more sheriffs like this.  The sight of chain gangs when I was a kid helped me decide early on that I wanted to stay on the right side of the law.

To the chagrin of the globalist, open border advocates, Joe Arpaio took his job seriously and did what he could to protect our border and enforce our immigration laws.  His crime?  Focusing on Hispanics in his search for illegal immigrants in a state that borders Mexico.  Who else would he go after?  The notion that this somehow constituted illegal racial profiling is ridiculous.  If another sheriff were to focus on whites while searching for a group of murderous white supremacists, would a judge declare this racial profiling and insist that they include blacks, Hispanics and Asians in their search?  If the victim of a crime describes the perpetrator as black man, is it racial profiling to include only blacks in the police line-up?  Arpaio’s conviction was exactly the kind of overboard political-correctness-run-amok, common-sense-be-damned nonsense that propelled Trump to victory.  Just look at some of the quotes in this article:

“Once again, the president has acted in support of illegal, failed immigration enforcement practices that target people of color and that have been struck down by the courts,” said American Civil Liberties Union Deputy Legal Director Cecillia Wang, who sought the court injunction against Arpaio.

Alejandra Gomez, co-executive director of Living United for Change in Arizona (LUCHA), said: “President Trump pardoned a terrorist tonight. Joe Arpaio intentionally terrorized immigrant communities across Arizona for decades and traumatized an entire generation of Arizonans…  The only proper place for him is in a jail cell,” Gomez said in a statement.

“Illegal, failed immigration enforcement practices?”  How about Obama’s illegal refusal to enforce immigration laws at all?  Somebody had to do something, and Sheriff Joe stepped up.  And then this Gomez character from some obscure, fringe group in Arizona goes so far as to call him a “terrorist.”  It’s truly over the top.

As I said in Five Short Blasts, my concern with illegal immigration isn’t rooted in racism.  It wouldn’t matter to me if it was Ireland on the other side of our southern border and if every illegal alien was named Murphy.  The world faces no greater threat than worsening overpopulation, and illegal immigration is a major contributor to that threat in the U.S.

Unlike Obama, who pardoned hundreds of real criminals, Trump has pardoned an American hero who stood up for all Americans by enforcing our immigration laws.  Thank you for your work, Sheriff Joe.  And thank you for correcting this injustice, President Trump.


America’s Worst Trade Partners in 2016

July 6, 2017

America’s trade policy is a disaster.  There’s just no other way to describe it.  In 2016, our trade deficit rose to almost $505 billion, beating the old record set in 2015.  We can’t continue on this path.  An economy that has that much money drained from it can only avoid a permanent state of recession through deficit spending, which is exactly what we’ve done for decades, and it’s bankrupting us.  Our infrastructure is crumbling.  The Social Security trust fund is on a path to bankruptcy.  Medicare is already there.  Household incomes and net worth are declining.  And the government can’t come up with a scheme that makes health care affordable.

But what to do?  How did “free trade,” the darling of economists, back-fire so badly for the U.S.?  A quick glance at the balance of trade data, which is broken into “services” and “goods,” reveals a nice surplus in services.  It was in this category that the U.S. economy was really expected to shine, and it has.  But the “goods” part of the equation has run completely off the rails, with the deficit in goods dwarfing the small surplus in services.

What’s the problem with “goods?”  Is it oil?  There was a time, decades ago, when the deficit in goods was due almost entirely to oil imports.  But no more.  It has shrunk dramatically and now accounts for less than 25% of the goods deficit.  The vast majority of our deficit in goods is due to manufactured products.  So let’s focus there.

Let’s begin with a look at which nations account for our biggest trade deficits in manufactured goods.  Here’s a list of the top twenty in 2016:  Top 20 Deficits, 2016.  China is at the top of the list, yielding a trade deficit that’s more than four times as large as the next nation on the list, Japan.  In fact, so large is the trade deficit with China that it is larger than all of the nations of the rest of the world combined.  It would seem that China must be doing something underhanded.  Some say that the problem is low wages in China.  Others claim that China manipulates its currency, keeping it artificially low, thus making its exports cheaper for American consumers and making American imports too expensive for Chinese consumers.  Or maybe it’s just the sheer size of China, a big country with one fifth of the world’s population.

What is it about this list of nations that they have in common?  The list includes nations from Asia, Europe, the Middle East and Central America.  It includes some of the wealthiest nations on earth – like Germany, Switzerland and Ireland – casting doubt on the “low wage” theory.

I mentioned China’s size.  But geographic size can’t be much of a factor.  Without any people, we wouldn’t even have trade with any particular country or region.  Take Antarctica.  It’s bigger than China, but we have no trade with that continent at all.  People are what’s important.  It’s their consumption of products that drives trade.  So maybe that’s where we should start looking.  Perhaps the number of people in a country – or their population density – is a factor.  So let’s take a look.  Let’s express the trade deficit with each one of those countries in per capita terms.  Now look at the list:  Top 20 Per Capita Deficits, 2016.

The median population density of the 165 nations* included in this study is 184 people per square mile.  The population density of the U.S. is apprximately 90 people per square mile.  Seventeen of the twenty nations on this list have population densities above the median.  The odds against that happening are 128:1.  Conversely, the chances of that happening are only 0.7%.  Clearly, population density is a factor.  The average population density of these nations is 522 people per square mile – almost three times the world median and more than five times the density of the U.S.

In per capita terms, China barely even makes the list, ranking 19th out of these twenty nations. Eleven of the twenty nations are European Union nations.

And what about the claim that low wages are to blame for trade deficits?  That’s clearly nonsense.  The average “purchasing power parity” (roughly analogous to wages) is just over $46,000 – on a par with the U.S.

On average, the per capita trade deficit with these nations has risen by 88% in the past ten years.

The fact that America’s deficit with Ireland, with a population density close to the world median, is almost three times that of Switzerland, the number two nation on the list, is an indication that something else is going on that tilts trade in favor of Ireland, and indeed there is.  Ireland is a tax haven and America is a fool to tolerate it.

Why is population density such a dominant factor in determining the balance of trade?  It’s because of the inverse relationship between population density and per capita consumption.  It’s because people living in crowded conditions consume less but are just as productive.  The result is that they come to the trade table with a bloated labor force and an emaciated market.  To understand more about why this happens, read Five Short Blasts.  It’s also the theme of this blog.

Any trade policy that fails to account for the role of population density in driving trade imbalances and fails to employ tariffs to maintain a balance of trade with overpopulated nations is doomed to failure.  America’s free trade policy is blind to this factor.  The resulting trade deficit is inevitable.

Next we’ll take a look at the list of America’s twenty best trade partners.  If population density is a factor, we should see the opposite results on that list.  It should be dominated by nations with low population densities.  Stay tuned.

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  *  There are 229 nations in the world.  Tiny island nations and city-states have been excluded from the study.  Trade with these nations is minuscule, accounting for less than 1% of U.S. trade.  The U.S. tends to have a surplus with such nations, regardless of their population density, since their economies are primarily based on tourism and not manufacturing.


Trump was right to pull out of the Paris Climate Agreement

June 3, 2017

Let me begin by making clear that I am an environmentalist.  It was my concern for the environment – especially my little piece of the environment that I enjoy in the north woods – that was the genesis of my discovery of the inverse relationship between population density and per capita consumption, which I presented and explained in Five Short Blasts.  It’s a clear-eyed look at just where unending population growth will take us.  Few have devoted as much of their time to trying to save the planet.

Let me also make clear that I’m neither a GOP conservative nor a Democrat.  As I stated in Five Short Blasts, the platforms of both parties – both of which embrace and promote population growth – produce nothing more than weaving left and right along a path to ruin.  So this post isn’t politically motivated.

“Climate change,” the now-politically correct term for global warming, is real.  The link to human activity is undeniable.  I’ve watched Al Gore’s “An Inconvenient Truth”  and agree with its premise.  Greenhouse gases like carbon dioxide (CO2) and methane are building up in the atmosphere and trapping solar heat.  The science is clear.  Kudos to the scientists.

But shame on environmentalists.  The environmental movement has been a colossal failure.  If it weren’t, we wouldn’t now find ourselves in the fix that we’re in.  We wouldn’t be in the midst of a mass extinction.  The dire consequences of global warming are now inevitable.  Environmentalists admit as much.  And who is to blame for all of this?  There’s plenty of blame to go around but it could be argued that no one is more to blame than the leaders of the environmental movement themselves.  There may be a special place in hell for these people for what they’ve done.

Why do I say such a thing?  A little history is in order.  Going back decades, to the ’80s, if my memory serves me correctly, the environmental movement was in trouble.  The Vietnam war was over and young, impatient activists seized upon the environment as a new cause.  Their approach was radical and intolerant.  Industry, the civilian half of the “military industrial complex” that was the object of so much scorn by young radicals during the Vietnam era, was demonized as the enemy of humanity by the environmental movement.  The environmental movement was anti-industry, anti-development anti-everything to the point where they were perceived as being anti-humanity.

At the same time, as a result of new trade policies ushered in by GATT (the Global Agreement on Tariffs and Trade, enacted in 1947), the de-industrialization of America was underway.  Factories were closing.  People were losing their jobs.  And the country was being flooded with imports from Japan.  Eager to find a scapegoat, industry successfully blamed the environmental movement for making it impossible to continue manufacturing in America.  People began to despise these young, impatient, intolerant and uncompromising environmentalist radicals.

Industry had its own image problems.  Both sides saw an opportunity and began to collaborate.   The environmental movement softened its approach to development and, in return for the environmentalists’ endorsement of new development projects, industry began to embrace some of their more reasonable demands and causes.  The environmental movement made a deal with the devil and the concept of “sustainable development” was born.

Soon after, the company I worked for served up an example.  They announced plans to build a new plant on a pristine “green field” site – a piece of undeveloped property they owned.  At the same time, they also announced that another such piece of property was being set aside as a sort of wildlife refuge, never to be developed.  This, they proudly proclaimed, was a prime example of “sustainable development.”  “How the hell is that sustainable?” I wondered.  Half of the property in question was now gone.  It didn’t take a genius to figure out where that will ultimately lead if such “development” is “sustained.”

The term is an oxymoron and there is no such thing as “sustainable development.”  It makes me bristle every time I hear it.  By it’s very definition, “development” means putting natural resources to work to enhance the lives of human-kind.  There’s nothing wrong with that, as long as you recognize that, in a finite world, the process has to stop at some point.  It can’t be sustained forever. A finite resource can only sustain a certain number of people at a high standard of living.  Even a child should be able to understand this.  Yet, that is exactly what corporate leaders and their environmentalist lackeys would have you believe – that we can continue growing our population and continue to consume more and more, and thus grow their profits – “sustainably.” Forever.

Of course, the leaders of the environmental movement responsible for this mess won’t find themselves alone.  If there’s a hotter place in hell, it’s occupied by economists – those people who, in the wake of their Malthusian black eye, proclaimed that there is no limit to man’s ability to overcome all obstacles to growth, and vowed never again to even consider that population growth could present challenges.  It is yet another claim unable to stand up to even the most rudimentary scrutiny, but is the foundation upon which the concept of “sustainable development” is built. Incredibly, the environmental movement has bought into this.

With all of this said, I decided to do my own objective evaluation of the Paris Climate Agreement to decide for myself the wisdom of Trump’s move.  I started with Wikipedia’s take on the agreement, but then decided to go right to the United Nations’ web site that documents the whole thing.  I wanted to read the agreement for myself.  But, try as I might, I’ll be darned if I can find it.  There’s lots of explanation from the UN about the agreement, but I couldn’t find the agreement itself.  That kind of thing always makes me a little suspicious.

Anyway, here’s some key aspects of the agreement:

  • Certain few developed countries – most notably the U.S. – are targeted to generate all of the reduction in greenhouse gases.  Many undeveloped nations are actually allowed to increase their emissions in order to allow them to develop.  China, the world’s worst polluter, committed to only 25% of the reductions in greenhouse gas emissions, in per capita terms, that the U.S. committed to achieving.
  • Aid, beginning at a minimum of $100 billion per year above and beyond aid that nations are already receiving, must be provided by developed nations to help undeveloped nations develop faster and to help them deal with the effects of climate change.
  • Each nation sets its own goals, consistent with the overall goal to limit global temperature rise to 2 degrees Celsius or less, but then must report annually on their progress toward meeting their goals.

Already, I was beginning to have my doubts.  Forcing dramatic emissions cuts on the U.S. while allowing other nations to increase their emissions seems to preclude the U.S. from ever re-balancing trade and rebuilding the manufacturing sector of the economy, even if it meant producing products in plants that operated under strict environmental regulations as opposed to the filthy factories spewing smog in China.  This feels like some sort of “eco-trade barrier.”

Secondly, the requirement that wealthy nations boost their aid to developing nations by a minimum of another $100 billion per year to help them develop seems like a money grab.  We all know where the vast majority of funding would come from – the U.S. – just as the U.S. funds a disproportionate share of the U.N., the World Trade Organization, the World Bank, NATO, and virtually every other multi-national organization.

Finally, as I scanned through the many web pages that the UN serves up, I found the real goal of the agreement.  In the UN’s own words, here it is:

  • The ultimate objective of the Convention is to stabilize greenhouse gas concentrations “at a level that would prevent dangerous anthropogenic (human induced) interference with the climate system.” It states that “such a level should be achieved within a time-frame sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened, and to enable economic development to proceed in a sustainable manner.”

And there it is!  “… enable economic development to proceed in a sustainable manner.”  This agreement isn’t about saving the planet or the environment.  It’s about keeping environmental degradation just tolerable enough that we can continue to pack the planet with more corporate customers.

If climate change is the result of human activity, then isn’t it logical that any effort to combat it should begin with a focus on limiting the number of humans or their activity?  What is gained if we all cut our greenhouse gas emissions per capita by 50% but then double the population?  Absolutely nothing!

The U.S. has already made strides in reducing greenhouse gas emissions. But it isn’t even close to being enough.  To achieve the cuts that President Obama committed to in the Kyoto protocol – cuts of 80% or more – the plan relies heavily on “carbon capture.”  That is, CO2 would be extracted from exhaust stacks and stored in tanks or underground.  Essentially, it’s a process of creating a CO2 “landfill” which, if we all cross our fingers and toes and hope real hard, maybe it’ll never leak and create such a catastrophic jump in atmospheric CO2 levels that the planet is almost instantly cooked!

Any approach to the climate change problem that doesn’t begin with a plan to stabilize and gradually reduce the human population to a level where we can all enjoy a high standard of living without threatening the planet is a hoax.  Climate change is real, but this Paris agreement is just that – a hoax.  It has little to nothing to do with fighting climate change.  Instead, it’s globalization and “sustainable development” on steroids.  There is an old saying that goes something like this:  “If you can’t bewilder them with brilliance, then baffle them with bullshit.”  That’s exactly what “sustainable development” does.

Critics have mocked President Trump, saying that he is incapable of grasping the complexities of the Paris agreement.  It could be argued that perhaps it was President Obama who didn’t understand that the agreement he proclaimed to be such an accomplishment actually does nothing for the climate and simply suckered the U.S. into yet another self-destructive deal.  And it’s time for all people who are concerned about climate change and the environment to wake up to the fact that the environmental movement has been hijacked by those who profit from plundering the planet and that they, too, are being suckered by the concept of “sustainable development.”

I’m not terribly concerned.  I believe that if the world doesn’t wake up to the inverse relationship between population density and per capita consumption, then the unemployment, poverty and rising death rate that it fosters are going to do more to put a lid on greenhouse gas emissions than the Paris agreement could have ever hoped to achieve.

In the meantime, other world leaders have rushed to the defense of the Paris agreement.  No surprise.  They can kiss goodbye the $100 billion (per year!) they were counting on.  Plus, championing the Paris agreement is all upside for politicians with no downside.  Everyone loves them for their concern for the planet and they can never be held accountable, since it’s impossible to gauge success under the agreement.  It’s like a campaign promise that never has to be kept because no one can tell whether or not you’ve delivered.

Americans have been fleeced far too much in the name of globalization.  Clearly, Trump wasn’t baffled by this BS.  I applaud him for having the guts to walk away from this deal and for being willing to take the political heat for doing so.

 

 


Anti-border tax coalition

April 20, 2017

http://www.reuters.com/article/us-usa-tax-lobbying-idUSKBN17C2HQ

I’ve been predisposed for a week or so and it’s now time to get caught up on some things.  There’s been a lot in the news lately regarding Trump administration policies on immigration and trade.  I’m extremely pleased with what’s happening on immigration, less so with what I hear about Trump waffling on the idea of a “border tax” (another name for tariffs).

But I’ll start with the above-linked story that came out last week because this is a perfect example of the divergence of interests that takes place when a nation becomes “economically over-populated” or takes on the characteristics of such an economy through free trade with a badly overpopulated nation.  For the benefit of those unfamiliar with this concept, this divergence of interests is one of the consequences of the inverse relationship between population density and per capita consumption.  As a society becomes more densely populated, the need to crowd together and economize space begins to erode per capita consumption.  As per capita consumption declines, so too does per capita employment.  The result is rising unemployment and poverty.   It’s in individuals’ best interest – in the best interest of the common good – that this situation be avoided.  (To better understand this concept, I encourage you to read Five ShortBlasts.)

However, while per capita consumption may begin to decline as a population density reaches a certain level, total consumption continues to rise with a growing population.  Who benefits from that?  Anyone in the business of selling products.  Not only do they benefit from the increase in sales volume, but they benefit further as the labor force grows faster than demand, putting downward pressure on wages.  Thus, it’s in corporations’ best interest to see population growth continue forever, and to pursue more markets through free trade.

So it’s in the best interest of the common good that we avoid meshing our economy through free trade with nations whose markets are emaciated by overcrowding and who come to the trading table with nothing but bloated labor forces hungry for work.  But it’s in corporations’ best interests to grow the overall customer base through free trade with those same nations.  So it comes as no surprise that a big-business coalition is eager to steer lawmakers away from any tax plan that would include a “border tax” (a tariff) that might shut them out of their foreign markets.

They call themselves “Americans for Affordable Products,” making it sound as though it is individual Americans who make up this coalition and not global corporations.  They want us to believe that products will become less affordable.  While prices for imports may rise, they want you to forget that those increases would be more than offset by rising incomes and falling tax rates.  They don’t care if the border tax benefits you.  All they care about is that it may not necessarily benefit them.

So which of these competing interests will lawmakers heed – their wealthy corporate benefactors or the angry Americans who swept the Trump administration into power on his promise to enact a border tax and bring our manufacturing jobs back home?  Money talks and I fear that groups like this coalition are having an effect.  Trump and Republicans would be wise to ignore them.  Democrats paid the price for ignoring the plight of middle-class Americans when Obama betrayed his promise of “hope and change.”  Those same middle-class Americans will pull the trigger on Trump too if he doesn’t come through.

 


Trump to Confront China’s Xi This Week

April 3, 2017

http://www.reuters.com/article/us-global-markets-idUSKBN175025

In the wake of the Obama administration, it still makes me nervous any time the president sits down for talks with a foreign leader.  For Obama, there were no concessions too big for him to make.  Foreign leaders played him like a fiddle.  Americans came out the losers every time.  I say this as one who had big hopes for Obama and voted for him in 2008.

As reported in the above-linked Reuters article, Chinese President Xi Jinping travels to Florida this week to meet President Trump at his Mar-a-Lago resort.  The media will be focused on dealings aimed at reining in North Korea’s nuclear ambitions.  But the real story will be their talks on trade.  America’s failed trade policy is far and away the biggest contributor to our economic decline.  All of our economic problems and virtually every other problem that is impacted by monetary resources allocated to deal with it can be blamed on our trade deficit.  The budget deficit, nearly all of our national debt, our crumbling infrastructure, our health care crisis, homelessness, poverty …. you name it, they’re all directly linked to the drain of our financial resources wrought by the trade deficit.  And no country is more responsible for that drain than China, who accounts for nearly one half of the entire deficit.

On Friday, the U.S. president sought to push his crusade for fair trade and more manufacturing jobs back to the top of his agenda by ordering a study into the causes of U.S. trade deficits and a clamp down on import duty evasion.

If the President is truly interested in the cause of U.S. trade deficits, he need look no further than this blog and can learn all he needs to know by reading Five Short Blasts.   Nations who come to the trading table with nothing to offer but bloated labor forces and markets emaciated by gross overcrowding are the cause of trade deficits.  By this criteria, China is the worst of the worst.  Only tariffs (or a “border tax,” if that term is less onerous) can maintain a balance of trade when dealing with such countries.  Negotiations are pointless since the only possible outcome is to trust the other side to take actions to rein in their appetite for our market.  Decades of experience since the beginning of the failed experiment with “free” trade has proven that they won’t.

So far, President Trump has proven that, for the most part, he can be trusted to follow through on his campaign promises.  No promise was bigger than getting tough with China on trade.  It seems that Germany’s Angela Merkel found him to be a very different president from Obama in her recent meeting with Trump.  Hopefully, he’ll be just as tough on Xi.  It seems that Trump’s “border tax” idea is now becoming more accepted as a crucial element of his upcoming tax reform plan.  Let’s hope he doesn’t negotiate away any of it this week.