Spreading Joy to Soyville, RV-Style

 

Ohio farmers are worried. But a guy named Sonny has swung by in his RV to reassure them. Sonny Perdue, the US Agriculture Secretary, is on an RV tour of several “flyover” states, reassuring farmers along the way that tariff tiffs will not harm them.

As the soybean industry assailed President Donald Trump today for launching a trade war with China, U.S. Agriculture Secretary Sonny Perdue said Trump assured him that farmers in Ohio and across the country “will not be allowed to be the casualty in a trade dispute.”

After an appearance before farmers here, Perdue acknowledged “there is legitimate anxiety out here” because of China’s announcement it plans to impose a 25 percent tariff on imports of soybeans, a move which could cripple Ohio farmers who exported nearly $700 million of soybeans to China last year.

Ohio farmers aren’t the only ones worried. Several Midwestern states, including Iowa, are leading producers of soybeans. Others, like Wisconsin, while not leading producers, still consider soy an important crop.

Speaking to reporters, Perdue cautioned that the new tariffs unveiled in the past two days by the United States and China “are announcements” which “are not going to take effect” immediately.

“Our goal frankly is to get China to the table to discuss some of the unfair trading practices,” Perdue said.

Perdue’s statement suggests the White House does not intend to let matters escalate to the point where these devastating tariffs would take effect.

Trump says trade wars are “easy to win.” FiveThirtyEight purports to have a simulation where you can test this for yourself. I played a few rounds and indeed found it fairly easy to win (where winning means matching or exceeding the gains expected from free trade). That said, I may have simply gotten lucky in my opponents. With the opponents I got, sticking almost entirely to a free-trade strategy, but choosing high “vindictiveness” if I did retaliate, seemed the way to win. Most times, though, players did not win, even when they won.

FiveThirtyEight explains,

In 58 percent of the games we analyzed, the winner was worse off than they would have been under free trade.

This trade game is essentially a repeated prisoner’s dilemma — a workhorse model of game theory that captures the tradeoff between mutually beneficial cooperation and individually beneficial betrayal.

How well does this simulation reflect reality? I’m not sure. Could it be a model designed to make trade wars harder to win than they really are? Perhaps.

In rust-belt states like Ohio and Wisconsin, Trump has been losing support from white working-class women, while retaining it among white working-class men. The rust belt and soy belt overlap some, while the soy belt also includes other swing states, like Iowa and Minnesota.

In their present predicament, denizens of Soyville, USA, might be too nervous to feel joy at sight of Perdue’s RV, but at least our US Ag Secretary is offering them some reassurance for now.

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There are 30 comments.

  1. Bob Thompson Member

    I watched Cavuto interview Kudlow about tariffs and trade wars. This should be fun to watch. It sure looks as if the players line up about as I would expect.

    • #1
    • April 4, 2018, at 7:12 PM PDT
    • Like
  2. Django Member

    Something about this soybean mess doesn’t add up. I heard today on Marketplace – I think it was – that almost a third of the US soybean harvest is sold to China, and that the tariffs will be disastrous. Now, here’s why that seems odd to me. I was playing with a new recipe, a mix of flank steak, soba noodles, shredded carrots and cabbage, flavoured with a mixture of chili-garlic sauce and ponzu sauce. Damn tasty I thought. The last ingredient is edamame which Wikipedia describes as “immature soybeans”. I dropped by the local market to pick up the edamame and every edamame product, shelled or not, had “Product of China” on the container. Are the Chinese buying the stuff from the US and selling it back at twice the price? Lately, there seems to be a disconnect between what I experience directly and what I hear and read in the news. Soybeans is only one example.

    • #2
    • April 4, 2018, at 7:46 PM PDT
    • 6 likes
  3. Randy Webster Member

    Midget Faded Rattlesnake: In their present predicament, denizens of Soyville, USA, might be too nervous to feel joy at sight of Perdue’s RV, but at least our US Ag Secretary is offering them some reassurance for now.

    Talk is cheap.

    • #3
    • April 4, 2018, at 7:54 PM PDT
    • 2 likes
  4. Midget Faded Rattlesnake Moderator

    Django (View Comment):
    Damn tasty I thought. The last ingredient is edamame which Wikipedia describes as “immature soybeans”. I dropped by the local market to pick up the edamame and every edamame product, shelled or not, had “Product of China” on the container. Are the Chinese buying the stuff from the US and selling it back at twice the price?

    My first thought – there are a variety of soybean, er, varieties. US growers may specialized in soybean varieties or methods of soybean harvest which don’t make for good edamame, or at least not cheap, widely-available good edamame.

    • #4
    • April 4, 2018, at 8:07 PM PDT
    • 3 likes
  5. Midget Faded Rattlesnake Moderator

    Randy Webster (View Comment):

    Midget Faded Rattlesnake: In their present predicament, denizens of Soyville, USA, might be too nervous to feel joy at sight of Perdue’s RV, but at least our US Ag Secretary is offering them some reassurance for now.

    Talk is cheap.

    Tooling about in an RV, kissing babies and pressing flesh, is at least a little more costly.

    • #5
    • April 4, 2018, at 8:35 PM PDT
    • 1 like
  6. RushBabe49 Thatcher

    I may be wrong, but I believe most soybeans grown in the US are intended to be fed to cattle, at least that part of the crop that stays here.

    I expect that there will never ever be totally or even mostly free trade in agricultural commodities. There are simply too many local interests that are very powerful in their own countries, and most governments try to avoid angering their farmers.

    • #6
    • April 4, 2018, at 8:42 PM PDT
    • 3 likes
  7. Guruforhire Member

    We have known what the optimizing strategy for iterated prisoners dilemmas are for a long time now. Don’t be greedy, always retaliate, and always forgive.

    If the goal is to get an unfair relationship with china it will fail, if the goal is to have mutually beneficial and equitable arrangements then it will probably work out.

    Its useful for the rest of the world to know that the broken one sided generally exploitative relationships are no longer viable.

     

    • #7
    • April 5, 2018, at 3:16 AM PDT
    • 2 likes
  8. Susan Quinn Contributor

    I keep wondering how often Trump can “play wolf”–making believe he’s going to do something but really only intending to get the other side(s) to the table. At some point the other side is going to figure out he’s bluffing; it’ll be interesting to see what happens then.

    • #8
    • April 5, 2018, at 7:43 AM PDT
    • 1 like
  9. Midget Faded Rattlesnake Moderator

    Guruforhire (View Comment):
    We have known what the optimizing strategy for iterated prisoners dilemmas are for a long time now. Don’t be greedy, always retaliate, and always forgive.

    What has me wondering about FiveThirtyEight’s simulation is that it was described as

    “This trade game is essentially a repeated prisoner’s dilemma”

    Essentially. So it may be gussied up somehow to not quite be a repeated prisoner’s dilemma.

    • #9
    • April 5, 2018, at 7:49 AM PDT
    • 3 likes
  10. Django Member

    Susan Quinn (View Comment):

    I keep wondering how often Trump can “play wolf”–making believe he’s going to do something but really only intending to get the other side(s) to the table. At some point the other side is going to figure out he’s bluffing; it’ll be interesting to see what happens then.

    I never read The Art of the Deal or whatever it was called, but I’d bet his opponents have. They still haven’t caught on it seems. 

    • #10
    • April 5, 2018, at 7:56 AM PDT
    • 2 likes
  11. Midget Faded Rattlesnake Moderator

    Django (View Comment):

    Susan Quinn (View Comment):

    I keep wondering how often Trump can “play wolf”–making believe he’s going to do something but really only intending to get the other side(s) to the table. At some point the other side is going to figure out he’s bluffing; it’ll be interesting to see what happens then.

    I never read The Art of the Deal or whatever it was called, but I’d bet his opponents have. They still haven’t caught on it seems.

    This review of The Art of the Deal is from a Trump skeptic, but overall pretty good, I though. Best part? Maybe this:

    I started the book with the question: what exactly do real estate developers do? They don’t design buildings; they hire an architect for that part. They don’t construct the buildings; they hire a construction company for that part. They don’t manage the buildings; they hire a management company for that part. They’re not even the capitalist who funds the whole thing; they get a loan from a bank for that. So what do they do? Why don’t you or I take out a $100 million loan from a bank, hire a company to build a $100 million skyscraper, and then rent it out for somewhat more than $100 million and become rich?

    As best I can tell, the developer’s job is coordination. This often means blatant lies. The usual process goes like this: the bank would be happy to lend you the money as long as you have guaranteed renters. The renters would be happy to sign up as long as you show them a design. The architect would be happy to design the building as long as you tell them what the government’s allowing. The government would be happy to give you your permit as long as you have a construction company lined up. And the construction company would be happy to sign on with you as long as you have the money from the bank in your pocket. Or some kind of complicated multi-step catch-22 like that. The solution – or at least Trump’s solution – is to tell everybody that all the other players have agreed and the deal is completely done except for their signature. The trick is to lie to the right people in the right order, so that by the time somebody checks to see whether they’ve been conned, you actually do have the signatures you told them that you had. The whole thing sounds very stressful.

    The developer’s other job is dealing with regulations. The way Trump tells it, there are so many regulations on development in New York City in particular and America in general that erecting anything larger than a folding chair requires the full resources of a multibillion dollar company and half the law firms in Manhattan. Once the government grants approval it’s likely to add on new conditions when you’re halfway done building the skyscraper, insist on bizarre provisions that gain it nothing but completely ruin your chance of making a profit, or just stonewall you for the heck of it if you didn’t donate to the right people’s campaigns last year. Reading about the system makes me both grateful and astonished that any structures have ever been erected in the United States at all, and somewhat worried that if anything ever happens to Donald Trump and a few of his close friends, the country will lose the ability to legally construct artificial shelter and we will all have to go back to living in caves.

    • #11
    • April 5, 2018, at 8:12 AM PDT
    • 5 likes
  12. Guruforhire Member

    Midget Faded Rattlesnake (View Comment):

    Guruforhire (View Comment):
    We have known what the optimizing strategy for iterated prisoners dilemmas are for a long time now. Don’t be greedy, always retaliate, and always forgive.

    What has me wondering about FiveThirtyEight’s simulation is that it was described as

    “This trade game is essentially a repeated prisoner’s dilemma”

    Essentially. So it may be gussied up somehow to not quite be a repeated prisoner’s dilemma.

    Probably. Traditional prisoners dillemmas don’t have options like “sort of cooperate” or “kinda but not really, just enough to avoid looking like a jerk” cooperation. 

    • #12
    • April 5, 2018, at 8:34 AM PDT
    • 3 likes
  13. Addiction Is A Choice Member

    With apologies to Ernest Thayer:

    “Oh, somewhere in this favored land the sun is shining bright / The band is playing somewhere and somewhere hearts are light / And somewhere men are laughing and somewhere children shout / But there is no joy in Soyville / The trade wars have struck out”

    • #13
    • April 5, 2018, at 9:07 AM PDT
    • 3 likes
  14. Midget Faded Rattlesnake Moderator

    Guruforhire (View Comment):

    Midget Faded Rattlesnake (View Comment):

    Guruforhire (View Comment):
    We have known what the optimizing strategy for iterated prisoners dilemmas are for a long time now. Don’t be greedy, always retaliate, and always forgive.

    What has me wondering about FiveThirtyEight’s simulation is that it was described as

    “This trade game is essentially a repeated prisoner’s dilemma”

    Essentially. So it may be gussied up somehow to not quite be a repeated prisoner’s dilemma.

    Probably. Traditional prisoners dillemmas don’t have options like “sort of cooperate” or “kinda but not really, just enough to avoid looking like a jerk” cooperation.

    I admit, I had trouble understanding exactly how the simulation weighted the various options. For example, in this round, I was playing an opponent “80% friendly” but 0% anything else, while I was “99% friendly” but also “60% vindictive” –

    I think that means that 99% of the time, I wasn’t going to defect from a friendly strategy, but when I did defect, I was pretty vindictive about it. But I’m not sure. And what was my trading partner doing the 20% of the time he wasn’t friendly, but apparently also not imitative or vindictive?

    • #14
    • April 5, 2018, at 9:37 AM PDT
    • 1 like
  15. Randy Webster Member

    Susan Quinn (View Comment):

    I keep wondering how often Trump can “play wolf”–making believe he’s going to do something but really only intending to get the other side(s) to the table. At some point the other side is going to figure out he’s bluffing; it’ll be interesting to see what happens then.

    Just because he wants to get the other side to the table doesn’t mean he’s bluffing.

    • #15
    • April 5, 2018, at 4:16 PM PDT
    • 1 like
  16. Susan Quinn Contributor

    Randy Webster (View Comment):
    Just because he wants to get the other side to the table doesn’t mean he’s bluffing.

    True. But he sure does ease up now and then when they agree to meet. Like with Mexico, China. . . .

    • #16
    • April 5, 2018, at 4:18 PM PDT
    • 1 like
  17. Randy Webster Member

    Susan Quinn (View Comment):

    Randy Webster (View Comment):
    Just because he wants to get the other side to the table doesn’t mean he’s bluffing.

    True. But he sure does ease up now and then when they agree to meet. Like with Mexico, China. . . .

    I think you find out he’s bluffing if they don’t come to the table, and then he wimps out.

    • #17
    • April 5, 2018, at 4:22 PM PDT
    • 4 likes
  18. I Walton Member

    The global economy is far too complex to be described and played out in game theory terms. Yes there will be relative winners and losers, but almost certainly we won’t know who won what and on balance there will be mostly losers. The uncertainly alone has already imposed costs. Look back at Obama, or Roosevelt for that matter, rhetoric lowered expectations and reduced investment. Obama didn’t do that much to harm things directly he just affected what was in peoples minds. There are ways to deal with China but this lose lose isn’t the way to do it.

    • #18
    • April 5, 2018, at 5:24 PM PDT
    • 2 likes
  19. tigerlily Member

    Randy Webster (View Comment):

    Midget Faded Rattlesnake: In their present predicament, denizens of Soyville, USA, might be too nervous to feel joy at sight of Perdue’s RV, but at least our US Ag Secretary is offering them some reassurance for now.

    Talk is cheap.

    Especially for a politician.

    • #19
    • April 5, 2018, at 7:30 PM PDT
    • 2 likes
  20. Joe P Member

    Midget Faded Rattlesnake:

    This trade game is essentially a repeated prisoner’s dilemma — a workhorse model of game theory that captures the tradeoff between mutually beneficial cooperation and individually beneficial betrayal.

    The flaw in this model is the idea that the “betrayals” are “individually beneficial.”

    I mean, when you have the world’s reserve currency, “I will raise a tariff on goods you give us in exchange for green pieces of paper that you can only use in our country” is basically the same as saying you’ll shoot yourself in the head if they don’t pay the ransom.

    • #20
    • April 5, 2018, at 7:35 PM PDT
    • 3 likes
  21. drlorentz Member

    The trouble with any game-theoretic approach is that real human players do not behave like the fictional entities of game theory. Genuine humans suffer from loss aversion, the endowment effect, and a host of other biases and impulses not captured by such simple models. Read the work of Kahneman and Tversky, starting with Prospect Theory. Alternatively, jump ahead to a summary of findings in the field found in Kahneman’s Thinking Fast and Slow.

    Lest anyone think that trade negotiators and political leaders are somehow immune from such biases, well, you’d be wrong. There’s plenty of data from diverse sectors of the economy, from tort settlements to labor negotiations, that demonstrate that everyone is affected by these quirks and biases. We’ve learned a thing or two since Daniel Bernoulli his theories of economic utility in the 18th century. Mr. Silver’s minions at Five Thirty Eight have some catching up to do.

    • #21
    • April 6, 2018, at 12:39 AM PDT
    • 1 like
  22. Chris Campion Coolidge

    The gov’t will fix this problem like it fixed the problem of corn growers in Iowa, who vote. Ready? Here comes the solution!

    Subsidies.

    • #22
    • April 6, 2018, at 3:22 AM PDT
    • 1 like
  23. Valiuth Member

    Susan Quinn (View Comment):

    I keep wondering how often Trump can “play wolf”–making believe he’s going to do something but really only intending to get the other side(s) to the table. At some point the other side is going to figure out he’s bluffing; it’ll be interesting to see what happens then.

    You could figure this out from day one. For goodness sake his tough businessman persona is from a TV show where he fake fires people from a fake company. The man is all paper no tiger. He couldn’t negotiate his way out of a paper bag. Even with his own party. Just look at his whining about the budget deal? 

     

    • #23
    • April 6, 2018, at 6:18 AM PDT
    • 1 like
  24. Midget Faded Rattlesnake Moderator

    drlorentz (View Comment):
    Read the work of Kahneman and Tversky,

    Yeah, I’m familiar with the work of Kahneman and Tversky. Familiar with some of the Bayesian rebuttals of their work, too. (To clarify, some of their claims have Bayesian rebuttals – I am not saying all do.)

    I don’t expect the repeated Prisoner’s Dilemma model of trade wars to be entirely accurate, but it’s a common, somewhat descriptive model. It shouldn’t have been lost on you that my OP wasn’t treating FiveThirtyEight’s simulation as the gospel truth. 

    • #24
    • April 6, 2018, at 6:24 AM PDT
    • Like
  25. Bob Thompson Member

    Joe P (View Comment):

    Midget Faded Rattlesnake:

    This trade game is essentially a repeated prisoner’s dilemma — a workhorse model of game theory that captures the tradeoff between mutually beneficial cooperation and individually beneficial betrayal.

    The flaw in this model is the idea that the “betrayals” are “individually beneficial.”

    I mean, when you have the world’s reserve currency, “I will raise a tariff on goods you give us in exchange for green pieces of paper that you can only use in our country” is basically the same as saying you’ll shoot yourself in the head if they don’t pay the ransom.

    Interesting the level of criticism directed toward Trump’s efforts to get better deals in foreign trade compared to the quiescence towards the extremely corrupt relations between our domestic government and big business. 

    • #25
    • April 6, 2018, at 9:27 AM PDT
    • Like
  26. Guruforhire Member

    Midget Faded Rattlesnake (View Comment):

    drlorentz (View Comment):
    Read the work of Kahneman and Tversky,

    Yeah, I’m familiar with the work of Kahneman and Tversky. Familiar with some of the Bayesian rebuttals of their work, too. (To clarify, some of their claims have Bayesian rebuttals – I am not saying all do.)

    I don’t expect the repeated Prisoner’s Dilemma model of trade wars to be entirely accurate, but it’s a common, somewhat descriptive model. It shouldn’t have been lost on you that my OP wasn’t treating FiveThirtyEight’s simulation as the gospel truth.

    Yeah these things don’t take into account power dynamics, etc.

    Perhaps the idea is that America is cooperating and china is only sort of cooperating. So they are a greedy player and are getting something of an unfair gain from the non cooperation part. So in order to promote their full cooperation, it has become necessary to also cooperate less. So their payouts are going down as our noncooperation reduces their payouts and ours. So this is the cold part.

    So now strategy kicks in. Does china think that they can retaliate to the retaliation and return to the status quo? Do they have the power or excess resources in order to force the status quo of a greedy outcome? This is pretty credibly what they are communicating. They don’t think they have to play ball, and that we need them more than they need us.

    Trump is probably thinking that given the social structure of china, that he has the power to get china to step a bit farther away from their greedy strategy.

    So its a game of chicken, and who will blink first. I think we do, but on the flip side, China has a lady shortage, and no food and no sex is not a good way to keep a large number of young men satisfied with life, so things like making soybeans and rice more expensive is going to hurt the chinese peasantry more than US farmers need a reliable cash crop in a rotation. At the same time Trump is politically vulnerable, and if they can outlast him, they will get the normal naive always cooperate government bureaucrat, and will have taken the top spot on the global superpower list.

    • #26
    • April 6, 2018, at 10:20 AM PDT
    • 1 like
  27. Midget Faded Rattlesnake Moderator

    Guruforhire (View Comment):
    So its a game of chicken, and who will blink first.

    A friend of mine off Ricochet made a similar comment – that it’s more like a game of Chicken than Prisoner’s Dilemma.

    Though Chicken is an imperfect analogy, too.

    @bloodthirstyneocon wrote on my wall,

    As @IWalton and @midge point out, game theory is not a perfect model for real world geopolitics. But Trump is a test case in whether a non-cooperative player in the real world can actually be made to cooperate.

    We’ll keep our fingers crossed and find out!

    • #27
    • April 6, 2018, at 10:27 AM PDT
    • Like
  28. Joe P Member

    Bob Thompson (View Comment):

    Joe P (View Comment):

    Midget Faded Rattlesnake:

    This trade game is essentially a repeated prisoner’s dilemma — a workhorse model of game theory that captures the tradeoff between mutually beneficial cooperation and individually beneficial betrayal.

    The flaw in this model is the idea that the “betrayals” are “individually beneficial.”

    I mean, when you have the world’s reserve currency, “I will raise a tariff on goods you give us in exchange for green pieces of paper that you can only use in our country” is basically the same as saying you’ll shoot yourself in the head if they don’t pay the ransom.

    Interesting the level of criticism directed toward Trump’s efforts to get better deals in foreign trade compared to the quiescence towards the extremely corrupt relations between our domestic government and big business.

    You mean how a subset of people who would be completely outraged at corrupt relations between the federal government and big business, suddenly stop being outraged just because a transaction occurs across an internatioal border?

    Yes, it’s a maddening double standard, along with the same one where increased taxes are evil unless they’re called a “tariff”, in which case they become part of the vital national interest. As if when WWIII finally arrives, we’ll need a domestic steel industry to hire Rosie the Riveter to make Shermans all over again, instead of realizing that we’ll never reach that point before a nuclear exchange occurs.

    • #28
    • April 6, 2018, at 10:29 AM PDT
    • 2 likes
  29. Umbra Fractus Inactive

    Chris Campion (View Comment):

    The gov’t will fix this problem like it fixed the problem of corn growers in Iowa, who vote. Ready? Here comes the solution!

    Subsidies.

    Tariffs are subsidies. 

    Remember when raising taxes to prop up failing businesses was a bad thing?

    • #29
    • April 6, 2018, at 10:48 AM PDT
    • 1 like
  30. Nick H Coolidge

    Midget Faded Rattlesnake (View Comment):

    Guruforhire (View Comment):

    Midget Faded Rattlesnake (View Comment):

    Guruforhire (View Comment):
    We have known what the optimizing strategy for iterated prisoners dilemmas are for a long time now. Don’t be greedy, always retaliate, and always forgive.

    What has me wondering about FiveThirtyEight’s simulation is that it was described as

    “This trade game is essentially a repeated prisoner’s dilemma”

    Essentially. So it may be gussied up somehow to not quite be a repeated prisoner’s dilemma.

    Probably. Traditional prisoners dillemmas don’t have options like “sort of cooperate” or “kinda but not really, just enough to avoid looking like a jerk” cooperation.

    I admit, I had trouble understanding exactly how the simulation weighted the various options. For example, in this round, I was playing an opponent “80% friendly” but 0% anything else, while I was “99% friendly” but also “60% vindictive” –

    I think that means that 99% of the time, I wasn’t going to defect from a friendly strategy, but when I did defect, I was pretty vindictive about it. But I’m not sure. And what was my trading partner doing the 20% of the time he wasn’t friendly, but apparently also not imitative or vindictive?

    What I found is that the worst option was to be the “coin-flipper” – 50% friendly and 0% on everything else. If your friendliness is random and the other player is even a little bit vindictive, you get screwed. I found 100% friendly and imitation, with some small % for vindictive worked the best against the other types. 

    • #30
    • April 9, 2018, at 8:58 AM PDT
    • 1 like