Tag: trade

The Dawning of the Trump Era

 

Victor Davis Hanson provides cultural and historical context for Donald Trump’s presidential victory and speculates on what the early days of the new administration may yield.

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The Pacific Trade Deal Looks Dead — and China Is So Very, Very Happy

 
Xi Jinping
China’s President Xi Jinping addresses the audience during a meeting of the APEC (Asia-Pacific Economic Cooperation) CEO Summit in Lima, Peru.

While many analysts are trying to predict Trump’s economic agenda — Tax cuts? Infrastructure? Deportations? — and its possible impacts, let’s not forget about the demise of the Pacific trade deal. From The Economist:

TPP’s collapse removes the main economic plank of Barack Obama’s much-hyped, largely abortive “pivot” to Asia. It leaves a gaping hole in the architecture of Asian commerce. And it adds to the strong headwinds that are buffeting global trade. … On the basis of size alone, TPP would have been important, the largest regional trade deal in history. It encompassed 12 Pacific countries, including America, Japan and Canada (see chart). Together, they account for two-fifths of the world economy. But what made it all the more significant was its strategic intent. Notably absent from the membership was China. Economically, this made little sense. Studies indicated that including China, the world’s biggest exporter, would have substantially expanded the benefits of TPP. But America wanted to show that it could set Asia’s economic agenda. China might eventually have been invited to join TPP, but only after America had written “the rules of the road”, as its negotiators liked to say. Matthew Goodman of the Centre for Strategic and International Studies, a think-tank, considers its collapse a “body blow” to American economic policy in Asia. … It is also a blow to the global economy. Over the years rich countries have cut tariffs to the point where the main obstacles to commerce now lie in regulations that discriminate against foreign companies. TPP took aim at barriers hidden in government-procurement guidelines and investment restrictions. It would have raised the bar for future trade deals, says Jayant Menon of the Asian Development Bank: “That’s where the biggest loss lies.” … For Asia’s reformers, there is thus no getting around the disappointment of TPP’s demise. Vu Thanh Tu Anh, a Vietnamese economist, says that Vietnam had hoped to use the deal to pressure sluggish state-owned companies to shape up. Shinzo Abe, Japan’s prime minister, viewed it as part of his programme of structural reforms, since it would have exposed coddled Japanese industries such as health care and agriculture to more competition. Even in China, liberal officials thought TPP might prompt the government to loosen its grip on markets in order to join one day.

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Member Post

 

In the wake of Donald Trump’s election, the Mexican stock market and the peso are down. Between fears of increased tariffs and of a renegotiated NAFTA, Mexico’s economy is on hold. Should Trump follow up on his promises to curtail trade between the U.S. and Mexico, expect to see a new flood of immigrants heading north long […]

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America the Alienated

 

Victor Davis Hanson explains why many Americans are increasingly removed from the nation’s core political, economic, and cultural institutions.

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Member Post

 

Is that coffee you’re drinking fair-trade certified and ethically sourced? Is the microprocessor in your laptop manufactured by a company whose board is half comprised of women? Have the holes in your blue jeans been carefully frayed by Indonesians working in an air-conditioned surround? More

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Rob Long Is Wrong

 

I am flattered and humbled that my last post was discussed on the last flagship podcast, but I am sorry to say that I think Rob Long is wrong about TPP.

When Rob says that, “somethings are true even if Barack Obama says they are true and TPP is good for this country.” I am going to get into more of the substance of TPP in a few moments, but I’d like to begin by saying that Obama advocating for anything is a red flag. Why should I trust Obama when he says this is free trade or that this is good for America? Why would I trust anyone in government after the last 8 years? Did the Affordable Care Act make healthcare more affordable? Did Dodd-Frank protect consumers or did it just end up hurting small community banks while protecting big banks and big law firms? I should trust Obama on TPP after he said there wasn’t a smidgen of corruption at the IRS? I should trust Obama after he said he found out about Hillary’s server on the news even though the FBI documents showed that he emailed her on that very same server? I’m sorry, but Barack Obama is not to be trusted.

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Member Post

 

Maybe this is why rich politicians are more likely to favour increased trade regulation: A study by Pablo Fajgelbaum of the University of California, Los Angeles, and Amit Khandelwal, of Columbia University, suggests that in an average country, people on high incomes would lose 28% of their purchasing power if borders were closed to trade. But the […]

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If You Think Trade Deals Have Ruined the American Economy, Reconsider

 

TradeIf you think America’s fundamental economic story over the past few decades is a narrative of decline due to bad trade deals — especially the North American Free Trade Agreement — then you must completely ignore economic consensus.

Some key paragraphs from the new CBO study on trade deals:

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Member Post

 

One of my persistent criticisms of Donald Trump the candidate is his protectionist stances on trade. There is no economic merit to propping up outmoded or inefficient domestic industries and businesses at the expense of international trade that permits production of goods and services at their lowest opportunity cost. Note the words “economic merit.” There […]

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Member Post

 

One motivation for Brexit which I hadn’t read before: the UK had recently overtaken France as the fifth-largest economy in the world, and is expected to surpass Germany within the next two decades.: But until Brexit, Canada [and other non-EU nations] was shut off from this economic powerhouse, our only path to profitable U.K. trade wending […]

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Trade and Immigration After Brexit

 

Border control chaos at Heathrow airport's terminal 5, LondonNo matter what happens next, last week’s stunning “Leave” vote on Brexit has permanently disrupted the status quo ante. Both the Conservative and Labour parties are facing major leadership changes; Conservative Prime Minister David Cameron has resigned, and Labour’s Jeremy Corbyn has been besieged by his shadow cabinet for his tepid support of the Remain option. Stock markets worldwide continue to tumble and the British pound has taken a beating. The Sunday New York Times lead story took a somewhat hysterical tone when it announced that the Brexit vote “is already threatening to unravel a democratic bloc of nations that has coexisted peacefully for decades.” And the strong supporters of Remain are now determined, it seems, to predict the worst, perhaps in the hope that Great Britain will take the opportunity to “reconsider” its decision in light of the global economic hit that occurred the day the Brexit vote was announced.

As I recently argued, the Brexit vote was complicated, given the pros and cons on both sides. But now that the voting has occurred, the correct response is to put the fear-mongering aside and to think hard about the two major issues, so central to the Brexit debate, which will continue to vex Britain and the EU — trade and immigration. On this score, it is important to realize that those two issues are distinct. The argument for free trade is pretty clear — but with the much murkier issue of immigration, it is virtually impossible to come up with a knockdown argument in favor of either fully open or fully closed borders.

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Candidates, Keep Your Hands to Yourselves

 
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Michael Woodruff / Shutterstock.com

Hillary Clinton delivered a major speech earlier this week, focused on Donald Trump’s credibility on economic issues. She warned that his policies and brash leadership would result in major economic problems. “Just like he shouldn’t have his finger on the [nuclear] button, he shouldn’t have his hands on our economy,” she said. Clinton is right and correctly identified Trump’s economic strategy as potentially disastrous. Ricochet contributor James Pethokoukis recently wrote about Moody’s analysis of Trump’s plan, which predicts Trump’s high tariffs will trigger a recession lasting longer than the Great Recession. Taking all of Trump’s policies into consideration, Moody’s also forecasts large deficits, government borrowing, and labor shortages to contribute to the economic slump. A heavy handed protectionist agenda punishes businesses and consumers alike through high taxes, constrained trade, and restricted access to consumer goods. Ironically, the ostensibly nationalistic economic plan would be bad for American business and for the American people. Trump should not have his hands on the economy.

And neither, of course, should Clinton. Implementation of just one of her centrally-planned proposals – transitioning the entire supply of US residential electricity to solar energy – would be enough to send the economy into ruin. The plan would cost untold billions of dollars, money that neither the government nor the private sector has for an inferior energy technology. Worse than the financial cost, it would push the entire country onto an intermittent and unreliable energy source, such as solar, resulting in regular, widespread blackouts all across America. The ensuing economic disruptions would be so great it would be nearly impossible to quantify. Suffice it to say, every aspect of modern life — personal, professional, and everything in between — depends on access to reliable sources of electricity and energy. Economic policy that jeopardizes the existence of 21st century life as we know it is beyond absurd, it is horrifying.

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Ben Sasse on “The Crisis of Political Vision”

 

Though it takes him a while to complete the wind-up — the real substance begins at 7:45, but what precedes it is charming and substantive — Senator Ben Sasse recently spoke on how both parties’ domestic agendas are woefully out of date (the Democrats by a century, the Republicans by mere scores of years). Give it a listen and give us your thoughts.

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Member Post

 

Anecdotes are powerful things. There is a reason why whoever happens to be delivering it, the President always has people in the galleries during the State of the Union. Anecdotes make things personal, the help to drive your point home. They are also pretty useless at reflecting the broader reality. We have heard in these pages […]

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Producers Are Consumers, Too

 

In debates on trade, it’s a sure inevitability that some free-marketeer will defend cheap imports on the grounds that they make goods more affordable to American consumers. This is, so far as it goes, absolutely true. But the equally inevitable retort from trade-skeptics that cheap flatscreen TVs are no good to those without jobs is also true, at least so far as it goes. Both sides, unfortunately are missing a critically important point: Most American manufacturers are also American consumers, and in a very significant way.

Just last month, our own Skipsul provided an eye-opening example of this in his piece “I, Circuit Board,” which detailed how his automotive electronics manufacturing company relies on a web of supply chains that stretch across half the world, starting with raw materials, and proceeding through a series of intermediate products that culminate in a single consumer good. And the less expensive a given input for Skip, the more money he has to put to other uses, whether it be lowering prices, improving his product, hiring new workers, increasing wages, or giving him enough cash on hand to pursue his hobbies or further upgrade his Ricochet membership. (Just sayin’. Hey, we’re an American employer, too!)

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Is the US Really Getting “Trumped” on Trade? A Q&A with Claude Barfield

 

china_hong_kongTrade and trade partnerships hit the American public in a big way this past summer in the form of the Trans-Pacific Trade Partnership, with voices on right and left chiming in on a deal positioned as President Obama’s NAFTA. Signed this past February, it included 12 nations representing 40 percent of the world economy.

But China – one half of the world’s two economic superpowers — wasn’t part of the TPP, and Donald Trump’s campaign trail emphasis on failed American deal-making seems to stoke popular fears that trade with that country hurts the American worker. So did “trade [make] America great,” as one CEO opined in the WSJ? “Are Trade Agreements Good for Americans?” Is America losing a trade war that will see China crowned the world’s strongest economy?

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The Amazon Theory of Protectionism

 
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Hadrian / Shutterstock.com

For years, Walmart was the model of efficiency for the retail business. The true genius behind the world’s biggest retailer was not the superstore, or the cheap goods from China, but logistics. Walmart established what was perhaps the best distribution network in the history of mankind: an interconnected web of manufacturers (yes, some in the USA), warehouses, and trucks that moved goods from one point to another with astonishing efficiency. Coupled with advances in computer technology that gave them real-time data on stock levels, Walmart pioneered a way to use its trucking network as mobile warehouses, able to restock stores quickly with the goods that were most in demand. This allowed them to reduce their warehouse footprint, expand their retail presence, satisfy their customers, and make billions of dollars.

Then, a small start-up decided to disrupt it all. Amazon is a tech giant of the 21st century and one of the few dot-coms to not only survive the tech bubble, but to dominate its field going forward. Today, its businesses range from basic Internet retail, to back end server infrastructure, to some of the best darn consumer devices money can buy. It’s easy to forget it all started as a bookstore.

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Member Post

 

Who is more arrogant and annoying, Donald Trump or Paul Krugman? A Hobbesian choice to be sure, but I’d say Krugman every time. Of course, the media would uniformly disagree, as can be seen in the reaction to Trump’s economic ideas, The bizarre optimism in Donald Trump’s theory of the economy. Like Krugman, much of what Trump talks […]

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Yet Another Theory of Trump

 

Here’s another theory of Trump. Well, it’s not really a theory, more just a set of disparate observations. I’ve broken it into chunks so you can tell me which parts you agree with, don’t agree with, and why:

  1. Trump means ratings. Trump means pageviews. Trump means advertiser sponsorship. The media (very much including Ricochet) deserves a large share of the blame for the Rise of Trump, in so far as it’s driven by relentless competition for profit. The media gave Trump a massive amount of free publicity, not realizing — because the media is part of a clueless elite — that Trump was not just an entertaining bonanza for ratings and a guaranteed-clickbait diversion, but a serious political candidate who spoke to and for a very significant number of their fellow Americans.
  2. The opening of the ownership of broadcast channels, cable, and satellite to private investors has changed our civic culture, and not for the better. It did not result in a competition to provide informative news coverage to a civic-minded public. It resulted in just what you’d expect: competition, period — and thus a race to the bottom for ratings. The result was the creation of a mass culture of empty commercialism and short attention spans unconnected to deeper spiritual, moral, or civic values. Shopping channels, infomercials, product placement, and reality TV gave rise to a population fascinated, even obsessed, with consumer brands, products, celebrities, and super-celebrities. The Rise of Trump or someone like Trump was, in this culture, inevitable.
  3. The Internet, likewise, failed to meet its potential as an instrument for communicating conservative political ideas, traditional and religious values, and democratic civic mores. Only media outlets with well-established brand names and an already-large audience, or huge financial resources, have been able to enter the Internet media market and draw the attention of the public in significant numbers. The profit model of major media and their portals (Facebook, Google) is based on selling goods. The audience is no longer captive — as it was in the time of newspapers and the broadcast cartel — and thus there’s ferocious competition to amuse it and keep it from switching to another channel or clicking on another site. The media has severely cut back on news reporting and analysis; what little reporting they do is often based on press releases from corporations and lobby groups, foreign and domestic. (The number of people who work in PR now vastly exceeds the number who work in investigative journalism.) There’s a massive focus on providing shows and websites that are immediately attractive to audiences and advertisers: sex, sports, violence, and comedy, rather than detailed and informative reports about complex trade negotiations, the budget, tax reform, or health care.
  4. Advertisers don’t, generally, like programs and websites with complexity and disturbing reporting that interferes with the “buying mood.” They seek programs, themes, and stories that lightly entertain and fit in with the spirit of the primary purpose of program: selling their products. (Thus people are far more likely to read about restaurants and vacation destinations abroad than elections or deeper geopolitical trends.)
  5. Western elites, political and economic, understood the fall of the Berlin Wall as a vindication of free-market capitalism. The victory was so complete and so overwhelming that regardless of evidence, this elite has blindly assumed free trade to be always and everywhere benevolent and even democratic (although exceptions are allowed when private firms need subsidies and bailouts). The mainstream media, which is part of this elite, internalized this ideology.
  6. The steady encroachment of marketing and advertising into every aspect of our lives displaced both religion and the political public sphere, replacing it with a shallow consumer culture unsuited to thoughtful, democratic participation. Increasingly, we live in a world of virtual communities built by advertisers and based on consumer demographics.
  7. Whereas once we lived in a world of physical communities, sharing a social life and common concerns with our fellow citizens — of all classes — increasingly we live in virtual communities that may superficially be political, but whose chief purpose is to buy and sell goods, not to create or service the public political sphere and a healthful democracy.
  8. This social sorting has been accompanied by geographic sorting: Increasingly, we literally have no idea how the other half lives. They don’t live in our neighborhood; they don’t watch the same television, and we don’t even talk to them on the Internet. In fact, we deliberately “unfriend” people who don’t share our view of the world. (This helps to account, for example, for the massive disjunct between the Ricochet primary and the real primary.)
  9. Non-stop entertainment (including sports) doesn’t just help to sell goods. It is, even if inadvertently, a vehicle for the transmission of the elite class’s political ideology, as well as the contemporary equivalent Roman circuses. It diverts the public from politics, reinforces the beliefs of the elite class, and creates political apathy — until the dam breaks.
  10. The public has nonetheless been aware that it has been working harder with stagnant or declining incomes; it has inadequate medical care at high cost, and education is the pathway to the elite class — but education is increasingly unaffordable, and the culture of our educational institutions increasingly bizarre. It knows that things are done in their name all over the world, often involving their sacrifice or that of their families, but not, seemingly, to their benefit. Few understand our foreign policy or its history, because the media provides almost no substantive information that would help them place any of it in context. Neither does our educational system. The media does not see providing this information as its key responsibility. Its key responsibility is to shareholders and advertisers.
  11. Case in point: NAFTA. Substantial American majorities opposed NAFTA. Only the elite favored it. But media editorials, news coverage, and “experts” overwhelmingly reflected elite preference. The “experts” repeatedly intoned that the benefits of NAFTA were obvious and understood by all qualified authorities, and that only demagogues and “special interests” were opposed to it. (The “special interests” who were the losers included lower middle-class white males.) The media dealt with the awkward fact that polls showed steady majority opposition to the agreement mainly by ignoring it or occasionally suggesting the public was uninformed and didn’t recognize its own interests.
  12. The lower-middle class, white men in particular, has been under siege in the United States for the past several decades, adversely affected by the deflationary policies of the 1980s, corporate downsizing, globalization, and the government’s support of, or indifference to, the damage being done to them. While this class experienced significantly diminished wages and benefits, more onerous working conditions, and greater insecurity, a “protected” elite in government, finance, tech, tenured academia, and the media failed even to notice this, no less consider its long-term political implications.
  13. Since the 1970s, the income of the top 1 percent of households has grown by 85 percent and the top 10 percent by 45 percent, but the bottom 60 percent lost ground. The income of the lowest 20 percent fell by 12.5 percent. Real hourly earnings among the working class fell 5 percent. This, along with the adverse trend of social indicators (morbidity and mortality, drug addiction, suicide) suggests that the welfare of the majority of the country declined in the age of globalization — a point that was unnoticed because of the abovementioned points: The elite class became ideologically ossified after the failure of the USSR, which they took as dispositive proof of the benevolence of free markets and their ability to lift all boats in their rising tides; moreover, the elite class mentally and geographically separated itself from the rest of the country, and thus literally did not see what was happening to it. The mainstream media, drawn from this class, barely noticed that only a minority had been the beneficiaries of global trade. It briefly noticed this issue during Pat Buchanan’s 1996 campaign, then forgot it again entirely.
  14. The media and professional politicians — the elite whom Peggy Noonan calls “protected” — thus failed to notice the discontent of the public. The elite domination of the media occurs so naturally that media news people, even when operating with complete integrity and goodwill, are able to convince themselves that they choose and interpret the news “objectively” and on the basis of professional news values. These constraints are so powerful, and built into the system in such a fundamental way, that they don’t see that they’re operating within them. Thus the media confused a public that had been lulled into apathy by cheap imported goods and cheap non-stop entertainment for a public that was, in the main, satisfied with politics as usual.
  15. As a result, the media both failed properly to report the sentiments of this public to policy makers and failed properly to report to this public with information it could use to guide its political decision-making. This public is now in full-scale revolt.

Do you agree with some, all, or none of the above? If so, why?

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