Tag: trade

The Anti-Business Businessman

 

We’ve been instructed not to take our new president literally, but instead seriously (in the felicitous phrasing of Salena Zito). As I write, there are hints that the inaugural address will focus on the theme of “America First.” President-elect Trump may or may not be familiar with the historical taint of that phrase, but in any case the meaning he attaches to it has been clear enough.

Throughout his career, Mr. Trump has been consistent on two issues: trade and admiration for strong men. He departs from the consensus about American leadership in the post-World War II era. Rather than seeing US security guarantees and promotion of trade as providing the means through which the world (and the US) has seen unprecedented growth, peace, and prosperity, he thinks we’ve been chumps.

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How Far Back Do the Populists Want to Turn the Clock?

 
The old Heinz factory, now a combination of residential lofts and a manufacturing facility, sits among houses in Pittsburgh.

From Janan Ganesh in the Financial Times:

What western electorates seem to want is a correction of the liberal model, not its extinction. The marginal British voter, who braved EU exit, but only just, can worry that freedom — to migrate, to trade, to avoid taxes — has run away with itself since the millennium without pining for Ye Olde Worlde rigidities.

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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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