Trump is fed up with inaction against China.
In an Oval Office meeting, Trump demanded Bring Me Some Tariffs!
The meeting was attended by Trade Representative Robert Lighthizer, senior trade adviser Peter Navarro, top economic adviser Gary Cohn, and Trump’s former chief strategist Steve Bannon.
The following is a rare account of President Trump in a small Oval Office meeting, venting at senior staff for sometimes resisting his hawkish trade agenda.
This account — confirmed by sources with knowledge of the meeting and undisputed by the White House — hints at where Trump may be heading with his trade agenda. And it shows he believes some of his top economic advisors are resisting his agenda because they are “globalists.”
Trump, addressing Kelly, said, “John, you haven’t been in a trade discussion before, so I want to share with you my views. For the last six months, this same group of geniuses comes in here all the time and I tell them, ‘Tariffs. I want tariffs.’ And what do they do? They bring me IP. I can’t put a tariff on IP.” (Most in the room understood that the president can, in fact, use tariffs to combat Chinese IP theft.)
“China is laughing at us,” Trump added. “Laughing.”
Kelly responded: “Yes sir, I understand, you want tariffs.”
Gary Cohn, who opposes tariffs and the protectionist trade measures pushed by the Bannonites, had his shoulders slumped and was clearly appalled by the situation.
Staff secretary Rob Porter, who is a key mediator in such meetings, said to the president: “Sir, do you not want to sign this?” He was referring to Trump’s memo prodding Lighthizer to investigate China — which may lead to tariffs against Beijing.
Trump replied: “No, I’ll sign it, but it’s not what I’ve asked for the last six months.” He turned to Kelly: “So, John, I want you to know, this is my view. I want tariffs. And I want someone to bring me some tariffs.”
Kelly replied: “Yes sir, understood sir, I have it.”
At one point in the meeting, Navarro pulled out a foam board chart. Trump didn’t pay attention to it, saying “I don’t even know what I’m looking at here.”
Trump made sure the meeting ended with no confusion as to what he wanted.
“John, let me tell you why they didn’t bring me any tariffs,” he said. “I know there are some people in the room right now that are upset. I know there are some globalists in the room right now. And they don’t want them, John, they don’t want the tariffs. But I’m telling you, I want tariffs.”
Global Trade War on Deck
A global trade war is on deck. However, trade wars are not winnable. The damage will be immense if China retaliates.
Anyone who wants a recession or a market crash should be rooting for Trump.
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Mike “Mish” Shedlock
i read this. almost sounded like Trump was having his Captain Queeg Strawberry moment
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So much for the non-“Warmonger”.
Such a lousy argument for trump over clinton, when BOTH were terrible choices.
Don’t know how many votes were swung towards trump by this blog, but it contributed to the confirmation bias of some and to the “viability” of trump by the rest who “held their noses”.
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Then a “market crash” it is. America seems to be unable or unwilling to clear the “economic deck” of the rot created by the debt cycle.
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I am all for tariffs , provided they are used expressly for the purpose of creating two-way free trade — both China and the US allowing unfettered trade… which would benefit both countries. Based on media reports that all to obviously have an anti-Trump agenda, its hard to say if Trump just wants tariffs for tariffs sake (dumb) or as a negotiating tactic (smart).
But part of the US trade problem is self inflicted. Too many anti-business laws and regulations. Too many taxes (and lets not be naive that tax revenue goes to the poor, it goes to government bureaucracy). There is an innumerate public that absolutely loves debt debt debt and hates saving for a rainy day.
That isn’t China’s fault. Its the US’s fault. I wish Trump would talk about the part of the trade imbalance that is 100% within our control
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How ironic. The man who the rust belt sent to bail them out will be the man who destroys them as a casualty of a trade war.
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“Anyone who wants a recession or a market crash should be rooting for Trump.”
I operate on the presumption that we will have a market crash and recession sooner or later, tariffs or no tariffs. The only question is what Congress, Trump and the Fed are likely to do about it after it becomes apparent.
Tariffs on imports are no worse than income taxes or sales taxes as all violate the principles of free trade. Congress has already forced trade barriers on Trump by enacting the Russia sanctions bill.
So they might as well give the baby his bottle – er tariffs – as it will help get the recession started sooner.
Perhaps the US government – and many other governments – will collapse. That would be great for the economy – as it was for Germany’s and Japan’s after WWII.
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There is no escape from our predicament, and any action to remedy the causes of our maladies will only make the issues precipitate sooner, but the longer they are avoided the worse it will be. Everything we are suffering under was caused by actions designed to paper over the more serious issues. We now have massive debt and a loss of decent paying jobs, and our only solution is to create even more money to buy the cheap imports as few can afford to buy American anymore, or artificially raise the wages on jobs that cannot support them virtually guaranteeing an even faster elimination of those jobs.
Tariffs must be selective in intent…protectionist in specifics, not in ideology. It can’t be used as a sledgehammer or a political platform, but as others have pointed out, as important if not more so is reform of our tax system that is pushing corporations out of the country or business completely.
As technology advances, our costs will only be substantially higher than China’s if our overhead expenses are higher….. GOVERNMENT.
Free trade can only exist on a level playing field. Tariffs can help level it. It is foolish to pretend that tariffs are somehow counter to free trade when we haven’t seen free trade or anything like it for many decades. Fake money and distorted markets and manipulated trade deals, and MASSIVE debt coloring everything.
And it only gets worse, yet all we hear is screaming that we will destroy it all if we try to even modestly attempt to alter it.
When was the last time we saw a REDUCTION in our trade deficit?
How big does the deficit need to be before we actually DO SOMETHING?
Or is this like every failed business I have seen, where rather than quit while they can still walk away, they continue to borrow and stall, PRETENDING that it will somehow work out, until the bank walks in and shuts them down?
Is THAT what we are waiting for? For someone one or THING to physically STOP US?
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War is the greatest thing when you win. I don’t see why we couldn’t with vs China.
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Losing less in a trade war is winning. The Chinese are communist hammers. Apologists for China in the guise of free trade are just that, apologists.
Not that China won’t eventually overwhelm the U.S. with innovation. China is a meritocracy while the U.S. is focused on equal outcomes. That, they, win in the end.
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We have evolved into a new type of winning….it’s winning without working at it. Anything else is just not worth the effort. Meritocracies are just too much work, and anyone willing to work to get ahead is morally suspect…likely greedy, thus evil, you know.
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China would dump all their treasury holdings sparking others to do the same which tanks the petrodollar. Then everyone scrambles to begin trading in various other currencies and the US becomes a fouth world country with other worldly hyperinflation.
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Name a currency or debt market with the depth, liquidity, and willingness of the Central Bank to provide it, the size of the USD and US treasuries. One that comes remotely close.
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Alan, talk of China dumping their $ assets voluntarily is pure nonsense. Doing so would hurt the Chinese badly. Their currency would come under extreme pressure as the reserves dwindled and an economic consequences of a sharp increase in US rates would ripple across the globe causing any number of dominoes to topple. It would be mutually assured destruction.
Tying the Yuan to gold is pure bunkum too because no government would voluntarily surrender the power to print all the money they wanted and, again, moving to a gold standard would likely necessitate a big devaluation. The Chinese and the US are locked in an embrace that will be hard to prize apart absent a huge crisis.
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China cannot and will not dump assets
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“War is the greatest thing when you win.”
By that logic, everyone should immediately declare war and start shooting up everyone else, right now. Or perhaps start by aiming for greatness by declaring war on, and beating up, their wife and kids.
Noone wins a game of destruction. The nominal winner may have less of his destroyed than the nominal looser, but that’s as good as it gets.
Of course, war is often part of a larger picture. As in, it also involves theft, and possibly enslavement. And the nominal winner sometimes manage to steal and enslave enough, to more than make up for the destruction he suffered.
But that doesn’t mean the winner of a war has it great. Just that someone who gets to loot and enslave others, do. Looting and enslaving is almost always, at least in the short run, lucrative for the looter. War in the traditional sense has nothing to do with it. Noone in history has benefited more from looting and enslaving others than the beneficiaries of the debasement and financialization scam being imposed on the West, at increasing pace, since Nixon went full retard. And hardly any of those beneficiaries, had to do as much as fire a single bullet.
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Free trade theory is based on gold standard currencies. Gold backed currency automatically balances free trade. Fiat currencies do not balance trade. Our trade with China and others is out of balance enough to do harm to US employment and national security. Tariffs are warranted to correct the balance.
The US has 40 million or more on welfare. We need to repatriate millions of low wage jobs as we cut the welfare cord. Tariffs that facilitate the end of socialist welfare are a boon. Working society is a wholesome society. The higher cost of living from tariffs can be balanced by lower taxes to support welfare.
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People only need jobs if they don’t have credit cards. I don’t understand why our government doesn’t understand this. They could solve all of this if they simply made sure we all had credit cards….something with a good points program would be nice.
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You probably cannot go back and resurrect the past like you hope. It’s worth noting that China is the US’s off shore manufacturing base, because so much of its exports are at the behest of US companies, like Apple. I’m pretty sure Trump has no idea about this inconvenient detail.
Watch this talk by Mark Blyth. It’s a good overall view of the economy;
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“It’s worth noting that China is the US’s off shore manufacturing base, because so much of its exports are at the behest of US companies, like Apple. ”
When you understand this is because of tax and trade regime arbitrage you will understand the Trump viewpoint. We ceded our manufacturing base to China because of poor policy, and for no other reason. In fact, some of our past trade agreements were explicitly designed as wealth transfer mechanisms to increase and encourage trade with our partners.
Subsequently, those trade partners exploited those very deals to keep their economies closed to us while continuing to derive the benefits of the wealth transfer, effectively kicking us in the groin for our magnanimity.
The poorly informed claim the transfer of our manufacturing to China is somehow a result of their low cost of labor and ‘globalization’ but there are many examples of countries around the world engaged in ‘globalization’ that have concurrently protected their domestic manufacturing and national interest industries by enacting intelligent trade and tax regimes. We aren’t one of them.
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This idea that “we” did anything is the classic language of centra planning.
Companies like Apple moved to China because US manufacturing isn’t competitive. Regulations strangle factory setup; union laborers demand exorbitant salaries and limits to productivity; supply chains are mostly outside the USA for components.
The idea that a Four Year Plan of tariffs and policies will somehow force the rest of the world to embrace lower profits and higher costs is naive.
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That notion that “we” did nothing and things happened to us of their own accord is ludicrous.
“We” engaged in trade deals, “we” changed our tax code, “we” failed to penalize those who exploited our free markets while they blocked our access to theirs, and mostly, “we” created the tax, labor and regulatory regimes we currently toil under.
The idea of a Four Year Plan of tariffs and policies to “force the rest of the world to embrace lower profits and higher costs” is a creation of your own imagination and isn’t what’s being addressed here.
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The Four Year Plan is the Trump administration, and judging from all the policies you’ve listed and your argument that “we” can magically achieve utopia and “fair” outcomes (for who?) using central planning further underpins that observation.
Trump supporters are the kindergarteners in the room who wail about “fairness” and describe competitive success by major businesses as “exploiting our free markets.”
If only we let the Supreme Soviet equalize things, they cry, we could have a truly fair outcome! Utopia!
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“Trump supporters are the kindergarteners in the room who wail about “fairness” and describe competitive success by major businesses as “exploiting our free markets.””
If you think Chinese government injecting 80b into COSCO is “Free Trade”, as one example, the kindergartner in the room is you.
I guess I could also point out the various other instances of US business being kneecapped on its entrance to China by non-competitive trade practices but it is increasingly evident your diatribe here is purely some kind of unicorn politics and not rooted in any understanding of reality.
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If China wants to sell me stuff below cost, that benefits me as a consumer. If American businesses can’t compete globally through some other adaptation (like Apple, Google and numerous other American enterprises have capably done), they aren’t viable and should go under. Creative destruction.
Companies who whine about how unfair the world is cannot compete and need to go away. The solution isn’t to make the US more like China.
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Dude! If the supposed “trade balance” “problem” is caused by lack of a gold backed currency; then the solution is a gold backed currency. Not carte blanche for a bunch of government hacks to grab some more money from someone.
And that’s assuming the even more lopsided “trade balance problem” between me and my favorite grocer, is some sort of devastating tragedy. Which requires an army of tax feeding leeches to “fix,” to the cheers and fistpumps of their well indoctrinated sycophant army, by engaging in even more robbery and harassment than they are already doing.
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There is fair and fair. How about the Chinese government distorting the value of Yuan? That’s okay then, I suppose.
I see this as a correcting the course of action and it might work as a threat. I have never seen and probably never will see something like fully free trade. In this world it just will not happen so control through tariffs is fine by me.
The system itself is built on continuous expansion of credit and consumption so it will crash sooner or later. The question is, whether it is beneficial to see the crash now or later when another Trillion or so has been credited.
As I see money nowadays, it is becoming in its today form more of a tool for relocating resources rather than being the kind of money we used to have that was based on the amount of labor and its value adding. Now “the money” is just been created which is detrimental to the real economy.
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If it takes tariffs to balance our trade agreements so we don’t continued to get played by the rest of the world – then bring on the tariffs.
Sometimes when abnormal or unbalanced relationships are allowed to persist for long periods of time without intervention or an effort to remedy the inequities – people begin to perceive deviance as ‘normal’.
This holds true in both business and personal affairs. A comfort zone exists in longstanding dysfunctional relationships.
Now we have a President with the nads to call attention to the dysfunction and he’s attacked for it.
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“Sometimes when abnormal or unbalanced relationships are allowed to persist for long periods of time without intervention or an effort to remedy the inequities – people begin to perceive deviance as ‘normal’.”
Excellent observation. I would define “normal trade” as unfettered, like what goes on between unconstrained individuals. “Tariffs” have been traditionally used to raise revenue, thinking here of the UK wool tariffs which were great for the king’s treasury but at times inimical to UK industry. Job creation via tariffs has never been a main goal, but rather incidental to raising government revenues or corporate profits.
Lacking baseline definitions, ambiguity will reign. If Trump wants jobs, he needs to go back to the urban enterprise zones he talked about during the campaign. All you are doing with tariffs is fighting over a static pie, and history suggests that the other side will fight back. China has it right, trade wars are a lose-lose game. UK after “winning” trade wars that became hot wars with Germany has lost its Empire. Trump may want tariffs, but reality that his staff sees is same lose-lose reality China sees.
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+1.
Agree also with Joel.
This observation also insightfuk: “A comfort zone exists in longstanding dysfunctional relationships.”
How much pain to change and is the perceived benefit from a changed relationship worth it afterwards?
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Bring the collapse – it will be tough but wasn’t life supposed to be?
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The short form: “Trade war is bad. It’s bad. It’s so, so bad. Everyone is going to shrivel up and die if we defend our interests.”
This is the stance being taken. News flash: Trump isn’t about trade war. He isn’t about hurting the economy. He is all ABOUT the economy. What he wants here is to fast forward the debate and move to unfettered unrestricted global free markets, without the baby steps the likes of Cohn want.
It’s a goddam simple fact that China blocks our access to their market, engages in unfiar, non-free-market government subsidization of their businesses, steals trade secrets and engages in all sorts of other very, very non-free market activities.
This fear of pushing China to *be* a Free Market instead of just allowing it and no other to exploit other countries’ Free Markets is ridiculous. I was around before China brought massive loads of low cost goods to the market. We did just fine. Overall quality of construction of *stuff* was better because it was intended to last a long time and be repairable instead of thrown away and replaced by another low cost piece of garbage.
*Fear* is the biggest driver of anti-Trump policy. It’s the difference between Trump and everyone else. The guy is not scared of anything and pushes back when pushed. For the most part, rampant ‘fear’ of the unknown consequences of Trump pushing China *hard* on trade is making people piss their pants. Why?
Are we going to try and engage on a multi-decade long process of slow-stepping China to liberalize their markets, while allowing them to rape our economy of its resources? How does that make sense?
I’m with Trump on this. Tariffs. Bring me Tariffs!
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What’s this “our interests” stuff?
Creating a protected, centrally planned economy with tariff barriers to protect low productivity workers creating subpar and overpriced product helps a relatively small number of obsolete companies and firms, at a massive cost to the vast majority of the country… who are stuck with higher prices and lower quality for goods and services.
Trump’s protectionist policy is no different than the Soviet central planners, who believed — like Trump and his supporters — that they could shield inefficient industries from competition with trade protectionism.
The result was decades of economic stagnation and a massive relative decline in the quality of life in the Soviet bloc; it’s pure fantasy to imagine that such protectionist delusion would work after such a record of consistent and unbroken failure.
If you need a tariff or other government protections to be viable, you’re in the wrong line of work. You’re a loser and need to go bankrupt.
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“Creating a protected, centrally planned economy with tariff barriers to protect low productivity workers creating subpar and overpriced product ”
You don’t understand what’s going on here.
Have you listened to any of the interviews of Ross and Lighthizer? Have you bothered reading the administration’s position piece on the NAFTA renegotiation? Have you been following any of the dialogue on what’s going with KORUS? Because your comment is exactly the opposite of the administration’s intent.
The notion of Trump as a ‘protectionist’ is media fake news with out any basis in reality.It’s not amazing to me you have missed this, in this era of echo chamber news. But for your information, what rhetoric has come out of the administration is pure Fair Trade and nothing else, and if you bothered to spend some time participating in the process you’d know this.
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“your comment is exactly the opposite of the administration’s intent”
Intentions are irrelevant.
When Karl Marx created communism, his intent was to relate a paradise for working class people. Instead, his ideology created hell on earth.
When Vladimir Lenin embraced central planning to create the USSR, his intent was to create a communist utopia where a diverse population of people lived in harmony without want. The USSR went down in history as one of the worst regimes to exist in human history.
When Smoot and Hawley implemented their central plan to impose tariffs, their intent was to rebalance unfair trade. The result of their tariffs was global trade war and the Great Depression.
When Neville Chamberlain opted to centrally plan the future of Eastern Europe by dismembering Czechoslovakia, his intent was to deliver peace in our time. He instead emboldened the Nazi regime and guaranteed World War.
When Richard Nixon embraced central planning to retire the gold standard, his intent was a more stable economy without constant unpredictability. He instead delivered a currency that has lost almost all its value over the past century.
When Hugo Chavez embraced central planning in Venezuela, his intent was to help the poorest workers in the barrios get a piece of the economic action and improve their lot. Instead, his countrymen are starving on the streets.
Trump’s efforts to use central planning will fare no better. His “intent” is irrelevant.
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The notion that what is going on here is “central planning” is out of left field and completely uninformed.
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@KM
So are you saying the tariffs will not be centrally planned and enforced? As in, anyone can decide themselves how much tariffs, and to whom, they want to pay on their Chinese made IPhone?
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“The result was decades of economic stagnation and a massive relative decline in the quality of life,”
Unfortunately that is what we have already experienced. Low wages, part time work, opioid addiction, a growing welfare system, unaffordable health care.
We ae heading toward an endpoint, and not a good one.
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“that is what we already have”
Typical doomer political nonsense.
It’s never been better to be alive. Unemployment is under 4.5%. I can buy a device with 100x the computing power of a $5 million Cray supercomputer from the late 80s that fits in my pocket and connects over the air to a global repository of free info for under $100.
Obsolete industries and areas that depended on them are going through turmoil, but that’s nothing new. The travails of Detroit and Toledo are sobering, but they’re also a natural part of economic transformation — and they’re an outlier.
The average American has never had a better chance to succeed, economically. And the continued influx of people from around the world, looking to access that potential themselves, underpins that position.
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Reality belies your creative interpretation of the country’s current place in the world.
It is simply a matter of fact that Americans were wealthier and more prosperous in times past than they are now, and that the middle class has labored under stagnant wages for going on two decades.
Cherry picking data points makes for a persuasive argument, but only when arguing with the uninformed.
As for the continued influx of people who are mostly comprised of the unskilled and uneducated type which we’ve been getting for the last two decades, it’s arguable the lack of GDP growth is partly attributable to them.
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“Unfortunately that is what we have already experienced. Low wages, part time work, opioid addiction, a growing welfare system, unaffordable health care.”
None of which has anything to do with some dude trying to make ends meet by building the best product he can, as cheaply as possible, in a factory in China somewhere.
Wages of most people are low, because wages of a small clique of completely unproductive, rent seeking less-than-nothings in the Finance, Law, Real Estate, Insurance, Government and government protected rackets are at all time highs. Within reasonable round off, not one of the above produce anything of value AT ALL. Most straight up destroy economic value, by dedicating their entire lives and careers to act as roadblocks for those still silly enough to aim to create some. Yet, those are the ones who have the ability to consume the most these days. AKA, has the most wealth. And the highest salaries. The value of what they consume, has to be created somewhere. And since they create less than zero of it, that means other people’s wages has to be depressed. That’s all there is to it. No childish, trumped up progressive Newspeak “measures,” revolving around imaginary hobgoblins in scary foreign lands.
Chinese manufacturers engaged in voluntary trade with American buyers, DO create value. As much or more of it than they take back out in the form of consumption. Just as productive Americans, productive Anywheres do. People who produce as much or more than they consume, are not the reason other people’s standard of living is decreased. Productive people never is. Unproductive leeches living off, by force of government, the work of others, are.
If it wasn’t for laws barring completely unfettered Chinese access to send doctors and nurses over here, and make any drug they could find a way to make as cheaply as possible; health care would once again become affordable. The reason it is not, has nothing to do with “The Chinese.” But rather on insurers, AMA lobby beneficiaries, unionistas, beaureaucrats and rent seeking pharmacos. Which are specifically protected by the government against free and fair competition with the Chinese, Indians and anyone else. Protected by the US government. Not the Chinese one.
And “a growing welfare system?????” What the heck does some Chinese guy have to do with that??? Just end welfare, scrap the welfare system, fire the leeches it employs, default on any bonds that may have been issued to prop it up, and get back to pretending to be some sort of a free country again. Back when America was a free country, there was no welfare system. The ones who put it in place, were Americans. Of the usual stupid, gullible, well indoctrinated, progressive variety. Not some Chinese.
And opoid addiction? When was the last time some Chinese were forcing Americans to get high? If you don’t want to be addicted to opiods, don’t do opoids. Otherwise, do them, and it’s not a problem. To the extent it still is, it has everything to do with lack of unfettered Chinese access to make and sell better drugs, making said better drugs expensive enough that doctors are being pressured to just prescribe pain killers. That way, the imbeciles who believe in “health care systems,” can pretend that “they” are “insuring someone.” Such that now, thanks to “their” tireless bootstomping and fistpumping for Massa, “everyone has health insurance…” While patients are conveniently disposed of on the cheap, after being doped up enough to not complain.
When you have a country where an ever greater share of total annual compensation, is doled out in the form of “asset appreciation” and from protected classes taking cuts of ever more pumped up asset valule movements between one unproductive but privileged leech and another; the share left to be doled out as compensation for actual productive work, will inevitably decline. That’s about as simple as arithmetic gets. You’d kind of wish having enough grey matter to understand something so obvious was a prerequisite for being President or one of his advisers, but I guess 150 years of pervasive public indoctrination has successfully dumbed the yahoo choir down, to below even that meager standard.
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“Tariffs. Bring me Tariffs”
Trump is saying Tariffs. But he really means “Bring me Jobs.” I think General Kelly knows that, and so will be good for the White House. If Trump succeeds, mainstream media will say it was “not enough” or “too late” or some such nonsense.
If you “buy” the job growth numbers, then why do you need tariffs? I’ve been watching a lot of small companies go out of business, and it is from lack of access to small amounts of financing and has nothing to do with tariffs. Small business is starved for cash, and operates in a universe detached from Fed low interest rates.
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Lack of support to SMEs is a mistake.
Micro and mini-scale capitalism is critical.
It’s just not sexy enough for big ego politicians.
Creating jobs, servicing smaller scale needs and often at less risk of foreign competition if they manufacture.
They are the back bone of a functioning economy.
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tarriffs should be a means not an end. trump is ranting about a means. and this line about china laughing suggests trump has demons
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I have become convinced that two of the biggest economic confidence plays have been free trade and comparative advantage. As always, when those who purport to know best about such subjects tend to cite hypothetical cases where all else is equal and thus make their cases. But the reality of life is that all things are not equal and economics is a rather messy human endeavor. If we look at the economic policies of Germany from 1870 on we see that their supposed comparative advantage was the wheat and rye production that fed much of Europe. And since the french had both iron ore and coal, Germany should have been buying French and British steel. But history tells us a different story about industrialization during that time. Tariffs went up in Germany and their industrialization began to increase to the point that by WWI their out put was greater than France and they had “invented” the industrialization of the chemical industry. So tell me, who “won” that tariff war, Germany, England, or France?
You see, so many of the world economic events just don’t fit the pat economic theories issued from so many professors who claim to know best. Chile has tin and copper mines, definite comparative advantages. Yet where is their growing middle class (last report it has disappeared) and why aren’t they a world economic power? Perhaps if they had invested in energy and smelting, even intermediate and finished goods production their economic status might have been different. The same could be said of many raw materials/ores/oil/gas producers. Where is their industrialization?
As for trade, Steel is not steel but comes in different grades according to its smelting and treatments. Quality does not often translate across the borders. If you fly on commercial aircraft you better hope that the execs that buy the high strength bolts that hold that plane together got them from a US maker and not some Chinese rip off artist. Yes, it is true. a good many bolts, simple things when you look at them, come in different grades and we get more than our share of “counterfeit” bolts from Asia and the Chinese in particular. Hell, that has been going on for the last ten years. Where do you think most of your automotive replacement parts come from? You know, the ones that tend to fail quickly.
In the “You get what you pay for” department, there is a reason why we are losing our middle class. CEOs shipped quite a few jobs out to China and the surrounding countries so they could “compete”. Well, it was really about lowering prices a little while hiking profits a lot more. But our middle class is a lot like a savings account. Use it all up and we become a third world country. That is the problem with the free trade mantra. No one has ever shown that it works. Like the great argument that socialism really works if you do it correctly, free trade is suppose to do the same thing if we do it “correctly”. So far our trade agreements for “free trade” haven’t worked very well. Doing more of the same will not guarantee success. Perhaps tariffs might be a better solution to our current problems.
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Hey William. Well argued, as usual. The world is indeed a complex place, full of complex problems. It has been my experience that humans desire simple solutions to complex problems, but that simple solutions rarely work. I do not believe that tariffs will work.
For example, the US just put tariffs on Canadian softwood lumber, which reduced the amount of Canadian softwood lumber the US imports. This was replaced by more expensive imports from Russia, Austria, etc. US producers benefited from higher prices, while builders and consumers paid more.
Tariffs are just government deciding who wins and who loses within your own country.
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The biggest economic con job is not free trade and comparative advantage, but rather the Trump-endorsed option that government knows best what, how, when and where I should spend my money.
Democrats think I’m too stupid to buy the retirement and medical benefits that work for me, and that they need to centrally plan things out; Republicans under Trump think I’m too stupid to buy the products and services that work best for me, and that they need to centrally plan things out.
Both are antithetical to the functioning of a free, prosperous market.
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Actually, Mr Miller, I doubt whether the Democrats believe you to be too stupid to buy medial and retirement benefits that actually benefit yourself. They believe in wealth and income redistribution and you are a very likely source for the funds they seek. They do not care about the details such as whether individuals actually receive good or even not so good healthcare or whether individuals can afford such healthcare. As long as they can say that they did something progressive for the “people”, then they are happy. As for most of the republicans as all of the democrats, well, they should be voted immediately out of office and made to pay restitution to the American people for this mess they made.
As for corporations and CEOs, maybe it is time to disband all corporations and make the CEOs, past and present for the American people for all the poor decisions they have made. What I now see of large corporations is that they are antithetical to free markets everywhere.
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“there is a reason why we are losing our middle class.”
Yes, there is.
The middle class is rapidly outgrowing the income and assets necessary to be classified as merely middle class. They’re becoming wealthy.
Not a terrible “problem” to have, though it does give lie to the persistent doom-and-gloom nonsense of popular politics.
https://www.forbes.com/sites/timworstall/2016/06/21/sure-the-middle-class-is-shrinking-30-of-americans-are-too-rich-to-be-middle-class-now/?c=0&s=trending#45840af51365
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It is interesting that one segment of society who want government out of their lives, keeps expecting Trump to do things that expand government involvement in the country; expand the military, build a wall, expand border security, impose tariffs that determine which industries gain and which lose (plus the consumer always loses), send troops and equipment to other countries, etc.
There is a role for government, just as there is a role for the private sector. The difficult part is to find the right balance. Many on this site only appreciate when government does what “they” want, and hate everything else.
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I would tend to believe that without a middle class or an extremely small one economic growth would be very difficult. As for Forbes, I don’t read propaganda, sorry.
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If you’re going to ignore data that undermines your assumptions, there’s little point in continuing the conversation. I’m data driven.
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If you are dependent upon Steve Forbes for your data then so be it. But “data” has little meaning in the real world. I have found that Forbes and his publishing empire less than truthful in many areas. I draw data from many sources and try to verify the validity of such data. One of the problems is that not all “data” sources are what they appear to be. Sort of like depending on the US Federal Government for one’s data. Not all of it is trust worthy.
Now if you trust Steve Forbes, fine for you. But I don’t that that hardly undermines my assumptions. If you feel that Forbes is correct, then your argument is based on an appeal to authority, not data driven. That means that there is little point to continuing any conversation.
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I’m not “dependent upon Steve Forbesl” for anything.
Though it is pretty clear you’re not basing any of your argument on any data or rationale beyond your feelings; there are no facts connected to your argument.
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You make a statement that the middle class are becoming wealthy and that is why the middle class is shrinking. Then you cite some study from Forbes. Think about that for a minute. By all accounts, the concentration of wealth is growing but the number of individuals in the 1 percent is relatively unchanged. Even the two percent is not growing by more than a percentage point. So if the middle class use to account for let us say twenty five percent of the population, then that would mean that the 1 percent would no longer be the one percent, would it. According to you, the wealthy should be the twenty five percent.
And your argument was…..? Maybe you need to rethink your basic assumptions.
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I didn’t “cite some study from Forbes.” I cited actual data, which Forbes reported on.
You Trump guys need to stop depending exclusively on Alex Jones, Sean Hannity and Breitbart. Come join the rest of us in the real world, with real data.
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Think about your assertion for a minute. What did you say? Was that really a logical statement? and where did Forbes get the data? Did you think to verify that data? Data is nothing without the logical that puts it in some semblance of reason, perspective.
And for the record, I seldom watch Hannity or Alex Jones. I also don’t use one source of “data”, i was taught much better than that. When you do good research you first start with a good question no the subject of your choosing, we call it a research question. Then you start to read the literature so that you become familiar with the “data”, as you like to put it. Then you come up with a hypothesis and start to design your research.
But what did you do? you stated that the middle class is disappearing because they are getting rich and no longer middle class. They are now wealthy and that means that the top one percent, the top two percent, and the top five percent is getting larger even though the population is only marginally increasing. Then you cite Forbes as your proof because it has “data”.
The worst part is that your argument is that I am wrong because I rely on emotion, Alex Jones, et al, and so on. You are right because you have “data”. That is your whole argument. Impressive!
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I agree with Mish. Trade wars are not winnable. Everyone loses, especially the least vulnerable of society. Instead of creating jobs for his supporters, Trump will simply force more of them onto social assistance programs. And for those who say the US needs a recession or market crash, that will be even worse for the bottom 80%. Be careful what you wish for.
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“A global trade war is on deck.”
Of coarse it is. It is the phase of the cycle for one to occur. The bust phase is always different than the boom phase. Glass Steagall lasted until the 1920’s boom phase came around again. Then it was gone.
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One of the 1st things BHO signed was a 10% tariff on Chinese tires. Stupid copycat. Lucky for me, back then I got my motorhomes tires in the nic of time.
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“A global trade war is on deck. However, trade wars are not winnable. The damage will be immense if China retaliates.”
The Rust Belt doesn’t care about it. They are already at the bottom. All these cries of “But… but… it will get even worse” from Wall St types and Silicon Valley types will not faze them. They know how selfish and self-serving those types are.
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I looooove my President Trump 👌 💯 💥 👍 lol @ Mish thinks he’s smarter than a self-made billionaire who became President against all odds. 🙈💩
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What does “smart” have to do with it?
Krugman, Bernanke, Hillary, and Trump may all have an IQ higher than mine.
However, I know far more about economics than any of them.
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