Sunday, December 4, 2016

Trump on how trade is going to work


Lesson for the materially unqualified lefties (now keep the time domain in mind here I know that is hard for the incompetent left who have never been trained in this but try to get it thru your thick heads anyway...):









If the company doesnt take the deal and leaves, THEEEEEENNNNNN we go to war and put the tariffs on... like, govt spends first THEEEEEENNNNNNN collects the taxes... etc... get it?


51 comments:

Kristjan said...

I remember the lefties commenting on this before Trump won the election: Trump will never do this, this cannot be done etc. I am not saying Trump is some ideal president. But given a choice between Tsipras, Varoufakis and Trump It is going to be Trump for me. Fuck the globalists.

Bill said...

How's that working out for Carrier?

If the company does not like the deal, we sweeten the deal.

Actions speak louder than words.

Tom Hickey said...

What this amounts to is an attempt to wind back the clock.

Those who traveled the world some time ago will remember that the then developing world had different goods than the developed world, exception the upper echelon in those countries that imported their luxury goods from the developed world. The people in the low wage developing world exchanged low cost goods that low wage workers could afford. These goods tended to be either handcrafted or low tech goods, but satisfactory enough for developing countries.

The people of the developed world had goods made in the developed world that cost a lot more, and I means a lot lot more. They could afford those goods because wages were many multiple of what they are in the developing world.

Under the scenario that Trump proposes, the US will supply itself at high wages and export only every expensive goods and high tech, while China will be the factory for the developing world, supply low cost but satisfactory goods to the low wage workers of the developing world.

Matt Franko said...

Well its hotter in Mexico than here... so they need AC more than we do...

If Carrier wants to make ACs in Mexico to sell to Mexicans then who cares?

As long as they make the ACs in the US that they sell in US then all is well...

This is how the left doesnt understand the math in this, they dont understand proportionality or something ... they think ACs are all the same and you make ACs all in one place or something...

The left couldnt even check the oil in their cars... and they are trying to opine on manufacturing... they dont even know what the hell they are talking about...

btw 40 more of them killed in that fire at the art commune in SF yesterday... "meh, we dont have to worry about fire codes, etc..." 40 dead...

Unknown said...

Tom, Matt, this is going back to the maxim of the early 1970's - "Think Globally, Act Locally" - in other words produce and consume locally - import and export only that which you must.

Matt Franko said...

Unk, I think so... but tell that to the Asian USD zombies...

Its hard to predict how those Asian zombies are going to react if Trump takes away the object of their desire... idk of any zombie stories where they take away the objects of the the zombies... there is always plenty of the non-zombies for the zombies to go after in the stories....

They might actually turn on each other if you take away the previous object of their desire.... have to stay tuned to see how they react if Trump really cuts them off of USDs... they might REALLY freak out, become unpredictable...

Tom Hickey said...

History shows that trade is a flash point. Meddle with trade and there is conflict and eventually war.

The classical economists recognized this. According to classical economics, trade is the basis of political economy. "Economics" wasn't invented yet.

Matt Franko said...

Well hopefully it stays a 'trade war' Tom and not a real war....

Tom Hickey said...

Trade and foreign investment are a two-way street. US firms risk getting shut out of the emerging world, which is the driver of growth in the 21st c. I am sure that people like Tim Cook will explain this to the new president, who wants to make America great again.

Ryan Harris said...

"What this amounts to is an attempt to wind back the clock. "

-Capital markets and information flow are more open in the past enabling more distributed manufacturing.

-The gap between the real effective wages in China (60000yuan ~ 10,000usd) and low wage states (30,000) or Mexico ( 10,000)isn't so large anymore.

-We're seeing freight flows fall off significantly, more than can be explained by cyclical factors, which probably implies there is less profit to be made between labor markets. The first time in decades that freight volumes have fallen and not rebounded.

-At the same time design and research and administration are being centralized.
If you paid close attention to Trump's speech, he addressed this as well. White collar jobs fleeing to countries, he would examine INFORMATION flow between nations. For example strategically interrupting the flow of information between the US and India or the US and Germany could be examined as a tool similar to a capital control that could help over short time periods to inject uncertainty and raise costs of trade to subvert mercantilism policies. Like capital controls, they would only work for short periods, but by making the lines of communication less reliable, its a good strategy.

Ryan Harris said...

" US firms risk getting shut out of the emerging world, which is the driver of growth in the 21st c."

When China refuses to sign up for US free trade deals, they don't wring their hands over being "shut out." They negotiate the best bilateral trade deals they can get as they fit into their five-year plans.

The idea is that trade agreements are negotiated to benefit workers in addition to companies alone. If Apple gets screwed, pity, I'm sure the displaced worker in Indiana will send a few thousand dollars in trade adjustment assistance to the De-Anza community college in Apple's home town of Cupertino to help Apple workers adjust. ;) If you haven't been to Cupertino, the population is almost 70% Asian, majority Han Chinese. I don't think China will be shutting down Apple anymore. It hurts the Chinese more than US. Apple employees more people in China than the US by multiples. The point is there is no "going back" or being "shut out."

It's impossible in our modern society, we don't have the means of production or own the technology to produce anything in the United States anymore, the economy would implode. So its more a matter of not making stupid agreements.

Tom Hickey said...

China already warned that if Trump imposes tariffs on China, China will retaliate in kind against Apple. Apple was specified.

China's message to Tim to explain to Trump what this will do for making America great again.

Ryan Harris said...

The stakes are real. Lost sales would hurt companies. China doesn't import Apple products, the produce them domestically. Virtually no part of the phone is produced in the US besides the pretty pictures of the designs and software.

When the US was displeased with China interference in Iran and Afghanastan, US made fake news about Chinese food safety and stopped selected imports. More than likely China would do the same thing they did when they had these disagreements with Obama. They launched Patent infringement claims against Apple and forced apple to stop selling several models of handsets.

John said...

Slapping huge tariffs on Apple and all the other mega US firms making products in Asia and elsewhere? And Congress is going to go along with this? This is far fetched. Not only is Congress unlikely to support this, Trump will end up dropping it like a hot potato. The likely boom in the economy will distract attention, and he can always say that these things take time to achieve. Fucking with your biggest campaign contributors and the people who literally own the country seems unlikely.

Trump may have a small cock, but he's clearly got a gigantic hard on for China. The only way that Trump's proposals could possibly get through Congress, State and the other institutions which run the country and essentially make policy is to make this into a geopolitical issue about national security and ensuring no rivals for global hegemony, which may explain the deliberate antagonising of China by calling Taiwan. Congress is jam-packed with knuckle dragging neanderthals, so Trump and Congress may decide fucking with the biggest corporations in the world, the people who own the country and on whom you rely for contributions is worth it if it heavily sets back China's progress. Washington may have allowed the near-destruction of the frackers, so it is possible that state interests will see the biggest corporations bend the knee and pledge fealty.

Deep state interests will decide whether it's worth going along with Trump or to make it clear that this nonsense has to stop. But with TPP dead in the water, Trump has only bolstered China and its attempts to refashion Asia. China is in a much stronger position now than if this was attempted during, say, the Clinton years. If we're suddenly hit by a tsunami of anti-China propaganda, we'll know what happens next.

All in all, it seems very unlikely. A good idea has to be politically achievable. Overturning forty years of Washington-driven world trade policy is unachievable. Washington isn't going to just reverse its position because Trump says it's a new day and there are new policies. To misquote Herb Stein, if something is unachievable, it won't be achieved.


Schofield said...

Need agreement to "floating tariffs" alongside "floating currencies" to avoid trade wars!

Six said...

From Matt:

"This is how the left doesnt understand the math in this, they dont understand proportionality or something ... they think ACs are all the same and you make ACs all in one place or something...

The left couldnt even check the oil in their cars... and they are trying to opine on manufacturing... they dont even know what the hell they are talking about...

btw 40 more of them killed in that fire at the art commune in SF yesterday... "meh, we dont have to worry about fire codes, etc..." 40 dead..."

It's very ironic that you can string these three paragraphs together and claim that someone "don't even know what the hell they are talking about". Perhaps it's time to turn your analysis inward?

Matt Franko said...

Oh yeah Six I'm the one going all around saying "we're out of money!"

???????

The left is saying "Trump lost!" because Carrier ends up with any employees at all in Mexico ... they dont know what they are talking about and couldnt figure out the sectoral accounting if their lives depended on it... they are in the tank for Hillary she probably doesnt even know how to turn a stove on.... yet they are going lecture the materially competent on the right about material systems admin/management....

same with the efficacy of fire codes in San Francisco now they have 40 dead... nice job morons!

Matt Franko said...

The left are simply NOT competent for positions of rule... if the measure of rule is material systems outcomes...

Kristjan said...

Tom's story is not true at all. The expansion and product he is talking about takes advantage of cheap labor abroad. Capital is looking for profit. If there is any to make abroad, It is going to expand. Current model is taking advantage of yellow cheap fingers and that what I see Trump ending. The current model of globalism is collapsing.

Matt Franko said...

Here Pelosi is 100% correct:

"Nancy Pelosi: I Don’t Think Democrats ‘Want A New Direction’

They should just STICK to evaluating material system outcomes that are implemented/administered by the right.... if they actually rule, it will just be WORSE....

If things get shitty under Trump and they are effective at pointing it out it will go straight to the core of Trump and hit him HARD and he will put his all into trying to fix it...

Think like he ended up with a fungus infection all over the greens at one of his golf courses... and you would point this out to him and tell him his course was in very bad shape... he would lose his f-ing mind...

John said...

"The left are simply NOT competent for positions of rule... if the measure of rule is material systems outcomes..."

By America standards, FDR was on the left. The New Deal was on the left. Medicare, medicaid, social security is leftist. If you mean the likes of the Clintons, yeah, they shouldn't be in positions of power.

As for the right, you think they're competent? What are you smoking, brother?

Matt Franko said...

Ummmmm we're talking about today...

the right is far more competent than the left... its going to get better from a material systems perspective under Trump from what we know so far about his policies...

He's going to put in tariffs to protect domestic jobs and increase domestic spending on infrastructure and the military and do a tax cut which will trickle down a bit... its going to get better from a material perspective... ie "the trains will run on time..." etc...

Matt Franko said...

The left are just not material oriented.... they are more "people" focused... and that doesnt cut it if you are after better material outcomes...

Matt Franko said...

When the fire code people showed up in SF those artsy-fartsy lefties probably accused them of being the "xenophobia!" because they wanted to limit occupancy of the building to safe levels....

Tom Hickey said...

Tom's story is not true at all. The expansion and product he is talking about takes advantage of cheap labor abroad. Capital is looking for profit. If there is any to make abroad, It is going to expand. Current model is taking advantage of yellow cheap fingers and that what I see Trump ending. The current model of globalism is collapsing.

Read the links. China's wages are increasing and the cost advantage for US businesses is decreasing. In fact, China is now automating and robotizing as its workforce ages and the coming generation is too small to replace it owing to the one-child policy.

Yes, other countries' workers are available, like Indonesia, but they don't have the same kind of infrastructure as China. US firms are using Pakistan, Bangladesh, Indonesia, etc. but they are not on the economic level of China. Even India is not, other than in a some respects.

China is now becoming industrially competitive with the developed world and is also entering the arms bazaar with "good value." Their weapons are not as technologically sophisticated as those of the developed nations but they are far more affordable for small countries. Russia and China are about to challenge the aircraft industries of the developed nations, too.

BTW, this happened with Japan and Korea out WWII, both of which started exporting "cheap" goods to the US but pretty quickly upper their game to be competitive and navigate the middle income trap and Lewis turning point. This the model that countries like China are seeking to emulate and China is doing it.

China's entry was delayed by the revolution, and India's by its civil war, ending on the split between majority Hindu India and majority Muslim Pakistan and Bangladesh. The difference between China and India is that China's type of government allows it to focus, while India's doesn't.

Obama actually got it right when he said that either the US will make the rules governing globalization or a country like China will. He was right, and the Chinese are about to do it.

This is the real reason that the US elite want to confront China as an economic contender, militarily if need be.

Tom Hickey said...

I don't see the right as being "materials" oriented. Since Reagan, the right has been Hayekian. Reduce government and "free the economy" and it will automatically generate "spontaneous natural order" that will optimize the satisfaction of all. That is religious belief.

The reason that the US is in the pickle it is is because neither left nor right have a clue. Same with UK and EZ. Morons in charge.

Well see about Trump, but his appointment list so far is not encouraging unless he intends to micromanage everything and does a brilliant job of it.

Matt Franko said...

That's libertarianism Tom.... right now the libertarian right is freaking out about these Trump tweets this morning...

here is one:

https://twitter.com/marklevinshow/status/805492577512357889

Levin: "Economic authoritarianism has now arrived..."

There are levels of moronism... as far as material outcomes, the anti-libertarian right can deliver higher levels of material results... still morons yes but it will be better if your measure is "eating and pooping"...

John said...

"Ummmmm we're talking about today... "

Well, fair enough then. The best candidate in the last seventy years for the presidency has been Ralph Nader - an old fashioned leftwing social democrat. Plenty more examples, not just the presidency.

I don't particularly like, say, Elizabeth Warren (president elect 2020?), but she's extremely competent and intelligent. The GOP has Palin and Bachmann. Really, how the bloody hell does an imbecile like Bachmann make it to Congress? What kind of party CHOOSES a knucklehead like Bachmann to represent the party? I don't particularly like, say, Bernie Sanders but he's one of a handful of people in Congress who has any idea what to do. Meanwhile, the GOP has the extremely disturbing Louie Gohmert. What kind of party has a fucking wacko like Louie Gohmert as a congressman, or a racism madman like Strom Thurmond? Not only has the GOP chosen other candidates, they specifically CHOSE them. The GOP went totally nuts a long time ago. If Eisenhower could see the GOP today, he'd shit, he'd fucking shit.

The GOP is full of freaks and lunatics, which explains their incompetence. The Democrats aren't exactly incompetent as sellouts and politics of identity liberals: they'd be more concerned over one case of gay discrimination in the workplace than millions of working class job losses. Although I have to say, as much as I loathe the Democrats, the Republicans are clearly afraid and detest the governing competence and the occasional half-decent policies of the Democrats. That's why they bring government to a virtual halt as soon as there is a Democrat in the Oval Office. The Republicans would sooner see 50% unemployment than work with a Democratic president. That type of governing happens nowhere in an advanced capitalist democracy. South Korean members of parliament may punch either senseless, but they get right back to governing after the icepacks and stitches. Even Italy doesn't have political parties whose aim is to shut down the government because someone from the other side has made it to the top, and Italy has had more than fifty governments in fifty years.



Tom Hickey said...

Still lots of libertarians and neoliberals that are followers of Hayek in the GOP.

These are people who think that there is no such thing as society, which means that they are not systems thinkers and do not understand system dynamics. Trump doesn't either.

John said...

"Well see about Trump, but his appointment list so far is not encouraging unless he intends to micromanage everything and does a brilliant job of it."

Hear, hear. Trump is not known to be a details man, so the micromanaging isn't going to happen. Trump's gonna be like Dubya: the big picture. A big picture he doesn't understand, unless it requires crayons.

For a long time I wanted Trump to win, but finally I came to the conclusion that there is something very wrong with him. Now we see his nominations, and they're all fucking nuts! Billionaire anti-working class nuts. Religious nuts. Warmongering nuts. This tells you that there is something seriously wrong with Trump.

Trump proved a lot of people wrong. Good for him. The problem that he now has is that government requires competent people. His cabinet is not competent, and it could have been more incompetent had Jerry Falwell Jr chosen to accept the nomination as education secretary. What, was Big Bird unavailable? This is going to be a seriously dysfunctional government.

John said...

And what the fuck is all this stuff about systems dynamics? What has that got to do with sensible policies?

All this stupid shit about systems dynamics that has come straight out of management consultancy bullshitters is now going to enter government? What, are you going to sneak a feedback loop model into the Nasa budget?

Get the bullshitters in from McKinsey to tell you how much the residual fallout radiation should be of the next generation of nuclear weapons. They've got a systems dynamic model for it.

John said...

Addendum. As utterly useless as it would be to governing, systems dynamics isn't going to enter government because, as Tom says, the Trumpsters are Hayekians and they think, if they think at all, in terms of the individual - the billionaire individual.

Matt Franko said...

"These are people who think that there is no such thing as society, which means that they are not systems thinkers "

Yes they are they are material systems thinkers... not "society system" thinkers...

Trump will get more people employed... if that is your goal...

Tom Hickey said...

Systems dynamics = time based analysis about the consequences of cause and effect in a complex interactive environment.

Similar to feedback control theory.

Similar to information theory

It's called engineering and its application to social systems is social engineering.

The first priority is not doing stuff that will result in what you don't want, as in don't do stupid stuff and do no harm.

The second priority is doing stuff that will result in what you want, as it keep your eye on the ball.

Most policy violates the first priority and less policy leads to the second priority.

Because of lack of understanding of how the target systems operate.

MMT operates on these principles wrt monetary operations, monetary economics and policy formulation based largely on fiscal space.

Tom Hickey said...

Yes they are they are material systems thinkers... not "society system" thinkers...

The problem here is unforeseen and unintended consequences.

Economic liberalism interpreted as capitalism is quite good at material systems but the assumption that material systems translate to social and political system optimization by the invisible hand of the market (price rationing scarce resources) hasn't work out very well social and politically. Nor has liberals approach to social engineering since they don't understand the engineering principles and practice.

peterc said...

Just an impression, but I do think engineering seems to be a good background for an economist. That was Kalecki's background. I see a great deal of compatibility and consistency between Kalecki and MMT. Even though most of the academic MMTers presumably don't have engineering studies in their backgrounds, they have managed to incorporate much of Kalecki's insights, whether directly or indirectly. I know it is very much direct in Bill M's case. In many ways (though not all, of course), I see MMT as "enhanced Kalecki". The enhancements invariably fit beautifully with Kalecki's analysis.

Tom Hickey said...

A good example of system dynamics at work is in the Forrester article. Liberals assumed that funding affordable housing in cities was good policy. Forrester showed conclusively that it would fail every time unless jobs were created for the people the affordable housing program was meant to house.

This may seem obvious but most people did not believe it owing to ideology, but they could not argue with the model that showed the dynamic relationships. That led to a new concept in policy.

MMT is similar. It's patently obvious that governments issue their currency but owing to ideology most people are unaware of the implications of this until it is demonstrated conclusively to them. Otherwise, the concept of fiscal space gets lost.

Six said...

Matt, fire codes are a form of regulation, something the right in the US passionately opposes.

Tom Hickey said...

See Billy Vaughn Koen, Discussion of the Method: Conducting the Engineer’s Approach to Problem Solving

Tom Hickey said...

Systems Intelligence Thinking as SystemsEngineering Philosophy

The Engineering Method and the Heuristic: A Personal History By Billy V. Koen

lastgreek said...
This comment has been removed by the author.
lastgreek said...

By America standards, FDR was on the left.

Also to add that by today's standards, Eisenhower would be a Bernie Sanders supporter.

Matt, fire codes are a form of regulation, something the right in the US passionately opposes.

Not to mention stop signs, a regulation I am particularly fond of ;)

I get the dislike for Clinton. What I don't get is why anyone with a smidgen of smarts would opt instead for a fraud and phoney like Trump. The Trump U scam alone should have disqualified this guy.

300 million plus Americans and the world winds up with "cocksplat as President of the United States." WTF!

Calgacus said...

John:And what the fuck is all this stuff about systems dynamics?

Wray has a paper with UMKC's Linwood Tauheed (the local expert I believe) using systems dynamics. Was a main post mentioning it here a few years ago.

John: That's why they [Republicans] bring government to a virtual halt as soon as there is a Democrat in the Oval Office. True, the Rs have done this with more malicious and maleficent persistence imho, but the Dems were the first to start the extreme deficit terrorism of bringing the government to a halt over the debt limit, back under Reagan.

Steve D said...

Matt says, 'When the fire code people showed up in SF...morons!' And most morons know the difference between Oakland (location of inferno and those 40 DEAD stupid for sure "leftists") and San francisco-apparently YOU DON'T.

Ignacio said...
This comment has been removed by the author.
Schofield said...

Amazing nevertheless that Trump is attempting to do something about turning "effective demand" into a human right in the U.S. even though he's still paradoxically and simultaneously working at the extremely narrow application of the same right for the super-wealthy like himself via the "trickle-down economics" tax cut game. John Maynard Keynes must have a slight smile on his face somewhere!

https://www.youtube.com/watch?v=5P_J9IJqxaY

Bob said...

these companies are able to move between all 50 states, with no tax or tariff being charged.

So he wants to stop the game of pitting one state against another in order to attract jobs and investment?

Tom Hickey said...

There two factions of the elite. Both want more wealth.

One faction is those who want to grow the pie so that everyone has more if only to prevent growing social unrest. Trump seems to fall into this group.

The other faction is made up of those that want to just take a bigger share of the pie regardless.

In this latter faction there is also a cohort that wants as large an income and wealth gap as possible with the intent to repress dissent when it arises.

John said...

Calgacus: "Wray has a paper with UMKC's Linwood Tauheed (the local expert I believe) using systems dynamics. Was a main post mentioning it here a few years ago."

My point isn't that systems dynamics isn't a proper subject or that it may have some uses. My issue is that we know what policies work and which do not. Do we need a scientific subject turned into management speak to understand the issues? No, we don't. It seems that this is just another liberal way of obfuscating serious issues, or more likely getting systems dynamics experts to give you the answer you already want: privatise social security, medicare, medicaid; end entitlements; more tax cuts for the rich, etc, etc. Systems dynamics consultants will end up being like the rating agencies: they'll give you any answer you want as long as you pay them.

Do we really not know what does and what doesn't work? That's my point. Systems dynamics management consultancy is a circle jerk.


Schofield said...

"There are two factions of the elite. Both want more wealth."

The problem being persuading those who are not the sharpest pencils in the box to see that unless they control the "institutionalization" of rules the sharpest pencils will monopolise "effective demand" for their own selfish advantage. Many of us experience that elitist control as Laissez-Faire or Neo-Liberalism.

John Maynard Keynes fired the first shot across the bow of "undemocratic institutionalism" in 1926 with the publication of his pamphlet "The End of Laissez-Faire." Now history appears to be going full circle and we are slowly lurching back to the idea of "democratic institutionalism." The exception this time, however, is we are better prepared in understanding it has to be microeconomic as well as macroeconomic in implementation if we want to achieve widespread "effective demand."

Calgacus said...

John, afaik, the repute of system dynamics is not modern management speak, but rather a somewhat old-fashioned, currently unfashionable approach, that saw its greatest fame in the early 70s. So I don't think there is much danger of turning a scientific subject into management speak. On the other hand, it might have some good ideas or viewpoints that would help one understand the scientific subject's issues better. I wholeheartedly agree with you on obfuscation and oppose it just as fervently.

Haven't read Forrester's urban work, of which my very off the cuff assessment is that the subsequent decades show was dubious. My guess is that it didn't correctly look at the dynamics of the whole system :-). For as I said, comparing things across countries and across decades shows that low-cost public housing is a very good idea if you look at the whole society measured by non-sociopathic values. But the dangers you suggest were probably real back then; it might have contributed to the disappearance of affordable housing in the USA.