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The Donald vs. China (Or The Fallacy Of Protectionism)
Submitted by Pater Tenebrarum via Acting-Man.com,
Not Every Populist Topic is Worth Exploiting
For reasons that will forever remain a mystery to us, mercantilism and protectionism actually hold enormous popular appeal. The best explanation we can come up with for this phenomenon is that the support for such policies is based on a mixture of economic ignorance and relentless propaganda by vested interests over the past, say, four centuries. Still, it is almost comical that people are so vociferously clamoring for policies that can actually cost them a fortune and will definitely lower their standard of living.
Entangled in the Donald’s magnificent hair.
Cartoon by Sack
Donald Trump currently enjoys great success as the frontrunner in the Republican nomination race. Usually the business candidate never wins, and maybe his participation will end up increasing the chances of the candidate the Republican establishment really wants – i.e., Jeb Bush, a member of the immensely costly American aristocracy, and a dependable neo-con warmonger. For now though, Trump seems to have said establishment in disarray.
Anyway, the Donald has evidently noticed that his political incorrectness and populism are a huge draw for the grumpy and by now quite cynical electorate, and so he couldn’t let an opportunity for a little China bashing pass him by. As we have pointed out, we do like him for his great entertainment value and his remarkably candid and correct assessment of Fed policy, but there are a number of areas in which he seems quite deficient. As CNBC reports, Trump reacted with characteristic hyperbole to the recent devaluation of the yuan:
Republican presidential candidate Donald Trump on Tuesday said China’s devaluation of the yuan would be “devastating” for the United States. “They’re just destroying us,” the billionaire businessman, a long-time critic of China’s currency policy, said in a CNN interview.
“They keep devaluing their currency until they get it right. They’re doing a big cut in the yuan, and that’s going to be devastating for us.”
Earlier on Tuesday, China devalued its currency following a series of poor economic data in the yuan’s biggest fall since 1994. Some said this could signal a long-term slide in the exchange rate.
China has been a frequent theme for Trump since he entered the 2016 presidential campaign, promising to be a tougher negotiator with Beijing in order to bolster the U.S. Economy.”
(emphasis added)
If a devaluation of the yuan by a few percentage points really has the potential to “devastate the US economy”, the US economy must be a lot more fragile than we thought.
I solemnly hair that I will faithfully execute the office…
Cartoon by Mike Luckovich
Is a Weaker Yuan a Threat?
It is of course absolutely true that China has manipulated its currency for decades. However, the economic rationale of China’s rulers is simply misguided – and Trump seems to be saying “we should pursue the very same misguided currency policy”. In other words, he seems to believe that China will gain wealth to the detriment of the US by lowering the value of its currency and would prefer it if things were the other way around.
First of all, we should point out here that the yuan was actually egregiously overvalued at its recent highs. In trade-weighted terms, it had risen by 14% against the US dollar just over the past year – the only currency in the world exhibiting such strength against the surging USD. At the same time, China’s economy has actually begun to wobble, as its credit and housing bubbles are teetering on the edge. If China’s leaders were to finally listen to their critics and make the yuan fully convertible, we would confidently predict that it would crash by at least 30% against the dollar. In short, if China were to cease to act as a currency manipulator, its critics would be faced with the exact opposite outcome they are apparently hoping for.
The yuan vs. the USD, daily – if the yuan were to become fully convertible, it would likely weaken a lot more.
It is true that China’s policymakers for a long time did everything they could to keep the yuan from appreciating. As a result, they kicked off an almost unprecedented credit bubble in China, creating an orgy of malinvestment that has been stunning to behold. However, the low yuan was a great boon to consumers in the countries trading with China. Thus, while China’s economy was structurally undermined, others reaped great benefits. Every dollar a consumer can save because China offers him goods at extremely low prices can be put to other uses – it can be saved and invested, or used for additional consumption. This is great for individual consumers and the economic areas in which they reside.
However, in recent years, China’s currency policy has changed. The country’s policymakers gained a lot of “face” when China was the only emerging economy not to devalue after the 2008 crisis. Subsequently a decision seems to have been made to let the yuan appreciate, for three main reasons: 1. protectionists in the US and Europe had to be pacified. 2. China’s economy needed to be moved away from its investment-heavy model to a more balanced one (especially in light of the fact that much of this investment was akin to Keynesian pyramid building or ditch digging, i.e., a complete waste of scarce resources) and 3. China wanted and still wants to see the yuan included in the SDR currency basket, which is a matter of prestige and would moreover imbue the yuan with potential reserve currency status. Apparently the fact that the IMF rejected the application for the time being caused China’s policymakers to bring the yuan closer to its market value, essentially saying “let’s see how you like it”.
A subtle gesture from Beijing…
Capital outflows, a weak economy and a number of easing measures by the PBoC over the past year were all contradicting the strong yuan policy. The markets were well aware of this fact, which is why setting the yuan’s trading band closer to the appropriate value indicated by the markets resulted in a weaker yuan. Trump seems to be saying that China should continue to manipulate the value of its currency, only in a direction more to his liking.
Not least due to the “strong yuan” policy of the past few years, money supply growth rates in China have collapsed – this is beginning to unmask a lot of malinvested capital, leading to a weakening of economic activity in China – click to enlarge.
The great error of both China’s mercantilists and US protectionists is to believe that a positive trade balance is somehow improving a country’s welfare. They all need to urgently read what Frederic Bastiat wrote on the topic 167 years ago already . Apparently Mr. Trump and many other politicians are the modern-day incarnations of a certain M. Maguin:
“The balance of trade is an article of faith. We know what it consists in: if a country imports more than it exports, it loses the difference. Conversely, if its exports exceed its imports, the excess is to its profit. This is held to be an axiom, and laws are passed in accordance with it.
On this hypothesis, M. Mauguin warned us the day before yesterday, citing statistics, that France carries on a foreign trade in which it has managed to lose, out of good will, without being required to do so, two hundred million francs a year.
“You have lost by your trade, in eleven years, two billion francs. Do you understand what that means?”
Then, applying his infallible rule to the facts, he told us: “In 1847 you sold 605 million francs’ worth of manufactured products, and you bought only 152 millions’ worth. Hence, you gained 450 million.
“You bought 804 millions’ worth of raw materials, and you sold only 114 million; hence, you lost 690 million.”
This is an example of the dauntless naïveté of following an absurd premise to its logical conclusion. M. Mauguin has discovered the secret of making even Messrs. Darblay and Lebeuf laugh at the expense of the balance of trade. It is a great achievement, of which I cannot help being jealous.
Allow me to assess the validity of the rule according to which M. Mauguin and all the protectionists calculate profits and losses. I shall do so by recounting two business transactions which I have had the occasion to engage in.
I was at Bordeaux. I had a cask of wine which was worth 50 francs; I sent it to Liverpool, and the customhouse noted on its records an export of 50 francs. At Liverpool the wine was sold for 70 francs. My representative converted the 70 francs into coal, which was found to be worth 90 francs on the market at Bordeaux. The customhouse hastened to record an import of 90 francs.
Balance of trade, or the excess of imports over exports: 40 francs. These 40 francs, I have always believed, putting my trust in my books, I had gained. But M. Mauguin tells me that I have lost them, and that France has lost them in my person.
And why does M. Mauguin see a loss here? Because he supposes that any excess of imports over exports necessarily implies a balance that must be paid in cash. But where is there in the transaction that I speak of, which follows the pattern of all profitable commercial transactions, any balance to pay? Is it, then, so difficult to understand that a merchant compares the prices current in different markets and decides to trade only when he has the certainty, or at least the probability, of seeing the exported value return to him increased? Hence, what M. Mauguin calls loss should be called profit.
A few days after my transaction I had the simplicity to experience regret; I was sorry I had not waited. In fact, the price of wine fell at Bordeaux and rose at Liverpool; so that if I had not been so hasty, I could have bought at 40 francs and sold at 100 francs. I truly believed that on such a basis my profit would have been greater. But I learn from M. Mauguin that it is the loss that would have been more ruinous.
(italics in original)
Frédéric Bastiat: bane of protectionists and social engineers
Image via Wikimedia Commons
What more can one say? A good businessman of course doesn’t necessarily have to be a good economist. In fact, in most cases that would probably be a drawback rather than an advantage (Bastiat evidently was a rare exception). However, if someone wants to become president, he should perhaps acquaint himself with a few basic principles of economics.
With regard to the policy of devaluation, we always cite the two paragraphs shown below, which were penned by Ludwig von Mises. They represents the most concise and easy to grasp indictment of the debasement policy we have ever seen in print:
“The much talked about advantages which devaluation secures in foreign trade and tourism, are entirely due to the fact that the adjustment of domestic prices and wage rates to the state of affairs created by devaluation requires some time. As long as this adjustment process is not yet completed, exporting is encouraged and importing is discouraged. However, this merely means that in this interval the citizens of the devaluating country are getting less for what they are selling abroad and paying more for what they are buying abroad; concomitantly they must restrict their consumption. This effect may appear as a boon in the opinion of those for whom the balance of trade is the yardstick of a nation’s welfare.
In plain language it is to be described in this way: The British citizen must export more British goods in order to buy that quantity of tea which he received before the devaluation for a smaller quantity of exported British goods.”
(emphasis added)
Ludwig von Mises: Hi there, sorry to inform you that you can’t get richer by devaluing your currency.
Photo via Mises.org
So if you like restricting your consumption (i.e., if you like your standard of living to decline), you should root for the devaluation of your own country’s currency and root for currencies elsewhere to strengthen. This is why we will never truly understand the populist appeal of protectionism. It helps only a tiny group of producers to the detriment of everybody else in the economy, and even that tiny group’s advantages are strictly temporary.
In fact, in the long run, advantages gained due to either devaluation or the imposition of tariffs always turn into a competitive disadvantage, because they make businessmen lazy and foster the misdirection of resources that could be much better employed in other sectors than the protected ones.
Someone should perhaps get Mr. Trump a book or two.
Conclusion
If China’s authorities are so eager to support consumers in the US and elsewhere in the world by making Chinese goods cheaper for them, then by all means let them forge ahead! Should he be involved in negotiations with Beijing in the future, Mr. Trump should perhaps choose different topics to discuss.
One more hair joke – because we can.
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I'm really glsd that america never manipulates its currency or forces others to bend to its will by converting their own money to dollars before they can buy oil.
/sarc
So if you like restricting your consumption (i.e., if you like your standard of living to decline), you should root for the devaluation of your own country’s currency and root for currencies elsewhere to strengthen. This is why we will never truly understand the populist appeal of protectionism.
Yep, chinas per capita wealth / standard of living has gone straight down the shitter for the past several decades.
People rooting for currency devaluation, tariffs, quotas, protectionism in general!? Wow, just wow. (by the way, make your mind up zerohedgers, either you're pissed by the FED inflating the money supply or you are happy for currency devaluation, but it can't be both).
Mr. Trump IS WRONG about the currency devaluation thing, I'm sorry. One of the purposes of 'money' is to serve as measure of account. You devalue your currency and you get a leg up on this front, but this is JUST TEMPORARILY. Until the rest of the world catch up, and then for example, the japs instead of sending Toyotas for $25k they will now request you to chip $50k in instead. Then the positive effect is gone.
But you know where the problem lies? that other purpose of 'money' is to serve as store of value. Guess what's gonna happen to your savings account. But that's even worse factories are capital, research is capital, you bleed the capital the nation has in form of money and let's see who is going to give you jobs, do research, and so on.
Tariffs, quotas, all the same. Protectionism only helps a few selected, yes the protected ones, or the elites if you still don't get it. At the expense of the VAST MAJORITY of the people. People here rooting for this shit, how dumb is that?
Asshat. We're not talking about money. What you are calling "money" is actually debt. Once you understand this, then any argument that doesn't confront this fact is meaningless.
And, yes, I down arrowed myself first for using "asshat."
You are still spot on. Credit is a debt yet to be booked, most of the world is running on that fairdust called credit. The bigger issue is that unbooked debt can never be booked, as its grown to big for the balance of accounts.
Most of the world doesn't rely on cheapening their currencies to score major wins for their products. They use outright bans on U.S. made products. They steal designs. They do not abide by copyright protection or any legal agreement. The Author this stupid piece obviosuly works for the elite.
I used to believe this BUT if the US wants to help its people (The 99%) the best way to do so would be a large dose of protectionism. Sure costs would rise but so would domestic manufacturing, jobs and wages. Gloabalisation has been great for Corporations but for "Everyday Americans", not so much...
Trump appeals to Americans because he thinks and acts like an American, arrogant, obnoxious, and ignorant about global affairs. The problem with Trump's tough on China approach is that China holds all the Trump cards in this game, namely, several hundred billion in us treasuries. Trump, like his supporters think they can 'beat' China and other competitors like the Broncos might beat the Rams, the problem is, Trump's team is bankrupt, poorly educated, lazy, with 20%% relying on food stamps and hand outs just to survive the day. America was great once, but it will take more than a cocky businessman to turn things around. The smartest thing he could do would be to open the borders to all immigrants and reignite the movement that made America great in the first place - immigration.
are trump's billions as real as the gold in fort knox?
Another status quo propagandist.
George Will: Trump is like Primal Scream Therapy
http://tinyurl.com/q9aplj3
Logic, of course, sides with your position. Emotion, on the other hand, is what (generally) carries the day.
His position is that of a toady economist or financier. Trade needs to be fair, not free. Free trade is insanity.
Look, if I want to make a widget in this country and build a factory and employ domestic workers, what do I have to go through?
First, I will need to site the factory. This likely means I employ lawyers, realtors, and other specialists to deal with the governmental zoning rules and regulations, the EPA, DHEC, etc.......but, WE THE PEOPLE voted for these rules and regs because we want clean air, clean water, protected property values......
Then, when I build the factory, I have tons more rules and regs like how many toilets are required, how high the loading docks are and on and on.
So now, I have spent a ton of money with no sales yet....but I'm ready to hire folks and start cranking out my super duper widgets. But I soon discover it's not so simple, and I find that I better get me a Human Resources department to deal with all the compliance issues. More expense, still no sales.
But, after a long time and a lot of expense, my Widgets hit the market, and sales are great! They work like I thought they would, we are making money, paying good wages, health care, profit sharing, and a lot of taxes - local, state, and Federal. I'm happy, the employees are happy, the tax man is happy. Soon, I'm donating a building to the local college, and on a board to build a new library. Life is good.
Then, I notice that sales are starting to slip. Not a major worry, but needs to be watched, so I personally attend the next big trade show. On the opening day, I see one of my best customers walk by, so I stop him to chat, and ask about his next orders. He then explains to me that he shifted his business elsewhere, & a booth 2 aisle over has a virtually identical Widget for half the price. Sure enough, they do...and guess where it's made? I'll give you a clue. Someplace where there are no environmental protections, no employee benefits, no costly construction regulations.
One year later, my business is down 60%, half my workers have been laid off and are drawing unemployment & some on welfare, and I try to hang on with current cash flow.
Any person who leaves his garage or gate open is a fool, and will eventually get plundered. Same thing applies to countries. Only some ivory tower financial prick can fail to understand how unemployed workers and a declining tax base fucks up a country. Over-educated nitwits who fail to understand that burdening the business base with rules and regulations, while allowing direct competition from those with none of those burdens will kill an economy should be flogged and banished to some 3rd world sewer to contemplate their navel. You can take your anti-protectionist drivel and stick it where the sun don't shine. I live in the real world where getting business is a fistfight everyday, and have a very sensitive bullshit meter. This article sets it off, big time. We should have equalizing tariffs at the border, period. Compete on a level playing field. Build a better product, hire a better sales force, develop a superior marketing program, and beat me fair & square....but what have we done? Let a bunch of multi-national corporations and bankers buy up our government and sell is all down the river, that's what, with a load of snake oil.
Cue Donald Trump.
Just bizarre reasoning...
Stupid rules made me uncompetitive so the solution is more stupid rules to make me competitive. Assuming of course that the makers of Trade Agreements choose to protect my industry (does Buffet have any money in it?). Maybe they choose to protect some othe industry, like say rail by not approving pipelines as an example?
You live in the real world, but you want Papa government to help you out? Bully China for me please Papa! ...Please pay the requisite Senator.
You made poor investment choices, and you did it already being protected by trade agreements. There is no free trade between China and USA as a whole at this moment.
You could choose to accept this competition... by finding a different industry, by finding a niche, by innovating, by improving the product, by adding value... any number of strategies.
But you want the protectionist one. As Pater calls it in his article, the "lazy" solution. The one that gets to point a finger and scapegoat anybody but yourself.
And here you are a year later still trying to compete with a competitor who has a product at half the cost, and you're still doing the same old same old, and with no strategy for change or getting out? Just burning cash with no hope of recovery... You probably shouldn't be a businessman, lol.
You are just asking for more corruption, more cronyism, more misallocation, more capital destruction, and more international belligerence.
So, okay, Papa government bails your sorry ass out and tariffs the Chinese product.
China responds by devaluing or tariffing some US import. US retaliates with further tariffs, China retaliates with more deval' and tariffs. And so on and so on and so on.
Lovely world that. We've been there before historically. Did not work out well for anyone.
How in God's name does mercantilism raise its ugly head after being defeated so soundly so many years ago? People want to cling to easy solutions and anything that blames someone else.
It's populist. Trump knows it, and is playing on people's weakmindedness and laziness. Just like Hitler did when he started blaming others for the economic woes of Germany. Not calling Trump Hitler, just that he's playing on the same human weaknesses.
Fuck this colon destroyer.
The day our government make business possible for SME - WILL BE the day we will make a comeback as a country.
Papa government gave plenty of handouts to many if not all of the top 10 companies in the US.
Don't think they even CONSIDERED giving tax-incentives/benefits to SMEs that was worthwhile for mom and pop to do business.
If we can't compete with all the environmental and regulation laws in place we really only have two choices, one is to repeal most of the crap away to oblivion (some are for the benefit our health etc) the other is to instil protectionism. There are good protectionism laws and bad ones
I sense an unweavering feel of anti-patriotistm from this shill
Where's the NSA when you need a good anal probing?
If protectionism doesent work, then why do countries like Germany and China have high taxes on US made goods??..
Whats left to protect exactly ?
Oh, oh! Our Freedom! They subjected us to this in basic training. The reason I hate it is because of two words of the lyrics, 'at least'. So, they shipped your jobs to China? No problemo, mi amigo, 'at least' you're free!
http://www.youtube.com/watch?v=Q65KZIqay4E
If two criminals enter the Author's home and commence to steal all the goods and rape his wife will he put up a defense or will he watch and say: "To defend one's home is protectionist."
Ahh so trade is now a crime? And competition too? Are u a card carrying Marxist or just a weekender?
And you, sir, are a moronic tool. Sounds like you got all your education from a text book. Why don't you go find some elementary school kids to bother.
"relentless propaganda by vested interests over the past, say, four centuries."
Rather, the relentless propaganda has been on the free trade side. Globalists control the media and they are against protectionism, hence the collapse of manufacturing in the West which cannot compete with bonded labour in the East. Hardly a level playing field when you compete against slaves.
I guess the article's author needed to count four centuries to make this arguement since it doesn't hold for the past 50 years.
You are exactly right.
+1, Bravo!
I fear for the future of ZH when such economically naive and historically ignorant comments earn so many upvotes.
The world hasn't seen free trade since the onset of WWI. Versailles forced all countries into bilateral trade agreements which is one of the causes of the Great Depression.
If it was really free trade it wouldn't need a fucking treaty. Trade treaties entrench potectionist interests and are a form of corporate socialism and clientelism.
Pull your fucking heads out of your asses.
We haven't seen the real definition of anything since the globalist took over the meaning of words.
Which somehow excuses what? Mental laziness?
Lol... downvoted... so some people DO want the excuse... 'The globalists took away my understanding of concepts and my ability to do math. I can't possibly know anything now.' LMAO.
There are those who still know the meaning of words.
The point in question was use of propaganda.
And you're still wrong, naive and ignorant.
Hilarious. Some yahoo gets the wool pulled over his eyes and thinks globalists and trade treaties are all about free trade, in the meantime dissing one of the best authors out there making a case for gold as money, Austrian economics, and Libertarianism and I get downvoted for calling out this embarrassing naivetee?
Fuck I thought I was at ZH not HuffPo.
And more downvotes... but not a single argument against.
Can't argue against an ideologue.
The author used a straw man to attack Mr. Trump, I asume to extol the virtues of 17th century trade.
I mean seriously your argument is on the level of saying The Institute for Peace is really about promoting peace or that the War on Drugs is really about getting illicit drugs off the streets. Just fucking naive.
Hey, Mr. Destroyer! You lock your doors at night, or your car doors when you go downtown? Do you insure your home or business? If so, why? To protect your investments, maybe?
Well, in my part of the world, our investment was in Textile and Furniture factories that employed hundreds of thousands with decent wages and provided a solid tax base that further developed the local ecconomies. Now, I drive around the countryside and see all the boarded up businesses, & the unemployed, and read the statistics on the swollen welfare rolls and the ever rising crush of debt - business, personal, and govt.
Ross Perot was right. All these trade agreemenst are losers for the US, and that gisnt sucking soound when NAFTA was signed was indeed the sound of our jobs leaving the country. Donal Trump is right too, when he says our leaders are corrupt morons. Not that I think Trump is the answer, but I really do appreciate his bringing it up.
Now, please excuse me while I stick my head back up my ass. China opens in about 30 minues, and I need to submit a request for a factory quote.
Thank you for making my point for me. And the point of the author. I can't believe in this world of unrelenting doublespeak that people actually think that because the elites put 'Free Trade' on a document that it must be so. In fact you would think that appellation might be a little fishy but no... this time the elites really meant it despite the fact that anyone with a brain in their head knows if it was free trade there would be no need for a treaty.
And after all this interventionism, there you sat with a misallocation of resources and the loss of scarce capital and rather than truly examining the causes you want to blame 'free trade'... which was nowhere near the scene of the crime.
Has Libertarianism and Austrian econ died on ZH?
You, and the author, can deal in esoteric BS all you like, but in the real world, there must be a degree of protectionism. Otherwise, your economy will be plundered by multi-national corporations, foreign corporations, and even foreign governments. So, the question rapidly becomes "who's ox is gored"?
Our leaders are either corrupt or stupid, and I have not forgotten that those 2 things may not be mutually exclusive. A look around at the reality on the ground tells me that at least one is true. Theory is one thing - reality quite another, and reality is the result of unpredictable humanity.
Blue Vervain didn't say he believed in 'Free Trade.' Free Trade is a concept tossed about like Efficient Market Theory. Both only exist in the minds of academics.
During Bastiat's day, when you could send a good from France to England without tariff or other interference from the government other than an accounting of the trade would have been called what then by you?
I'm quite certain people from those days received payments for unloading of shipment goods or had to pay ship docking fee for entering another country's border. that cost to do business would necessarily be added to the final cost of the product.
There is no such thing as a free trade, just FAIR trade. Everyone getting their fair share.
NOTHING is new under the sun.
Who is talking about the world? We are talking about the rape and plunder of America. There is a head up an ass in this thread - yours.
"I guess the article's author needed to count four centuries to make this arguement since it doesn't hold for the past 50 years. "
But, Bungholio says that 'Gold is the best performing asset class of the milennium' and I should ignore the last four years!
Schmuck.
And the score on Blue Vevrain's post thus far:
30 votes for... when a globalist calls it free I believe every bit of it despite all evidence pointing to the contrary.
3 votes for... I don't believe a single thing that comes out of a globalist's mouth.
A stunning and lopsided win for the socialist elite's propaganda, right here on ZH.
Bastiat also promised free trade would bring world peace. How'd that work out?
When has there ever been free trade, anywhere?
There's been a lot more lately than in most previous eras. How's that working out?
You forgot the sarc tag.
Actually, no.
If global trade has reached the level it was preWWI it was only recently and by sheer force of increased population. The world hasn't seen freedom of trade since WWI, and enforced thereafter by The Treaty of Versailles. The Allied nations feared a ressurected Germany so to deprive her of economic freedom required that all nations enter into one-to-one trade agreements, ie bilateral.
Global trade collapsed, and then the world's wage fund disappeared when the banning of real bills destroyed small producers, and then governments printed like mad to paper over the structural problems... which made the 1920s roar but the 1930s rail.
We are not living in a world where trade is anywhere near free. It faces obstruction every step of the way especially if you are not a large multinational with the resources to navigate and absorb these costs.
Industries that should never exist are begun under false premises when there is protectionism. When that protectionism is removed or even simply eased it exposes the false premises and misallocation of capital and industries collapse.
And then free trade gets the blame because all that is seen is the recent easing and not the fucked up situation that allowed the industry to exist in the first place.
*mallmap* You are here.
Crony free trade deals don't create world peace.
Right. Only massive imbalances papered over by the counterfeiters.
Free trade or world peace? Both are as rare as a hens tooth.
"Clamoring for policies that cost them a fortune...."
Er, like moar last century failed socialist policies? Ala, Bernie Sanders?
Trump leases space to the Chinese government, so he's not going to tell them to fuck off.
But he says he will work to renegotiate better trade deals with the competition.
Fair deals that don't give China the complete advantage.
Current trade deals are one sided against the American working class.
He'll also push for innovation in the coal industry, I hope.
Clean coal use is smart.
No coal use (Obozo's position), or unfiltered coal use is suicide.
You all or nothing bimbo trolls amuze me.
the circus gets more entertaining as the days pass...while the elephant in the room continues to be ignored...and I am not talking about the republican elephant thing....by the way, off topic but it just came to me, where did the elephant and donkey symbols for the parties come from? They look nothing like each other, when the republicans and democrats look exactly the same. Maybe they should have one symbol, how about a "elephankey"?? :-) jackassphant?
And so exactly which elephant are you referring to?
Civil War.
Wow. Globalist apologetics again.
The principle of comparative costs worked back in the 18C. David Recardo's assumption was that capital was immobile.
You do not seek comparative advantage when you get absolute advantage by moving everything lock stock and barrel to China.
Unbalanced deals work for a time.
Then someone like Trump shows up and threatens to balance it.
Why don't you become an American again?
Not everything. Environmental standards were not moved. Workplace health and safety standards were not moved. Child labor laws were not moved. In fact, no protections against any externalities at all were moved, which is why all the exploit... err... "free traders" keep bleating about protectionism.
Zion and their noiZ-media only push memes that further their plunder, and benefit them.
Trump, being a Zionist controlled stooge--after all, his "empire" is completely dependent upon fencing Zion's banksters' fiat-debt plunder--is nothing but a mouthpiece for Zion's neocon wing of power. He is selling the sheeple more of tyranny's rope and noose to them.
Protectionism, and its propaganda corollary, "free-trade" (really managed-trade), are ways Zion and their grifting banksters forestall the price-inflation caused by their "printing" and fiat-debt.
They send cheap "printed" capital overseas to be matched with cheap labor, and then create outlets (Walmart, Amazon, etc,) here for the resulting cheap production. They then use alternating propaganda memes of "protectionism," and its corollary, "free-trade," to confuse and divide the people. While the people swirl around in confusion and delusion, Zion, their grifting banksters, and their DC US governors continue the plunder and murder of the American country, and us, the American people.
Liberty is a demand. Tyranny is submission..
Always about money, power, and division.
Don't let them take it. Don't let them have it. Don't believe it.
If protectionism is what's needed to keep a large percentage of middle class jobs from being moved overseas the I'm all for it,,,, if it's set up and implemented with a lot of common sense.
If the Chinese have tariffs and the US has tariffs, how is that protectionism?
You idiot.
Who the fuck are you talking to?
It's not protectionism to charge a tariff on imported goods if the nation you're trading with does the same thing.
That's called defending your industry from having an unfair trading advantage.
If anyone is to be called a protectionist, it's China.
And the US idiots have allowed it for the benefit of a few donors.
And the tax structure in the US allows internationals HQ'd in the US to permanently stash cash in foreign banks tax free.
Your point doesn't justify you calling me an idiot.
Please complain to ZH and have me banned.
I've tried to delete my account and they wont do it.
Well, why don't you just stop showing up for work and self delete?
Consider just the amount of money wasted by unemployment insurance and other government aid (food stamps, disability, etc.) to just support idled workers. Consider then the amount of money families do not spend because dad can't find reasonable work. You begin to see why tariffs are needed just from that stand point alone. Then include massive government debts that begin to become out of control just to keep the idled workers from rioting. Example Greece.
Free trade has become a matter of whom is the bigger fool trade.
You just made my argument for ending the FED. Tariffs only treat the symptoms. Sorta a band aid for herpes. Since Trump only proposes a band aid, he's clearly working for the banksters.
Why give money away for free when you can... give incentives for people to start their business (small/Medium Enterprises) better yet, give them a bonus for being able to sustain their business past the 5 year/7 year period as some of us know that 80-90% of businesses go bankrupt within 5-7 years.
Then its nothing but good things waiting for those SMEs that make it past the 5-7 years, especially with buildup clientele, paid back(hopefully) the debt they took out from the bank in the first place, lots of experience and specialized trade, lastly reputable credibility.
I don't see how we can survive WITHOUT SMEs
Our stupid bought and paid for politicans have been looking at the wrong pond(large) to feed where the water is toxic and the fish GM'd so it is IMPOSSIBLE to have offsprings
The pond that they should really be tending for should be the fresh, glacial water pond(small) with a variety of newborn fishs that are kicking and scream for survival and have infinite possibilities to grow into BIG ASS fishs and to give off inifinite number of offsprings
With respect, but "protectionism," is resorting to government's theft and violence to control and/or prevent another from trading his production with others that just happen to be overseas--You become a co-op of tyranny.
And soon enough, tyranny will be applying "protectionism" to who an individual can trade his production to within the tax-jurisdiction--"drug war," regulations, hiring and firing, free-association, speech, etc.
"Protectionism," and "free trade" are propaganda memes used to divide the people, but also serves as cover for the fact that Zion and their grifting banksters' fiat-debt is being utilized to destroy the American economy, and not some poor "illegal," or 10 cents and hour China man.
Solution: Guillotine tyranny and their banksters, "return" Zion, Restore the American country, the Constitutional republic, the rule of law and justice, and then allow Liberty to re-energize prosperity again.
Liberty is a demand. Tyranny is submission..
Not defending the "illegals," but what gets one the fastest and best ROI? Hunting down and trying to eliminate 17 million "illegals," or the guillotining of the few million thieving and treasonous slithers, gun and badge thugs, and banksters?
Bottom line, the elite don't want competition.
They like Chinese and Mexican slave labor too much.
You are trading cheaper goods for long term and massive unemployment. I'm not convinced that trade deficit of employed citizens is worth pursuing.
fix trade deals? deport illegal immigrants? all pipe dreams. where was donald and all his money a decade ago? When a person runs for president and says, "its too late, we are fucked" then wake me up. What is coming over the next year will be so tremendous that nothing will change it except divine intervention, or a violent revolution. With the american people so dumbed down and medicated, a violent revolution will not occur, so divine intervention is all we have now for any type of "hope and change"
They would all wake up if grocery store shelves were empty and there were no games on television.
Take away the food and circus and you have anarchy.
Glad to see that my fellow Zeros are not fooled by this tripe. I logged in just to vote it down. Bastiat won because the 50 francs of exports were used as capital and he almost doubled his money on his investement of that capital, then brought back his capital gains.
The short term advantage of buying cheap imports allowed manufactures and retailers to spread their profit margins. They knew in their gut that their policies would in time kill the middle class cutting their future bottom lines. They shrugged it off and took the short term gains. The chickens have now come home to roost. We have a hollowed out middle class and a hollowed out industrial base. We can’t build a tv set or a toaster oven but we have Patriot Missiles down pat.
the people running these candidates want the population reduced by 200 million - with no jobs they will hasten the process
That's exactly right. Just what the new world order has brought to America.
This author is soooo full of it! Definitely a backdoor globalist.
He seems to forget that for the usa citizen to purchase the cheap Chinese goods he first needs money. In order to get that money he usually has to perform some work. That would imply some kind of manufacturing but, alas, manufacturing has been shipped to China because the labor is 1/10 the cost. No job,,, no money.
Without the dreaded protectionism there is only one way Americans and other Peoples can compete with China's low wages,,, their wages must be reduced to that of China's. This will eventually happen if things stay as they are.
Americans can either choose to protect their industry and their jobs or they can be dirt poor like most of the Chinese. So far the politically correct choice seems to be winning but government can't keep the massive payouts to keep its citizens form starving forever. Mr. Debt will finally win and then what. I guarantee you hunger will rapidly overcome any political correctness.
Who let this mercantilist socialist moron in the door?
A multipolar world, by design.
http://redefininggod.com/?s=multipolar
Trump could probably impliment some of the best ideas found in Zerohedge and its associated blogs. I'd have to say try to help him.
thinly disguised poorly written hit piece on trump. i guess zh is trying to be balanced but this is crap. way too long and says nothing. the establishment lost the trade war thirty years ago. that many americans' standard of living is way beyond their actual means is not the point. eventually the whole thing will collapse and then mocking laughing boyz like the author will claim they saw it coming the entire time. hack.
American consumers aren't made better off by cheaper consumer goods when they can't pay for those goods because they've either lost their jobs or their income growth is being depressed by foreign competition.
Is free trade good? Sure, in theory and in moderation. Countries can specialize in producing the things in which they have a comparative advantage.
But we don't even have free trade, we have cutthroat foreign competition that is subsidized by foreign governments and supported by foreign central banks. Even worse, they're being aided by our policy because our leaders are inept, incompetent, or just serve special interests.
Donald Trump isn't anti-free trade. In fact, many of his policies will actually bring us closer to this idealistic model that is being worshipped in this piece while keeping the American worker in mind. Corporate tax reform and punishing currency manipulation will actually allow us to compete where it actually matters: who can produce the best good most efficiently at a decent price. Not who can skirt regulations and dodge taxes and get the blessing of governments.
The author of this crap apparently has not driven through any cities that formerly had a middle class manufacturing economic base. Free trade between like economies like Canada and the states is one thing but free trade between first world and third world countries is nothing more than a power grab by already rich and powerful people. As soon as the former middle class remove their head from their ass globalization willend.
Perot, 1992. He was blocked from the debates 4 years later.
http://www.youtube.com/watch?v=EAHM9rXjdUo
http://en.wikipedia.org/wiki/Ross_Perot#Reform_Party_and_1996_presidenti...
Slow internet
Oops
I didn't expect the populists and know-nothings and nativists that infest these comments sections would understand anything about this article. A quick scan of the comments show that I am correct.
The profit motive in action:
If I manufacture my product in China I can gain a competitive advantage.
I am losing profits as that firm manufacturing stuff in China is under-cutting our prices.
I must move my manufacturing to China.
Some time later.
Everyone is manufacturing stuff in China and there is no competitive advantage.
China has become a new super-power.
There are no decent jobs left in the US.
Domestic consumption and GDP fall.
China becomes the dominant super power.
The balance of power shifts from West to East through one businessman's short term increase in profit.
Not to mention decades of product development and manufacturing expertise handed to China on a plate.
The businessmen never did take into account China's lax attiude to intellectual property rights.
The US is a protectionist success story.
"If a foreign country can supply us with a commodity cheaper than we ourselves can make it," wrote Adam Smith in 1776, "better buy it of them with some part of the produce of our own industry, employed in a way in which we have some advantage. The general industry of the country will not therefore be diminished... but only left to find out the way in which it can be employed to the greater advantage."
When the UK was the workshop of the world in the 1800s the US and Western Europe caught up by forgetting all about Adam Smith.
The UK was the home of the industrial revolution and therefore had all the technological advantages.
The US and Western Europe used tariffs on UK manufactured goods to catch up with its more advanced technology.
If Adam Smith's ideas had been popular 100 years ago the UK would still be the workshop of the world and the US would be a third world agricultural nation.
The author's insanity is that allowing China to make more products, cheaper - is that China is using workers that are replacing American jobs. Eventually ZIRP and QE will no longer make up for those lost jobs.
Protectionisms is not fallacy
if you let all production go abroad and then just import everything then you better think of something you will produce and trade in return.
If you got nothing left to produce and run constant trade deficits then the protectionism is the way to go
wrg
Sorry Pater, I call bullshit.
Protectionism is necessary because moving a factory offshore is simple arbitrage of the following:
1. Environmental regulations,
2. Worker health and safety regulations,
3. Material safety regulations.
This started in the seventies and really had its root cause back in the black July of the UAW in the sixties. Yes the UAW put a gun to Detroit's head and won but they also dug their own grave. Management, from every company in America, SWORE that would not happen to them. One way of doing that was simply to shutter the plants and move them off shore.
Next problem: OSHA....or, the prevention of killing and maiming employees. This is the law in the entire West.....not so much in Asia...YET. As such, it costs a bit more to outfit a factory in a Western country than Asia.
Environmental regulations and zoning, an issue in every Western nation, not so in Asia. Its cheaper to open a factory in Asia because there are fewer hoops to jump through in this regard mostly because we in the West have seen how much factory owners care about the environment when there are no rules. As such, its cheaper to open the factory in Asia.
Wages? That's kid of related to my first point. Organized labor FUCKED-UP the management labor relationship as it was all adversarial. I would argue organized labor is no longer required due to state and federal health and safety laws. The absolute SAFEST job security and wage raiser for anyone is a booming economy, not extortion by striking.
Since the cost differentials of opening a running a factory in Asia/Mexico are as described above, those arbitrage savings must be applied to the imports form those factories as a tariff. Its that simple.
The free-trade ship has sailed, I bought into it initially as did most poeple but we see it for the farce it is now.
Squid
Hey that's my avatar
Another article by a moronic shill* for the Rich.
Does this moron Tenebrarum really believe that trade with China is fair? If so, let's export his job and then see what he thinks when he tries to sell his "product" in China. Everyone knows that trade with China is strictly a One-Way Street in China's favor.
Why does ZH carry trash like this written by moronic shills for the rich? Oh, well. Added another name—Pater Tenebrarum—to the list. Another pike added to the production quota. ;)))))
*Note: I have decided that it's too demeaning to honest women trying to make a living to refer to things like Tenebrarum as "whores". For the time being I have decided "moronic shill" is more appropriate. A more accurate descriptor for Tenebrarum and his ilk would be a word meaning "more disgusting or lower than a child molester". But, alas, I can't think of a word with that definition.
Actually it is China that is seriously up S*** Creek. They have been exporting surpluses and are attempting to continue to grow by exporting surpluses. Well, in Depressions surplus exporters have the weakest hand. All that we have to do is to just say, "No. I don't think that we are going to buy your crap. We are going to put our own people back to work manufacturing products."
China can sit on it and rotate for all that I care. They can eat all of that gold for all that I care. Or, maybe they'd like to exchange some gold for US agricultural exports? If not, I hope that they choke on all of that gold.
The USA had 20,000 metric tons of gold all throughout the Great Depression. A lot of good it did us./sarc
(That is, all of that gold didn't do us a damn bit of good. Because gold is only useful when it circulates as money from countries with a surplus of gold in trade to countries with a deficit of gold. It doesn't do anyone any good when it's hoarded! That's what all of the gold bugs and anti-gold bugs fail to appreciate in their interminable pro-gold and anti-gold arguments.
The USA accumulated tremendous stocks of European gold in exchange for war materiel during World War I (which wouldn't have been a World War if we had remained neutral). After WW I the USA's oligarchs decided that, instead of repatriating to the war ravaged countries by buying products from them, we were going to hoard the gold and destroy the world wide gold standard. We also loaned them dollars to buy US exports and expected them to repay in gold, too. Not that they had all that much gold after the mad butchery of four years of all out war.)
Ian Fletcher: The Case Against "Free" Trade
https://www.youtube.com/watch?v=qmUlN3p8qK8
Free Trade Doesn't Work: What Should Replace It and Why
by Ian Fletcher
http://www.amazon.com/Free-Trade-Doesnt-Work-Replace/dp/0578079674