St.Cyr: "We're Not Starting A 'Trade War' - We're Revoking Prior Agreements Of Preordained Surrender"

Authored by Mark St.Cyr,

When it comes to business there’s one group that believes they, above all else, know how business should be conducted at all levels. The problem is most, if not all, have never run a business in their careers. If they have, it’s quite common that it never rose beyond the equivalent of a lemonade stand.

And yet, it is this very same group that will/have imposed regulations so egregious, that even that simple lemonade stand, that fixture of years past, enabling many a kid their first brush with business – to be nearly regulated out of existence. You know – for the safety of the children and public at large.

Lord knows how many unsuspecting patrons consumed lemonade over the years and fell dead, or were hospitalized needing to undergo tests as to find out what contaminants may have been present, because there were no warning labels, or listed ingredients affixed to the plastic cups. And to top it off: No license!

What other possible offense could these business malcontents be involved in that would demand political intervention? Brace yourselves: They actually dealt in an all-cash business model. Obviously those 6 year-olds were just posing as neighborhood children, raising money for a local cause or charity.

No, what was obvious (via the political eye) was they must be underworld kingpins, extorting unsuspecting passer-byes of their hard-earned money to funnel back into their ill-gotten coffers. Need I say it again? They. Only. Accepted. Cash. (or pocket change) Obviously they must be criminals. So, therefore, they must be stopped! And sadly, for many, they have.

And who gets the credit for all this “brilliance?” Hint: Politicians, of all stripes.

The reason for the above is this: That’s about the level of business understanding that many, if not most, of today’s politicians have that negotiated the multi-national, multi-$Trillions of trade deals we are now, supposedly, bound by.

I know it’s seems over-the-top, however, let me assure you – it is not. For if you think I’m off base? Need I remind you of the most egregious statement made directly to business people which demonstrated today’s political leaders understanding of business; its fundamental relevance to a nation, its economy, as well as its working public. e.g, “You didn’t build that.”

Sorry, that’s not a capitalist infused statement of argument. That’s a defensive communist infused statement. Period. If you take offense to my statement? I’ll assume you are not, nor have ever, built a business. And you should probably stop reading here. Consider that your, “trigger alert.”

Over the last few decades politicians of all stripes (e.g., Left, Right, and everyone in-between) have entered the U.S. and its business sovereignty into trade deals that have done more damage to the U.S. and its middle class than anything before it.

“Free-Trade,” as it is bandied about, is great in theory. However, most “Free-Trade” agreements prior were nothing more than simple documents with general outlines that set a framework that was easily understandable, as well as administered. (i.e., Trade agreements used to be some 20 or 50 pages long. Now, their 2000 to near infinitum. And that’s just for, “Lemonade!”)

If you look at the results of all the trade agreements over the last few years, one thing is glaringly obvious: The U.S. rarely breaks even.

In most cases (Hint: See China for one) the counter-party to all U.S. trade agreements usually not only gets the oversized proportions of the deal, but are seemingly inoculated from any violations they commit. i.e., Dumping products into U.S. markets? Complain all you want. Just don’t “rock the boat.” Or should I say, “shipping container ship?”

Again, one (as in the U.S.) can complain all they want. Does anything ever come of it?

No. All you’ll hear is some form of “Well, we brought this up to the ___________(insert political body of you choice) and the needed recommendations are a process and will take time, and blah, blah, blah. But we’ll keep up the good fight to get those jobs back, just remember to donate to __________” (fill in part affiliation here.)

Remember – To a politician: “Talking business, is doing business.” To a business person: “Talking is one thing – bona fide sales, are quite another.”

Regardless how one feels politically about the current stance being initiated by the administration, what is abundantly clear is the following:

This is what business looks like when you’re trying to turn around, or right past mistakes, in the midst of a “turn around operation.”

For those unfamiliar with the term, “turn around operation.” This is what is used to describe the process that a failing business adopts when there’s only two options: (1) Go out-of-business, now. (2) Try to save it.

Being a former successful “turnaround specialist.” This is precisely (i.e., what everyone is currently mislabeled a “trade-war”) what you do (and need to do) when you’re engaged in the latter. (I’ve expressed a similar point before in an article titled “The media is perplexed because this is what business looks like and they don’t get it.”)

All prior negotiations are simply either curtailed, rewritten, or thrown into the scrap-heap. Nothing is sacred. Repeat: Nothing.

Again, we are currently engaged in the latter. And the ones that have benefited in prior agreements, at the expense of the U.S. and its industrial backbone, are naturally going to wail like spoiled children.

“Free Trade” agreements were meant to be reciprocal, honest, sharing of markets. Otherwise, there is no “Free” anything.

What’s been taking place for decades is nothing more than a business bloodletting, being forced via a legion of leeches that have done nothing more than negotiate away a nations most fundamental asset. i.e., Its business and industrial might. It’s been a deplorable, disgusting display of nothing more than the equivalent of a bastion of rentier’s greed. This has not been about capitalism, business principles, or ideals at all.

It’s been nothing more than pure “Wall Street” incentivized greed. The greatest bastion for capital formation is now, nothing more, than a shell game. Literally.

Most, if not all, of the past agreements have been nothing more than structures of one form or another to fuel the insatiable thirst of what “Wall Street” has now become. i.e., It’s no longer the greatest capital formation vehicle the world has ever known. No, now it’s nothing more than a front running, parasitical infested, algorithmic, headline reading, High-Frequency-Trading, casino. My apologies to casinos everywhere.

Do not get me wrong, I’m not making any argument in favor of any administration, or politician. That is not what I’m discussing here.

What I am making clear is this: There’s a difference between opening up a “Trade War” and – just ending prior egregious trade agreements.

That’s not “War.” That’s called defending oneself. And just as in life at the schoolyard level – The bully doesn’t like when they suddenly find their “bullying” not only unheeded, but rather, they now find the once “bullied” has decided to fight back.

Again, all we are now engaging is – defending ourselves. That’s a distinction with a mighty big difference. And most of the mainstream business/financial media hasn’t the slightest clue of the differences.

Wall Street objectives (i.e., wringing every last cent, regardless of the human toll or national cost to its business sovereignty) have done nothing more than incentivize businesses to move operations offshore using the “wage gap,” “regulation gap,” and “environmental gap,” as an incentive to jettison any and all morals of capitalistic fundamentals, and replaced it with some form of grotesque hodgepodge of business maxims which are entirely specious when used improperly.

All hyperbole? Fair point. So, let’s use another example for comparisons, shall we?

This time let’s use the media’s go-to patriarch of U.S. business: “Ole Uncle Warren.” Far too many hold this man up as “The Face of what U.S. Business should look like.” Here’s a hint: Here’s what you get with that “face” and a trade deal such as NAFTA.

I made this point originally back in May of 2014 in the article, “Moving The US Economy Forward By Reversing Its Tax Policies”  when it originally took place. To wit:

“We hear many on the taxation issue regurgitate so-called “wisdom” or arguments for higher levels of taxes using opinions from academia such as the Krugman-ites, or axioms by none other than Uncle Warren (aka Warren Buffett) as to buttress their claims or stance why they’re unquestionably correct.

Remember when we were told ad nauseam Mr. Buffett believed in higher taxes? We heard: “Oh his secretary pays more in taxes than he does, blah, blah, blah.” And if Uncle Warren says it, well it must be so. After all, he throws great shareholder parties and plays the ukulele. He’s for the little guy. Yeah, right. Until you actually try to touch his money. For no matter what they say, one needs to watch what they do.

A little event took place last month that for all intents and purposes resembled a tree falling in the forest for today’s financial media. Fruit Of The Loom™ is closing its plant which employs some 600 U.S. workers in Kentucky and moving the operation to (wait for it….) Honduras. I guess those 600 U.S. workers were doing jobs that people paying lower wages, taxes, and more won’t do. Oh wait, they will. And now Honduras can claim family ties to Uncle Warren. I wonder if Mr. Buffett broke out into a rendition of Cinco de Mayo when he played his annual ukulele solo surrounded by the Fruit Of The Loom quartet?”

Sure, Mr. Buffet bought FOTL in the early 2000’s when it was in bankruptcy. Nothing wrong there. What’s wrong is his implied song and dance across the media in a willing to pay up, or call for higher taxes in some “good steward of business ” tone. i.e., “I don’t pay enough in taxes, blah, blah, blah.” or some other such drivel.

The fact of the matter is: If there’s a tax break or incentive that he or his businesses can take advantage of? They’re going to take it, regardless of the economical costs to the people he employed, or the community that was built around it.

Welcome to, “Uncle Wall Street” priorities, first, via the cover provided by prior trade deals negotiated by “lemonade stand” politicians. Great for them – not so good for the U.S.

Here’s a question: Do you think those 600 jobs would be gone today (and the devastation to the community that was built around it for years) had the prior “trade agreements” to incentivize such were not implemented? Imagine if “Ole Uncle Warren” didn’t have NAFTA as a useful argument to jettison all those U.S. jobs. Truly contemplate it, for this is just one example that demonstrates what has been taking place across the entire U.S.

Also contemplate: This was prior (e.g. 2014) to all the tax reversals, incentives, and more coming out today. Think KY would still lose to Honduras in 2018 vs 2014 tax policies, or recent NAFTA calls for renegotiating? Maybe, but then again, they’re already gone so why bother, right?

Is trying to make those once “Free Trade” incentives or conditions less favorable now entering some part of a “Trade War?” And if it is, why so? Is a country dumping products (Steel is just one) on a market subsidized by its government, flooding its trading “partner” and businesses with unsustainable pricing parameters, with no toleration (actually more like laughing in the face) for trying to protect oneself from such practices “Free Trade?”

As far as the Ivory-towered academia cabal is concerned that answer is: Yes, yes it is.

But if you’re an American citizen or business owner? I would garner to assume your view is a little bit different, is it not? (not to mention if you are one of those 600 that were jettisoned.)

So now – it’s China’s turn, along with a growing list of others. (E.U. springs to mind)

Will there be fallout? Economic upheavals? Financial chaos? Wall Street bedlam?

The answer is more than likely, Yes, too all, and then some.

But what’s the alternative? Here’s one:

Further bloodletting of U.S. industrial and business might – and a further – if not complete – obliteration of its workforce. All at the expense of remaining in prior “trade agreements” made by politicians that don’t possess even a “lemonade stand” understanding of business. Agreements that did nothing more than gut the U.S. of its once ingrained competitive advantages, enabling a cabal of international pols and business leaders to become rich beyond compare.

That’s not capitalism – that’s oligarchy. Pure and simple.

But there is an alternative, which is this:

Simply rip up all prior agreements – and start anew the best we can. Even if it means, yes, I’ll dare say it: Tariffs. Then, suffer through the healing process best we can as we rebuild.

That’s the two decisions at the core of any turn around plan. Hint:

Only the latter has a chance of working. It’s not easy, and at times feels utterly frightening, but that’s the cost. You either pay it now, or slowly bleed away into oblivion. And if that means we’re going to enter a trade war as most Ph.D’s argue? Then I say…

“Let’s Roll!”

Comments

Al Gophilia Oldwood Mon, 03/05/2018 - 01:18 Permalink

This guy has been writing about the destruction of the manufacturing and farming sector for years and yet still ignores the most destructive reason for the situation; IT"S THE MONEY, STUPID!!! 

If the Chinese, Arabs, Packistanis, Indians and the rest of the world had to compete on an equal monetary basis, where their money was the same as ours, where their labor competed with ours on a /hr basis, then this would be a different story. As it is, he is avoiding the elephant in the china shop.

Our businesses are using currency arbitrage against us in the pursuit of profits. They have betrayed and abandoned their own countrymen. Pigs at the trough, aided and abetted by the self-serving pricks we voted in to represent us politically.

In reply to by Oldwood

Oldwood Al Gophilia Mon, 03/05/2018 - 01:26 Permalink

Its not the money, its the debt. Monetary policy places a big role, but one of this would have been possible if not for infinite debt to fund entitlements, treasuries to our growing trade partners and the ability for us to buy far beyond our budget or needs on credit.

People find it easy to look the other way with debt, but real money out of the pocket has far greater introspection

In reply to by Al Gophilia

fx Bubba Rum Das Mon, 03/05/2018 - 09:49 Permalink

The author asks some right questions but ultimately gives the wrong answers and has it completely backwards. At one point he correctly identifies the big corporations as the major beneficiaries of all these trade agreements. Yet, suddenly he switches back to "nation" concepts. "the US" is now fighting back. Oh, really?

Guess what, it is not "the US" or "the American people". It's corporate America that made a killing for decades with all these former agreements but which  starts to realize that surging Asian corporations are starting to beat them at their own games. So what to do? Simple, rewrite the same rules that no longer benefit them but were defenden tooth and nail just a few years ago.

 

Trade agreements over the past decades were largely in favour of first world multinational companies, sucking vast resources at depressed prices from emerging countries. Suddenly, the author complains and feels "the US" is being treated unfairly.

LOL, what a nonsense!

Lots of these trade "agreements" were forced upon the other side (i.e. the US-counterpart" via economic, political and military pressure). In the case of China, it was a bit different though. Here it was the riches that were looming in the giant market and from cheap labour for US corporations.

In general, cheap foreign labour has been one of the major advantages that US (or German or whatever industrialized nation you take) based corporations have sought and exploited through such agreements.

 

In reply to by Bubba Rum Das

blentus Theta_Burn Mon, 03/05/2018 - 06:13 Permalink

And at the same time, congress is moving on with changes to 'miscellaneous tariff bills', which became completely perverted over the course of almost 2 decades and instead of making it easier for US manufacturers to obtain source materials, it is now allowing companies to import many fully finished products without tariffs. Including fucking bags or shirts from China, and over 100 other products.

But yeah, your leaders really have sack.

For loud talking, I guess.

Steel tariff show is just that. A show. It will only make steel more expensive for US companies. Probably some US companies will make a killing by selling more expensive steel to other US companies, surely no politicians would be involved in such a scheme.

But yeah, MAGA, USA USA, whatever floats your boat. Just put hands over ears and yell "lalalalala". They're fucking over everyone, all the time, and people still somehow think "this one will be different". And keep voting for them.

Masochists, I guess.

In reply to by Theta_Burn

medium giraffe Dindu Nuffins Mon, 03/05/2018 - 03:44 Permalink

Tariffs on Euro auto manufacturers will be quite damaging to US jobs. Like it or hate it, the US is a globalised economy. After years of globalisation, to think you can suddenly switch tack overnight is absurd.

Don't get me wrong, I don't want to see Detroit in the state that it is in any more than you do, but it will take decades to move back to a fully 'Made In The US' economy. This just seems like populist headline grabbing without much forethought, and probably not very good news for Main St. I hope I'm wrong.

In reply to by Dindu Nuffins

vato poco medium giraffe Mon, 03/05/2018 - 04:53 Permalink

I think you're wrong about the 'it'll take decades to [recover]' part. we were told it would "take years" to get unemployment down to good numbers; and it would "take years" before we could even approach 3% GDP growth; it would "take years" before the big corps would repatriate their overseas cash hordes ... but that was wrong. Spectacularly wrong. 

ergo, I now believe we can fire up manufacturing; deport a shitload of illegal aliens; and Get That Fuckin Wall Built in quicktime.

as the Mighty God-Emperor Trump has shown us, all it takes is the Will. (backed by competent management, which is where it always broke down before)

In reply to by medium giraffe

Eyes Opened Dindu Nuffins Mon, 03/05/2018 - 08:57 Permalink

American manufacturing businesses weren't "stolen" by China or EU...

Your own politicians, bankers & even (maybe especially) the management class themselves SOLD U OUT !!... & they did it to line their pockets ... simple as....

"Why should we manufacture a widget here for $10 when we can get it for $3 in (insert rogue nation of choice)... "

"We wont have pensions to pay out or property to purchase & maintain " 

"The public will STILL buy the widgets even tho they are now top-grade shite"...

 

And AMERICA... you DO buy the shite so you are as culpable as the above-mentioned thieves...

 

You want it all... & you want it now...

Its the american way... materialistic & apathetic as to the jobs lost..... until it's YOUR JOB....

 

U want to re-write agreements ? Fine !!

Get ready to pay more for EVERYTHING !!! 

And because the aformentioned pigs are still at the trough, expect the pocket-lining to continue 'til u "remove" 'em...

In reply to by Dindu Nuffins

Oldwood Mon, 03/05/2018 - 00:07 Permalink

Cheap imports and more credit will solve all our problems. All we have to do is to task our political and economic "scientists" to find a way to feed hundreds of millions of people who DO NOTHING OF VALUE.

Oldwood 07564111 Mon, 03/05/2018 - 01:20 Permalink

Politically they cannot stop or reverse because of the pain, so all they know to do is the same can kicking, rolling the debt as always. If this trend is not reversed there will far most pain, misery and death.

Debt is our devil as without it we would have never been able to survive these trade deals, our illegal immigration or the coming automation trend that continually adds people to the entitlement dependency rolls.

In reply to by 07564111

The Transpirator Oldwood Mon, 03/05/2018 - 01:22 Permalink

Interesting article but it doesn't address the issue of why these inequitable trade agreements were agreed to in the first place. These inequitable "trade" agreements seem to stem from a point in time somewhere in 80's; not that long after the rise of the petro-dollar (US/Saudi collusion), making the US dollar the de-facto world reserve currency.

And perhaps, just perhaps, these "free" trade agreements were the pay offs required by others, not to rock the boat?

Perhaps TPTB felt/feel that doling out compensatory "free trade" deals was a small price to pay for having effective control of the world's reserve currency. All I would add to the argument is this; if we're going to have a level playing field, perhaps an old fashioned trade war is necessary to bring about a new world (order) reserve currency.

I'm all for genuinely free trade agreements, but if we're going to be revisiting those, let's get all the cards on the table. The banker's been raking it in without question for decades; perhaps it's time for a more equitable banker.

We don't want more of the same (SDR's), let's have something more equitable for all people, not just the very, very few. And with today's blockchain technology, it is all within our grasp.

To bastardise a phrase of one of the evil ones; Let me control and issue a world's (nation's) money, and I care not who writes the free trade agreements (laws)

 

Just a thought

In reply to by Oldwood

Dr. Bonzo The Transpirator Mon, 03/05/2018 - 02:41 Permalink

it doesn't address the issue of why these inequitable trade agreements were agreed to in the first place. These inequitable "trade" agreements seem to stem from a point in time somewhere in 80's...

So, let's go back a bit. Actually philosophically these agreements go back well into the 19th century. Americans think continentally; American industrialists, and later American conglomerates, think globally. America got off scott-free because there were 2 world wars essentially everywhere except in the US. Gave the US a lot of advantages. Our industry wasn't devastated, merely retooled. Lend Lease Act, Marshall Plan, these initiatives were developed to to boost war-ravaged economies and tether their economic interests to ours. The Japs and the Germans were our mortal enemies, but never in the history of warfare can I think of an example where the conquering nation was a magnanimous in victory as the US toward these former foes.

The Japs were the very first to bite the hand that fed them, and we let them. The US saw it as imperative to grow Europe and Asia after WWII to stop the spread of communism. So when the Japs started flooding the US with high quality cheap transistor radios and other electronic gadgets as far back as the 50s. No harm, right? Except.... within 20 years the Japs put every major US electronic company out of business by flooding the US with cheap imports. In the mean time the Japs absolutely refused to allow even American apples into their economy. Forget about manufactured products. Ditto Europe. Ditto Korea. This went on for DECADES. Where were our politicians then? Where have they been for the last 50 years? They're all culpable.

Taiwan and Korea were military dictatorships with heavy Japanese influence. Park Junghee was educated in a Japanese military academy and fought in the Imperial Army in Manchuria. Chiang Kai Shek desperately needed to make Taiwan prosperous to counter the mainland commies. By the time they intended to grow their economies it was obvious what they had to do: copy Japan. And so they did.

Remember, during the entire length of the Cold War, the US wasn't exactly hurting, but there were emerging signs that all was not well. The cheap oil had been pumped right out of the ground. The US went from the world's largest oil exporter to a net importer in a 10-year span. Japanese car imports were becoming a symbol of a failing US auto industry.

We essentially paid for the defense of Europe and those Tiger economies and at the same time actively allowed them to grow their economies--future customers right--commie boogie men everywhere, and this whole thing just started spiraling out of control.

By the 80s it was already well out of control. Then along comes NAFTA, the WTO is being slapped together, US corporations start actively moving their base of operations overseas and the death blow comes when the geniuses who are sinking the ship think, hey, the Chinese commies want to "Westernize" their economy. Let's give them a hand too.

The rest is history.

You can call it whatever you like. Strategic thinking run off the track, misplaced priorities, evil master plan, whatever the fuck you please. The bottom line is the same.

I'll tell you one common mistake though. People continue to mistake kindness for weakness.

We'll see how this plays out. I do know one more thing about Americans most people seem to take for granted. We're not quitters. Far from it.

We'll see.

 

In reply to by The Transpirator

Oldwood Theta_Burn Mon, 03/05/2018 - 00:19 Permalink

I want to see some debate, not the typical name calling shit. We come here in some pretense that these issues are important, and MORE importantly we have actually thought about them. Instead so many just want to shit on people.

People want to bitch about being treated like children and then act like children.

In reply to by Theta_Burn

Jasher Oldwood Mon, 03/05/2018 - 00:24 Permalink

22 For my people is foolish, they have not known me; they are sottish children, and they have none understanding: they are wise to do evil, but to do good they have no knowledge.

28 And unto man he said, Behold, the fear of the Lord, that is wisdom; and to depart from evil is understanding.

In reply to by Oldwood

wisefool Oldwood Mon, 03/05/2018 - 00:39 Permalink

+1 Definition of USA surrender as follows.

When the head of the FBI when 911 happened (who thinks jet fuel can melt steel beams) is now the biggest threat to POTUS in 2018 you almost want to see what the honorable bill clinton being the first gentleman would be like in the alternative timeline.

Naw. I'll keep these cards for now. Robert mueller the turd is no ken star.

no sarc. young people: don't join any club that would let you into it. Deep state is dead. us old farts have them in a dutch oven. The next generation has a future that is not of a tax slave.

In reply to by Oldwood

MusicIsYou Mon, 03/05/2018 - 00:39 Permalink

Oh these brilliant politicians and business owners claim to know how business should be conducted. Oh really? Do you know you were brainwashed since you were a child to chase candy at town parades tossed from firetrucks, shit for brains? No you don't, because you're not an aware human being, you have shit for brains. Yep you have a turd in your head you call a brain, you have poop in your head.

Bear Mon, 03/05/2018 - 00:49 Permalink

If it comes from the US media, it's probably propaganda. 'Free Trade' is good is all the rage with the MSM who were totally supportive of the hard working, blue collar American worker two decades ago.  Oh how times have changed.

The Media, Government, and 'Big' Corporate all singing the same tune now and 1984 has arrived a few years late.