Evidence Grows That Trump's Trade Wars Are Hitting U.S. Economy [hold your water]

President Donald Trump regularly declares that he’s winning his trade wars. Yet evidence is growing that the U.S. economy is a net loser so far.

"So far" is irrelevant. Trump's not gauging his negotiating position and the end result on "so far." The longer term is what will matter. Trump may quit too soon. I hope not. He may not hold out for any democratic changes in China. I hope not.

The criticisms of Trump's tariffs are coming from "free trade" globalists (international corporations) with a vested interest in the anti-tariff mantra because tariffs work if done correctly. They don't want you knowing it. Tariffs are regulations. "Fee traders" are anti-regulation so they can run over the top of everyone else and become even more obscenely rich. I think Trump's position is not against them but that he thinks they don't know what's best even for themselves as greedy people. Remember, calling them greedy is factual and no insult to them. "Greed is good" actually works for them.

In two separate papers published over the weekend, some of the world’s leading trade economists declared Trump’s tariffs to be the most consequential trade experiment seen since the 1930 Smoot-Hawley tariffs blamed for worsening the Great Depression. They also found the initial cost of Trump’s duties to the U.S. economy was in the billions and being borne largely by American consumers.

Smoot-Hawley tariffs were not responsible for worsening the Great Depression. Don't buy the narrative until you've thoroughly researched it. Also, the Chinese are bearing the costs even more so. Both Trump and Xi know that. That's why Trump says he's winning.

In a study published on Saturday, economists from the Federal Reserve Bank of New York, Princeton University and Columbia University found that tariffs imposed ... also were causing the diversion of $165 billion a year in trade leading to significant costs for companies having to reorganize supply chains.

There's nothing wrong with having to reorganize supply chains if the cost will be worth it in the longer run. It's why Trump has said he's in no hurry to finalize a deal. He knows that the longer the tariffs run (and he will raise them if necessary), the more the Chinese will cave to his demands. If he plays his cards correctly, the US will come way out ahead relative to where the US has been vis-a-vis China.

Significantly, the analysis of import price data by Mary Amiti, Stephen Redding and David Weinstein also found that almost all of the cost of the tariffs was being paid by U.S. consumers and companies. That contradicts Trump’s claim that China is paying the tariffs.

They did not look at Chinese costs in terms of lower prices and higher subsidies. If China weren't being hurt, China wouldn't be negotiating and changing things up, which they are.

Nobody has any patience. Everybody so geared to quarterly reports. The Chinese think in terms of five years at the least.

After accounting for the impact of higher tariff revenue and the benefits of higher prices to domestic producers the study found the aggregate annual loss for the U.S. economy fell to $6.4 billion, or 0.03 percent of GDP.

Perspective please! We have a $22 Trillion GDP. I'm not losing any sleep.

At a minimum, Trump said, tariffs were “the greatest negotiating tool in the history of our country,” pointing to talks now underway with China which appear increasingly likely to result in a deal in the coming weeks.

He's practicing the American School of Economics instead of the Austrian School of Economics. I'll take the American over the Austrian every single time, and so should you. I'm not saying he'll do the best job of using tariffs, but tariffs, per se, definitely are not some inherently evil thing.

Concerned about the health of your tenants? How's the air-pollution, and what are you doing about it?

Last week scientists put the number of early deaths caused worldwide by air pollution at double previous estimates: 8.8 million a year, according to research published in the European Heart Journal, meaning toxic air is killing more people than tobacco smoking. [Source]

I'm surrounded by neighbors with old fireplaces, old wood-burning stoves, old fireplace inserts, oil-burning heaters, and who knows what else. When the temperature drops, the smoke greatly increases. No-burn days are not nearly good enough to stop it. They help, but simply don't kick in quickly enough.

Lately, we've had some of the worst air on the planet during our summers due to forest fires. Is really bad pollution going to become constant?

The freeway isn't far off and neither is the airport. The noise levels are unhealthy; but, when the air is still and cold, the jet fumes are much worse than the fireplace smoke.

Replacing heating sources and paying for fuel or energy can be a real difficulty. That's why I advocate government mandating upgrades and means-tested subsidies for the upgrades and clean energy.

We can pay now or pay much more later due to ill-health and stunted minds.

Tenant Pre-Screening Process

"The Compleat Tenant Screening Process: Pre-Screening," by Drew Sygit, is another good article, which overviews the pre-screening process.

I'm not comfortable ruling out people who don't make 3 times the rent and such, though. Some people are simply more frugal than others and can manage well and forever making only 2 times the rent rate. Consider the individual's prior rent payment history, which is often readily available from the prior landlord. Now, if you intend to almost constantly up the rent as much as possible, especially in a "hot" market, 3 times the rent would make sense.

The Hip New Teen Trend Is Leading the Climate Movement to Save the World [trend, no fleeting fad]

I marched against the Vietnam War in my teens. I really get these kids: "The Hip New Teen Trend Is Leading the Climate Movement to Save the World."

I've been an environmentalist all my life and no compromiser on it. However, the "system" always made it harder to function in everyday society while being strictly environmental. They literally stole the opportunity for electric cars from us when they yanked the EV1.

Thanks to this new generation, we're finally going to win. I will eventually be transported everywhere via non-carbon-burning means (unless we figure out how to sequester it all while also not polluting in other ways).

For a non-MMTer, David Andolfatto does an excellent job of defending MMT from the Chicago Booth Survey on MMT

David Andolfatto states correctly as follows:

Mainstream economists, like myself, like to point out what matters is not technical default but economic "default." An unexpected inflation whittles away the purchasing power of those caught holding old money as new money is printed to pay for whatever. I think it's clear that MMTers understand this too. This can be seen in their constant reference to an "inflation constraint" as defining the economic limits to government spending. [Source]

The Chicago School of economics is extremely libertarian-capitalist leaning. That they would design a survey on MMT without including MMT economists in the formulation of the questions is rather manipulative, whether intended or not, because they did get the questions completely wrong, as David points out very well.

"The Dangerous Absurdity of America’s Trade Wars," by Jeffrey D. Sachs [Close, and still a cigar]

Trump's secular error is not tariffs but almost exclusively taxes. There is no doubt whatsoever that trade deficits are fiscal deficits if the fiscal side is mismanaged, which it is. That is only made worse by imperialistic ambitions run amok for being win-lose propositions for everyone else, which Trump's typically are.

Jeffrey D. Sachs says the following:

A deficit on the current account is purely a macroeconomic measure: the shortfall of saving relative to investment. The US external deficit is not in any way, shape, or form an indicator of unfair trade practices by Canada and Mexico, the European Union, or China. [Source]

"The US external deficit is not in any way, shape, or form an indicator of unfair trade practices...." By itself, that's correct. However, unfair trade practices can still make the US external deficit worse and do. The fact that they don't necessarily have to doesn't mean they can't or aren't. Sachs has failed to think it through enough. He's only looked at it from one angle at best.

The reason Trump's tariffs on China haven't resulted in no deficits (trade or fiscal federal budget) is because of his stupid corporate-tax cut. The cut was completely misplaced. However, Trump's economic advisors knew that. They were deliberately misplaced so corporate CEOs and shareholders could be further enriched while Federal revenues shrink so the deficit hawks could call for more privatizations (to further enrich the top end of the private sector) and slashing of the welfare state (to weaken and hold down the bargaining position of workers).

The right tax cuts would have been to eliminate taxes altogether for those at the bottom and to increase those cuts until the economy is humming as a result, which it would. That would have further enriched the rich but not at the expense of anyone else. Trump probably knew that but wanted an immediate payoff to CEOs and others so they'd get behind him and want to donate to his reelection. He wouldn't have wanted to risk alienating them by running contrary to the privatizers' mindless, mind-numbing mantra.

The balance of Jeffery's article, which I didn't finish reading before writing the above, comes very close to taking my position. The real difference is the degree to which bad trade deals matter. I agree more with Trump as to degree but not as to remedies. Jeffery's heart is more in the right place.

China’s Still-Too-High Savings Makes China 2025 a Bigger Global Risk [Yes, but what about the rest of the article?]

I disagree with plenty of the fundamental statements/positions mapped out in Brad W. Setser's article, "China’s Still-Too-High Savings Makes China 2025 a Bigger Global Risk."

Here are my countervailing thoughts.

The tariffs are very low. The higher they go, the lower China will have to price its goods to export them. It knows that. That's why its negotiating so hard with Trump. That's why Trump is still in the power position versus Xi.

China wants to build more of what it is still importing because of the potential for US and EU sanctions. It wants to be a manufacturing and consumer economy at the same time. With the size of its population, it would continue getting considerably richer were it able to pull that off. The US is being much more politically competitive against China now, so pulling it off will be that much harder. The US will seek to undermine China's rise to US levels.

The idea that manufacturing more inherently means exporting less is nonsense. The entire economy of humanity would have to reach total saturation before that would happen. We aren't nearly there. Of course, there is the issue of the carrying capacity of the planet, but that's changed via human ingenuity and resulting technology, which isn't going to stand still.

China, under Xi, does not want to, and will not, "liberalize" its economy. That means it will not really move more and more toward the laissez-faire end of things even as it attempts to appease Western investors. Xi still wants to have his Marxist cake while eating his capitalist one. It won't work in the long run because it will be impossible for him to keep reasonably balanced even if he comes to rely upon AI, but that is what he wants and is insisting upon. A truly mixed economy is not truly Marxist. There's no way around that. Xi is simply being illogical.

The Erosion of Public Control Over Public Utilities [it's been costing us all dearly]

Real estate investors often pay a great deal to utility companies. Be aware:

... corporations have used their private market power to cheat the public. The most notorious episode was in California in 2000 and 2001: After California restructured its electric power industry, five generation companies dominated the in-state wholesale electricity market. Exploiting high demand and reduced out-of-state supplies of electricity, the “Big Five” power generation companies used their position to create an artificial shortage of power and raise prices to astronomical levels. At the same time, El Paso (a major pipeline owner) withheld gas from the California market. The collective exercise of market power transferred billions from Californians to generators’ and gas producers’ coffers, led to rolling blackouts, and drove the main utility serving Northern California into bankruptcy.

This chapter in California was extreme, but not an outlier. Since then, generators across the country have been accused of market manipulation many times.

Through their decisions, Congress, FERC, and the courts have neutered public control over public utilities. Instead of public regulators setting rates, the private discretion of sellers now governs markets for gas and electricity.
Given the importance of affordable and reliable energy and the existential threat from climate change, the public must reassert control over public utilities. The urgent need for transforming energy production demands nothing less. As a start, Congress should override judicial expansions of the filed rate doctrine and restore the full application of the antitrust laws in gas and electric power markets. Injured consumers and businesses should have the right to hold corporations to account for market manipulation and deter future misconduct, including the exclusion of cleaner sources of electricity. But this is merely necessary, not enough. The reassertion of public control will require other actions such as reviving public utility rules and replacing private ownership of natural monopolies with public ownership. [Source]

It's amazing how many "experts" are out there who simply don't understand MMT

Mohamed A. El-Erian joins the crowd talking about MMT in ways that clearly indicate that he doesn't understand MMT.

MMT isn't using recent history to develop MMT. Recent history is reflecting the reality of MMT.

MMT isn't an issue for Fed independence, because MMT is fiscally based, not monetarism. If we were to go full MMT, we wouldn't need a Fed, independent or not.

MMT doesn't abandon keeping inflation in check. It uses taxes to do it rather than interest rates.

MMT is an economic model, not a policy built upon itself. That said, most MMTers are progressive leaning. Very few, however, are socialists. The vast majority are mixed-economy academic economists.

The "public-employment as last resort" program idea is built upon MMT but isn't MMT, per se. There's the MMT model, then there are programs that are MMT-based.

Diplomacy: Can China See the Global Public Good? [Define good]

Democracy and human rights: At the time that China joined the WTO in 2001, it was rated “unfree” by Freedom House. Specifically, it earned a 7 on political rights and a 6 on civil liberties, on a scale from 1-7, in which the higher the number, the less free the society. Some who advocated engagement with China argued that the country’s integration into the global system would lead to gradual political changes. However, 17 years later, China has exactly the same rankings. China experts were skeptical right from the start that there would be political change anytime soon. However, as the economy became more free, it seemed plausible to some that there would be more scope for debate among academics and in the press, and that minority groups such as Tibetans and Uighurs would be given some room to practice their religions and preserve their cultures. To the contrary, the repression of scholars, journalists, Tibetans, and Uighurs has only increased over the past decade. China has made great technological strides in AI-enabled digital surveillance. Not only is it using this technology to control its people at home, but there is a growing risk that it will export these methods to other authoritarian regimes. [Source]

Even though David Dollar wrote that, he doesn't see opening China as a failure. That's because he lumps in a number of other areas that have nothing to do with freedom for the general public. However, look at the end of his statement about the lack of democracy: "... there is a growing risk that it will export these methods to other authoritarian regimes."

China's dictator, XI, has said that the world should follow the Chinese model. He has call democracy the enemy. We need to keep things prioritized correctly. David Dollar mentions the lack of democracy last. He doesn't mention it as a goal in his opening statement, as if we weren't told it was THE goal. We were told it was the THE goal, as without it, the vast majority of Americans would never have gone along with the opening of China in the first place.

It's quite clear that the US government said one thing and did another, promoted one thing but never had it as a true goal.

We are all paying the price for that now. It's a huge price that never should have been allowed to start.

China to vote on foreign investment law, which has zero to do with democracy enhancement

We were told in the US by fellow Americans that if we "open" China, China would become a democratic state. I didn't believe them then. Obviously, I was correct not to.

China was totalitarian at the time. It is totalitarian now. It will remain totalitarian until the Chinese People rise up for democracy. The longer they wait, the uglier it will be.

Trump's trade deal will not facilitate the Democracy Movement at all. In fact, it will make things worse.

Here we have the Chinese Communist Party with a pending law that does nothing but address "trade." Trade is not freedom for the Chinese People. It is not a lessening of tensions over the South China Sea or Taiwan or Hong Kong or anything else.

Continued "trade" will prolong the totalitarians' grip. That's not good risk management. That's helping excessive risk to become even riskier.

Capitalism and democracy: what if we have it backwards? [We don't]

I want to make clear here that I'm referring to capitalism in its true state, not mixed in with socialism. We have a mixed economy in the US right now. Which side has more power has ebbed and flowed for centuries. We are cycling back toward the more socialistic, the more democratic.

The problem with this article, "Capitalism and democracy: what if we have it backwards?," is that it is speaking at cross purposes concerning democracy. I mean it is misdefining democracy. It is conflating limited, representational government (with legislators bought and paid for by anti-democratic capitalists) with democracy. It's an age old problem.

Where's the instant recall of federal legislators when they don't keep their campaign promises to support progressive positions? What about the mass media owned by capitalist corporations that decide what the masses see, hear, and read? I could go on and on about it.

But if their position in the knowledge economy makes the members of the new middle class socially progressive, it can also make them less economically progressive, since neither their interests nor life experiences overlap greatly with those of the old middle and lower classes. Herein lies the primary reason why the rising inequality accompanying the transformation of capitalism has not been effectively countered by increased redistribution: the old middle class is hostile to the poor and the rising middle class is uninterested in the plight of the declining middle class—it is the workings of the democratic system rather than the political power of capital that is to blame.

Read what I said above about who controls the narrative or tries to. I add "or tries to" because people seem to be still hearing, seeing, and reading what they aren't supposed to (aren't supposed to according to those who don't want purer, more-direct democracy).

Another thing completely wrong with the article is the use of the terms "populist" and "populism" as synonymous with reactionary. The Populist Party of the US was decidedly left-wing. It was more left-wing than the Progressive Movement that followed. Bernie Sanders is a populist. AOC is a populist. I'm a populist. Most of the up-and-coming youth, urban and rural, are populists. The Green New Deal is populist/progressive.

MMT: More Green & Less Fear?

So, I consider this Logan Mohtashami article to be a hit piece. Here's why I take exception to his positions.

First, Stephanie Kelton may simply have misspoken about 50% being in poverty. Perhaps she was using a different level in defining poverty. We can't tell from Logan's article.

As for the jobs guarantee, it's not simply about addressing the unemployment issue right now but forever. Besides, there's much more labor slack than indicated in Logan's cited stats. People are underemployed. People are working part time when they want full-time positions. People are working multiple jobs at slave wages. The Green New Deal is designed to address all of that in ways Logan's just-more-of-the-same won't.

As for forgiving student loans, the Green New Deal is about providing free college. Why would we not be retroactive about that by forgiving loans? Would loan forgiveness be bad? If for-profit "colleges" was a large part of the problem, then that's the whole point about free public-college.

It would have been better for Logan to spell out his own ideology before condemning MMT and the Green New Deal. Who is he seeking to protect, whose profit that would vanish under the Green New Deal that would be much better for the whole and for everyone with a long-term vision?

It doesn't appear that he's very empathetic to the real pain and suffering of people right now who would be served by the Green New Deal in major ways.

Infrastructure around the world is failing. Here’s how to make it more resilient [I have a better idea]

US infrastructure was recently rated a D+ overall, with dams, roads and energy scoring some of the lowest grades. ...
The public sector should also consider monetizing existing infrastructure assets which have attractive investment characteristics (through leasing or sales to the private sector) to free up public sector capital for investment in new infrastructure. [Source]

No it shouldn't. The public sector should create the funds needed and without borrowing. It should not privatize a thing. We've had way too much of that. We don't need more tolls but more infrastructure free for everyone to use without charge.

China will not devalue renminbi to spur exports: central bank chief. Why China doesn't have to.

"Let me stress here that we will never use the exchange rate for the purpose of competition, nor will we use the exchange rate to increase China's exports or as a tool in handling trade frictions," said Yi. [Source]

He can say that because China can issue more debt and can lower prices. Besides, Trump and Xi will make a deal before long.

"It turns out Americans weren’t ready to become a nation of renters. Homeownership is back in." Not so fast.

This article, "It turns out Americans weren’t ready to become a nation of renters. Homeownership is back in," gives lots of good reasons people started buying. What it doesn't mention is that lending standards loosened again (perhaps too much) and that it won't be pretty if we hit another strong recession, which could happen. Also, rents are still outpacing what they ought to. I'm saying the country still isn't building enough rentals to make them, and to keep them, affordable over owning.

Lastly, there are still plenty of headwinds in single-family construction. Land, materials, labor skills, and equipment are all costs that vary but have remained high collectively. Skilled labor is still in short supply.

It remains to be seen whether buyers will have huge regrets. Many have already expressed at least some regret.

Ocasio-Cortez is speaking against anarco-capitalist-corporatism, not all capitalism

“Capitalism is an ideology of capital –- the most important thing is the concentration of capital and to seek and maximize profit,” Ocasio-Cortez said. And that comes at any cost to people and to the environment, she said, “so to me capitalism is irredeemable.”

Though she said she doesn’t think all parts of capitalism should be abandoned, “we’re reckoning with the consequences of putting profit above everything else in society. And what that means is people can’t afford to live. For me, it’s a question of priorities and right now I don’t think our model is sustainable.”

Instead of conservative politicians scaring people that socialism means the government is going to take over their business, “we should be scared right now because corporations have taken over our government,” she said. [Source]

What's call pure capitalism is irredeemable. Pure capitalism is unbridled, unregulated, the game of total monopoly played out in real life. Pure capitalism would result in the most unscrupulous person amassing a fortune such that everyone else would be literally owned by that one person. There would be no freedom as we think of it.

Pure socialism is zero private ownership, only collective ownership completely and purely democratically controlled.

Ocasio-Cortez is pushing for something between those two polar opposites: How much private versus how much public, how much non- or anti-democracy versus how much democracy?

She's trying to find where to place the fulcrum for the best balance.

She deserves a hearing. She is speaking for hundreds of millions, even billions, over many, many centuries, perhaps millennia. She is standing on the shoulders of giants.

Merkel's successor, Annegret Kramp-Karrenbauer, responds to Macron's Europe vision

"Europeanisation of social services and the minimum wage would be the wrong way", she [Annegret Kramp-Karrenbauer] argued. [Source]

Actually, no.

I disagree with Macron on a whole host of issues; but, on those two ideas, he's completely correct. Kramp-Karrenbauer is simply out to protect Germany's unfair and unmerited supremacy that's chiseled into the EU's terrible design.

I've always been for deeper European integration, just not on an anti-democratic basis. Right now, the EU is highly undemocratic. It is a technocracy of, by, and for the European elite.

Whose fighting the impacts of human-caused global warming while ignoring carbon burning?

Global-warming denial?

As they consider how to plan for and react to future weather events, the governor and fellow politically conservative members of the South Carolina Floodwater Commission aren’t quite ready to accept the general consensus among scientists that pollution and other manmade factors are largely to blame for climate change.

The commission’s leader, attorney and environmental professor Tom Mullikin said solving the problem can’t be derailed by what he described as politically charged debates over the cause. [Source]

Personally, I believe they believe it's human-caused global warming due to carbon burning. I can't prove it. It's simply my feeling. I see it as putting money over the environment and its negative impacts: very shortsighted and driving up insurance costs.

If we don't acknowledge the cause, we can't fix it.