Trumps Trade War - Still Easy To Win? by Walrus.

I have stated before that free trade is a good idea that enriches all participants. I think I understand that President Trump does not agree.

His latest tweetstorm on the subject seems to me to contain an element of desperation. Each tariff  he imposes stimulates a new Chinese response.

But wait! You say, what about all those new American jobs? Surely that’s a good thing? Sadly it ain’t because you lose jobs in areas that can no longer compete because of higher local American input prices.

Then of course there is the job loss caused by China refusing to buy American agricultural products like soybeans. AhHa! you say “but the government can compensate the farmers out of tariff revenue” Of course this is true, but you have just allowed the Federal Government to set a proportion of farmers income. Guess how well that works?

The direct job losses are only a first order effect and the need for farm subsidies is a second order  effect. You will see more of those second order effects shortly - government subsidies to folks injured by our trade war. They cost lots of money and take oodles of public servants to administer. Then add in the lawyers and slime balls gaming the system and you can have some real fun.

The real problem your children will see are the third order effects -  loss of competitiveness, stagnation, poor exports. You will have jobs but they won’t pay very well. This happens for a simple reason; if you are the manager of a business protected behind a tariff wall and you want to raise profits you have two choices; invest in R&D, buy new plant and equipment to become more efficient or lobby Washington to raise tariffs 5%. Guess which option is cheaper and faster?

I lived in a protected economy. You get frustrated by seeing cheaper and better products available overseas while you are constrained to buy expensive shoddy local product, it takes about 20 years to reach that point.

Its rather like drug addiction; the initial high, then larger and larger doses to keep “up” then the gradual health decline as the drug use affects the body. Good luck with being a closed economy, you are going to need it.

P.S. All that stuff about stealing intellectual property is puffery. We all do it, any way we can, as much as we can. China steals from us. We steal from China. Who cares?

Comments

[turcopolier]

John Minehan
That is true but their logistical sustainment skills were appallingly bad.
everywhere they fought for extended periods they starved and died of disease in droves.

[confusedponderer]

Fred,
I have a proposal for the canadian value added. Actually is quite simple:

The canadian value added is China getting soy beans without that arbitrary penal tax ... tweets ... ejected by Mr. Trump on one of his worse tweetery days?

You know, in such trade wars, just as in more physical wars, the nother side shoots back.

And as far as "free trade recession" goes, maybe we in the EU or Germany have that, maybe not. We'll see, and we are not careless (hopefully) or (certainly not) arbitrary in that.

Now look at the US for a change:

Trump is gambling with the US perhaps getting a "arbitrary penal taxery trade recession", which - if his rather vicious attacks at the Fed and its chair are an indication - a thing Trump is apparently afraid of.

I read that Trump has delayed the time his latest China penal taxery goes off for a few months.

Reason? Nah, there's not reason at work. It likely is vanity:

Likely he IMO did that so that the prices of all the things the US (need to) import from China won't rise before christmas and so that he'll avoid having driven away supporters by hurting their purse (and likely for some of his supporters their purse is almost their heart - likely be a thing Trump can empathise with).

But then, it is as with his new friend Boris Johnson - Brexit is an easy peasy thing (never mind that odd Yellowhammer plan for the worst) - and for Trump, Pence and Navarro trade wars, especially with China, are easy peasy to win.

It's all just like playing ball in the kindergarten, all easy peasy.

But then, even kindergarten is not without risk: I iirc hit the first time another person then when a loon boy suddenly started to strangle my sister. Then he stopped immediately and was as surprised as I was.

Alas, let's have fun - scream Geronimo! and jump out of the aircraft, hopefully not forgetting the parachute - and that's for Johnson as much as for Trump.

[Jim Ticehurst]

A Army Officer gave me a Nice Push Dagger that his Moro guide had given him During WW2.....It looks Persian …. Nice Teak wood sheath...

[walrus]

Yes I know that Anon. They even added melamine to baby formula so that it appeared to meet specifications, killing thousands of Chinese babies as a result. There is very little the Chinese won’t do to make a dollar.

What I said was that if you insist on good quality from China you will get it. The fun and enjoyment in this game is how you “insist”.

[John Minehan]

From what I've read, being able to continue the mission under appalling conditions was a big part of their military ethos.

Having that level of discipline and training is a good thing, lack of concern for Soldiers as an assumption is not.

Good point.

[turcopolier]

John Minehan

Spare me the hoo hah BS about how tough you have to be. I am an SF man. I know how tough you have to be. Soldiers who are not fed, clothed, medically treated and re-supplied LOSE. Operational imaginings are nothing without sound logistics. Conventional forces like the IJA in WW2 are inherently vulnerable if not well supported logistically. Their early victories against the US and British Empire did not require prolonged fighting and were against ill prepared opponents.

[Fred]

CP,

Believing it is all about money has been a sacred belief of the left long before "Don't Think an Elephant" came out. To quote Pascal "The heart has reasons that reason knows nothing about."

[John Minehan]

Actually, that's my point.

The Japanese Empire had great, well-trained, disciplined troops. But you do them a vast disservice if you don't give them the tools they need to succeed, the logistics support to sustain ops and the equipment they need to sustain their training advantage and turn that into beating the enemy.

Two seemingly divergent points by GEN Patton sum it up, “A pint of sweat will save a gallon of blood” and his idea in War As I Knew It, to have the Infantry carry as little as possible in the attack and trucking in what they needed after the fight.

Training people to operate under the worst conditions has great training value but it is not something that is an end in itself. The end is winning and logistics is a big part of that.

[different clue]

The Age of Trump will be very valuable in that it will force all kinds of people who never wanted to understand things like "trade" and "economics" to begin to have to do so. Maybe even begin to want to do so.

And those who are already interested in these things might begin digging around for many neglected sources and much neglected wisdom. People might begin studying past periods of success to try really understanding what made those periods successful. Perhaps recovering and relearning and re-doing what worked in the past ( where suitable) might become as respected as forever inventing something new.

What is the opposite of "innovation"? Is there even a word for it? Perhaps reverse-innovation might become so important and useful that a word will be coined for it; a word like "retrovation" perhaps.

[catherine]

''And with 7 billion plus people "American" companies will always find lower cost abroad.''

It wouldn't benefit them to chase the lowest cost labor countries if the price 'leveling' plan was instituted.
Just this week Africa was declared 'free trade zone' for importing into the US. The multinationals will be all over that cheap labor market like a herd of locust.

We cant control where companies the US buys from locate but we can make the rules for importing into the US.

[catherine]

Why not something like that for state and federal purchasing? Maybe based upon percent of non-domestic content''

You've got the idea. Paper products would be no problem but other things like uniforms, clothing would be because we no longer grow
enough cotton crops and even synthetic fabrics usually contain at least a percentage of cotton....most of it is imported from Egypt.
BUT...even that could change. Two young fellows a few years ago found and rehabbed a small old cotton gin mill in NC and started buying cotton from a few farms that still had cotton fields...they started making T shirts and have a pretty good cottage industry now of both individual and commercial customers.
There is plenty of entrepreneurial spirit left in Americans if they can just get a level field to compete on.

[John Minehan]

"And those who are already interested in these things might begin digging around for many neglected sources and much neglected wisdom. People might begin studying past periods of success to try really understanding what made those periods successful. Perhaps recovering and relearning and re-doing what worked in the past ( where suitable) might become as respected as forever inventing something new."

"What has been will be again, what has been done will be done again; there is nothing new under the sun." Ecclesiastes 1:9

[different clue]

Though there can be new-ish versions of the old things been and done, re-adjusted for new-ish versions of old situations.

Still, there is much scope for useful retrovation, and much retrovation to be done.