The Rabid Independent, Nonpartisan solutions, independent policy ideas

A Review of the Power of the Trump Taint

I wrote some time ago that advocates for fair trade and reduced immigration may not see any of their goals achieved. These issues were just too connected to the vile President. I’m happy to say that so far that’s proving not to be true. Third parties including Dems and academics are or were unrelenting in the blows against tariffs – for example. Immigrants at the border were being put in cages like animals!

It seems that Peter Navarro et al have given proper exposure to trade crime. In fact, the media has sort of grabbed onto the story as good entertainment. Netflix has a series called Rotten that is supposed to be about (food) trade crime in general but it turns out to be all about the criminal behavior of the Chinese. I don’t think there’s a politician or economist left who is denying (anymore) that the stealing of intellectual property is a huge problem. The cries heard around the country about the horrors of tariffs have withered as it seems their impact is de minimus.

Which leaves us with immigration. For some time Trump seemed to be really blowing it. His people seemed to have no idea how to handle the mess at the border. I have long said that most Americans don’t really like big new illegal arrivals from Mexico. It’s just not in people’s nature to let in masses of people who don’t look and act like them. There may be many politicians who run to an open-border policy because it seems more sympathetic, more caring, but they rarely take the voting masses with them. Goodbye Julian Castro. Goodbye Beto. I think people just want this issue to go away … and it has! All the central American refugees are stuck getting processed in Mexico City. I don’t think anyone is unhappy with the status quo. As long as there are no more stories about people in cages or children getting separated from their parents then this issue will die.

It seems proven that these two issues will continue to go the Trump way even after he is gone. Besides these two, Trump is wrong about everything and he is distinctly unpresidential. The Democratic candidate has only two things to do – embrace Trump’s position on the above and then act more Presidential. Throw in better healthcare and this should be a walkaway.

But this part of his legacy will stay intact.

The Buck Stops Here

It sounds like such a strong statement:

“I take full responsibility for what’s gone on here”. My mind goes to an out of control fraternity party where the president of the house takes the fall so his frat can stay alive. He may logically get suspended or expelled. The house is saved… rah-rah.

But what does it mean when the (ostenible) King of Saudi Arabia says “I take full responsibility for what happened to the journalist, Jamal Khashoggi “. He said just that to a 60 Minutes reporter during an extended interview and then she asked him “What does that mean?” There was silence and then she just moved on. She should have stayed there and pressed him. If Khashoggi was murdered then Mohammad bin Salman should be tried for murder – that’s the only thing that “taking full responsibility” can mean! What he really means is “I’ll slap some wrists and tell you (the west) it won’t happen again – not nearly good enough.

In the midst of the Iran-Contra uncoverings, Ronald Reagan (senile as he was) went on TV to say he would take full responsibility for the crime but did anyone actually believe that he would go off to jail in the place of the eleven who were convicted from his administration? The words sound tough and self-sacrificing but they mean nothing because they have no meaning in a court of law. This is not A Tale of Two Cities. Every time we hear this ridiculous expression we should rebel. Journalists should not let it go until they find out exactly what it means. In both cases, the best they’ll get is an intent to resign, if their people committed a crime. Do you see MBS actually stepping down from his throne?

One thing’s for sure – we’ll never hear Donald Trump say this. He will find someone to blame every time which is why he needs to replenish cabinet positions. Finally, we have a scandal where all the evidence is directly related to Trump. There was no intermediary called upon to make this Ukraine deal. Sure Rudy may have made it worse or piled on. He can be taken out like Michael Cohen. Even the repulsive John Bolton saw the criminal activity and got out of Dodge. A pure sycophant – Mike Pompeo, got sucked into the vortex.

I guess I should be happy that I don’t have to hear Trump utter those words. The House can attack the perpetrator and the crime(s) doesn’t involve underlings. It is finally true that the buck will stop at the top.

Social Credits

There is an episode of Black Mirror where everyone is measured by their social media likability score. If you ever get angry or express dismay towards a stranger then your score can fall and suddenly you won’t be provided with corporate discounts or common social courtesies.

China is implementing almost exactly that system and it will be finished next year. At that point, (for example) your score will improve if you complement President Xi on Instagram and your score will drop if you say – jay-walk. This is where hi-tech meets totalitarianism a la 1984.

What you may not know is that they are also implementing a corporate credit system as well. If a company gets caught cheating on its taxes then its score will decline. If it finds a way to export its goods to the US then its score will go up. I presume the government can reward a company by supplying it with cheap or free electricity or cheap bank loans.

US companies doing business will also get scores as will Chinese companies operating in the US. It is therefore easy to see how a US company’s behavior will be affected by what the Chinese government’s rating system says!

I’ve ranted for years about how we should disengage from trade with China since they are trade criminals plain and simple. Do we need another reason?

Do wealth taxes make sense?

Thomas Piketty has a new book out where he advocates a 90% global tax rate for billionaires. Elizabeth Warren recommends a 2% tax on all wealth above $50mm. They are dying to solve a problem by attacking the effect not the cause. Poor wealth distribution is an effect, not a cause. Wealth concentration happens when capital returns are high. That means there is a relative shortage of capital compared to what must be a surfeit of labor. Why should we blame the capital owners for such a circumstance? We can and should enforce monopoly laws more seriously so we avoid the concentration of just a few companies in a particular business. Does congress have the power or nerve to tell Wall Street that the next giant merger they’re planning is a no-go? (Apparently not). If they did, that would help a lot. We don’t need to whine about Google’s market share – there are many industries with only two sellers and we see oligopoly style pricing. Mergers are bad for competition and (consumer) choice. Breaking Google or Facebook in two would worsen both industries, from a consumer perspective. The White House has found the exact cases that we don’t need to attack.

Increased business competition would help but it would not change the global labor surplus problem. If production were more local and less global – just a little, then labor would have more power. If a product was once produced locally and is now imported then those goods must be taxed – yes a sales tax or a tariff. That new revenue must flow directly back to the damaged locations that lost jobs by virtue of this production transfer. We must make it harder for companies to access cheap 3rd world labor. If they respond with better technology that requires less labor then so be it. At least that technology was created here.

Rogue states that steal IP or block our imports must be cut off in a rather severe manner. Appropriate quotas or tariffs must be introduced gradually. We have let this mess grow for 25 years (since we gave China MFN status) and it has infected virtually all aspects of our economy. The first thing to do is stop its growth and from there roll back the infestation – gradually.

Where does Pickett address the global labor surplus? Perhaps he thinks nothing can be done about it. Warren seems to have no clue about the cause of poor returns by labor so she attacks capital owners as though playing Robin Hood will win her the nomination. Robin Hood was a thief and so is Warren if she taxes, again, income that has already been taxed.

Summer Musings

We are a country of immigrants.

This stupid tautology is being recited on every news channel along with the poem from the Statue of Liberty as though it clears up all aspects of immigration policy.

It doesn’t.

If I start with a huge piece of empty land, cleared away of previous inhabitants by smallpox and then populate it with non-first born people from the UK then I will eventually reach some sort of equilibrium. Then allow me a war with Mexico and I/we’ll have more land to work with so we can keep the flood gates open, more or less. New arrivals were always more comfortable with fellow Englishmen. They let in other Europeans begrudgingly with close attention always being paid to economic conditions. At various points in time they/we slow down the rate of acceptance and that’s the part that is never mentioned by these open border nuts.

We have the highest level of foreign-born people since 1910 when the US virtually closed its borders. Allowing in more people is fine, but as we have done throughout history, moderation is appropriate after big new inflows. Give us your tired and poor but allow us to schedule their admission.

Do we need more evidence that China is not a friend?

Are you following the events in Hong Kong? Have you read the Chinese propaganda that says that we are planting protesters (CIA infiltrators) amongst the rebels. They have photoshopped images of Americans in the crowd in HK. From their point of view, the enemy is obvious – it’s us. So after ample evidence of trade crime and now this, we still have China defenders (mainly Democrats) saying we should treat them like an ally (??).

Can we please just stop all association with them. They are not cuddly teddy bears who need a little love. When will we get the message?

What if we turned our attention to other countries regarding currency cheating?

Have you noticed how our trade imbalance with Japan never goes away and their currency falls no matter what? Similarly, India’s currency can be surprisingly stable in spite of a volatile trade account with consistent trade surpluses. They are both (obvious) currency manipulators. If a country is devoted to running a trade surplus with us then they have to do whatever it takes to sustain that condition. Block imports by a whispering campaign so the WTO can’t hear and at crucial times stop your currency from rising materially. Everyone does it (except maybe Canada and the UK).

A new retweet rule.

If you retweet something then you are now obligated to stand fully behind what it says. You shall not be given the latitude to say well “it was just a retweet”. That’s like passing on gossip and blaming the person you heard it from for the content as though that fully exonerates you. It doesn’t and retweeters must not be allowed to get away with retweeting (say) Alex Jones and then pretending that they don’t really know who he is and that none of his stupid conspiracy theories ever prove to be true.

Can you think of anyone who does this?

Sundry Musings

Here a few thoughts and questions that I can’t figure out. Feel free to offer solutions.

  • The Golf of Hormuz Resolution. Yes I know there isn’t such a thing but I am replacing Tonkin with Hormuz to make a point. Does anyone believe the Trump statements that Iran attacked Japanese oil tankers, with mines? Why would they do that – because they want a war with … Japan? Please, I beseech you, watch this video:
  • Why don’t the Toronto Raptors offer parades in Montreal, Calgary, and Vancouver? If they are the national team and they want to sell merchandise then include the rest of the country. Their support deserves a parade with the players in attendance.
  • Why don’t the Democrats set up a telethon with all their candidates on stage to raise money to improve conditions for illegal aliens who are sleeping on the floor in cages? Everyone gets a toothbrush! It would be a great use of 25 unknown people dying to be onstage- answering phones.
  • Elizabeth Warren needs to remember that George Bush (#2) won the election in 2000 (sort of) without offering any new policies of consequence. Yes, policy ideas are great but in the end, you won’t pass any of them so you need to appeal to people’s (apparent) need to like you. Someone give her a joint.
  • The women’s movement should be careful about their support of the women’s national soccer team. They are correctly arguing that tv ratings are just as high for their games as they are for the men’s team – so they deserve equal pay. Sounds fair to me. It also means that women playing every other sport from tennis to golf to swimming should receive a fraction of what men get. Did you see the empty seats for the women’s semifinals and finals at the French Open?!
  • Can someone tell me what they teach these days in economics? We used to believe that profits led to investment which led to higher wages and lower unemployment. We now have huge companies accumulating profits and doing nothing with them. It makes sense – if you’re already employing (mainly) foreigners and NOT building anything in the USA then you start to build up cash. Your loyal American customers are useless as employees (apparently). Manufacturing wages are falling yoy with an unemployment rate of 3.6%. Apple has $245bn in cash on hand. Throw out all those textbooks.
  • No matter what the Democrats say and do it just sounds more credible to proclaim that new tax cuts will feed back into a stronger economy (even if they don’t pay for themselves) than the Dems saying free healthcare for all and no more student debt ever again! Giving stuff away sounds less responsible than reducing tax bills. They need to find a way to make this sound like they’re not just huge giveaways to various subsets of society.
  • I’m sorry Mr. Coates but you’ll never sell the idea that I or my children owe you money because of the sins of slaveholders 150 years ago. Yes, Jim Crow laws carried on the tradition of discrimination against blacks – in the Confederate states. Try suing them. The more ridiculous your demands- the less likely you are to be taken seriously. Start small – ask for free college tuition for all African Americans. Please stop asserting that all positive economic activity is achieved by virtue of treating blacks poorly. It will never sell.

Trade as a weapon

We are told that tariffs are terrible because our consumers must pay them – not our trading counterparts. We are never told that there is a huge disincentive to pass them on. Usually there is a domestic alternative that looks suddenly rather cheap. If the foreign producer raises their prices by the full 25% tariff then much of their business will walk away.

We are also told that the adjustments we must make to our supply lines will be very inefficient. We must stop sending those cars to Mexico for rear view mirrors because there is a super cheap supplier of mirrors there. We are so in love with cheap imported goods that we can’t see their destructive impact on American jobs.

So why is Mexico freaking out over the loss of exports while our experts tell us that it doesn’t matter if we ever export anything to anyone?

The answer, of course, is jobs. Mexico looks at exports as job creators just like China does and Taiwan and Singapore and South Korea. We used to call them Tigers because they had discovered a miraculous way to get out of poverty and reach first world wealth levels. Well, there wasn’t any magic to it. All they did was sell everything they could to us and buy nothing. In return, they got jobs, jobs, jobs. Initially they sold cheap toys but eventually, it became Korean cars and Taiwanese computer parts.

Mexico was late to the game but it figured it out eventually. They know that the Trump tariff threat would destroy the plan so when he threatened, they responded – immediately. Chinese consumers and businesses are certainly less well off when they can’t buy (say) Microsoft products. They must use some inferior local product. Are their economists whining about poor efficiency? The consumers of Mexico are most certainly worse off when their government focuses all their attention (subsidies) on exports but the low unemployment rate is a perfect salve.

We hear a lot of talk about how global economic prosperity is rising and the reason is entirely because of these mercantilist policies in Asia (including India and Japan). We are their patsy.

Mexico has sent its motley national guard to its southern border. Is there anything else you would like Mr. President?

The Necessary Costs of A Trade War

I am still a big fan of a trade war with China. In fact, I think it would be better if we had no economic relationship with China at all. Yes, we would lose a cheap producer of consumer goods but the costs of such outsourcing are massive – not to the economy per se but to the wage structure and the subsequent destruction of our middle (and lower) class.

In the short run, the costs are evident and the benefits are invisible. If virtually everything at Walmart suddenly goes up by 25% and that’s where you do most of your shopping, then you’re going to take a big hit. We have grown far too dependent on Chinese peasants to make our clothes, toys, drugs, and electronics. We have become hooked on this cheap stuff like a drug addict. A proper policy would take the revenue from tariffs and pump the money back into lower class pocketbooks. Call it a Chinese Tariff Bonus. People won’t be so offended when they see their Walmart bill for those new clothes.

In the long run, companies will have to take into account this tariff so they’ll consider producing these goods in the USA (Dare I suggest something so anachronistic!) All this would be better if every other country in the developed world imposed the same tariffs. Otherwise, China will try to get around this problem by shipping through Singapore or Mexico. They’ll go on trading with the EEC and stealing their IP (which may include some of ours).

China is an evil economic enterprise completely disinterested in anyone’s welfare other than their own. They don’t set up trading partnerships unless it benefits them, not because they’re in a race with us to garner international favor. If they run a deficit with a country it’s because they are desperate for their coal or grain, not because they want to be friends. We (on the other hand) enter into countless trade agreements that are against our economic interests so we can use those countries for military bases or help them become more politically stable. (Why else would we bother trading with Peru or Haiti?) China trades with Mozambique so it can raid their mining industry. It uses Italy as an offshore leather production factory.

We seem to be uniquely interested in overall economic efficiency and being nice to small poor countries – the rest of the world uses trade to directly boost jobs. We can debate this among ourselves but if you care at all about our disastrous income distribution curve then you must accept the approach of the rest of the world and be prepared to accept a loss in efficiency. Trump is too stupid to understand the efficiency argument so he has (correctly) happened upon the latter approach.

Now, if only he could understand how to wrap it in a fully developed policy.

Five Quick Rants

  1. Unshaven Men. Yes, it’s the new fashion brought to you from Silicon Valley where looking unkempt is a statement of one’s intensity. You’re so busy you don’t have time to look in the mirror. Sorry, sir, you’re not a super-coder, you never were. For those over 35 where white is your dominant beard color then you need to get a grip. Your growth looks hideous. Think David Stockman

Does he own a mirror? I especially hate it when actors are cast in period pieces when beards were out of fashion but the actor has a 2-day growth- hoping that viewers won’t notice or know the difference.

2.  The Magical Word SO   Must we all start sentences with the word so? It should connect one idea to another not start a thought. Apparently, this too is a Silicon Valley thing. It doesn’t make you sound more authoritative or logical unless there is a preceding supporting clause.

3.  Whispering Why are Hollywood actors all whispering as though someone is listening nearby and they don’t want to be heard. Try watching the two lead characters in Billions or Keifer Sutherland in Designated Survivor (or pretty much any show he’s ever been in). Are we to believe that nothing said out loud matters much unless the character is whispering? Speak up! I can’t hear you.

4.  Why Trump Won  When pundits are asked why Donald Trump won they often begin with – his effort to be a populist, but reason number two is “Hillary was a flawed candidate.” Then they go on to say how he will win again; they just know it. Therefore if we replace Hillary with someone with fewer or no deep flaws, the Dems can win – right? Now the pundit must assert that all those candidates are more flawed than Hillary and Trump, which they are not asked to do. The new assumption that Trump will win again in spite of terrible ratings is by no means a given especially since Hillary is gone. We also know that Russia helped a little last time. Can we assume they won’t be able to do as much this time?

5. Bills That Will Never Pass Can we stop discussing bills that will never pass like the Green New Deal or free tuition and childcare for everyone. The Senate will never let them happen. We can just change the discussion to: “Which Presidential decrees will you use to invoke policy?

Poetic Justice

The Democratic party has become the party of open borders. All their rhetoric says – “show compassion, let everyone in.” When they are asked if they are in favor of open borders, they deny it, knowing it would be political suicide but each time a person is denied entry or treated inappropriately they defend their right to proper treatment as though they are all American citizens. The compassion is good, the policy, or lack thereof, is pathetic.

Republicans talk about reducing immigration but do nothing about it because the dirty details don’t look good on the front page (and big business loves cheap labor). They can pass new laws reducing quotas but the problem with illegal immigration is that quotas mean nothing. Many pundits recommend solutions that include the elimination of chain – migration and the reduction of H2-B visas but they never get their hands dirty presenting solutions to say 500,000 Central Americans arriving en masse.
(If Trump is in favor of lower immigration then he should be reducing entries not allowing more of them!?)

The real problem is that Central America is a mess and these people are on the move. They have great reasons to come and most are legitimately seeking shelter for political (not just economic) reasons.

Now that there is a record number of people pushing at the southern border, we must address the issue that no one ever discusses – what do you do with them all? You must either let them in (old style) and then pay little attention to what happens to them or – you get mean. Donald Trump has sold himself as mister tough with regard to this issue. His base would never allow for the old style solution. That means you have to put them all in some kind of semi-permanent camp – as in a Palestinian Refugee Camp or Syrian camps in Turkey – with tents and barbed wire and plenty of poverty. I guess we can set ours up in some scrub desert land in southern Arizona.

This would be a bad look for the USA, the country of immigrants. Maybe we could find another country willing to “house” them for us (for a fee) sort of like what Australia does, sending most of them to Nauru and Papua New Guinea. No matter where you put them, there will be squalid conditions and lots of barbed wire. The (liberal) press will eat this up as material to attack Trump while offering no solutions themselves.

For now, I love the fact that this mess is being handed to Donald Trump – an idiot with no plan who likes to proclaim that he has it all figured it out. He must now live up to his tough rhetoric or go down hard. First, he’ll add a few troops but the buildup will become too big for them to handle and there are a lot of holes. His wall is beginning to look quite reasonable.

It’s also a great test for (pro) open-borders Democrats. Do they want to let all these people in, so “they can do jobs Americans won’t do.” It’s good that Obama just released a quite rational statement against open borders as did Bernie but we now must deal with the repercussions. It’s time for us all to get our hands dirty (or not). It’s easy to feel compassion for small groups of people but we lose sympathy when the numbers get very big. Such big numbers are no longer theoretical. The solution does not depend on legislation – it never did since no one wants to be the guy who prescribed (in a bill) walls and camps for hordes of illegals.

If you believe in borders then you must also accept walls, tents, barbed wire, and poverty. If you can’t then confess, you’re in favor of open borders.

Fair and Unbalanced

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