Wednesday, September 26, 2018


By economic historian Martin Hutchinson

As President Trump imposes tariffs on China and elsewhere, much dark muttering is heard from the media and conventional economists about Smoot-Hawley and the 1930s. They are too gloomy.

Three developments in the last few decades have made it sensible to look again at this question. First, the inexorable growth of welfare states in every Western country, together with the increase in life expectancy, has destabilized budgets, making them impossible to balance. As a result, public debt which in the United States had fallen steadily since the end of World War II until 2000, has turned up again sharply and is inexorably increasing. The Obama administration and its overseas contemporaries, with their sluggish economic growth and phony Keynesian rationales for wasting money, have everywhere except Germany turned a difficult problem into an impossible one. Public debt levels everywhere except Germany are heading relentlessly upwards and will within the next decade reach historically unprecedented levels in the United States and several other countries.

The EU’s solution to this problem is an ever-escalating level of VAT. This effectively acts as a tariff, since exports are free from the tax while imports are subject to it. Thus, EU and British sanctimony about free trade is sheer hypocrisy. However, it also subjects domestic consumers to the VAT levy on items produced domestically as well as overseas, producing a highly regressive tax system that bears especially heavily on poorer consumers.

A second change since Smoot-Hawley is the spread of manufacturing capabilities to far more countries. Back in the 1930s, most products could only be produced in advanced economies that had undergone full industrialization. Other economies, often part of a colonial system, were mostly producers of agricultural and mine output, while importing industrial products. Only in a few sectors, such as textiles, was the industrialization process sufficiently cheap and simple to allow textile industries to develop even in poor countries.

Today there are over 100 different countries from which many products can be sourced, and the major centers of manufacturing capability have moved to emerging markets with lower labor costs. Consequently, trade has infinitely many routes it can take to achieve its objectives, and a tariff that blocks sourcing in one country still leaves a vast array of other sourcing possibilities open to the importer.

The third and most important change since the 1930s is the invention of computers, and more particularly the possibility of intelligent software that can track the trade barriers existing at any instant, calculate the optimal source for the components of a particular consignment of goods, then place sourcing and shipping orders to ensure that those goods are produced and delivered to where they are needed.

With the changes that have happened since the 1930s, the outcome of a tariff escalation today would be very different to that of Smoot-Hawley. At that time, if there was a high tariff against a particular import, there were few alternative sources of the item, and little ability to find out what the possibilities were. With intelligent software (which may still need to be designed for this specific purpose but is undoubtedly feasible with today’s technology) it will today be possible to find all the alternative sources of an item as well as the possibilities for substitutions of other items from other sources. Thus, an interlocking network of tariffs today need not be anything like as trade-destroying as was Smoot-Hawley. It will simply result in new routes being found for the global sourcing process that has grown up in the last few decades.

Tariffs today would thus kill much less trade than equivalent tariffs did in the 1930s and would have a correspondingly smaller adverse effect on the efficiency of the global economic system. Since more trade would remain after the tariffs, they would produce more revenue for the Federal budget, thus helping to balance it. Even a modest 10% tariff averaged over the current $3 trillion of U.S. imports would produce $300 billion of additional annual revenue for the federal budget, not enough to balance it but enough to make a sizeable hole in the deficit.

In addition, a world of tariffs would divert a considerable amount of trade towards domestic production, thus moving the U.S. closer to a balanced payments position and producing additional revenue from the people employed in the domestic production. Overall, with a substantial tariff, the U.S. tax system would be balanced between domestic production and international trade.

To the extent that tariffs deterred international trade which would otherwise take place, the lower domestic taxation and higher domestic production would encourage economic activity elsewhere. By ensuring that a higher percentage of world output was manufactured closer to where it was consumed, a tariff system would increase (not decrease as is conventionally asserted) the efficiency of the world economy. Global sourcing may have got easier, but it is still expensive, inefficient, time-consuming and prone to fraud.

Contrary to free-tradist thinking, the overall effect of a balanced and moderate set of international tariffs should not depress global GDP, indeed it should increase it because of the greater balance in the world’s fiscal system. There will no longer be corporate tax havens, because the tariff arrangements with such havens will generally be onerous, but there will be tariff havens, which have tariff arrangements that allow goods to move exceptionally cheaply between the different trading blocs.

When the “North American Free Trade Agreement” includes Canadian quotas on milk imports and a 218% average duty on dairy imports beyond those quotas, it is not truly a free trade agreement at all, as Richard Cobden would have understood it. Likewise, the proposed Trans Pacific Partnership’s imposition of $70 billion in U.S. intellectual property protection, far exceeding the free trade effect of the agreement, indicated that TPP was little more than a handout to the Hollywood and Silicon Valley lobbies. Quotas are essentially infinite tariffs; they block trade far more than ordinary tariffs, while intellectual property protections are impediments to trade, not enablers of it. All such quotas, bounties and trade regulations are sources of inefficiency that produce no revenue (or, in the case of bounties, consume revenue) and block economic activity. They should be swept away.

The regime under which we have been working is not one of free trade and has been grossly mis-sold as such. For fiscal and other reasons, we will be far better off with a world trading system that includes revenue-generating tariffs, which can be optimized and dealt with by high-quality software.  The world will be a happier place with less regulation, no bounties or quotas, and with openly disclosed tariffs, set at a moderate level.



America's Totalitarians

Today's leftists believe it is their solemn duty to take the country back even if our republic is destroyed

“We had to destroy the village in order to save it” was a quote popularized during the Vietnam War. Today’s Democrats, along with their allies in Hollywood, academia, Big Tech, and media, believe it is their solemn duty to take the country back from the “dregs of society” and their “ally in the White House,” even if our republic is destroyed.

And they’re increasingly embracing totalitarianism as the means to their end.

“I don’t use the ‘T’-word lightly,” writes columnist Sohrab Ahmari. “I’ve spent years pushing back against those who fling it about in free societies like ours. But totalitarianism doesn’t require cartoonish, 1984-style secret police and Big Brother. The classical definition is a society where everything — ethical norms and moral principles and truth itself — is subjugated to political ends.”

Political ends Democrats are willing to trash the Constitution to achieve. Sens. Chuck Schumer (D-NY) and Mark Warner (D-VA), and Reps. Adam Schiff (D-CA) and Nancy Pelosi (D-CA) are demanding that the intelligence community, the FBI, and the Justice Department defy President Donald Trump’s order to release unredacted documents to Congress until they are vetted by the so-called Gang of Eight, calling it a “brazen abuse of power.” Former CIA Director John Brennan insisted deep-state officials — unelected and publicly unaccountable officials — were obligated to “push back” against the order as well.

Congress has lawfully subpoenaed the documents, yet a defiant deep state has refused to release them for months, citing “national security concerns.” Those concerns have already been debunked on two separate occasions, including the wiretap warrant applications presented to the Foreign Intelligence Surveillance Court that ultimately revealed the warrant to spy on Carter Page was based on the Hillary Clinton/DNC-funded Steele dossier. Moreover, redactions made by the FBI removed critical exchanges such as this: Lisa Page: “[Trump’s] not ever going to become president, right? Right?!” Peter Strzok: “No. No he’s not. We’ll stop it.”

Trump initially ordered “immediate declassification,” but now wants the inspector general to review documents on an “expedited basis,” due to concerns about how it would impact the Russia investigation. Yet in a tweet he noted that he can still “declassify if it proves necessary. Speed is very important to me — and everyone!”

Indeed. The 2018 election is “not going to be just about economic growth and running on the economy,” Rep. Devin Nunes (R-CA) explains. “It’s going be about what the other side did to play dirty, to dirty up a campaign … by corrupting the FBI and the DOJ. That is important for the American people to know as we have to deliver that message going into October.”

Who’s going to deliver it? The New York Times reported that Deputy Attorney General Rod Rosenstein secretly proposed recording Trump’s Oval Office conversations and discussed the idea of Cabinet officials removing him via the 25th Amendment. Rosenstein insists he was joking. Times reporter Adam Goldman says otherwise.

The far bigger story? Rosenstein’s statements were reportedly corroborated in memos written by Andrew McCabe and given to Robert Mueller and kept at the FBI, according to the Times. Yet they were kept from Inspector General Michael Horowitz — while he conducted his investigation of McCabe? If Horowitz is corrupt, “expedited basis” becomes a meaningless term with regard to deep-state corruption impacting the midterm election.

Unfortunately, our law-enforcement agencies aren’t the only government departments where rank partisanship — bordering on sedition — exists. Last week Project Veritas released a trio of damning videos. One featured State Department employee and Metro DC Democratic Socialists of America (DSA) member Stuart Karaffa bragging about drafting DSA communications at work, and stating his mission with regard to Trump administration policies. “Resist everything … Every level. F—k s—t up,” he declared.

The second video showed DOJ paralegal and DSA member Allison Hrabar, part of the DSA group that harassed DHS Secretary Kirstjen Nielsen at a DC restaurant, bragging about using the department’s Lexis Nexis account to access home addresses of government officials DSA sought as protest targets. DOJ employee Jessica Schubel, former chief of staff for the Centers for Medicare and Medicaid Services, is also shown discussing her efforts to resist the administration as well.

In the third video, Government Accountability Office auditor and DSA member Natarajan Subramanian admits he breaks rules “every day.” He boasted, “If you’re in an executive branch agency, you can slow-ball things to a degree.”

Three of these subversives expressed one common belief best stated by Karaffa: “I have nothing to lose. It’s impossible to fire federal employees.”

The DOJ, the State Department, and the GAO are conducting investigations, but if history is any indication, Karaffa’s right. At best it takes on average from 170 to 370 days to fire a government employee according to the GAO. Appeals can drag the process out for years.

Columnist James Simpson optimistically notes there are bills being contemplated in both chambers of Congress that would “greatly streamline the process for firing employees who are poor performers, insubordinate, or otherwise engaged in misconduct.” Will they pass?

Perhaps Simpson hasn’t noticed that some of the nation’s worst government employees are members of Congress.

In fact, it’s impossible to imagine how much lower Democrats can sink than their Stalin-esque treatment of Supreme Court nominee Brett Kavanugh, or how much more spineless Republicans can get acquiescing to their contemptuously orchestrated delay. Sentient Americans know this spectacle has nothing to do with Kavanaugh or the increasingly dubious charges leveled against him. “From abortion to gay marriage, plus a host of less titillating issues, modern liberalism has lived by the Court,” Ahmari explains. “And liberals fear their cause will die by the Court.”

Thus, force-feeding their agenda to the American public — by any means necessary — has become the American Left’s modus operandi. Can’t win elections? Insist Russian collusion was to blame and demand an investigation, call voter ID requirements “racist,” or simply grant illegals the right to vote. Don’t like the current administration’s foreign policy? Undermine it, like John Kerry is doing with Iran. Can’t persuade an American public to embrace your ideology? Have your progressive tech allies censor opposing viewpoints or manipulate searches; transform college campuses and public schools into citadels of progressive indoctrination that breed contempt for the nation’s history, traditions, Constitution and its exceptionalism; and turn everything from entertainment venues to corporate business operations into platforms for progressive virtue-signaling.

It’s become clear that virtually every aspect of modern-day progressivism is driven by the same despicable delusions that have animated every totalitarian movement since the dawn of time:

Our cause is “noble” and thus, the ends justify the means.

The 2018 election will likely be one of the most clarifying moments in the nation’s history. Either an American Left whose “win by any means necessary,” Constitution-crushing proclivities — never more exposed than right now — will be rejected by the electorate, or the number of Americans poisoned by a corrupt education system has reached critical mass, and a majority of voters will embrace totalitarianism, destroying America in order to “save” it. Save from whom?




Yale Study: Twice as Many Undocumented Immigrants as Previously Thought in U.S.

A new Yale study has concluded that the population of undocumented immigrants in the U.S. is close to double the generally accepted estimate.

The population of undocumented immigrants is widely thought to be around 11.3 million. But the study, which was conducted by three Yale-affiliated researchers, indicates that the total may be more than 22 million. Even the authors were surprised by their findings.

“Our original idea was just to do a sanity check on the existing number,” said one of the study’s authors, Edward Kaplan, a professor of operations research at the Yale School of Management. “Instead of a number which was smaller, we got a number that was 50 percent higher. That caused us to scratch our heads.”

“There’s a number that everybody quotes, but when you actually dig down and say, ‘What is it based on?’ You find it’s based on one very specific survey and possibly an approach that has some difficulties. So we went in and just took a very different approach,” said another of the study’s authors, Jonathan Feinstein, a professor of Economics and Management.

To arrive at their estimate, the authors used operational data such as deportations and visa overstays as well as demographic data such as death rates and immigration rates.

“We combined these data using a demographic model that follows a very simple logic,” Kaplan said. “The population today is equal to the initial population plus everyone who came in minus everyone who went out. It’s that simple.”

“The analysis we’ve done can be thought of as estimating the size of a hidden population,” he added. “People who are undocumented immigrants are not walking around with labels on their foreheads. . . . There are very few numbers we can point to and say, ‘This is carved in stone.'”

The researchers said their goal in crunching the numbers was not a political one.

“We wouldn’t want people to walk away from this research thinking that suddenly there’s a large influx happening now,” Feinstein commented. “It’s really something that happened in the past and maybe was not properly counted or documented.”



A dash of reality from Britain's "Daily Telegraph"

A history lesson for those who would smear the moderate Right: the Nazis were socialists

By Norman Tebbit

The [Leftist] New Statesman magazine has become rather unsettled in recent weeks about what it describes, on the front page on September 14, as "the far Right wing rising again", and "the return of fascism".

Those headlines were printed across the cover picture of a huge Nazi rally of steel helmeted men. There was not much inside to back up the scary front cover.

Indeed, inside the cover story had the headline "The Dark European Stain" but the author, Thomas Meany, seemed to pour cold water over it all.



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