Sunday, March 04, 2018

Trump's "trade war"

I have hesitated to comment on Trump's plans to put import duties onto steel and aluminium  -- but his plans have so few defenders that I think I should point out a few things that are being overlooked.  For a start, this is NOT a great departure from normal GOP thinking.  George Bush II did the same for a time. The steel business is a chronic political problem worldwide. I will say why below. And there is certainly nothing new about this from Trump.  He campaigned on a policy of using tariffs to protect American industry. So he has a very clear mandate for what he is doing.  And his rationale that small price increases on consumer goods are worth it to save communities applies here.

And Trump's own comment that trade wars are easy to win is instructive.  It suggests that his tariffs are just a bargaining tool and a temporary one at that.  So any long term damage is avoided.

And what about political damage?  He is such a big winner there that he could well be prepared for substantial damage in other directions.  The working class liking for Trump could now well become ecstatic in many quarters.

But to get back to economics, this is a well-known problem.  It is known as a "dumping" problem and Trump is being perfectly orthodox about it.  A dumping problem arises when a country produces more of a good than can readily be sold. And steel is almost continually in that situation.  Because it is such an icon of industrial maturity, almost every country everywhere wants to have a steel mill and governments everywhere support the building of them.  So steel is chronically in glut, oversupply.  China has a big surplus but so does Canada, Europe etc.

So what to do when nobody wants to buy your product?  Easy!  Discount it.  But you have to be careful about doing that or you may be selling your product for less than it costs to make. But with government support your home market is captive so you apply discounts only to stuff you sell overseas, leaving your home market as a survival revenue source.

So if China were selling Americans Chinese steel for less than it costs to make, you might think Americans would celebrate:  China is giving us a gift!  And some economists think we should look at it that way.  But nobody does. The Chinese steel will now be replacing steel made in America and the American steel millers will be up in arms.  They will demand that their government put a tax on all the imported steel so that any discounts are cancelled out.  And that is basically what Mr Trump is doing.  He is keeping out all that foreign steel so that American steel millers can sell their stuff.

But there are problems.  China has in fact been quite restrained and has not raided the American market.  It is those nice Canadians who sell most of the "foreign" steel marketed in America.  Do we really want to shaft them? If we do they could retaliate. They could, for instance, buy their military aircraft from Europe rather than America.  They have already cancelled their F35 order and the Super Hornets could be next. And the latest Saab Gripen E would make a very nice alternative.

But Trump is undoubtedly cooking up a deal of some sort so we will have to wait and see.  My best guess:  He will be "persuaded" to replace his new tariffs with a system of national quotas -- with the largest existing international suppliers getting the biggest quotas and the smaller suppliers getting no quota at all.  Good for Canada, bad for China, only a little bit bad for American consumers, great for the mid-terms.


Ideology and Political Divisiveness

What Robert Higgs says below undoubtedly explains part of the problem but I think there is a lot more to it. I think we are looking at a change primarily on the Left. They have drifted Left almost to the point of insanity in recent years.  Reality no longer matters to them.  Why?  Because they have always been aimed in that direction.  They never ceased to defend the Soviets while that gory bunch were around.

For a long time, however, the need to get votes kept them cautious.  They risked a wipeout if they got too far from the centre.  Recently, however, they have realized that their 3 big rusted-on constituencies -- blacks, Jews and Hispanics -- will support them no matter what, so they need add only the fanatical end of the white Left to get into power. So they have moved to more extreme positions.  And such extremism is of course divisive.  You almost have to let go of your sanity to embrace it

In recent years, many politicians and political pundits have lamented what they perceive to be growing political divisiveness in the United States. Public-opinion polls have confirmed the reality of this growing divisiveness (Badger and Chokshi 2017; Hook 2017; Pew Research Center 2017). Nearly everyone who remarks on this phenomenon views it as regrettable, and many offer recommendations for alleviating it, especially by embracing a greater willingness to compromise in Congress and among the public. Not many commentators, however, have evinced an understanding of how the heightened divisiveness came about or of the necessary condition(s) for reducing it.

To understand recent trends in political divisiveness, it might help to recall the situation at an earlier time when such divisiveness was not so great—say, during the 1950s or perhaps even as recently as the 1990s. In those days, the two major political parties as a rule kept their squabbling between the forty-yard lines. They and their supporters among the public agreed on the fundamental political issues (e.g., anticommunism in foreign affairs, a sizable welfare state at home). Of course, even within the accepted bounds of political dispute, disagreements and conflicts might become heated from time to time in certain areas, yet, given the broad agreement on the nature of the regime, politicians and their supporters could fashion compromises that kept nearly all changes within the established bounds. Indeed, politicians could brag about and take credit for their capacity to forge compromises, and few held this flexibility against them or accused them of being sellouts.

In more recent times, however, as the government has grown and extended its involvement into more—and more important—areas of life (e.g., comprehensive health-care insurance coverage and broad-gauge financial-rescue operations such as those undertaken in 2008 and 2009), the perceived stakes have become greater in the minds of political actors. With more at stake, people’s willingness to compromise has declined: compromise may be too costly for them to tolerate. So as government grows, extending its scope and power into more corners of economic and social affairs, it pushes more and more people beyond their thresholds of acceptance.

Now, whenever the government grows, it does not simply take an action and push it onto an unwilling public or a large unwilling part of the public, telling those who oppose it to “like it or lump it.” Such an overbearing imposition is well-nigh guaranteed to increase and sharpen the existing resistance to the action and thus to make the implementation of the government’s new policy more difficult. To ease the imposition of an action on unwilling parties, the government and its supporters always clothe it in attractive ideological garb, claiming that it affords great benefits for the general public, necessary protections from foreign or domestic threats, and so forth. Some potential resisters are likely to be persuaded by such ideological cover stories—if they weren’t, the government’s propaganda would be pointless. So ideology, it turns out, plays an essential role in the conduct of any government’s operations, especially when it is expanding the scope of such operations.

More than thirty years ago I formulated a conception of ideology (a highly contested concept among scholars) that I have found helpful in analyzing the nature of government and its growth. In my conception, ideology is “a somewhat coherent, rather comprehensive belief system about social relations.” Such a system must have “four distinct aspects: cognitive, affective, programmatic, and solidary” (Higgs 1987, 37; for an extended discussion of ideology viewed in this way, see chapter 3 of the same source, “On Ideology as an Analytical Concept in the Study of Political Economy,” 35–56). The key connection between ideology and political action arises from the fourth aspect, solidarity among an ideology’s adherents. This solidarity establishes an identity because affiliation with an ideology defines the kind of person one is and wishes to be, and maintenance of this identity requires that a person act as a faithful comrade of others who identify likewise. An ideology thus defines and solidifies personal identity, but it simultaneously defines the enemy—as someone has said, it tells the ideological adherent whom to fear and whom to hate.

As government grows, pushing into more and more areas of social and economic life and evoking an ideological rationale to justify its action and attract supporters, it simultaneously causes its supporters to identify those who oppose the action as “the other” and even as “the enemy.” When people come to view each other in this stark fashion, social and political divisiveness is almost certain to increase. During the past several decades, as a harsh and unforgiving view of political opponents has grown, the fear and loathing of those who “are not with us” may well have been the main avenue along which the willingness to compromise has declined.

If such has been the case, it follows that a necessary condition for the alleviation of such divisiveness is the retardation or cessation—perhaps even the reversal—of the government’s growth. Even if meeting such a condition should be proposed or carried out, however, the problem is that a sort of Tullockian transitional-gains trap (Tullock 1975) may impede such a turnaround. Many individuals and groups have become deeply and variously embroiled in the government’s current scope and power, and they are likely to resist fiercely any attempt to reverse the process they helped to push forward in recent decades. They will fight any changes that would require them to surrender benefits, policies, and programs in which they are deeply invested not only materially but also ideologically. Such resistance constitutes one of the important aspects of the ratchet effect in the growth of government, whereby each major lurch toward greater government becomes at least in part irreversible (Higgs 1987, 57–74; 2012, 75–97)



Obama Snubs Graham Tributes, Promotes His Presidential Library Instead

Obama never was a Christian

Barack Obama has chosen not to participate in any of the events honoring evangelist Billy Graham this week, but he did carve out time to make a surprise visit to a community meeting in Chicago to promote the building of his presidential library.

Graham met, and in some cases became close friends, with every president from Harry Truman to Obama during his tenure as America’s Pastor, which stretched from the 1940s to the 21st century. He in fact also earned the moniker of Pastor to the Presidents.

Trump was not able to meet with Graham as president, but was on hand to help celebrate the preacher’s 95th birthday in 2013.

Obama met Graham in the spring of 2010 at the evangelist’s home in Montreat, North Carolina.

As reported by The Western Journal, George W. Bush and his wife Laura traveled to Graham’s library in Charlotte on Monday to pay their respects to the late Christian leader.

Bush also came bearing greetings from his 93-year-old father George H.W. Bush — the nation’s 41st president — saying, “I know he wished he could come too, but he’s not moving around much these days, but his spirit and heart is here.”

Former President Jimmy Carter, also 93 and has experienced health challenges, sent his regrets.

Former President Bill Clinton, like George W. Bush, made the journey to Charlotte on Tuesday. Clinton told reporters that he first heard Graham preach in Little Rock, Arkansas, when the future politician was an 11-year-old boy. He said meeting him later as an adult was one of the most memorable events of his life.

Clinton noted that Graham demanded that his 1959 Little Rock crusade be integrated and threatened to pull out when city leaders resisted. The pastor also became a strong supporter of Dr. Martin Luther King Jr.’s fight for racial equality.

“The ground at the foot of the cross is level, and it touches my heart when I see whites standing shoulder to shoulder with blacks at the cross,” Graham said.

While the Washington, D.C., resident did not take the time to make the short flight to Charlotte or even the drive to the U.S. Capitol, where Graham’s body lies in repose, Obama did travel to Chicago on Tuesday to push for approval of building his presidential library on the city’s South Side.

He was participated in a town hall-style meeting to allay local residents’ concerns that his presidential center will cause housing costs to increase and be too disruptive to their neighborhood.

“A lot of times, people get nervous about gentrification and understandably so,” Obama said. “It is not my experience … that the big problem on the South Side has been too much development, too much economic activity, too many people being displaced because all these folks from Lincoln Park are filling into the South Side. That’s not what’s happening.

Obama tweeted about the event later Tuesday night, saying it reminded him of his days as a community organizer in the 1990s.

While Obama does not plan to attend any of the events honoring Graham, he did post a tweet regarding one of the 20th Century’s most influential people.

The 44th president wrote: “Billy Graham was a humble servant who prayed for so many – and who, with wisdom and grace, gave hope and guidance to generations of Americans.”

On Wednesday, President Trump spoke at a ceremony in the Capitol Rotunda lauding the life Graham led as a minister of the Gospel of Jesus Christ.

The president also plans to travel to Charlotte to attend Graham’s funeral service on Friday.



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