tag:blogger.com,1999:blog-582368152716771238.post2717756358536197883..comments2024-03-28T14:41:03.793-05:00Comments on The Grumpy Economist: Trade War 1914John H. Cochranehttp://www.blogger.com/profile/04842601651429471525noreply@blogger.comBlogger24125tag:blogger.com,1999:blog-582368152716771238.post-51252461833224976742018-08-05T23:07:26.024-05:002018-08-05T23:07:26.024-05:00Professor:
The impetus for imposing a tariff is ...Professor: <br />The impetus for imposing a tariff is the fact that we don’t live in an economy with a Job Guarantee as part of a Full Employment Fiscal policy. If we implemented a Job Guarantee, we wouldn’t need a tariff to keep folks working. But,<br /><br />• The Job Guarantee jobs would probably provide lower value-added service jobs compared to higher paying heavy industrial jobs.<br /><br />• Maintaining a high trade deficit is providing foreign folk a claim on our grandkids’ output. But why should they care who owns the capital (or has a claim on it) when they come into the world naked and ready to work. Why should they care who gets the output of their labor: a Chinese family or the rich guy in the town over. It doesn’t matter to them. (see blurb on Intergenerational Equity: http://mmt-inbulletpoints.blogspot.com/2018/04/the-kids-are-not-alright-truth-about.html )<br />Moreover:<br /><br />• A tariff is a tax on everybody else. Why should everybody subsidize the few industrial workers and companies in steel/aluminum?<br /><br />• It will also cause retaliation, and massive disruption in production/distribution with Canada and Mexico.<br /><br />• If someone wants to send us cheap stuff, we would be crazy not to take it.<br /><br />Right now we have the worst situation: high trade deficit, no Job Guarantee, resulting in low labor utilization –> unemployment/misery.<br /><br />The solution:<br /><br />– Job Guarantee (see the blurb: http://mmt-inbulletpoints.blogspot.com/2017/09/im-just-responding-to-various-economic.html ),<br /><br />– High public investment in higher education (with an emphasis on STEM and trade schools) to maximize the level of people output, and<br /><br />– Free Trade.<br /><br />Easy Peasy.DoDealshttps://www.blogger.com/profile/03771077157351067426noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-63046414582506188712018-08-05T13:46:52.489-05:002018-08-05T13:46:52.489-05:00Sorry I can't attribute this excellent analogy...Sorry I can't attribute this excellent analogy<br /><br />Tariffs are like those college drinking games. How much you drink has little effect on your opponent but does have a significant affect on the severity of your own hangover.WP Kelpfrothhttps://www.blogger.com/profile/05184024473186697911noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-11606920967898562252018-08-03T19:13:30.386-05:002018-08-03T19:13:30.386-05:00@ David: you are correct 100% sir. Trade never pre...@ David: you are correct 100% sir. Trade never prevented a war, and can create instability by causing Thucydides traps--as we have done with China. That was a completely unforced error--thanks largely to the genius advice of Libertarian economists based out of Chicago. The Pollyanna "strategy" was that they would "naturally" become nice once they realized the virtues of the Western World made available through Western technology. Instead, we have merely enriched and strengthened a totalitarian police state. After all, proper police states are very expensive to run. We have created a monster, and it does not love its creator. Warren Plattshttps://www.blogger.com/profile/14166267641435230047noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-31366171351082309282018-08-03T18:56:09.385-05:002018-08-03T18:56:09.385-05:00Or it might have simply strengthened and emboldene...Or it might have simply strengthened and emboldened Japan, as the current "strategy" toward China seems to be doing...Warren Plattshttps://www.blogger.com/profile/14166267641435230047noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-61888770173066469052018-08-02T10:18:55.471-05:002018-08-02T10:18:55.471-05:00What does the US government risk when it gambles w...What does the US government risk when it gambles with the property of its own citizens?Milton Hayekhttps://www.blogger.com/profile/00034978604239024293noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-54822614230134752112018-08-02T10:17:57.629-05:002018-08-02T10:17:57.629-05:00Free trade is when buyer and seller peacefully, vo...Free trade is when buyer and seller peacefully, voluntarily agree to price and terms and each performs as promised.<br /><br />Anything done by government beyond that is medieval privilege peddling...Milton Hayekhttps://www.blogger.com/profile/00034978604239024293noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-71312734892844306592018-08-02T10:14:52.036-05:002018-08-02T10:14:52.036-05:00Your extreme negotiating position ends at my prope...Your extreme negotiating position ends at my property...Milton Hayekhttps://www.blogger.com/profile/00034978604239024293noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-72744282005483244642018-08-02T10:14:02.215-05:002018-08-02T10:14:02.215-05:00You assume Congress wants to both hold power, and ...You assume Congress wants to both hold power, and be responsible to voters for its use. Congress wants as little accountability as possible while maintaining as much power as possible...Milton Hayekhttps://www.blogger.com/profile/00034978604239024293noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-85967930576752528862018-08-02T09:58:47.189-05:002018-08-02T09:58:47.189-05:00Given that I read this blog almost as much for the...Given that I read this blog almost as much for the comments as I do for the post content, maybe a more appropriate name for Dr. Cochrane's blog would be "The Grumpy Economist and His Even Grumpier Commenters"...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-84330713623936719812018-08-01T14:28:31.613-05:002018-08-01T14:28:31.613-05:00Good luck. Problem is, global politics tends to he...Good luck. Problem is, global politics tends to help suppliers at the expense of consumers. Tariffs are just an example.Fish Goldsteinhttps://www.blogger.com/profile/13864053986442147618noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-9346299790036057752018-08-01T09:19:51.384-05:002018-08-01T09:19:51.384-05:00For the analogy of a trade war as two people shoot...For the analogy of a trade war as two people shooting holes in the bottom (raising tariffs) of the boat to stop the other person from doing the same, there is an assumption that both persons share the same risk. However, for US-China the US is like Michael Phelps and China is like your average swimmer. The risk of the boat sinking is not symmetrical. More explicitly, the US is less vulnerable to tariffs, since the US economy is mostly service related and less dependent on exports. Donhttps://www.blogger.com/profile/12086617700575759258noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-59582552537187749092018-08-01T07:05:44.277-05:002018-08-01T07:05:44.277-05:00Thanks for pointing out that after WWI we did in f...Thanks for pointing out that after WWI we did in fact have a WWII and several additional squabbles since then. I’m sure this blog’s readers had forgotten.The Donkhttps://www.blogger.com/profile/14153840277624094270noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-70839201361373865312018-07-31T22:07:54.657-05:002018-07-31T22:07:54.657-05:00Thank you for this excellent post. If China feels ...Thank you for this excellent post. If China feels hurt enough by Trump’s actions, do you think that China might start to use financial pressure? During the Suez Canal Crisis Ike effectively threatened the UK with destabilizing the pound. What if China boycotted a US bond auction and put pressure on the other countries to follow suit? Is a “high finance war” a realistic possibility if things got bad enough for China and other countries? Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-79833802148375869272018-07-31T20:42:52.995-05:002018-07-31T20:42:52.995-05:00I've heard all the economists say tariffs = ba...I've heard all the economists say tariffs = bad; free trade = good.<br /><br />I've heard all the diplomats say nukes = bad; no nukes = good.<br /><br />Based on this information is it unreasonable to conclude that we should immediately remove all tariffs from foreign goods and immediately dispose of all of our nuclear weapons.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-18972213641135810092018-07-31T20:12:30.629-05:002018-07-31T20:12:30.629-05:00I surely wonder if there even is such a thing a gl...I surely wonder if there even is such a thing a global trade "free," "fair: or "foul." <br /><br />In some nations, such as China and Singapore, land and capital is provided to exporters, for free. That is their version of "free trade."<br /><br />In other nations, such as Germany, exporters do not pay the primary tax, the VAT. The exporters get all the benefits of government---infrastructure, fire and police, civil courts, public health---but piggyback for free. That is the Teutonic version of "free trade." <br /><br />Obviously, outside of mining and farming, absolute and comparative advantages are largely artificial and can be manipulated by government or multi-nationals. <br /><br />So we have global trade, as manipulated by government and multi-nationals. Is that free, fair or foul? <br /><br />As I have said if you want to have a serious discussion about global trade, first send in the clowns. <br /><br />In general, governments manage international trade to benefit their citizenries, and multi-nationals (properly) operate global trade to benefit shareholders (due to fiduciary obligations), and no nation. <br /><br />There is US exceptionalism in one regard: US foreign and trade policy is evidently managed by multi-nationals for the benefit of multi-nationals, and not the citizenry. <br /><br />Will higher US tariffs lead to WWIII?<br /><br />That seems like a bit of a stretch. Indeed the tariffs, in relation to GDP or global trade, appear minuscule. <br /><br />I would guess domestic property zoning is 100 times the structural impediment to the GDP that Trump's new tariffs are. Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-10273253880523875642018-07-31T18:29:39.294-05:002018-07-31T18:29:39.294-05:00John,
"The founders thought not, that's ...John,<br /><br />"The founders thought not, that's why they didn't do it this way."<br /><br />And yet, the Smoot Hawley tariff sponsored by two Congressmen (as the founders intended?) was a contributing cause to the Great Depression.<br /><br />Our founders were imperfect men.FRestlyhttps://www.blogger.com/profile/09440916887619001941noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-3578275723193989062018-07-31T18:26:03.500-05:002018-07-31T18:26:03.500-05:00John,
My point was that 2/3 majority override by ...John,<br /><br />My point was that 2/3 majority override by Congress is by no means an "imperial" Presidency.<br /><br />I would agree that Congress ceded some power when the RTAA was passed, but not to the point of imperialism.<br /><br />https://www.merriam-webster.com/dictionary/ignorance<br />"lack of knowledge, education, or awareness"<br /><br />Should I have instead said that you seem to lack knowledge of the RTAA?FRestlyhttps://www.blogger.com/profile/09440916887619001941noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-43462410001370629442018-07-31T18:02:27.116-05:002018-07-31T18:02:27.116-05:00Watch it, we don't use the word "ignoranc...Watch it, we don't use the word "ignorance" on this blog. A 2/3 majority override is a lot difference than 51% (and no filibuster) to pass a tax bill, which must originate in the house. <br /><br />By your logic, just have the president write all laws and issue them by proclamation, giving congress only the authority to overrule by 2/3 majorities. Do you claim this will have the same results? The founders thought not, that's why they didn't do it this way. John H. Cochranehttps://www.blogger.com/profile/04842601651429471525noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-9348433135554739202018-07-31T15:39:20.009-05:002018-07-31T15:39:20.009-05:00A very interesting analogy. May I just add that WW...A very interesting analogy. May I just add that WWI was not the war that ended wars. For a variety of reasons, the carnage of how WWI ended lead us to World War II. Who knows what carnage this trade war will cause.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-53518266943790418952018-07-31T15:26:40.236-05:002018-07-31T15:26:40.236-05:00John,
"By now, both parties ought to be sick...John,<br /><br />"By now, both parties ought to be sick of the imperial presidency. Congress: Take back the power to impose tariffs."<br /><br />You seem to be demonstrating your ignorance here.<br /><br />https://en.wikipedia.org/wiki/Reciprocal_Tariff_Act<br /><br />"Another key feature of the RTAA was the fact that if Congress wanted to repeal a tariff reduction, it would take a two-thirds supermajority."<br /><br />If Congress wants the tariffs to end, all that they need to do is garner the votes.<br /><br />It's no different than if Congress wants to pass a bill after it has been vetoed by the President - a 2/3 majority vote will pass a vetoed bill and it will nullify any tariffs imposed by a President.FRestlyhttps://www.blogger.com/profile/09440916887619001941noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-33829722335864486892018-07-31T11:50:46.055-05:002018-07-31T11:50:46.055-05:00As a british newspaper put in his front page in no...As a british newspaper put in his front page in november 1918: "Archduke Ferdinand found alive in Brazil. War fought by mistake"Jacques René Giguèrehttps://www.blogger.com/profile/08044522160459914143noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-14434500016502850102018-07-31T11:04:51.164-05:002018-07-31T11:04:51.164-05:00Good stuff. I fear you are correct sir, human natu...Good stuff. I fear you are correct sir, human nature being what it is. Slight quibble with the term "war." I served in the military. Please believe me when I say, "This is not a war!"David Seltzernoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-88519289072627067322018-07-31T10:47:43.164-05:002018-07-31T10:47:43.164-05:00Your ultimate conclusion that Congress has abdicat...Your ultimate conclusion that Congress has abdicated its responsibility is spot on. The benefits of REAL Congressional oversight are a) Members and staff get educated by holding real oversight hearings and publishing the hearings; b) the public gets to see Congress holding oversight hearings and doing something other than pontificating in media soundbites; c) holding hearings on important issues sucks the time of the media from pontificators (pundits) of all stripes and requires media to spend time; and d) might lead to informed Congressional action in a more open process that reflects consequences rather than ideological preferences alone. And, yes, Congress should withdraw from the executive the unilateral authority to impose tariffs.Anonymoushttps://www.blogger.com/profile/16791916693887857937noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-74505479128124719362018-07-31T10:27:41.984-05:002018-07-31T10:27:41.984-05:00"Trade" played a significant role in tri..."Trade" played a significant role in triggering the Pacific portion of the Second World War. A free trade agreement in Asia might have avoided that war, and all its horrors and after effects, entirely.<br /><br />Absalonhttps://www.blogger.com/profile/09131268683451462949noreply@blogger.com