Wednesday, April 03, 2024

Trump’s Tariff Talk Proves Bad Economics Can Be Good Politics

Hmm ... This is orthodox economics below but there is a bit of sleight of hand involved and insufficent notice is taken of social effects from economic policy.

They say that the REGIONS affected by the tariffs did not benefit. But Trump aimed at INDUSTRIES. And he got results there. The steel industry did benefit.

And economists have always recognized that social benefits can prioritize over economic benefits, as in the case of the infant industry case.

A little known case that illustrates benefits from Trump-like policies comes from Australia in the '50s, during the long rule of Prime Minister Menzies.

Australia was very autarkic at that time. It made its own cars and kitchen appliances plus much else. Some goods were imported, chiefly from Britain, but Australian manufacturers were encouraged and were readily given tariff protection. If you made toasters in Australia you did not have to worry about overseas competition. A nice little tariff would protect you.

So businesses and their employees could relax. Their factory would just keep running year after year. The workers could plan their savings and their holidays with no fear that their job would suddenly vanish due to a new competitor entering the market and selling the product at a cheaper price.

And under that system there was very little unemployment. Anyone who wanted one could get a job. Unemployment was always under 2%. It was a crisis if it seemed likely to rise to 2%. There is nowhere like that in the world today.

So Australia at that time was a capitalistic economy with autarkic characteristics. Despite its tariffs, Australia was in the '50s one of the most prosperous places in the world.

Trump has probably never heard of Menzies but he is treading a similar path and can expect similar beneficial influences from it.

His threat of a big tariff on Chinese cars is in fact timely. The American automotive industry is under great pressure to switch to electric cars and Chinese cars are particularly good at that -- so the American industry could conceivably be wiped out without intervention. But that industry is so central to American manufacturing that its demise would be a widespread disaster. Trump's tariffs plus his skepticism about global warming is probably just what America needs at the moment

Former President Donald Trump made increasing tariffs a major focus of his campaign in 2016, and he’s escalating his anti-trade rhetoric again in 2024. Unfortunately, while his trade policies were bad for our economy, they are good for his political prospects.

During a recent rally in Ohio, when referring to otherwise duty-free Chinese cars made in Mexico, Mr. Trump declared,“We’re going to put a 100-percent tariff on every single car that comes across the line, and you’re not going to be able to sell those guys if I get elected.” Similarly, in February he confirmed that he planned to re-ignite a trade war by imposing a 60-percent tariff across the board on all Chinese imports.

When he campaigned with anti-trade rhetoric in 2016, economists could point to more than 200 years of economic theory, dating back to Adam Smith, that indicated his trade policies would shrink incomes in both the United States and China. They also could point to evidence that lower tariffs and increased trade had improved lives in the United States over previous decades.

But economists didn’t have recent examples of the impact of major tariff increases in the United States because we had been lowering tariffs, not raising them, for decades. Now, in 2024, we can examine the results of Trump’s first-term trade policies to better evaluate the validity of his trade rhetoric today.

During his first term President Trump imposed tariffs on European goods and made some relatively minor changes in our trade agreement with Canada and Mexico. But his declaration of a trade war with China was his signature change in trade policy. Throughout 2018 and 2019 he imposed thousands of tariffs targeting roughly $350 billion in Chinese imports. China retaliated by imposing tariffs on roughly $100 billion in U.S. exports.

A recent National Bureau of Economic Research (NBER) paper by economists Pablo Fajgelbaum and Amit Khandelwal surveyed scores of economic studies that have estimated the consequences of the trade war with China. Their two main takeaways were that “U.S. consumers of imported goods have borne the brunt of the tariffs through higher prices” and that the trade war decreased average incomes in both countries, though this was not large relative to our overall economy.

Supporters of Trump’s trade policies may be willing to bear the burden of higher prices and lower incomes if U.S. manufacturing jobs are protected. However, his trade policies apparently did not deliver on that either. Another new NBER study, by economists David Autor, Anne Beck, David Dorn, and Gordon Hanson, found that Trump’s tariffs did not increase employment in the regions of the newly protected industries. They also found that China’s retaliatory tariffs decreased agricultural employment in the United States.

Their study also pointed to why Trump continues to try to sway midwestern voters with his anti-trade rhetoric. Voters in districts with firms targeted for protection by his tariffs became “less likely to identify as Democrats, more likely to vote to reelect Donald Trump in 2020, and more likely to elect Republicans to Congress” despite the lack of economic benefits in the targeted industries and districts.

The political appeal of Trump’s rhetoric can be partially explained by voters’ difficulty in disentangling the effects of many individual economic policies. The bulk of President Trump’s domestic economic policies on taxation, regulation, drilling, and a host of other important issues were pro-growth and led to an economy that raised living standards for the middle class before the pandemic despite the drag caused by the trade war. Without a solid understanding of economics, voters hearing Trump’s rhetoric could easily confuse correlation and causation.

In 2018 President Trump declared, “I am a tariff man.” Until economists do a better job of educating voters about the harmful effects of tariffs, Trump is likely to continue to be a tariff man. Unfortunately, good politics often runs counter to good economics.


JK Rowling's defiant trans tweets are NOT criminal: Police refuse to arrest author amid furious backlash at new SNP 'hate crime' laws

Police wimp out at enforcing oppressive law, setting a useful precedent

Police Scotland have confirmed no action is to be taken against JK Rowling after she challenged new hate legislation north of the border with a flurry of gender critical posts on X, formerly Twitter.

Reports were made against the Harry Potter author but police have assessed her tweets against Scotland's new hate crime laws - already slammed by footballer Ally McCoist - and found they did not breach the legislation.

Ms Rowling, a prominent gender-identity critic, had been reported to police after referring to a number of transgender women including campaigners, convicted prisoners and celebrities as 'men' in a range of tweets reported to the force.

As the 58-year-old's comments whipped up a social media storm, she won support from Prime Minister Rishi Sunak who said: 'People should not be criminalised for stating simple facts on biology.'

A Police Scotland spokesperson said of the tweets: 'We have received complaints in relation to the social media post. The comments are not assessed to be criminal and no further action will be taken.'

Rowling said of the police response: 'I hope every woman in Scotland who wishes to speak up for the reality and importance of biological sex will be reassured by this announcement, and I trust that all women - irrespective of profile or financial means - will be treated equally under the law.'

In her social media post, the author listed ten high-profile trans people and denied their claims to be women. They included double rapist Isla Bryson, 31, who was initially jailed for eight years at a women's prison before later being moved to a male prison following a widespread backlash.

Bryson, who was known as Adam Graham at the time of the offences, began transitioning only in 2020 after being charged.

Initially referring to them as 'women', Rowling ended the thread by saying: 'April Fools! Only kidding. Obviously, the people mentioned in the above tweets aren't women at all, but men, every last one of them.'

Ms Rowling added: 'In passing the Scottish Hate Crime Act, Scottish lawmakers seem to have placed higher value on the feelings of men performing their idea of femaleness, however misogynistically or opportunistically, than on the rights and freedoms of actual women and girls.

'The new legislation is wide open to abuse by activists who wish to silence those of us speaking out about the dangers of eliminating women's and girls' single-sex spaces, the nonsense made of crime data if violent and sexual assaults committed by men are recorded as female crimes, the grotesque unfairness of allowing males to compete in female sports, the injustice of women's jobs, honours and opportunities being taken by trans-identified men, and the reality and immutability of biological sex.

'For several years now, Scottish women have been pressured by their government and members of the police force to deny the evidence of their eyes and ears, repudiate biological facts and embrace a neo-religious concept of gender that is unprovable and untestable.

'The re-definition of 'woman' to include every man who declares himself one has already had serious consequences for women's and girls' rights and safety in Scotland, with the strongest impact felt, as ever, by the most vulnerable, including female prisoners and rape survivors.

'It is impossible to accurately describe or tackle the reality of violence and sexual violence committed against women and girls, or address the current assault on women's and girls' rights, unless we are allowed to call a man a man.'

The author, who lives in Edinburgh, challenged those who opposed her views to report her under the Hate Crime and Public Order (Scotland) Act, which came into effect on Monday.

It aims to protect a number of characteristics from abuse under the law, including age, disability, sexual orientation, transgender identity and those with variations in sex characteristics, such as intersex people.

Rowling continued: 'Freedom of speech and belief are at an end in Scotland if the accurate description of biological sex is deemed criminal.

'I'm currently out of the country, but if what I've written here qualifies as an offence under the terms of the new act, I look forward to being arrested when I return to the birthplace of the Scottish Enlightenment.'

She signed it off with the hashtag #arrestme.


An Indian despairs of the loss of self-confidence in the West

Ramesh Thakur writes below. He is a bit misled by surface appearances. What he points to is just Leftist destructiveness. Underneath it all there is still widespread patriotism in the West, particuilarly in the USA. You can see that at any Trump rally

Browsing a bookshop online recently, I came across the familiar acknowledgement of the traditional First Nations owners and custodians of the land and the assertion that, ‘Sovereignty was never ceded’. I left the site, never to return, thinking, Mate, the problem is your white guilt, not my white privilege, for I have none.

Over nine million illegal migrants have swarmed across the US southern border during Biden’s presidency. The biggest millstone around the doomed Sunak government is the hundreds of thousands of legal and illegal migrants. Some 550,000 migrants came into Australia last year. And yet still the cry is raised that all three are irredeemably structurally racist countries.

India is touted as the world’s fastest growing major economy yet the outflux of large numbers into the West continues. Many explore how to bring over more family members; few are planning to return to the supposedly booming country.

I left in 1971 to pursue graduate studies in Canada, returned for a year in 1975 to do some archival and interview research, but aborted the visit when Indira Gandhi declared a national emergency to assume and exercise dictatorial power. Born and having grown up in independent, free India, taking democratic freedoms for granted, I was shocked by the overnight suffocation of the notoriously argumentative Indians.

My first academic publication explored that topic and, at a time when the fashion among young graduate students in North America was to sneer at democracy, I wrote a lament for its demise in India. That is what decided the issue of switching to Canadian citizenship. I experienced a déjà vu moment with the military coup in Fiji, having taught at the University of the South Pacific for a few years before moving to New Zealand and then Australia.

My commitment to democratic governance, civil liberties and citizens’ rights is thus grounded in ‘lived experience’. Hence the despair at Westerners’ growing loss of self-confidence to defend their values, heritage, institutions and contributions to net human welfare. The fossil fuel-driven industrial revolution and the Enlightenment freed peasants from the land, women from the home and workers from the village to destroy feudalism, emancipate workers, democratise citizenship and liberate creativity. Europeans’ military superiority enabled them to colonise many peoples. The colonial legacy is mixed rather than uniformly evil or virtuous.

Every culture and civilisation has stains in its history. Most borders today are the result of the use of force in the past. That said, is there a country that contributed more to the end of slavery than Britain? How many people from developing countries owe gains in life expectancy, education, income, political rights and life opportunities to intellectual and scientific revolutions in Europe?

Yet Westerners seem intent on feeding the bonfires that are consuming them. There’s almost a palpable end-of-Roman-Empire, fin-de-siècle feel in the air. In the latest global self-reported happiness rankings, the Nordics took the top four positions again. Australians are the tenth-happiest people. The US has dropped out of the top twenty, due primarily to the self-focussed and social media-obsessed under-30s who ranked 62nd globally.

Reasons for this include the relentless climate catastrophising and attacks on their ‘privileged oppressor’ identity. Holly Valance describes Greta Thunberg as a ‘demonic little gremlin high priestess of climatism’ who is treated ‘as a goddess in the classrooms’ despite contributing to the epidemic of ‘depression and anxiety’ in children.

At an appearance in parliament on 20 March, Rebecca Knox, Chair of Dorset & Wiltshire Fire and Rescue Authority, said she agrees with a report that her force is ‘institutionally racist’. Asked if white people had any unfair advantages in her force, she said ‘No’. ‘Then how can you be institutionally racist?’ ‘Um, sorry, I might have to get back to you’, she stammered.

In New Zealand, the progressive embrace of all things Maori is so deeply internalised that in cross-national group discussions, Kiwi colleagues unthinkingly resort to Maori greetings to start and end messages (kia kaha katoa, kia ora koutou, arohanui). They forget this is gross bad manners because it’s rude and discourteous to speak in a foreign language that excludes some in the group from the conversation. Maybe I should respond in Hindi, including the foreign script?

Trans-activists are erasing the word woman even from motherhood and sexual assaults. Nurses are advised to use words like ‘birthing parents’ and ‘chestfeeding’ as substitutes for mothers and breastfeeding.

J.K. Rowling has promised to keep calling transwomen ‘men’ and risk criminal conviction after a new Scottish law that threatens to severely punish factually correct speech that violates legally correct definitions.

Recording trans-identifying males as women in rape and murder statistics will distort and mock sex-specific statistics on violent crime.

The linguistic gender madness of the crowds is spreading to esteemed medical journals that are banishing the ‘w’ word and associated language.

In Canada, a Supreme Court justice gratuitously reprimanded a lower court judge for using the word woman, in a sexual assault case no less, instead of a ‘person with vagina’. That too with the explanation that the single word was confusing in comparison to the clarity of her own preferred phrase. Neither the complainant nor the accused in the case claimed to be transgender and gender identity and language was not an issue before the court. To cap it all, the decision came on International Women’s Day (8 March).

I hope someone has forwarded Rowling’s wicked tweet to the judge: ‘Happy Birthing Parent Day to all whose large gametes were fertilised resulting in small humans whose sex was assigned by doctors making mostly lucky guesses’.

Cleanse your memory of the aggressive big trans bullies you see in action on the streets intimidating gender-realist critics. The ultimate emotional blackmail card of trans-terrorists is the threat of self-harm and suicide by vulnerable trans snowflakes.

Watch any old Bollywood movie and you will quickly discover that the master of emotional blackmail as the tool of choice for ensuring compliance with parents’ wishes is the Indian family.

New-age feminists attack alleged male privileges but support men who claim to be women under the banal slogan ‘transwomen are women and trans rights are human rights’. The push for more women in boardrooms, meant to redress gender imbalance, is subverted when transwomen are included in the female category in gender-specific lists of CEOs.

In the recent gender gap report on Australian businesses, measured by the median earnings of men and women, gender equity – that is, equality of outcomes – is in practice anti-choice. For most pay differentials today, when paying differently for the same work to men and women with similar qualifications and experience is illegal, are better explained by lifestyle and life balance choices that women make, and very sensibly too.


Famed economist blames Walmart, not inflation, for high prices

Robert Reich is primarily a historian rather than an economist but is in any case highly political. He is making too much of a familiar phenomenon -- that prices are "sticky downward". When prices fall for any reason, they tend to be slower to fall than they could until competitions cuts in and forces them down. The stickiness is mainly a case of firms compensating for previous losses so is not necessarily unfair in any way

The Covid pandemic caused higher prices due to supply chain problems and inflation. Demand for certain goods increased while labor prices were pushed higher due to the challenges of operating factories, farms, and shipping operations under Covid protocols.

Retailers in 2020 and 2021 faced real challenges in getting goods into their stores. Inflation was real and even as the impact of the pandemic faded, some problems remained.

Wages have generally been pushed higher in the service industry. The $15 minimum wage, while not a law in most places, has become significantly more common.

Related: Popular closed retailer brought back from the dead

But, with covid mostly an unpleasant memory, supply chain issues have become less of a concern, and inflation has receded. Retailers, however, have not been all that willing to talk about that, and, in many cases, in-store prices remain inflated even though costs to the company have gone down.

Former Costco CFO Richard Galanti has been very open about inflation and during his company's second-quarter earnings call, he essentially said that it had gone away.

"A couple of comments about inflation. In the last quarter, in the first quarter, we estimated that year-over-year inflation was approximately 0 to 1%. We'll now say that in Q2, it was essentially flat. And notwithstanding essentially flat, we're taking price reductions where we can," he shared.

While that may not be true for smaller chains that lack Costco's (COST) buying power, it's almost certainly true of Walmart. That chain, however, has not followed the warehouse club's pricing lead and has continued to charge higher prices, according to Bill Clinton's former Labor Secretary.

Is Walmart price gouging?

Consumers have an imperfect view of inflation.

"Americans believe that grocery retailers are earning a 35.2% net profit margin, 14 times higher than grocers’ actual net profit margin average of 2.5%, and that food-at-home inflation is 24.3%, double the annual rate reported by the U.S. Bureau of Labor Statistics," Dunnhumby's Consumer Trends Tracker reported in February 2023.

It's a problem of perception especially now that the actual impact of inflation on what the retailers are paying has mostly gone away. The perception that inflation remains high — an idea that has become highly politicized — has helped some retailers maintain higher profit margins than they traditionally do.

Former Labor Secretary Robert Reich believes that Walmart has been taking advantage of the situation and public perception of inflation.

“When I say price gouging is driving inflation, this is what I mean,” he said on X (the former Twitter).

Walmart hiked prices on its Great Value food brands.

The result? Its net income spiked 93% to $10.5 billion towards the end of 2023.

Walmart rewarded shareholders with $5.9 billion in buybacks and dividends.

When I say price gouging is driving inflation, this is what I mean.

— Robert Reich (@RBReich) March 23, 2024

Reich's comments touched off a wave of social media posts where people showed how prices have increased on certain Walmart items.

President Joe Biden spoke about inflation during a recent campaign event.

“Inflation is coming down. It’s now lower in America than any other major economy in the world. The cost of eggs, milk, chicken, gas, and so many other essential items have come down. But for all we’ve done to bring prices down, there are still too many corporations in America ripping people off: price gouging, junk fees, greedflation, shrinkflation,” he said.

The Federal Trade Commission (FTC) also released a report on March 22 "accusing big grocery players of using pandemic-era supply chain disruptions 'as an opportunity to further raise prices and increase their profits, which remain elevated today,'" Supermarket News reported.

Walmart was not the only target of the FTC investigation. Walmart, Amazon, and Kroger were also named on the retailer side while manufacturers including Procter & Gamble, Tyson Foods, and Kraft Heinz were also cited.

Walmart CFO John David Rainey refuted claims of price gouging (although he was not addressing them directly) during his comments in the company's fourth-quarter earnings call.

"Overall, we expect some level of improvement in gross profit, but I want to decompose that further because there's two elements to that. One is our product margin, which we are not relying on raising prices to achieve our long-range plan," he shared.




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