Detoxifying the Trade Debate

Real Clear Markets ^ | October 18, 2016 | Will Marshall

[cba123]

Trump is the first leader in America, in over one entire generation, who is for rebuilding our own country once again.

The only one.

Anywhere.

[ModelBreaker]

Interesting look into left-wing, ruling class minds. The ruling class does not understand conservative objections to things like TPP, which is that it transfers power and authority over Americans to unelected, international governing bodies.

This was the core problem with Law of the Sea and why it could not muster Senate ratification. LOST actually began the process of giving international governing bodies a revenue stream that was independent of donations by nation states—a dream of internationalists for a century.

The globalists cannot resist munging “free trade” together with a global governance infrastructure. The failure of LOST is why they made this a trade “agreement” that did not need constitutional Senate ratification.

[ClearCase_guy]

This is globalist claptrap. Economic Nationalism is what is needed. Our country needs to come out ahead and we need regulatory reform, tax reform, and new trade deals so that we can actively compete in the world.

The globalist plan simply lowers our standard of living until we are no better than Mexico or China or wherever. That’s NOT a good goal. Unless, of course, you’re at the top and seek to directly benefit from paying people peanuts.

[expat_panama]

 

Happy mid-week everyone!  Yesterday our "Uptrend Under Pressure" bounced up off longer term support yesterday in rising volume.  While this really is a nice sign it's off a low point and we're still not back up over our traditional 50-day moving average.

This morning's futures traders are happy tho. they got stocks up +0.42%, they got metals up +0.40% too and gold/silver prices still seem stable.

Today's reports seem safe enough--

7:00 AM MBA Mortgage Index
8:30 AM Housing Starts
8:30 AM Building Permits
10:30 AM Crude Inventories
2:00 PM Fed's Beige Book

--but I'm looking forward to getting in trouble post these on the FR:

China's Uncannily Stable Growth vs The Price of Reform - The Economist
A Better Name for GDP? Grossly Defective Product - Paul Wallace, Reuters
Why 27 Million In US Are Still Uninsured Under Obamacare - Bloomberg
The United States Has Its Own 'Oil Curse' - Ellie Ismailidou, MarketWatch
Fed Damned If It Does, Damned If It Doesn't - A. Mirhaydari, Fiscal Times
Please, Stop Comparing 2016 Stock Market to 1987 - William Watts, MW
Rex Sinquefield's Trump Support Is About 1 Thing - Julia La Roche, Yahoo
Investment Implications of a Clinton Presidency - David Bahnsen, Forbes

[wastoute]

I still say the economic rationalization for allowing manufacturing jobs to go offshore was that “new, better jobs” would take their place. Obviously that second bit failed to happen.

Agreed, it did start to happen before NAFTA. As a young man I was a machinist in a factory. I made $20,000 gross the year I quit to go to Med School. We had health benefits BC/BS with Equitable to pick up the deductible and copay. We had $1,500 per family member per year dental. We had two pairs of glasses per year per family member.

By the time I finished Med School a new factory in Japan had our small size business and a CNC factory in Conn. had our large size business. The guys I had worked with we’re lucky to find jobs at minimum wage (1/4th what we had made) AND NO BENEFITS. By the early 80s a large swath of formerly productive America that had once been the manufacturing heart of the world was called “the Rust Belt”.

There were a number of reasons discussed but the bottom line was, well the bottom line. Labor was cheaper “over there”. But why was this so? In heavy industry automation was part of it, certainly CNC revolutionized the machine tool industry. Why were such industries not given depreciation allowances and incentives to automate here? We had an administration that “acted globally”. We gave away the Panama Canal. We gave away our jobs to “help lift the world”.

And then during the 90s we gave away what was left because they were “buggy whip” jobs and we were going to get new jobs that hadn’t even been invented yet (making Unicorn bridles?). The new jobs turned out to be stocking shelves at WalMart. The economy was dominated by large retail businesses that made more money selling shares than products. Financial “services” that turned out to be worse than gambling but financial IEDs. The balloon vented a bit in 2000 but we “powered through” the 911 catastrophe by “going shopping”. So the balloon just began filling up once more. Congress was informed in that “secret meeting” in Feb. 2007 that the balloon had to be vented again. Remember that? The only time in HISTORY that congresscriminals ever kept a secret.

Well the balloon has been filling up again, folks. You might want to consider getting ready. Just my opinion, of course. Free advice and all. I confess I have not made billions buying shares. I did buy mutual funds for several decades. Instead of watching stock prices I spent several decades carefully WATCHING THE GUMMINT. In 25 years I did not make a fortune BUT I NEVER LOST A DIME.

It ain’t how much you make. It is how much you keep. And you ain’t made it until it has been turned back into cash.

[bert]

Regarding China’s growth, I will interject the info in a recent Forbes article on the Pearl River Delta. Excluding Macau and Hong Kong that lie on either side of the river, the region includes 9 cities. They have grown together over a period beginning in say 1990, to include an area equal to that of Vermont and New Hampshire. The 2014 population of this area in 2014 had grown to 68 million people.

Standing alone, the PRD is the thirteenth largest economy in the world. It surpasses Russia in $$ volume.

[Will88]

It also omits the inconvenient fact that America has been losing factory jobs since the 1970s — well before NAFTA and other supposedly ruinous trade pacts came along.

Of course, there were a series of trade negotiation rounds before NAFTA that lowered or eliminated tariffs on many goods, putting US workers in competition with the world's cheapest labor, as well as making it very profitable for large US corporations to move production to cheap labor nations and export to the US market.

NAFTA was not the first trade arrangement to benefit Mexico and cause the relocation of US plants to take advantage of cheap labar.

In 1964, the Bracero Program, which allowed Mexican agricultural workers to work legally in the U.S. on a seasonal basis, came to an end. Less than a year after the end of the Bracero Program, the Mexican Government launched the Border Industrialization Program (BIP) or the Maquiladora Program, to solve the problem of rising unemployment along the border.[2] The maquiladoras became attractive to US firms due to the availability of cheap labor, devaluations of the peso and favorable changes in US customs laws.[citation needed] In 1985, maquiladoras overtook tourism as the largest source of foreign exchange, and since 1996 they have been the second largest industry in Mexico behind the petroleum industry.[3]

Maquiladora

Who can remember when televisions and radios and tape recorders, the electronics of the '50s and '60s were all made in the USA? Then we had a few changes of tariffs and trade policies, and suddenly, they were most all made in Japan.

All the losses of manufacturing jobs and relocation of US production to cheap labor nations was caused by changes in US government policies.

[Will88]

Some have lost jobs to trade (though more manufacturing jobs are supported by exports). Many more have been automated out of their jobs.

The globalists love that explanation. It sort of lets them off the hook for all manufacturing job losses in the US. But has anyone seen a single objective study that substantiates that claim?

[RedStateRocker]

It is interesting that there is as much, or more, dislike of TPP on the left as on the right.

[Gritty]

Facts, evidence, and rational argument have been routed by the visceral power of populist “narratives” drenched in cultural resentment, economic demagoguery, and tinfoil-hat paranoia.

Donald Trump’s slurs, compulsive lying, and ignorance of public issues make him by far the worst offender.

Will Marshall is President of the Progressive Policy Institute.

What a bullscat article! I felt like all I was doing was reading DNC talking points taken straight from Das Kapital.

[Wolfie]

One of our most valuable assets (if not THE most valuable asset) is access to the our markets. It’s simple...if you want access you pay. If you move manufacturing overseas and give American jobs to foreigners, you pay to get your products into the U.S.

[Buckeye McFrog]

Should have thought about “detoxifying” the debate before they spent thirty friggin years LYING to people in the Rust Belt about how great it was all gonna be.

[citizen]

My first radio of my own was a new GE transistor radio. Cost $5.99 in the early 60s and used 2 AA batteries. Worked great for years. It probably would have lasted a lot longer but with me being a kid it got dropped a lot, things spilled on it and in it.

A few years later my dad bought me a great AM-FM-SW radio, also made by GE. It was bad for the day (at least to me!) Used 6 D-cell batteries and had a 6-foot antenna. Also had an AC power cord. Loved it.

[semimojo]

One of our most valuable assets (if not THE most valuable asset) is access to the our markets. It’s simple...if you want access you pay.

Access to the our market is valuable, but the vast majority of potential consumers are outside the US.

The American companies who count on providing goods and services to these consumers will only be hurt by protectionism.

Long term economic growth will be much greater if we engage the world instead of hiding behind barriers.

[Wolfie]

We’ve been “engaged” for decades. So when does the economic growth start?

[semimojo]

We export over $2T in goods and services each year.

What would things look like if we took that out of the economy?

[Will88]

My first radio of my own was a new GE transistor radio.

In my early teens I had a Philco transistor radio made in the USA. I got a new one at Christmas or HS graduation and it was a Sony made in Japan.

A huge percentage of electronics production moved to Japan in a very few years. In the '50s and '60s Japan was cheap labor until they revived their economy, and soon started their massive exports of electronics and autos and other products.

[Will88]

We export over $2T in goods and services each year.

What would things look like if we took that out of the economy?

What would things look like if we produced domestically a significant amount of the $2.75 trillion in imported goods and services?

[semimojo]

What would things look like if we produced domestically a significant amount of the $2.75 trillion in imported goods and services?

Interesting question. Among other things our overall standard of living would be lower because we would be spending more for the same goods than we do now, and the people who today produce the $2T in exports would be out of work because it's folly to think we can continue to export if we block imports.