'Trump only understands if somebody wins and somebody loses'

Arutz Sheva ^ | 2/9/19

[DoodleBob]

Dr Fischer is actually correct that you CAN have a win-win situation in trade. The concept is know as Pareto Optimality, whereby to people or countries etc. shift production and resources whereby they have a more optimal output than they did previously.

We have all experienced this professionally, in moving from an inferior job to a superior job. Your employer is better off and you are better off - that IS a win-win situation and there is nothing Swamp-like or CFR etc. about this reality.

Now, the concept of Pareto Optimality is agnostic toward social utility or costs. For years, as countries moved toward that blue Pareto line there were displaced workers whose jobs were either eliminated by technology or outsourced. The usual solution to that social cost was either "re-train for a higher paying job" or "learn to code." In a well-functioning society, that would work, like it did when we moved from an agrarian to industrialized nation. Furthermore, the introduction of the PC to the workplace did wonders for productivity (remember the typewriter?) but in many of those cases the workers DID upgrade their skills - admins learned how to use a word processor.

The huge difference in the case of American workers' jobs being mechanized or outsourced away or replaced by cheaper laborers domestically was that few cared...they became a voting block that was dropped in favor of other blocks, like GenXers, Boomers, etc. As a result, the nation moved toward Pareto Optimality with disregard to the forgotten American.

Trump is arguing that the social cost IS an important element in this debate. He is effectively saying that, in the short-run, America would be ok living in Pareto sub-Optimality to re-employ American workers. The unspoken linchpin in Trump's approach is that, once reengaged, that American worker (who, btw, comes from a mix of races, creeds, etc) can outptoduce more efficiently and with greater creativity any worker elsewhere and America would get back to Optimality.

Now, this MAY cause a displacement of workers in America who are basically illegal and the political re-capture by Trump et al of forgotten Americans from all walks of life who would likely vote enthusiastically for Trump et al...and THAT is the REAL reason why this is such a BFD.

[Eleutheria5]

Real good sex is a win-win situation.

[Eleutheria5]

Precisely. These are spoiled children entrusted with the world economy.

[freeandfreezing]

"Trump only understands if somebody wins and somebody loses."

That is an idiotic statement by the author. If they just read Trump's books, or followed his business dealings they would know he is a master at win-win negotiation.

And when it comes to business you either win or your lose. The other guy may also win or lose. But the only deals worth having are the ones where you are winning. If the other party wins also that is a bonus.

Having a trade deal with another nation where the USA loses is never smart.

[traderrob6]

Because, they may negotiate for some improvement of their situation but one party WILL come out on top.

There has never been a deal in the history of mankind that both parties benefitted precisely equally.

Why is that so hard to understand...... it’s such a basic yet universal concept. What’s more it’s demonstrably provable.

[DoodleDawg]

Because, they may negotiate for some improvement of their situation but one party WILL come out on top.

And what determines which party came out on top? What if both parties think they came out on top? Who is the final judge?

There has never been a deal in the history of mankind that both parties benefitted precisely equally.

As determined by what?

Why is that so hard to understand...... it’s such a basic yet universal concept. What’s more it’s demonstrably provable.

Then prove it. And you're going to have to go back to every deal every done. Good luck. Let me know when you're finished.

[freeandfreezing]

Pareto Optimality is a simple approximation of reality. It does not capture the higher order effects of innovation that result from participation in a wider variety of productive endeavors. It also does not capture the risk inherent in Pareto optimized allocation decisions.

Once a disruptive factor enters the situation the model is no longer useful.

Consider just one simple case, the gun producing nation and the butter producing nation get into a war.

[Dahoser]

Speaking at the conference, Fischer said: "The problem with Trump's approach to trade is that he doesn't understand trade. Trump only understands if somebody wins and somebody loses. Both sides profit if they have a head on them and they know how to conduct negotiations."

Right, the guy who publicly calls everyone his good friend and how they're working on a super deal while he's privately negotiating with them, doesn't understand both sides profiting and how to conduct negotiations. Even if everyone knows that the President says those things just for show, the idea that he reserves most of his hardball tactics for the negotiating table rather than the glare of the public eye tells you he understands the importance of each side coming away with a profit and that begins by having a good public relationship.

[rlmorel]

Wow.

While it is true that in a legal situation where all sides observe the same rules on a level field and a good business decision makes both sides a willing party to a deal the benefits both, I would characterize the necessary approach to business dealings with China in this fashion:

If a party is being robbed, the existing situation that needs to be remedied is that someone is gaining something illegally and unfairly, and someone is losing something illegally and unfairly.

The only fair and legal resolution should be that the situation is reversed: One party gets to keep what is fairly and legally theirs (not be robbed) and one party is deprived of getting wealthy off of their ill-gotten gains.

It is really that simple. So simple all those “Excellent economists” cannot get it right.

[Phil DiBasquette]

Character defects again with the pearl clutchers

Never mind the global criminals with serious character defects
like the previous admin, Soros, etc

[Eleutheria5]

Equal shmeequal. If I’m closing out a long position on Corn by selling my contract to someone who’s closing out a short position on Corn, we’re both better off than we would be if we didn’t close our positions and instead got stuck on the last day. I’d have to make room in my garage for 5,000 bushels of corn and pay for it at contract price, and he’d have to find 5,0000 bushels of corn to sell at his contract price. We solve each other’s problems with one transaction, and free up our capital. Equal? Maybe by accident, but it’s irrelevant whether or not it’s equal.

[silverleaf]

Stanley Fischer
Noted businessman and author
Built a fortune of billions while employing tens of thousands.

Wait.
Never mind!

[silverleaf]

A career professor and govt hack

[grania]

Huh? President Trump is a businessman. He understands win/win situations. That's why he's a superior negotiator. The problem he's having now is that his political enemies (everyone associated with the establishment) work their hardest to only have situations in which Trump loses. Even when it's awful for the country, they'd rather have lose/lose than win/win.

They don't care about the country. It's about their survival, not ours. (don't wind me up!)

[qaz123]

The usual solution to that social cost was either “re-train for a higher paying job” or “learn to code.” ...... I love(actually loathe) the people that say stuff like this. Because the guy that has worked for one of the Class 1 railroads for over 20+ years, driving trains, and loses his job because a hedge fund like, Mantle Ridge, buys up controlling shares and fires about 7000 employees, after the railroad had a record year in profits, because he’s going to make the railroad more efficient....and his justification for that is the fact that he more or less destroyed the 2 biggest railroads in Canada before finally finding a board of directors that were willing to buy his snake oil.

Furthermore, the introduction of the PC to the workplace did wonders for productivity (remember the typewriter?) but in many of those cases the workers DID upgrade their skills - admins learned how to use a word processor..........the word processor is/was just a fancy typewriter where you didn’t need white out or the white eraser ribbon installed.

As a result, the nation moved toward Pareto Optimality with disregard to the forgotten American ...... now you’re talking and this is what, IMHO, the President is talking about. Is he not saying to the world and everyone, lets keep trade fair and balanced and let America and the American worker compete on a level playing field? Hasn’t he said, repeatedly, that he would love ‘free trade’ agreements as long as they were actually “free” and that American manufacturers could compete? Which is something they’ve not been allowed to do.

The unspoken linchpin in Trump’s approach is that, once reengaged, that American worker (who, btw, comes from a mix of races, creeds, etc) can outptoduce more efficiently and with greater creativity any worker elsewhere and America would get back to Optimality....... I truly cannot understand why so many people cannot understand this or at least acknowledge this. If a Wall St guy isn’t a fan, oh well. But at least acknowledge that the President, the first one in a long time, has confidence in America and the American worker, and that we would out-hustle anyone. We did it at some point in the early 1940’s if my history serves me right.

[adorno]

It is really that simple. So simple all those “Excellent economists” cannot get it right.

You bring up an excellent point, and it's one that so-called diplomats fail to understand or talk around, or just need to complicate.

The point being that, keeping it simple is preferred over trying to be diplomatic about things, which then makes things overly-complicated. Simple matters like, stealing IP and getting rich off other people's/companies ideas, and not compensating them accordingly. That's worth at least a few hundred billion dollars a year, and that hurts the originators of the ideas and IP. It's not a matter of just trading and selling and making money. IN the long run, the theft of IP and ideas will be very hurtful to the victims, and the victims are not the Chinese in these cases.

[qaz123]

Having a trade deal with another nation where the USA loses is never smart.

For Wall St, et al, and guys like the author it is, because they have the money invested in China.

[Dr. Sivana]

Speaking at the conference, Fischer said: "The problem with Trump's approach to trade is that he doesn't understand trade. Trump only understands if somebody wins and somebody loses. [ . . . ]
br>"I understand that Trump is an expert on this," he added. Fischer also mentioned the book "The Art of the Deal," authored by Trump or someone who wrote it "in his name."

I am glad a I heard the audiobook version of "The Art of the Deal". First, the primary content couldn't have been ghostwritten, because 90% of it consists of some of Trump's deals, describing things that only Trump knew, or only Trump knew in the detail in which he desribed them.

Second, he NEVER says that a deal is "someone wins and someone loses". He suggests finding what the other person really wants, and being creative to give him some of what he wants in order to get most of what you want.

Third, there ARE winners and losers in trade deals. Trump parachuted into a situation where we have been played for patsies. I EVERY kind of "trade", and every financial transaction is a form of trade, terms change over time and the parties may renegotiate. These are driven in everything from the discovered flaws in a used car on a dealer lot to a running back with an exceptional performance (or an injury), to weather disasters that interfere with the international supply chain to new technologies and natural resource discoveries that benefit those countries willing and able to exploit them.

[Dr. Sivana]

Though the global economy has recovered since World War II, Fischer believes that "almost every day" the US takes steps to "weaken the global economy."

Slamming the economic wars between China and the US as "virtually insufferable,"

It wasn't that long ago when we had little trade with Communist China, before Bush let them in to WTO. We got our cheap stuff from Hong Kong (electronics, toys), Taiwan (R.O.C.) (electronics, toys), S. Korea (electronics, shoes), and Mexico (cars). Our economy wasn't "insufferable" in 1990. The dog food wasn't poisoned, and the drywall wasn't moldy, either.

[Dr. Sivana]

Returning to his Trump-bashing, Fischer claimed: "I am almost certain that if Trump had not intervened, the Fed would not have raised the interest rate."

According to him, "Trump provoked them [the Feds] into asking" how they could prove that they were not his followers.

Then they are not professional economists at all, but babies.