Posted on 07/30/2015 3:46:16 AM PDT by 2ndDivisionVet
The Republican Party must be tearing its hair out. For years, visitors from the US have extolled the strength of the party’s potential Presidential candidates for 2016. The pack is certainly more impressive than in 2012 and, with the exception of one or two candidates, they are ostensibly advocates of relatively free market policies. In a campaign against an unlikeable Hillary Clinton, many conservatives were quietly confident of victory in 2016.
But all these voices are being drowned out by the brash businessman and property magnate Donald Trump. Despite widespread criticism for his remarks about “rapist” illegal Mexican immigrants, Trump yesterday topped a poll of GOP candidates, garnering the support of 18 per cent of Republicans. At best, he looks set to draw significant amounts of precious airtime in the coming months. At worst, given that he’s unlikely to win the Republican nomination, he may decide to run as an independent, handing Clinton the keys to the White House.
At least in part, Trump’s success so far is likely to reflect his stance on border control. As in the UK, many Americans are worried about (illegal) immigration – and feel that mainstream candidates do not reflect their concerns. But the overwhelming reason for Trump’s success looks to simply be many voters thinking a strong businessman is preferable to someone from a political class that is perceived to be weak.
Yet businessmen often make lousy politicians. The US should not need reminding of this – after all, Herbert Hoover was a businessman with no history of elected office before becoming President, and is now regarded as a failure by all sides. The importance of managerial skills and deal-making in delivering clear goals within large, centrally planned firms is not easily translatable to the political arena – which requires persuasiveness and nuance, rather than bombastic fist-slamming.
But the most worrying aspect of Trump’s candidacy is his contribution to the economic debate. Trump is a nativist and a protectionist. He laments that America imports cars and exports corn – taking the mercantilist position that imports are bad and exports good, alongside a Ross Perot-like fetish for manufactured “stuff”. This shows complete ignorance of comparative advantage – and trade being about the exchange of things people want and need.
Trump therefore promises “fair” tariffs on imported goods, and a crackdown on China’s currency manipulation through taxes which reflect currency “undervaluation”. This would likely start a trade war at a time when a growing Chinese middle class offers untold opportunities for rich Western countries to export services. But Trump doesn’t stop there. He also wants to tax firms that “export jobs” and factories overseas. In particular, he laments the fact that many call centres are based in India.
This shows a remarkable misunderstanding of the way the world works. Call centres are based elsewhere because, at the moment, it is cost-effective to do so. But these specific jobs being overseas need not lower US output or welfare. In fact, it helps lower prices for US consumers, and workers are freed up to work in higher-value occupations.
Even on fiscal issues, Trump has bizarre views. He’s promised the seemingly inconceivable agenda of hugely lower tax revenues and reduced spending, but balancing the books while leaving the big entitlement programmes – which are the real, long-term drivers of US debt – largely untouched. In the past, he’s advocated a potentially catastrophic one-time high wealth tax to “pay off the national debt” – a $5.7 trillion liquidation of assets that would have seen substantial capital flight and severely affected the US economy. While he’s not advocating a repeat today, he still promises populist “no pain” solutions to America’s long-term fiscal challenges that seemingly ignore reality.
Quite simply, Trump’s nativist economics agenda and fiscal fairy tales are not what the Republicans or the US need. They’d better hope he fades sooner rather than later.
What domestic sources?
Tariffs would create incentives to open domestic factories, even a < expletive deleted > like you should understand that.
I know a lot of ex line workers that took a 8 week course in brain surgery and are doing really well now.
Really? You don't think American factories can be built or re-tooled to produce the cheap junk Walmart now buys from China and Mexico? Do you think Americans have lost the ability, the knowledge to manufacture televisions, washers, dryers, smartphones, computers?
Seriously?
Oh really? Recreating the domestic consumer electronics manufacturing industry and the textile industry and the furniture industry and all the other industries, basically from scratch since the all went virtually extict years and years ago, would require tens of billions in investments and years of time. Who is going to pay for that? Especially when they can just continue to import from China and pass the tariff along to the consumers? And especially since the next administration can come along and remove those tariffs with a stroke of a pen? Who will you find that will take that financial risk? And where are the U.S. consumers better off since the purpose of tariffs is to artificially inflate prices so domestic manufacturers can compete? Either way, U.S. consumers will see the price of their goods go up.
It didn't take me that long to find the flaw in your "logic" and I'm nothing but an < explative deleted >. Pretty good, huh?
Yawn. Another chattering sleep-inducing wonk blathering on about things he has no clue about. He’d fit in well on “Meet The Press”.
We destroyed our domestic industries years ago. Recreating them won't be simple and it won't be cheap. So where is the incentive for investors to sink the billions of dollars necessary to rebuild industries from scratch just so they can produce, as you put it, cheap junk for Walmart? How much of a profit margin is there in that, given the risks involved and especially when Congress could come along and repeal all those tariffs, making their investment worthless?
This drivel is brought to you from Londonstan the Socialist/Muslim capital of the world. :-)
Indirectly it can, by forcing cuts in welfare spending and increasing investment in new technologies. Our modern life is a reflection of all the new technologies invented during WWII: jets, rockets, microwaves, radar, nuclear energy, computers. The list is long. The best war of all though is a cold war.
We have all the base technologies right now for a robotics boom but we aren't moving very fast on that. The biggest customer of "cutting edge" robotics is as expected: the U.S. military.
Right.
Recreating them won't be simple and it won't be cheap.
Neither was going to the moon, but it was the right thing to do.
So where is the incentive for investors to sink the billions of dollars necessary to rebuild industries from scratch just so they can produce, as you put it, cheap junk for Walmart?
Profit????
How much of a profit margin is there in that, given the risks involved and especially when Congress could come along and repeal all those tariffs, making their investment worthless?
Industry will adjust. Come back and tell me in two years how much their capital investments are worth in China.
because what we do now works so well
You disagree? Then tell me who is making TVs or cell phones or microwave ovens in this country?
Neither was going to the moon, but it was the right thing to do.
It was also a federal initiative that was not supposed to make a profit. Are you saying the government should go into the textile business or grant large subsidies over and above the tariffs to consumer electronics manufacturers?
Profit????
Will the government guarantee one?
Industry will adjust. Come back and tell me in two years how much their capital investments are worth in China.
Probably a great deal.
Ummm, no when I say "right", that means I agree with you. Accept that someone on this thread is agreeing with you about something.
Then tell me who is making TVs or cell phones or microwave ovens in this country?
Right. I agree with you. See above.
Neither was going to the moon, but it was the right thing to do. It was also a federal initiative that was not supposed to make a profit. Are you saying the government should go into the textile business or grant large subsidies over and above the tariffs to consumer electronics manufacturers?
No. I am saying that granting MFN status to a super low wage country like China sealed the demise of US manufacturing. It should never have happened. Steps should be taken to mitigate that mistake. Please accept when I agree with you and don't put words in my mouth when I don't.
Profit????
Will the government guarantee one?
They don't have to, why should they?
Industry will adjust. Come back and tell me in two years how much their capital investments are worth in China.
Probably a great deal.
Well, I guess we will see about that. Recent investors in the Chinese stock market are barred from selling their shares, in other words they cannot realize their profits or even mitigate their losses. It is a small step from here to nationalize foreign owned factories and investments.
The Chinese "economic miracle" is built on a mountainous pile of sand. There is no real foundation other than debt. In other words, paper.
When TSHTF, as is happening now, the Chinese communists who run that country will show their true colors. The jails will be full of "capitalists" and "profiteers" before this is all over. How much is a Chinese factory worth that is owned by foreign interests when the managers are in jail and the People's Army is occupying the factory?
Probably a great deal.
Actually, we did not have to wait two years. In the last two weeks China has devalued the yuan, making all Chinese investments worth less in terms of US dollars. More ominously, the Chinese government has issued orders to banks to reduce the amount of US dollars that can be purchased by corporations. If you can't get your profits out, how much is your asset worth?
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