The Donald And Trade

Michael Tanner from CATO is on NRO taking The Donald and the Democrats to the woodshed on trade.

There is a good reason for the [Democrat] rhetoric. Several recent studies, from researchers at Harvard, Columbia, the IMF, and two different branches of the Federal Reserve, have all concluded that the tariffs imposed by President Trump on China and others have indeed hurt American consumers and threatened economic growth domestically and internationally.

As Michael’s title says, the Democrats are no better.

But with the exception of extreme long-shot Representative John Delaney, every major Democratic candidate either joins Trump in opposing the TPP or is highly critical of the current negotiation.

You knew that John Delaney was running for the Democrat nomination, right?

Sidebar: Wisconsin is an open primary state.  Suppose that John or another sensible Democrat like Joe Sestak is still in the running for the nomination.  Would MWG take a Democrat ballot and vote for one of them?  What would such a nomination do to the probability of The Donald or the Dems winning?  We have not done this much math since grad school.  End Sidebar.

So 2020, just like 2016 presidential election, shapes up to be a binary choice but there is no choice that supports of free trade.

As always, MWG is with Kevin D. Williamson on trade.  In the NRO Corner, Kevin quotes his acerbic self:

Protectionists often describe reciprocity as if it were a cover charge for admission to American markets, but that gets the issue exactly backward: The question isn’t whether Washington may properly interfere with foreign sellers but whether it ought to interfere with American buyers. The case for allowing Senator Sanders to interpose his political interests between buyers and sellers is non-obvious, on either moral or economic grounds. It takes a special kind of stupid to believe that a voluntary exchange — willing seller, willing buyer — is transmuted into a form of hideous predation simply because some of the parties to the transaction may hold different passports.

We are with Kevin in supporting unilateral free trade.  We wish there was a major candidate that was supporting it in 2020 but there isn’t.  So when you make your decision between The Donald and the Democrat in 2020 free trade will not relevant to your decision unless there is a big surprise.

 

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Enough Philosophy!!!

Michael R. Strain, an AEI guy writing on The Corner at NRO has a great post on philosophical debates.  Michael is talking about conservatism debates but we have seen it in numerous academic situations.  We had a colleague who was sincerely convinced that if we came to an agreement on principles that every other issue could be resolved from those principles.  Our accounting/economics background lets us play the principles game but we realize that the practical needs more than principles.  Michael seems cut from the same cloth.  Perhaps we can make him an honorary accountant. Oh, and we think of that as a great honor for an economist.

Do read all of Michael’s post.  We have a long quote below because we need it for our discussion of conservatism.  Michael starts out:

Rich’s post this morning, which builds off Matthew Continetti’s excellent column, addresses a feature of the intra-conservative debate that has been on my mind for quite some time: The emphasis on doctrinal discussion above specifics.

Rich’s post is forward looking. He accurately observes: “The questions, What and How? almost never appear, i.e., what policies are we talking about and how are we going to achieve them?”

There is a backward-looking component to this as well. I commonly come across some variant of the following: “I’m a free trader. I just think trade should be put in its proper place. It isn’t more important than family and community.” But what, specifically, does that mean? [f we are honest it means the speaker is not a free trader.]  Was the president right not to enter TPP? Should the United States not have formed NAFTA? Should we have actively tried to keep China out of the global trading system?

In his first paragraph we think Michael is being kind about the contributions of Rich and Matthew but kindness is a good thing.  The conclusion is exactly right because doctrinal discussions don’t lead to specifics.  They can be useful but we need both doctrine and specifics.

The second paragraph is exactly right except he (or Rich) leaves out priorities.  We would end the last sentence in the second paragraph with “rather than others.”

The third paragraph shows how folks defeat proposals that they do not agree with or are not their priorities.  The bold phrases can be rearranged so that the first two are something specific like free speech, lower taxes, or entitlement reform.  You could change the third one to any meaningless generality or keep it the same.

Rather than dissing David French let’s find some specific proposal that we can support.  The Donald and the Democrats may make passage problematical but we need to get specific on a good proposal.  It could be health care but we can’t find Avik Roy’s proposal.  If we don’t like it then Michael tells us how to answer.

Shoot The ******

We need Mel Brooks.  He would have the Donald and Xi each holding himself at gunpoint and, like Cleavon Little in Blazing Saddles, threatening to shoot themselves and using some racist name to make it even more silly.  Kevin D. Williamson is on it at NRO and Mark Perry is all over it at Carpe Diem but we really need Mel because this situation needs humor rather than logic.

It is too silly.  The Chinese harm their folks by raising taxes and raising prices for their citizens.  The Donald says he will harm Americans [we don’t really understand why] perhaps to get even with the Chinese for harming their people.

Sidebar: One almost rational rationale is that The Donald is using bluster to negotiate.  The problem is: what is he negotiating?  He is trying to get the Chinese to lower their taxes and help out the Chinese.  That is nice but we don’t like being a human shield.  End Sidebar.

The Marx Brothers were good on this topic but Mel would be great. Unfortunately if The Donald raises our taxes (tariffs) then as Mel has Slim Pickens say, “We’re gonna need a sh*tload of dimes.”

Yea For NBC

As you know, we support free trade and economic freedom.  We support them because they mean that folks get better things cheaper.  The press rarely does so it gives us joy to report on an NBC story by Martha C. White.

Sidebar: Yes, it bothers us a bit to generalize about the press.  There are members of the press that are serious about economics but mostly they are in support of leftist.  Instapundit always has some good comments on the connection between the press and the left.  End Sidebar.

It is a long quote but it is worth it when Martha says:

“It’s a good example of how the benefits of free trade are extremely diffuse but then the benefits of protectionism are concentrated,” said David Dollar, a senior fellow at the Brookings Institution.  [Emphasis added]

Collectively, Americans are paying more than $1.5 billion extra every year from this tariff alone. Another recent study by a trio of economists from Princeton and Columbia universities and the New York Fed found that the combined impact of all the Trump administration’s trade sanctions costs Americans $1.4 billion each month.

Although the tariff studied by the University of Chicago researchers was only on imported washing machines, the study found that the price increases were significantly more widespread. “Taking the effects on both goods together, the overall tariff elasticity of consumer prices is above 100 percent for the 2018 safeguard tariffs,” they wrote. “The costs of these 2018 tariffs are substantial.”

 

 

The Donald And The Jones Act

Kevin D. Williamson is at his acerbic best in encouraging The Donald to permit waivers from The Jones Act for natural gas distribution.  Kevin asks a great question and gives us the answer in no uncertain terms:

So why are people in New England importing natural gas from Russia?

Welcome to the batty world of trade protectionism.

The United States has on the books and enforces an antediluvian piece of legislation known as the Jones Act, signed into law by that great malefactor of his day, Woodrow Wilson. The Jones Act forbids the transportation of goods, commodities, or people between U.S. seaports unless the vessels used are manufactured, registered, flagged, and owned in the United States — and owned and crewed by U.S. citizens or permanent residents. It’s the reason why a cruise ship picking up passengers in Fort Lauderdale can’t disembark them in Key West — and also the reason why we can’t get natural gas from the Gulf Coast to users in the Northeast and in Puerto Rico.

We might have played the Puerto Rico card more blatantly.  We are not sure if folks care about the WASPs up in the northeast.  We have a question: Can The Donald do that, give a waiver to The Jones Act to help out the US?  We don’t know the answer but we support The Donald giving a waiver.  We also support legislation to eliminate The Jones Act permanently.  Then cruise ships can stop wherever they please and we won’t help out Russia by hurting Texas and New England.

 

 

Trade Among The States

We support free trade.  Everyone should but some folks think it is a problem to buy stuff from other countries.  It is not.  It makes us all richer.  People who oppose free trade, like The Donald, are pretty silly.  We had not, until today, found anyone who thought that trade among the states of the US was a problem.  That person is Dave Skoloda writing in the La Crosse Tribune.  Dave says and we are not making this up:

By one estimate, because we have to ship in almost all our fossil fuels, our energy deficit amounts to some $14.4 billion per year in the cost of importing coal and petroleum products.

That’s money that could benefit the state economy if power could come from in-state sources, according to a report by the Center on Wisconsin Strategy, a UW-Madison-based think tank. Wisconsin has one of the worst energy deficits of all the states, according to the COWS report.

Eeekkk!  People in Wisconsin buy stuff from other states?  Of course it will not help the Wisconsin economy to pay extra for Wisconsin based energy.  An no, we should not care about our energy deficit or our avocado deficit or our cheese surplus.  We might have a frat sand surplus but that has controversy surrounding it. [Check the picture.  The chairperson doesn’t look like a Tiffany.]  Of course, you know what Dave wants to do.  He wants money and regulations from the state for his friends  It is crony capitalism although we are hard pressed to understand why folks use capitalism in the phrase to describe such behavior.  Dave says:

The growing evidence that renewable energy production makes economic and environmental sense begs the question why the Legislature doesn’t wake up and devote some energy to spurring the transition with such things as higher goals for renewables and incentives for electric cars.

If it made economic sense it wouldn’t require an act of the legislature to create it.  Dave wants to charge the citizens of Wisconsin more for less reliable energy and spend their tax dollars to benefit his friends.  We have a much better idea. Let’s sell sand (and milk etc.) to other states and buy their gas (and avocados etc).

Sidebar: Eeekk!  The avocados might come from Mexico rather than New Mexico.  We have no problem with Wisconsin prospering along with Mexico.  You may but surely you have no problem with Wisconsin and North Dakota prospering together.  Do you? We have rewritten many parts of this to make it way less sarcastic.  This is the best we can do on this topic.  End Sidebar.

Both states will be better off.  Dave has a really bad idea but to be fair it is even a worse rationale.  We need to think up a name for an award for ideas like Dave’s.

Jones Act And Trade-offs

Recently we recommended elimination of the Jones Act.  Now George Will has made the same recommendation at NRO in more detail.  It seems that great minds often roll together.  You need to be convinced about George Will?  Kyle Smith at the NRO Corner says George has pellucid prose.  He also has a book you might be interested in.  Oh, it is MWG’s classification that you are worried about.  You have a point.

You should read all of George’s article to understand the problems with the Jones Act.  We are not convinced that Mike Lee’s frontal attack on the Jones Act will be successful.  We support Mike hope he is successful  but we think that some politics might be necessary.  We still like a modest carbon tax, elimination of the gas tax, elimination of the Jones Act, and a player (or two) to be named later.

There are two questions: First can the two sides negotiate in good faith or is the political atmosphere too polluted for a deal.  Second, what is a trade that both sides would accept?  We think even a modest carbon tax is a high priority for the left.  We think a modest carbon tax would be acceptable to the right if some enticements were offered.  We could be wrong twice.