Tuesday, March 06, 2018

Protectionism Always Fails... You Think Trumpy-The-Clown Will Be The Exception?


As the midterms approach, it's becoming clearer and clearer that Trump's toxicity is going to sink a lot of ships, er, careers. As I mentioned earlier, if a weak candidate like Conor Lamb wins a week from today in PA-18, all hell will break loose inside the House Republican Caucus. More GOP incumbents-- including Paul Ryan-- will announce retirement plans and more and more GOP incumbents will start making it aggressively clear to their constituents that they will stand up to Trump.

In fact, his ill-considered decision to snap his fingers and follow Wilbur Ross' insane suggestion that he start a trade war has already given Republicans an excuse to scream that the orange chimp with the crown on his head has no clothes.

The strongest and most passionate support for Trump's tariffs I've heard was from Leo Gerard president of the Steelworkers Union when he was a guest on Chris Hayes' MSNBC show. (Tape is not available but Chris says it will be soon.) Gerard was an economist before he was a steelworker and he's not happy Trump blundered into punishing "countries that don't cheat," like Canada and the EU, but he's no fan of China's. "Some of these idiots that say we are going to start a trade war, he said, "well, we are in a trade war now, and we are just sitting back."

Meanwhile, Republicans in Congress, are screaming like stuck pigs. The tariffs are somewhat popular in Paul Ryan's Wisconsin district but he's trying to talk Trump out of imposing them. (Trump doesn't need congressional approval to do this, no matter how damaging they are.) [Some of Trump's allies are whispering that the whole tariff thing amounts to a ploy to elect Saccone in PA-18 next week and that Trump will back off the trade war shtik after the special election.]
Ryan spokeswoman AshLee Strong issued a statement:

“We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan. The new tax reform law has boosted the economy and we certainly don’t want to jeopardize those gains.”

The Washington Post reported that members of the House Ways and Means Committee were also circulating a letter expressing their opposition to the tariffs.

Several GOP lawmakers had expressed their contempt for the policy when Trump announced it last week.

And Congress is even considering-- gasp-- attempting to rein in the president, the Post reports. While Trump does have the authority to issue tariffs, Business Insider’s Josh Barro writes that Congress could simply pass a new law stripping him of that power, then try to override his veto. (It seems doubtful the current set of lawmakers would have the stomach for this move.)
Will there be a backlash against Republicans in the midterms? The protectionism works for Trump politically bit not necessarily for all Republicans. For one thing, a trade war would drive consumer prices up, noticeably so. Orrin Hatch expressed his dismay within hours of Trump's original announcement: "Should the administration opt to move forward with tariffs on steel and aluminum, American manufacturers, businesses and consumers would be forced to bear the brunt, paying more for steel and steel products. Such action could very well undercut the benefits of the pro-growth tax reform we fought to get on the books." Reactionary Trump ally Lawrence Kudlow was so upset he may start snorting coke again. From his CNBC OpEd with right-wing economists Arthur Laffer and Stephen Moore:
One of the ironies of trade protectionism is that tariffs and import quotas are what we do to ourselves in times of peace what foreign nations do to u‎s with blockades to keep imports from entering our country in times of war.

Or consider that we impose sanctions on U.S. enemies such as North Korea, Russia and Iran because we want them to feel the economic pain of being deprived of imports. But now we are imposing sanctions on our own country by punishing with tariffs in order to make Americans more prosperous. If ever there were a crisis of logic, this is it.

President Trump genuinely believes that his steel and aluminum tariffs will save thousands of blue collar jobs. And we know from our interactions with him that he truly cares about these workers in Pennsylvania, Ohio and other rust belt states.

The American people do as well, and we don't want factories to shut down. But even if tariffs save every one of the 140,000 or so steel jobs in America, it puts at risk 5 million manufacturing and related jobs in industries that use steel. These producers now have to compete in hyper-competitive international markets using steel that is 20 percent above the world price and aluminum that is 7 to 10 percent above the price paid by our foreign rivals.

In other words, steel and aluminum may win in the short term, but steel and aluminum users and consumers will lose. In fact, tariff hikes are really tax hikes.

...Trump should also examine the historical record on tariffs, because they have almost never worked as intended and almost always deliver an unhappy ending.

The Smoot-Hawley Tariff Act of 1930 signed into law by Republican President Herbert Hoover gave us, and worsened, the Great Depression.

Richard Nixon's 10 percent import surcharge contributed to the stagflation of the 1970s.

George W. Bush tried to save the steel industry by imposing tariffs on steel and If those tariffs worked, we wouldn't be having this discussion today. ‎We tried to save the color TV industry with protectionist measures and instead they wiped out the domestic production.

...Ronald Reagan in the 1980s invoked anti-dumping provisions against Japanese steel. It was one of his few decisions he later confessed he wishes he hadn't made. ‎Trump will come to learn the same thing, and we hope it is sooner, not later.

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At 6:11 PM, Anonymous Anonymous said...

If these were traditional times, I'd agree with the themes in the post. But since "democrats" have been kowtowing to St Ronnie of Raygunz since 1980, there remains plenty of time on the clock for the GOP to pull out a victory despite defeat looking all but certain right now. Think Hillary having in in the bag last year. The Dumbs could certainly lose it all again.

At 6:55 AM, Anonymous Anonymous said...

If you look at what Japan has done since the '60s plus what China has done since the '80s, you must allow that protectionism DOES work, spectacularly ... as long as your trading partner is as stupid as the united shitholes of America.

The story of how all consumer electronics manufacture (and now, engineering) moved from the us to asia in the span of less than 2 decades is a saga of corporate greed and American stupidity that will leave you shaking your head.

Does anyone remember the last us manufacturer of television machines (Curtis Mathis co. the family ratfucked by governor GW Bush for land so he could build his baseball stadium)? It's been a long time since then.

At 7:18 AM, Anonymous Anonymous said...

What doesn't work is Free Trade, Nafta .. the WTO, where corporate control,profits and self interest Trumps, US environmental & labor laws, self determination and national interest. Everything went downhill in this country after above were implemented and corporate fascism became the norm.

At 11:38 AM, Anonymous Anonymous said...

It actually predated Clinton, who gave us the first of the xxFTAs, WTO, GATT plus repeal of FDR's bank laws.

The Japanese were swapping corporate America their cheap labor in exchange for us "registering" technology with their government. They then improved our methods, built our shit faster and cheaper and sold it back to us/US and drove us/US factories/jobs out of business. SK and China followed suit enabled by the American corporate waiving of tariffs due to them being "emerging economies" or some shit.

Then the xxFTAs removed all barriers, real (but often ignored) or imagined, to the migration of capital to climes of cheapest overhead.

At 2:49 PM, Anonymous Anonymous said...

Yep protectionism, done right does work. Alexander Hamilton wrote the book, and the US practiced it, and got rich in the 19th century. The Germans copied us and became Europe's strongest power under the Kaiser.

Then after WWII we forgot what we learned, Asia learned from the Germans and took over the world economy, and the rest is history.

Trump doesn't know how to do protectionism or anything else, so the result will be another US fuckup.

At 3:14 PM, Anonymous Anonymous said...

Yes, the entire us government was financed by tariffs only for a century. But our corporations found cheaper labor/overhead elsewhere after WWII. Domestic economic health, commons, jobs, everything FDR taught us... all lost almost immediately.

Once the Asians became halfway competent making shit... we were buying it all from them instead of making it ourselves.

We still make war materials and financial fraud schemes... that's about it.
But very soon, we won't have the mfg and machining skills to make war materials any more. We bought ammo from fucking china for Iraq/iran because we couldn't make it fast enough any more (I mean we had to support the wars AND all the domestic fire fights). We also buy airplane parts from all over the world. Pretty soon the Chinese and/or Japanese will compete with boeing and airbus for commercial airliners... and then we won't make shit any more.

We'll buy the printing presses and linen to mint our own money from the Asians. It'd make sense if we just let them print it there and just keep it. It would save shipping it here and then back there again. Mark it down. It'll happen.


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