China's unavoidable trade reality

Sundance writes at The Conservative Treehouse,

China is a production-based economic model, they do not have the ability, or wealth, to consume their own durable goods production; they rely on exports.

The U.S. is a more balanced economy; we consume 80% of our own production. We are self-sustaining, China is not.

Without a market to sell their products, the Chinese economy cannot survive.

Conversely, China has focused so intensely on durable-goods manufacturing, their consumable goods market (food) is dependent; they cannot feed themselves. The U.S. can survive without exporting food, China cannot survive without importing food. The U.S. economy can survive without importing durable goods; the Chinese economy cannot survive without exporting durable goods. This is the unavoidable trade reality. As a consequence, President Trump has all the factual leverage.

Again, the key dynamic: The U.S. economy can survive without importing durable goods; the Chinese economy cannot survive without exporting durable goods. This is the unavoidable trade reality.

Now, frame that in a similar way for NAFTA.

The Canadian and Mexican economy (due to NAFTA) cannot survive without importing cheap durable goods from China to use in their assembly-based economies, and then trans-ship into the U.S market. However, the U.S. economy can survive, it can actually expand BIGLY, without accepting trans-shipped assembled goods from Mexico and Canada

Put simply, without NAFTA, the assembly processes just moves INTO the U.S because the market *is* the United States. We are the $20 trillion customer. We hold the leverage.

Read more here.

"A Measured Response"

President Trump ran on doing four economics issues: tax cut, deregulation, unleashing the energy industry, and trade reform. He has already been attacked by people like Orrin Hatch, who have been putting up with the status quo for the last twenty years!

Peter Navarro does not believe any country will retaliate. We are the most lucrative market in the world. Our trade deficit with China is $375,000,000,000!

Wages and jobs; jobs and wages!

Laura Ingraham gives Trump credit for being the first US President to stand up to China, which has become increasingly aggressive. She has Bob Lightheizer as a guest. He, as US Trade Representative, is trying to reverse a very bad trend for our workers, ranchers, and farmers: wages and jobs. Reduce the deficit!

"Leadership is different from being a sucker and being a patsy."

Are you a trade or economic wonk? Sundance has videos of Commerce Secretary Wilbur Ross in interviews and panel discussions in Davos, Switzerland at the World Economic Forum.

“Before we get into sticks and stones about free trade we ought to first talk about, is there really free trade or is it a unicorn in the garden,” said Ross. {{{ZING}}} Again, no response from the panel. Despite the tariffs Trump imposed this week on solar panels and washing machines, China is hoping for a “bumper year” for new trade deals, according to China’s own Commerce Ministry.

Another Rossism: … “We don’t intend to abrogate leadership, but leadership is different from being a sucker and being a patsy. We would like to be the leader in making the world trade system more fair and more equitable to all participants.” …

Read more here.

How Multinational Corporations, Wall Street interests and Multinational Financial stakeholders create trade outcomes favorable to them

Here is another urgent effort by Sundance at The Conservative Treehouse to educate us on economic issues.

Earlier today USTR Robert Lighthizer released President Trump’s NAFTA Objectives outline to congress and the American people. The NAFTA renegotiations are scheduled to begin in August.

The bilateral trade negotiations with the EU (European Union), S.E.A.N. (Southeast Asian Nations), China, U.K. and all other nations will follow -individually- after the NAFTA process is complete.

It cannot be overstated how critical this is. Please, please, understand. There are trillions of dollars at stake. All political opposition to President Donald Trump will increase in exponential severity as the dates of these renegotiated trade deals draws closer. There are trillions of dollars at stake. The entities outlined below will throw everything at the current administration in an effort to secure a better financial outcome for their interests.

Multinational Corporations, Wall Street interests and Multinational Financial stakeholders (mostly banks and foreign governments), have lobbied DC politicians for decades to create trade outcomes favorable to them. It is, at its core, the financial and policy cancer that has distributed America’s physical and financial wealth globally. Additionally, multinational corporate media are part of this entire process and are stakeholders in the outcomes.

Read more here.

Economic national security

Sundance is busy at The Conservative Treehouse. One of his posts is, as often is the case, about economics.

...Most are not aware that in reality, Steven Mnuchin has more control over economic national security than Secretary of Defense General Mattis has over military national security. Both Secretary of State Rex Tillerson and Defense Secretary Mattis are more reliant on Mnuchin than any other cabinet member.

No-one ever fully understood the national security trade leverage, apart from economic sanctions aspect, other than businessman Donald Trump, then candidate Donald Trump, and now President Donald Trump. His economic views/policies are specifically and intensely focused on America’s interests first. Hence, MAGA.

Team Trump (Mnuchin, Ross, Lighthizer, Tillerson etc) are using every angle and point of leverage to unraveling decades of global tentacles undermining our economy. [EXPLAINED HERE] Every single Trump policy is connected to economic security.

As we are seeing in action, the energy sector is the first beneficiary. This makes sense because it underlines all other manufacturing advantages. However, all other manufacturing sectors of a revitalized U.S. industrial economy will also benefit over time as the policies are actualized.

Read more here.

Trump team meets with South Korea president

Sundance writes at The Conservative Treehouse,

...It is worth noting and emphasizing the Paris Climate treaty specifically exempted China, India, and SEAN (South East Asia Nations) from compliance with standards within the treaty. This was by design of the multinational interests who constructed their economic global control mechanism under the auspices of ‘climate change’. The climate was never the driver of the Paris treaty, it was always about multinational economic control.

Read more here.

Trump's negotiations with China

Left behind

At the Wall Street Journal Brett Stephens laments that the Republican party has left him. On immigration he remembers a debate between George H.W. Bush and Ronald Reagan:

At a 1980 Republican primary debate in Houston, candidates George H.W. Bush and Ronald Reagan were asked whether the children of illegal immigrants should be allowed to attend public schools for free. Mr. Bush said they should. “We’re creating a whole society of really honorable, decent, family-loving people that are in violation of the law,” he lamented.

Reagan agreed. Instead of “putting up a fence,” he asked, “why don’t we . . . make it possible for them to come here legally with a work permit, and then, while they’re working and earning here, they pay taxes here.” For good measure, Reagan suggested we should “open the border both ways.”

Where, in the populist fervor to build a wall with Mexico and deport millions of human beings, is that Republican Party today?

Trade: In one of his final radio addresses as president, Reagan warned “we should beware of the demagogues who are ready to declare a trade war against our friends—weakening our economy, our national security, and the entire free world—all while cynically waving the American flag.”

Where, in the tide of Tea Party opposition to the Trans-Pacific Partnership and all those other “disastrous trade deals” that Donald Trump never fails to mention, is that Republican Party today?

Foreign policy: In 1947 Harry Truman asked Arthur Vandenberg, the Republican chairman of the Senate Foreign Relations Committee, to support his efforts to shore up the governments in Greece and Turkey against Soviet aggression. Vandenberg agreed, marking his—and the GOP’s—turn from isolationism to internationalism.

Since then, six Republican presidents have never wavered in their view that a robust system of treaty alliances such as NATO are critical for defending the international liberal order, or that the U.S. should dissuade faraway allies such as South Korea and Saudi Arabia from seeking nuclear weapons, or that states such as Russia should be kept out of regions such as the Middle East.

Where, amid Mr. Trump’s routine denunciations of our allegedly freeloading allies, or Newt Gingrich’s public doubts about defending NATO member Estonia against Russian aggression, or the alt-right’s attacks on “globalism,” or Sean Hannity’s newfound championship of WikiLeaks and its founder, Julian Assange, is that Republican Party today?

Culture, civility and character:

For decades, conservative publishers have issued a long succession of titles on the importance of personal character to the preservation of democratic institutions. Notable on the list is William J. Bennett’s “The Book of Virtues,” whose first chapter deals with the importance of self-discipline. The former secretary of education followed that one up with “The Death of Outrage: Bill Clinton and the Assault on American Ideals,” timed to the Lewinsky scandal.

Where, in the apparently limitless forgiveness GOP voters are willing to extend to Mr. Trump for his public affronts to “that face” Carly or that “nasty woman” Hillary Clinton, is that Republican Party today?

... I don’t see the point of belonging to a party on the increasingly dubious assumption that it’s slightly less bad than the opposition. If I can’t get my Grand Old Party back, I’d rather help build a new one.

Read more here.

Reality begs to differ

Scott Lincicome writes at National Review a very important explanation of the American labor market's lack of dynamism.

It is virtually impossible to tune in to political TV or radio without hearing presidential hopeful Donald Trump promise to restore American manufacturing glory by imposing punitive tariffs on imports from China, Mexico, and any other country that pops into his golden dome. Trump’s shtick, repeated ad nauseam since he first started toying with a presidential run in the 1990s, is replete with errors and myths. But buried therein is an important kernel of truth about America’s labor market and its distressing lack of dynamism — a problem exposed, though certainly not caused, by free trade.

There remains no evidence that imports are the primary driver of U.S. manufacturing-job losses, or that the U.S. manufacturing sector is actually in decline. In fact, American manufacturers began slowly and steadily shedding workers as a share of the U.S. work force in the late 1940s and in sheer numerical terms in 1979 — long before the North American Free Trade Agreement existed or Chinese imports were more than a rounding error in U.S. GDP. By contrast, the United States has gained about 54 million jobs since 1980, 30-plus million of which came after the creation of NAFTA and the World Trade Organization in the mid 1990s.

Meanwhile, it is a myth that the United States “doesn’t make anything anymore” or that trade agreements have caused a “giant sucking sound” as investment and jobs go elsewhere. Our manufacturers continue to set production and export records, and the United States is the world’s second-largest manufacturer (17.2 percent of total global output) and third-largest exporter. America also remains the world’s top destination for foreign direct investment ($384 billion in 2015 alone) — more than double second-place Hong Kong and almost triple third-place China. Much of this investment went to U.S. manufacturing assets, as shiny new BMW, Toyota, and other foreign-owned plants across the American South attest.

For these and other reasons, it is widely accepted that U.S. manufacturing “decline” has been limited to employment, and that these losses were primarily caused by productivity gains, not trade.

The consumer gains from trade disproportionally accrue to America’s poor and middle class. A 2015 study by Pablo Fajgelbaum and Amit Khandelwal finds that these groups, because they concentrate spending in more-traded sectors such as food and clothing, enjoy almost 90 percent of the consumer benefits of trade. These benefits are even more concentrated for Chinese imports, since poor and middle-class American consumers are more likely than their richer counterparts to shop at “big box” stores such as Target and Walmart that carry a lot of made-in-China goods.

American businesses, of course, also benefit. More than half of all imports (including those from China) are inputs and capital goods consumed by other American manufacturers to make globally competitive products.

David Autor in 2012 stated, “I’m not anti-trade, but it is important to realize that there are reasons why people worry about this issue.” He elaborated: “We do not have a good set of policies at present for helping workers adjust to trade or, for that matter, to any kind of technological change.” His co-author Gordon Hanson told the New York Times earlier this year: “The problem is not trade liberalization. . . . The problem is that labor-market adjustment is too slow.”

Total non-farm job openings, for example, are at their highest point on record (including well over a million unfilled jobs in “blue collar” fields such as manufacturing, construction, and transportation) and continue to outpace hirings. ...workers have become less likely to move to areas with better employment opportunities, choosing instead to remain in places hit hard by the Great Recession and to drop out of the labor force entirely.

Meanwhile, the costs of health care, child care, and education — all highly subsidized, protected, and regulated — have risen far faster than the rate of inflation, and there is little doubt that government intervention has played a role in this trend. The New York Fed in 2015, for example, found a strong link between federal student aid and the skyrocketing cost of tuition. Such cost increases disproportionately harm poor and middle-class Americans and force them to spend more of their stagnating wages on these essential services — money that could have gone into a savings account. Indeed, the rampant inflation in these sectors stands in stark contrast to the declining prices of other goods, such as clothing, toys, and electronics, that are less subsidized, more open to competition (foreign and domestic), and less subject to onerous government regulation.

Second, government policy actively discourages Americans from finding work in burgeoning fields. Perhaps the most brazen example of such policies is the federal tax code’s business deduction for work-related education, which permits a worker to deduct education and training expenses from his taxable income, but only if they relate to his current job.

...According to one recent study, a big cause of the recent collapse of business dynamism is the federal government’s response to the Great Recession, which involved “defensive policies to protect large firms and existing employment, rather than proactive policies to encourage entrepreneurship and new venture/job creation.” None of this is good for people looking for a job or considering a career change.

Free trade — with China or any other country — has demonstrable benefits for American families and businesses. To the extent he denies this, Donald Trump is entirely wrong. However, the economic anxiety propelling Trump reflects very real problems in America’s labor market — problems caused not by Chinese imports or any other type of creative destruction but by multiple government-policy failures and a resulting collapse of labor dynamism. The solutions to these problems are complex and deserving of substantial debate.

Protectionism not only would ensure that these problems aren’t fixed but would actually make things far worse.

Read more here.

Immigration and trade: American workers being left out

Someone whom I respect, Matt Dunn of 710 KNUS radio in Denver, has a show every Sunday night called Backbone Radio from 6 to 8 p.m. MST. Matt likes Donald Trump because of Trump's positions on trade and securing our borders. Even though I was repulsed by Trump in last night's debate, I decided to listen to Matt's whole show tonight. Matt agrees with Trump that America is losing the trade wars. He played a clip from the Carrier executive announcing to workers in Indiana that they would soon be out of jobs. You may remember Trump bringing that up last night.



Matt Dunn's point is that no one but Trump is raising this issue. Matt fears that if a candidate is not elected who will put a stop to this loss of jobs, people will vote for socialism.

Trey Gowdy endorses Rubio

Trey Gowdy is going to be campaigning in Iowa next week for Marco Rubio. At Breitbart Julie Hahn examines in great detail Gowdy's record on illegal immigration and the fast track trade agreement.

Trey Gowdy’s record on immigration and trade underscores that while establishment media may try to put Jeff Sessions and Trey Gowdy together in a broad “conservative” bucket, Gowdy’s statements on immigration and trade represent the antithesis of Jeff Sessions’ populist platform.

...According to Pew, 92 percent of the GOP electorate—and 83 percent of the American electorate as a whole—would like to see future immigration growth curbed rather than increased. The polling data suggests that Gowdy, Rubio, and Ryan’s support for higher rates of foreign worker importations places them far outside the mainstream of Republican thought. Yet despite the data, one hill operative put it to Breitbart News thusly: “The clique running the show in Congress are the Ryan-Rubio radical Republicans.”

As Rush Limbaugh warned earlier this year, with Rubio in the White House and Paul Ryan as Speaker, in the “first 12-to-18 months, the donor-class agenda is implemented, including amnesty and whatever else they want.”

Breitbart News asked Gowdy several questions about his endorsement and the expected impact a President Rubio would have on the nation’s immigration policies. Gowdy’s office has not responded.

Read much more here.