Trade wars

Globalization – Not an option

by Dave

Donald Trump tells his loyal base in his rallies that he is a nationalist, and does what’s best for our country. This distinguishes himself from the Obama era, which looked for global cooperation, usually ending in a compromise.  I mean putting American interests first really does  sound good..   But then something comes along like coronavirus,  a terrible contagious disease and we have a crises that needs international cooperation like never before.

The broad drop off in the stock market yesterday was at least in part due to the announcement that the  incubation period (time until the disease displays symptoms)  of coronavirus could be about 14 days and during that time, the person infected with the virus could be spreading it to others.  Previously, it had been reported that the disease could only be spread through close contact, which sounded like good news.  France officially became the first European country to be touched by the viral pneumonia, which has already contaminated almost 2,000 people and killed 56 others, mostly in Wuhan. Small number of cases have also been reported in Hong Kong, Macao, Taiwan, Thailand, United States, Canada, Australia, Japan, South Korea, Vietnam, Singapore, Malaysia and Nepal. Yes, the World Health Organization has to be very busy.

My point is this attitude of “We can take care of our own problems”  and the rest of the world should do similar, just doesn’t seem to be working on so many levels.  I like the saying more over, “What goes around, comes around.”   We’ve seen the horrors of climate change in Australia and the immense forest fires in the Amazon forests of Brazil.  Our dry periods have become longer increasing our vulnerability to devastating fires.  We have seen equally terrifying fires in California and the increase in hurricanes in the Caribbean and Gulf Coast states.  Yet,  Trump was among other world leaders downplaying the impacts (can that seriously be done!),   criticizing Greta Thonberg and others as “prophets of doom.”   Constructive steps to working with others was not on Trump’s agenda.

Under Trump,  we seem to be involved in a series of trade wars, which result in almost an immediate retaliatory tariffs imposed on the US.   Most notably is the current trade war with China.   I view the current Phase 1 agreement as simply an agreement to delay the trade war escalation.  After the election, should Trump win, things could get very grim as Trump will not be constrained by the need to be re-elected.   The US in the past, relied on the World Trade Organization to resolve disputes, which wasn’t always effective.  However, this going it alone, with increasingly higher tariffs, seems not only fail, but with real economic consequences for US businesses (primarily agriculture, but also primary materials)  and Chinese companies which rely on exports.

The list of what doesn’t work with the nationalistic approach is pretty long.  I could add pressuring North Korea to abandon its intent to abandon its nuclear program, has truly backfired.   Yes,  North Korea had no problem meeting with Trump and agreeing to denuclearization of the Korean peninsula in general terms, but it was all for show.   We hardly can expect China’s support as we engage in a trade war with them.   The uncompromising position of the US on the electronic firm, Huawei, seems just another bargaining chip, rather than a real security risk, as the Trump administration claims.  From Wikipedia:  “In September 2019, Microsoft’s top lawyer and president Brad Smith expressed concern about the continued US ban of Huawei products and services. In an interview with Bloomberg Businessweek, he remarked that the ban shouldn’t be imposed without a “sound basis in fact, logic, and the rule of law”. Microsoft Corporation, which supplies Windows 10 for Huawei PCs, says the allegations by the Trump administration that Huawei is a genuine national security threat to the US are not supported by any evidence.”

And I’ve saved the worst for last – the Iran Nuclear Deal.  It appears to be falling apart, and the last thing I want to see, is Iran joining the list of nuclear nations.  Iran argues it is no longer bound by the agreement along with inspections and limits on enriched uranium, because the US re-imposed sanctions on Iran.   The US will not be able to put pressure Iran through sanctions, the way Obama did, through cooperation of China and Russia.  It looks bad.

Nationalism sounds good, but fails really to fix the problems.  Globalism may seem at times to be slow, and not fully solve problems,  but it at least makes progress in the right direction.  Health issues involved in the coronavirus really must be addressed as a global problems.  Similarly climate change, trade issues and nuclear non-proliferation (Iran and North Korea at present, there will be more to come) are global in nature, and there isn’t any other choice on how to solve them, except by international cooperation on a very large scale.

Stay tuned,

Dave

 

Weaker alone and it’s getting worse (China, Iran, Climate Change) + Over the top distractions

by Dave

Trump has started a number of highly disruptive “wars” without a clear end in sight.  The two big ones is his economic war with China and the political war with Iran.   A third huge division among us and our allies is our recent action against international cooperation in climate change.  Our Department of Justice is currently waging war against our automobile manufacturers who are working with California to improve exhaust emissions standards.  I guess the idea is that we all must breathe the same polluted air.   I’ll leave this last one for separate blog.

— Trade War – No end in sight.

The trade war with China, just seems to get worse every month.  According to experts, China has engaged in unfair trade practices.  But, the current trade wars are just the US and China.  We failed to obtain international support.  We created the World Trade Organization to address issues such as unfair trade practices and currency manipulation.  Now we take action without their involvement.  Trump pulled out of the Trans-Pacific Partnership Agreement (TPPA) which included 12 countries (China not one of them) and would have been the best counter measure against China’s unfair practices.  Trump has correctly stated that prominent Republicans and Democrats were against it.   Likely, if Clinton were elected president, then she would have attempted to make  changes in the agreement.

The TPP agreement is long and complex.  It has survived without the US in a new agreement, the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP).   The US was insisting on certain provisions which would be best for the US. and none of the other countries before we signed it.  See links below.  When Trump pulled out, all the contested provisions were pulled out.  It includes however, what seems at the top of Trump’s wish list – respect for intellectual property as follows:

It [CPTTP] includes the most detailed standards for intellectual property of any trade agreement, as well as protections against intellectual property theft against corporations operating abroad.

Manufacturing as measured by the US ISM manufacturing employment index, last month hit a two year low of  47.4 in August 2019, down from a high of 60.17 on September 2017.  See link.

Trade wars are a lose-lose proposition.   There are 18 countries which are party to the CPTPP agreement including Japan, Mexico, Australia, Singapore and Canada.  They are stronger together, and the US is now weaker as it stands alone.

—  IRAN

Now Iran.  As long as the sanctions were lifted, Iran obeyed by its commitments.  They had a strict monitoring program.  The agreement basically called for the US to lift sanctions as long as Iran was in compliance.  When Trump imposed economic sanctions by refusing to import oil from Iran, it put the US in violation of the agreement.  Further, the US was pressuring other countries and companies not to lift Iran’s oil.

Thus, Iran correctly stated that they had the right not to be bound by the terms of the agreement, primarily on the amount of uranium it could enrich.   None of our European allies want Iran to get nuclear weapons, so they are pleading with the US, to drop the sanctions, so Iran can be brought back into compliance.  President Macron is leading this effort.  The head of the UN atomic energy watchdog agency (IAEA)  is in Iran now,   Iran makes no secret of its violations of the treaty and in fact will comply with thorough IAEA inspections,   It is simply tit-for-tat against actions taken by the US.

Trump’s theory, that once Iran felt the pain of sanctions, it would do anything to please the US hasn’t worked at all.  In fact, it has been a terrible failure.   Treaties are tough to put together, but much easier to fall apart.

I’ll stop here.  I’ve got a lot more to say on Trump’s misguided policies on reducing our carbon emissions and minimizing the real threat it is creating throughout the world, including droughts and extreme weather events.  But that will be a separate blog.

— DISTRACTIONS

I have to contend with a huge number of distracting events in July and August.  It’s really nuts.  Vice President Mike Pence wants an American on Mars by 2024, about 6 years earlier than planned, price tag around 500 billion dollars (a trillion here and there eventually adds up to real money) plus the militarizing of space with the Star Wars themed “Space Force.”   Then the trip to Ireland, was a publicist nightmare.  His grandfather was Irish, but he fled Ireland as a refugee escaping violence and poverty, just the folks Trump is trying to ban from the US.  Plus,  it was a terrible snub to stay at the Trump hotel, far outside of Dublin, for “security reasons.”  Nobody bought this one.   See link.

What else:  Trying somehow link Bill Clinton and Jeff Epstein by repeating social media nonsense,  buying Greenland and insulting Denmark (whose next?), the Trump drawn hurricane maps to include Alabama, pulling funds for Puerto Rico hurricane rebuilding effort to build the Mexican border wall (seeing just how far the National Emergency Act can be stretched), and a barrage of tweet attacks against Jay Powell for basing his decisions on interest rates on economic data and Fed Reserve objectives, rather than Trump’s polling numbers.  Remember, Jay Powell was Trump’s nominee to the Fed and highly qualified for this position by both Democrats and Republicans.

I’m not sure if any of the above means much. Our policies on Iran, China and Climate Change are real issues where an immediate course correction is necessary.  More like 180 degree turn, as we are “stronger together.” This will have to wait until the 2020 elections.

Stay tuned,

Dave

Links:

Manufacturing Unemployment index is down

Wikipedia: Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP)

Atomic watchdog chief in Iran for high-level talks

The distractions:

Mars Confusion 

Pence’s disasterous trip abroad

The Irish love anyone who can drink beer and has a bit of Irish heritage.  I believe they’ll make an exception with VP Mike Pence.

Irish Times Review of Mike Pence’s visit

 

 

 

 

 

Trade Wars and Protectionism

by Dave

Stocks rose yesterday, and will probably give back their gains today.  Lots of slow down, but no melt down like 2008.

Per the Wall Street Journal on August 13:

The Trump administration abruptly suspended plans to impose new tariffs on about $156 billion in goods from China, saying the move was driven by concerns about the impact an escalating trade fight would have on businesses and consumers ahead of the holiday shopping season. The shift fueled a rally on Wall Street, sending the Dow Jones Industrial Average up 1.44% to 26279.91. But it wasn’t immediately clear if the retreat marked a significant step toward resolving the more than yearlong trade conflict between the U.S. and China.  Under the reprieve, the U.S. agreed to postpone until Dec. 15 tariffs of 10% on smartphones, laptops, toys, videogames and other products that were set to take effect on Sept. 1. The value of those goods imported in 2018 was about $156 billion, according to a Wall Street Journal analysis.

Did Trump just now realize that tariffs could result in higher cost to consumers?

The New York Times columnist, Thomas Friedman,  yesterday (Aug 13)  had some comments which sounded complimentary of Trump:

Trump was right in arguing that America should not continue to tolerate systemic abusive Chinese trade practices — intellectual property theft, forced technology transfers, huge government subsidies and nonreciprocal treatment of U.S. companies in China — now that China is virtually America’s technology equal and a rising middle-income country.

Friedman quickly changes his tune.  Good objectives coupled with a failing strategy  leads nowhere.  Actually, tariffs hurts rather than helps the US economy.    Friedman mentions Trump is obsessed with the trade deficit.  As long as workers are paid low wages in China, it is not really a fixable problem.

See Thomas Friedman’s column, Trump and Xi Sittin’ in a Tree.   If you don’t know this song, the next line goes  K I S S I N G.  However, this is another tree, where the sides are too far apart for meaningful discussions, and neither has a way down from their high perches.   Friedman writes,  “Both men have overplayed their hand and are desperate to be seen as the winner in their trade war.”

Fareed Zakaria gave a more broad perspective of how imposing tariffs on a country do not accomplish anything but an immediate retaliation, and the consumer pays the price every time.   CNN link 

Finally,  our Make America Great Again President can no longer claim that the stock market made exceptional gains since he’s been in office.   See  CNN comparison.

Stay tuned,

Dave

 

 

The real immigration problem

by Dave

Donald Trump tweeted a video showing 1,000 migrants coming through a chain link fence at the border.  They were all caught, of course.   We are catching a lot more migrants.  This makes sense, because long before Trump became president, we have spent billions making our southern border more secure.  The Customs and Border Patrol  shows a surge in the number of apprehension and inadmissibility at the SW Border.  Last month approximately 90,000  immigrants who have been apprehended.  This number is about 10,000 less than the CBP numbers which include both   apprehensions and inadmissibilities.

Looking at the video clip a second time, it looks like we could have swarmed in and arrested the first few migrants to get through the hole in the fence and the rest would have not entered the US.  At least on that day at that location.   So, a conscious decision was made to make as big arrest as possible.

I am certain walls do impede the flow of migrants.     Trump likes the word “walls” but what really works are fences.  In fact, what the video showed was that a chain link fence worked, because it took time for the migrants to cut a hole in the fence, and this delay allowed immigration enforcement officers (ICE) to get in position to round everyone up.   It certainly looks like night time video surveillance cameras also work.   The end result of spending all this money at the border,  should logically be that fewer of those intending to cross, actually succeed.  Thus the video could be used, not to show a crisis, but how we’ve succeeded in avoiding one.  I’m certain “electronic walls” (detectors, cameras, drones) work also,

The coyotes will always find ways to get people across the border.  That’s their job.  They will look for the areas with the least barriers to cross.  Obviously, the chain link fence was easy to breach, but the group was so big, it was easy for CBP to spot them.   Border security has been beefed up with about 525 more border agents.

Drugs and other  human trafficking come across the border at the ports of entry, not through holes in chain link fencing.   Both Obama and Trump administrations have been increasing funding to deal with illegal drug smuggling.   It’s a huge problem, but it is a separate issue from the migrant inflows.   Trump is always conflating and confusing these issues.

Statistics are interesting because we are presented with a partial picture and misinterpretations or distortions  are common.  The distortions are often purposeful, particularly with commentators attempting to dramatize the problems.

We know how many people,  who attempt to cross out southern border,   get caught.  This is in the Customs and Border Patrol report.  Last month, 90,000 migrants got caught.  What we want to know is how many made  it to the US.   There are no really good numbers, and trying to guess this based on those caught is wrong.   If measures to catch migrants were basically unchanged, then we could assume that the migrants making it across successfully would go up in proportion to the number who are caught.  Of course this is not true.   Even if we knew how many get into the country illegally, there are substantial numbers who get caught later, particularly if they are involved in criminal activities.   About the best we can say, is that the worst of the migrants, run a high chance of being deported later.

On any particular day or month, you just don’t know in the general population of illegal immigrants is increasing or decreasing.  A lot are here, not because they crossed in illegally, but they overstayed their visas.  A substantial number return to their country.   A general estimate of illegal immigrants in the US is 11 million and our population of illegals may be on the decline.

Now on to removal statistics.   We sent 256.000 illegal immigrants back to their country in Fiscal Year 2018 (last full  month is Sept 2018).   I believe Mexicans crossing at the southern border can be quickly deported.  Returning others to their country of origin has become the real immigration problem.  Apprehensions are nearly double from a year ago, with the real surge from Guatemala and not Mexico.  The real problem is we have run out of space to adequately house immigrants.

 

With more than 13,000 migrants in custody—an unprecedented number and more than twice what CBP considers a “crisis level”—McAleenan said, calling the situation an “unprecedented humanitarian and border security crisis all along our southwest border.” The overcrowding of CBP facilities have caused the agency to start directly releasing some migrants caught at the border, instead of transferring them to Immigration and Customs Enforcement (ICE), which itself doesn’t have sufficient detention capacity to accept them.  This is the first time in more than a decade that the CBP has had to directly release its detainees and is trying to pick those with the lowest risk, McAleenan said.

Trump hates “catch and release” but he is forced into it because there’s no room at the facilities.  So, we are having a trade war over what?  Beds?  You’ve got to be kidding.   This is what Mexican officials will be telling US leaders in Washington on Wednesday  They will be saying “You invested heavily in law enforcement, and nothing else.  That was the route you took,  You were successful.  Now deal with it.”   Also, that they will retaliate in equal measure to any trade tariffs.

The threat of higher tariffs on Mexico, could not come at a worse time, as the USMCA (or NAFTA II) has not bee ratified by Mexico, Canada nor the US.   What we need most right now, is cooperation between the US, Mexico, Guatemala and Honduras on economic development and immigration policy.  The hostile and aggressive actions of Trump will only make the situation worse.

Stay tuned,

Dave

Links:

https://www.theepochtimes.com/border-patrol-apprehensions-reach-10-year-single-day-record-of-over-4100_2857594.html

Ice report (256,000 removals)  includes CBP apprehensions at the border.   Note of the violations, 57% were for “failure to appear”  which makes sense.  Who would appear at a hearing where they would be deported?  This kind of violation is for the catch and release group.   Initial book-in was 154K from ICE and 243K from CBP in FY 2018 for a total of 397,000  – incredible.

https://www.cbp.gov/newsroom/stats/sw-border-migration

 

 

 

 

 

Trade Wars – No winners

by Dave

March 2 is getting way too close for comfort.  The stock market crashed yesterday as hopes dimmed on any negotiated settlement.  The two hard core hawks in Trump’s administration (Lighthizer and Navarro) are likely in control, working on the premise that once we exert enough economic pressure, China will cave in.

Trade wars are unlike real wars.  In this case, we know exactly how China will react on March 2 when tariffs go to 25%.  They will try to match us dollar for dollar. It will simultaneously  hurt both countries.   The slowing Chinese economy coupled with a general slowdown in Europe, will make for less demand for US goods abroad.

China can withstand a lot more pain than we can.  They know this and we know this.   Trump talks about doing what is right for our country, while Chinese leaders talk about global cooperation.   Wow, it used to be the other way around.   It is a mess, because we need China’s help in convincing North Korea to end their nuclear plans.

Republicans used to be for free trade, but by embracing Trump’s policies, they are really for isolation and protectionism.

Stay tuned.

Dave

2018 myth of the year

by Dave

Politifact selects a lie of the year.    They don’t have a similar award for myths.  They should.

A political myth is perpetrated usually with great concoction of bits of truths mixed in with a lot of lies or exaggerations.  John Kennedy got it right in 1962 when he said:

“The greatest enemy of truth is very often not the lie – deliberate, contrived and dishonest, but the myth – persistent, persuasive and unrealistic.  Too often we hold fast to the cliches of our forebears.  We subject all facts to a prefabricated set of interpretations.  We enjoy the comfort of opinion without the discomfort of thought.”

I am concerned with the mix of news and opinions presented primarily on cable news.  Fox News is a clear example of this.

“You’re entitled to your own opinions. You’re not entitled to your own facts.”

Let’s consider a few examples:   Trump sent the military to halt the impending invasion of a caravan of immigrants, filled with would be criminals.

Basically,  this was just a mid-term election stunt.   Unfortunately, a very unnecessary one.  But it was done to because immigration was a hot button issue, and Trump wanted to stand out, as the toughest guy on halting illegal immigration.

But the myth of the year, I believe is Trump’s  simple statement:

“Trade wars are good, and easy to win”

Trade wars makes every economist who understands the mechanisms of capitalism cringe.   Tariffs imposed on China result almost immediately in China imposing tariffs on the US.   No one is ahead in negotiations.  The government gains because they receive the tariff income, but industries which import from China must pay higher costs.   Higher steel prices strongly impacts the oil industry and their capital investments.  I believe Trump has  killed any chance of the  Keystone XL pipeline, Phase 4 of every being constructed given the sharp drop in oil prices and the increase in steel prices.   Trump bragged at his ability to talk down oil prices, by getting Saudi Arabia to increase production.   The Saudi’s increase production as Trump pushed through new sanctions against Iran, and importers of Iranian oil.   Of course, Trump then reversed course and granted waivers to many countries, so Iranian oil could keep flowing to the world market, creating a temporary oil glut.

The Department of Energy will let oil companies drill almost anywhere they want, but the economics of many projects are gone.  This includes the decades of controversy of drilling in northern Alaska and extensive oil shale developments.

Mr. Tariff man, you’ve made a mess of things!

Stay tuned

Dave

 

 

 

 

 

Trump: Populism, Nationalism with overriding Pro-business focus

by Dave

Populism and nationalism are not policies, but ideologies, which when rigidly applied or taken to extremes, have terrible consequences.   Populism concentrates on the problem, rather than the solution.   Nothing is every built on existing solutions.   It is more of a tear down and rebuild philosophy,  Underlying populism is a focus not on problems of society, but on government itself.   An excellent example was Trump’s campaign slogan, “Let’s drain the swamp.”   The message was that policies in the Obama administration were only what lobbyists wanted, and he was truly independent of their efforts.   The more Hillary Clinton spoke of her background in government, the more she became part of the “elite” class who were causing all the problems.

Populists exaggerate the problem and are vague on the solutions.  Trump frequently goes from an exaggeration to an outright lie.   Populists  are constantly at war with opponents who they claim will only make matters worse by continuing government policies.   Case in point was Scott Pruitt, Administrator of the EPA, taking an axe to hundreds of environmental rules, on the basis of deregulation.   He had no interest in protecting the environment.  He allowed  and in fact appointed “elitists” or fossil fuel lobbyists guide federal policies.  I guess Pruitt would defend his policies as doing what is best for the nation in helping companies explore for oil, ultimately lowering the cost of gasoline.

Nationalism says that a country does only what is in its best interest.   With Trump, it seems anytime we are part of an international organization, we have this tremendous clout to determine outcomes.   Case in point, is Trump’s verbal attack of Germany at the NATO summit.

Trump renewed the long-standing U.S. criticism of the project on Wednesday, and doubled down by tying it to the future of NATO. “Germany, as far as I’m concerned, is captive to Russia because it’s getting so much of its energy from Russia,” Trump told NATO Secretary General Jens Stoltenberg, speaking on camera. “We have to talk about the billions and billions of dollars that’s being paid to the country we’re supposed to be protecting you against.”

Trump was referring to the Nord Stream 2.  It will take another blog to Here is the irony of nationalism – other countries can’t tell us what to do, but we can tell them how to run their countries. I will explain the Nord Stream 2 pipeline in a later blog.

The third element is a pro-business agenda.  The tax cut is a very much part of this.  It seems not much of the tax cut is being put to use to expand manufacturing.  It likely will drive up our deficits.   With trade tariffs, this will in the short term help some businesses, particularly steel and aluminium manufacturers.  It is likely to hurt US car makers, and drive up the price of cars.  In Florida,  the orange and grapefruit growers are worried about being priced out of Asian markets due to reciprocal tariffs.

So, if populism focuses only on the problem, and nationalism guides policy decisions, the end result as in the coming trade war, likely will hurt Trump’s pro-business agenda.  International cooperation will be dwindling under Trump, as he pushes America first, and above everything else.

The travel ban is an excellent example of populism and nationalism, accomplishing very little.   Certainly,  the Muslim world thinks very little of our president.

Getting tough on immigration, was rooted in populism and nationalism.   It was founded on exaggeration and frequent lies. The resulting family separation and horrific outcomes were predictable.  It was a bet that executive authority would triumph over judicial restraint.  It didn’t.

Stay tuned,

Dave

 

 

 

Trade Wars – What doesn’t work

by Dave

“Trade wars are good, and easy to win”  Donald Trump March 2, 2018 tweet

Trump would like to pressure China into respecting intellectual property.  A lot of folks who understand free trade say this is fair and right.   Trade wars using tariffs don’t work.  In fact, the outcomes are so absolutely predictable, the other country will retaliate.  We have a 34 billion dollar tariff against China, so they impose equal tariffs against us.   Their and our exporters get hurt.  Does any country gain leverage on trade disputes by first imposing tariffs?   What tariffs have done is to end trade discussions between countries.   Policy changes can’t proceed while trade wars are in progress.   So, the idea of waging war and peace doesn’t work.  And leverage would work if one country is feeling real pain and the other is not.  But, this isn’t the case, and our pain is very apparent to voters.  China doesn’t have voters, so their tolerance is as high as the leaders want to go.

Really dumb.

Stay tuned,

Dave

PS.  I’m working on another blog called Presidential lies and myths.    Trump’s tweet on trade wars is a myth and it’s a whopper.   Lies usually have some false statistic associated with them, most notably with immigration and the economy.

 

 

 

 

Trump’s economic advisors

by Dave

“It is a horrible deal, really horrible, but we’re going to fix that”

This is any particular quote from Trump but applicable to many accords – from NAFTA, the Trans-Pacific Partnership and to many bilateral accords, most recently his attack on he  South Korean Trade Agreement.   The same quote can be said of the Iran Nuclear deal and the Paris Accords on Climate Change Mitigation.   Everything is blamed on prior administrations, but most of the blame still goes to President Obama.

A minor case in point –  on January 12, 2018,  Trump cancelled a trip to the US embassy in London, citing Obama poor decision in moving the Embassy at a cost of 1.2 billion dollars.   It was decided upon by President Bush and not Obama.   Trump rarely lets facts get in his way.

Gary Cohen,  was the head of the National Economic Council,  and chief economic advisor to Trump.   He is generally accredited for Trump’s tax cut and jobs program, signed into law on December 22, 2017.   On March 6, 2018,  Gary Cohen resigned in March, just before the imposition of tariffs on aluminum and steel.  It was widely reported that he was against the tariffs.  Larry Kudlow has been appointed to this position.   Kudlow is a strong believer in  supply-side economics, which means that a cut in federal taxes, will stimulate the economy sufficiently to make up for the loss in tax revenue.  He been dead wrong a number of times, beginning with the opinion that tax increases would dampen the economy during the Clinton administration.  Just the reverse happened, and the economy boomed after this.

Kudlow was a strong advocate of George W. Bush’s substantial tax cuts, and argued that the tax cuts would lead to an economic boom of equal magnitude. After the implementation of the Bush tax cuts, Kudlow insisted year after year that the economy was in the middle of a “Bush boom”, and chastised other commentators for failing to realize it. Kudlow firmly denied that the United States would enter a recession in 2007, or that it was in the midst of a recession in early to mid-2008. In December 2007, he wrote: “The recession debate is over. It’s not gonna happen. Time to move on. At a bare minimum, we are looking at Goldilocks 2.0. (And that’s a minimum). The Bush boom is alive and well. It’s finishing up its sixth splendid year with many more years to come”. In a May 2008 column entitled “‘R’ is for ‘Right,'” Kudlow wrote: “President George W. Bush may turn out to be the top economic forecaster in the country”. By July 2008, Kudlow continued to deny that the economy was looking poor, insisting that “We are in a mental recession, not an actual recession.” Lehman Brothers collapsed in September 2008, creating a full-blown international banking crisis.

Larry Kudlow is well educated, articulate and  very straight forward.  He has been a regular commentator on MSNBC.  His comments is generally appreciated, as he is well informed.  However,  he has been frequently wrong on the basic moves of the economy, I believe because of his philosophical perspective of less government intervention.   This has been chronicled in a book entitled Superforecasting (2015).   The book explains how experts in various fields, do no better than amateurs.

Two key advisers right now, are Peter Navarro, Director of the National Trade Council  and Wilbur Ross,  Secretary of the Commerce Department.   In many administrations, these organizations and individuals might not receive much attention, as they engage in behind the scenes negotiations on trade and commerce.   However,  as fears of a trade war with China,  intensify and concerns of the impact on our economy is debated,  these two individuals are increasingly in the media, particularly in the business news reporting.

Peter Navarro is a very controversial figure at present.  Wikipedia labels him as a heterodox economist, with opinions  outside of the mainstream economistss.   He is also considered a protectionist and isolationist by Wikipedia.   According to the Guardian:

Navarro was a key architect of Trump’s “America First” policy of economic nationalism and a tireless critic of China’s economic policies – one of his books is decorated with a map of America being stabbed in the heart with a knife marked Made in China. Although he has agitated for aggressively protectionist trade policy since joining the Trump campaign in 2016, the tariffs are his first key victory. During the campaign, Navarro, the only economics PhD in the Trump team, described his role as merely a facilitator. “The president – he’s the man who leads,” he told the Wall Street Journal. “He says, ‘I want to do this. How do we do it?’ The way I help is figuring out how you might do it.”

Protectionism, or economic nationalism?  Perhaps the choice of words doesn’t matter; it is the outcomes in the long run that are important.   I’ve included links on Peter Navarro at the end of this blog.

Finally,  a key adviser to Donald Trump is  Wilbur Ross.   His view on trade, as per Wikipedia:

On the subject of foreign trade, Ross has said: “I am not anti-trade. I am pro-trade, but I’m pro-sensible trade. [Being anti-trade] is a disadvantage of the American worker and the American manufacturing community.” Ross has also said that the government “should provide access to our markets to those countries who play fair, play by the rules and give everybody a fair chance to compete. Those who do not should not get away with it – they should be punished.” Initially in favor of the Trans-Pacific Partnership, Ross has said that after examining the agreement, he found it was “not consistent with what was advertised.”[34]

In 2004, The Economist described Ross’s views as protectionist. Germany’s chancellor Angela Merkel has also voiced concerns during 2018 World Economic Forum in Davos over Ross and the Trump administration views as “not the proper answer”.  Ross, at the 2018 World Economic Forum, responded to concerns by noting that “There have always been trade wars. The difference now is U.S. troops are now coming to the ramparts.”

Wilbur Ross has appeared on a number of business news stations, including MSNBC, and I happen to like his straight forward answers to questions.  He always seems to be well prepared, informed and polite.   He chooses his words well.    However, he seems to underplay the affect of the proposed tariffs  might have on the stock market.

How the Trump trade wars will finally be resolved, is difficult to say.   Republican biased news stations say that in the end,   the hard position taken  by Trump will result in China yielding, particularly on intellectual property rights.  Other commentators see only an escalation of tariffs, as China would rather fight than be seen as having given in to the US.   Economic nationalism works on both continents, sometimes escalation is easier than compromise.  Certainly, the sell off in the stock market is based on the potential for a protracted battle.

As I publish this blog, the Dow is poised to drop around 500 points.

I have included a number of links on Cohen, Kudlow, Navarro and Ross.   All individuals  have extensive biographies available on the Internet.

Stay tuned,

Dave

Links:

Wikipedia:Wilbur Ross

Wikipedia:  Peter Navarro 

Peter Navarro, the economist shaping Trump’s economic thinking

Wikipedia:  Larry Kudlow

New York Times:  Larry Kudlow is the new favorite to replace Gary Cohen

Wikipedia:  Gary Cohen