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 Richmans' Trade and Taxes Blog



Capitalism is coming to an end in China
Howard Richman, 11/17/2019

Capitalism is coming to an end in China. On the China Law Blog, Dan Harris writes that Chinese businesses are trying to get short-term profits now because they don’t believe in the long run. Harris also writes that Chinese partners in joint manufacturing ventures with American companies are starting to ignore their American partners:

[O]ur China lawyers are dealing with an increasing number of situations where the Chinese side of a China joint venture has essentially taken over the joint venture and stops communicating with its foreign joint venture partner. Maybe these joint ventures are no longer even profitable, but our clients are entitled to determine this and if the joint venture should be shut down, our clients are also entitled to a share of the joint venture company’s existing assets. For how to prevent/mitigate such problems, check out this article on China joint ventures. It’s as though the Chinese side in these joint venture partnerships views it as their patriotic duty to kick their foreign partner to the curb....

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How Urkaine oligarchs stole $1.8 billion of IMF (i.e., U.S.) loans, while Biden was watching.
Howard Richman, 11/15/2019

The U.S. gives loans to prop up foreign banks through the International Monetary Fund (IMF).  In 2009 and 2015, President Obama increased the U.S. contribution to the IMF, so that our contribution went up by a total of $9.2 billion. In 2014, the IMF gave the central bank of the Ukraine a massive $4.51 billion loan. However, $1.8 billion of that loan disappeared, despite the fact that Vice President Biden had been delegated by President Obama as the U.S. point man (start watching at 51:37) to prevent such corruption. In an article that was published in 2015, Harper's Magazine traced how that $1.8 billion disappeared:

The scheme, as revealed in a series of court judgments of the Economic Court of the Dnipropetrovsk region monitored and reported by Nashi Groshi, worked like this: Forty-two Ukrainian firms owned by fifty-four offshore entities registered in Caribbean, American, and Cypriot jurisdictions and linked to or affiliated with the Privat group of companies, took out loans from PrivatBank in Ukraine to the value of $1.8 billion. The firms then ordered goods from six foreign “supplier” companies, three of which were incorporated in the United Kingdom, two in the British Virgin Islands, one in the Caribbean statelet of St. Kitts & Nevis. Payment for the orders—$1.8 billion—was shortly afterwards prepaid into the vendors’ accounts, which were, coincidentally, in the Cyprus branch of PrivatBank. Once the money was sent, the Ukrainian importing companies arranged with PrivatBank Ukraine that their loans be guaranteed by the goods on order....

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Review of: The Unifinished Peace: The Council of Foreign Ministers and the Hungarian Peace Treaty of 1947 by Mihály Fülöp
Jesse Richman, 11/11/2019

Published by Social Science Monographs, Center for Hungarian Studies and Publications. 

2019 marks the 30th anniversary of what in Hungary is sometimes referred to as the "annus mirabilis" or year of miracles -- the fall of the iron curtain which was rapidly succeeded by the end of the cold war.  In that year a series of events, some planned from above and others organized from below, brought about the dissolution of the Soviet empire in eastern Europe and the freeing of nations which had been held in bondage and coercion in the Soviet orbit for more than four decades.  One of the joys of my Fulbright in Budapest this year has been the opportunity to take part in many commemorations of the events that unfolded 30 years ago.  

But the world is now 30 years beyond that era.  And as tensions rachet, institutions are tested, and power balances shift in the current moment, it is worthwhile to reflect upon another set of lessons: lessons from the tumultious years that marked the transition point from World War II to the Cold War.  And to understand those events, there are perhaps few more intriguing vantage points than the Hungarian experience.  During WW II Hungary had fought the Soviets, attempted shifting sides, been occupied by the Germans, and been liberated by the Red Army.  In the aftermath of the war, it was the only country in what would become the Soviet block to hold nearly free elections, a late 1945 ballot in which communists won less than 20 percent, even under Red Army occupation. 

Fülöp's book introduces the reader to the complicated interplay of understandings and and actions that shaped the policies... 

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Balanced Trade Advocate Raymond L. Richman dies at 101 - in American Thinker this morning
Howard Richman, 10/28/2019

Here's the text:

RayRichman.jpgOne of the first advocates of balanced trade, Dr. Raymond L. Richman, died on October 23 at age 101. A commentary that he wrote in 2003 (The Great Trade Debate) recommended the very policy that President Trump is carrying out today – the negotiation of bilateral agreements that balance trade.  He concluded that commentary:

Is there any way to balance our trade? Let's take a clue from the fact that barter is always beneficial to both parties. Instead of "Free Trade" as the slogan, how about the slogan, "Free and Balanced Trade"? We could announce to countries with whom we have large chronic deficits that their exports to us in the future will be limited to, say, 110 percent of what we bought from them last year. If you want to trade with us, you'll have to buy from us. Let's barter!

I'm sure the countries given this ultimatum will protest to the World Trade Organization (WTO) but there is precedent for bilateral agreements. We have a bilateral agreement with Japan now that limits the number of autos it can export to us.

The rules of international trade discriminate against the U.S. but the discrimination is not the cause of the deficit. The average level of U.S. tariffs is lower than that of any other large industrial nation. We have some barriers in the form of quotas but they affect a small proportion of our trade. The definition of dumping under WTO rules allows countries to rebate value-added taxes. Since we have no value-added tax and income taxes cannot be rebated, goods from many countries sell for less in the U.S. than in the countries in which they are produced. We could replace the corporate income tax with a value-added tax and subsidize exports by rebating the tax. Or we could change the rules to deny countries the right to rebate the value-added tax.

While such actions would do some good, the principal cause of chronic trade deficits was and continues to be capital flows from abroad. The U.S. went from being the world's leading creditor nation in 1970 to become the world's biggest debtor.

The situation calls for dramatic action. Stop the bleeding! Blue-collar workers have been bearing the burden of so-called "free trade" long enough. Let's have balanced trade.

He was a well-respected economist who received a PhD from the University of Chicago in 1957 with Milton Friedman his dissertation advisor. Then he worked as a consultant for the OEEC, the World Bank, the IMF, the Inter-American Development Bank, the US Agency for International Development and the Asian Development Bank. When he retired from the University of Pittsburgh in 1982, he became Professor Emeritus of Public and International Affairs.

He authored four books, dozens of journal articles and hundreds of commentaries about economic development, tax policy and trade policy. In recent years most were co-authored with his son (Howard) and his grandson (Jesse), a unique three generational collaboration. Many of their commentaries have appeared in American Thinker.

Meanwhile, the balanced trade policy that he recommended, which is being implemented by President Trump, has already contributed to the longest continuous economic expansion in American history. 

To read it go to:

https://www.americanthinker.com/blog/2019/10/balanced_trade_advocate_raymond_richman_dies_at_age_101.html

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Raymond L. Richman dies at age 101
Howard Richman, 10/25/2019

RayRichman.jpgFormer University of Pittsburgh Professor of Public and International Affairs, well-known economist, soldier, and author Dr. Raymond L. Richman died at age 101 on October 23 at his home in Pittsburgh.

He earned a Doctor of Jurisprudence degree from the Chicago-Kent College of Law in 1940 and was a member of the Illinois Bar. He served as a legal assistant to the Selective Service Board of Appeals in Toledo, Ohio until he enlisted in the army in December, 1941 as a private. During World War II, he became an officer in the US Army Air Corps, and exited his active military service in 1945 as Executive Officer of the 600th Bomb Squadron with the rank of Major, serving in the European theatre, and joined the US Air Force Reserve and rose to the rank of Lt. Colonel.

He received a PhD from the University of Chicago in 1957 and spent 1957-58 as a consultant to the European Productivity Agency of the Office for European Economic Cooperation (OEEC) in Paris and teaching courses in Economic Productivity in Rome and Yugoslavia. He served for many years as a consultant to the World Bank, the IMF, the Inter-American Development Bank, and the US Agency for International Development, participating in and heading missions to Panama, Colombia, Central America, and Egypt. He also served as a consultant to the Asian Development Bank and directed the preparation of the Real Estate Assessment Manual of the Commonwealth of Pennsylvania, published in 1971.

He served briefly as head of the Departments of Economics at the University of Illinois at Chicago and the University of Massachusetts at Amherst and taught at the Universidad de Cuyo in Mendoza, Argentina. He traveled, lectured, and studied extensively in Brazil. When he retired from the University of Pittsburgh in 1982, he became Professor Emeritus of Public and International Affairs.

Raymond Richman authored four books, dozens of journal articles and hundreds of commentaries about economic development, tax policy and trade policy. In recent years most were co-authored with his son (Howard) and his grandson (Jesse), a unique three generational collaboration. Beginning with a commentary in the Pittsburgh Tribune-Review on September 14, 2003 (The Great Trade Debate), he became one of the first advocates of a policy of balanced trade, an alternative to the free trade vsfair trade debateHis essential argument was that trade, free or not, benefits both countries if it is balanced.

He was always there for his extended family whenever they ran into problems dealing with personal crises. As a result, he was the honored guest when his nephew Colonel Mark Richman moved his Air Force Medical Group retirement ceremony in 2016 from California to Pittsburgh so that Ray could participate.

A member of Rodef Shalom Congregation, Raymond is survived by his wife of 47 years Wilma T. C. Richman, his children Janice Richman, Howard Richman (and wife Susan Richman), Robin Richman and Lucila Silva, and Maria Silva (wife of Newton Silva), 11 grandchildren, and 11 great-grandchildren. He was preceded in death by his first wife Hilda Richman, his parents Reuben Richman and Ida Jakobson Richman, his brother Lester Richman, his sister Dorothy Stern, and his son Newton Silva.

Local friends and family will be received at his Pittsburgh home at 3:30pm on Sunday, October 27 (for info email DrHBR1950@gmail.com). A memorial service will be held in Sacramento CA on Sunday, November 10 (for info email RobinBethRichman@gmail.com).

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The Fed and the Dollar Shortage Abroad
Jesse Richman, 10/10/2019

The US dollar has been bid up strongly of late relative to many world currencies.  In part this may reflect trade pressures.  But it goes back before Trump stepped down the escalator of Trump Tower and into politics.  In part it may reflect the gradual unwinding and disintegration of the eurodollar market (https://www.realclearmarkets.com/articles/2017/02/24/the_eurodollar_never_really_made_sense_to_begin_with_102561.html).  And if so, perhaps it should be celebrated because that market always had its problems.  But on the other hand, the appreciation of the dollar in the face of large US trade deficits calls for Fed action.  If the Federal Reserve was actively managing the US balance of trade and the value of the dollar to bring trade towards balance, then it would be pushing dollars into world financial markets...

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The rich are getting poorer, and the poor are getting richer... but you wouldn't know it from the press coverage
Jesse Richman, 10/10/2019

A recent piece on Real Clear Markets does an excellent job of taking down recent highly distorted reporting of the poverty and income growth data for 2018 that the Census Bureau recently released. 

https://www.realclearmarkets.com/articles/2019/10/10/the_economic_news_from_the_census_bureau_is_very_good_103941.html

Most of the commentary suggests inequality is increasing and Trump is to blame.  But in fact the incomes of the lower income groups are increasing faster than the incomes of high income groups. 

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The rich are getting poorer, and the poor are getting richer... but you wouldn't know it from the press coverage
Jesse Richman, 10/10/2019

A recent piece on Real Clear Markets does an excellent job of taking down recent highly distorted reporting of the poverty and income growth data for 2018 that the Census Bureau recently released. 

https://www.realclearmarkets.com/articles/2019/10/10/the_economic_news_from_the_census_bureau_is_very_good_103941.html

Most of the commentary suggests inequality is increasing and Trump is to blame.  But in fact the incomes of the lower income groups are increasing faster than the incomes of high income groups. 

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Scientists Deny Man-Made-Climate-Change
Raymond Richman, 9/13/2019

The head of the world’s foremost weather science organization, Petteri Taalas, the secretary-general of the World Meteorological Organization (WMO), told the Talouselämä magazine in Finland that he disagrees with doomsday climate extremists who call for radical action to prevent a purported apocalypse. Talaas said that establishment meteorological scientists are under increasing assault from radical climate alarmists who are attempting to move the mainstream scientific community in a radical direction. “Climate experts have been attacked by these people and they claim that we should be much more radical. They are doomsters and extremists. They make threats,” Taalas said.

The WMO is one of the two organizations that founded the Intergovernmental Panel on Climate Change (IPCC) in 1988. Since being formed, the IPCC has become the leading institution worldwide to promote the theory that human activity contributes to global warming. Talaas pointed out that climate extremists are selectively picking out facts from the IPCC reports to fit their narrative. The vast majority of the climate models the IPCC uses as the basis for its predictions have incorrectly forecast higher temperatures repeatedly. According to an analysis by the Cato Institute, 105 of the 108 models predicted a higher surface temperature for the period between 1998 and 2014 than the temperature actually recorded. The IPCC has previously admitted that climate models cannot be used to accurately predict long-term changes in the climate.

Talaas’s comments were sent to a list of 5,000 media contacts, but none have picked up the story according to Benny Peiser, the director of the Global Warming Policy Foundation in London. Peiser said. “He talks about a religious cult. He talks about people being extremists and doomsters. It’s quite staggering. The language that he uses and the signal that he’s sending out is ‘We are afraid of these extremists. They are destroying our society.”

A new study conducted by a Finnish research team has found little evidence to support the idea of man-made climate change. The results of the study were soon corroborated by researchers in Japan. ...

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Trump's Tariffs are keeping the US out of a Recession - We're published in this morning's American Thinker blog
Howard Richman, 9/9/2019

Trump's tariffs are keeping the US out of a recession

By Howard Richman, Jesse Richman and Raymond Richman

The rest of the world is experiencing an economic slowdown.  The graph below shows the world's 12 largest economies.  According to statistics for the most recent economic quarter, the only two currently growing faster than a 1% annual rate are the United States and China.  And the United States grew faster than China.

Growth2ndQ2019.png

The United States is currently experiencing the longest economic expansion in American history, and Federal Reserve chairman Jerome Powell expects that expansion to continue.  In Zurich on Friday, he began a speech by stating:

Click here to read the post on the American Thinker website.

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Trump's Tariffs helping keep US out of a Recession
Howard Richman, 9/7/2019

The rest of the world is experiencing an economic slowdown. The graph below shows the world’s 12 largest economies. According to statistics for the most recent economic quarter, the only two whose economies are growing faster than a 1% annual rate are the United States and China.

Growth2ndQ2019.png

UK is not the only country that may have already entered a recession, usually defined as two consecutive economic quarters with negative growth. The Euro Area as a whole is growing at a miniscule 0.2%, and Germany, usually the Euro Area leader, shrank by 0.1% in the most recent quarter.

The United States is currently experiencing the longest period of economic expansion in our history, and there is no end in sight. On Friday, Federal Reserve Chairman Powell announced:...

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Climatology's startling error
Howard Richman, 9/5/2019

Lord Monckton and his team of scientists have found an error in the feedback calculations of former NASA administrator and climate change alarmist James Hanson. Monckton's calculations are based upon the standard equation of control theory, while Hansen's were based upon an overly-simplified version of that equation. Moroever, Monckton's equation allows the feedback factor to be calculated mathematically, without need for a model.

Monckton's team found that a doubling of carbon dioxide increases earth temperature by precisely 1.15 degree Celsius, not the 3.35 to 4.5 degrees claimed by global warming alarmists. When carbon dioxide in the atmosphere doubles over the next 150 years, the Earth's temperature will only go up by 1.15 degree Celsius, other things being equal. Such a small rise in temperature, when combined with the positive effect that carbon dioxide has upon plant life, will be beneficial for mankind.

Here's a YouTube video showing an interview with him which I borrowed it from this blog posting:

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The Man-Made-Trillion-Dollar-Climate Warming Hoax
Raymond Richman, 8/19/2019

Man-Made-Trillion-Dollar-Climate Warming Hoax

The following items are excerpted from two recent articles on climate change that the media and pundits alike ignored. Indeed, Pundits like Paul Krugman and US leaders like Sen.Lindsay Graham are making a push to force Pres. Trump to change his position and to enact curbs on the use of fossil fuels. Almost all of the Democratic candidates for president take the same position. Countries around the world have already spent hundreds of billions of dollars to promote wind and solar sources of energy and continue to subsidizes electric vehicles making hundreds of millionaires.

 

The source of the first is RT.com. Published 12  and 13 Jul, 2019

A new study conducted by a Finnish research team has found little evidence to support the idea of man-made climate change. The results of the study were soon corroborated by researchers in Japan. ...

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The Delusional Wall Street Journal
Howard Richman, 8/11/2019

Trump Derangement Syndrome has not only affected Democrats. It has also affected some of those on Wall Street who oppose Trump's trade-balancing agenda. On Thursday, the Wall Street Journal (A Navarro Recession?) suggested that Monday’s stock market slide heralded a recession which they blamed on White House Trade Advisor Dr. Peter Navarro's unreasonable stance on China. But later that day the stock market rose, for the third day in a row, erasing Monday's slide.

In the same editorial they claimed that China had stopped manipulating its currency in 2014. But a few days earlier the Chinese government had forced the yuan through the 7 yuan per dollar barrier, and on Monday (August 5) Secretary of Treasury Steven Mnuchin determined that they were a currency manipulator. Meanwhile the price of gold has been surging, probably because China has been accumulating gold as a byproduct of its currency manipulations.

Mnuchin's declaration showed off yet another delusion in the Wall Street Journal editorial, that Navarro is somehow isolated within the administration. To the contrary, the President has put together an economic team that is working very well together. Treasury Secretary Mnuchin wasn't the only one to act this week. On Tuesday (August 6) Commerce Secretary Wilbur Ross slapped a 230% countervailing duty on two Chinese cabinet makers. 

In the words of Sundance at the Conservative Treehouse, President Trump has put together "an incredible team, delivering astonishing results." In fact, the U.S. economy is now in the midst of our longest period of expansion ever, largely due to three of Trump's actions:

  1. Business income tax cuts that make it less expensive to produce in the United States.
  2. Cuts in costly business regulations.
  3. Tariffs, tariff threats, and negotiated trade agreements which have encouraged growth-producing business investment in the United States.

Because Navarro has been in the WSJ crossfires this week, he has been interviewed frequently. Unfortunately, his interviewers have tended to interrupt him constantly. Here's the rare interview in which he was given a chance to lay out the administration's reasonable goals in its negotiations with China:...

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Trade Deficits Are Taxes on American Workers Levied by Foreign Countries
Raymond Richman, 6/18/2019

The media are all trumping that Pres. Trump’s tariffs are a tax on American consumers and favor free trade. They are telling less than half the story. The chronic trade deficits are also a tax on American workers. The chronic trade deficits tells us that foreign countries are shipping to us more goods at current exchange rates than we are shipping to them. They are accumulating the difference in US cash, bonds or notes or existing productive assets like real estate or private securities. They are not buying newly produced goods or services which require labor to produce. The workers who lose their jobs have to seek lower paying jobs in the US domestic market.

The American consumers are for the most part salary and wage workers. The trade deficits eliminated the jobs of millions of American manufacturing workers who found continued employment only in lower wage domestic jobs. Many multinationals have been producing products abroad and selling most of their output in the US producing huge deficits with China, Germany, Japan, Mexico, S. Korea, and others. Santa Monica, California once had hundreds of manufacturing jobs creating products for Apple Corp. Its principle product now is produced by Foxconn, a Chinese company, in China.

It is true that the laid off workers found jobs eventually but at much lower wages. This is the excuse for the widespread economic belief that trade deficits do not cause permanent unemployment. The difference between the wages before and after a trade deficit has all the characteristics of an income tax, leaving the worker-taxpayer with less after-tax income to consume or save. Chronic trade deficits may not cause unemployment in the long-run as many economists argue but millions of manufacturing workers lost well-paid jobs as a result of the trade deficits and ended up considerably poorer. ...

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Trade Agreements Are "Entangling Alliances" That Are Difficult to Exit Once They Are Approved.
Raymond Richman, 6/2/2019

Pres. Thomas Jefferson, in his inaugural address, declared his devotion to "peace, commerce, and honest friendship with all nations, entangling alliances with none", using a phrase which is often attributed to Pres. Washington. warned against entangling alliances. He thought they could involve us in wars that we did not want to fight. e thoushht An exTple of an entangling alliance is the European Union and the difficulty the UK is experiencing to make a British exit from it. Multil­ateral trade agreements are eThe USA took advantage of its success in breaking up the USSR by getting some former members of the USSR to join the North Atlantic Treaty organization (NATO). It waged war against Yugoslavia and got Albania, Croatia, and Slovenia to join the European Union and NATO. ntangling alliances which become the law of the land even superseding the Constitution. The General Agreement on Tariffs and Trade created the World Trade Organization. The GATT agreement that it administers has a provision that members shall not require the country of origin to appear on the sales of imported products. The U.S. Congress passed a law requiring labeling meat products with the country of origin. The WTO warned the U.S. Congress that that was in violation of the treaty. The U.S. Congress dutifully rescinded the labeling requirement.

It is amusing to observe the leaders of theThom Democratic Party pretend to be upset about an alleged Russian interference in the 2016 USA presidential election and argue that it smacks of collusion. They object not at all to USA intervention in Venezuela or to the inclusion in NATO of former Russian dominated countries, ...

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Politics and the Trade War
Jesse Richman, 5/27/2019

Samuel Rines has a good piece on the broader political moment of which the trade war is only a part.  https://nationalinterest.org/feature/trade-war-not-only-about-trade-58822. It misses two or three things though.  First, China's rise was facilitated by the US failure to counter it's mercantilism until it was much too late.  Second, the state capitalism model has many anticedants. Finally, the challenge of global economy versus state regulations needs more attention.

 

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Regulation to Address Undervalued Currencies
Jesse Richman, 5/24/2019

The Trump administration appears to  be moving forward with regulations that will allow the Commerce Department to impose countervailing duties against countries found to have undervalued currencies.  Currency manipulation and undervaluation have long been a prime tactic of mercantilists, and so this regulation is a welcome move that will expand the capacity of U.S. companies to respond to subsidized competition from abroad.  A comment period is now open on the proposed regulations. 

Under the regulations, the Commerce Department in conjunction with the Treasury Department will determine whether the currency has been undervalued.  Specifically:

"We will seek and to defer to the Department of the Treasury’s (Treasury’s) evaluation and conclusion as
to whether government action on the exchange rate has resulted in currency undervaluation,
unless we have good reason to believe otherwise, based on the record as a whole, in which case
we will provide Treasury an opportunity to review and rebut the contrary reasoning....

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Trump's China Tariffs will Succeed -- we're published in today's American Thinker
Howard Richman, 5/15/2019

Here's how we begin:

For the last four decades, the United States has often engaged in trading away its future by running up debt and selling assets instead of products. This brought about the stagnant living standards and incomes experienced by the U.S. middle class during the presidencies preceding Trump.

The countries with which the U.S. had the largest trade deficits (goods and services) in 2018 were:

  1. China - $379 billion
  2. Mexico - $78 billion
  3. Germany - $67 billion
  4. Japan - $58 billion

These countries accounted for 93% of the total, with China, by itself, accounting for 61% of the U.S. trade deficit. Donald Trump was elected by the people who have borne the brunt of this policy failure, with a mandate to fix it.

On Friday, President Donald Trump took a huge step toward doing just that. He raised the U.S. tariff rate from 10% to 25% on $200 billion per year worth of Chinese goods that were being imported into the United States. Back in July, when Trump had initially imposed the 10% tariffs on Chinese imports, China responded by imposing tariffs on $110 billion of U.S. exports to China.

Trump also threatened to place tariffs on the other Chinese goods being imported each year into the United States. This gives the U.S. leverage that China can’t match. As a result of its mercantilist strategy, China exported $540 billion worth of goods to the U.S. but only let $121 billion worth of U.S. goods into China in 2018. (Mercantilism is the “beggar-thy-neighbor” economic strategy of maximizing exports and minimizing imports in order to grow at one’s trading partners’ expense.)...

To read the rest, go to:

https://www.americanthinker.com/articles/2019/05/trumps_china_tariffs_will_succeed.html

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Bring on the Trade War -- Why the US must, can, and will win a more balanced trading relationship with China
Jesse Richman, 5/8/2019

The liberal trade world that was built after World War II is on the verge of collapse.  And the only politician who can save it is Donald Trump.  And the only way to save it is to win the trade war with China. 

Donald Trump was elected president in part because he recognized the bankruptcy of US trade policy and promised to do something about it.  As negotiations with China enter a difficult and vital phase, America is very lucky to have a president with the gumption and determination to see this fight through.  The trade war with China is one that the US must, can, and will win.  And when it comes to the tariffs proposed so far, the US has not yet begun to fight. China should change course, stop reneging on its negotiated promises, and become a normal capitalist nation.  But if China prefers to remain mercantilist, totalitarian, autocratic, illiberal, and despotic, the US must treat it as it deserves -- to a healthy course of isolation, disinvestment, and containment. 

For decades the United States has been played for a sucker by China's totalitarian masters... 

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Tariffs Raise Costs on Dryers (Without Dryers Being Taxed?!?)
Jesse Richman, 5/6/2019

A few weeks ago a working paper by Aaron Flaaen, Ali Hortaçsu, and Felix Tintelnot got a great deal of attention.  The headline treatment in many publications was along the lines Mark Perry at AEI gave it: "Trump’s washing machine tariffs created 1,800 US jobs, but at a YUGE cost to consumers of $820,000/job." The Washington Examiner opined that this study showed "Why protectionism fails."

But there are some strange things going on in the analysis of the paper.  The authors acknowledge one such flaw in the abstract when they write: "We find that in response to the 2018 tariffs on nearly all source countries, the price of washers rose by nearly 12 percent; the price of dryers—a complementary good not subject to tariffs—increased by an equivalent amount."  

Come again?  Let's lay this out for a moment and pause to think about it objectively.   

The evidence:

1. Tariffs were placed on washers.  Washer prices went up by about 12 percent. 

2. Tariffs were NOT placed on dryers.  Dryer prices went up by about 12 percent. 

Now let's apply some basic logical reasoning.  Mill's method of agreement implies that if a cause produced an effect, then the cause must be present in both cases.  Clearly the effect happened in both cases but the tariff was applied in only one case.  Hence, the tariff cannot have caused the increase in price of the goods... 

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Trump's 3.2% economic growth puts Bush and Obama to shame - we're published in the American Thinker Blog this morning
Howard Richman, 4/29/2019

[Here's the text of our post. You can also read it on the American Thinker website at this URL.]

by Howard Richman, Raymond Richman and Jesse Richman

The 3.2% economic growth rate for the first quarter, reported as the “advanced estimate” by the Bureau of Economic Analysis on Friday, caught everyone by surprise. During both the George W. Bush and Obama administrations, the average quarterly economic growth rate was only 1.9% per year. But during the 9 quarters that Trump has been president, the economic growth rate has averaged 2.8% per year, almost a full percentage point higher. 

Anybody who wants to know how the American economy would look today if someone espousing policies like Obama’s were still president only need peek over our northern border. Canadian Prime Minister Justin Trudeau stayed in Obama’s Trans Pacific Partnership trade agreement and in Obama’s Paris Climate Accord, despite Trump pulling the US out of both agreements. And, how has Canada been doing? Just 1.6% GDP growth over the latest year and 0.1% growth during the latest quarter!

Middle Class Income

Whenever GDP grows, American income grows at about the same rate. But income growth is not evenly distributed. At the end of the Bush presidency, median household income (after subtracting for inflation) was at about the same level as before Bush took office.

When running for office in 2008, Obama correctly claimed that the rich were getting richer, but those in the middle class were not benefiting. So how did the middle class do under Obama? Again, median household income failed to grow!

In January 2017, after the presidencies of both Bush and Obama, median household income (after subtracting for inflation) was actually 1.3% lower than it had been in January 2000. (Our statistics for median household income come from Sentier Research, which has been calculating and graphing household income as it unfolds.)

How is Trump doing with middle class income? Pretty well! Median household income has risen at a 2.5% annual clip since Trump became president, approximately the same rate that GDP has been growing. In fact, median household income is now higher than ever before! How is Trump doing it?...

 

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Reciprocal Trade Act
Jesse Richman, 4/2/2019

Here is a press release from the Coalition for a Prosperous America concerning a new bill introduced in Congress.  The press release can be accessed at: https://www.prosperousamerica.org/cpa_endorses_reciprocal_trade_act_hr_764 

CPA Endorses Reciprocal Trade Act, HR. 764

Sees legislation as key to addressing trade barriers

Washington. The Coalition for a Prosperous America (CPA) has endorsed H.R. 764, the Reciprocal Trade Act (RTA) recently introduced by Rep. Sean Duffy (R-WI). The RTA would expand the president’s ability to defend domestic US manufacturers and agricultural producers against foreign protectionism by raising individual product tariffs to match foreign tariff and non-tariff barriers.


“We are pleased to support the efforts of Rep. Duffy and the Members of Congress who have co-sponsored this important legislation,” said CPA Chairman Dan DiMicco. “The Reciprocal Trade Act will provide much-needed leverage for President Trump as he confronts unfair trade. Congress should move swiftly to pass this bill.”

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The Archaeological Evidence of the Purim Battle
Howard Richman, 3/16/2019

According to the Book of Esther, two decrees were issued by Persian King Ahasuerus (Greek name: Xerxes; Hebrew name: Achashveirosh) within a short period of time. The first, written by Haman, gave people permission to kill and loot Jews. The second, written by Mordechai, gave Jews permission to defend themselves. Here is how the Book of Esther describes the fighting that took place in the provinces of the Persian empire:

And the other Jews that were in the king's provinces gathered themselves together, and stood for their lives, and had rest from their enemies, and slew of them that hated them seventy and five thousand – but on the spoil they laid not their hand  – on the thirteenth day of the month Adar, and on the fourteenth day of the same they rested, and made it a day of fasting and gladness. (Esther 9: 16-19)

The archaeological evidence for the fighting comes from a dig at Shechem (Tel Balâtah), a Biblical town near present day Nablus located about half way between Samaria, the Samaritan capital, and Jerusalem, the Jewish capital. A paper by archaeologist Nancy Lapp dated the fire and temporary abandonment of Shechem precisely, based upon the imported Greek pottery that had been burned in the conflagration. She wrote:

The latest example of figured ware, No. 9, dates ca. 480 B.C. Allowing time for its importation into Palestine and consideration for its value, a conservative terminus for the end of Stratum V at Balâtah would be the end of the first quarter of the 5th century B.C. or ca. 475 B.C.

In a 1987 journal article, William H. Shea compared the date found by Lapp with the date specified in the Book of Esther and found that they were nearly identical:

Esther 9:16 dates the fighting that broke out “in the provinces of the king” to Adar of Xerxes' twelfth year, or March, 473. (p. 244)

So how did the enmity between the Samaritans and the Jews begin? Ezra wrote that it began during the reign of Persian King Cyrus, about 70 years before this fighting took place, when the Jewish leaders refused a Samaritan offer to help rebuild the Jerusalem temple, saying: ...

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There Is Less Inequality Now Than Ever Before in History
Raymond Richman, 2/12/2019

There is less inequality today than at any time in our history. There is less wealth inequality now and there is less income inequality now than at any time in our history. Those who argue that wealth is more unequal now or that income is more unequal now are using a very narrow definition of wealth and income. They exclude, for example all public goods like public education, public parks, museums, swimming pools, beaches, police and fire departments, international security, water and sewage, streets, legal courts, etc. They do not include ownership of real estate and personal property including autos, boats, clothing, and recreational vehicles. They do not include hospitals, churches, colleges and universities, clubs, voluntary associations, etc. They do not include recreation and entertainment.Baseball, football, soccer, hockey games and other mass entertainments such as movies and television exist for the masses not billionaires. ...

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

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  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

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  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]