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Richmans' Trade and Taxes Blog
Morici: Events in Tunisia and Egypt were caused by Chinese mercantilism
In a commentary in The Street (Egypt and Stagflation), U. of Maryland economist Peter Morici argues that the events in Egypt were caused by Chinese mercantilism. It sounds a bit far-fetched. Here's how he ties it together:
Sperling, a Poor Choice for Director of National Economic Council
Gene Sperling, who pretends to be an economist although he has no economics degree, has been chosen by Pres. Obama to be the Director of the National Economic Council. He has a law degree from Yale. He owes his excellent reputation as an economic policy expert to the fact that he served on Pres. Clinton’s National Economic Council and chaired the Council during Clinton’s second term. We decided to read his 2005 book, The Pro-Growth Progressive: An Economic Strategy for Shared Prosperity (NY: Simon & Schuster, 2005) to learn more about him. The title of the book tells you he would like to be known as a pro-growth Progressive by which he apparently means that he is devoted to the growth of the economy and wants to ensure that government economic policies create benefits for the lower economic classes. He is not a good enough economist to follow through on whether in fact the lower economic classes actually did benefit from earlier policies. He mentions some and some were failures. He paid no attention to the trade deficit with China that exploded during Clinton’s second term and cost American workers hundreds of thousands of well-paid manufacturing jobs and caused American wages to stagnate.
He writes that the “(t)raditional divides in American politics are increasingly ill-suited to a serious inquiry about how to ensure we grow together in a dynamic global economy.” [my italics] His solution to the loss of jobs is retraining. He writes that we are out of touch with the “growing imperative for public policies to help workers adjust to the uncertainties of the global market and ensure that growth is fair and consistent with our values.” In other words, he was then and presumably continues to be a free trader even, apparently, when we are the only ones practicing free trade. As the reader knows, we have been urging that a “scaled tariff” be imposed on imports from all countries with which we are experiencing chronic trade deficits. In 2008, while Sperling was Director of the National Economic Council, our trade deficit with China was close to $800 billion, an amount roughly equivalent to the output of 8 million American workers. Neither he nor the Council of Economic Advisors acknowledged any problems the huge deficit caused. ...
Evans-Pritchard on China
Ambrose Evans-Pritchard has a great commentary in the London Telegraph today (Appeasment is the proper policy towards Confucian China). He comes to a different conclusion than we do, but faces the facts squarely. He writes:
Obama-Hu Summit Ignores our Imports from China
In a famous Sherlock Holmes story, the key clue to the mystery is the fact that a dog did not bark. Similarly, the key clue to this week's US-China summit was something that did not happen. In his post-summit commentary, U. of Maryland economist Peter Morici nailed it:
After that meeting, President Obama said:...
How to Balance Our Trade with China and Put Americans Back to Work
Chinese Pres. Hu Jintao made a coolie out of Pres. Obama during their two day meeting in Washington. Obama was obsequious and meekly pulled the rickshaw and made almost no criticism of Chinese mercantilist practices. Reading their remarks at their joint press conference on Jan. 20 left us with a feeling of déjà vu, words, promises, mutual sweetness and cordiality with nothing really changed. You would never guess from the meetings that the U.S. has over 14 million involuntarily unemployed, a majority of whom having lost their good-paying manufacturing jobs to companies in China, Japan, Germany, and other countries with whom we have been running trade deficits.
Adding insult to injury, American companies like Apple, Dell, HP, etc., etc., import their Chinese-made products to the United States. One estimate has it that there are ten employees of these companies employed abroad for every one employed in the U.S. It was reported that corporate leaders had a very enjoyable discussion with Hu Jinto. The U.S. has the power under international trade rules and the economic power to resolve all its trade problems quickly, but its leadership won’t do what needs to be done. The term WIMPS comes to mind.
Obama in his meeting with Jintao said:...
Rosh Limbaugh nailed Chinese motives in his morning update. Here's a key quote:
The Give-Away Summit
This week (January 18-21) U.S. President Obama and Chinese President Hu will engage in the Give Away Summit. On the agenda at this week's negotiations in Washington, Obama will ask Hu to comply with WTO rules and also reduce his manipulation of the dollar-yuan exchange rate.
In return, Obama may offer to give Hu access to American products with military uses and he may offer to share NASA-developed space technology with China. These offers would please China's military which holds ultimate power in China and which has been preparing for a confrontation with the United States, perhaps over Taiwan, Korea, or disputed Japanese islands....
71% of Americans oppose raising the debt ceiling
According to a Reuters/Ipsos poll, 71% of Americans oppose raising the debt ceiling. Here's a selection from a Reuters article about the poll results:
When asked where to cut:...
U.S. Trade Deficit with China edges up in November
The overall U.S. trade deficit in goods and services (seasonally adjusted) edged down in November to $38.3 billion from $38.4 billion in October. Meanwhile the U.S. trade deficit with China in goods edged up to $25.6 billion from $25.5 billion, as shown in the following graph:
U.S. free trade policy promotes worldwide authoritarianism
An annual report from Freedom House finds that authoritarianism has increased in the world for the fifth straight year. According to Breitbart:
Significantly, the report mentions China, Russian, and Venezuela as authoritarian regimes that have stepped up their repression of their own people over the last year. These are all countries that have run huge trade surpluses with the United States, stimulating their economies while sedating ours.
The following table shows these countries' trade imports and exports with the United States from October 2009 through September 2010....
Government Wimps Masquerading as Economists
Dr. Lawrence Summers in a swan song speech to the White House’s Economic Progress Institute entitled “Economic Progress and Economic Policy” is more noteworthy for what he did not say than what he did say. ”It is by what happens to the middle class that our economic policies have to be judged.” He means the independent voters. Surely the welfare of the working class is equally important but the Democratic Party takes them for granted. 14 million or more unemployed and Summers offers them little or no hope for years.
Summers writes, “..(S)cholars .. will continue to debate just how close the American financial system and economy came to all-out collapse in the six months between September of 2008 and April of 2009.” In our opinion, there won’t be much debate. Pres. G. W. Bush’s $750 billion TARP program which lent billions to the banks, foreign and domestic, prevented the collapse.
As to what caused the recession and what we have done to prevent a recurrence? Not a word. Even the Community Development Act, which made ACORN rich and was a full employment act for communists and other leftists is still on the books. What we do know he says is: that during that time the stock market fell more sharply than in the six months after Black Tuesday in 1929, that global trade declined more rapidly than in the first year of the Great Depression. and that the economy was not self equilibrating and that a variety of vicious cycles were pulling it down even deeper, at a rate of 700,000 jobs a month at the worst of it. "Had it not been for President Obama’s willingness to support a sufficiently aggressive response – from the late stage of the presidential campaign to his first days and months in office – I have little doubt that we would be looking at a vastly different world today.” We suppose it is to be expected that Summers would laud Obama’s inadequate efforts. After all Summers himself must share the blame. The President wasted his first two years treating the economic crisis as second to reform of health care. The Recovery Act of 2009 was a failure because it consisted of huge transfers to the states and school districts which created no jobs and huge subsidies to wind and solar power which only increased the cost of energy. Although we were importing 60% of our crude oil, no steps were taken taken to increase our own output of crude oil. To the contrary, greater restrictions were applied on investment in oil drilling on public lands.
China rounds up the usual suspects
At the end of the movie Casablanca, Rick (Humphrey Bogart) shoots Nazi Major Strasser so that Ilsa (Ingrid Bergman) can escape. Although French Police Chief Renault had just witnessed the shooting, when his men arrive he tells them, "Round up the usual suspects."
Life sometimes imitates cinema. China just rounded up the usual suspects. Their crackdown on copyright crimes is timed for President Hu's visit to the United States from January 18-21. AsiaOne reports (China detains 4,000 people in copyright crackdown):...
Donald Trump calls for a 25% tariff on Chinese products
Donald Trump called for a 25% tariff on Chinese products on the Michael Savage radio show last night and in turn received Savage's endorsement for President:
In the interview, Trump comes off as forceful and competent. If he discovers the scaled tariff and campaigns upon a plan to balance budgets and trade at the same time, he could win the election and then fix the American economy.
AEA features Dismal Forcasts of America's Economic Future
According to a Reuters report (Economists foretell of U.S. decline, China's ascension) about papers presented at the current meeting of the American Economic Association (AEA), many economists share our dim prognosis of America's economic future. Reuters began:
Reuters doesn't mention whether economists at the AEA convention have any solutions. But my father, son and I do. We recommend balancing the federal budget while balancing trade with the WTO-legal scaled tariff. The benefits would be enormous, as we pointed out:...
A Scaled Tariff would Help Balance the 2011 Budget - we're published in today's American Thinker
Follow the following link to read the rest:
Gene Sperling didn't understand trade in his 2005 book
Last week, President Clinton named former Clinton advisor Gene Sperling to replace Lawrence Summers as his National Economic Advisor. So I checked out Sperling's 2005 book The Pro-Growth Progressive: An Economic Strategy for Shared Prosperity to get a feel for his position on trade.
I was dismayed that he was caught up in the free trade vs. protectionism dichotomy, not even realizing that the balanced trade position exists! He made his ignorance clear when he discussed what he considered to be all of the alternatives in the following hypothetical situation:...
What do Obama's new top appointments have in common?
President Obama's top new appointments have more in common than just past involvement in the Clinton Administration. They were both deeply involved in the decisions to get China into the WTO and to give China most-favored-nation trading status.
President Obama's new chief of staff is William Daley. According to Reuters:
Obama's new chief economic advisor is Gene Sperling. According to Wikipedia:
Unlike Daley and Sperling, Robert Cassidy publicly regretted the result of these China negotiations. In the June 2008 issue of Foreign Policy in Focus (The Failed Expectations of U.S. Trade Policy), Cassidy wrote:...
Requiem to Roger Milliken and red-lentil stew
Patrick J. Buchanan's latest commentary (Requiem for a Patriot) is a tribute to Roger Milliken who just died at the age of 95. Buchanan begins:
Buchanan's reference to "Chinese-made pottage" suggests that either he or Milliken have read our writing. The title of our 2008 book, Trading Away Our Future, appears once within the text of the book, we wrote:...
The North American Unilateral Free Trade Agreement
Free Trade Agreements are worthless unless they require that trade also be balanced. Take NAFTA for example. When President Obama announced that he would focus upon jobs in 2011, he forgot to mention that he was talking about jobs in Mexico. Under his watch, our trade deficit with Mexico has climbed rapidly as shown in the graph below:
Mexico has turned the NAFTA highway into a one-way street. When President Obama refused to let Mexican trucks operate in the United States, Mexico began placing tariffs upon U.S. products. It now collects tariffs on 99 categories of U.S. products. These include a 25% duty on U.S. cheese, a 20% duty on U.S. wine, 15% duties on U.S. fruit and fruit juices, 15% duties on U.S. pencils and pens, 10% duties on U.S. shampoo, hair spray, tooth paste and deodorant, and 10% duties on U.S. dog and cat food....
Proposed 'Scaled Tariff for Balanced Trade Act'
Ideal Taxes Association has put a scaled tariff proposal into bill form. You'll find the text below. It would take in, as revenue, half of our trade deficit with each of those countries with whom we have a large trade deficit. The rate of the duty would be adjusted to our trade surplus with each country and would go down when our trade with that country moves toward balance.
If you are interested in helping get this bill passed, you can republish this proposal on your website and/or e-mail it to your friends. Also, you can email your offer of help to firstname.lastname@example.org (include your name, state, nine digit zip code, and organizational affiliations; subject line: "Scaled Tariff Bill").
To achieve balance in the foreign trade of the United States through a scaled tariff, and for other purposes.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the `Scaled Tariff for Balanced Trade Act'.
SECTION 2. FINDINGS....
Journal of Economic Literature:
Atlantic Economic Journal: