Raymond Richman - Jesse Richman - Howard Richman
Richmans' Trade and Taxes Blog
The Insights and Outsights of Clyde Prestowitz -- A review of his 2010 book: The Betrayal of American Prosperity
Clyde Prestowitz, The Betrayal of American Prosperity: Free Market Delusions, America’s Decline, and How We Must Compete in the Post-Dollar Era (NY: Free Press, 2010)
In some matters, Clyde Prestowitz displays a brilliant mind. His account of how we went from the world’s leading creditor to the world’s leading debtor is better than anything that we have read. But when it comes to finding a solution to our chronic trade deficits that our foolish domestic and foreign policies have caused, he suddenly becomes “politically correct” –lacking a single original thought. The first eight chapters are must reading for the intelligent layman and economists could profit from them. His solutions are another story; they are worth less than nothing.
In the introduction, he writes of the contrast between the incoming and outgoing cargo at the port of Long Beach. “The imports.. include everything from shoes..to computers..and photo voltaic panels for generating solar energy. The exports, though are few, consisting mostly of scrap metal and waste paper—this millennium’s dung, you might say.” Clearly U.S. government policies have been completely ineffectual and are Trading Away Our Future, the title of our 2008 book.
He notes the popular myth that the Smoot-Hawley tariff passed in 1930 exacerbated the recession. He argues that it was not “the disaster of conventional mythology”. We agree with him and have so argued on this site. He notes that the nearly equally high Fordney-McCumber tariff of 1922 was followed by the boom of the 1920s.
Foolish domestic policies have been compounding the errors of our international trade policies. In the foolish domestic policy known as “cash for clunkers”, Prestowitz estimates that about half the cash paid went for imported autos or parts. Likewise the continuing subsidies for wind turbines in the green energy programs went largely for purchases of wind turbines from China, hardly a stimulus to domestic employment....
Bernanke: China's currency policy is causing the slow growth in the advanced industrial countries
Ben Bernanke said the following on October 4, when he testified before a joint congressional committee:
I do think that China's currency policy, besides creating problems for them -- in particular they've dealt with some inflation lately which is a result to a large extent of their currency policy -- has been to some extent preventing global adjustment. That is, we have a two-speed recovery, where emerging market economies have been growing very quickly and advanced industrial countries have been growing very slowly. A more balanced growth path could be achieved if there was greater flexibility in currencies. China's currency policy not only affects obviously U.S.-China relations, but it also affects third party currency policies as well."
In a commentary on October 24, University of Maryland economist Peter Morici (The Fed Is Out of Tricks to Jump Start Housing and Economy) went just a bit further. He argued that the trade deficit must be addressed in order to jump start the U.S. economy. He wrote:
Gov. Perry is On Track to Create a Million Jobs -- We're published in this morning's American Thinker
Follow the following link to read it:
Gov. Perry Is On Track to Create a Million Jobs. Could Be Several Million
Maria Recio reported in the McClatchy Newspapers on Friday, October 14 (my birthday! And it was a nice gift!) that Presidential candidate Gov. Rick Perry released an energy-centric program to expand offshore drilling and domestic oil and gas exploration that he claimed would create 1.2 million jobs. Perry, who spoke at a suburban Pittsburgh steel mill said he would move to open federal lands to drilling, including Alaska's Arctic National Wildlife Refuge, and curtail the Environmental Protection Agency's regulatory powers.
Perry calls the plan “Energizing American Jobs and Security” and claims that it will “kick-start economic growth and create 1.2 million jobs." Perry said, “We are standing atop the next American economic boom ... energy." “But we can only do that if environmental bureaucrats are told to stand down," he said. "America has proven but untapped supplies of natural gas, oil and coal. America is the Saudi Arabia of coal, with 25 percent of the world's supply. Our country contains up to 134 billion barrels of oil and nearly 1.2 quadrillion cubic feet of natural gas." We said the same on this site several times that removing the restrictions on the drilling of oil on public lands and offshore would create a million jobs. Together with the drilling of natural gas in our abundant shale deposits, it would create an economic boom and millions of additional jobs.
Perry's energy proposal drew fire from President Barack Obama's campaign and environmental groups. "Gov. Perry's energy policy isn't the way to win the future, it's straight out of the past -- doubling down on finite resources with no plan to promote innovation or to transition the nation to a clean energy economy," Obama campaign spokesman Ben LaBolt said. Daniel Weiss of the Center for American Progress Action Fund, said Perry's plan "ignores a clean tech future while returning to a fossil fuel past. ... The Perry plan should be stamped 'Made By Big Oil.” Texas Democratic Party spokeswoman Rebecca Acuna said Perry "wants to abolish the Environmental Protection Agency and run the federal government like he runs Texas." This is the kind of garbage the ultraleft uses to attack the ideas of opponents instead of debating the issues. ...
Romney's position against China's intellectual property theft resonates at Microsoft
China freely allows piracy of American CDs, DVDs and software. Potential Republican presidential candidate Governor Mitt Romney says he will do something about it. As a result, he got a "warm reception" at Microsoft. A Reuters' story states:
Unfortunately, what Romney says he would do about it would be ineffective:...
Governor Mitt Romney won the October 11 debate on the economy in Hanover New Hampshire. Here are some selections from what he said:...
Senator Webb Introduces Bill to Combat Chinese Intellectual Property Grabs
Senator Webb recently introduced legislation aimed at combating China's intellectual property grabs, particularly when the technology being 'transfered' was developed with U.S. government support. I've copied his press release below. Note the examples of the massive technological transfers U.S. multinationals have been forced to make as a condition for doing business in China.
Examples of China profiting from U.S. taxpayer-funded technologies:
American Production of the iPod? Setting the Record Straight
The iPod gets used as an example a lot in the discussion of global trade. Those who defend the current system of one-way 'trade' like to emphasize that although China assembles the iPod, the components (some of them anyhow) come from elsewhere. This is of course absolutely true. I heard this argument made again today, but it was accompanied by the false claim that many of the components come from the US. Perhaps a lot has changed in the last several years, but an article in 2007 by eminent economist Hal Varian in the New York Times sets the record straight on this, noting that at the time the U.S. produced portion of the iPod amounted to "$8 to various domestic component makers." Thus, if the ratios have stayed the same as those Varian cites, the iPod is roughly 1/20 manufactured in the United States, with most of the remaining 19/20 of its manufacture conducted in Asia.
Two Great Economists Offer Solution to Restore U.S. Economic Growth
“Any considered examination of the prospects for a major economy is dependant, as never before, on that economy’s performance in the realm of international trade.” With that remarkable beginning, Profs. Ralph Gomory and William Baumol note that their fellow economists, “having been nurtured on the doctrine of mutual gains from trade, seem to resist serious consideration” of the possible negative effects of free trade “and the threat they pose to the welfare of the United States and other countries.” Their article entitled, “Trade, education, and innovation: Prospects for the U.S. economy” appeared in the Journal of Policy Modeling recently.This lack of awareness among economists was the principle reason for writing our own book, Trading Away Our Future: How to Fix Our Government-Driven Trade Deficits and Faulty Tax System Before It's Too Late (Pittsburgh: Ideal Taxes Assn, 2008). And as we have stated many times on this site, the so-called "free trade" ideology has been an unmitigated disaster for the U.S.
Profs. Gomory and Baumol in their seminal book Global Trade and Conflicting National Interests (MIT Press, 2001) challenged the centuries old doctrine of mutual gains from trade based on the Ricardian theory of comparative advantage. They showed in the book and summarize their argument in this paper that countries can, by employing mercantilist or protectionist policies, achieve a competitive advantage that is harmful to their trading partners.
They arrive at the remarkable conclusion that the invention of new products, like I-pad, laptop computers, and many others, without retaining the manufacture of those products in the U.S. is causing Americans a great deal of harm. Citing China as an example, they note that China has no tradition of inventing new products but it has succeeded in inducing American inventors to outsource the production of their inventions to China. Andy Grove, a founder of Intel, recently pointed out that a large number of high tech American product innovations are outsourced for production in China, with the effect that Apple, HP, Dell and dozens of others have ten times as many employees in China than they have in the U.S. Chinese workers gain good manufacturing jobs while U.S. manufacturing workers face a lower standard of living competing for fewer and relatively inferior jobs. ...
An Economist's Look at Mythical Man-Made Global Warming(AGW)
As an economist and a former student of Prof. Milton Friedman at the University of Chicago, I am by education skeptical about any theory of climate change that explains warming but not cooling. The anthropogenic theory of climate change (AGW) blames man-caused carbon emissions for global warming but cannot explain past periods of global warming and cooling when there were no human beings to blame for climate change. Another economist who shares this view is former Czech President and Prime Minister,Vaclav Klaus, who fought against Communism and recognized in the movement that blames man for causing global warming, a new threat to our freedom saying:
It not only cannot explain past periods of global warming and cooling, it cannot explain the most recent decade of global cooling. Just fifty years there were allegations that we were entering a period of global cooling. There are reasons to be skeptical.
But even if the AGW theory had some basis, economists have to ask , “What is the best policy to deal with global warming?” Whatever policy is selected should meet the standard economic criteria of economic benefit-cost analysis. World leaders have picked the worst policy --forcing businesses and households into the most costly and ineffective policy -- reducing man-made carbon emissions which has had the effect of lowering living standards of workers around the world. ...
"What Would Keynes Do?" The Diagnosis is Right. The Solution?
Of course, others (even in the pages of this magazine) have pointed out that the US external trade debt is a bad thing, though it gets very little mention in our political debate. But it has a whopping big role in the current global crisis. The world filled up with foreigners holding dollars. They put the money back into the US economy in the form of loans—Treasury bonds, to be sure, but also corporate bonds, financial instruments, prime loans, subprime loans, payday loans and all manner of corporate debt. And the bloating of the financial sector—unregulated—led to the collapse.
Obama contributing taxpayer money to global warming god
At a California fundraiser, President Obama explained why his contributions of billions of taxpayer dollars to bankrupt and near-bankrupt solar power producers are worthwhile. According to Obama, if appeased, the global warming god will cause the rains to come in their season, and thus prevent droughts and fires like the ones currently occurring in Texas. Specifically, he said:
But the high priests of global warming haven't proven to be a very successful in their prophesies:...
Journal of Economic Literature:
Atlantic Economic Journal: