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 Richmans' Trade and Taxes Blog

A Shutdown over Trivialities
Jesse Richman, 12/27/2018

Shortly before Christmas, Congress discovered it could not agree between its chambers or with Trump concerning funding for the border wall requested by Trump.  Trump has been very patient with Congress over the last two years as it has repeatedly failed to provide much of any funding for the wall he campaigned on.  At last moment of the outgoing Republican Congress Trump seems to have realized that funding was not going to be coming unless he tried a different negotiating strategy.  And hence the shutdown came. 

Some shutdowns are over major issues of significant national import.  Others are over trivialities.  This one must rank nearly at the very top of the list of shutdowns over trivialities.  Whether or not the wall is a good policy idea, it is a minor one.  At stake is five billion in funding out of a Federal budget numbered in trillions.  To shut down the government, even part of it, with all of the chaos and costs that entails over an unwillingness to provide such funds so that the president can make a down payment on one of his major campaign promises reflects a Washington in which tribalism trumps policy sense... 

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No Danger From Man-Made-Global Warming
Raymond Richman, 12/20/2018

President Macron’s imminent fall from power in France did not result from his proposed tax increase but because it was to be spent foolishly on addressing man-made-global-warming. Federal government, state government, and increased private expenditures wasted on man-made-global warming over the past two decades, nearly a trillion, yes a trillion dollars, on subsidies, tax credits, and private expenditures that accomplished nothing but made Gore and many others rich beyond belief. Most climate scientists believe that fossil fuels do bear responsibility for a small contribution to global warming. But the largest contributor is solar activity, which should not surprise anybody. And in less than a century, fossil fuels, a limited resource, will be displaced naturally by other energy sources. ...

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No Danger From Man-Made-Global Warming
Raymond Richman, 12/20/2018

President Macron’s imminent fall from power in France did not result from his proposed tax increase but because it was to be spent foolishly on addressing man-made-global-warming. Federal government, state government, and increased private expenditures wasted on man-made-global warming over the past two decades, nearly a trillion, yes a trillion dollars, on subsidies, tax credits, and private expenditures that accomplished nothing but made Gore and many others rich beyond belief. Most climate scientists believe that fossil fuels do bear responsibility for a small contribution to global warming. But the largest contributor is solar activity, which should not surprise anybody. And in less than a century, fossil fuels, a limited resource, will be displaced naturally by other energy sources. ...

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Easy to Get Entangled in an Alliance, Hard to Withdraw From It
Raymond Richman, 12/16/2018

Brexit. the withdrawal of the United Kingdom from the European Union, is a perfect example of the proposition that it is easy to form an alliance but hard to secede from it. In 2016, the United Kingdom voted to exit the Eurozone. The exit is still going on. But original French and German efforts to form an alliance were intended to prevent the United States from dominating Europe. The USA invented NATO as a military alliance against the USSR, completely eliminating the threat of a united Europe antagonistic to the USA. This gave the USA control of Europe and led to the collapse of the Soviet Union. A Europe free of communism was achieved by the break-up of Yugoslavia.

The USA took imperial advantage of its success in breaking up the USSR and Yugoslavia by getting some former parts of the USSR and Yugoslavia to join the European Community and NATO,  In 1999, Poland, Hungary, and the Czech Republic joined, followed by Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia. Albania and Croatia joined in 2009. The most recent member added was Montenegro in 2017. As of 2018, there are four aspiring members: Bosnia, Herzegovina, Macedonia, and Georgia. The Ukraine, Sweden, Finland, and Serbia are considering applying for membership.

The incorporation of countries formerly parts of the Soviet Union and of Yugoslavia has induced Russian to take counter measures in the Ukraine, Georgia, Syria, Turkey, Iran and elsewhere. American media are united in considering Russia the aggressor while Russia considers NATO the real aggressor.  ...

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Easy to Get Entangled in an Alliance, Hard to Withdraw From It
Raymond Richman, 12/16/2018

Brexit. the withdrawal of the United Kingdom from the European Union, is a perfect example of the proposition that it is easy to form an alliance but hard to secede from it. In 2016, the United Kingdom voted to exit the Eurozone. The exit is still going on. But original French and German efforts to form an alliance were intended to prevent the United States from dominating Europe. The USA invented NATO as a military alliance against the USSR, completely eliminating the threat of a united Europe antagonistic to the USA. This gave the USA control of Europe and led to the collapse of the Soviet Union. A Europe free of communism was achieved by the break-up of Yugoslavia.

The USA took imperial advantage of its success in breaking up the USSR and Yugoslavia by getting some former parts of the USSR and Yugoslavia to join the European Community and NATO,  In 1999, Poland, Hungary, and the Czech Republic joined, followed by Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia. Albania and Croatia joined in 2009. The most recent member added was Montenegro in 2017. As of 2018, there are four aspiring members: Bosnia, Herzegovina, Macedonia, and Georgia. The Ukraine, Sweden, Finland, and Serbia are considering applying for membership.

The incorporation of countries formerly parts of the Soviet Union and of Yugoslavia has induced Russian to take counter measures in the Ukraine, Georgia, Syria, Turkey, Iran and elsewhere. American media are united in considering Russia the aggressor while Russia considers NATO the real aggressor.  ...

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Worthington Hardware Versus Home Depot
Jesse Richman, 12/14/2018

At a holiday party the other day I had an interesting conversation with a local Home Depot manager.  I told him about how in the last year I had replaced two major kitchen appliances.  I told him that in both instances when the appliance failed I first went to Home Depot in search of a replacement.  But I ended up buying at Lowes because Lowes kept a large selection in stock while Home Depot required the customer to order everything and wait days for delivery.  His response surprised me.  I thought perhaps he would be concerned about the fact that his company had lost thousands in business from me because of its stocking policy.  Not at all.  Instead he noted that Lowes had recently hired a Home Depot executive who was bringing the same stocking approach to Lowes.  So... soon I would have to wait to weeks to get the appliance from either store. 

Perhaps Home Depot and Lowes know what they are about.  But I don't think so.  It strikes me as short-sighted maximization of the efficiency of their capital and the taking of oligopoly profits at the expense of serving customers well. 

By contrast, the old fashioned independent hardware store Worthington Hardware (https://www.facebook.com/pages/category/Home-Improvement/Worthington-Hardware-218045868210376/) typifies a different approach built on stocking what the customer needs.  The motto of the store seems to be "if we don't have it, you don't need it."  And they have everything.... 

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Time to Require Reciprocal Free Trade
Jesse Richman, 12/7/2018

The most recent US trade deficit statistics highlight the challenges faced by the piecemeal approach to the effort to balance trade currently under way.  Trading partners' retaliations and a strong US dollar (those are not necessarily separate events) have led to one of the largest deficits in years.  The goods deficit was 77 billion.  https://www.politico.com/story/2018/12/06/us-trade-deficit-china-europe-1047317

It is time for the US to consider rolling out a principled pro-free-trade settlement, one that automatically balances trade irrespective of the mercantilism of the other side. 

There are several good alternatives available to accomplish this objective, some of which could be put in place using existing powers granted by Congress to the President. 

Because of its immediate feasibility and a range of other desirable properties, the best approach is a reciprocal free trade trade tariff or scaled tariff.  http://ww2.odu.edu/~jrichman/workingpapers/MechanismstoBalanceTrade.shtml....

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Easy to Get Entangled in an Alliance, Hard to Secede
Raymond Richman, 12/2/2018

Brexit is a great example of the proposition that it is easy to form an alliance but hard to secede from it. In 2016, the United Kingdom voted to exit the Eurozone. The exit is still going on. The USA and the European Union are involved in a military alliance. But original French and German efforts to form an alliance were intended to prevent the United States from dominating Europe. The USA invented NATO as a defensive military alliance to prevent the USSR from establishing itself in Europe. This gave the USA control of Europe and led to the collapse of the Soviet Union. A Europe free of communism was achieved by the break-up of Yugoslavia.

The USA took advantage of its success in breaking up the USSR and Yugoslavia by getting some former parts of the USSR and Yugoslavia to join the European Community and NATO,  In 1999, Poland, Hungary, and the Czech Republic joined, followed by Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia. Albania and Croatia joined in 2009. The most recent member added was Montenegro in 2017. As of 2018, there are four aspiring members: Bosnia, Herzegovina, Macedonia, and Georgia. The Ukraine, Sweden, Finland, and Serbia are considering applying for membership. The incorporation of countries formerly parts of the  Soviet Union and of Yugoslavia has encouraged Russian counter measures in the Ukraine, Georgia, Syria, Turkey, Iran and elsewhere. American media are united in considering Russia the aggressor while the Russia considers NATO the real aggressor.

A formal military alliance is “permanent” and “entangling. 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.

Trade agreements are non-military alliances. ...

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