Winner-Take-All Economy

We are told almost daily of the attributes of the “free market” economy….but those markets are far from free….for many years I have written numerous times about this lie….this illusion…..

https://lobotero.com/2008/09/20/free-markets-truth-not-spoken/

https://lobotero.com/2020/05/25/that-free-market-illusion/

Then there is the economic inequality….where 1% of the population owns more than the bottom 80%…..but how bad can it possibly be?

Well as you might imagine I have also written numerous posts on this as well…..

https://lobotero.com/2014/02/25/the-increasingly-unequal-states-of-america-income-inequality-by-state-1917-to-2011-economic-policy-institute/

https://lobotero.com/2018/03/17/inequality-how-bad-can-it-be/

After WW2 the economic growth ranged across all levels of society but that equality was to be short lived……our economy has become winner take all….and each passing year the inequality spreads.

In the three decades following World War II, the US saw economic growth that was shared across all levels of income, from the working class to the richest 1 percent. But that changed after the mid-1970s as income inequality increased exponentially during the next four decades.

A new study by nonprofit research organization RAND nails down what really happened. It shows that this rising inequality took a substantial bite out of the earnings of up to 90 percent of American households.

In this week’s WhoWhatWhy podcast, we talk with the authors of the RAND study, mathematician Carter Price and labor economist Kathryn Edwards.

Price and Edwards detail the unique approach they took in putting this report together. Up until now, they explain, nobody had devised a formula to show just how individuals and their families were affected by the rising inequality across the entire income spectrum. 

Proof Positive of the Winner-Take-All Economy

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Trump’s Trade Wars

Are you a Trump supporter? If so, how do you think his numerous trade wars are faring for the country?

I have written numerous posts on what I think of this sanity that is nothing more than a political stunt.

But let’s look at the results of the so-called trade war with China just weeks before the vote.

trade warAs the curtain falls on the first Trump presidency, it is timely to reflect on what has been achieved – or not. And nothing could be more at the heart of US President Donald Trump’s mission to “Make America great again” than an audit of his
on China.
costly claim….It is more than two years since his crassest, most significant and most
: “Trade wars are good, and easy to win.” The shocking naivety of that statement still makes me shudder. But having declared war, he has fought it, and continues to fight it, unflinching in his conviction that one way or another he will eventually succeed, and that the United States will have been made stronger in the process.
Whether Trump wins another term in office or not, he can take comfort that his good fight will continue. His opponent in the presidential election, former US vice-president Joe Biden, has given
every indication
that Trump’s trade war on China will rage on.
tariff wars
But how well served have the US economy, American companies and workers been by the, and unprecedented efforts to roll back seven decades of globalisation and trade liberalisation?
 
I have listened to his drooling slobbering supporters applaud and scream when he mentions what is war is doing to China…..it is nothing but make believe and wishful thinking…..
 
Further Reading…..If you dare…..
 
 
To be honest I am not thrilled with the trade policies of the Dem candidate, Joe Biden, either…..on which I wrote recently….read those thoughts as well…..https://lobotero.com/2020/05/27/biden-on-trade/
 
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Oval Office Slap Fight

Closing Thought–12Aug20

The media has reported numerous times about the knock down arguments that are held in the Oval Office….well this time it is between trade slug Navarro and Treasury toad Mnuchin……

A “knock-down, dragout” brawl broke out in the Oval Office last week when two key presidential advisors fought in front of their boss, an insider tells the Washington Post. Trade adviser Peter Navarro and Treasury Secretary Steven Mnuchin reportedly locked horns over the fate of TikTok, the Chinese-owned video app that President Trump warned he might ban—or let Microsoft buy, if the US Treasury received a “substantial” fee. In the meeting, Mnuchin said he had talked to Microsoft officials and believed the sale was warranted on national security grounds. But Navarro demanded the ban, accusing Mnuchin of going easy on China. A “vicious” battle ensued between the two, recalling their foul-mouthed argument on a trip to Beijing in May 2018.

“I think Trump’s instincts are to be aggressive toward China,” says a former US official. “Navarro’s like the devil on his shoulder, saying, ‘Do it, do it.’ Mnuchin is more like a governor, trying to slow everything down—’What about Wall Street? What about Phase 2 [of the trade deal]?'” How it ended is unclear, but Trump signed an executive order Thursday that would basically shut down TikTok’s US operation in 45 days if it isn’t sold, per CNN. Navarro later said the Trump administration relies on “strong, often opposing views,” and added this: “It is critical for a strong America that ‘what happens in the Oval Office, should stay in the Oval Office’ so I have no comment on what is clearly a malicious leak riddled with hyperbole and misinformation.”

I imagine a couple of nerds slapping at each other when the argument breaks down into physical touching.

I would have loved to be that fly on the wall of the Oval Office……my imagination is running wild…..a fight, really?

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Are We Winning The Trade War?

Trump came into office promising all sorts of stuff but mostly that he was an expert at trade policies and he would return the US to its rightful place as the world leader in trade.

I have written about this experts consequences of his trade wars…..

https://lobotero.com/2019/03/29/trade-war-consequences/

https://lobotero.com/2019/09/16/trumps-trade-war/

Let’s be honest his policies have been disastrous to this country….only a handful of extremely rich people have benefited from these failed policies….

Some have asked just why has these policies failed other than a total impotent approach to trade…….

Before Donald Trump took office, he promised he was going to stick it to China on trade. When he assumed power, he indeed did so — threatening and then levying tariffs on hundreds of billions of dollars worth of Chinese imports. China responded in kind, before agreeing to a largely symbolic trade agreement in January only to have it disrupted by the coronavirus pandemic.

The problem the Trump administration was ostensibly trying to solve was America’s enormous trade deficit, which Trump has portrayed as the U.S. being ripped off by foreign countries. This was also the motivation behind the renegotiation of the North American Free Trade Agreement, and a threatened trade war on Europe that is also now on hold.

Yet all these actions did not shrink the trade deficit. On the contrary, the deficit widened for the first few years of Trump’s presidency, shrank back to about what it was before he took office in late 2019, and now has widened once again. What gives?

https://theweek.com/articles/923813/why-trumps-trade-war-failed

My thought is if we are to trade with other nations that maybe a more inclusive talks and a mutual beneficial agreements would help everybody.

Instead we are “going it alone”…..and the results are noticeable to all….jobs loss…..factors closing……lack of confidence in the US.

Time that we stop acting like the sole nation on this planet and start working with others for common goals.

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“lego ergo scribo”

 

NAFTA 2.0?

Back in the day globalization took off big time in the 1990s and the presidency of Clinton….when it was signed into law I said then that it was a bad idea for workers not just here but around the world.

I was a supporter of the Trump’s idea to trash the deal and come forth with a new more inclusive deal.

But after 3 and half years and lots of talk and tariff stuff we have a new “NAFTA”…..

President Trump has touted the North American Free Trade Agreement (NAFTA) as the worst trade deal ever negotiated—and vowed to replace it. Today, it has been replaced by the U.S.-Mexico-Canada Agreement (USMCA) and, unbeknownst to him, this agreement should hold that unsavory title. While the USMCA makes some modest improvements (largely by borrowing from the Trans Pacific Partnership, which Trump withdrew from), it also includes some protectionist elements and veiled industrial policy. Furthermore, while the administration has been rushing to implement the deal in order to score political points on the campaign trail, businesses are left to sort out the new rules and paperwork that they will have to start following as of today. USMCA was pitched as a way to reduce uncertainty among the three trading partners in the face of threats of withdrawal from NAFTA that Trump made regularly. But at the end of the day, much uncertainty still remains.

The first area where we are likely to see some challenge in implementation was exactly the issue that received an inordinate amount of attention during negotiations: autos. The rules that determine whether a product can cross duty free across the border—rules of origin—were tightened for the auto sector. In NAFTA, passenger vehicles were required to have 62.5% North American content, and in the USMCA that has been increased to 75%. This means that auto producers will need to source more components from the region, in addition to ensuring that 70% of the steel and aluminum used in production also comes from Canada, Mexico or the United States. On top of this—a first ever in a trade agreement—a new labor value content requirement was added that requires auto makers to have 40–45% of their auto content made by workers making at least $16 an hour. This is clearly aimed at moving production out of Mexico, which has been an important link in the North American auto supply chain. For automakers these rules will raise some challenges in implementation, not least because auto production is so fragmented, and that every producer up and down the supply chain must abide by the new content rules. Coordinating this is no easy feat. Canada has yet to pass the regulations that will bring the auto rules into force, and with today being a holiday in Canada, that process will undoubtedly be delayed. In the United States, guidance on the regulations has been shared, but the interim final rules on uniform regulations and labor value content were just published today.

https://nationalinterest.org/blog/reboot/trump-signed-worst-trade-deal-ever-and-it-just-went-effect-164021

I do not see how this would benefit the workers or make their lives more enriched…..once again the words of Trump have proven to be total crap.

I Read, I Write, You Know

“lego ergo scribo”

Biden On Trade

Looks like all the hard work the media and pundits have done is giving Biden the inside tract to the nomination….we can only hope that it is not so…..well he made it….Biden is the man with a plan…..at least that is his story.

But since Trump will probably run on his trade policies I thought maybe a look at those of Biden would be helpful…..

“In terms of the coming general election we don’t have to predict what [President Donald] Trump will be saying about Joe Biden, because he is already making those attacks. Trump—who won Michigan, who won Wisconsin, who won Pennsylvania—made one of his major campaign tenets his opposition to NAFTA and PNTR [Permanent Normal Trade Relations ] with China,” said Sanders.

“In 2016, he criticized those trade policies as being disastrous—and just yesterday, he made that claim,” Sanders continued. “The truth is, and we have to be honest about this, that NAFTA and PNTR cost this country well over 4 million good paying jobs. In Michigan alone, these disastrous trade agreements led to the loss of more than 150,000 good paying jobs. And not only job loss—when good paying jobs go, you are involved in a race to the bottom and employers can pay lower wages.”

“These trade agreements have been a disaster for the people of Michigan, the state of Vermont, and for the entire country. Joe Biden and I have very strong and different positions in terms of how we reacted to NAFTA and PNTR,” Sanders said.

https://www.commondreams.org/news/2020/03/06/will-bidens-trade-policy-record-come-back-haunt-him-midwest

To be fair to Biden…..OnTheIssues.org asked some question to Biden…..if you are considering voting for Joe Biden then maybe get to know his policies before doing so…..https://www.ontheissues.org/International/Joe_Biden_Free_Trade.htm

Another look at Biden’s trade policies…..https://www.csis.org/analysis/what-former-vice-president-bidens-policy-trade

I would give you his website but they want my email and I refuse to give it….so if you can find another way into his policies I wish you luck.

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Tariffs–Trump Weapon Of Choice

Most Americans know that Trump has decided that a good trade war is what this country and the world desperately…..

He expanded his “war” with tariffs…first on two South American countries…..

President Trump leaves for a NATO summit in London on Monday, but first he’s making headlines in regard to South America. In an early tweet, the president announced he is restoring tariffs on aluminum and steel shipped from Argentina and Brazil, reports the Wall Street Journal. Trump accused both countries of manipulating their currencies to hurt US farmers, and he paired his action with criticism of the Federal Reserve, notes Bloomberg, which sees the morning moves as significant. Trump says that by these and other nations deliberately devaluing their currencies, “this makes it very hard for our (manufacturers) & farmers to fairly export their goods,” he wrote. “Lower Rates & Loosen – Fed!”

This is the first time Trump has explicitly linked tariffs to currency moves, per Bloomberg, and “as such, it signifies a potential new phase in his trade wars in which foreign-exchange markets are the battleground.” The US initially exempted Brazil and Argentina from metal tariffs put into place in 2018, but that exemption is now being lifted. The New York Times notes that the two countries have benefited from the US trade war with China: Both have been shipping soybeans and other farm products to China, making up for the shortfall of US exports

France is next in the cross hairs….

The Trump administration is proposing tariffs on up to $2.4 billion worth of French imports—including Roquefort cheese, handbags, lipstick, and sparkling wine—in retaliation for France’s tax on American tech giants like Google, Amazon, and Facebook. The Office of the US Trade Representative charged Monday that France’s new digital services tax discriminates against US companies. The trade office will accept public comments on the tariffs, which could hit 100%, through Jan. 6. The French tax is designed to prevent tech companies from dodging taxes by putting headquarters in low-tax EU countries. It imposes a 3% annual levy on French revenues of digital companies with yearly global sales worth more than $830 million and French revenue exceeding $27.7 million.

The US also criticized the French tax for targeting companies’ revenue, not their profits, and for being retroactive, the AP reports. The decision to pursue tariffs “sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on US companies,” US Trade Representative Robert Lighthizer said. He warned that the US is also looking into digital taxes introduced by Austria, Italy, and Turkey. The decision to target France got bipartisan endorsement from GOP Sen. Chuck Grassley and Democratic Sen. Ron Wyden. In a joint statement, they assailed the French digital tax as “unreasonable, protectionist and discriminatory.”

I have made my thoughts known on Trump’s sanctions and tariffs….(you can find them in IST archives under “tariffs”)….I believe there is a better way to deal with other countries than trying to punish them for perceived violations.

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We Have a Deal!

Closing Thought–16Dec19

Just in time for the beginning of the process to pick our next president it has been announced that Xi and Trump have reached a deal on ending our trade war…..

Do not let the peasants dance just yet….they have agreed on only one phase of the deal…..

China and the U.S. agreed on the text of a phase one trade deal that includes the removal of tariffs on Chinese goods in stages, Vice Commerce Minister Wang Shouwen said, as President Donald Trump confirmed that some levies will be reduced and said the next round of talks will start immediately.

China will increase imports from the U.S. and other countries, Wang said at a briefing in Beijing Friday. Vice Chairman of the National Reform and Development Commission Ning Jizhe added that the specifics of agricultural purchases would be released later, as the text of the agreement is still under review.

The comments were China’s first response to a deal signed off by Trump on Thursday that would halt higher tariffs planned for Dec. 15 and represent the first phase in defusing the trade war that’s shaken the global economy.

https://outline.com/9fvXqt

Just in time to help the markets rise a bit and make the economy look better than it is……but the markets did bite this time from Trump….

Stocks are closing at more record highs as traders hope that the US and China can make enough progress on trade to avoid new tariffs kicking in over the weekend, the AP reports. Banks and technology companies led the gains. The S&P 500 rose 26 points, or 0.9%, to 3,168. The Dow Jones Industrial Average rose 220 points, or 0.8%, to 28,131. The Nasdaq rose 63 points, or 0.7%, to 8,717. The S&P 500 and Nasdaq are at record highs. Traders dumped safe-play investments like utilities and real estate companies and moved money into riskier assets. Bond prices also fell, sending yields sharply higher.

I still question the timing of this “deal”….not that Trump is doing anything different from any other president looking for a boost for the next round of voting.

Personally, I feel that we need a more “progressive” trade policy….we are giving too much a way to other nations…..

It is clear that these trade and investment policies no longer even benefit the signatory countries, but rather line the pockets of global elites at the expense of ordinary people and the planet we share. Backlash to these policies has peaked and waned, peaking 20 years ago with the fight against the MAI and the Seattle WTO protests, and again reemerging in the past decade, against the FTAA and, again, against the TPP more recently.

As the right has increasingly taken up opposition to trade policies from a protectionist and often xenophobic angle, the need to distinguish a left, internationalist critique of corporate globalization has never been more urgent. The chauvinist policies of the Trump administration and its imitators need to be strongly condemned. But if the progressive movement is simply reacting to the neoliberal trade agenda and its right-wing disruptors, it is unlikely to achieve meaningful change.

So, progressive politicians and policymakers — from AMLO to Elizabeth Warren and Bernie Sanders — must unify around a progressive vision of trade to guide an international system that places people and planet over profits. That is why a bold new vision for international economic cooperation and global development is so crucial.

https://www.commondreams.org/views/2019/12/12/we-need-progressive-alternative-trade-and-nafta-20-isnt-it

Trade should be our focus to save our family farms….and our industries as a whole….not some idle campaign slogan.

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Closing Thought–11Dec19

The Dems wanted to prove that they did not go to DC justn to impeach the president…..plus they needed to give their members some cover in the close elections in 2020….for these reasons they helped pass the new NAFTA that Trump promised….

House Speaker Nancy Pelosi on Tuesday announced agreement on a modified North American trade pact, handing President Trump a major Capitol Hill win on the same day that Democrats announced impeachment charges against him, per the AP. Crediting Democratic negotiators for winning stronger provisions on enforcing the agreement, Pelosi said the revamped United States-Mexico-Canada Agreement is “much better” than the North American Free Trade Agreement and “infinitely better than what was initially proposed by the administration.” “This is the right thing to do for our trade situation, for our workers,” she said. In a tweet, Trump said the revamped trade pact—his top Capitol Hill priority along with funding for his long-sought border fence—”will be the best and most important trade deal ever made by the USA. Good for everybody – Farmers, Manufacturers, Energy, Unions.”

Marcelo Ebrard, Mexico’s foreign relations secretary, said the three countries’ negotiating teams would meet Tuesday “to announce the advances achieved.” NAFTA eliminated most tariffs and other trade barriers involving the US, Mexico, and Canada. Critics, including Trump, labor unions, and many Democratic lawmakers, branded the pact a job killer for the US because it encouraged factories to move south of the border, capitalize on low-wage Mexican workers, and ship products back to the US duty-free. Weeks of back-and-forth, closely monitored by Democratic labor allies such as the AFL-CIO, brought the two sides together, though Trump had accused Pelosi of being too wrapped up in impeachment. More protectionist and labor-friendly, USMCA contains provisions designed to nudge manufacturing back to the US.

This is nothing but a political gimme to the president…..just a way to help Dems in the states that depend on trade for their economy.

This is just NAFTA 2.0, as it has been labelled)…..it is weak…..

The revised U.S.—Mexico—Canada Agreement (USMCA), announced today by House Speaker Nancy Pelosi and endorsed by the AFL-CIO, represents a significant improvement on the draft agreement first released in 2017. Negotiators for labor and House Democrats strengthened the provisions on labor rights, environmental standards, and the enforcement of these rules, and also removed costly and egregious new protections for corporations, including giveaways by the Trump administration to pharmaceutical companies.

But the changes embodied in the USMCA still constitute Band-Aids on a fundamentally flawed agreement and process. Powerful multinational corporations have used and controlled the negotiation of trade and investment deals to facilitate offshoring and the deregulation of the U.S. and global economy, as noted by the Machinists Union, which has announced its opposition to the USMCA. The original North American Free Trade Agreement (NAFTA) resulted in the loss of at least 680,000 U.S. jobs due to growing trade deficits with Mexico alone. It also caused downward pressure on the wages of nearly 100 million U.S. workers and the devastation of manufacturing communities across the United States, especially in the industrial Midwest and battleground states—with far-reaching social and electoral consequences.

https://www.commondreams.org/views/2019/12/10/us-mexico-canada-agreement-weak-tea-best

Like I wrote…this is a weak piece of manure that does little but give Dems some cover for their upcoming elections back home.

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“Lego Ergo Scribo”

Economic Realism–2019

We hear almost daily at a Trump rally just how good the economy is doing since he became president….I will admit that the markets, stock markets, are doing well and that is where it ends…..there is nothing good happening beyond those hollow promises.

Trump and the GOP keeps Tweeting about what great condition the economy is in….but I feel they need a refresher course….the economy means….”the wealth and resources of a country or region, especially in terms of the production and consumption of goods and services.”

Markets are soaring…the economy not so much.

I mean a 10% drop in manufacturing (I thought it would all come back under a Trump admin) and investment lagging…..all thanks to the economic policies of this president….

Decisions based on false or misleading information can lead to wrong and harmful solutions. The constant harping on Chinese trade having “cost” America millions of jobs is false, especially given what we now know: that 85 percent of American job losses have resulted from technology, not trade.

This complicated issue is detailed in a Yale University School of Management report. However, this is not the end of the story.

Millions of simple manufacturing jobs have been replaced with service and advanced manufacturing jobs, where America still leads. In fact, American manufacturing’s major problem right now is a shortage of a million skilled workers. We need better worker re-training programs and a campaign to change attitudes towards the social standing of skilled workers in place of our current hyper-focus on college degrees.

Trump’s Trade War Has Dire Consequences

Americans are starting to see just how disastrous Trump policies are for them….these policies may help his rich friends but do very little for mainstream America…..

Nearly two-thirds of U.S. voters said they are not better of financially since Donald Trump took office, a new poll of likely voters finds.

The October 2019 poll conducted by the Financial Times and the Peter G. Peterson Foundation found that 31 percent of potential U.S. voters reported being worse off financially since Trump took office in January 2017. An additional third of Americans surveyed, 33 percent, said there has been no change in their financial status under the Trump administration.

Just over one-third of those surveyed, 35 percent, said they were better off since Trump moved into the White House.

https://www.newsweek.com/trump-presidency-helped-americans-financial-standing-poll-us-voters-1469625

The bottom line on the economy is…..not good.

While you weren’t looking — perhaps while you were watching impeachment hearings – the trade war with China went completely off the rails and lost its meaning.

To understand why, you have to know why the US started a trade war with China started in the first place. It started with a very specific investigation — an investigation into China’s theft of US intellectual property (IP) using Section 301 of the Trade Act of 1974.

The investigation determined what many in the business community had been talking about for years, the fact that China abused its US partners, stole the IP of American companies, forced those companies to reveal their technology to Chinese counterparts and muscled US firms out of the Chinese economy in favor of state owned enterprises (SOEs).

https://www.businessinsider.com/trump-trade-war-us-china-tariffs-lost-no-meaning-2019-11

Sadly those so-called “Free Markets” are killing the very sector it is suppose to help and advance…..

National industrial policy was once something you might read about in today’s equivalent of a friend’s Facebook post, as hard as that might sound to believe. It was in newspapers; it was on the radio. Taxi drivers had opinions about it. That all changed in the last 35 years, when the rise and fall of the stock market and a shallow conversation about unemployment rates took over. Industrial policy became an inside-baseball conversation, and to the extent that it was discussed, it was through the prism of whether it imperiled the golden gospel and great economic distraction of our time, “the free market.”

The decades of free-market propaganda we’ve been exposed to are basically an exercise in distracting the public from the meaningful choices that are now made behind closed doors. The two big political parties that outwardly represent symbolic issues like gun rights and school prayer spend the bulk of their time and political energy on complex industrial and regulatory questions.

America Will Keep Losing Its Middle Class as Long as ‘Free Markets’ Dominate the Economic Debate

Trade wars do nothing to help the Middle Class advance….and after so many years of a “free Market” mentality the proof is in the dwindling of the Middle Class.

The stock markets are not the economy in its entirety.

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