I hasten to add that those who lost their jobs would soon find other opportunities unless their next best opportunities were below the minimum wage.
The real big losers would be consumers who would see their standards of living drop as cheaper foreign goods would no longer be available in many cases.
-RW
How does one discuss numbers that are made up presuming a false notion? Simply, the president cannot impose tariffs, that is a power of congress. There are better ways to scare people away from Trump, the problem is those would also scare people away from the status-quo in general.
ReplyDeleteWith status quo against him the odds of Trump getting tariffs imposed is approximately zero.
Re: Jimmy Joe Meeker,
Delete─ How does one discuss numbers that are made up presuming a false notion? Simply, the president cannot impose tariffs, that is a power of [C]ongress. ─
Understand that while this is theoretically true, Congress is still populated by politicians who would not hesitate to humor a popular authoritarian like El Trumpo just to ensure their own survival.
Only if they felt Trump voters would be able to oust them from office in the next election in favor of a Trump approved rival and that siding with Trump was their best chance at re-election. Otherwise Ds and Rs will stand against Trump challenging their way of life. This is unlikely for more than a few seats.
DeleteTrump's power as president is to negotiate treaties. He may use that to create what are in his mind better trade deals. That requires a) foreign governments to agree and b) the Senate to approve.
The odds of horrific trade deals coming to reality this way are highly unlikely as well.
The practical reality is that Trump may be able to knock some of the lopsidedness off the present situation. That is move towards the direction of freer markets using protectionism as leverage.
I read this & the WaPo article & others am lead to believe no good can come of Trump's plans.
ReplyDeleteBut then, my wife was fired by her employer whose accountant said she was overpaid & should be replaced. Over the next few months she looked for another job paying as well without success, & her employer was also unsuccessful. Replacements did not work out. So they asked her to return at her “overpaid” rate. She refused demanding a raise to return. They refused. Both continued to lose $'s since she had been fired. They blinked first & took her back with a raise. Sometimes you lose money while working out a deal that eventually pays for itself. What's wrong with that?
We refused to allow Mexican trucks into our country so they had to unload at the border & Americans reload into US trucks for delivery. Mexico responded by putting tariffs on ~100 US products, hurting their citizens as tariffs are a cost to citizens. It took a few years but the US blinked. Mexican trucks can deliver here & Mexico dropped the tariffs. Sometimes you lose money while working out a deal that eventually pays for itself. What's wrong with that?
Trump is many things, but not a complete idiot. Two sides with something to gain commonly bring carrots & sticks to the table haggling to agreement. Trump's argument is that our guys are terrible & motivated by other considerations, perhaps such as contributions to a foundation, rather than what is good for the US. Trump may screw up but he's right about keeping your limits private prior to the table. Maybe economists could write a better book than “The Art of the Deal.” Maybe they should.
Were my wife & Mexico foolish? The articles assume no deal can be had. Why?
I respond here rather than at WaPo cuz I think there is a better chance of an economist to respond. Please.
─ We refused to allow Mexican trucks into our country so they had to unload at the border & Americans reload into US trucks for delivery. Mexico responded by putting tariffs on US products, hurting their citizens as tariffs are a cost to citizens. ─
DeleteWhat the Mexican government did was to sue the US government over treaty violations and the US government lost. Even then the US government refused to comply with the treaty. In this case, it was the US government, pandering to unions, who kept postponing what was a covenant by treaty. The Mexican government's only legal recourse left was to slap tariffs on American-made goods, sanctioned by a NAFTA dispute settlement panel.
How does this compare to what your wife did is beyond me. She was fired; her employer tried to re-hire her. She had every right to negotiate her salary; her decision was entirely rational based on her individual preferences and the opportunity costs she faced. Neither your wife nor her employer had an agreement, contract or covenant that required enforcement. What would have happened if her employer had found a person just as qualified? She would probably settle for a different job.
─ Trump is many things, but not a complete idiot. ─
No, of course not. He's so incompetent, El Trumpo is only half an idiot.
NONE of the examples given above provide a moral justification to impose what is ultimately a TAX on people who are merely engaging in peaceful trade. This collectivist thinking that who trade are countries rather than individuals is what drives the pernicious belief that presidents or government gets to set terms on trade.
I'm fully aware of the Mexico/NAFTA/Truck/Union thing & thought about including it but did not for it added complexity. The article I read said our motive was to get those Mexican tariffs removed under pressure from US firms as well as or in part to finally comply with the law.
DeleteRegardless of motives re Mexico Trucks: It is plausible that the threat of tariffs during negotiations would lead to accommodation on some issues.
My wife's situation is the same: A deal betwixt 2 entities, same as a trade deal, or any deal between 2 (or more) parties: BOTH have something to gain. BOTH have something to lose. My wife's negotiations started when they offered to hire her back. She lost $'s not agreeing immediately & risked NO deal at all, but they were obviously losing also. If a foreign nation places restrictions on our goods (treaties or otherwise) BOTH nations suffer economically. If US “threatens” tariffs we are threatening to cost the other nation though we too suffer. Safest thing would have been my wife's acceptance. Safest thing for our nation is to accept ANYTHING as does Singapore (as I recall); however, DEALS can be had for the benefit of both.
I've observed several economists assert Trump is wrong on tariffs. Don't know if it was all tariffs, but WSJ sez NO economists who've advised Presidents endorse Trump. Some of what he sez CAN be construed as “We gonna cut a deal” to be a real & reasonable motive. Absolutely none that I've seen even day-dream it is possible that a “Deal Maker” like Trump thinks primarily in terms of making a deal. I don't understand why?
Peterson Institute (AKA PIIE) is virulently anti-Trump, as such not surprising to see them put forth a very unscientific, speculative position release.
ReplyDeleteRe: J,
DeleteDo you mean that it is not possible that protectionist schemes will affect employment and consumer prices?
In Tom Woods recent interview of David Stockman
ReplyDeletehttp://tomwoods.com/podcast/ep-741-david-stockman-what-the-fed-and-the-feds-have-done-to-us-and-how-to-reverse-it/
Stockman explains how the combination of free trade and the Feds inflation policies have some detrimental effects on employees in the USA.
Stockmans argument in a nut shell is: Prices and wages rise in the USA faster than many countries that trade with the USA making workers in the USA less competitive.