Tuesday, January 3, 2017

Protectionist Trump on Steroids Just Threatened General Motors

This is simply over the top central planning and demonstrates once again that Trump has no understanding of the basic economic principle of comparative advantage.

This is a quite alarming indication of what is going to happen to free trade under Trump---it is going to collapse.

I am forced to add this is Neandrethal.

   -RW

UPDATE

On top of it all, apparently, Trump has fake information.





9 comments:

  1. Apparently it worked: http://www.reuters.com/article/us-ford-mexico-idUSKBN14N1EO

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    1. Who says Ford's decision was made because of these tacit threats from El Señor Presidente Bananero Trumpo?

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    2. Ford did. They said it was a "vote of confidence" in the country's improved business climate under Trump.

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  2. If the companies are able to negotiate a better 'deal' with the government that lowers their cost of doing business (lets assume the deal is better than they would have got if they moved the company overseas), isn't that a net positive for consumers?
    If the only comparative advantage is less regulation or government interference etc. that is much different than wine growing better in one climate over another.
    If the reason that companies leave the USA is because of government restrictions, lessening or removing those restrictions should be seen as a good thing for all of us.

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    1. Just to clarify, I would like any 'deals' to apply to all industries in the country. Not picking and choosing to help car maker X over car maker Y, for example.

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    2. Rob,

      An easing of taxes/regulations would indeed be a good thing (probably even if it only occurred on an ad hoc basis.) However, what's being threatened here is not freedom, but the imposition of further state predation. And even in the Carrier case it was almost certainly promises made around UTC's many government contracts that convinced them to stay, not the tax breaks which really weren't all that significant.

      And it's not just that Trump is an interventionist. It's that he continues to spout the same ridiculous mercantilist fallacies about how we should obsess over which nation particular lines of production occur in. As if people need any more excuses to be paranoid, tribalist nationalists.

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  3. Keep in mind that CAFE law requires automakers to sell more small cars than the market would ordinarily take which drives down the margin on these vehicles. So Trump wants to address the effects of a previous intervention with a new intervention. That's what politicians do.

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