Another day, another tariff as the twit in the White House tries to reduce the US trade deficit. Unfortunately, things are often not what they seem nor as bad as they sound. Specifically, trade deficits are not what they seem nor as bad as they sound. Unfortunately, the twit in the White House, who claims to be a rich guy, does not seem to understand money. He seems to think our dollars paid for China’s development to our detriment. Let’s look at the facts.
China sends good to America in exchange for US Dollars. The goods that China sells in America require raw material inputs and labor to fashion them. Since we run a trade deficit with China that means they sell us more goods than we sell to them so the extra goods they sell to us require we ship them US Dollars (a good percentage of which are electronic entries in financial accounts. the rest of pieces of paper with printing on them).
Take a look at a US Dollar. What backs it up, Gold? NO, nothing backs it up. You will find that the law, as printed on the front, mandates that ‘this note is legal tender for all debts public and private.’ It is fiat money. It is money because the US Government says it is and because almost all Americans think it is money. However, the law requiring one accept it as payment stops at our borders (and the borders of countries using the US Dollar as currency). Yet, the Chinese and almost all other nations accept our US Dollars in payment. If you think about it foreign nations and nationals accepting US Dollars in payment is very strange.
The US issues a lot of US Dollars on a virtually continuous basis. One would think that would create inflation. However, sufficient US Dollars go to foreign entities who sell us goods and services in exchange for those dollars. So, one break on inflation is the sheer volume of dollars flowing overseas. Then too, some exchanges (market) are traded in US Dollars, oil springs to mind. The international oil market is cleared with US Dollars. With a significant portion of the US Money Supply tied up in the international oil market, we have another break on inflation.
So let’s take the twit’s logic and stop the flow of money abroad. That means we will enter an inflationary cycle. America will be awash in money, as the twit calls it, coming home. The domestic value of the US Dollar will plummet (and so will the value of the dollar in financial markets).
At the same time the twit’s tariffs will kick in and the price of goods Americans, individuals and firms, will increase by at least the value of the tariffs (not to mention the inflationary impact of the flush of dollars driving all prices up, remember, inflation?). Americans will be able to afford less of the goods they have been purchasing. When prices go up, standards of living go down and Americans can not afford the domestic products the tariffs are supposed to generate.
Obviously there is more. But this is enough for today.
Yesterday morning, I read an article in the newspaper about a new problem/danger to Flint, Michigan’s water supply. Waste contaminants from industrial pollution. However, it does not just apply to Flint. It is a growing problem in America. Earlier in the morning, I had heard an NPR report on the dismantling of offshore drilling and fracking regulations by the Trump administration. Oil industry lobbyists have explained to anyone who will or will not listen that these regulations on what chemicals they can put into the ground and must report for a variety of reasons are expensive—drive up their cost of obtaining oil and consequently our price for using them to fuel cars. What the lobbyists fail to tell people is that what they are providing us are more Love Canals. But then most people are not old enough or have long enough memories to remember the billions of dollars the government (you and I as taxpayers) paid to clean up toxic sits (and some are still toxic). So they fail to tell you that for every dollar you save at the pump now it will cost you hundreds or even thousands later to clean up, isolate or work around the toxins they use under relaxed regulations. Besides, the people who live near these sites and get sick and die don’t own stock in the companies. What the lobbyists don’t tell you is that you are making short-term profits for their bosses and keeping the Members of the House, Senate and 50 state legislatures in office with their donations. Relaxing regulations have consequences for you that are not good, for the corporations that are profitable, and keep the best Members of the House and Senate that corporate money can buy in office.
What I do not understand about the DACA debate.
T. Edward Westen, Ph.D. and Professor Emeritus, Central Michigan University.
September 5, 2017
As I listen to the talking heads on television, voices on the radio and stories in the print media I hear about the undocumented alien, children who only know the US, and the rule of law, and a whole bunch of other “stuff” that the utter seems to think applies and makes sense. This is not to mention the assertion that if we can’t control our borders . . .
The people in the DACA program were brought here illegally as children by their parents. They were in fact kidnapped from their native countries, even it if was for a good reason. DACA participants are victims of a crime—they are kidnap victims. Unlike kidnap victims in domestic kidnapping cases, they have no family that we can return them to unless we want to give them back to their kidnappers.
Now, we do not punish rape, burglary, robbery, assault, domestic victims of kidnapping and other victims of crimes. We do not give those who committed the rape, burglary, robbery, assault or domestic victims of kidnapping back to the criminals who raped, burgled, robbed, assaulted, kidnapped or other wish harmed someone criminally so why do we insist on treating the DACA participants differently?
Now to what I don’t understand. How is it we completely fail to recognize that the DACA participants are victims of a crime? Are we going to rewrite our laws so victims of rape are punished for being a victim of a rapist? Are we going to rewrite our laws so victims of a burglary are punished? If you think my question is absurd I must have grown up in the wrong America.
I grant permission for anyone to reblog, post or publish this in any forum, unedited, of course.
Senate Republicans plan to vote on a health care bill this week. It is not clear which bill—repeal and replace or just repeal. Sen. Bernie Sanders is offering his Third Party Payer alternative. Here is another viable option.
Let’s suppose you were to catch a dreaded disease, develop cancer, or have a debilitating injury. At that point, you would want the best medical care you could get. You may even feel as if you deserve the best medical care. The question is, however, if some one else is sick, suffering from cancer, or seriously injured, do they deserve the best medical care they can get too?
Now, what qualifications do you wish to place on others getting the best medical care possible? I submit that if you believe in the founding documents of this nation any answer other than ‘none’ is inconsistent with the “right to life, liberty and the pursuit of happiness” in which you profess to believe.
Indeed the freedom Americans so ardently hold to are seriously curtailed by medical issues: diseases, cancers, and injuries to name a few. Accordingly to have freedom one must be healthy. Toward that end, both health care providers and health care insurers should be nationalized and run to benefit all Americans.
Arguing that the USA cannot afford such an approach belies the evidence of our overall costs of medical care, the profits are taken by insurers, the statistics of the rest of the developed world and little things like infant mortality, deaths from opioids to name but a few. It is time for America to begin to embrace both equality and freedom for All.
The alternative is to condemn the vast majority of Americans to economic slavery to a set of for profit health care businesses.
T. Edward Westen
This morning I read an article about Ted Cruz’s plan to use seized drug money to build Trump’s Wall. I read an article about Trumps cutting taxes to businesses. Then I read another article about Trump imposing a 20% tariff on Canadian softwood imports. Taken together they would not seem to warrant treatment in one place, but both articles report a common phenomenon—public policy proposals that represent a complete misunderstanding of money.
Before I get into money aspects, just a bit of a background is in order for these two issues. Tax cuts for business is a way to give businesses an incentive to hire more workers. This happens in a strange way, it is largely invisible workers who will not actually show up on the shop floor. Tax cuts do not create jobs, demand for goods and services create jobs. But, Trump is convinced of the opposite just as he in convinced little green men bugged his bedroom. A former Obama Administration Trade Negotiator reports that Canadian Trade Negotiators chose to not make a deal over softwood thinking they would fare better under a Trump administration since he is a builder. Ted Cruz must see the writing on the wall when it comes to positive support by US Taxpayers for paying for the wall and is attempting an end run in an effort, I guess, to curry favor with Trump. Enough background.
A fictional story should illustrate one of the articles. A bunch of lumber folks in Canada got together and set up a softwood lumber association. They pooled some money and made donations to Canadian politicians to get them elected to Parliament. Once in Parliament, the elected representatives realized that there were jobs in the lumber industry in their districts. The softwood lumber association lobbyist came around with information about how the politicians could structure the tax or subsidy or employment laws to make it cheaper for the lumber folks to make money and hence hire more people. Since their tax bills were lower, or their subsidy from the government was higher, or their labor costs were cheaper, they hired more people, cut down more trees and exported to the US more softwood. In essence, in this fictional story, the price of softwood coming out of Canada and used in Canada is cheaper because of at least one kind of government support than it would be if only free market forces were determining the price of softwood.
Now, I say this is a fictional story because I do not know how the Canadian system works. If it works like the US system, I could, with some hours of research, put capital letters on the associations and lobbyists and identify chapter and verse the parts of the tax code, labor laws or outright grants of some kind or other to the softwood folks. What the fictional story illustrates is how moneyed interests determine public policy in a democracy.
On the other side of the story, Trump tweets how badly our politicians have been beaten by the Canadians over the years on these trade issues. Never mind that the US gives an energy subsidy to every energy user (it starts with the tax write-offs for oil companies and continues all the way down to the pump in one form or another) so that no one, despite cries of expensive gas and diesel, pays the real cost of moving their goods (the US subsidizes all transportation in this fashion). This includes the failure of the governments to charge heavy trucks for the cost of the damage they do to the highways in contrast to passenger cars. So, the US unfairly competes on the world market by making transportation cheap. Then too, US industry uses of unemployment insurance to maintain a labor pool, is a form of providing cheap labor to give our seasonal workers an income in the offseason. So, while we cry foul when the Canadians use some form of subsidy to increase profits for one of their industries we do the same thing, often on a larger scale.
The bottom line is any tax, subsidy, or regulatory advantage that gives a firm greater profit is an unfair trade practice. To wit, all such are unfair trade practices. Yet, they are written into the US and state tax codes by, indirectly, campaign donors to legislators.
It is interesting that the businesses that reap a profit from government tax cuts, subsidies and regulations are the first to cry when they have to cut pollution (which is a cost they impose on others), hire indiscriminately, or just plain pay fair.
Now, the tax cuts for business. While Trump imposes a 20% import tax on Canadian softwood, he creates an unlevel playing field for US firms by helping them make goods and services below cost. He will loudly argue it is the American Way. Actually, it is the way he and other rich guys keep getting richer. Watch the employment statistics and the national debt as a result of his lining his pockets.
So, how is this not understanding money? Simple, it does not matter where a dollar comes from it is a dollar. So it if it is seized funds from a drug lord or money you sent in with your tax returns (or didn’t get back) it is the same. It is a dollar just like any other that you have provided in one way or another (yes even the seized funds of a drug lord are there because of the laws that make it American money). It is not Mexico paying for the wall. A better idea is seizing Trump’s fortune and let that pay for the wall.
Giving rich guys money to create jobs, doesn’t cut it. If you do the analysis, less than 00.1% of such gifts to the rich make it to the job creation end of things and that is only because they can’t find a way to hang on to that 00.1%. You and I don’t know this, but the real kicker is we have let the rich guys pick the candidates we elect and make the laws to keep them rich. What if we were to find out?