U.S. vs China: Protectionism

[rb]

Ok, getting back to the original promise of this thread.

 

There is no way the RMB is 40% undervalued against the dollar. In fact there's actually little evidence that the RMB is undervalued at all.

 

If the RMB would be undervalued these are the things we should expect to see (no order, just don't like the bullet fuction):

1. Inflation pressure in China

2. Rising foreign exchange reserves

3. Large trade surplusses

 

Now about 10 years ago if one looked at China it was obvious their currency was undervalued. Their current account balance was about 10% of GDP - from an economics perspective that is insanely high. Inflation I think was pushing toward 10% and their foreign currency reserves were going up like crazy.

 

Today China's inflation is around 2. Their current account surplus is 1.8% putting it in the same league as say... Spain, and their reserves went down by about 25% (close to 1 trillion) between 2014 and 2017. All of this points to the fact that the RMB is not massively undervalued. It may be off here and there like any other currency, but the signs point that it's somewhere around where it should be.

 

By the way, for the people who are so fired up about trade deficits, you should be aware that trade deficits are generally driven by savings rates (internal factors) as opposed to trade agreements.

[rb]

EU may survive if Germany subsidizes all other countries through trade or other incentives. It runs a surplus. It is the same the us has done to sustain NATO. 

 

In terms of the number of parties to an agreement, I would submit that the European Union was designed to fail eventually by design but its demise will likely be precipitated by the relatively high number of heterogeneous members. So your suggestion to simplify negotiations through bilateral agreements is reasonable. After all, Canada is only a negligible factor in this global game. ???

 

Concerning the link provided, I understand that most essential comments and references support the arguments detailed in previous posts.

 

In 1918, Woodrow Wilson described 14 points that formed the backbone of the League of Nations. The League failed eventually in large part because President Wilson could not obtain support by the Senate, in the context of the primacy of domestic focus. The inability to deal with the global world order transition then did not help peace and trade, to say the least. The third point of his presentation: abolish economic barriers.

 

Definition of a barrier: a circumstance or obstacle that keeps people or things apart or prevents communication or progress.

The EU won't fail. Sorry guys, but if this is why you think that the EU will fail or that it was designed to fail, you don't understand the EU or free trade's role inside the EU. The EU will adapt, it will evolve, some changes will be made along the way but it'll stick together.

[writser]

The EU won't fail. Sorry guys, but if this is why you think that the EU will fail or that it was designed to fail, you don't understand the EU or free trade's role inside the EU. The EU will adapt, it will evolve, some changes will be made along the way but it'll stick together.

 

Bold prediction ..

[Cigarbutt]

The present context related to the described need to at least re-work the trade agreements with China is based, at least in part, on the perceived notion that trade imbalances explain the anxiety and frustration of some voters who feel left behind. Wages are stagnant.

 

Potentially useful link for constructive thought concerning this multi-variable equation.

 

http://www.nationalreview.com/article/451059/growth-stagnant-economists-disagree-reasons-automation-offshoring-demographic-change

 

I would submit that potential solutions mentioned (either market or government based) could give rise to investment opportunities.

 

[SharperDingaan]

Bi-lateral agreements make zero sense when you're dealing with a dominant trade partner; for the same reason that you don't sell to Walmart when you're a small player. They will own you, squeeze every nickel out of the relationship, & ultimately turn you into a slave. The strategic thing is to walk away - leaving you with a smaller, better diversified, agile & healthier business; that is a lot easier to manage.

 

The reality is that US production line industry is fundamentally obsolete in today's world, & the US hasn't been able to move on. It is no longer possible to use economy of scale to offset labor costs, simply because we don't buy millions of identical units anymore; factories compete on smaller, frequent, & flexible production runs - & robotics.

 

There is recognition that US citizens are going to pay more for their goods (protectionism), but it hasn't been thought out.

Make the cheap stuff more expensive, & the demand for it will fall off a cliff; automatically resulting in lower US imports and a better balance of trade.

 

SD

 

 

   

[SharperDingaan]

The US needs partners to trade with. No partners because of insistence on bi-lateral negotiations = no trade.

 

The US is also the #2 economy, not the #1; and the rate of decline is accelerating. Was #1, is not #1.

 

Trade deficits widened because the US bought more than they exported - & it was because the partner either couldn't afford to buy the US product - or was able to buy the acceptable quality alternative, elsewhere. The US value proposition failed.

 

SD

 

Except that none of this is true in the US context.

 

The US trade deficit has widened with a partner after every free trade agreement. US still is a large manufacturer with ~ 2 trillion in manufacturing.

 

https://en.wikipedia.org/wiki/Manufacturing_in_the_United_States

 

 

Bi-lateral agreements make zero sense when you're dealing with a dominant trade partner; for the same reason that you don't sell to Walmart when you're a small player. They will own you, squeeze every nickel out of the relationship, & ultimately turn you into a slave. The strategic thing is to walk away - leaving you with a smaller, better diversified, agile & healthier business; that is a lot easier to manage.

 

The reality is that US production line industry is fundamentally obsolete in today's world, & the US hasn't been able to move on. It is no longer possible to use economy of scale to offset labor costs, simply because we don't buy millions of identical units anymore; factories compete on smaller, frequent, & flexible production runs - & robotics.

 

There is recognition that US citizens are going to pay more for their goods (protectionism), but it hasn't been thought out.

Make the cheap stuff more expensive, & the demand for it will fall off a cliff; automatically resulting in lower US imports and a better balance of trade.

 

SD

 

 

 

[rb]

Except that none of this is true in the US context.

 

The US trade deficit has widened with a partner after every free trade agreement. US still is a large manufacturer with ~ 2 trillion in manufacturing.

 

https://en.wikipedia.org/wiki/Manufacturing_in_the_United_States

 

 

Bi-lateral agreements make zero sense when you're dealing with a dominant trade partner; for the same reason that you don't sell to Walmart when you're a small player. They will own you, squeeze every nickel out of the relationship, & ultimately turn you into a slave. The strategic thing is to walk away - leaving you with a smaller, better diversified, agile & healthier business; that is a lot easier to manage.

 

The reality is that US production line industry is fundamentally obsolete in today's world, & the US hasn't been able to move on. It is no longer possible to use economy of scale to offset labor costs, simply because we don't buy millions of identical units anymore; factories compete on smaller, frequent, & flexible production runs - & robotics.

 

There is recognition that US citizens are going to pay more for their goods (protectionism), but it hasn't been thought out.

Make the cheap stuff more expensive, & the demand for it will fall off a cliff; automatically resulting in lower US imports and a better balance of trade.

 

SD

Except that's not true either. For example, US trade surplus with Australia has widened significantly after the Australia-US free trade agreement went in effect.

[SharperDingaan]

No worries, the US is just another trading partner - same as everybody else!

 

Point is that if you're going to trade you cant be isolationist, and you cant dictate - the US isn't #1 anymore. A lot of what the US offers, Asia does as well - and often at better value. Currency manipulation, subsidies, protectionism, etc. is part of the value equation - and expected.

 

Like it or not, the imbalances exist because the US is addicted to buying more than it sells; simply either buy less, make the product yourself, or sell more. But recognize that you cant make someone buy from you when your value proposition sucks.

 

Many would argue that a very good solution would be making more product at home, and making US consumers pay more. Even Henry Ford recognized that the whole reason for paying a workforce more is so that they can afford to buy the products that you make; paying a foreign workforce little, then trying to sell them goods they cant afford - just ensures a growing trade deficit.

 

Deficits have to be financed, it is primarily Asia doing the financing, and they don't have to fully roll over maturing debt.

It is hard to see how the US would not be forced into a slow devaluation.

 

Ultimately it means adverse changes in the US standard of living, and the ability to accept them.

Not something the US does well.

 

SD

 

 

 

 

[shalab]

The usa is not just another trading partner - 50% of Canadian FDI comes from USA.  2/3 of outward Canadian investment is in the USA. A lot of Canadian jobs depend on USA bilateral trade.

 

If the govt of China was running USA, Canada would have become northern USA a long time back : -). The situation is similar with Australia and to a certain extent the U.K.

 

http://selectusa.commerce.gov/country-fact-sheets/United_Kingdom_Fact_Sheet.pdf

 

The USA is unlikely to be hurt significantly in the event of currency devaluation - production will simply move to the US as the US economy is very flexible. Around 50% of the earnings of SP500 are from overseas. 

 

The US still attracts the best and the brightest from around the planet. The US population is expected to cross 400 million in the next few decades whereas that in Canada will also increase but not significantly - the US population will be more than ten times Canadian population.  The economy will also be much larger. The population in Europe (Germany, Russia) will decline significantly. Chinese population will also age.

 

Furthermore, the US has the most arable land, plenty of water supply and abundance of natural resources. Even with the current GDP levels of ~60K/person, the US GDP will cross 24 trillion. (it already is at 19.3 trillion now)

 

The US has started exporting pulses to places like India. India has second largest arable land (after US) but huge population growth, conversion of agricultural land for housing is causing it to import food.

 

https://www.ers.usda.gov/amber-waves/2017/januaryfebruary/pulses-production-expanding-as-consumers-cultivate-a-taste-for-us-lentils-and-chickpeas/

 

No worries, the US is just another trading partner - same as everybody else!

 

Point is that if you're going to trade you cant be isolationist, and you cant dictate - the US isn't #1 anymore. A lot of what the US offers, Asia does as well - and often at better value. Currency manipulation, subsidies, protectionism, etc. is part of the value equation - and expected.

 

Like it or not, the imbalances exist because the US is addicted to buying more than it sells; simply either buy less, make the product yourself, or sell more. But recognize that you cant make someone buy from you when your value proposition sucks.

 

Many would argue that a very good solution would be making more product at home, and making US consumers pay more. Even Henry Ford recognized that the whole reason for paying a workforce more is so that they can afford to buy the products that you make; paying a foreign workforce little, then trying to sell them goods they cant afford - just ensures a growing trade deficit.

 

Deficits have to be financed, it is primarily Asia doing the financing, and they don't have to fully roll over maturing debt.

It is hard to see how the US would not be forced into a slow devaluation.

 

Ultimately it means adverse changes in the US standard of living, and the ability to accept them.

Not something the US does well.

 

SD

 

 

 

[Cigarbutt]

SharperDingaan,

 

In some cases bilateral is better than no agreement or even disagreement. Don't you agree? ;)

 

http://globalnews.ca/news/3711536/canada-mexico-will-stay-in-nafta/

 

Unilateral decisions can be good, if right. Partners can be useful.

 

"After I'm gone, after we break up

After I'm gone, you're gonna wake up

You will find you were blind

To let somebody come and change your mind"

Ella Fitzgerald

 

 

I don't spend much time on the horizon of the USD dollar relative strength, but I take in consideration that the US may have the cleanest dirty shirt. I also think that the US continues to have amazing attributes that may be masked now, and maybe for some time, by unusual expediency.

 

I agree though that "adjustments" will come along the way (opportunities?). Downsizing can be difficult.

 

[shalab]

FWIW, every country has its positives and negatives. I have enjoyed my several trips to Canada and have a very positive view of the country. Once a border guard was grumpy (we were crossing the border past midnight) but otherwise no major issues. I checked out how to become Canadian permanent resident but the paperwork was quite involved.

 

Our favorite insurer (FRFHF) has a lot of operations in the US and reports book value in USD. So we are very close  ;D.

 

 

SharperDingaan,

 

In some cases bilateral is better than no agreement or even disagreement. Don't you agree? ;)

 

http://globalnews.ca/news/3711536/canada-mexico-will-stay-in-nafta/

 

Unilateral decisions can be good, if right. Partners can be useful.

 

"After I'm gone, after we break up

After I'm gone, you're gonna wake up

You will find you were blind

To let somebody come and change your mind"

Ella Fitzgerald

 

 

I don't spend much time on the horizon of the USD dollar relative strength, but I take in consideration that the US may have the cleanest dirty shirt. I also think that the US continues to have amazing attributes but may be masked now, and maybe for some time, by unusual expediency.

 

I agree though that "adjustments" will come along the way (opportunities?). Downsizing can be difficult.

[Cigarbutt]

shalab,

 

The fact that I hold different or even opposing views does not mean that we are enemies.

 

Thank you for the inputs as it incites to dig deeper.

 

To get closer towards the light, maybe helpful to look at the other person's facts or line of reasoning.

I read your posts and links and suggest that you do the same.

 

In terms of trade balance, here are two links, chosen on basis of quality and objectivity.

 

https://sites.hks.harvard.edu/fs/rlawrence/ShatteringMyths.pdf

 

https://www.usitc.gov/publications/332/pub4614.pdf

 

You focus a lot on the trade balance issue, attribute the trade deficits to trade agreements and allocate a lot of unilateral harm to this aspect. That opinion likely played a decisive role in the last election. The second link has a lot of pages and the authors used "models" that can be reasonably questioned. However, I submit that the report shows convincingly that the trade agreements have not contributed significantly and independently to trade deficits.

 

The persisting trade deficits, especially with China, are significant. You can look at this from an "economist" point of view using the Kalecki equation (à la Montier/Hussman) or simply using common sense. Sharper Dingaan talks about the addictive buying behavior of America and high relative costs of production but it could very well be the savings glut behavior of export driven nations (you seem to favor the latter, with currency manipulation). But the deficits could also be due to Americans not saving enough themselves or the unusually low interest rates prevailing. There are many variables and the situation is dynamic.

 

What do you think of the Triffin dilemma?

 

Are you not worried that somehow unilaterally changing course on trade balance may precipitate a sharp fall of US firms profitability.

 

http://www.oftwominds.com/blogaug13/trade8-13.html

 

The Great Recession worked great in improving the USA trade deficit. Does it mean that we have to induce another Great Depression to normalize trade?

 

Like said before, in business, you need trading partners. Accords are better negotiated, not imposed. No?

 

 

 

 

[shalab]

Cigarbutt, your arguments are well reasoned.

 

I don't think the savings rate by itself is a huge issue in trade deficits - the US banks hold > 13 trillion in deposits. (http://www.bankregdata.com/allDP.asp)

 

As DTEJD has said, the US doesn't have reciprocal agreements with most countries. So government policy/regulation does play a big role on how trade works. 

 

In addition, there is no need to have a trade war, I like the Wilbur Ross approach, tweak and enforce the current agreements. (you should listen to his confirmation hearing as commerce secretary). It was his position that multilateral agreements don't work well as a lot of compromise is needed to make the agreement palatable to everyone. 

 

Your point of cost and consumption is right on - if the cost is high, people would think twice before spending.

 

In the reports you shared (including the one by the congressional group), it doesn't look at the US jobs lost due to these agreements. In the last election the majority from both sides thought that the US government is not acting for the benefit of its citizens. Part of it might be the Triffin dilemma.

 

Free trade is one aspect of it but there are others such as the cost of education, health care which is increasingly beyond the scope of an average citizen. So people in general have the feeling that they are not progressing forward. You can compare this to countries in Eastern Europe or Asia which were impoverished  but have made good progress in the past two-three decades.

 

shalab,

 

The fact that I hold different or even opposing views does not mean that we are enemies.

 

Thank you for the inputs as it incites to dig deeper.

 

To get closer towards the light, maybe helpful to look at the other person's facts or line of reasoning.

I read your posts and links and suggest that you do the same.

 

In terms of trade balance, here are two links, chosen on basis of quality and objectivity.

 

https://sites.hks.harvard.edu/fs/rlawrence/ShatteringMyths.pdf

 

https://www.usitc.gov/publications/332/pub4614.pdf

 

You focus a lot on the trade balance issue, attribute the trade deficits to trade agreements and allocate a lot of unilateral harm to this aspect. That opinion likely played a decisive role in the last election. The second link has a lot of pages and the authors used "models" that can be reasonably questioned. However, I submit that the report shows convincingly that the trade agreements have not contributed significantly and independently to trade deficits.

 

The persisting trade deficits, especially with China, are significant. You can look at this from an "economist" point of view using the Kalecki equation (à la Montier/Hussman) or simply using common sense. Sharper Dingaan talks about the addictive buying behavior of America and high relative costs of production but it could very well be the savings glut behavior of export driven nations (you seem to favor the latter, with currency manipulation). But the deficits could also be due to Americans not saving enough themselves or the unusually low interest rates prevailing. There are many variables and the situation is dynamic.

 

What do you think of the Triffin dilemma?

 

Are you not worried that somehow unilaterally changing course on trade balance may precipitate a sharp fall of US firms profitability.

 

http://www.oftwominds.com/blogaug13/trade8-13.html

 

The Great Recession worked great in improving the USA trade deficit. Does it mean that we have to induce another Great Depression to normalize trade?

 

Like said before, in business, you need trading partners. Accords are better negotiated, not imposed. No?

[Txvestor]

My view here is that the interests of the average american citizen and those of giant multinational corporations have diverged and been so ever since NAFTA. And in many instances they are diametrically opposed. One side has the lobbying power and ability to manouver a very archaic political system of rules and governance which is the US system, and the other has the votes. The people however do not have quite the same ability to navigate the political system and so their will is being drowned out. This break in the transmission mechanism is leaving the public very angry with the political and other classes of DC elites whom they see as serving the corporations and at their expense. And I have to say that perspective is with some justification.

If you look at every single law passed in this country in the past couple of decades, it intentionally or not(I believe in the former) favors corporations over small businesses and multinationals over american based manufscturers. Even the tax system enormously favors the under 75k cohort of earners and the giant corporations but the small business owner pays 44.6% plus State/local/property taxes etc. ending up with a marginal tax rate over 50%. Whatever your view on progressivity, surely one can agree that it is a mess and not a fair system when the burden falls so heavily on one subsection of the population. Currently the higher wage earners and working couples and small business owners are facing the brunt of this system. The public sees that and percieves that the ladders of success available to them are being pulled away.

[shalab]

+1. The amount of lobbying even in small town city governments is astonishing - a person doing 9-6 job has no chance to alter government policy.

 

My view here is that the interests of the average american citizen and those of giant multinational corporations have diverged and been so ever since NAFTA. And in many instances they are diametrically opposed. One side has the lobbying power and ability to manouver a very archaic political system of rules and governance which is the US system, and the other has the votes. The people however do not have quite the same ability to navigate the political system and so their will is being drowned out. This break in the transmission mechanism is leaving the public very angry with the political and other classes of DC elites whom they see as serving the corporations and at their expense. And I have to say that perspective is with some justification.

If you look at every single law passed in this country in the past couple of decades, it intentionally or not(I believe in the former) favors corporations over small businesses and multinationals over american based manufscturers. Even the tax system enormously favors the under 75k cohort of earners and the giant corporations but the small business owner pays 44.6% plus State/local/property taxes etc. ending up with a marginal tax rate over 50%. Whatever your view on progressivity, surely one can agree that it is a mess and not a fair system when the burden falls so heavily on one subsection of the population. Currently the higher wage earners and working couples and small business owners are facing the brunt of this system. The public sees that and percieves that the ladders of success available to them are being pulled away.

[HJ]

My view here is that the interests of the average american citizen and those of giant multinational corporations have diverged and been so ever since NAFTA. And in many instances they are diametrically opposed. One side has the lobbying power and ability to manouver a very archaic political system of rules and governance which is the US system, and the other has the votes. The people however do not have quite the same ability to navigate the political system and so their will is being drowned out. This break in the transmission mechanism is leaving the public very angry with the political and other classes of DC elites whom they see as serving the corporations and at their expense. And I have to say that perspective is with some justification.

If you look at every single law passed in this country in the past couple of decades, it intentionally or not(I believe in the former) favors corporations over small businesses and multinationals over american based manufscturers. Even the tax system enormously favors the under 75k cohort of earners and the giant corporations but the small business owner pays 44.6% plus State/local/property taxes etc. ending up with a marginal tax rate over 50%. Whatever your view on progressivity, surely one can agree that it is a mess and not a fair system when the burden falls so heavily on one subsection of the population. Currently the higher wage earners and working couples and small business owners are facing the brunt of this system. The public sees that and percieves that the ladders of success available to them are being pulled away.

 

+2.  Every administration in the US has their friendly economists or think tank write up some research paper proving free trade is great, that GDP has shown a certain growth over the past however many years, which wouldn't have happened without it (questionable).  They do some regression analysis and says econometrics proves that free trade is good and trade deficit isn't caused by free trade.  But you go tell that Indiana Carrier worker that the US trade deficit isn't being caused by labor arbitrage underwritten by NAFTA, but technological advancement.  Go tell the laid off GM worker that Apple isn't opening a factory in Detroit, and people buying iphones, causing trade deficit isn't a result of tax free trade policies but is caused by new technological advancement that somehow a Chinese farmer with no education is adapting to better than he is.  The average US person's living standard and especially their perception of their living standard isn't measured the way economist measure things.  If one applies the 20/80 rule, that says 80% of the economic activity is generated by 20% of the most active (wealthiest?) participants in the economy, OK, those people's life have improved, and instead of lording over the 80% of the US population, they get to lord over 80% of the world population.  What's not to like about that?  But the political divide is getting to a place now that US has elected Donald Trump, and UK has voted for Brexit.  Historically the 2 biggest proponent of free trade has democratically chosen to go isolationist.  To the average populace, the economic paper are worthless and prove nothing.  This political problem is only getting bigger not smaller under the current governance structure.

 

Capitalism needed to adapt in the 19th century to save itself from the political prescription provided by Karl Marx in Das Kapital.  So must the free trade theorists before they guide the world into a much darker place!

[SharperDingaan]

Bilateral versus unilateral, depends almost entirely on the dominance of your trading position.

 

If you're unevenly matched, & the #1 economy in the world, you want bilateral trade with all your trading partners.

You call the shots no matter what, might is right, and your trade partner says 'thank you' every time you deign to trade with them. Nice place to be.

 

If you're evenly matched, & one of the top economies in the world, you also want bilateral trade with all your top economy partners.

Its dirty trade, and you need the muscle, flexibility, & speed to deal with it.

 

But most of the world isn't in the top economies; & like fish, there is safety in schooling together - unilateral trade.

If you can get a dominant economy to buy more from you, than you buy from them - good for you. When they complain it is to them to either buy less, or invest in your economy such that you can buy more from them. If your production cost is lower than theirs, you will get the investment; & their labour force will suffer the unemployment. To buy less simply make more of it at home, & keep the jobs at home - but pay a higher price for the goods. No more 'throw-away' $10 T-Shirts assembled by slave labour in Bangladesh.

 

All trade is based on costs and benefits, and only occurs if mutually beneficial.

Obviously, when the folks on the bottom of the food chain aren't benefiting - you clearly need to do it differently. Lots of ways of doing that, many of which are being discussed at NAFTA.

 

Our own view is that ultimately labour standards rise in the low cost countries - reducing disparities, labour mobility between countries improves, & more product gets built at home versus outsourced. Higher consumer costs for everything we buy, & no improvement in the lot of the under-educated unskilled worker (responsibility remains at the individual/state level).

 

SD 

 

 

[Liberty]

Seems to me like the best solution for all is to remove all trade barriers everywhere, with clearly justified exceptions.

 

Why should I pay more for something just because it comes from some other country (on top of shipping and natural expenses, etc)? Just because some imaginary line is between us? I'm closer to many US states than the Western Canadian provinces, why should I pay more for something close by in the US than something far away in Canada? Because we have different passports?

 

One side sets up tariffs to "protect" some industry that has political clout, then the other side does the same, and now like Buffett's people standing on tip toes at a parade, everybody's in the same relative spot, except that the citizens of both countries are paying more for goods and services than they otherwise would.

 

Seems to me like protectionism only benefits special interest groups with political clout and is bad for citizens on average. It's also useful for demagogues who want to gain power by creating a "us vs them" dynamic when in fact, strangers in my country are just as much strangers as strangers in another country.

 

If we judge that some groups deserve to be helped, that's fine, but help them directly, rather than by indirectly adding friction in the system that reduces productivity and makes everyone poorer.

 

It's always easier to point to the losers of trade because they tend to be more concentrated and the winners tend to be more diffuse, but the winners are way more numerous and in aggregate win a lot more. It's fine to help the losers, but it's not fine to make everybody lose just to slow down what is usually inevitable (when a country goes from 3 automakers to 20, of course the original 3 will have to reduce their output and some people will have to find new jobs, etc).

[Cigarbutt]

Some US citizens are clearly struggling. Perhaps more so than usual.

 

At the same time, I read this:

 

http://www.realclearmarkets.com/articles/2017/09/05/the_underreported_story_of_middle-class_revival_102854.html

 

Is this the eye of the storm?

 

This concept of unfairness (inequality, inadequate governance (government and large firms), disconnect with the elite), I think, is not related to how the top (call them top 1% or top 10%) moved ahead, it is related to the fact that the poor or poorer segments have seen living conditions stagnate and their prospects deteriorate. A lot of finger pointing and resentment but perhaps not a lot of constructive action. :-\

 

There are many reasons for this new normal status and the main point of this post (my opinion anyways) is that the US-China trade dynamics have not contributed in a predominant way, even if the perception may be different by a segment of the US population.

 

Whatever the true causes and even if the trade debt with China would explain this new era of stagnation, I would submit that people should look forward and find effective ways to win.

 

http://www.pewinternet.org/files/2014/08/Future-of-AI-Robotics-and-Jobs.pdf

 

The article likely overstates the issue. Still, I think SharperDingaan on a previous post of a different thread talked about the growing need for individuals to be able to bring a value proposition to the market and I would say that, as a country, policies and actions should focus on increasing productivity. That would go along way to balance trade.

 

Do not underestimate the capacity of the forgotten man to react correctly to the right incentives?

And this is not an ivory tower concept.

Time to roll up our sleeves?

Let's get to work.

 

 

[HJ]

Seems to me like the best solution for all is to remove all trade barriers everywhere, with clearly justified exceptions.

 

..., ..., ...

 

If we judge that some groups deserve to be helped, that's fine, but help them directly..., ...

 

 

This unfortunately falls into the category of slogan solutions that theoretically exist but politically un-attainable.  Real life is not a slogan.  Will China remove all trade barriers?  Tax only Apple and Google?  Won't happen.  Unfortunately democracy is a  b....  Call it the friction in this political economy.  Sometimes there's no solution other than to slow down the leap into the utopia and take a step back. 

[Liberty]

Seems to me like the best solution for all is to remove all trade barriers everywhere, with clearly justified exceptions.

 

..., ..., ...

 

If we judge that some groups deserve to be helped, that's fine, but help them directly..., ...

 

 

This unfortunately falls into the category of slogan solutions that theoretically exist but politically un-attainable.  Real life is not a slogan.  Will China remove all trade barriers?  Tax only Apple and Google?  Won't happen.  Unfortunately democracy is a  b....  Call it the friction in this political economy.  Sometimes there's no solution other than to slow down the leap into the utopia and take a step back.

 

I realize that. I'm talking about what I think should be aimed for, which is different from what many others believe (nationalists who believe their country/group is special because they were randomly born in it and such). Goals and slogans are different. If you don't have goals and just do whatever is politically expedient or advantageous at the moment, you just float around with the currents and rarely get anywhere.

[Cigarbutt]

Thomas More, who was also into slogans as a Renaissance Man when he wrote Utopia, defined a semi-ideal society in a critical pamphlet disguised into a book.

Henry VIII did not like it. He kind of liked the status quo.

More was beheaded.

My take: Henry should have looked into this utopia thing more carefully.

 

Disclosure and relevance: I am trying to see how the US will regain global industrial and manufacturing predominance and trying to define prisms that will allow me to pick the winners before they reap the medals.

 

"Sometimes there's no solution other than to slow down the leap into the utopia and take a step back."

 

What is the game plan? 

 

 

 

[HJ]

Thomas More, who was also into slogans as a Renaissance Man when he wrote Utopia, defined a semi-ideal society in a critical pamphlet disguised into a book.

Henry VIII did not like it. He kind of liked the status quo.

More was beheaded.

My take: Henry should have looked into this utopia thing more carefully.

 

Disclosure and relevance: I am trying to see how the US will regain global industrial and manufacturing predominance and trying to define prisms that will allow me to pick the winners before they reap the medals.

 

"Sometimes there's no solution other than to slow down the leap into the utopia and take a step back."

 

What is the game plan?

 

Don't think there is a game plan other than simply cope.  I'm not sure there is any real solution other than time, which simply gets the aggrieved people used to their circumstance, and accept their lot in life. 

 

What I do think is hypocritical, are people who didn't take the pain turn around and lecture those in pain about the merits of free trade, that somehow theirs are "jobs of the past", and they need to move on to the jobs of the future, the silicon valley crowd, the Hollywood crowd and the Washington consensus crowd. 

 

I don't worry much about the US's place in this world.  For 500 years, humanity has been migrating from Eurasia to the Americas.  Why would it stop now?    North America continues to be the special place in this world.  The US went through its turmoil in the 70's, yet importance technological progress still came out of the US in the 80's and 90's.  When the world faced $100 oil, fracking and horizontal drilling still came out of the US.  Politics will throttle back and forth, the US may be more open and more closed to the rest of the world, but given time it'll be just fine.  The US also simply needs time to recover from an overly aggressive globalist agenda over the past however many years.  The "elites" need to recognize that.

 

 

[Cigarbutt]

HJ,

Fair enough. I respect your position. There are a lot of people in your camp.

I too think/hope that the US will regain its foothold.

The trajectory will lie between exceptionalism and cynicism.

 

There is a lot of talk about disconnect these days and I don't like it. Participation to this Board is only one of the ways to "fight" this.

And frankly, I don't know if the "elite" has disconnected from the common man or is it the other way around?

 

Whatever the cause, I submit that we have to re-connect.

 

Disclosure: Naturally born idealist.

[shalab]

Cigarbutt, really appreciate your optimism and positive outlook:

 

Here is an article from mainstream media on the impact of free trade on US jobs.

 

http://www.newsweek.com/free-trade-costs-american-jobs-332962

 

HJ,

Fair enough. I respect your position. There are a lot of people in your camp.

I too think/hope that the US will regain its foothold.

The trajectory will lie between exceptionalism and cynicism.

 

There is a lot of talk about disconnect these days and I don't like it. Participation to this Board is only one of the ways to "fight" this.

And frankly, I don't know if the "elite" has disconnected from the common man or is it the other way around?

 

Whatever the cause, I submit that we have to re-connect.

 

Disclosure: Naturally born idealist.