June 30, 2017

Tariff war to make supply chains American again, and Americans prosperous again

Although the DC Swamp and Deep State have thwarted the Trump agenda in military and immigration policy, and bogged down the Congress in unpopular items like Obamacare Lite and re-writing the tax code for the rich, there is one area where he and his base have been given wide latitude to re-shape policy in line with his campaign -- trade and re-industrialization.

While the RNC and GOP mega-donors would love to sign the TPP and ship even more manufacturing jobs out of the country, that agenda has prevented them from capturing the White House and thereby the rest of the Executive branch agencies. Trump was uniquely able to win the general election by promoting the re-industrialization of the Rust Belt, winning many Midwestern states that have not voted Republican in decades.

These working-class whites of the Rust Belt were willing to take a chance on Trump, and unless they see some major improvements, they will not be taking a chance on a Republican presidential ticket ever again, and the GOP will be shut out of the Executive branch for good.

The RNC may be blind and stupid, but they are not suicidal. Once someone showed them how to win the White House, they are happy to copy that strategy into the future. So, re-industrialization it is.

An article at Axios reveals that Trump and the economic nationalists are planning to launch a major trade war to bring back manufacturing to this nation once again:

With more than 20 top officials present, including Trump and Vice President Pence, the president and a small band of America First advisers made it clear they're hell-bent on imposing tariffs — potentially in the 20% range — on steel, and likely other imports.

The penalties could eventually extend to other imports. Among those that may be considered: aluminum, semiconductors, paper, and appliances like washing machines.

One official estimated the sentiment in the room as 22 against and 3 in favor — but since one of the three is named Donald Trump, it was case closed.

No decision has been made, but the President is leaning towards imposing tariffs, despite opposition from nearly all his Cabinet.

Reminder that "trade" these days is largely not trade, it is the corporations in the rich countries using the Third World as a source of cheap materials, cheap labor, and cheap regulations, to cut their costs and boost their profits.

Sometimes the entire product is made in a crappy country, and then a real-country brand and logo is slapped on to fob it off on American consumers as though it were high-quality. ("Made in Bangladesh to the specifications of Harrington and Heathrow Clothiers".) Other times the various parts of the product are made in various countries, and are finally "assembled" here rather than being "made" here. ("Assembled in USA from textiles made in El Salvador".)

In either case, the strategy has been to make the supply chains global, in search of the lowest costs for each piece of the product, and each bit of labor used to make or put it together.

This gutting of American companies making their product here in America has driven down the standard of living for working-class and middle-class Americans: their gadgets and clothing costs somewhat less than it used to, but their incomes have fallen off a cliff because the high-paying American labor has been converted into low-paying Guatemalan or Vietnamese labor. Manufacturing has been replaced with cheap service sector jobs, and more and more of these are done by immigrants, further driving down incomes -- while driving up the price of housing (our main expense by far), with tens of millions of new residents overnight. Not to mention that the quality of our gadgets and clothing today is lower than it used to, being made in the Third World.

Restoring our standard of living to what it used to be before the 1980s requires us to bring these supply chains back within the borders of our own nation. Not so long ago, entirely within the South, raw cotton was grown, spun, and woven into a usable fabric, and then cut and sewn into a finished piece of clothing or bedding. In the Midwest, steel was made, fashioned into machine parts, and then assembled together into a whole car or washing machine. Out West in electronics land, Texas Instruments made calculators from start to finish, and Apple made their computers, keyboards, and mouses all within American borders (only the monitors from Apple were made in Asia).

That is why it's so crucial that the Trump plan is targeting not just raw materials like steel, paper, sugar, beef, and so on, but machine parts (semiconductors) and finished products (appliances). If there is a heavy tariff on parts and finished goods, it will make it too expensive for corporations to make these things abroad, and bring production back here instead. The manufacturers ought to be doing that out of a sense of national cohesion, but as greedy as the corporate boards and stockholders have gotten over the past several decades, they will require a beating to get them in line with what is good for America and the American people.

Finally, bear in mind that when manufacturing returns, it will create not only high-paying blue-collar jobs, but also create tons of openings for the various managerial and professional tasks that need to be done to operate a semiconductor foundry, a textile mill, and an auto plant. The only ones who have gained from outsourcing production have been the very elite managers like the CEO, who still works, lives, and gets paid in America, unlike the workers and low-to-medium level managers and professionals whose jobs got sent to the Philippines.

That is the only way that the middle class is going to enjoy a higher standard of living -- by earning twice as much income managing an auto plant, rather than getting a tax cut on their low income in a service job. Even if they got to keep all of their income that goes to taxes, it would not be enough. We need to raise incomes through the roof, and the Industrial Revolution is the only thing that has done that for working and middle-class people.


  1. I'm a huge fan of Mark Blyth. He was warning his fellow academics and elites to watch out for Trump around the same time you started posting about him. For more in depth economic analysis I would highly recommend any of his lectures on YouTube. He's a bit of an SJW type but if you can suffer through hat he has a solid narrative that explains how we got to this point starting in the 1950's. He's also done an excellent job explaining the '08 financial crisis, the problems with austerity, and the Greek crisis (really a Euro banking crisis).

  2. http://deviance.socprobs.net/Unit_9/graphics/UCR_Prop_11.gif

    Off-topic, but....the 2000's/early 2010's property crime level is higher than the 1960-1967 level. Is this drug use related? A lot of theft happens due to addicts wanting stolen goods to fence. By just about all accounts, heavy use of "heavy" drugs rarely happened until the last couple years of the 60's, then became chic and de-stigmatized to the under 40 crowd in the 70's.

    The peak of property crime is circa 1980, when Boomer hedonism had gone out of control. It noticeably dips from 1982-1984, when white Silents and Boomers were cleaning up their act somewhat, then in the later 80's crack head blacks caused the rate to spike again. Year-over-year declines begin around 1991 (if memory serves, the Youth risk survey showed that high schoolers smoked the most pot in the late 70's, but by the early 90's the rate was like 2-3x lower). But we still aren't at very low early-mid 60's levels, in either drug use or property crime.

    We may be in a cocooning period, but we're also in a decadent period. An exceedingly small number of weirdos/headcases were outright junkies or wasted burnouts in the 40's-mid 60's, when restrained behavior last peaked. Similarly, far fewer people were passing STDs around and having sex/children out of wedlock in the mid-Century compared to the cocooned but decadent phase of the 90's-2010's.

    It's true what they say; something infected us in 1968 and we still aren't cured. Cocooning makes it harder to get into trouble, but there still have been a lot people who managed to do that, compared to pre-Woodstock America.

  3. I can imagine why that 1997 survey showed that people thought the 90's stunk. A cocooning and decadent phase is the worst of both worlds. People are selfish assholes, they're proud of it/standoffish, they blast shitty and obnoxious music, revel in toilet humor, and so on. Yuck.

  4. Dangit. Can't remember the article but it had some pundit bemoaning the fact that even if manufacturing returns to this country and they start building factories again, they'll only employ a small amount of people, because production will be farmed out to robots. (The "small amount of people" employed by the company will be robotics experts, - mostly H1-B hires from overseas.) Some fundamental things will have to change within the American psyche, before we accept a world where work is done inefficiently for the sake of giving low skill workers a job (low skill WHITE workers, anyway...)

  5. Robots have not, and will not, replace human beings. The example always given is the self check-out station at grocery stores. But none of the tasks that a paid human did before are being done by a machine -- they are being done by another human, just one who is unpaid, namely the customers themselves.

    Scanning items, placing them in bags, feeding money into a storage area, taking the change out of that storage area -- all done by the customer, not a machine. It's identical to building a new check-out aisle where the customer is the cashier and bagger who operates the machines used to check things out.

    Same if they start making the customer punch in their own order at fast food, feed their own money into a machine, and remove the change from that machine. That will be a human replacing a human -- not a machine replacing a human. Machines are too dumb or too costly to even act as cashiers and baggers.

    Fast food has done this sort of thing from the beginning, by making the customer carry food to their own table, and remove their own trash and tray from that table, unlike restaurants where a busboy is paid to do these tasks. Humans replacing humans, since machines are too dumb or too costly to bring food to your table and remove the waste.

    The attempt to extrapolate that model to manufacturing will fail before it begins -- customers of a new car will be doing zero percent of any labor involved in making a car. That's skilled labor, rather than unskilled cashier / bagger tasks. At most, the automaker would give you a discount for sweeping the floors of one of its plants, or keeping the cars in the dealer's display area nice and shiny.

    That generalizes to all manufacturing -- will not be done by the customer, only by humans.

    Hypothetically only, the company owners could try to invent, build, and maintain/service machines that operated the existing machines. But 1) it will never be machines all the way down -- some human is building the machines somewhere -- and 2) that is evidently way too expensive, or it would have already been pursued, instead of sending the production to where human labor is cheaper.

    And if in some exceptional case they really did pursue that option, we could slap a tax on such production. If the production "work force" is made up of robots above some threshold percent, the tax kicks in, and rises with the percent that is robots.

  6. If anything, in the future more people will be put to work, as the public is now being under-served. Fast food, for instance, is a business where supply falls far short of demand - most people would like to eat more of it, since its cheap and convenient, but the lines are long and the stores crowded.

    the big corporate heads only franchise restaurants that bring in mega-profits, the result being that one McDs ends up serving a large area - and becomes overcrowded.

    remember, the mid-century was the era of a diner on every corner. that's a lot of jobs. it wouldn't surprise me that, if equality starts rising again, fast food joints and other hangouts evolve into public mealhalls. More Starbucks and McDs - which there is genuine demand for - less specialty vegan stores.

  7. The economist Ian Fletcher points out that free trade costs the median household about $2,000 a year in wages, more than the annual tax bill of such a household.

  8. We're going to see who wants tax cuts in pursuit of the goal of a higher standard of living (paying off debt, owning more stuff), vs. who wants tax cuts because the government is a parasite that must be removed from us before we can become healthy again.

    Utilitarian vs. moral.

    The litmus test will be single-payer healthcare. Australia's system funds it with 2% income tax for most people, and 3% for the rich. Suppose we adopt the same thing here, and compare what you'd pay in this new tax vs. what you're currently (or earlier) paying in premiums, co-pays, etc.

    For someone earning $100K, 2% of that is $2K. Divided by 12 months, that's $167 a month -- pretty sure those people are paying well over that amount in premiums, co-pays, etc., per month.

    Even if $100K income were in the 3% bracket, that's still only $3K per year, or $250 per month.

    Lower income than $100K would see greater reductions.

    Only when you get much higher in income would the new system be more expensive. Someone making $1 million would be paying $2500 per month.

    Explaining this would win over people who just want more money for themselves while enjoying the same or higher quality of life.

    But it would not convince those for whom taxes are a matter of moral disgust -- the parasite must be removed to restore purity to the host.

  9. "It's true what they say; something infected us in 1968 and we still aren't cured."

    Yeah, it seems like its worse now than it ever was. It seemed like there was a turnaround from 2011-2012, when I first found this blog, and even Agnostic made a post in early 2013 that he thought things were turning around(based on growing popularity of colorful winter sweaters); but things just got more cocooned and shitty since then.

    Thought that the upturning of the political establishment signalled more outgoingness, but that hasn't proved true either yet.

  10. Misquoted, I'm talking about cocooning rather than inequality.

  11. Hey dudes...

    I know it's been tossed around here before, at some point, but I did think the other day about how first, we go through periods where everybody flips their wig over politics/social issues about every 20-25 years (as in the early 20's, the late 60's, the early 90's, and now the mid 2010's). Second, a teen mini-generation has their psyche/outlook shaped by this kind of period.

    Those born in the late 40's and early 50's are prone to being humorless and self-righteous because of the Sixties. Those born in the early-mid 70's because of the early 1990's, can be annoying too though not to the same degree (generations being different and all). And now, back half Millennials (born in the later 90's/early 2000's) are going to be insufferable preachy/have a sense of generational superiority because of the current outbreak of Shit Just Got Real.

    What was it like when you were in high school? If you went to high school in the late 70's and early 80's (late Boomers/early X-ers), nobody cared about politics. At that time, people were largely indifferent to theories of some kind of imminent generational tidal wave, too. It seems like kids are always front and center of every over-hyped period of political awareness. While one half-one third of a generation embraces this, those born before or since that cohort don't really care. X-ers born in 1968 or 1979 aren't as entitled or smug as the early 70's ones, likewise for Boomers born in 1960 or Millennials born 1986 compared to those born at different points in their generational birth range.

  12. Greetings.I have do say your analyses have been quite intriguing.

    I thought you might appreciate a couple of websites that expand on a lot of your hypotheses.

    One is a Zero Anthropology article on the "New Victorianism" that characterizes the current ancien regime in the US.


    Another is a blog on DeviantArt with a series of alternate history scenarios that appear to employ a lot of your analyses on cultural change (i.e. cocooning, immigration, IQ, competitiveness among elites, etc).



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