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Frequent Contributor

Trade War

I've been looking for analogies on how Great Powers managed their inevitable loss of hegemonic status relatively gracefully- like Holland and England.

Another analogy probably needs to be considered. That would be when Germany was the rising power in the early 20th Century. Historians still debate how that pointless and unimaginably destructive war ever came to pass but the short version is that the leaderships of Germany and England had decided that it was time to have it out, and they dragged all their respective allies in with them.

We're a long way from that with China, I think, but the world appeared a pretty stable and peaceable place in August 1914, too. There is no small degree of militancy emerging within both sides (see Ag Forum or leadership of The People's Liberation Army talking about The Long War (from Mao).

2% of our GDP isn't worth heading down the path to a Great War over. But we could (have, or maybe still) improve the terms of trade with them.

BTW, there is some broad benefit to cheap stuff. The problem is that we didn't offset the displacements with public investment. And there's really not any question that such investment was needed in infrastructure, R&D, education.

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Honored Advisor

Re: Trade War

That "2% of GDP" that you talk about is off of the gross, not the net GDP and in a world where 2% is considered a decent return, that has been a gift basket that`s tough to hand over to China each year.  That "only 2%" has a lot of shuttered US factories and boarded up storefronts on mainstreet behind it.

Frequent Contributor

Re: Trade War

https://fred.stlouisfed.org/series/MANEMP

https://fred.stlouisfed.org/series/OUTMS

Note- we basically lost no manufacturing jobs due to NAFTA (the worst deal ever) but it didn't feel that way to people  caught in the shifts.  And it probably did contribute to slower wage gains.  

China's entry to WTO is a different story- probably near 5 million manufacturing jobs lost. But they tended to be low value, low wage jobs- total domestic manufacturing output stayed relatively flat. With higher productivity, probably the most you'd get back under heavy protectionism is maybe 2 million. 

It is estimated that universal health care would create 1.7 million jobs* and spending $1T on infrastructure over a decade another million.

Renewable energy will become a monster job creator- too bad we've gotten ourselves behind the curve on that.

*if you could manage to decouple helathcare from being a tax on labor, that's probably the biggest problem for US competitiveness. But the reality of getting there doesn't really seem to be imminent.

Frequent Contributor

Re: Trade War

BA you are, as usual, shooting where the duck was.

That is MAGA in a nutshell.

Sorry, the farmers*, Gingrichites, Clintonites and 'Ol Grover** did some of the folks dirty. Gotta deal with where we are now.

* #1 populist lobby for trade liberalization, whether entirely grass roots or part astroturf.

**a large amount of wealth did accrue to Americans from those policies- it was just mostly the top tier and corporations. If you're going to enact policies then you have to take some of that and reinvest it in the country. But 'ol Grover said no.

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Honored Advisor

Re: Trade War

US jobs moved to Mexico and US workers had to scramble for lower paid, no benefit jobs in retail ringing up sales of Chinese junk behind the cash register at Dollar General and Walmart. 

Here`s a small REAL example!

https://globegazette.com/news/local/cummins-layoffs-stun-lake-mills/article_953cb972-42c3-5e1f-83cb-...

 

The layoffs are part of Cummins’ plans to move most of its North American filter assembly operations to its facility in San Luis Potosi, Mexico.

Cummins Inc. said it will save the company money.

Other operations, which employ approximately 110 people, will remain at the Lake Mills plant.

Cummins has two plants in Lake Mills. The South Plant produces pin-on filters for larger diesel engines and the North Plant manufactures cartridge-style filters for the mining industry.

“It feels like you’ve been stabbed in the back, moving it to Mexico,” Harang said.

The announcement came as a surprise to most of the community.

------ ----------------------------------

Yeah and did the price of anyone`s oil filters go down???? They haven`t for me, but the quality sure has.  Profits went right into Cummins Filteration bigwig`s backpockets and now Elizabeth Warren is capitalizing on the result.

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Frequent Contributor

Re: Trade War

Cummins and their top executives and board just got a very nice tax cut.

They are dedicating $2B to share buybacks.

 

 

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Frequent Contributor

Re: Trade War

Before getting into the company finances, the tax cut for the top 5 officers' $28M in compensation last year wouldn't be too far off the total compensation for those 110 employees.

The enemy is inside the gates.

Literally inside gates, and private jets.

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Frequent Contributor

Re: Trade War

Although one of the mottos of our current RW populist moment is "kick down, suck up."

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Honored Advisor

Re: Trade War

It was a total of over 600 employees that flat out LOST their jobs to Mexico.  And that is I believe a 2009 story, a little update the 11o employees were NOT retained, the building was sold and now Parts ASAP tractor aftermarket warehouse/distribution place is in the building, probably 50 employees, not making what Cummins employees did.  But at least the building isn`t empty like in many other cases.

But talking about "tax cuts" that is going into the weeds.  If you want to talk trade, let`s talk trade.

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Frequent Contributor

Re: Trade War

No, the trade thing is primarily a distraction while the vandals continue to sack the joint.

The US has more wealth and income than it ever has, but since about 1980 it has been continuously routed to the top.

That is why they have the pied pipers out rallying knuckleheads to call anybody who observes the obvious a communist.

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