Time Magazine recently ran a story illustrating the problem with electing stupid, uninformed people.
Numerous media outlets have explained–patiently, and in detail– why Trump’s evident belief that China is paying his tariffs is wrong; they’ve laid out–in painful detail–the way tariffs really work, and why those tariffs are more properly labeled tax increases on the American public.
The Time article addresses a subsequent demonstration of Trump’s utter economic cluelessness.
Tariffs on foreign goods are supposed to help companies that make things in the United States by increasing the costs of products sold by foreign competitors. Indeed, when rationalizing his administration’s increased tariffs on Chinese goods, President Donald Trump on Monday encouraged consumers and businesses to buy goods from countries other than China, or, in what he called the “best idea,” to buy American-made goods.
That would have been good advice, back when American companies were busy manufacturing horse whips and corsets. These days, however, advice to “buy American” simply displays an embarrassing ignorance about the current realities of the world of business.
But that advice is almost impossible to follow, as products made in America can contain parts sourced from all over the world. Even the most quintessentially American of goods has parts from somewhere else, whether that be a Ford F-150 pickup, a can of Budweiser, or tire chains from Worcester, Mass. “In the last 20 years, businesses have become much more strategic,” says Kara Reynolds, an economics professor at American University. “More and more often, they are looking at where they can find highest quality and lowest-cost parts so that they can be competitive.” More often than not, that’s China — and that means many U.S. businesses are feeling the pain thanks to Trump’s tariffs.
Trump, as usual, has ignored the warnings of more knowledgable people (a category that includes most sentient humans), and has doubled down on his tariff policy. Farmers have been the most notably hurt, but manufacturers and retailers aren’t far behind. Automobile companies are already feeling the pinch.
The most recent round of tariffs is expected to affect a broad swathe of industries that make products in the United States. “This is playing havoc with the supply chains of Americans producers — increasing their cost and reducing their worldwide competitiveness,” says Robert T. Kudrle, an economics professor at the University of Minnesota. St. Pierre, for example, makes chains and wire rope in its Worcester facility, as it began doing in 1920 when Henry St. Pierre started the company. But as it started facing foreign competition, St. Pierre began buying chain slings and other parts from producers overseas, then cutting them and adding hooks and fittings in the United States.
The cost of those imported chain slings have gone up as tariffs have risen. Even St. Pierre’s horseshoes, which are made completely from U.S. steel, have been affected by the tariffs on foreign goods. As the cost of foreign steel went up, the cost of U.S.-made steel rose too, says Peter St. Pierre, vice president of finance at St. Pierre Manufacturing — and Henry St. Pierre’s grandson. “Everything we do here is steel-related, and over the last year or so, the price of steel has been going up and up,” he said. Increased demand for domestic steel has allowed U.S. producers to raise their prices; one estimatefound that U.S. steel prices have more than doubled since 2015.
Companies affected by the tariffs include a number that make goods in the U.S., thanks to rising duties on imported parts.
A South Carolina plant that assembled televisions using Chinese parts said last yearit was shutting down because of the tariffs. The Beer Institute, which represents 6,000 brewers and 2.2 million American jobs, said thatabout six percent of the cost of beer is the aluminum used in cans, and predicted that higher aluminum tariffs could cost 20,000 American jobs.
Are we tired yet of all that “winning”?
Will his brainwashed base ever decide that it may be time to elect someone with less ego and more functioning brain cells?
25 thoughts on “Reality Is So Inconvenient”
C’mon, Sheila. Trade wars are easy to win. Any idiot knows that.
We hate communists…why are there U.S. companies operating in China?
Oh, wait, Russia communists are evil! Oh, wait, Russia is more Oligarchic like the USA.
The “inconvenient truth” is capitalism cannot coexist on a finite planet, especially one that is becoming globalized by the day.
Btw, any TV plant which buys China parts to assemble in America needs to go out of business because they would be WAY too expensive to compete.
Once again, a genius once wrote:
“This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career.
I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals. In such an economy, the means of production are owned by society itself and are utilized in a planned fashion. A planned economy, which adjusts production to the needs of the community, would distribute the work to be done among all those able to work and would guarantee a livelihood to every man, woman, and child. The education of the individual, in addition to promoting his own innate abilities, would attempt to develop in him a sense of responsibility for his fellow men in place of the glorification of power and success in our present society.”
~ Albert Einstein, “Why Socialism,” 1949
“These days, however, advice to “buy American” simply displays an embarrassing ignorance about the current realities of the world of business.”
And of course supporting the “world of business” is the ultimate goal of all American families today as they head out on shopping trips. But why, other than exotic foods, does that include the tasteless, expensive produce in all stores today, including our canned goods? A recent news item reported there is a current problem with the quality of recycled (trash) cardboard sold to China who in turn manufacture boxes to sell back to the United States. The article was published shortly before Christmas when we are buying up gift boxes by the dozens. And the Amazon shipments alone in cardboard boxes is a business unto itself. The last television set I bought proudly proclaimed on the box “Assembled In America”…probably in a box made from United States recycled cardboard, sold to China to manufacture the box and sell it back to the United States.
Last summer I bought two tomatoes at my local Kroger which actually strongly resembled the taste of real tomatoes. They had been imported from Canada shortly before one of Trump’s highly published insults of Prime Minister Trudeau. Maybe this latest tariff scheme of Trump’s between the U.S., Canada and Mexico will bring back those almost real tomatoes.
“These days, however, advice to “buy American” simply displays an embarrassing ignorance about the current realities of the world of business.”
Joseph Stiglitz, one of my favorite economists, calls the economy a pie, with slices of that pie designated as labor, profits etc. I, an amateur economist with a mere B.A. in the discipline, call it a balloon. If you pinch it in one place it will expand in another, and vice versa. Whatever the description, when the cost of parts made in China or elsewhere and assembled here suddenly goes up 25 or more percent, you are being pinches, and the expansion in that pinch will show up somewhere in the description in the form of costs, profits and, as Sheila suggests, even survival.
Trump doesn’t seem to recognize (or care) that a price is to be paid from dickering with the “free market” Republicans claim to worship. While I have never believed that a “free market” exists other than in theory, there has come to be a certain equilibrium in manufacturing and other such activities brought about by arcane economic rules of comparative advantage etc. that cannot be ignored which I will reluctantly label “the market,” and while there has always been politics in trade matters, there are certain areas that should be left alone – or to the market – and when politicians go too far, as Trump is doing, there is a price to be paid along the chain, and in our case, the consumers (aka you and me). Counter tariffs against our export industries don’t help our employment in that sector, and rotting grain in silos across the nation and Trump’s billions in welfare paid to soybean and other farmers because of Chinese counter tariffs gives us a double whammy, i.e. higher prices and tax money paid out to farmers – both from our pocket. Trump seems to see only the benefits of tariffs and not the burdens imposed on American consumers by imposition of the former. China, an immense consumer of soybeans, is now importing soybeans from Brazil, Argentina, and as announced by Putin recently, Russia. Thanks, Don. We farmers and consumers appreciate your help.
Something that isn’t mentioned when we get on the subject of tariffs are sales taxes. As the prices consumers pay for goods increases, so do the sales taxes. And since most states are controlled by Republicans this may account for why so few of them are complaining. Those state coffers will be filling up. More taxpayer’s money to spend on the privatization of government.
As Todd states this morning, capitalism assumes an infinite supply of resources, including human labor. All books on the subject, including mine, cover this reality ad nauseam. Tariffs are the red-headed step-child of this model and have NEVER worked. Any fool, except our president, knows we don’t manufacture anything but cars, airplanes and guns – O.K. there’s fast food too. So, tariffs actually screw all of us out of more of what we don’t have enough of: money.
Using words like intelligent or sentient in the same sentence with Donald Trump is an automatic oxymoron. Just look at all his “best people”. One only has to see and hear Ben Carson’s latest visit to Congress to know why he’s still there. The others in the Scott Pruitt school of graft are gone for being too greedy and corrupt. Those who actually had the temerity to disagree with the Lunatic-in-chief are also gone. Hmmm. If these are the “best people”, then what else is he going to hire? Who would actually WANT to work for this creature.
Ultimately, the hammer of non-intelligence must fall on those who still say, “He’s done more for this country than any President in my lifetime.” Or, what about those poor sods who can’t feed their families, are about to lose their farms and have to work three jobs to feed, clothe and shelter themselves? “Oh”, they say. “He’s the best President since Lincoln. Maybe those 62 million voters who actually voted for him are all-in. Then there are the 92 million who didn’t bother to participate in the democracy they’re about to lose.
There is no single perfect economic system, just as there is no single perfect President. Remember that Lincoln suspended habeas corpus during the Civil War.
Only a few of those farmers, whose lives are being impacted by the stupidity of the actions of 45, have turned against him. Emotional appeals are so much stronger than logic that it seems counter-productive to show them how badly he is hurting them. He will just ratchet up the hate speech, hating the same people they hate, and off they will go to the nearest polling place to prove that they wholeheartedly approve.
Will the people who have lost or will lose their jobs due to his tariffs continue to believe his lies and vote for him again? Are they mostly Fox Noise viewers that are brainwashed on a daily basis by the right wing’s very powerful and successful propaganda outlet?
Free Trade and Fair Trade are entirely different. The Wall Street crowd, along with a servile McMega-Media (they are Wall Street after all) the Republicans and the Corporate Wing of the Democratic Party sold the American people on Free Trade.
This Free Trade was a boon to the money lenders and manufacturers who set up shop in countries where human rights, labor rights and environmental regulations were non-existent, or not enforced, sweat shops in other words.
Steroid Capitalism could care less about human beings, except for unique talents they have that maybe exploited. Call it Neo-Liberalism or Globalism and a brutal system of exploitation becomes acceptable.
The other hammer Steroid Capitalism and it’s fellow traveler Crony Capitalism uses is to pick winners through the use of tax loopholes, and subsidies. Driving wages down for the 99% is accomplished by pitting labor against itself across the planet.
Trump’s trade wars are all about protecting the exportation of American capitalist interests abroad.
China for over 100 years suffered from Western, including American humiliations , with the so called “Open Door” policies. Whenever the Chinese challenged this de facto occupation, the troops were sent in. Japan got in on the act in late 19th century and continued into the the early 20th century with outright military aggression.
The Chinese leadership and the Chinese people probably have a better grasp of history than Americans do. President Agent Orange and Pastor Pence with their get tough on China talk and actions with tariffs will find out the Chinese will not be humiliated again.
I recently watched an interview with an American Farmer who voted for President Agent Orange. Even though he admitted that the soybean prices have tumbled and places his livelihood in jeopardy, he still backs up President Agent Orange with his “get Tough on China” talk. It is Amazing, how far Americans will follow an Authoritarian.
Back in the day–and that has been quite a while–when U.S. companies made products using U.S. material and with U.S. labor, tariffs could and would occasionally be effective against foreign companies “dumping” subsidized product into the U.S. market at reduced prices so as to claim a market share. But with the poisonous “free trade” and “global economy” boom engendered by Republican/Clinton policies and NAFTA, not only were U.S. jobs lost, but the effectiveness of tariffs reduced to zero–unless you want to count the extra cost added to U.S. consumers as a “good” thing.
Returning to a “in house” manufacturing country is the only solution to the problem. There would be increased costs, of course, but at least those who benefit would be U.S. citizens and not multi-national corporations. That, my friends, is where a limited democratic socialism would be a boon, and, where the U.S. could once again become an economic giant.
Thank you Sheila. Tariffs explained. I think the most telling part of this is about the increase in horseshoes because of the steel tariffs. When I go to Montana each summer the horses are re-shod about every 6 weeks. 4 times 90. Not only is the time of the farrier (did I spell that correctly?) important but the steel cost is going up. I feel the cost in my pocket when I have to pay for the terrific experience of being there. Many of my friends who ride there have horses, my daughter owns a horse. Think about this stupid approach to making us pay for tariffs. Decision making 101. Keep focused here and remember #2020.
Stupid is as stupid does!
The US is not capitalist, or socialist, it has a mixed economy as does every other country in the world today. Those labels are products of the 20th century when there was a lot of philosophical thought and experimentation going on about government in the wake of the failure of and need to replace different types of aristocracy.
A corporation outside of the accounting world is a pretty normal hierarchical organization like used in government, the military, organized charities, trade unions, etc that acts as an agency balancing the needs of several communities. All such organizations can be considered in terms of groups of customers, workers, investors, and suppliers and all of them are subgroups within a larger population typically defined by government. The government makes the rules that all of the agencies in their jurisdiction have to follow. Each agency makes the rules that their workers have to follow. In addition to regulatory oversight all those groups are more or less managed by market economics as a proxy for expressing supply and demand.
There’s no good or evil in any of this, it’s only necessary infrastructure among communities of people.
Like everything humans build these organizations must adapt their rules to the times, to the priorities that ebb and flow as time marches on. This adaptation occurs and speeds defined on a scale between evolution and revolution depending on urgency.
Humans relate on an individual scale in ways between competition and collaboration and following the rules (good) or breaking them (evil) and always in degrees. The least desirable among us are those with competition as a mind set and breaking the rules indiscriminately as a means.
What defines our times is the degree to which our infrastructure both tangible and personal is at odds with the reality coming at us, not an uncommon issue following good times.
One of those realities is that like it or not we are global in connections of all types. Yet our governments are national. There was an earlier time when the same disconnect occurred between states and nations and eventually it was fixed by the emergence of powerful nations supported by more local governments. Now national governments can’t meet the need so must be supplanted by global government the only example of which we have now is the UN.
The evidence is that we aren’t attacking this maladaption to current and future reality with any more grace than the previous one.
A very good article:
A Complete Psychological Analysis of Trump’s Support
Science can help us make sense of the president’s political invincibility.
The problem with having a “businessman” in office is that he thinks micro, not macro, and zero-sum in general.
Of course Trump, with a diminished intellect, is supremely confident and incapable of change, as are his fellow Fox New dotards.
Theresa has pointed out an additional externality of Trump’s senseless tariffs and trade wars, to wit: the increase in the sales taxes collected by states, mostly Republican, who benefit from this increase in revenues without political exposure to having “raised taxes,” the ultimate sin, depending upon who is impacted. Sales taxes are flat taxes in that both zillionaires and paupers pay at the same rate, and this result carries no political risk to state politicians. We have sales taxes approaching if not reached at ten percent of the sales price in some jurisdictions, which chill aggregate demand which in turn stifles our holy of holies, economic growth. Strange, isn’t it, that we the people pay sales taxes by the billions while Wall Street keeps the Tobin Tax at bay, a tax on stock transfers (I.e., sales tax) which I and others have advocated for years and years, suffering the ignominy of being called “a socialist.” Stranger, I hear no complaint from Wall Street that sales taxes at retail are “socialist.” It probably depends upon whose ox is being gored.
Thanks for bringing this economic externality to light, Theresa. I am ashamed to admit that this result accruing from Trump’s senseless trade games never occurred to me. I now wonder what other externalities are resulting from his idiocy in this connection, like those who own silos to store grain, local stores, John Deere, a spike in bankruptcies and the impact of the heightened increase in creditors who are stiffed, et al. Thanks, Don. We the bankrupt and overtaxed both directly and indirectly appreciate your help. Perhaps those who are working three jobs to keep life and limb together can get a fourth. GRRRR!
This new Constitution will not go away with Trump and McConnell. They have permanently broken what previously worked.
Most of us are continuously surprised of how much of our government was based on the motivation of those in it to make it work to the benefit of the country.
What Trump and McConnell showed is that the basic structure works just as well if key people want it to serve a majority party instead of the country.
That fault was in the design of it from the beginning but until now wasn’t exploited.
That toothpaste cannot be returned to the tube.
Now what? We have to find ways to patch the holes but who will do that knowing now that serving the parochial good is available compared to the greater good?
China is considered a “bad actor” for not respecting our intellectual property laws. Patent that we’re once 7 years to allow an inventor to recoup the cost of innovation now can be extended to 21 years. Drugs that have gone off patent are bundled in combination with other drugs and repatriated. This allows the US companies to continue to rake in huge profits. This trade war harms farmers and manufacturers. Are we great yet?
We created this problem,The ignorance of US citizens to try to ignore that this problem has been brewing for a long time and that we created it for ourselves,this is what is going to bring us down.I worked for large satellite communications company and anything that we designed, prototyped and approved we then took it to China, India or Korea to get manufactued.Then bring it back assemble it package it,and then claim It’s made in the USA.That is just a sad FACT.China is eating our lunch and if we don’t change things now our Children, grandchildren and their children will have nothing.you can fool yourself and say in your mind that this is not good for America to push back but we have lost so many jobs and positions that we don’t have Truck drivers or plumbers, electricians, Carpenters or other important skilled trade positions. This is a main result of shipping everything overseas to be made.Please check and see if you can’t walk around your own house and take a look at 90% of the products in your house and tell me that they were not made someplace else in another part of the worldYou would definitely be lying if you said they Weren’t.We should have got tough with China and the rest of the world years ago but we just didn’t have the guts to do it.What is happening now is just repercussions of us being lazy and not looking at or taking care of Americans but just getting the wealthy even richer.
It should be noted that our laws don’t apply to China nor any other country. How countries behave relative to each other is generally regulated by economic inducements and consequences. There is also some, if you respect us or disrespect us we will be more inclined to reciprocate.
@Pete: “It should be noted that our laws don’t apply to China nor any other country.”
A few years ago, Mark Roesler, an Indianapolis attorney won a case in China for Marilyn Monroe’s heirs, a case that protected the actresses’ heirs’ rights to proceeds, even in China, of Monroe’s photographs and other publicity materials.
Roesler won that case in China; keep that in mind.
Then read this article about how he lost the same case in America — https://www.theindianalawyer.com/articles/29745-marilyn-monroe-decision-points-to-right-of-publicity-s-shortcomings
Then tell us again how China respects no American law; and say so with the same presumption that America respects ALL American law.
If manufacturing in America is so admirable fo everyone else, why don’t Donald and Ivanka Trump manufacture HERE and why aren’t their products subject to these tariffs?
Hey!! Thanks for the post.
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