Home delivery the latest trend to hit retail and grocery outlets is a boon to sick people. I say this as someone who caught the current flu last Thursday. Here I was, innocently going about my usual routine, although I did note than on Thursday morning during the ritual Walking of The Doggles, that I was sniffing and sneezing; as if something had gotten caught in my sinuses. Innocently, it all seemed to pass; at mid-day my daughter and I went up to Bergheim in the Hill Country to meet with a small book club who had done me the honor of choosing the first of the Adelsverein Trilogy as their book selection of the month.
Entrepreneurship
President Trump’s ‘Xanatos Gambit’ Trade Policy
I’ve written previously in my column “President Trump’s ‘Xanatos Gambit’ Government Shutdown” of President Trump’s tendency for building political strategy trees were every possible outcome is to his advantage. (See the “Xanatos Gambit” strategy tree example in the figure below)
This is a decision diagram example of a “Xanatos Gambit.“ Source: https://tvtropes.org/pmwiki/pmwiki.php/Main/XanatosGambit
It very much looks like President Trump has done the same thing with the Democrats and “China lobby” GOP Senators with the post-NAFTA US-Canada-Mexico (USMCA AKA “You Smack-A”) trade agreement and the US economy.
THE US ECONOMY, NAFTA & USMACA
The key thing you need to understand regards NAFTA and American manufacturing is that NAFTA was geared to allow the “China lobby” of multinational corporations to use Canada and Mexico as an “international arbitrage opportunity” for Chinese slave labor wage manufactured goods to be assembled at Canadian and Mexican production facilities and avoid American tariffs.
Multinational corporations exploiting this “international arbitrage opportunity” was “The Great Sucking Sound” that Ross Perot talked about which killed the US domestic refined metals industry and hollowed out middle class manufacturing jobs in the American economy.
President Trump’s USMCA removes that “international arbitrage opportunity” via original 75% North American manufacturing content requirements for metals and intermediate manufacturing goods as well as a Mexican minimum wage rules on the order of $15 an hour for automotive parts assembly.
In response the “China lobby” has been paying large campaign contributions to both House Democrats and “free trade” GOP Senators to try and keep NAFTA, as well running info-war spots everywhere in the corporate media and “movement conservative” publications/media outlets about the benefits of “free trade.” This has resulted in public statements by Speaker Pelosi that the House does not intend to vote for USMCA.
This is where Pres. Trump’s ‘Xanatos Gambit’ strategy tree kicks in via a macroeconomic and trade policy manipulation of the very simple economic equation of gross domestic product:
GDP = US ECONOMIC ACTIVITY + EXPORTS + FOREIGN INVESTMENT – IMPORTS – EXTERNAL INVESTMENT
The American economy just grew 3.2% in the 1st quarter of 2019. It would have grown another 0.3% but for the 30-odd day federal government shut down. The “markets” were expecting 2.5% GDP growth. The huge half-percent GDP “miss” boiled down to:
1. The USA exported more.
2. The USA imported less and
3. There was more external foreign investment than expected.
All three were the result of a combination of Trump administration policies on oil/LNG fracking, tax & regulatory cuts and trade/tariffs.
First point, the USA will be a net energy exporter — of oil, natural gas & coal combined — in 2020 if it isn’t one already.
Some rough numbers: In 2012 US oil production was ~8 million barrels a day, all for domestic consumption, and in 2019 it is 12.6 million with some exports. Today’s US oil consumption is 20 million barrels a day. That increase in oil production that has reduced imports of oil by a net of 4.6 million barrels a day has also been accompanied by the displacement of coal and oil in both electrical production and manufacturing by cheaper natural gas, thus freeing both the coal and oil not used to be exported. This combined economic change since 2012 alone is worth a 1% increase in GDP growth a year compared to 2012.
Second, the Trump administration’s systematic and sustained attack on Obama era federal regulatory growth is reducing business compliance costs particularly in the energy sector for new infrastructure projects. These are the “anti-green” actions the Democrats accuse the Trump administration of.
Third, the Trump administration/GOP tax bill, in addition to increasing spending power for the middle class, has had a huge -YUGE- reduction in capital gains taxes and a one-time break in repatriating overseas capital holdings. This has made America a much more attractive place to hold and invest money. Particularly for energy companies like Exxon, which are dropping this foreign capital inflow into the Permian basin for oil and natural gas fracking and energy export infrastructure from the Permian to the Gulf Coast.
Finally, in terms of trade and tariffs, President Trump’s tariffs on Chinese steel and aluminum combined with the business implications of USMCA rules have made further investment in Canadian automotive plants a net loss position. American metal content is now economically competitive for energy sector infrastructure and automobile parts such that US Steel among others are reopening US metal plants.
Taken together every part of the GDP equation has been directly affected by the Trump administration macroeconomic policies to get that 3.2% GDP number.
This is where the Xanatos Gambit for USMCA arrives.
Things will be worse for the China lobby without a vote on USMCA than with one.
Short form:
NAFTA is dead regardless of any action or inaction by the House. All the House and Senate can do is not vote on USMCA. The legislative branch cannot revive a NAFTA trade agreement the federal executive has withdrawn from.
This means without a signed USMCA trade deal Pres.Trump can — and will — lay on even more tariffs on the multinational corporations playing price arbitrage in Mexico and Canada between Chinese and American manufacturing.
While such trade sanctions can reduce the American economy like a tax increase, when we are likely at close to 4% economic growth in late 2019 to early 2020 from the accumulated investment in energy projects bringing defacto energy independence, a 3.5% economic growth rate with tariffs is still pretty good.
And when the House refuses to vote in USMCA, NAFTA still dies.
Pres. Trump can and will lay on new massive new anti-Chinese tariffs on Canadian and Mexican front companies for China without USMCA rules. This will be massively popular in the Midwest in an election year and will hurt the income streams of the multi-nationals supporting the Pelosi Dems and McConnell RINOs.
From Trump’s point of view, What’s not to like about America’s manufacturing base employing the Midwestern white working class growing while the “international arbitrage opportunity” of China’s slave labor economy contracts?
Indy-Writing Scene; 2018
The indy-author scene is not the only thing which has radically changed over the last decade; just the one that I know the best, through having the great good fortune to start as an indy author just when it was economically and technologically possible. It used to be that there were two means of being a published author. There was the traditional and most-respected way, through submission to a publishing house which, if you were fortunate enough to catch the eye and favor of an editor, meant a contract and an advance, maybe a spot on the much-vaunted New York Times best-seller list. This was a method which according to the old-timers worked fairly well, up until a certain point. Some writers who have been around in the game for a long time say that when publishing houses began viewing books as commodities like cereal brands and ‘pushing’ certain brands with favored places on the aisles and endcaps, and treating authors as interchangeable widgets that’s when the traditional model began to falter. Other experts say that it began when tax law changed to make it expensive to retain inventory in a warehouse. It was no longer profitable to maintain a goodly stock of mid-list authors with regular, if modest sales. Mainstream publishing shifted to pretty much the mindset of Hollywood movie producers, putting all their bets on a straight diet of blockbusters and nothing but blockbusters.
Po nan Jwèt la: Asymétri Kache nan Lavi Chak Jou
Taleb, Nassim N., Skin in the Game: Hidden Asymmetries in Daily Life. New York City: Random House, 2018.
NB: precisely because I regard Taleb as a national treasure and have considerable respect for his work, I am not going to pull punches here. I get to do this because I have … skin in the game, and not only in Haiti[1] (where I wrote this post over the past ten days, thus the Kreyòl Ayisyen title), but in a couple-three moderately hair-raising situations back in KC, which I will relate when appropriate. Which might be never; see Matthew 6:1-4 (cited by Taleb on page 186).
Getting this out of the way—buy this book, read it, and recommend it to others. I say this very much irrespective of what might be called the Manifold-Taleb delta, which is not altogether trivial, as I will explain in some detail—again, as a sign of respect—below. Immediately below, in fact.
Flyoverphobia
So, there has always been a tension existing between city folks and country folks; the tale of the city mouse and the country mouse being an example. Then there are all those jokes about the city slicker and the country bumpkin, the effete city dweller and the down-to-earth country folk, the books, movies and television series painting the city as a glamorous yet spiritually and physically unhealthy place, the country being dull, desperately boring, backwards, even a bit dangerous … all in the spirit of good fun, mostly. But now we have a new and malignant version, and there is nothing at all fun about it. Here we have the bicoastal enclaves, all drawn as the glamorous and fabulously wealthy, sensitive and with-it woke folks … and then you have the flyover country in between, filled with as the bicoastal see it with those hateful, stupid looser deplorables, clinging to their guns, and religion, and hating on all those with darker skins.