Miscellaneous

Trade, Tariffs, and Prices

by

Several items:

1–At X, there’s some knowledgeable commentary on the relationship between tariffs and retail prices, from Craig Fuller @FreightAlley: “When products are imported into the US, the importer is charged a tariff based on the declared value of those imports, not the marked-up retail price consumers will eventually pay…The markup might be only 5% for big-ticket items like cars, while it could be as high as 500% for luxury goods. Most retail goods have markups of over 100% over their declared value.”  He discusses the alternatives available to importers and suppliers,  of which ‘raise retail prices’ is only one.  Link.

2–The WSJ, a while back, had several letters on tariffs in response to an article on that subject. One of them said:

Phil Gramm and Donald J. Boudreaux don’t mention the basic evil of tariffs: that they negate comparative advantage. If Product A can be produced cheaply or efficiently in Location 1 and Product B in Location 2, each location should concentrate on its speciality and trade to the benefit of both.

Imagine Massachusetts enacting a tariff on oranges to protect an industry of heated orange groves and Florida a tariff to support air-conditioned cranberry bogs. State politicians could trumpet creating a new industry, but OJ would be $25 a glass in Boston and cranberry sauce would be $10 a scoop in Miami. Tariffs amount to a “beggar thyself” policy. The Constitution’s framers recognized this and crafted the Commerce Clause to forbid restriction of trade by states. The same principle applies to trade between nations.

Trade based on relative efficiency of production, as for the orange/cranberry example, is a classic example of the advantages of trade.  But a high proportion of trade today is not of this nature: it is simply labor arbitrage, based on differentials in wages.  The primary reason why products made in China have been so much lower cost than those made in the US is because Chinese people would work for lower wages than US people. There was nothing inherent in Chinese geography or climate, or Chinese skill sets, that made assembly of iPhone more efficient in China than in Iowa.

3–In my Labor Day post for 2021, I said:

In a world with global and highly-efficient transportation and communications…and billions of people who are accustomed to low wages…is it possible for a country such as the United States to maintain its accustomed high standards of living for the large majority of its people?…and, if so, what are the key policy elements required to do this?

This question should be fundamental to discussions of trade policy, along with national defense and resilience considerations.

4–Bill Waddell, a very experienced manufacturing practitioner and consultant, who used to comment here sometimes, has a new book out:  Reclaiming American Manufacturing: Take Back the Middle Class From Globalism. A quick and worthwhile read, available on Amazon Unlimited.  Also, this post at LinkedIn.

5–Although offshoring is usually discussed in terms of its impact on manufacturing, there is also plenty of offshoring going on in service: Telemigration.

Your thoughts?

The Road Ahead

by

I know it’s trite to offer electoral predictions, but here are mine.

I have no idea who will president at 12:00 PM on January 20, 2025.

As I have written before, just as Election Day has become “election season” with early and mail-in balloting, the election campaign will stretch out into the weeks and months ahead after Election Day. Not only does past experience suggest it, but as I wrote yesterday the Electoral Count Act practically guarantees litigation.

The dates of December 16, when electors meet in the various state capitals to cast their votes, and Jan. 6 will be the key checkpoints that offer the chance to channel what promises to be a chaotic aftermath into something approaching normality. Any successful attempt to upset the proceedings on those days means all bets are off.

After that I don’t know; the future is unknown.

In analytical work, you seek to unite the various data points into a coherent picture through the use of capability and theories of intent. Civilization in general works to keep intent below the horizon of capability. After all, there many things that you are capable of doing that would never occur to you given the way you have been socialized into various norms. By contrast the sociopath has no self-restraint and the equilibrium between their capability and intent is only governed by external force.

We as a society have spent the past eight years breaking norms. There have been cabals of government and media to censor information and spin narratives favorable to a given political party. There has been the weaponization of the security services to spy on political campaigns and entrap people for crimes, in order to derive political gain. The use of law enforcement to hunt down and punish political candidates and their supporters. The collusion of media and government in covering up the machinations and foibles of the current administration and orchestrating a coup to replace the incumbent candidate with another.

In all fairness, you also have norm-breaking on the other side. I don’t care much for mean tweets, but you take the bad with the good. Ronald Reagan left the building a long time ago. I compare Trump with his times, not with some halcyon past.

So the question is, what are the Democrats capable of doing? How close will their intent match their capability? There is no small amount of naivete, a normality bias, on the part of many so-called people of the Right, who seem to form a predictive baseline centered on hope rather than empirical evidence.

The past history above leads to the conclusion that the Democrats have not let critical norms limit their behavior in the past, and that they have raised their stakes to apocalyptic levels within the past year by stating that Trump’s return to the White House would mean an end to democracy. They have escalated to the point where they are trapped by their own past rhetoric and actions; the only paths forward are either to escalate further or to pull back from the brink and risk collapse.

The other, and perhaps more troubling, factor to consider is that the Democrats and the Left in general no longer feel much attachment to either our political system or the Constitution, seeing it all as illegitimate artifacts of an ancient and evil past.

In escalating, nobody picks collapse. It’s also true that nobody picks Armageddon. The way escalation works its evil magic is that the losing, desperate side convinces itself that with just one more shot of escalatory juice, victory will be theirs… and it never is. Desperate people do desperate things. Desperate people with power do catastrophic things.

Also remember Rahm Emmanuel’s famous quip about never letting a crisis going to waste. He was simply, in his own sweet Chicago way, regurgitating Lenin’s older dictum about crises offering revolutionary opportunities to those who possessed both the organization and the sense of historical daring to seize them.

Accordingly, I expect the Democrats to maximize every opportunity at their disposal to alter the vote count, litigate the results, and attack the process up to and including an American equivalent of a color revolution.

The path forward will be a little clearer later tonight, as results from a number of states roll in. The appearance of a decisive Trump and of the Republicans’ keeping the House and taking the Senate would go a long way toward keeping the post-election chaos to a manageable level. Anything short of that and the road to Hell is open.

My prediction? Normally I run probabilities and prepare for the top two or three, but that would be weaselly. So my leading theory, my prediction: Trump wins beyond the margin of steal and the Democrats are forced to largely fold tents to figure out how to fight another day, their Progressive wave having crested for now.

However that’s not the way I’m preparing. You always prepare for the worst…

The Squirrel, the Raccoon, and the Bureaucrats

by

The sad story of Peanut the Squirrel and Fred the Raccoon has inspired many people to think about the nature of bureaucracy.  I’m reminded of a few stories:

When the fire alarm went off at Como Park High School in Minnesota in 2013 , a 14-year-old girl was rousted out of the swimming pool–dripping wet and wearing only a swimsuit–and was told to go stand outside where the temperature was sub-zero and the wind chill made it much worse. Then, she was not allowed to take refuge in one of the many cars in the parking lot because of a school policy forbidding students from sitting in a faculty member’s car. As Bookworm noted:

Even the lowest intelligence can figure out that the rule’s purpose is to prevent  teachers  from engaging sexually with children.   The likelihood of a covert sexual contact happening between Kayona and a  teacher under the actual circumstances is ludicrous.   The faculty cars were in full view of the entire school.   There was no chance of illicit sexual congress.

But the whole nature of bureaucratic rules, of course, is to forbid human judgment based on actual context.

Fortunately for Kayona, her fellow students hadn’t had human decency ground out of them by rules: “…fellow students, however, demonstrated a grasp of civilized behavior. Students huddled around her and some frigid classmates [sic], giving her a sweatshirt to put around her feet. A  teacher  coughed up a jacket.”  As the children were keeping Kayona alive, the  teachers  were  working their way through the bureaucracy.   After a freezing ten minutes, an administrator finally gave permission for the soaking wet, freezing Kayla to sit in a car in full view of everybody.

As Bookworm notes, this sort of thing has become increasingly common. In England in 2009, for example, a man with a broken back lay in 6 inches of water, but paramedics refused to rescue him because they weren’t trained for water rescues. Dozens of similar examples could easily be dredged up.

In Sweden, also in 2013, there was rampant rioting that included the torching of many cars.  The government of Sweden didn’t do a very good job of protecting its citizens and their property from this outbreak of barbarism.  Government agents did, however, fulfill their duty of issuing parking tickets…to burned-out cars.  Link with picture. 

The behavior of these bureaucrats is very similar to the behavior of a computer program confronted by a situation for which its designers did not explicitly provide. Sometimes the results will be useless, sometimes they will be humorous, often they will be harmful or outright disastrous.

Here’s an essay written by a Spanish naval official in 1797, on the subject ‘Why do we keep losing to the British and what can we do about it?’  The pathologies that Don Domingo Perez de Grandallana saw in his country’s naval operations are now disturbingly present in many American organizations.

Thoughts from Peter Drucker, the great writer on management and society, on the nature of bureaucracy.

An old SF story, “Dumb Waiter,” by Walter Miller, is very relevant to the subject of mindless and destructive bureaucratic behavior.  (Miller is best known for his philosophical/theological novel A Canticle for Leibowitz.)

In the story, cities have become fully automated—municipal services are provided by robots linked to a central computer system.  But when war erupted–featuring radiological attacks–some of the population was killed, and the others evacuated the cities. In the city that is the focus of the story, there are no people left, but “Central” and its subunits are working fine, doing what they were programmed to do many years earlier.

Pages: 1 2

Those Assertions About Trump’s “Darkness”

by

A Financial Times headline today refers to “Trump’s dark campaign.” This is not surprising coming from the FT, but even the WSJ today refers to Trump’s “dark pitch.” If one wants to look for Darkness, I’d suggest that it can be found in the rants of the Harris campaign and Democrats in general against Trump and especially against his supporters: ‘Fascists’…’garbage’…’anti-American’. I also see plenty of darkness in the ideology and policies of the Democratic Party…the divisive obsession with race/ethnicity…the casting of blame rather than solving problems, as with the blaming of grocery prices on ‘price gouging’ rather than government-caused inflation…the strange Democrat affinity with the Iranian regime…the tolerance of anti-Semitism and anti-Jewish violence on campuses and elsewhere…plenty of darkness there.

This video by a celebrity Harris promoter certainly sounds to me like a clear threat against Trump supporters. More darkness.

I haven’t personally attended any of Trump’s rallies, but those who have–such as this foreign student, who attended both Trump and Harris rallies–generally report an atmosphere which is positive rather than negative, and welcoming rather than hostile.

As an example of Trump’s ‘darkness’, the WSJ quotes from a rally speech in which he referred to ‘fighting against the most sinister and corrupt forces on earth.’ I wouldn’t have said it exactly that way, but there is no question that America is under threat by some trends that, if not interrupted and reversed, will destroy our society. And these trends are all heavily pushed by the Democratic Party and groups closely associated with it.  I’ve discussed these trends in my post Vectors of Societal Destruction–and the Growing Pushback Against Them.

Hopefully, the pushback will be strong enough to interrupt and reverse these trends before it is too late.