Trade, Tariffs, and Prices, continued

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Palmer Luckey, founder & CEO of Anduril, on the importance of US manufacturing.

Warren Buffett had an interesting suggestion for an approach to tariffs: Import Certificates. The idea is that when you export products, you receive import certificates, according to the dollar value of the products exported.  In order to import products, you need to provide Import Certificates of equivalent value.  And the certificates trade. So the system would be self-balancing.

Buffett suggested this approach in a Fortune article more than 20 years ago, I have no idea if that’s still his view, but I think it’s an interesting approach. The original Fortune article is still online but paywalled, the content can be read without subscription here.

See also my post Trade, Tariffs, and Prices from last November, in which I cited an earlier post:

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.  See also the discussion about tariffs and consumer price markups–it’s far from true that it’s always just a simple pass-though.

The Return of International Villainy

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Less than four weeks into the Second Coming of Trump and the New International Order.

There’s the throw down with Denmark over Arctic security and the status of Greenland.

There was the smack down in Munich by the Ohio Hillbilly (aka JD Vance) of those freedom-crushing European welfare queens.

Then there was the USA-Canada hockey game last night, where they had three fights in the first nine seconds of the game. In addition the hits were epic, especially the ones by Charlie McAvoy on Sidney Crosby and Connor McDavid.

By the way, we won.

This was the America we voted for.

Leave aside any of the current trade and other bad blood issues between Canada and the US (and oh, boy), the USA-Canada hockey rivalry runs hot and is great not just for hockey but for sports in general.

International hockey is so much better than those flopping pansies in the soccer World Cup. The fact that the game happened in one of the great hockey cities of the world (Montreal) and the fights were coordinated by two brothers (Matthew and Brady Tkachuk) just made it more epic.

Whether it’s international relations or international sports, the world needs more villains.

The game was part of the “Four Nations Tournament” and somehow I don’t think you are going to get the same passion from the NBA All-Star Game tonight.

More, please.

Quote of the Day

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Dominic Cummings:

The EU has kneecapped itself and is failing in all important areas: productivity, debt, public order, immigration, defence, technology, political extremism. Brussels chose self-sabotage on advanced technology. Unlike Britain which at least has DeepMind here, the EU has none of the leading labs. As the Commission said, we will be leaders not in AI but ‘trust in AI’! Mission semi-accomplished comrades! Brussels can kneecap itself and other countries that choose to follow its regulations but it will not compete with US and PRC or shape the global struggle over AI. Valley companies have already made clear they will simply not release models in the EU rather than follow EU regs. Taliban today can download new models now blocked for Brussels elites. Those who think AI will be like aspects of post-war car regulation are wrong. AI is ultimately about power and Great Powers will not let Brussels set the rules. I’ve watched SW1 repeat soundbites from the EU for 25 years on ‘strategic autonomy’ and ‘now we’re going to get serious on technology’. They’ve always been hollow. I said in 2022-4 that covid predicted that not even wanting to prevail in Ukraine would force either the MoD or Brussels to stop the delusions. They babbled and watched. They left defence industry and procurement a farce. They encouraged deindustrialisation and sabotaged industrial production while babbling about net zero. Thanks to Brexit and the work we did in 2020 with the secret part of the Integrated review exposing the disaster zone of the MoD and agreeing a plan for radical change, we could have sorted ourselves out. Instead, 2021-4 the Tories worked with the worst parts of the MoD to continue the lies and delusions and followed the EU into escalating a dumb war which could have been avoided. The latest defence review is a disaster and the UK and EU will be humiliated month after month.

 

Thoughts:

1. There but for the grace of God go we.

2. UK and EU politics and culture are farther gone than ours. However, as in the 1970s with Thatcher and perhaps now with Trump, political and cultural course reversals are possible given gifted opposition leaders and a preference cascade or two.

3. The British establishment, by criminalizing dissent, insure that even more than our Democrats  they will not see the political wave coming that turns them out of power.

4. It’s never over.

The Wages of Sin

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Once upon a time pot and gambling were considered vices and banned in most states.

Now they are big business.

The little strip mall where my gym is located has three retail outlets which sell marijuana (which is legal here in Maryland). Perhaps not coincidentally, there is also a 7-11 which does a booming business at night and on weekends.

Also visible from the parking lot are three very large signs promoting on-line sports betting.

Gambling and pot are not only big business, they are highly lucrative for state governments. Maryland currently takes in a bit more than $100 million in marijuana tax revenue and about $25 million in sports gambling. The amount generated by gambling is expected to double over the next 12 months as Maryland will raise the tax rate from 15 to 30% on revenue.

The wave of marijuana legalization kicked into overdrive in the 2010s, and sports betting was jumpstarted when the Supreme Court ruled in 2018 (Murphy vs. NCAA) that the issue was a matter to be resolved by the individual states. In both cases concerns about public health effects were downplayed, both in the belief that such effects were minimal, and that they were more than offset by increases in tax revenue and by reduced strain on the criminal justice system.

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