“Evil Amazon”

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Josh Treviño regarding the Mexican cartels:

“It is evil Amazon, really. They’re logistic firms with small armies attached that will profit from whatever they can and increasingly take on the characteristics of insurgency.”

I think the Amazon comparison is apt, but Treviño pulls up a bit short because it’s more than just logistics. Amazon has proven to be a master of leveraging existing capabilities in order to exploit new markets. There is of course its e-commerce transformation from an online bookstore to selling just about everything under the sun. Then there was its leveraging the last-mile delivery and now using its expertise in data centers to develop AWS and enter the AI market.

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Welcoming Hitler to the White House and Other Thoughts

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First, watching a smiling Joe Biden welcome Trump back to the White House caps off an eight-day period of whipsawed memory-holing. Leave aside that just a few weeks before, Biden was reported as calling the man next to him a fascist, the media has been legitimizing the American Hitler’s victory on a daily basis by alternating between breathlessly reporting his nominations and wailing about why they lost.

That’s not how you go about stopping Hitler.

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Stick a Fork In…

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… the national establishment corporate media, for they are done. Roasted to a turn, reduced to irrelevancy, as has been predicted by Insty and others for lo these many years. I had a sense that for decades, everyone kind of expected a sudden, catastrophic loss of credibility at every significant moment – a single spectacular event, abrupt like the sinking of the Titanic. But on and on the ship of national corporate media went, seemingly undisturbed by any such disastrous encounter with an iceberg. We kept waiting for that spectacular collapse, but it never happened, and so we started to route around. Still simmering, of course, over the willful and sneaky partisanship, the slanted coverage, and the constant overt or subtle name-calling, the constant reliance on the same-old-same-old experts from the same old same old press rolodex. We took heart in fact-checking their a**ses, but remained mildly disheartened that there was never an apology or a walk-back that mattered. About the best that we could hope for might be one of those sniveling “we’re sorry you stupid deplorable garbage people were offended” non-apology apologies. Alternate media, in the form of internet blogs – which rose and fell over two decades – Substack, Reddit, Twitter/X but more of a slow accumulation of small leaks … until everything fell apart at the final blow, and there we are.

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Trade, Tariffs, and Prices

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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?

2024 Election Plus/Delta

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Pluses: admittedly much the shorter list, but we did resolve a few things.

  1. Thanks mainly to vote shifts in California and New York, the popular vote outcome was not at variance with the Electoral College vote, and it wasn’t particularly close (over 4-1/2 million votes).
  2. Largely as a result, the losing side, and VP Harris herself, have indicated cooperation with formal certification and transition processes.
  3. Harris is gone. She’ll get a chunk of money for a book and retire to the lecture circuit.
  4. Walz, same, and given the likelihood that he would have been a 21st-century version of Henry Wallace, with Chinese instead of Soviet agents in his inner circle, that might be more important than getting rid of Harris.
  5. Taking a somewhat longer view, Trump is gone too (perhaps not a much longer view; see the final Delta item below).
  6. By extension, there is some chance that ’28 will not have the electorate choosing between a crook and an idiot for President.
  7. Whatever one may think of prediction markets, and there are arguments on both sides regarding their functionality, the biggest prediction market of all, the US stock market, was forecasting a Trump victory all year (not coincidentally, the same thing happened in 2016).
  8. By the way, the media will actually report negative economic news now.
  9. I could have put this in either category, but I’ll leave it here: your Cluebat of the Day is a reminder that Trump is as old as Biden was in ’20, and notwithstanding some of my more apprehensive items below, to expect anything much of him is a waste of time.
  10. Likely continuation of relatively good space-industry policy across Administrations, which should be the only thing that matters several decades from now.

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