Tag: Trade
Respect
Hard not to write about John McCain, but most of what needs saying has been said: he was a Vietnam War hero, a stalwart supporter of a strong and democratizing American role in the world, and a flawed presidential candidate who lowered the level of electoral discourse with his choice of a know-nothing vice presidential candidate whose name should be forgotten. I disagreed with many of the Senator’s domestic policy preferences and didn’t vote for him, but give him ample credit for saving the Affordable Care Act at a crucial moment.
McCain liked to be called a maverick, but he only occasionally behaved like one. A Republican loyalist to the end, McCain was critical of President Trump but never quite broke with him completely. This is unfortunate, as he might have led a Congressional rebellion to limit Trump’s worst impulses. But to expect that of someone dying of a malignant brain tumor really is too much. McCain merits a lot of credit, especially for his principled stand on supporting human rights and democracy, at home and abroad.
It is apparently also too much to expect the President to show even minimal respect for a war hero whose entire life is admittedly a condemnation of Trump’s. He managed to issue a pro forma recognition of McCain a day or two after his death and to order flags flown at half mast, after pointedly refusing to answer questions about McCain and having the White House flag raised in a purposeful show of disrespect.
It is hard for me to understand how the US military puts up with Trump, never mind likes him. It is not only McCain he disdains. Trump has failed to visit troops in a conflict zone since becoming president. His most intense personal interest in the troops was on display when he needed them for his now-cancelled parade in Washington. The troops will be grateful that isn’t happening.
McCain’s death represents a big loss for American foreign policy. He was a stalwart of NATO and advocate for a strong American leadership role abroad. Trump thinks the allies are worthless and the leadership role too expensive. His Make America Great Again has amounted to making America alone again, as it was after the first world war when it declined to join the League of Nations. We know how well that worked.
Trump touts his trade deal with Mexico, which updates a small portion of NAFTA. It is only a little more real than his denuclearization agreement with North Korea and his “deal of the century” between Israel and the Palestinians, both of which amount to nothing. Never mind that the Mexicans have refused to pay for his wall and he is stiffing the Canadians over a few million additional dollars of dairy exports, wrecking relationships that the US should be treasuring.
Everyone is looking for a hedge against Trump’s bombast and unpredictability. My own today is to think about the other great American to be buried this week: Aretha Franklin. I saw and heard her at Radio City Music Hall about 1995, but here she is the year I graduated:
Share this, I'll really appreciate it:
Jobs count
Today two big items on the job front:
- President-elect Donald Trump has saved 1000 jobs at Carrier in Ohio, at a cost to the state of $7000 per job;
- The Obama recovery that started in July 2009 generated 178,000 new jobs last month, at no cost to the Federal or state governments, lowering the unemployment rate to 4.6%.
We are now in the eighth year of Obama’s much-criticized “slow” recovery.
Which news gets the electrons? It’s mainly the first of course: Trump is a master at attracting attention to everything he does. What he has done in this case is unusual: a direct intervention in a single company’s decisions by the president-elect, with the threat of “consequences” if it does not comply.
What’s wrong with that?
Let me count the ways:
- This kind of non-market intervention is precisely what most economists (and until recently virtually all Republicans) think is a bad idea, as it causes distortion in the distribution of resources (in this case both capital and labor) that cannot be justified on economic grounds.
- A precedent of this sort gives all companies who can pretend to be considering transfer of jobs out of the US an incentive to seek a bribe from the state or Federal governments not to go ahead. Ohio in particular can expect to be flooded with such requests.
- Carrier’s labor costs in the US will be higher than in Mexico, otherwise it would not have considered this move. It will need to pass those costs on to consumers, making its products less competitive than they might otherwise have been not only in the US but also abroad, reducing American exports.
- A company considering a US investment will now have to take into account the unspecified threat of consequences should it decide to move the jobs it creates here to another country, thus discouraging foreign investment.
- Mexicans who might have earned decent wages at a Carrier plant will be poorer, thus limiting their purchasing power and ability to buy US goods.
These downsides are all well-understood and major reasons why American presidents have stopped “jawboning” on price increases, investment decisions and other economic issues. As Ronald Reagan taught us, the proper role of government is to set the parameters for open competition and leave the specifics to private individuals or companies.
So what should a president do about jobs being shipped overseas? The key is to create an improved business environment at home, in particular by streamlining regulations and lowering corporate tax rates. This would make the US more competitive rather than more willing to dole out $7000 checks. There is actually a good deal of agreement between Democrats and Republicans on improving the business environment, even if there are serious disagreements on which regulations should be streamlined.
This carrier deal is an insignificant achievement in the grander scheme of things, though one that points in bad directions. For those who don’t like globalization, wait until you see the consequences of economic nationalism.
RSS - Posts
