Friday, November 11, 2016
Veterans Day
Liberalism is a philosophy of consolation for the West as it commits suicide.
James Burnham
If a foreign government had imposed this system of education on the United States, we would rightfully consider it an act of war.
Glenn T. Seaborg, National Commission on Education, 1983
“Deriving their just powers from the consent of the governed.”
Immigration without assimilation is invasion.
I am a bit harried today, but I will attempt a ramble on free trade.
The costs and benefits of Free Trade.
Traditionally (prior to 1950) the Democratic Party policy was “Tariff for revenue only”, while the Republicans favored protective tariffs to encourage and strengthen domestic industry. I was taught this in fifth grade.
Economists use models with some reality checks to argue that free trade – no tariff at all – is best for both trading partners. They can come up with examples to show where nations have benefitted from free trade in the real world, and most economic models and theories are based on David Ricardo’s 1817 analysis and his theory of comparative advantage. What is to be compared is the cost of producing various goods within your country, not between the two countries. If you are more efficient at making widgets than gadgets, while your trading partner is more efficient at making gadgets than widgets, then both countries will be able to consume more if they make the good they are best at, and buy the other from their trading partner. You should make widgets, not gadgets, and sell them to your trading partner, while he builds gadgets and sells them to you, thus earning the money to buy widgets from you. It can be shown mathematically that both countries will have more widgets and gadgets to consume with free trade, than without it even if you can make gadgets cheaper than he can (but you’re much better at making widgets than gadgets). This is said to be counter intuitive.
The theory makes the explicit assumption that there are differences in labor productivity between the two countries.
It also makes a number of assumptions not usually revealed, and are assumed to be externalities. They may be important: for example political entitlements; but they are not part of the economic model. There are also assumptions involving transportation costs, the mobility of labor, and the costs of disrupting communities. We will return to these assumptions later. The theory of free trade is more rooted in the differences in costs of labor and labor productivity between the two countries than anything else.
Abraham Lincoln talked about free trade. He said that if he bought a shirt from England, he got the shirt; the money went to England. If he bought a shirt made in America, he would pay more, but the money stayed in the United States, where it could be taxed. I am not aware of his carrying this further, but he could very well have observed that if he bought the shirt in the United States, that money would be paid to American workers, and anything not paid to the workers (profit) could not only be taxed, but might be invested in improving productivity.
Lincoln was a Republican, and favored protective tariffs to build American industry. That preference stayed in the Republican Party at least until 1950, when I left the South, and stopped thinking about the problem. I was taught in grade and high school that the Republicans and the northern states preferred high tariffs on all the goods they made, including cotton cloth and clothes they made from cotton; they also imposed staggering tariffs on much industrial machinery, thus prohibiting the South from industrializing; this was one reason for the “Solid South” which always voted overwhelmingly Democrat in local, state, and federal elections. There were a number of standing jokes, such as the county sheriff discovering a Republican vote, putting it aside for a while, then finding another and saying “He must have voted twice.” Republicans never put up yard signs, or otherwise indicated that they were that unusual. I was through high school before I discovered my parents were Republicans. They moved, first to Ohio, then Alaska, in my last year of high school.
Thus I pretty well grew up favoring “free trade”. I never thought much about it. I went into sciences and engineering and operations research which is either engineering or mathematics depending on how you look at it, and I thought about economics even less.
During the 50’s and 60’s there were many books disparaging “Detroit”, a word used to most of the US automotive industry, and its economic dictatorship and its stranglehold on American automobile consumers. Books like “The Insolent Chariots” for example. They were well written and sold well, and were persuasive. I don’t recall American cars being so badly designed, but in those days I didn’t buy new cars, and the old ones I could afford tended to be basic, without gull wings or tail fins, and they ran well and were reliable except for the voltage regulators which always seemed to die on long trips and need replacement. Tires weren’t so good, either, and a road trip of a thousand miles or more was practically guaranteed to have at least one flat tire incident, and very likely a blown out voltage regulator.
A lot of this changed when Japanese and German cars began to be more common, and the improvement was obvious. I put that down to the competition from free trade.
Back then, Detroit was synonymous with industry and productivity. We were a world power because of Detroit, and we had won the War because Detroit existed to be converted into a war production city, turning out tanks, artillery, rifles, and trucks and jeeps; the Wehrmacht still had mules and horses for much of their transportation, and motorized infantry was rare; the United States had no leg infantry. It was all motorized, and we motorized much of the Russian and British armies as well.
That was then. Now Detroit is largely a wasteland convertible into nothing. So is much of the so-called rust belt, formerly the heartland of American light industry. We have free trade; but we don’t have the factories that made the field guns for cannon company in infantry and cavalry regiments. Days after Pearl Harbor we had trained workers who could man the new machinery resulting from the conversion of, say, Saginaw Wheel Division of General Motors; and we buried the Germans and he Japanese in ships, tanks, aircraft, trucks, guns, bombs, and ammunition. We entered the war at the beginning of 1941; we ended it in fall of 1945.
Whatever the advantages of free trade, they did not cripple us.
Of course that’s not the whole story, but you don’t need to be an economist to see that something’s wrong; and that an economy with a large part consisting of opening shipping containers of stuff from China and paying for them with money borrowed from the next generation may not be optimum for resolving policy differences with China. Exporting the industrial base without replacing it may not be an optimum path for either military or diplomatic stability. I do not believe the economic models include that.
Another assumption in the theory of free trade assumes mobility of labor. The theory does not pay much attention to the economic costs of transporting that module labor; and pays none at all to the social costs of disrupting communities. Regard for social stability may be higher among conservatives than among liberals, but surely there is some even among policy wonks?
And finally there are the very real costs of entitlements for those who no longer work. The immediate cost, unemployment compensation, is obvious, and at least some economists are becoming aware of it, though I know of none who add that cost into the models of free trade. Beyond unemployment – when the worker is no longer considered part of the work force because he – or she – is no longer expecting or looking for a job – the entitlements get bigger and become eternal. Food stamps, welfare, health care, visits to the emergency room all come to mind, and I am sure there are more. Poverty in the United States is not defined as it is elsewhere; many of the world’s working people think of American Poverty as a goal they can never reach; as wealth beyond avarice. And no comparative advantage model I know of includes those costs in the costs of free trade.
Would we all be better off paying more for the domestically made shirt than if the worker who made it was no longer employed and paid no tax, but the customer for the shirt had to chip in to support that worker through taxes? Of course we have paid for some of those entitlements by borrowing the money, but somebody will have to pay it back some day. I suppose we could simply default some day, but that does not seem very admirable – and it can be done only once. And now we have made the disemployed garment worker a thief without his consent.
And I think that is enough for the day.
Perhaps fitting for Veterans Day
Gurkhas – pipes and drums
And kukris.
https://www.youtube.com/watch?v=C1J9sW6wAio
I’ve never seen that rocking marching step before, but wow.
Further words are superfluous.
Cordially,
John
The kukri’s are about half way through the film and are gone at the end.
I still have seen nothing of this in the mainstream media or Fox, but I do not think it was faked:
http://louderwithcrowder.com/watch-liberals-attack-trump-supporter-just-voting/
sc:bubbles]
Evening Jerry,
Glad to hear she’s making progress. We’ll keep you both in our prayers.
I admit to being stunned. I figured the polls were skewed, as usual, but taking the rust belt was a complete surprise. Imagine what it’d have been like if we had a less-objectionable non-establishment candidate. I’d said we managed to nominate the only candidate Hillary could beat. Evidently the Dems did the reverse instead.
The liberal press (see bloomberg.com) is all full of advice about what Trump should/must/need to do, and most of it involves going back on campaign promises. They all talk about diversity, but clearly those don’t include American exceptionalism or conservative views.
Reports of Bolton being considered for SecState are somewhat frightening – I didn’t expect Trump to go down the Neocon route.
I wonder if the renegotiated NAFTA will simply remove Mexico, and replace it with the UK. North Atlantic Free Trade Agreement has a nice ring.
One last thought: all the fragile little snowflakes throwing tantrums, being excused from exams, getting counseling from their employers, and so forth make me sick. When did we get to be a nation of wimps?
If Clinton had won, the next morning conservatives would have….gone to work.
Cheers,
Doug
I would not think Bolton a neocon, and certainly Trump is not. Bolton is an experienced cold warrior, but I doubt he is eager for conflict with Russia.
Idea–GoFundMe campaign to fund airline tix and relocation expenses for Ruth Bader Ginsburg
Jerry:
Last July Ruth Bader Ginsburg quipped that if Donald Trump were elected, it would be “time to move to New Zealand.”
I’d like to see a GoFundMe campaign to fund airline tickets and relocation expenses for her. I’d donate.
I also hope that Cher, Barbara Streisand, Lena Dunham, Miley Cyrus, Amy Schumer, Chelsea Handler, Al Sharpton, Whoopi Goldberg and the rest make good on their promises to leave the country. I’m not quite sure how Cher is going to get to Jupiter, though. Maybe the EmDrive is involved.
Best regards,
Doug Ely
Now that would be an interesting fund…
400 year old shark?
Dear Jerry,
Just when you thought it was safe to go in the water, once again, the sharks come out on top:
http://site.people.com/pets/earths-oldest-animal-400-year-old-greenland-shark-could-claim-title/
“Sorry tortoises, you’re losing seniority.
Scientists believe they have found Earth’s oldest creature with a
backbone: a Greenland shark living in the icy waters of the Arctic.
According to the Associated Press, a female Greenland shark, who just
recently passed away, was estimated to be about 400 years old at the
time of her death.”
Previous record holder was a 211 year old Bowhead whale. Living in a
cold, micro gravity environment seems to be a good idea. Kind of like
Old Charlie in “The Rolling Stones”.
Petronius
SUBJ: In a real revolution . . .
Apropos of nothing specific. I just love a good quote. 🙂
As you have wisely said before – those who start a revolution are seldom those in charge at the end of the revolution. The following fills in some of the details.
“In a real revolution, the best characters do not come to the front. A violent revolution falls into the hands of narrow-minded fanatics and of tyrannical hypocrites at first. Afterwards come the turn of all the pretentious intellectual failures of the time. Such are the chiefs and the leaders. You will notice that I have left out the mere rogues. The scrupulous and the just, the noble, humane and devoted natures, the unselfish and the intelligent may begin a movement, but it passes away from them. They are not the leaders of a revolution. They are its
victims: the victims of disgust, disenchantment–often of remorse. Hopes grotesquely betrayed, ideals caricatured–that is the definition of revolutionary success. There have been in every revolution hearts broken by such successes.”
— Joseph Conrad, via ChicagoBoyz
http://chicagoboyz.net/archives/53595.html
It may bring a smile to picture Bernie Sanders in the first tumbrel cart after the revolution he dreams of comes to fruition. Cold comfort, though.
But such as he will be swayed neither by history nor reality for:
“Revolution is the opiate of the intellectuals.” – from _O Lucky Man!_
Cordially,
John
P.S.
“The trouble with quotes on the internet is they are so often simply
fabricated.” – Abraham Lincoln
“Oh, really?” Karl Marx
Space manufacturing and space “safety”
Jerry,
I thought you’d find this interesting.
And since I can’t find a mention of Rand Simberg’s “Safe Is Not An Option” on your site via Google, I thought I should point that out, too.
Calvin Dodge
I inadvertently overlooked this some time ago, but it remains interesting. And I understand that Mr. Trump is very interested in commercial space.
sc:bubbles]
Freedom is not free. Free men are not equal. Equal men are not free.
