Friday, March 9, 2018

A True Steel Story


Recently I listened to a CEO of a company that uses steel as an input for a product that is sold globally. The company has two facilities, one in the US, the other in Europe. The CEO was asked about the impact of the steel tariffs on his business. He wasn't sure. On the one hand, steel prices would rise, so he would have to increase the price of his end product. But, he has two facilities. So maybe, he said, he would bid projects with his European facility and avoid the tariffs.

Perfect. Trump increases tariffs to "save" the US steel industry. In this example, however, not only does the consumer NOT buy US steel, but it moves manufacturing to a different country in order to avoid the higher steel prices.

When government interferes with the price mechanism it creates all sorts of perverse outcomes. Like when it artificially increases the price of labor with minimum wages or mandatory paid maternity leave the result is a decrease in demand for the very labor it is "protecting."

Economic ignorance is a true bipartisan accomplishment.


Thursday, March 8, 2018

When Trump and Sanders Agree, It has to be Monumentally Wrong.


Bernie and Trump agree on trade.
"We need to fundamentally rethink our trade policies and move to fair trade rather than just unfettered free trade,” Sanders told The Daily Beast in an interview on Wednesday afternoon. “So Trump is identifying a problem. Certainly China’s role in dumping an enormous amount of steel, not only in the United States, but all over the world, is very very clear. It has to be dealt with.”

Maybe mercantilism and socialism are similar ideologies. Both bad for consumers, wages, growth, innovation etc.


Monday, March 5, 2018

Trump's Trade Wars


My view on tarriff's is not much different than many who oppose them. Like these guys: Economists Against Smoot-Hawley. Or this guy: “We’ll Injure Ourselves If You Injure Yourself!

I was hoping the knee-jerk Anti-Trumpians protectionists like Rosa De Lauro and Sherrod Brown would automatically oppose these misguided taxes on consumers, but alas, no.

It's an odd thing to me that people who mostly see the benefit of allowing consumers to buy groceries from whatever retailer serves them best find it anathema to allow consumers of steel and aluminum to buy from whatever retailer serves them best because: "unfair trade," and "jobs." It matters little to them that if I am forced to pay more for a product with steel in it I'll be forced to forgo consumption of some other product, so the job saved/job lost calculus is murky, at best. And "fair?" China wants to tax their citizens in order to give me cheap steel. We'll make that "fair" by increasing prices for our consumers. It's odd logic.

It is futile to expect politicians, of any party to be economically literate. Reagan imposed tariffs on autos, and my guess is all of them have done some sort of silly market distorting action like minimum wages, tariffs, supporting one industry over another, "green" energy for instance. Economic ignorance is a true bipartisan achievement.

I have little sympathy for those in Congress bemoaning the President's actions. The Constitution gave tariff power to Congress, not the President. Then Congress passed legislation giving that power to the President. Don't like it? Change it.

No President or Congress will get it right completely. I just hope they get more right than wrong. So far, in my opinion, Trump and the GOP have gotten more right. But it's early.


Wednesday, February 28, 2018

Nothing Is Permanent Except Loss


My neighbor died last week. He was in his late 80s. He was was old new England Yankee who took over his father's medical practice after graduating from Harvard, in an era when local boys from my hometown an hour south of Boston were admitted regularly, and getting into Harvard depended more on family and social ties and not an unpredictable mix of increasing exotic qualities. He was a deeply elegant man and a passionate sailor who owned salmon colored cat boat with a gaff rig anchored in the cove outside the backyard of the beachfront home my father built in 1962 for fifty thousand dollars. 

In my mind a summer morning begins with the sun glittering across the cove, and the mast of the boat reflecting across the water like a long line casting for fish. He would appear later in the morning with his stately gait and his understated elegance and grace. There might be the pleasure of a short chat which always left me  a bit more optimistic, about everything . I have a picture of the boat at sunrise in my office. Its a touchstone.

He would never die, I thought, somewhat foolishly. But last Spring his bone marrow decided it had made enough red cells for one lifetime, and he became transfusion dependent. Subsequently, a pericardial effusion developed and he declined to have it drained. In the words of his wife of 50+ years, "He dressed every day and did his usual routine as best he could.  I am happy to report that he died himself."

The boat's been sold. This Sping it will no longer grace the cove. There will just be the endless expense of ocean, and a hole inside my heart that will not likely fill in


Tuesday, February 27, 2018


The table is from Mark Perry's column at AEI, "America’s top 10 inbound vs. top 10 outbound states: How do they compare on a variety of tax burden, business climate, fiscal health and economic measures?" I'm typically skeptical of these types of presentations since it's easy to pick the things that support your argument and ignores the things that don't. That said, an interesting table. North Dakota in the outbound states probably due to the oil recession in 2016. It would be interesting to see how much of the migration is retirement driven (AZ, FL, NV, the Carolinas). I was struck by how similar the unemployment rates were in the two groups, and how different the employment growth was. But employment growth is a function of both labor demand and supply.


Tuesday, February 20, 2018

Trump and the Russians,


If I understand Friedman’s and your argument correctly it goes like this: The Russians interfered in the US election. Trump can’t or won’t defend the US against this attack  (Friedman puts the election in the same category of attack as Pearl Harbor and 2001), that means our democracy is in serious danger and that threat is Trump himself: “The biggest threat to the integrity of our democracy today is in the Oval Office.”

When I hear this argument I hear something different. And now I’m (unfairly?) putting you and Friedman into this camp:  Trump’s election was a shock.  There has to be a reason such a loathsome person won. Because he is loathsome there has to be a way to invalidate the results. Russian interference and collusion sounds plausible because of Trump's praise of Putin, the Clinton-purchased Steele dossier and the hints that Trump’s real estate deals are financed by Russian money.

Even if the anti-Trumpers hadn’t been trying to invalidate the election since the election, I’d be skeptical of such a claim. But this is one in a series of accusations and arguments made, (Trump never wanted to win, he’ll resign; the Intelligence Community should brief the electors of the electoral college; pleas to the electors to vote for Clinton; calls for impeachment before he took office; and my favorite, conclusions by psychiatrists that Trump is crazy without ever examining him) to change the outcome of the election. If the reaction to Trump’s election hadn’t been so hysterical maybe I would be more open to the Russian collusion argument. Probably not, but the reaction by the Dems and the media harmed their credibility in my eyes.

And the hysteria continues today. The TV headlines after something Russian is announced  are often Mueller is “closing in” on Trump. The headline itself reveals the belief in the conclusion that Trump is guilty of something. Or take Friedman’s argument that 1) Trump is hiding some threatening item or 2) he’s criminally incompetent. There are certainly many more options than that. Trump doesn't have to be hiding anything. Maybe he's hiding something that has nothing to do with Russia. Maybe he is incompetent but not criminally. Maybe he's super competent but Friedman doesn't like the results.  I find it difficult to be sympathetic to Friedman’s false choice argument. This type of argument, by its nature, is either 1) lazy or 2) deceitful. Or your headline, “Traitor Trump.” Really? Traitor? Thank you Red Queen, first the verdict, then the trial.

Friedman doesn’t embrace the collusion theory, at least explicitly, although he hints at it. He is worked up over Russian interference and I understand that and share that concern, although I’m not alarmed. Admittedly, it’s not a compelling argument when I speculate this probably isn’t  Russia's first time interfering in another country’s elections. Nor is it comforting to point out other countries (China, North Korea, Iran, even our allies to some extent) also interfere in our elections. And it is rather meaningless to point out the US interferes in other country’s elections.

Maybe one of the reasons I’m not too alarmed is because I've been told repeatedly there is no voter fraud in the US. This is as good as any explication of that view. But that’s a cheap shot and somewhat avoids the issue. No one, yet, is claiming that Manchurian voters were sent to the polls. Although when the claim is made the Russians “hacked” the election that is implied. The argument is that the Russians engaged in a campaign that confused voters into not voting for Clinton, voting for Trump or simply not voting.  We do know the Russians tried to sow confusion. We don’t know if it was effective. 

Mueller’s indictment against the Internet Research Agency states the Russians began as early as 2014 to “interfere with the U.S. political system,” and “addressed divisive U.S. political and social issues,” with a “strategic goal to sow discord in the U.S. political system,” and this included the 2016 presidential election. They started out raising rabble and then moved on to supporting candidates Trump and Sanders and attacking candidates Clinton, Cruz, and Rubio . The stated goal was “spread[ing] distrust towards the candidates and the political system in general.”

The indictment doesn’t say why the Russians supported Trump and Sanders. My guess is because it was the best way to support its mission of sowing discord. If my presumption is true, it doesn’t rise to the level of collusion.

From my reading of the indictment, the interference of the Russians through the Internet Research Agency is pretty small time stuff. For example, an Instagram post from  “Blacktivist” that read in part: “Choose peace and vote for Jill Stein. Trust me, it’s not a wasted vote." and social media posts,“  “American Muslims [are] boycotting elections today, most of the American Muslim voters refuse to vote for Hillary Clinton because she wants to continue the war on Muslims in the middle east and voted yes for invading Iraq.” Or contacting Trump's campaign in Florida to suggest flash mobs for Trump.

The exact amount spent on these posts is undisclosed other than “millions” over the 2 or 3 year time period and in the month of September 2016 $1.25 million. It is difficult for me to believe this had an impact on the election.  And much of the FaceBook ads are posted after the election. Elliot Schrage, VP of Policy and Communication at Facebook pointed out “44% of total ad impressions (number of times ads were displayed) were before the US election on November 8, 2016; 56% were after the election.” ( This makes sense to me if the intent is to sow confusion, but less sense if there was collusion and further supports the idea there was a very small impact, if any.

But again, that’s somewhat avoiding the issue. What do we do about Russian, or any foreign actor, interfering in our elections. Should we regulate speech on Facebook, and Twitter? Should we limit all political speech on all media platforms? I’m opposed to limiting speech, so it’s a thorny issue. 

You and Friedman want Trump to do something, and since he isn’t doing what you want, he’s a traitor and should be impeached or resign. Well, I guess that is a conclusion that can be drawn, but it does seem rather perfervid. Plus, it’s a very strange solution. Besides presuming guilt before there is evidence of guilt, how will that solve foreign interference in our elections.

Again, my conclusion on all this is some people don’t like the outcome of the election, and they are willing to go to any lengths to invalidate it, including believing in a conspiracy theory worthy of Jim Garrison.

The heartbreaking aspect of these events is that the Russians have succeeded beyond their wildest dreams. They have sowed discord and chaos into our elections, mostly because some refuse to accept the outcome of the election and have latched onto a theory that explains to them a very surprising decision by the American voter and now are desperately seeking a way to invalidate the election. I prefer the simpler theory: The election was a coin toss between two despicable candidates and the toss came up Trump.


Monday, February 19, 2018

Traitor Trump


I think Thomas Freidman's OpEd today pretty much makes the case. Sooner or later, the truth will out.