I have a question for those screamers who claim to be students of the Chicago School of Economics. Or have a gig at one of the business television networks.
What part of the Bill of Rights says “Congress shall make no law or allow no tariff abridging the right of citizens to gather at Walmart and buy cheap Chinese crap”?
To listen to most of the folks on CNBC, Fox Business and Bloomberg, you’d think they replaced the Second Amendment with that.
I’ve been in business, negotiating deals, for most of my adult life. A bad deal is when you memorialize being taken advantage of. A good deal is when all parties to the deal get something they want.
Our trade deal— from the beginning of modern time to date—with China can generously be called a bad deal.
Apparently we want the cheapest flat screen television sets so badly we’re willing to give up our rights to sell stuff in China to get them. And if President Trump thinks that’s a bad deal and wants to impose tariffs to correct it, the companies importing and selling those sets scream that the American consumer is going to take a beating. As opposed to the American worker, who of course, are one and the same.
Then, when it all is sorted out by the Wall Street Journal, that beating appears to be about $800 a year per family. And, keep in mind that the Journal is also populated by many of the same screamers on TV.
The big weekend story was that Apple could be hurt because most of its products are assembled in China.
As an iPhone user (in fact, I use just about every Apple product except the Mac) my humble suggestion to Apple CEO Tim Cook would be build your products in, say, Viet Nam or, here’s a real idea: how about Minnesota, down the street from where Mike Lindell makes My Pillows? No matter how much you say the words multi-national, living in Cupertino has to be nicer and more efficient than Beijing.
At some point you have to realize that the word “nationalism” is not a four letter word.
Steve Jobs and Bill Gates started their companies because you can do that in the United States. They expanded to markets like China in a search for new markets.
And, let me tell you a little about our “friends” in China. They owe me and millions of other Americans millions of dollars in defaulted bonds which their government doesn’t want to pay. Those bonds were issued before China became Red China and many of us either bought them or inherited them. (You can read about that at the American Bondholders Foundationhttp://www.americanbondholdersfoundation.com) They were sold by Wall Street firms who today are still selling Chinese debt.
So, I’m not very sympathetic to the words “trade war” because I doubt that the Chinese have the economic muscle to cause us much pain—not nearly as much as the folks on business TV would like us to believe.
Simply put, President Trump is right and these guys are wrong. After all, God, it is said, invented Economists to make Astrologers look good.
And if it costs us $800 a year per family—or even significantly more—to make that point to the leaders of Red China, buy less cheap Chinese crap and more stuff made in America. It will strengthen our hand and, in the long term, make our lives better.
Trump advisor Larry Kudlow explained the issues very succinctly to Chris Wallace on Fox News Sunday. “Intellectual property theft has to be fixed. Forced technology transfer and ownership of American companies has to be fixed. Cyber interventions have to be fixed. Tariff and nontariff barriers have to be fixed. And there have to be very, very strong enforcement provisions.”
To say that none of this is worth taking strong steps like tariffs is exactly like the Democrat House saying that there’s no crisis on the border.
This President fixes things. The Chinese aren’t used to dealing with a President who fixes things.
They will learn soon enough.
In the meantime, while they are dancing, pay attention to Kudlow’s observation about that, “Some of the Chinese officials have said the agreement was too unbalanced. No. The relationship has been too unbalanced and because of these problems of unfair and sometimes unlawful trading practice, we have to have a very strong agreement to correct, to right, these wrongs before we would be satisfied.”
If you think the American economy is booming now, just think what it would be like if American collegians had an extra $1.5 billion to spend—especially with President Donald Trump’s tariffs set to raise the prices of imported consumer goods despite he and his administration saying the tariffs won’t result in price hikes.
Well, if prices aren’t increasing, tariffs aren’t working. The point of a tariff is to make locally produced products more attractive to local consumers by raising the price of imported alternatives. This, in theory, would result in more local production and fewer imports. But a tariff is paid by the importer of a product, not the exporter. So the 25-percent tariff Trump recently leveled on Chinese imports is transferred to the American consumers of those goods, not the Chinese producers.
The trade war isn’t taking money out of the pockets of Chinese manufacturers; it’s taking money out of the pockets of American consumers of Chinese products and Chinese consumers of American products. And since the United States runs a $375 billion trade deficit with China, the only way Trump can “win” his trade war is if Chinese economists can’t do the math to match Trump’s tariffs dollar-for-dollar. It’s even becoming more likely trade with China ends altogether. China has already cancelled planned trade talks with Trump.
It is impossible for America to run a trade surplus with China because China produces more products Americans consider essential than America produces for the Chinese, including car, computer and mobile phone components. It’s lower labor costs and Americans’ addiction to consumption allow China to perpetually have the upper hand in a trade war. If an iPhone were made entirely in America, it would cost as much as a brand new car, so while Trump might be making some American-made products more attractive to American consumers, he’s doing so at the expense of American consumers who can’t do without many of the Chinese imports found in their technology and automobiles. Even the Tesla Model 3 can only be 95-percent American-made at most.
Since Americans will be paying more for computers, mobile devices and cars, it’s not entirely unreasonable to forgive the $1.5 billion in student loan debt and allow those accepted into college two years of college education free of charge. Students and parents are going to pay more for the devices required to attend college, and colleges are going to pay more for them as well, which will be reflected in tuition costs, which will further increase student loan debt while decreasing consumers’ available income for spending in the American economy, potentially sinking the stock market.
There are other reasons besides boosting the economy for the government to payoff student loan debt. First, today’s Associate’s degree, usually obtained in two years at a community college, is the equivalent of a 1980s high school diploma. Advances in technology have made working in what is now a global economy much more complicated and necessitates further education be obtained. Students are not leaving high school with the education necessary to provide for themselves let alone a family, and it’s not their fault.
Secondly, with 17 states offering tuition-free college programs, the trend seems to be students at least delaying the accumulation of student loan debt for two years, potentially lowering accrued interest as well as principal loan balances. In short, future college students in the United States will be saddled with considerably less student loan debt than current and past college students. Meanwhile, entire generations (and student loan debt does span generations), are suffering student loan debt and unable to stimulate the American economy by spending money on anything but debt and living expenses.
Finally, the collective credit rating of American college students, past, present and future, would receive a boost that could spur entrepreneurial growth and investment in businesses as a whole. America was the land of opportunity, where you could go from “rags to riches” with enough hard work. America used to be the best place to start a small business and be your own boss. That isn’t the case these days because despite incomes increasing for middle-class Americans, their purchasing power has barely budged since 1965. You can’t grow an economy in which most consumers have hardly more purchasing power than their grandparents did over 50 years ago, and consumer confidence in the stock market can’t increase if consumers have no means to express their confidence by purchasing stocks.
Lifting the $1.5 billion in student loan debt owed by 44.2 million American borrowers would allow 44.2 million Americans to spend their student loan payment, averaging $351 per month, stimulating the American economy instead of simply paying off interest. Lenders can’t be the only ones making money if the American economy is going to grow.
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