The Rabid Independent, Nonpartisan solutions, independent policy ideas

Open Borders and Cheap Imports

In order to make a credible  argument in favor of granting all illegal immigrants green cards, you must also have a plan to control and limit future immigration. Otherwise you are simply saying you don’t believe in countries, sovereignty and the rule of law. Similarly, before you defend cheap imports you must explain where you draw the line between illegal trade practices (such as dumping and foreign subsidies) and the free and fair global trade system. It’s easy for anyone to argue that cheap foreign stuff saves consumers money.  Why should we stop China from giving us steel for free?  Locally produced car companies would be very happy and there are many more jobs making cars than there are making steel [in the United States] . We could extend this argument to everything – solar panels, computers, clothes, toys, furniture. Even if China is subsidizing all those exports to gain market share and/or bankrupt first world producers- so what. This is modern economic Darwinism -right?

Why should I start a business knowing that at any moment China et al could target my product group? What happens to manufacturing employees after they are casualties of dumping?  Pass them some opioids along with a python textbook. Those whining car companies are next on China’s target list. I suppose the New York Times will then defend China saying consumers should be able to buy cheaper cars made in China. And so on until the only business is debt issuance so people can buy foreign goods. Comparative Advantage is a quaint anachronism in this world of parasitic mercantilism.

Quite simply – If you want to sustain a strong American economy you must draw a line somewhere regarding trade cheaters. You must then penalize them. That doesn’t mean putting tariffs on all steel importers – just putting them on the cheaters. Punishing Canada for the crimes of China is shockingly stupid. [China is number 11 on the list of exporters of steel and aluminum to the United States but it is the sole perpetrator.)

The problem here is not that Trump is trying to punish cheaters, rather it is that such punishments have been applied so infrequently in the past.  We have allowed trade crime to run rampant so that now when we act it seems unfair – like ticketing a particular car for speeding after allowing fifty other speeding cars to go by. The broken windows crime prevention theory tells us we should be putting up trade barriers quickly and often. (That’s exactly what China and Japan do.)

If the press and economists in general are so outraged by the economic inefficiency of tariffs then why did they not yell and complain when China completely blocked Google, Facebook and Microsoft from doing business in China? They seem far more willing to defend foreign producers of goods than American companies. Maybe they’re just in love with rampant debt crazed consumerism. Whatever is best for consumers is always the way to go… we buy everything from everyone and ultimately sell nothing. Is that a path to prosperity? These economists frequently revere the recent economic success of China – but it has exactly the opposite model(?!)

Keep calm, there will be no trade war since we hold all the cards. The stock market won’t be happy but it is a corrupt entity in this regard – it would prefer if all Americans worked at Walmart, hopelessly indebted – buying only marked up foreign-made goods. That way profit margins are maximized. The S&P 500 will worry about the debt later, besides it’s good business for banks. Sovereignty and domestic solvency are the enemies of the stock market. (That’s why Trump’s corporate tax cut was received so well.) so please stop using stock market declines as proof of the validity of your anti-tariff position.

I’m tired of hearing about white nationalists, I want to know why we have no economic nationalists. What happened to those anti-WTO protestors? America loves its military but it is the least patriotic country in the world. Let’s not oppose tariffs because Trump is for them.

A broken clock is right twice a day.

Our Post Industrial Economy

Economics professors have always agreed about what comes after an industrial economy: a knowledge-based economy. Service industries would rise up to push around the money we made, inventing and utilizing new technologies. Workers would be data crunchers. They would be accountants, economists, health care workers and computer scientists. Great – no problem we all said. Just stay ahead of the (education) curve and don’t expect to get rich as a steel or car plant worker.

There is, however, another path. What if our remaining industrial base becomes so denuded that it (virtually) no longer produces goods. We won’t need as many engineers to improve productivity or to build robots to replace workers. We won’t need accountants or investment professionals to manage the wealth created by these industries. We won’t need scientists to do R&D since that always takes place near the production facility. (Why do R&D anyway in a world of rampant global IP theft?)

China has replaced us as the new industrial behemoth. They need raw materials for their factories and food for their army of peasant labor. Yes, they need services too but those markets are completely closed to foreign providers. (Just ask Google and Microsoft). Who shall feed the beast?

The Future: Our industrial capacity is shrinking towards irrelevance and our service sector is stalled out. We are the global consumer and without any trade barriers, everyone is just chewing on our flesh. We can still buy their goods but it’s all paid for with borrowed money. So now we are to go back to what we used to do – before the 2nd industrial revolution. We will produce food, minerals, and fuel and sell them to China and Japan just like Africa, Australia, and the Middle East. There are no import barriers on oil or wheat. This is economic development in reverse. It is, of course, a path to poverty and massive income inequality. The whole idea behind trade barriers was to protect young industries (and countries) until they have improved efficiency and become innovative. We have been doing the opposite for 20 years and it’s killing us.

Am I  being too cynical? Let’s look at the data. In 2017 6/10 of the top exports (by category) to China were commodity goods. Only three of the top ten were commodity sectors in 2007. ” In 2007, the U.S. manufacturing trade deficit … accounted for 76.99 percent of the overall merchandise deficit on a Census basis. The 2017 figure? 116.50 percent.”

The race to the bottom that began when China got MFN status is in its final stages. To sustain 2.5% growth we are bankrupting the state.  We have manufactured the illusion of increased wealth by virtue of massive debt increases. The robotics wave will have a greater effect on Chinese and German productivity since that is where global manufacturing now resides. We must get it back. Mercantilism can save us just like it made us in the 19th century but we’ll need a new mindset and new leadership.

Let’s dig up Alexander Hamilton.


Why do you hate the idea of a wall?

Let me guess your answer – “… because I can’t stand Donald Trump so I want to deny him anything he asks for.” If he wants something, it must be for some malevolent reason – right?. There is some merit to the argument but it frequently goes along with an effort to justify the anti-Trump position with a legitimate reason. That has lead us back to identity politics. Suddenly a wall is bad because all illegal aliens coming from Mexico and Central America are flawless perfect immigrants who just happen to be “undocumented“. In fact, it’s better for us to get these people (“who do all those horrible jobs we won’t do”) than it is to get migrants from anywhere else – even educated ones that speak English.

This leads directly to an open borders position. If you can’t articulate how you’re going to keep out some people then you must be in favor of letting everyone in.

Let the deluge begin.

This would be fairer to those unfortunates born in s(*&hole countries but then we must set a new rule. You are never allowed to whine about lousy income distribution. Your open borders policy will guarantee the suffering of our ever increasing underclass. You can never lament the poor economic position of the African American community or those less educated souls who failed to get a CS degree. There is pure Darwinian hell at the very bottom of the labor force and open borders guarantee its survival. (Let’s say it together class – Opioid Crisis)

Maybe you prefer feudalism…

I am not a heartless person – really. I do understand the luck of being born in the west and (in my case) getting entry to America legally. I don’t want to break up families or condemn teenagers to gang warfare in Central America. For that matter, I’m sure we could find an infinite number of Senegalese, Syrians, and Ivory Coasters who just want safety and justice. The problem is a simple one of supply and demand. A limitless number of destitute workers will (is) suppress wages for the unskilled. There’s a reason “no one will do those jobs” – the pay is terrible. What do you call a country with no borders?

So get on with it Chuck – get protection for DACA people and let’s build a southern border wall. Do the deal. And please, NPR and all the writers at the NewYorker,  stop interviewing members of the huddled masses who are either here illegally or sitting offshore waiting for plane-fare. You must tell me how you would stop the deluge before you make an argument in favor of letting in every person you profile.

Personalizing policy is the worst way to make it.

Is Trump an exception or a new paradigm?

We could argue that new media and its omnipresence have produced a new celebrity-rules condition. People don’t necessarily believe that politicians are ineffectual, they’re just bored by them. Why not make politics more exciting? No one can tell the difference between real policy ideas and absurd demagoguery anyway. Does history tell us anything? We have gone this way in the past – three times:

  • Andrew Jackson was not a politician- he was a former general who had a little bit of crazy in him. He shut down the US central bank and produced a 12-year recession. The country moved on quickly and went straight back to “normal “ cowardly politicians.
  • In 1904 the country (re-)elected a charismatic iconoclast (TR) who had become a great public celebrity. He spoke to huge crowds and produced policy that both liberals and conservatives could (and can) champion. After he left we saw a list of dullards – Taft, Wilson, Coolidge, and Hoover.
  • In 1964 the Republicans nominated Barry Goldwater – an iconoclast from the libertarian wing of the party. Was it a breakthrough for right-wing populism? Hardly, but at least they sort of stuck to the theme by later picking an actor but they also chose Nixon and GHW Bush – yawn.

None of these temporary excursions represented a significant change in voter preference. Everyone likes a change now and then but the majority of candidate offerings seem to mean-revert, back to a selection of Senators and ex-governors. Such men are rarely exciting or unconventional. Even though there are more ways today to enter the fray, there are fewer reasons to do so. The stalemate in Washington means you won’t get anything done unless you throw in your lot with one party or the other, in which case you are no different from the other mainstream choices. Oprah would be owned by the Democrats just like Mark Cuban would be controlled by Mitch McConnel et al.

We are left to ask from a policy point of view- would a Mike Pence administration be any different than the current one? Can Trump get substantive immigration and trade reform through Congress? If the answer is no then there will be little reason to champion another rogue candidate. It will be evident (again) that parties rule so you might as well go along with one of the mainstream dullards. Most Americans see the Trump choice as a disaster and that will set back any argument to choose another celebrity.

Even if he weren’t, history implies he is probably just a one-off.

The Union Gets a Win.

The American confederacy was an agrarian economy trying to survive during the industrial revolution.  The only way for it to compete with the north and raise living standards was to enhance productivity by the use of free labor. Agrarian economies tend to be more traditional culturally since their lifestyle is the same as it was generations ago. Cows are cows and wheat is wheat. Eventually that culture gets out off sync with industrial competitors and neighbors. A rift grows and such rifts are not easily repaired.

To some extent the animus produced by cultural difference is exacerbated by  inferior economic performance. A hundred and fifty years after the war the rift still exists for the same reasons it did in 1858. The  animosity tends to expand into other spheres such as science and religiosity.

This national bifurcation has been around a long time and the party of the south (and the rural west) has always had to strike a balance or a tolerance between its two factions. FDR had to look the other way  in the face of the KKK and southern lynching because he needed southern Democrats to vote for his new deal programs. Truman and Kennedy  made similar compromises. Johnson blew up the party and handed the south to the the Republicans when he pushed through new civil rights laws. Now the balancing act must be done in that party.

The Repubs used to have a hard core group of free market driven Northeastern intellectuals led by William F. Buckley who had nothing in common with southern racist (James Birk Society)  southerners. Each side served to offset the other so they delivered compromise candidates who could still win a national plurality.

Coastal intellectuals have uniformly rejected Trump’s malevolent narcissism so he must now cow to the southern racist wing of the party. A narcissist must find adoration. Of course he/they favor no estate taxes just like English land barons of the 19th century). Social services for the poor (healthcare) are absurd if you rule over a plantation. Don’t tread on Jesus and Robert E. Lee.

Congress is now ruled by southern Senators with southern Confederate agendas. There is no balance of northeastern or Californian senators who believe in evolution, climate change or balanced budgets. In fact there is little populism in their policies since the south has always been ruled by plutocrats just as it was in medieval times in Europe. Tax cuts for corporate donors – of course!

The structure of the US Senate and the Electoral College were supposed to ensure regional balance and fairness. All they do now is sustain the Confederacy’s malevolent influence. We are condemned to a life or death struggle against the likes of Roy Moore and Mike Pence – living anachronisms, ascendant in the era of Elon Musk.

Today we can celebrate our win and next week Congress will pass a new tax plan that will destroy the federal budget.

Are all these policy changes targeted at me?

That’s how it feels. It’s not just Trump who is after me,  it’s the entire Republican party. I have a few basic issues that excite me and it seems that someone in Congress is singularly devoted to doing the exact opposite of what I believe in:

  1. All steps closer to universal coverage and subsidies for the poor are being undone – as though Republicans want the working poor and the nearly old – to die, literally.
  2. Net Neutrality is being revoked. I have (like most people) no choice regarding my internet provider. Now, if they want to jack up my rates because I use Netflix then they can and will.
  3. At every turn, the government seems devoted to anti-science. I seem to waste my time learning about such things as climate change as though my advocacy for clean energy production matters.
  4. Corporate taxation ranks right at the bottom of my priorities. Why? .. because profits as a share of GDP have never been higher! How does anyone defend lower corporate taxes in this context? Are many head offices moving to Switzerland? Have all those profits produced fabulous wage increases for workers?
  5. I seem to be the only person left in this country who cares about the US budget deficit. Why? I have to accept that neither party cares and the the Republicans are unfazed about jacking the deficit to $1 trillion/year. If there’s a new recession then maybe we’ll see $1.5 trn!
  6. Eliminating the estate tax moves us precisely to where the founding fathers said they didn’t want us to be. An up and coming business will be moat construction.
  7. The elimination of state and local tax deductiblity, is a perfect way for the Republican Party to hurt Democrats including yours truly. Let’s say it together -Double Taxation for all!

We have finally arrived at irrefutable proof that this is not a democracy. Gerrymandering had already pretty much accomplished this. A  new tax bill that raises personal taxes on non-millionaires in order to pay for a reduction of corporate taxes tells us that voters are irrelevant. This is precisely the kind of policy you would expect to see in a corrupt third world autocracy.

What surprises me is how this all contrasts wits other western democracies. They’re not taking the same anti-science anti-democratic bus to  insolvency town. They all have universal heath care – our House speaker wants to cancel Medicare!

I emigrated to the USA 31 years ago – I never felt as foreign as I do today.

Military Form Over Substance

No matter what people say about John Kelly’s remarks regarding Robert E. Lee – we all sort of understand him. We always default toward a feeling of respect regarding military men. They have great posture and perfect manners – always calling people ma’am and sir. Their uniforms are attractive and perfectly pressed not to mention the colorful medals that often accompany them. They march well in large powerful groups with shiny swords or rifles. When we see them at ceremonial events – parades or burials they are taciturn, appearing respectful of the flag or the coffin. The Germans in the 1930’s grew intoxicated by their glory.

We (too) are suckers for their appearance and countenance.

They may have spent the day torturing prisoners at Abu Graib prison or murdering innocent villagers at My Lai (Vietnam). Every culture forgives them of their stupidity and war crimes as soon as they see them up close looking pristine and noble. How dare we question the good intentions of a man on a horse looking dignified and proud even if it’s just a statue? To doubt the majestic warrior on his horse is to doubt all marching men with clean uniforms. We’re taught to revere all these people.

General Kelly got caught up in this unavoidable attraction to the military form just like the press secretary who, in defending him said – we should never question the intent or veracity of a general. Of course not – not with all those beautiful medals and impeccably clean shoes. Her reverence for Kelly is no different than Kelly’s reverence for Lee. Lee was famously dressed to the nines in his fanciest uniform when he surrendered to Grant. Even Grant who had known him for years and hated slavery found him to be irresistible.

The civil war should have taught us that we must consider what these people do rather than just how they look. If that didn’t teach you then maybe you want to question your judgment by looking at this guy:

He must have been a smooth operator. I’m sure he had a clean gun and called all his superiors sir. Jochen Peiper was a field officer in the Wafffen SS. He received the Knights Cross of the Iron Cross (a big deal). He was later imprisoned for 12 years for war crimes.

How about this guy?

Look at that immaculate uniform. Who wouldn’t applaud him for his service if he appeared at a football game? If you didn’t you’d be seen as unpatriotic. He is currently on trial for desertion.

Let’s face it the US is the least patriotic country in the world. People are just as happy to employ a foreigner as long as he costs less. They are just as happy to buy a foreign made product. They abhor mandatory military service and they would riot in the streets if their taxes were increased to pay for a military engagement. It seems that to make up for it we all wave flags and stand for the anthem at football games.

Form over substance wins every time.

Sundry Musings

Isn’t this exactly what the supreme court was created for?

Gerrymandering is a clear violation of the democratic principles that define a representative democracy. Both political parties are logically driven to use it when they can to gain an electoral advantage so neither will ever vote to stop it. As the 3rd branch of government, intended to be objective, it falls on these nine people to correct this. They shouldn’t throw up their hands and say it’s all too complicated. They should demand a serious quantitative measure to judge these districts. If the first solution doesn’t work well then they can accept another case and rework it. Our republic depends on them having the grit to fix this problem – not ruling on gay wedding cakes.

Should (Free) Health Care Be a Right?

No! You can’t have rights that demand other people’s labor. My right to freedom requires people to leave me alone. My right to happiness requires others to NOT hurt me. Health care requires medical professionals to work on my behalf. I can’t command them to do so so it can never be right – a privilege, maybe.

The INS Must Hire (virtually) Illiterate Agents.

We need to enhance our sense of community rather than divide it as we are doing with identity politics. How about this: Part of the inadvertent success of Ellis Island was its use of unilingual processing agents. If you gave them a hard to spell Polish or Italian name they butchered it into an anglo version that English speakers could pronounce and spell.  This inadvertently served to give people a new American identity – Katarzyna  Kowalewicz became Cassie Cowel. When Cassie gave up her old Polish name she truly felt more American. (I don’t doubt she was somewhat aggravated.) Everyone got on the same page without foreign names and impossible spelling that creates distance between people. What if every Middle Eastern person emigrating to Belgium was forced to change their name to a generic french one? Mohammed Hussein would become Hubert Fournier. A new British (former Afghani) would be renamed, Bob Pence. This would immediately reduce the distance between people that exists simply because of their names. It would also help people avoid bias and get work in a world of electronic resume applications. (See this Freakonomics podcast)

Authoritarians Who Love Well Armed Police 

The federal government (The Homeland Security Dept.) has provided local police departments with high powered weapons and war vehicles. Republicans applaud all these tools since they love such toys and they support “aggressive policing. But don’t these weaponized police geld private militias and private gun fanatics/owners? How can one be in favor of the former while obsessing over the second amendment?

Stop saying – The 2008 Crisis had nothing to do with banks.

This is becoming a common trope thanks to the statements of Hillary on her book tour and those of Lawrence Summers. Yes, the firms that went under were AIG (an insurance company) and 2 investment banks (Bear Stearns and Lehman Bros.) but that doesn’t prove the point. If the problem was localized to them then the government wouldn’t have had to get involved. The fear was that their obligations to commercial banks and the impact on those banks holdings, would destroy the institutions that hold our savings. Have they forgotten that Citibank was propped up with a $20bn cash infusion and a $300bn guarantee of its obligations? Financial crises are always about retail banks.

Originalists must strictly follow the text.

If you are a firm believer in the sacred writings of the bible then you must be forced to follow everything in it. You must stone your children when they are insolent, cut your hair precisely as Paul advocated (very short), eat strictly ancient middle eastern food and spend a lot of time washing other people’s feet. Supreme court justices who believe in the infallibility of the constitution may enforce the right of militias to own muskets but not AK-47s.

Is this Tax Reform or a Tax Cut?

Maybe it’s both so let’s look at five (Republican) axioms for their veracity:

  1. Flattening, simplifying and reducing the corporate tax rate will help business which will stimulate the economy. Why? Corporate taxes are too high so corporations are not locating here anymore. Really, name some. Last I checked Silicon Valley wasn’t having a problem with new business formation (and they’re in a high tax state too). So how much higher are our rates?The countries with meaningful lower rates are ones where infrastructure and talent are severely lacking. They have lower rates to make up for these (and other geographical) shortcomings. Please note – the effective rate is nowhere near the “statutory” rate.
  2. Corporations have a ton of money locked up offshore. Give them a tax holiday and it will come home and be spent on new plant and equipment -jobs!! (Yes I have already written about this.) US corporations are awash with cash and rather than spend it on new capacity (or higher wages) they are buying back stock with it. Is this just a plan to increase stock buybacks?
  3. We are in year 8 of an economic expansion – that’s when we should be raising taxes to balance the budget, not cutting them. Has no one read Keynes?
  4. If I pay taxes to the state and town, is that money still taxable by the Feds? Let’s say I earn $100,000 and pay $80,000 (total) to the state and my municipality (easy for someone with a big house in Westchester NY). Can the Federal government still come along and ask me for $30,000 more? They have been prevented from doing this ever since the inception of income tax in 1918 so as to protect state revenue from the evil Feds and to prevent income tax rates from exceeding 100%. I feel a supreme court challenge coming.
  5. Can we please stop saying that tax cuts pay for themselves. Until they come up with one perfectly clean example of this, it must stop. In fact, they don’t really have the right to say that tax cuts are good at all unless they find a case where interest rates rose, taxes were cut, and GDP rose without some corresponding budget deficit nightmare. That leaves the 80’s out. How about the EGTRRA of 2001?  Yes – the one that took the budget from a surplus of $600bn/yr to a $200bn/yr deficit. Does anyone want to talk about the Kansas tax cutting disaster? Does anyone remember that Clinton raised rates (in 1993) and economic growth accelerated? In economics, like all social sciences, nothing is cut and dried.
  6. All LLC’s must have low tax rates to compete with corporations or else they’ll all just incorporate. If the LLC rate falls way below the maximum tax rate then everyone will quit working for wages and become an LLC. Wait, have I seen this ridiculous idea before – Yes, Kansas did it!

If you hear an expert espouse the magic of tax cutting like a religious zealot – change the station.

Where have you gone Walter Cronkite?

As President a Trump creates fake news with his lies, he tries to gain political advantage by denouncing accurate news reporting. This is straight from the totalitarianism playbook. I once met an older man in LA who had moved to the US in 2003 from Spain. He said “I spent most of my life (under Franco) digging for the truth, fighting through the ubiquitous state media which polluted everyone’s heads with lies. Now that I have arrived here I find that a form of Pravda (Fox News) has begun to infect people’s heads with lies and people are happy to watch!”

Is this split in the media a cause or an effect of our national political divides?

Some historians like to tell us how our political divisions were just as bad during the Vietnam war. There are differences that make the comparison useless. The political split in the 60’s was essentially a generational one – baby boomers with “modern” values vs their parents who were holding on to (largely) out of date beliefs.

Today’s divisions are more heterogeneous. The problems of the 60’s evaporated as baby boomers aged and got jobs. They became more conservative and much of their once-radical agenda – women’s rights, civil rights, greater government transparency, became accepted as indisputable truths. This time the split is based on irreconcilable views about the purpose and role of government, immigration, and income distribution. There is no demographic shift that will settle (or explain) these issues.

The severity of these divisions has led us to such a polarized state that there are almost no swing voters left. We have no authorized media that pull us together like say Walter Cronkite once did. Don’t tell me I’m mired in the past. Most other countries still have a government assisted TV station that the citizenry watch and trust. England has the BBC, France has RFI, and Germany has ARD.  A modern national voice need not have a political view but it would help settle  issues using facts like:

  • Climate change is real.
  • Russia really did interfere in our election.
  • The massacre in Newtown CT was real.
  • Al Quaeda was solely responsible for the destruction of the twin towers.
  • Barak Obama was born in the United States.

Wouldn’t it be nice if such things were indisputable? A common sense fact-based national voice would push InfoWars et al to political irrelevance. It could also provide the people with a common entertainment experience. It’s part of being French to listen to RFI. The BBC has comedy shows, human interest stories, international coverage and economic reports. It’s the first choice of news searchers in the UK.

Americans don’t share a common set of facts and this a huge problem. We’ve lost all our 60 Minutes heavyweights who spoke with authority. NPR is denounced as socialist. We desperately need a new Walter Cronkite – not the staid dull one, the one that denounced the Vietnam war after visiting the front. Opinions can and must be changed by new knowledge. Myths and conspiracy theories now take up as much space as the truth. Who would have thought that in an internet world so many lies could survive? Media leadership (and commonality) is desperately needed. Most other democracies have such national voices. We suffer every day by not having any.

Google alone isn’t getting the job done.


Fair and Unbalanced

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