HaroldWilson
7d ago
calculating emissions of imports in a unfavourable way
This I agree would be a non-tariff barrier to the extent that it happens.
It also inherently favours domestic European goods due to the lower transport emissions and the fact the Europeans are trying to develop green industries... but the fact it favours domestic industry must surely be a nice bonus.
Well this I think is silly. On this basis any taxation which is not very broad-based is a non-tariff barrier. If the British raise their alcohol duty on spirits faster than beer is this discriminating against American whisky-makers and French cognac producers in favour of domestic breweries, assuming Britain is more competitive in beer production than spirits?
HaroldWilson
7d ago
I find it difficult to see how this is different to literally any regulation though. It's not as if any product is prevented from entering the EU under these rules, it's just a question of how it's marketed. It's as much consumer protection as producer protection - when someone sees 'champagne' they expect it be from Champagne (and not just because of expectations created by the regulations). After all the EU does enforce non-EU names - Celyon tea, Sussex wine, Mongolian Cashmere etc. etc.
HaroldWilson
7d ago
I am worried about this too, but the strength of the favourable initial market reaction to his climbdown makes me hope he might not try again in 90 days again.
HaroldWilson
7d ago
Ok, but until he climbed down the expert consensus was exactly right on what the reaction of the markets would be.
HaroldWilson
7d ago
at points in 2022 where all the gains of my portfolio were wiped out going back to 2017
What the fuck you invested in? Year end 2017 S&P 500 was below 2,700, the low point in 2022 was over 3,500.
These tariff hiccups don't even take my portfolio back to the beginning of 2024.
Until Trump climbed down today the slide was showing no signs of stopping whatsoever. We're barely more than a week removed from the original announcement.
HaroldWilson
7d ago
So it seems like it’s more of a targeted war against China specifically? Likely giving other nations time to choose (with us or against us), and slapping the nations who chose to align with China with huge tariffs in 90 days
I think this is giving too much credit. Plenty of people in Trumpworld, even people very close to him, have spent the past days insisting that the tariffs are not a negotiating tactic, they are a necessary measure, and even in some cases that the stock market collapse is a necessary correction. I think they just got spooked that the slide had no signs of stopping and went into reverse gear. It's hard to see that 90 days is sufficient to conclude trade deals with most of the countries in the world (TPP took over 8 years to conclude), it's just a panic button.
HaroldWilson
8d ago
doubt Trump's approval rating will drop below the high 30s for any sustained period of time
Probably true, but even a 55-45 margin in Presidential elections implies a landslide. Bush/Dukakis was 53/46.
HaroldWilson
8d ago
The Deep State will like the Great Depression; the last one is what created them, after all.
Idk about this, but I do wonder the extent to which Democrats will be tempted to let Trump shit the bed for two or even four years given that the ensuing backlash could create the environment for New Deal-era levels of political dominance. If the question arises they can't credibly choose not to step in, but in ways the best case scenario politically is for mostly-Democratic majorities in Congress to try to stop him and then a majority of the Republicans prevents the overriding of his veto, which prevents them from trying to shed the Trump legacy down the line. Indeed, when there was shutdown talk Nate Silver said Democrats should stop trying to be the adult party and just let Republicans take ownership of their own messes.
HaroldWilson
8d ago
I meant to say sucking wealth away from productive enterprises around the world. Suppose Zhang in Chongqing makes an iphone that goes to a product manager who doesn't do any useful work, just sits around in meetings all day.
Ah I see. If this were true though the system would surely have collapsed long ago. In order that an American can buy that phone, the people of Chongqing must be willing to either buy American production (or buy the production of a country which in turn buys the production of America), or invest in America securities, assets etc. But since these are essentially a claim on future American productive capacity, if America didn't have much there would already have been a total crisis of confidence.
In any case the total American BoT deficit is not that large all things considered, about $120 billion - US imports from China are near $500 billion. This would seem to imply that the net size of the American 'fake' economy in relation to foreign countries is $120 billion at the most, because the rest of total imports beyond that figure are directly compensated for by the sale of American production overseas. Given that the size of the US economy is $22.7 trillion, this seems a fairly trivial problem. Again, I'm not necessarily arguing that the total fake economy in the US isn't larger than $120 billion if US productive workers are subsidising the non-productive industries, but this doesn't matter in relation to trade.
When Onlyfans whores delight in their paid-off houses
This seems like a particularly bad example because they clearly create a product which people are willing to pay for. Their job is no more 'fake' than an independent cobbler or carpenter just because the good they sell isn't durable - indeed the cobblers and carpenters are clearly willing to exchange their shoes and tables for subscriptions. The case of product managers, HR is different but an Onlyfans model seems analogous to other makers of frivolities insofar as their existence is a symptom of prosperity as we have enough productive capacity that people are willing to trade it away for non-essentials. But this isn't 'fake' any more than LVMH is a purely 'fake' company. Value has no meaning except what people are prepared to exchange on an open market.
HaroldWilson
8d ago
Ok but the arrangement applies to non-EU foods too. Looking at the UK protected name list (which is largely carried over from the EU regs, which I can't find in such an easily accessible form), there are 771 protected names for American products and regions (almost exactly the same as the number of French protected names by the way) - why would anyone do this if it were pure protection? It's more a question of false advertising. If you call your whisky a bourbon or your sparkling wine a champagne it comes with obvious expectations. After all there is no barrier to the importation of the product, it's just a question of what you sell it as when it's here. Nobody is preventing anyone from selling American sparkling wine.
HaroldWilson
8d ago
came roaring back
Are you serious?
HaroldWilson
8d ago
But it does still provide a non-tariff trade barrier (i.e. is a protectionist policy) against potentially more competitive imports.
Even if domestic producers are subject to the same requirements? It's not as if a wine-producer from Ireland, or even Normandy, could make a sparkling wine and call it champagne.
HaroldWilson
8d ago
geographical indicators to carbon border adjustment mechanism and other regulatory measures
I don't really see how these can be perceived as equivalent or even comparable to tariff barriers. Tariffs explicitly privilege domestic goods, something like CBAM is precisely designed to ensure that on something like carbon emissions imported and domestic production is on exactly the same footing. Trying to explain origin rules or CBAM as neo-mercantilism is wild over-explanation - the former, for instance, really is just environmental policy, since if you want a carbon tax you really do need something like CBAM otherwise your emissions just get exported.
HaroldWilson
8d ago
Historically opposition to free trade has been a corner stone of left wing politics.
This is nonsense. Protection was the High Tory's cause throughout the 19th and early 20th centuries, where Lloyd George and even Keir Hardie were free-traders - Hardie's words:
Free Trade is the free exchange of commodities between different countries. Trades Unionism is the combination of workmen to protect their own interests against the employing class - there is nothing whatever contrary to the principles of Free Trade in Trade Unionism
Even in America the identification of the cause of protection with the left and the Democratic party is a phenomenon only of a few decades of the post-war period. Extending left and right into the 19th century may be slightly anachronistic, but in the second half of that century the groups most closely associated with protection were bankers and factory-owners.
HaroldWilson
8d ago
They're basically sucking wealth away from productive enterprises since they consume wealth but do not produce wealth.
See this doesn't necessarily any problem with trade as such, as this is an internal dynamic - if regulation produces non-productive workers who piggyback off productive workers in 'real' sectors, it's just shuffling around the fruits of production among Americans.
The US runs huge trade deficits to support a high level of prosperity, relying on the social construct of 'the US is the greatest country in the world, with the strongest military and the safest currency' so that people maintain confidence in the US dollar.
If this is the explanation for how the US sustains non-productive work, how come other Western economies have observed a similar turn toward services?
HaroldWilson
8d ago
production is too low
Physical production? I don't see why this is a problem if service production rises to compensate (except for e.g. national security reasons which has nothing to do with whether some service jobs are 'fake' or not). Yes the US runs a BoT deficit but the durables deficit is like an order of magnitude bigger than the overall deficit - that is to say service exports wouldn't have to rise that much to eliminate the deficit, which would certainly be easier than trying only to boost physical goods exports in which the US obviously has far less comparative advantage, especially in mass production.
There are lots of people in the US who are very wealthy and prosperous but shouldn't be
How could this even be true in an inter-country sense? If production is too low, what sustains consumption? Foreign investments in American instruments? But surely these prove that investors are satisfied in the likelihood that future American production, on which they are trading, will be able to make good their investment? Service exports would be the other candidate, but then these, if they are competitive on the open world market, clearly 'deserve' their price.
I don't really understand tbh, and I don't mean that in a rhetorical sense. How do you perceive the supposed 'instability' of the US position unravelling?
HaroldWilson
8d ago
a lot of historical works
Well yes and no, picking the 'Junior' list at random, it includes only two works of historiography (Gibbon and Spengler) and lots of original sources. Nothing wrong with Gibbon or Spengler as things to read, though it's a strange choice as literally works of history for a full year. It's even stranger to read the Federalist papers etc. without accompanying it with a single historiographical work. Obviously it's important to read the documents themselves but doing so without attempting or seeing any kind of interpretative framework is meaningless - it would be much more instructive to read a work or two from each of the major historiographical schools of early American history, and realistically I think the course-setters know this, otherwise they would have set primary sources on Rome too, and it's hard to shake the feeling that setting the Federalist papers is a purely aesthetic decision.
In fact just had a look at the Sophmore list and it does set Livy, Tacitus etc. Points for consistency then but this is just silly. The average student would get a thousand times more out of reading Syme or just the Oxford History of the Roman World than any primary sources.
HaroldWilson
9d ago
If you like, but it's a very important and large difference of degree. VAT is non-discriminatory and applies to all production equally, tariffs apply only to particular sections of production.
HaroldWilson
9d ago
Your link is broken on my end so I can’t see the figures.
Essentially every decile consumes 10% of their income on imports +/-1% (and I'm not reading the table wrong it's just a funny coincidence the figure is 10%, it used to be all deciles spent 6.5% +/-1%).
“Proportion” being key here, because 134,000 households are sitting on 44 trillion dollars in wealth.
Well note it's by income, not by wealth. Post-tax income of the top decile is only about 30% of the total.
This depends on where the tariff proceeds go.
Given Trump's track record on distributional policy the chance of anything close to offsetting the disruption via distribution of revenues is near-zero. If reshoring does occur then there will be an increase in price with no concomitant revenue, and in a basically full employment economy it's difficult to see what benefit this reshoring would even have, you're just shifting workers into lower-productivity sectors (since they have been necessarily outcompeted in a freer market by whatever sector they're working in at the moment).
HaroldWilson
9d ago
There is no difference in kind whether increased costs for the consumer are a result of multiple price-hikes along the way (your critique of tarifs) or one-off taxes along the way (your defense of VAT). There might be a difference in degree
Well there is because tariffs don't apply to everything in the way that VAT does, or at least not in the same way in the case of countries which exempt food etc. from VAT, and are therefore much more distorting.
HaroldWilson
9d ago
I would think the problem here is that luxury goods are substitutable whereas cheap goods are not, not for domestic production anyway. America does produce luxury cars which the rich can buy (though this won't even necessarily increase demand for American products because they will become proportionately less competitive abroad to the foreign rich), but there is no possible way for domestic products to compete on price for cheap consumer goods, so consumers will just have to eat the extra cost.
In any case none of this matters because the base assumption is just false. All deciles spend a very similar proportion of their income on imported goods. This does mean the top deciles will spend more in dollars on imports, but (obviously) the SoL impact will be much greater on the lower deciles which can't afford to take the hit - the distributional impact will be similar to ordinary inflation, except even worse because hourly workers' wages are more responsive to inflation than those of (on average, higher income) salaried workers.
HaroldWilson
9d ago
he's a reformer
Really? Arguably one of the defining aspects of 'reform' in the traditional sense is it's opposition to special and entrenched interests, and a believe in a Chadwickian scientific governance. Free trade is in many ways the paradigmatic reform cause, as it stands against the special protection of a subset of society (manufacturers) in favour of the entire nation of consumers - most of the great reformers were free traders.
By contrast the whole ethic of Trump II seems to be that some of the nation deserves special status and protection (literally), and some of it (the public and service sectors) deserves punishment.
HaroldWilson
9d ago
It does unfortunately seem as if one of the themes of this Presidency will be 'making all the mistakes which the nation learnt to avoid by lessons of experience it has since forgotten'. Given the company he keeps perhaps he'll start asking for a return to the gold standard next.
HaroldWilson
9d ago
I don't think it's really possible for this to be true on a grand scale. After all, if the American GDP is in some way fake how come the median American can buy so much Chinese production with his or her dollars? The ratio of durable goods consumption to GDP in the US is not vastly lower than it was in the 60s, and that small decrease we would expect given that the average person obviously has many more 'consumer' services to spend his money on these days in a way that is obviously real consumption than he did in the 60s.
Well it sort of obviously is a negotiating question. If you want free access to European markets some degree of harmonisation has to occur - whether one party thinks regulation X is pointless isn't really material, the question is are they willing to endanger a trade deal to ditch the bendy bananas regulation. And so the inevitable horse trading.
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