San Juan Mountains

San Juan Mountains
San Juan Mountains: Grenadier Range

Wednesday, June 29, 2016

Trump Is An Economic Idiot

When it comes to his understanding of economics, Donald Trump is as much of a socialist as Bernie Sanders.  That makes both of them fitting citizens for the Socialist Democracy of Amerika as well as making them equally idiotic men who desperately desire to rule over us.  How can I write that first sentence?  It is easy (the second sentence was a bit harder but I managed to do it).  Donald Trump believes that trade between two entities is essentially competitive in nature and that all exchanges have a winner and a loser.  That fundamental view of what it means to trade with one another is one hundred percent socialist.  The truth is the exact opposite of what Trump believes.  But don't take my word for it.  Here is what Donald had to say just yesterday about foreign trade:
"Republican Donald Trump took aim at U.S. free trade deals in a speech delivered in Western Pennsylvania Tuesday that painted his likely Democratic rival Hillary Clinton as a champion of the kind of globalization that has pushed manufacturing jobs overseas.  'This wave of globalization has wiped out totally, totally our middle class,' said Trump, standing in front of stacks of compressed metal on the floor of Alumisource, a plant that provides aluminum scrap and other raw materials to the aluminum and steel industries. 'It doesn't have to be this way. We can turn it around and we can turn it around fast.'  The speech, delivered in the heart of America's struggling rust belt, stressed a central premise of his campaign: that global free trade — a Republican Party staple for decades — has hurt American workers because deals have been negotiated poorly. Trump has vowed to bring back manufacturing jobs, in part, by slapping tariffs on goods produced by companies that move manufacturing jobs offshore....He said the North American Free Trade Agreement, which was signed by Bill Clinton, was a 'disaster' and pointed to the Clintons support for normalizing trade relations with China."  (CNBC.com  June 28, 2016)
Allow me to critique Trump's position on trade in general and foreign trade in particular.  The article begins by mentioning "free trade deals" that exist between various nations.  There is no such thing as a "free trade deal" anywhere in the world today.  Any deal crafted by politicians and bureaucrats is, by definition, the opposite of free.  All of the alleged free trade treaties that have been signed in recent years are little more than enormously complicated descriptions of how each country will protect its domestic industries by enforcing tariffs on goods produced in other countries.  Sure, they might agree to reduce their tariffs in exchange for other concessions but there is nothing free about what takes place.  A truly free transaction exists when two or more parties get together and agree to exchange what one has for what the other has in an environment that is completely free from coercion.  In other words, governments do not intervene in any way, shape or fashion when people and corporations agree to trade with each other.  Free trade never has a winner or a loser.  In truly free exchanges both parties go away happy with the end result.  If both parties had not come to the point where they were glad to make the exchange the exchange never would have been made.  Of course, free trade only exists in small communities around the world where people generally barter with each other and stay below the radar of government regulators.  The rest of us are stuck with politically negotiated "free trade" deals.
Trump sees everything through the eyes of winning and losing.  He cannot conceive how two people can exchange things between themselves and both of them go away winners.  He therefore believes that he needs to renegotiate all of the free trade deals that currently exist in the SDA so that the SDA can come out the winner. What is his evidence that the SDA is losing out in those deals?  According to Trump the proof that the SDA is a loser when it comes to free trade is the fact that many domestic corporations have outsourced some of their production to foreign lands.  Trump believes that to be an abomination and promises to bring the full force of law down upon any company domiciled in the SDA that seeks to send some of its productive activities overseas.
Donald does not understand that companies move their production to foreign countries because it is more profitable for them to do so.  Or, perhaps more accurately, Trump does not understand that profitability is the only means by which a company can determine if it is serving the consumers.  Trump, like all socialists, despises profit.  That is a wildly ironic and hypocritical stance for a self proclaimed billionaire to take but he takes it anyway.  In the real world profits are only realized when consumers purchase the goods and services produced by profit seeking companies.  If people do not purchase those goods profits are not realized and the companies go out of business.  Conversely, the more profitable the company is the more it is serving the consumers.  If a company can increase its profitability by moving some or all of its productive activities to a country with lower costs it is morally required to do so.  Refusing to maximize profit is an evil and consumer hating position for businesses to take and those who do take it are punished by economic death, in other words, they go bankrupt.
Trump believes that "normalizing" trade relations with China, whatever that means, is a bad idea.  I am not aware of the particular contents to be found in the, no doubt, encyclopedia sized trade agreement that exists between the SDA and China.  Whatever those terms are, like all government created trade agreements, they exist to protect domestic jobs and thus allow the politicians who created them to be continually reelected.  When a politician decides to allow one segment of the SDA economy to be sacrificed to the more efficient competitors in a foreign country you can be sure that decision was made only after it was determined that doing so would not affect his chances at reelection.  Trump, according to his speech, wants to change all that and protect all domestic industries.  I do not know how he is going to determine just how many, and how large, all SDA domestic industries are or should be.  I do not know how he is going to calculate how much they should be allowed to grow or how profitable they should be.  I do not know how he is going to enact and enforce just the right amount of tariff charge on hundreds of thousands of individual goods and services that are involved in the production of finished goods around the world.  I suspect he does not know how he is going to do any of those things either.  But the mere fact that he believes that he can do those things proves he is a raving socialist, just like Bernie.
Trump stupidly refuses to recognize the economic truth that producers compete against producers for the benefit of the consumers.  When one company undercuts another company and sells a similar quality good for a lower price the consumers will flock to that company and leave the old company behind.  Make no mistake, consumer loyalty is a fiction.  The one thing consumers are loyal to is their own money and when the day comes that Apple (is it already here?) no longer can compete against other companies producing similar goods it will go the way of the economic albatross and become extinct. Who benefits from this process?  Billions of consumers benefit from this process.  We are all better off when trade is free and jobs are located in those locales where the workers can produce most efficiently.  Trump wants to change that.  He wants to protect bloated and inefficient domestic companies that should have gone out of business long ago by enforcing tariffs against their more efficient competitors.
Strangely, from an economic perspective, Trump only calls for tariffs when the competition is found in foreign countries populated with stinkin' foreigners who probably deserve to die by means of an SDA military bombing campaign but who have been allowed to exist because they served the purposes of the Empire in some fashion.  If Trump wanted to be logically consistent on his socialist position about protecting inefficient companies, he should enforce tariffs on California strawberries so growers in Minnesota do not go out of business.  He should enact huge tariffs on Florida oranges so orange growers in Maine can compete on a level playing field.  If the playing field is not level enough he should use taxpayer funds to create indoor orange groves in Maine.  Kansas wheat should be slapped with a huge tariff so that wheat producers in Mississippi can stay in business.  Chile pepper growers in New Mexico should pay monstrous tariffs to ensure the continuation of the once thriving New Hampshire chile business.  But why stop there?  Trump needs to create barriers to entry to all highly efficient competitors in order to protect another, less efficient group.  Tariffs on all cars imported from Japan would be a good place to start.  Pretty soon we can get back to the good old days when international trade did not exist and the entire world was mired in the Great Depression.
Donald has made it very clear that he has no desire to expand the Amerikan empire by means of worldwide warfare.  That has angered the neo-cons in the Republican party to the point that, if he is elected next King of the SDA, I believe he will be quickly assassinated by them.  He should be applauded for his opposition to empire but his position on foreign trade is ridiculous, contradictory and highly damaging if actually enacted.  Donald wants to wage economic warfare on every country in the world and he will not be content until the SDA has "won" all of those wars. That makes Donald Trump an idiot in my mind.

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