Category: free trade & free markets

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free trade & free markets too much government

Retreat to Atlanta

California, Yamaha, brain drain, business, escape, taxes

“California is the place you oughta be” — or so sang Jerry Scoggins for The Beverly Hillbillies. That may still hold true, if you are an oil millionaire retiring to a pleasant climate.

But if you are trying to make your fortune, the direction is outbound.

Take, for example, the case of Yamaha Motor USA.

The company’s big bike sales — motorcycles 500cc and up — went way down during the last dozen months, 19 percent. And since Yamaha’s operations are in California, hits to revenue like that intersect alarmingly with ongoing hits to the cost of doing business. 

Which explains the decision to move the company to “just outside of Atlanta, Georgia,” as reported by Jensen Beeler in Asphalt & Rubber.

“It should be an obvious statement that California is an expensive place to operate a business,” Beeler explains. “The state isn’t known as being a tax haven for corporations, the property values are high, which means buildings are expensive, and the standard of living for Los Angeles is one of the highest in America, which means that employees have to be paid a premium as well.”

And Beeler’s report does not even mention the state’s regulatory burden.

Problem? Southern California is “where the bulk of the motorcycle industry resides,” and Yamaha will face some difficulty being so distant from its industry’s major talent pool.* But there are a few automotive and motorcycle companies in Georgia, so Yamaha is not alone.

Indeed, if politicians continue to wreak havoc on their business sector, the Golden State bike industry will lose more than just Yamaha.

This is Common Sense. I’m Paul Jacob.

 

* The company will keep “a small cadre of Yamaha employees” behind in Cypress, California, focusing on testing and racing.

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Illustration by JGill (running silhouette from Max Pixel)

 

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free trade & free markets general freedom ideological culture too much government

The Ambit of an Ambition

“The geopolitical situation makes this Europe’s hour: the time for European sovereignty has come,” said European Commission President Jean-Claude Juncker this week, staking a big claim for the future in this year’s State of the Union Address.

Juncker wants the EU to be a shiny new “global player,” but shies from the word that comes immediately to mind: “We have to be super,” Juncker clarifies, “but not a superpower.”

The big question is how Juncker’s ramped-up globalism would serve European citizens. Juncker itches to build a “More United, Stronger and More Democratic Union,” but his biggest problem may be that the people seem increasingly iffy on this whole unity thing. 

Brexit is only the most spectacular popular rebellion.

“The Visegrad nations of Hungary, Poland and the Czech Republic,” the Washington Times noted yesterday, have balked at EU migration policies, and “all face EU legal sanctions.” Meanwhile, “Populist governments have been elected in Italy and Austria, where voters are sick and tired of the constant intrusions into their lives by Brussels.” 

And on Wednesday the EU enacted Article 13, an intrusive copyright law that Net activists have dubbed a “meme killer” capable of destroying “the Internet as we know it.”

While Juncker talks about Europe taking “destiny into its own hands,” Europeans seem more interested in taking their government into their own hands.

After all, it is not as if Europeans cannot prosper in a world economy without confederation — much less something much more, a stronger central bureaucratic authority. 

European states could, for instance, adopt free trade. It would make them richer and the world safer.

And they could, in addition, junk Juncker.

This is Common Sense. I’m Paul Jacob. 

 

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Common Sense free trade & free markets general freedom ideological culture meme porkbarrel politics too much government

Wisdom for Labor Day

Jefferson, quote, good government, labor day, “A wise and frugal Government, which shall restrain men from injuring oneanother, shall leave them otherwise free to regulate their own pursuits ofindustry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government. . ."

“…a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government…”

–Thomas Jefferson, 1801

 

Full quote is here

 

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Common Sense free trade & free markets government transparency insider corruption local leaders media and media people national politics & policies too much government

Never Trust a Politician

salt, lies, politicians, politics, Donald Trump, truth, economy, trade

One of my more persistent critics on this site asked, last week, why I might believe anything the current president says — considering all the lies.

For reasons of decorum I won’t repeat his exact wording.

The odd thing about the comment was not the vulgarity, though (unfortunately). It was the idea that I was relying upon belief in Donald Trump’s veracity. The whole point of my commentary regarding Trump’s handling of trade and foreign policy was to read between some lines.

I try never to believe anything . . . er, everything . . . any politician says.

In Donald Trump’s case, though, there are lies and there are fictions and there are exaggerations. And corkers . . . and “negotiating gambits.” Separating the wheat from the chaff from the grindstone is not always easy.

Based not only on some of what he says, but also on results-thus-far from the EU negotiations, Trump’s idea of “fair trade” appears to be multilateral free trade. But he has chosen a bizarre method to get there: the threat of high-tariff protectionism — which in the past has led to multilateral protectionism, not free trade.

Trump sees everything as a contest. Trade isn’t a contest as such. It’s win-win. But trade negotiations are contests. And Trump’s game of chicken is dangerous.

Regarding foreign policy generally, though, he seems to be playing a more familiar game: we can outspend everybody. The recent increase in Pentagon spending is bigger than Russia’s annual military budget!

So, who pays? Americans in

  1. higher taxes and 
  2. the consequences of massive debt, as well as in
  3. the higher prices from his tariffs.

That’s awfully daring of him. For us.

This is Common Sense. I’m Paul Jacob.

 

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Photo from Max Pixel

 

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free trade & free markets government transparency media and media people national politics & policies too much government

Most Outrageous Negotiation Strategy Yet

Trump cards, Donald Trump, The Madman Theory, strategy, negotiation, deal, trade, tariffs, trade war

The best defense of Donald Trump’s presidency, so far? He is smarter than the rest of us, and knows how to negotiate with bad guys and insider players. We have to discount what he is saying, the theory goes, because he is not telling truths . . . obviously. 

He is negotiating.

Take nothing at face value, including Trump’s professed beliefs.

Protectionism, for example. Trump has long been against NAFTA and the modern version of “free trade.”* But, as I noted in late July, Trump does not seem to be demanding managed trade, or high tariffs as a means to protect American producers, or even tariffs as a means to increase government revenue. He appears — at least some of the time — to be using tariffs as a way to bargain other countries to reduce their tariffs.

This method has not worked in the past.

But is Trump different enough a politician to pull off a “madman” strategy to get leaders in other countries to do the right thing and reduce their tariff and regulatory burdens on their own countries?

A long shot — and several sectors of American business are being hurt right now in this “negotiating” (threat) phase of Trump’s outrageous gambit.

Another area where one might express such hope for a master-negotiator president is in reining back the Pentagon. In the run-up to November 2016, Trump sure seemed defiant of the neo-conservative/neo-“liberal”/center-left establishment on foreign policy.

But now he just signed a huge increase in the Pentagon budget: an $82 billion increase.

Is Trump’s plan to bring big-spending military-industrial complex lobbyists to heal by first giving them what they want?

That. Won’t. Work. 

This is Common Sense. I’m Paul Jacob.

 

* Post-WWII trade policy has consistently defended treaty-based global trade, but with heavy elements of protective tariffs, regulations and subsidies, making the whole thing look less like Free Trade and more like Mis-Managed Trade.

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Accountability free trade & free markets general freedom responsibility too much government

No Other Options?

Washington D.C., metro, repairs, closed, government, waste, efficiency, accountability

Long I have criticized the Washington, DC, Metro — the transit authority in our nation’s imperial capital — most recently in March. But I am foursquare in support of the government body’s recent hazard warning: “Only take Metro if you have no other option.”

Good general principle.

But what’s the particular occasion? There will be “Major 24/7 Construction Activity” for 15 days in mid-August. The service is advising usage of buses and even freely-provided shuttle services to compensate for commuters stuck in the repairs.

Christian Britschgi, writing at Reason, actually dared ride one embattled line. He found what you might expect: a long history of lazy, perverse incompetence at Metro, bordering on corruption. When concrete started falling from the ceiling at one station in 2016, “an internal investigation . . . uncovered Metro safety inspectors at the station had taken to just cutting and pasting positive evaluations from prior year reports instead of actually checking for damage in some hard-to-reach areas of the station,” Britschgi explains

This is the kind of thing you expect to find in government. Why? Because we don’t allow government projects to go under, even after repeated and massive failures. Ignominy.

Should we be shocked, though? No. Spectacular non-success is close enough for government work. Markets work better because of important communication via profit and loss. Without that stick of loss, governments just take our taxes as their carrot. 

Not a whole lot rides on actually serving riders.

This is Common Sense. I’m Paul Jacob.

 

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Accountability free trade & free markets general freedom ideological culture media and media people national politics & policies

Driven to Sanity

Washington Post, economics, economy, control, government, limited

Having the federal government centrally plan the economy is “a huge waste of everyone’s time and resources” states an amazingly common-sensical Washington Post editorial.

“In a well-functioning modern economy, businesses are generally free to buy and sell the things they need, absent a compelling public need for government intervention,” the editors further expound.

Hmmm, a capitol-town rag that regularly extols the virtues of big government regulation of everything now notices the importance of freedom.

Of avoiding, especially, a system where bureaucrats and other government bullies micromanage commerce.

“Were we directed from Washington when to sow and when to reap,” Thomas Jefferson wrote long ago, “we should all want for bread.”

And aluminum.

“Worse,” the Post argues, the system “also politicizes — and, indeed, corrupts — economic life. Companies that feel threatened by any particular tariff exclusion request have the right to present their objections to the Commerce Department, meaning that each decision represents a high-stakes competition for federal favor between at least two companies with every incentive to influence it through lobbying, campaign contributions, you name it.”

Correct. It seems we may have Donald Trump to thank for opening the Post’s eyes. 

“[T]he way to get ahead in Mr. Trump’s economy,” those editors conclude, “is not making better products for the people, but making better connections in Washington.”

Tragically true.

But, sadly, true long before Mr. Trump entered the White House. No new powers have been given to Trump. 

Let’s drain the stinking Washington swamp. Let’s end the corrupting influence of a regulatory state run amok. Let’s limit the power of the people wielding political power.

How?

Free the markets!

This is Common Sense. I’m Paul Jacob.

 

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Accountability free trade & free markets general freedom national politics & policies property rights responsibility too much government U.S. Constitution

The Trump Trade Enigma

Trump, worship, trade, trade war, tariff, free trade, trade deficit

President Donald J. Trump, former “reality TV” star, often seems merely to skirt reality.

“Our trade deficit ballooned to $817 billion,” President Trump exaggerated to the “men and women of U.S. Steel” last week. 

“Think of that. We lost $817 billion a year over the last number of years in trade,” he went on. 

“In other words, if we didn’t trade, we’d save a hell of a lot of money.”

This is the sort of dopey bunk a drunk at a bar might say, after the fourth shot had obliterated any remnant of economic understanding from his synapses.

But the president said this in Granite City, Illinois, in front of cameras, a live mic, and a cheering crowd.

And yet, as I wrote yesterday at Townhall, Donald Trump is now explicitly aiming at a worldwide free trade policy, negotiating to break down trade barriers and get rid of subsidies on . . . well, “non-automobile industrial goods.”

I’m almost afraid to ask him why not all industrial (and, for that matter, agricultural) products. Could one expect a coherent answer from someone who does not understand that an $817 billion “trade deficit” means that we, the consumers of the United States of America, got stuff from each billion spent? Each dollar?

And yet, if he pulls off worldwide free trade agreements — for whatever reason — he may almost be worth the attention that Bussa Krishna, of the southern state of Telangana, India, gives him.

The man set up a shrine to worship Donald Trump.

I will never do the same. But I’d tip my hat to almost anyone who fosters trade, and the peace and progress trade brings to the world.

This is Common Sense. I’m Paul Jacob.

 

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free trade & free markets national politics & policies responsibility too much government

Trump’s Biggest Secret?

golden crutches, farm subsidies, tariff, trade, free, Trump, EU

“This trade war is cutting the legs out from under farmers,” says Senator Ben Sasse (R-Neb.), “and White House’s ‘plan’ is to spend $12 billion on gold crutches.”

Referring to Donald Trump’s tariff brinksmanship with China, Sasse is decrying Trump’s request to Congress for compensatory farm subsidies. Sasse insists that “America’s farmers don’t want to be paid to lose” — but regardless of what farmers want, we should want free trade.

Tariffs are taxes. Consumers ultimately pay for them all.

Trump’s requested “crutches” is just another example of a bad government program leading to another, “compensatory” bad government program.

Old story. Too familiar.

The senator is right to be alarmed by the Trump “administration’s tariffs and bailouts,” for the president is playing a most dangerous game. Trade wars are not mutually beneficial. Trade is.  

Of course, if the ultimate result is an end to all trade barriers — as Trump himself demanded regarding the EU — then . . . could it be worth it?

One thing’s for certain: the history of protectionist brinksmanship is not pretty. Sasse himself predicts that Trump’s tariff hikes “aren’t going to make America great again, they’re just going to make it 1929 again.”

Sasse is referring to the passing of the Smoot-Hawley Tariff Act of 1929, which led not only to a spooked Wall Street, but to bank failures and retaliatory protectionism from other countries. 

And a worldwide depression. And world war.

But is Trump really a secret free trader,* using tariffs in a game of chicken with trading partners?

This just in, from The Guardian: “Trump and EU officials agree to work toward ‘zero tariff’ deal.”

Stay tuned.

This is Common Sense. I’m Paul Jacob.

 

* We could be forgiven for thinking him an old-fashioned protectionist, considering his repeated insistence that “Tariffs are the greatest!” But with Trump, maybe we should never take him literally.

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Photo by Carlos Martinez

 

Categories
Accountability folly free trade & free markets general freedom moral hazard property rights responsibility too much government

Poison Is Poisonous

poison, inflation, Venezuela, socialism, free markets, capitalism

Venezuela’s socialist economy has been collapsing.

No big mystery. If, out of hostility to capitalism, a society keeps destroying everything that production, trade, and prosperity depend upon, the economy suffers. The benefits of markets don’t flow no matter what.

One assault has taken the form of hyperinflation — runaway printing of currency, done in part to dissolve government debt. Many Venezuelans are resorting to barter. It’s easy to understand why.

Or is it? A Reuters reporter says that economists say that “the central bank [of Venezuela] has not printed bills fast enough to keep up with inflation, which . . . reached an annual rate of almost 25,000 percent in May.”

So go faster!?

Dude. Dude. The massive expansion of Venezuela’s money supply is what’s causing massive jumps in prices. Just like any other economic good, the medium of exchange is subject to the laws of supply and demand.

Other things being equal, enormously increasing a supply of a good will enormously lower its market value or price. Money, too, has a price — in terms of the non-monetary goods being bought. If the pre-hyperinflation price of a dollar in terms of bread is one loaf and the post-hyperinflation price is one bread crumb, you won’t reverse the decline by printing even more dollars or bolívars even faster.

If you’re ingesting poison, you can’t fight the effects by being poisoned more and harder. The very first thing to do is stop ingesting the poison.

This is Common Sense. I’m Paul Jacob.

 

 

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