Protectionism and Protectionism

Yukon Huang and David Stack, in their National Interest piece, worry about a trade war with the People’s Republic of China—it would be borne of American protectionism, don’t you know.

The United States can learn an important lesson from China’s past experience: the key to strengthening competitiveness lies not in protectionist measures but by increasing the productivity of a nation’s workforce through supportive infrastructure investments.

Plainly, they have no understanding of protectionism, of which damaging tariffs are only one aspect, and none of the type or protectionism practiced by the People’s Republic of China.

The PRC’s protectionism begins with its demand that foreign companies seeking to do business inside the PRC take on a domestic partner that will have a significant, if not majority, ownership of the joint enterprise as it operates inside the PRC.  The PRC’s protectionism continues with the government’s demand that, as part of that joint ownership, the foreign company transfer much of its proprietary technology to that partner—as a condition of forming the partnership.  The PRC’s protectionism goes further: the PRC government demands a backdoor into the foreign company’s software so that the government can “monitor” the foreign company for “compliance.”

Rather than focusing on trade frictions, America’s interests should be on strengthening investment relations by concluding a bilateral investment treaty (BIT). The United States can learn an important lesson from China’s past experience: the key to strengthening competitiveness lies not in protectionist measures but by increasing the productivity of a nation’s workforce through supportive infrastructure investments.

Perhaps a BIT could be useful, however, the bit about increasing productivity is a complete non sequitur.  Increasing our labor force’s productivity would be a general good in its own right; that has nothing to do with optimal trade relations.

Beyond that, the only way a BIT—or any multilateral trade agreement involving the PRC—would be beneficial to us (or to the PRC’s citizenry, come to that) would be if, just as a start, those PRC protectionisms were corrected.

Filibusters

Since the Progressive-Democrats in the Senate are dead set on shutting down the Federal government (I won’t argue the utility of the government being shut down or by how much it actually would be) for the sake of their own petty political egos, it’s time to get rid of the filibuster on all matters relating to the budget, spending, and revenues.

It’s time to put an end to the obstructionism of these Precious Ones.

Full stop.

French Election

With the preliminary selection of Emmanuel Macron and Marine Le Pen as the France’s Presidential candidates for the money round, the election of 7 May, it would appear that the popular revolt against establishment politicians, if not practices, is continuing apace.

Neither of France’s mainstream, established parties—the Socialist Party, the party of outgoing (because with his popularity in the ditch, he chose not to stand for reelection) François Hollande, and Les Républicains (whose last elected President of France was Nicolas Sarkozy)—were able to pass a candidate into that second round, a first in the 5th Republic’s history.  (This is not a pure result, though; the Républicains may have lost because voters rejected its candidate due to his personal scandals as much, or more, than they rejected the party’s establishment policies.)

Le Pen is the head of the National Front, a far right party that originally espoused virulently anti-Judaism (and may still; Le Pen’s public words are often at odds with the party’s founder, her father, but not always), is virulently anti-Islam and anti-immigration, and she wants to take France out of the eurozone and reestablish the franc.  She’s also committed to holding a plebiscite on membership in the European Union.

Macron may be a centrist, but both it’s too early to tell—his party, En Marche! (On the March!), was newly created to support his candidacy.  Macron resigned from the Socialist Party and from Hollande’s administration, where among other posts he was Minister of Economy, Industry, and Digital Affairs, in order to run for the Presidency in his own right.  He’s a staunch supporter of the EU and of the euro, and so he might look centrist, and he might look establishment.

However, Macron also wants to revise France’s labor laws to give more flexibility to business’ ability hire and fire (at the expense of the unions), to lengthen the work week, to raise the retirement age, and reduce both government employment and taxes among other non- if not anti-establishment positions.

In fine, French voters have said Non! to the establishment of any stripe, and now will choose between two candidates who are outside the mainstream, much less the establishment.

My prediction: Macron will be elected in a solid, if not landslide, final round.  Le Pen and her National Front are too extremist and functionally too isolationist—not just from the international stage, but from anything not pure French—to suit most of France to get more than the roughly 22% of her first-round vote.  Her ceiling, the National Front’s ceiling, seems to be in the range of 25%, but the electorate’s disgruntlement along with the terrorist attack just before this first round might give her a boost.

François Fillon, of Les Républicains and Sarkozy’s Prime Minister, got around 20% of this first round vote, and he has urged his supporters to vote for Macron, if only to block Le Pen; Benoît Hamon, the Socialist Party candidate, recommended the same for his voters, some 6% of the first round vote.  If Républicain and Socialist voters do that, it would seem to give Macron 50% of the votes right there.

Thus, France will stay in the EU and stick with the euro.  There may or may not be hard fighting in the French Parliament over Macron’s economic reform policies, depending both on how well those politicians—primarily denizens of the establishment—have read their constituents’ disgruntlement with the way things are and on how sincere Macron is with his policy claims.

One last bit: with Le Pen wanting France out of the euro and the EU and Macron wanting France in both, the final round election will closely approximate Le Pen’s promised plebiscite, too.

Budget Cuts

Because it isn’t possible to get the same bang for fewer bucks by using the smaller amount more efficiently.  No, just keep throwing money at the thing; if a single dollar sticks, it’s sufficient.

That’s the apparent position of folks on the left like Bill Nye, the guy with a Master’s degree in Engineering who represents himself as “The Science Guy.”

Nye, who served as an honorary co-chair for the March for Science, chided lawmakers who ignore scientific research in areas like climate change and railed against the Trump administration’s proposed budget cuts.

I’ll leave the irony of a climatista chiding others for ignoring scientific research to others.  The question here is the budget cut proposals that so confound the engineer.

It’s possible, and it’s necessary, to spend our tax dollars much more efficiently, but this is a fact as lost on pseudo-scientists as it is on most any Progressive-Democrat.

The Congressman Misunderstands

What he misunderstands, though is a very expensive thing to misunderstand: basic economics.  Congressman Joe Crowley (D, NY), Vice Chairman of the House Democratic Caucus and member of the House Ways and Means Committee said in an interview with PJMedia‘s Nicholas Ballasy that he’s willing to “experiment” with a VAT in the US, “what effect that will have.”  And

PJM: … A traditional VAT tax that works in other countries or that other countries have, at least, do you think that could work in the United States?
CROWLEY: Well, it’s been something that we haven’t necessarily gone to in terms of—sales tax, for instance, is typically a states’ issue, you know, states have used that nominally in terms of tax purposes in terms of the impact. A VAT would be usurping that, taking for the federal government as opposed to state, and I think we’re open to talking about that and seeing what effect that will have because I do think that bringing our overall [corporate tax] rate down does make us more competitive, a more attractive place.  …   So I don’t think we have to go to 12% or to 20% per se; getting that right down is what we’re attempting to do and doing it in a way which is the least invasive or hurtful to the average working man in this country.

First, there’s a hint there: that “States’ issue” bit.  Other countries that use a VAT (which taxes an item sold at every stage of its production—at every stage at which value—as defined by the taxing government—is added to the product in production—so that by the time the end user buys the item is paying mostly tax value and not product value) are not federal republics like the US is, where the States in the federation are on an equal plain, at least nominally, with the central government in most national domestic areas, like taxing.

Second, it does no good to an economy to lower tax rates in just one area while other tax rates are increased in other areas (vis., the imposition of a VAT) to make up for it.  Total, overall taxes must be lowered, all tax rates must be reduced.  It’s the increased retention of money in the hands of citizens who work and who own businesses—shareholders—that spur economies, not the transfer of that revenue to government for spending.

Third, it’s not at all least evasive or unhurtful to force the average working man to pay a VAT-inflated price for everything he wants to buy or must buy.

Then this tidbit:

PJM: We’ll see. It’s going to be a quite a debate.
CROWLEY: It will be. There is a reason why neither healthcare nor tax reform was suggested by Democrats after the election as things we could work on right away—it was infrastructure. We did that for a reason—for some reason, that seems to have been lost on everyone.

Yewbetcha.  The Progressive-Democratic Party standard plan: get spending locked in first, then see about taxing to pay for it.