Tag Archives: markets

A Thought on Tariffs

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The tariffs as used by President Donald Trump are viewed by many as having no impact on our overall trade deficit, and much is made of Trump’s disdain for trade deficits.

Thirty months into the Trump Presidency, the US economy continues to import more than it exports. This isn’t a problem, since the trade deficit is of no great consequence as an economic measure.  But in President Trump’s telling this is a clear and present danger….

Suppose something else, though.

Mr Trump has imposed 25% tariffs on $200 billion of Chinese goods, and he’s threatened a duty on another $300 billion. This has narrowed the US-China bilateral goods trade gap in recent months, but the total US trade deficit reached a record high in 2018. … Producers are leaving China, but not for America.
While Chinese goods exports to the US fell 12.3% year-over-year from January through May, Vietnam saw a 36.4% increase, according to US Census data. Taiwan had a nearly 22.5% year-over-year increase in the same five months, more than triple the increase from 2017-18. South Korean exports to the US increased 12.4% over the period.

Recall one of Trump’s other reasons for disdaining the trade deficit: the People’s Republic of China declines to play by international trade rules, and it steals or extorts other nations’ (ours in particular as one of the, if not the, leader in) technology and intellectual property, along with merely proprietary materials.

If the PRC doesn’t want to play by the same rules as the rest of us, it doesn’t need to trade with the rest of us.

Thus: if the tariffs aren’t realizing their first secondary purpose, moving production back to the US, they are gaining their primary purpose: moving production, and associated export, out of the PRC.

That’s not all bad.

Starbucks Fail

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A Starbucks in Tempe, AZ, had one of its baristas ask five police officers who were having a pre-shift coffee either go sit somewhere else or leave altogether because one customer felt “threatened” over their being where the customer could see them.

In the hoo-raw ensuing, Starbucks spokesman Reggie Borges said

We have a deep respect for the Tempe Police and their service to the community.

That’s plainly not true. If Starbucks really cared, if it had any actual respect for the police—much less a shred of self-respect—it would have had a better-trained crew of baristas who wouldn’t knee-jerk insult cops over a snowflake’s made-up beef.

A day after the story broke, Rossann Williams, Executive Vice President and President, US Retail for Starbucks said this:

On behalf of Starbucks, I want to sincerely apologize to you all for the experience that six of your officers had in our store on July 4. When those officers entered the store and a customer raised a concern over their presence, they should have been welcomed and treated with dignity and the utmost respect by our partners (employees). Instead they were made to feel unwelcome and disrespected, which is completely unacceptable.

These are empty words, whether sincerely offered or just marketing damage control. What’s necessary is actual, visible changed behavior over a sustained period of time.

It’s also sad that no one else spoke up and told this barista to seat the cops with him.

Aside from the simple courtesy of such a gesture, it might also be the case that other patrons wouldn’t feel safe without the cops around. Especially with someone possessed of so little respect for law and order so close by.

Is Renault a Useful Business Partner?

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When Fiat-Chrysler offered a merger deal with Renault, Renault’s subordinated partner, Nissan, expressed reluctance unless its subordination to Renault could be revised upward at least somewhat so that it could have a greater voice in the resultant combined company.

Note, though, that the French government is a major shareholder of Renault, and the government has a virtually controlling number of seats on the Renault board: Nissan was—and is, given subsequent events—subordinate to the French government as much as it is to its nominal business…senior partner.

The French government interfered with the offer, and it dithered and stalled, and finally Fiat-Chrysler lost patience and withdrew its offer.

Any possibility of the offer being revived (Nissan’s reluctance was not a block) has been dashed, though, by the French government’s effective refusal to discuss Nissan’s future role.

President Emmanuel Macron urged the French car maker to focus on generating cost savings with its partner Nissan Motor Co, rather than reshaping their 20-year alliance.

As he arrived in Japan for the G-20 discussions—conveniently local to Nissan—Macron flat refused to discuss the matter.

Mr Macron told reporters in Tokyo, where he is on an official state visit ahead of the G-20 summit, that discussing the shareholdings was “off topic.”
“We need to focus less on politics, less on finance, and more on industry,” he said.

That’s the flimsiest of excuses.  Its implication that Macron is unable to do two things in the same time frame is an insult to our intelligence.

Is Renault a useful business partner?  It may well be from a business perspective.  The heads of Fiat-Chrysler certainly thought it could be, and the heads of Nissan plainly were willing to consider the matter seriously.

However, from a political perspective, as long as the French government is involved with Renault in any way other than as a customer, Renault has no possibility of being anyone’s useful business partner.  The government-run company just isn’t worth the trouble.

Only Part of the Story

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New Hampshire publishes on a State Web site the prices charged by hospitals in the State, and President Donald Trump is working up an Executive Order that would, with some differences in breadth (including information on the prices negotiated with insurers), make the practice a nationwide one.

Price transparency is a Critical Item in controlling—bringing down—the cost of health care, but it’s only part of the story.  A measure of cost transparency would be useful, too, not only for the consumer, but for governments as they look for (non-subsidy, non-tax) ways to further price competition.

Most costs are legitimately proprietary, especially in the competitive market environment that’s optimal for constraining prices.  One cost, though, would be useful: how much of the price charged through insurance to a consumer goes to covering the cost to the hospital of treating an uninsured consumer—both the voluntarily cash-paying consumer and the consumer who can’t otherwise afford the prices charged.  Within that cost, too, are useful data on how it is split between the hospital and the insurer(s) with which it has contracted.

Tax and Spent Progressive-Democrats

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In spades.  They’re in a race to bankrupt us.  Or, as The Wall Street Journal put it,

The Democratic presidential primary is turning into a bidding war.

Senator and Progressive-Democratic Party Presidential candidate Elizabeth Warren (D, MA) has broken out of the starting gate with an offer of forgiveness of $640 billion in student debt for our votes.

Senator and Progressive-Democratic Party Presidential candidate Bernie Sanders (I, VT), though, has caught her at the first turn: he’s offering $1.6 trillion (yes, that’s with a ‘t’) in canceled student debt plus tuition-free “public” colleges.

And both, and their fellow horse racers, are offering tens of trillions more dollars on their Green New Deal variants, health care for all variants, government jobs guarantee variants, social security for all variants, and on and on.

Free stuff for all, and all they want is our votes.  And the destruction of our economy and our wallets.