Protectionist Trump on Steroids Just Threatened General Motors

[Juliet]

http://www.economicpolicyjournal.com/20 ... mment-form

This is simply over the top central planning and demonstrates once again that Trump has no understanding of the basic economic principle of comparative advantage.
.

This is a quite alarming indication of what is going to happen to free trade under Trump---it is going to collapse.

I am forced to add this is Neandrethal.

I believe in comparative advantage only when each country has comparative wages. Otherwise we all sink to the lowest economic health. It.is better for healthy countries to stay healthy and let developing countries rise until they can compete fairly, meaning, without abusing employees in order to specialize in something

It's nice that you believe that, but it is soundly untrue. The Law of Comparative advantage proves that even a country that is better at everything can benefit by trading with countries that are worse at everything. The last thing developing nations need is trade to shut down due to ignorant and self-righteous first worlders. You are not helping them by doing this. Perhaps you missed this doozy:
viewtopic.php?t=42999" onclick="window.open(this.href);return false;

May I ask, do you think the people of Mississippi can be made better off by erecting trade barriers between it and the other states? The logic of your argument says yes.

The last 8 years we have allowed free trade and people in America are very poor. Those who can't afford the high rent become homeless and then they disappear quietly off the face of the earth. It is not reported how many people go missing, especially the homeless. At this point we have to do something to keep Americans in the work force.

I agree the poor countries may have corrupt leaders, and that is the corporeal political corruption that has caused this. Poor countries are in debt to western corporations and have to give away their life's harvests. Meanwhile they starve.
A good book about this is Confessions of an Economic Hit man. The corruption is waist high and what really will solve things is to end corruption.

[larsenb]

More freedom works. Really doesn't matter what others do. Think about what you are suggesting, because others are unfree, we must make ourselves unfree, until we are all free.

Truth is always fighting an uphill battle.

You only look at the seen, but fail to see the unseen. See: Broken window fallacy.

No problem being called a "purist". Somebody's got to stand for liberty and teach its principles. Hopefully with correct principles, we can govern ourselves. Mises motto was: Tu ne cede malis, sed contra audentior ito: Do not give in to evil but proceed ever more boldly against it.

Go Mises, et al. I agree with upholding correct principles. They will probably be fully implemented in the Millenium.

I've just seen too much hardship and poverty the way things are going now. You might say Von Mises, et al., are suffering from the blind idealist fallacy. I.e., they are blinded to practical solutions because of an iron-clad adherence to their idealism. And they seem to side-step and maybe ignore almost intractable and very real conditions that militate against their solutions.

[Separatist]

http://www.economicpolicyjournal.com/20 ... mment-form

I believe in comparative advantage only when each country has comparative wages. Otherwise we all sink to the lowest economic health. It.is better for healthy countries to stay healthy and let developing countries rise until they can compete fairly, meaning, without abusing employees in order to specialize in something

It's nice that you believe that, but it is soundly untrue. The Law of Comparative advantage proves that even a country that is better at everything can benefit by trading with countries that are worse at everything. The last thing developing nations need is trade to shut down due to ignorant and self-righteous first worlders. You are not helping them by doing this. Perhaps you missed this doozy:
viewtopic.php?t=42999" onclick="window.open(this.href);return false;

May I ask, do you think the people of Mississippi can be made better off by erecting trade barriers between it and the other states? The logic of your argument says yes.

The last 8 years we have allowed free trade and people in America are very poor. Those who can't afford the high rent become homeless and then they disappear quietly off the face of the earth. It is not reported how many people go missing, especially the homeless. At this point we have to do something to keep Americans in the work force.

I agree the poor countries may have corrupt leaders, and that is the corporeal political corruption that has caused this. Poor countries are in debt to western corporations and have to give away their life's harvests. Meanwhile they starve.
A good book about this is Confessions of an Economic Hit man. The corruption is waist high and what really will solve things is to end corruption.

I agree RE corruption. No doubt. However, we aren't poorer because of free trade. (And besides, we really don't have free trade, but rather managed trade). And the idea of being poorer is also debatable. People work less hours in order to purchase the same bundle of goods than they ever have in history. That is the very definition of a better standard of living. For example:
http://www.aei.org/publication/the-good ... ems-today/" onclick="window.open(this.href);return false;

This is not to downplay people's hardships. No doubt there are. However it is not due to the dubious hobgoblin of free trade.

But if it is true, that indeed we are poorer, I would look at the Federal Reserve and it's policy of monetary debasement and grinding inflation, which harms first and foremost the poor and those on fixed incomes. It has actually been free trade and the ability to buy cheap foreign goods which has been the savior for many of these people.

[larsenb]

. . . . . It has actually been free trade and the ability to buy cheap foreign goods which has been the savior for many of these people.

I think you should have ticked 'free trade' in this instance. But you're right, we've been able to largely stave off, at least up until recent years, the real effects of our economic malaise because of being able to buy cheaper goods. It's called exporting our inflation.

[Separatist]

More freedom works. Really doesn't matter what others do. Think about what you are suggesting, because others are unfree, we must make ourselves unfree, until we are all free.

Truth is always fighting an uphill battle.

You only look at the seen, but fail to see the unseen. See: Broken window fallacy.

No problem being called a "purist". Somebody's got to stand for liberty and teach its principles. Hopefully with correct principles, we can govern ourselves. Mises motto was: Tu ne cede malis, sed contra audentior ito: Do not give in to evil but proceed ever more boldly against it.

Go Mises, et al. I agree with upholding correct principles. They will probably be fully implemented in the Millenium.

I've just seen too much hardship and poverty the way things are going now. You might say Von Mises, et al., are suffering from the blind idealist fallacy. I.e., they are blinded to practical solutions because of an iron-clad adherence to their idealism. And they seem to side-step and maybe ignore almost intractable and very real conditions that militate against their solutions.

If you know the truth, you teach the truth. Mises, Hazlitt et al sought truth in economics and taught it fearlessly.

See my post above to Juliet RE hardship and poverty and some of my thoughts on it. (Hint: look to the Fed Reserve)

An interesting side note on poverty, a couple hundred years ago, almost 85% of the world's population lived in extreme poverty (defined as less than $1 a day). That number has now been turned on it's head. That number is now only about 16%. This is because of the liberalization of markets - freedom, free trade etc. If you want to return to povery, stop trading with your neighbors.

[Separatist]

. . . . . It has actually been free trade and the ability to buy cheap foreign goods which has been the savior for many of these people.

I think you should have ticked 'free trade' in this instance. But you're right, we've been able to largely stave off, at least up until recent years, the real effects of our economic malaise because of being able to buy cheaper goods. It's called exporting our inflation.

Being able to buy cheaper goods allows us to spend the extra money elsewhere in the economy. Again, the seen and the unseen.

If I can buy a car for 20k, but because of Trump I now have to pay 25k, I am now unable to use the additional 5k for a variety of others things. With Trump I only have the car. Without I have the car + 5k, which will probably be dumped into a variety of local business and saving/investment. Trumps policies harm consumers and the untold variety of unseen uses the consumers would have had with the extra money.

[Juliet]

I believe in comparative advantage only when each country has comparative wages. Otherwise we all sink to the lowest economic health. It.is better for healthy countries to stay healthy and let developing countries rise until they can compete fairly, meaning, without abusing employees in order to specialize in something

It's nice that you believe that, but it is soundly untrue. The Law of Comparative advantage proves that even a country that is better at everything can benefit by trading with countries that are worse at everything. The last thing developing nations need is trade to shut down due to ignorant and self-righteous first worlders. You are not helping them by doing this. Perhaps you missed this doozy:
viewtopic.php?t=42999" onclick="window.open(this.href);return false;

May I ask, do you think the people of Mississippi can be made better off by erecting trade barriers between it and the other states? The logic of your argument says yes.

The last 8 years we have allowed free trade and people in America are very poor. Those who can't afford the high rent become homeless and then they disappear quietly off the face of the earth. It is not reported how many people go missing, especially the homeless. At this point we have to do something to keep Americans in the work force.

I agree the poor countries may have corrupt leaders, and that is the corporeal political corruption that has caused this. Poor countries are in debt to western corporations and have to give away their life's harvests. Meanwhile they starve.
A good book about this is Confessions of an Economic Hit man. The corruption is waist high and what really will solve things is to end corruption.

I agree RE corruption. No doubt. However, we aren't poorer because of free trade. (And besides, we really don't have free trade, but rather managed trade). And the idea of being poorer is also debatable. People work less hours in order to purchase the same bundle of goods than they ever have in history. That is the very definition of a better standard of living. For example:
http://www.aei.org/publication/the-good ... ems-today/" onclick="window.open(this.href);return false;

This is not to downplay people's hardships. No doubt there are. However it is not due to the dubious hobgoblin of free trade.

But if it is true, that indeed we are poorer, I would look at the Federal Reserve and it's policy of monetary debasement and grinding inflation, which harms first and foremost the poor and those on fixed incomes. It has actually been free trade and the ability to buy cheap foreign goods which has been the savior for many of these people.

Cheap foreign goods sometimes is a savior. But usually things are low quality. The main reason businesses leave is for cheaper labor, not due to a special advantage due to climate or location.

I believe when the colonists started out building communities in America, they starved several times before James Town survived. They learned that having a one for all community produces starvation. But having a self reliance, take care of yourself first, and then the community, actually worked.

I think the council on foreign relations has an agenda for pushing comparative advantage that isn't really about prospering people but it is really about keeping people as poor as possible and controllable. I could be wrong but usually what is taught as school looks good on paper but in real life it is not so applicable. Perhaps I am biased against globalism ideas because I do not trust them.

[larsenb]

. . . . . It has actually been free trade and the ability to buy cheap foreign goods which has been the savior for many of these people.

I think you should have ticked 'free trade' in this instance. But you're right, we've been able to largely stave off, at least up until recent years, the real effects of our economic malaise because of being able to buy cheaper goods. It's called exporting our inflation.

Being able to buy cheaper goods allows us to spend the extra money elsewhere in the economy. Again, the seen and the unseen.

If I can buy a car for 20k, but because of Trump I now have to pay 25k, I am now unable to use the additional 5k for a variety of others things. With Trump I only have the car. Without I have the car + 5k, which will probably be dumped into a variety of local business and saving/investment. Trumps policies harm consumers and the untold variety of unseen uses the consumers would have had with the extra money.

We'll see what Trump's policies actually do.

The other side of the coin, if his policies are able to increase the number of good paying jobs and increase employment in general, you could radically increase the amount of money spent on any number of things, maybe even offsetting an increase in the marginal cost of a car..

Also, cheaper goods may allow people on the edge only to buy some of their actual necessities, whereas, normally they would have to do without. This group, and its a laarge group, is not going to have money to spend on anything beyond this.

[Separatist]

It's nice that you believe that, but it is soundly untrue. The Law of Comparative advantage proves that even a country that is better at everything can benefit by trading with countries that are worse at everything. The last thing developing nations need is trade to shut down due to ignorant and self-righteous first worlders. You are not helping them by doing this. Perhaps you missed this doozy:
viewtopic.php?t=42999" onclick="window.open(this.href);return false;

May I ask, do you think the people of Mississippi can be made better off by erecting trade barriers between it and the other states? The logic of your argument says yes.

The last 8 years we have allowed free trade and people in America are very poor. Those who can't afford the high rent become homeless and then they disappear quietly off the face of the earth. It is not reported how many people go missing, especially the homeless. At this point we have to do something to keep Americans in the work force.

I agree the poor countries may have corrupt leaders, and that is the corporeal political corruption that has caused this. Poor countries are in debt to western corporations and have to give away their life's harvests. Meanwhile they starve.
A good book about this is Confessions of an Economic Hit man. The corruption is waist high and what really will solve things is to end corruption.

I agree RE corruption. No doubt. However, we aren't poorer because of free trade. (And besides, we really don't have free trade, but rather managed trade). And the idea of being poorer is also debatable. People work less hours in order to purchase the same bundle of goods than they ever have in history. That is the very definition of a better standard of living. For example:
http://www.aei.org/publication/the-good ... ems-today/" onclick="window.open(this.href);return false;

This is not to downplay people's hardships. No doubt there are. However it is not due to the dubious hobgoblin of free trade.

But if it is true, that indeed we are poorer, I would look at the Federal Reserve and it's policy of monetary debasement and grinding inflation, which harms first and foremost the poor and those on fixed incomes. It has actually been free trade and the ability to buy cheap foreign goods which has been the savior for many of these people.

Cheap foreign goods sometimes is a savior. But usually things are low quality. My flat screen is higher quality than my tube tv ever was. And this idea of 3rd party assessment of my decisions is wrong from the beginning. See first 3 minutes: https://www.youtube.com/watch?v=JpGlh6qcWtQ" onclick="window.open(this.href);return false; The main reason businesses leave is for cheaper labor, not due to a special advantage due to climate or location. Of course. Labor is a cost. As consumers, we generally look for the best deal, so there is tremendous pressure to keep prices competitive. Not having labor and industry unnecessarily tied up here, frees it up for other lines of work. If I can find someone to make my shoes cheaper, it is in my best interest to allow them to do so, thus freeing up labor for me.

I believe when the colonists started out building communities in America, they starved several times before James Town survived. They learned that having a one for all community produces starvation. But having a self reliance, take care of yourself first, and then the community, actually worked. This was a private property vs communal property issue.

I think the council on foreign relations has an agenda for pushing comparative advantage that isn't really about prospering people but it is really about keeping people as poor as possible and controllable. I could be wrong but usually what is taught as school looks good on paper but in real life it is not so applicable. Perhaps I am biased against globalism ideas because I do not trust them. What is taught in school is interventionism. And as I mentioned before, world poverty numbers have flipped on their head from 200 years ago. The one's seeking to keep people poor are the ones disallowing others to voluntarily exchange with who we wish, and the people who seek to manage our money.

[Separatist]

The other side of the coin, if his policies are able to increase the number of good paying jobs and increase employment in general, you could radically increase the amount of money spent on any number of things, maybe even offsetting an increase in the marginal cost of a car..

viewtopic.php?f=1&t=44308&p=758255#p758255" onclick="window.open(this.href);return false;

[Separatist]

FT: Mexican Standoff Looms Between Trump and Carmakers South of Border
http://www.economicpolicyjournal.com/20 ... trump.html" onclick="window.open(this.href);return false;

751c4628-d1f5-11e6-b06b-680c49b4b4c0.jpg (58.51 KiB) Viewed 743 times

The Financial Times reports:

Mexico’s motor industry has seen extraordinary growth in the 22 years since the North American Free Trade Agreement opened up the US market.

Production more than tripled to 3.4m vehicles in 2015, and 82 per cent of the country’s 2.7m exports that year went to the US or Canada.

But Ford’s announcement on Tuesday that it was abandoning plans for a new Mexican car plant highlights the serious threat that incoming US president Donald Trump poses to the industry.

The president-elect has publicly berated US companies that move work across the southern border, including General Motors just this week, and threatened to tear up Nafta.

Sergio Marchionne, chief executive of Fiat Chrysler, has already described Mr Trump’s election as a “game changer” for the car industry.

Since 1994, low labour costs, unfettered access to the US market and free-trade deals covering another 44 countries have propelled Mexico to become the world’s seventh largest car manufacturer and fourth-largest exporter. Its plants and supply chain support more than 750,000 jobs.

Mexican suppliers also provide 40 per cent of all the components used in US-assembled cars, including almost all of the seat belts, air bags and seat covers that go into cars built in the US. In total, a third of all exports from Mexico to the US are cars or associated components.

“Without question, the success of Mexico vehicle manufacturing is tied closely to US, and any tinkering with that could have an impact on output and investment in the country,” says Bill Rinna, a senior analyst at forecasting group LMC Automotive.

Mexico’s lower cost base also means that manufacturers often use plants there to put together vehicles that would be unprofitable if made in the US.

Analysts often cite the Chevrolet Cruze, the vehicle that drew Mr Trump’s ire on Tuesday, when he tweeted that GM should face a “big border tax” for importing cars from Mexico to the US. Although the saloon version of the Cruze is manufactured in the US, the less expensive hatchback model is made in Mexico.

“All the domestic manufacturers struggle to make money in small passenger car assembly in the US,” says one executive from a non-US carmaker when speaking about the decision to invest in Mexico. “Economically, it makes far more sense to manufacture in Mexico.”

Read the rest of the article here.

[Silver]

Oh, by the way, in real life one of my jobs is working for a company that supplies auto parts to virtually every car maker in the world.

We have multiple plants in Mexico. A starting salary for an operator on the assembly line is around 130 pesos/day. At today's exchange rate, that is approximately US$6. Many cars sold in the US are made in Mexico. If you are in favor of protectionism, then you might find yourself paying more for your next vehicle. Or there may be fewer choices of vehicles as the unprofitable model lines are eliminated.

Even if you're not purchasing a new vehicle, the parts that are made in Mexico (and elsewhere) may cost more when imported as they become needed for repairs and restoration after accidents.

[Separatist]

Trump Issues Crazed Threat Against Toyota
http://www.economicpolicyjournal.com/20 ... ainst.html" onclick="window.open(this.href);return false;

Let's face it, Donald Trump is a complete idiot when it comes to understanding trade.

Here is his latest threat:

Donald J. Trump ✔ @realDonaldTrump

Toyota Motor said will build a new plant in Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build plant in U.S. or pay big border tax.

12:14 PM - 5 Jan 2017
10,414 10,414 Retweets 32,485 32,485 likes

Comparative advantage explains why Toyota would want to build cars in Baja, Mexico and it has nothing to do with "hurting" American workers.

Trump is going to take us into a global trade dark age. It will accomplish nothing but lower standards of livings in the United States and worldwide.

[Silver]

All hail, Dictator For Life Trump!

Actually, he's just doing what Mnuchin and Kissinger and the boys are telling him to do. After they've finished ruining the US economy, we'll need a solution. Unfortunately, the solution will come from the very Gadiantons who messed things up in the first place.

[Separatist]

I'm not sure if anybody is telling him what to do. He has held these views for a long long time. He is quite simply an economic idiot, which is no sin in and of itself. As Rothbard explained, “It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

He is threatening to do to us in peace what we do to enemies in war...prevent trade.

This is quite simply, an attack on the average American consumer.

[Silver]

I'm not sure if anybody is telling him what to do. He has held these views for a long long time. He is quite simply an economic idiot, which is no sin in and of itself. As Rothbard explained, “It is no crime to be ignorant of economics, which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”

He is threatening to do to us in peace what we do to enemies in war...prevent trade.

This is quite simply, an attack on the average American consumer.

I would beg to differ on one point. If Trump were simply an economic idiot, the odds say that on a long enough timeline roughly 50% of his "mistakes" would favor liberty. I'm not so sure we're seeing that sort of benefit. Give him more time, you say? With enough time, he and his Gadianton cohorts will ruin the country. I guess it's going to happen anyway.

[Separatist]

Trump and the Economic Ignorance On Which He Surfs Are Both Appalling
http://www.economicpolicyjournal.com/20 ... which.html" onclick="window.open(this.href);return false;

A Don Boudreaux email to a reader:

Mr. Vince Vogel

Mr. Vogel:

You “celebrate” Donald Trump’s tweet threatening Toyota with a “big border tax” if it produces America-bound Corollas in Mexico rather than in the United States. You “find refreshing … our President-elect getting tough on corporations which take and don’t give to America.”

Are you serious? How is Toyota not ‘giving’ to us Americans when it offers to sell automobiles to us at prices that we find attractive? Do Americans who voluntarily buy such cars not benefit? Of course they do. And do other Americans who, because of Toyota’s competition, pay lower prices for American-assembled cars not also benefit? Of course they do. That you fail to see that an increased flow of goods and services made available to Americans – especially at prices that reflect production costs as low as possible – raises Americans’ standard of living means that you fail to understand the most basic facts of economics.

You also fail to understand the nature of Trump’s bullying threats. First, Trump threatened not only Toyota; he threatened also Americans who would purchase Mexican-assembled Corollas. Mr. Trump’s “big border tax” would oblige these Americans to pay higher prices.

Second, suppose that Trump learns that in 2017 Americans intend to eat more meals prepared at home and fewer meals prepared at restaurants. Would you “celebrate” if, in response, Trump tweets to every American household “NO WAY! Eat at restaurants or pay big home-cooked-meal tax”? Both cases – the home-cooked-meals case and the Toyota-in-Mexico case – feature actions that destroy or fail to create some specific jobs in an identifiable American industry. Both cases feature outcomes that depend upon the voluntary actions of American consumers. Both cases, in short, are economically identical. Yet I suspect that you would be appalled at any tweet threatening Americans who choose to eat more home-cooked meals. If I’m correct, you should be equally appalled at Trump’s tweet about Toyota producing cars in Mexico.

Sincerely,
Donald J. Boudreaux
Professor of Economics
and
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030

The above originally appeared at Cafe Hayek.

[Separatist]

[ajax]

Trump Threatens BMW With 35% Tax on Cars Built in Mexico...
http://www.economicpolicyjournal.com/20 ... -cars.html" onclick="window.open(this.href);return false;

...what an economic ignoramus.

President-elect Donald Trump has warned the United States will impose a border tax of 35 percent on cars that German carmaker BMW plans to build at a new plant in Mexico and export to the U.S. market.

Trump gave the warning in an interview with German newspaper Bild.

A BMW spokeswoman said a BMW Group plant in San Luis Potosi would build the BMW 3 Series starting from 2019, with the output intended for the world market. The plant in Mexico would be an addition to existing 3 Series production facilities in Germany and China.

Trump said BMW should build its new car factory in the United States because this would be "much better" for the company.

[ajax]

Now who's seeking to put U.S. workers at a disadvantage?
http://www.betweenthelines.us/2017/01/n ... rs-at.html" onclick="window.open(this.href);return false;

I have two questions for Sean Spicer, spokesman for the President-elect, in response to (emphasis mine):

Asked whether an auto border tax could impact Canada, President-elect Donald Trump’s spokesman, Sean Spicer, told reporters their policy isn’t specific to any one country. “When a company that’s in the U.S. moves to a place, whether it’s Canada or Mexico, or any other country seeking to put U.S. workers at a disadvantage,” Spicer said on a conference call Friday, then Trump “is going to do everything he can to deter that.”

1. Of the hundreds of millions of Americans who don't work for the auto industry, and who buy cars, aren't the majority of them U.S. workers?

2. And while forcing a higher cost of a car onto them, won't the folks who work for their local merchants be disadvantaged as well -- as the border tax will suck up what would've been the car buyers' discretionary income?

Seriously folks, looks like the U.S. is the country seeking to put U.S. workers at a disadvantage. And, believe me, it can do it like no other country can!

[Bronco73idi]

I didn't read the 2nd page so my point wasn't on topic and I deleted it. Yes trump trade ideas will have consequences but our country's liberty is more important in my opinion. Let's raise ourselves up and hope others will follow.

[ajax]

Unsure how curtailing liberty promotes liberty. Talk of a country's liberty is nonsensical. Individual's exercise liberty, not countries.

[Bronco73idi]

So when Obama gave excessive entitlements he didn't purposely become and enabler??? Give a man a fish and he will eat for a day!!!!!!!

[Bronco73idi]

Then again we are smarter then bears, don't feed the bears hahahaha