The Boss Finally Discovers the Real Enemies!

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President Trump — The Boss, the man of steel — has an improbable target for his incandescent ire: the Koch brothers, billionaires famous (or infamous, depending upon your political predilections) for funding free-market-oriented Republicans.

What triggered The Boss was the fact that the Koch brothers have refused to support a Trump puppet Republican — one Kevin Cramer — in his fight to defeat Democrat Heidi Heitkamp for the North Dakota Senate seat. The Kochs use a PAC they help fund — Americans for Prosperity, or AFP — to support free-market Republicans. You know traditional liberal free-market thinking: free movement of goods, capital, and labor. That sort of view is antipathetic not just to high taxes and regulation but to protectionism, nativism, and unbounded government spending as well. It once was the defining ideology of the Republican Party (full disclosure here: I have in the past donated to the AFP). Cramer supports “fair trade” (which typically means “trade under tariffs and non-tariff barriers until we have equal trade balances”), and fully backs The Boss’s plan to provide $12 billion in subsidies to American farmers who are casualties in this administration’s worldwide trade war.

Trump played the nativist card by accusing the Kochs of being against “strong borders,” and bragged that he has never needed their money.

The Kochs have launched radio ads opposing this policy of subsidizing farmers to make up for the business they have lost from the tariff war. This lost business is the unseen economic downside of tariffs that protectionists can never quite grasp: tariffs may save some jobs, but they cost other jobs, elsewhere in the economy. When those jobs are lost, you then have to subsidize the people who were screwed over to save the original jobs — hell, you could have just subsidized the original companies that lost jobs!

Besides refusing to back Cramer, the Kochs have indicated that they are looking at several other close Senate races to see whom to support (if anyone).

The Boss is not amused at all this. In one of his signature blitzkrieg tweet attacks, he railed against the Kochs, calling them “globalists” — which is the current epithet that has replaced the old rightest term “cosmopolitans,” meaning people who have no patriotic loyalty to their own country, but only to the world — or their ethnic group spread out around the world, or their secret clan (the Illuminati!). He also called them a “joke in real Republican circles.” He played the nativist card by accusing them of being against “strong borders,” and bragged that he has never needed their money. The boss also crowed that the Koch brothers’ network is “overrated” and claimed, “I have beaten them at every turn.” Naturally, he suggested that the Kochs oppose tariffs because of selfishness: they don’t want their foreign operations taxed.

Oh, those rootless cosmopolitans! Such traitors, and all for money!

All this is insufferably rich. Trump — who has himself made a fair amount of money in business done abroad — is attacking a group of pro-business, pro-free-market Republicans who believe in free trade and balanced budgets. A group, please note, that has been supporting Republican candidates far longer than The Boss — who, until a few years ago, almost always gave his political donations to Democrats, including to “Crooked” Hillary Clinton. And The Boss had no problem with the Kochs’ spending millions to help get his tax bill passed.

This lost business is the unseen economic downside of tariffs that protectionists can never quite grasp: tariffs may save some jobs, but they cost other jobs, elsewhere in the economy.

The Kochs and their AFP organization should be commended for standing on principle and opposing the trade war, increasing government deficits, and nativism that The Boss represents. They were consistent when they supported his drive to cut regulations and taxes, and they are consistent now in opposing his protectionism, nativism, and indifference to deficit spending.

But The Boss, who cannot bring himself to view Vladimir Putin and Xi Jinping as enemies, now views these decent Americans as precisely that. This is puzzling, until one recalls Proverbs 29:27, which tells us that “an unjust man is an abomination to the righteous, but one whose way is straight is an abomination to the wicked.” This explains what we see here with perfect clarity.




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Unfair Competition from Robotland

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This campaign season brings many complaints about “shipping jobs overseas.” Candidates promise to crack down on the offending corporations. American workers and the United States as a whole must compete on a slanted playing field against foreigners paid much below a dollar an hour. Moreover, the foreigners manipulate their currencies. They buy less from us than we from them, putting the US into a trade deficit (more exactly, a current-account deficit) costing us many billions of dollars a year. China, Japan, and Mexico count among the worst offenders. Free trade is fine, but only when it is fair.

In a similar but imaginary scenario, technology has advanced so far that “Robots” (in a stretched sense of the word) displace American workers at costs equivalent to Robot wages of 50 cents an hour. What is the difference between shipping jobs to Bangladesh and shipping jobs to Robotland? Well, Robotland does not have a balance of payments, so it cannot be accused of buying less from us than we from it, fleecing us of the difference. In the real world, automatic market mechanisms, if allowed to operate, forestall worrisome trade deficits and surpluses; and if the foreigners do make unbalanced sales to us, what can they do with the money? They acquire American bank accounts, securities, and properties, so supplying us with financial capital on advantageous terms.

What sense does the notion of one country competing with others have? Does it mean that international trade is a zero-sum game, with countries squabbling over shares in a fixed total of gains? On the contrary, international trade and advanced technology are alike in making desired goods more abundant. One country’s relatively low standard of living would trace to technological and entrepreneurial backwardness and perhaps to bad government. It would be absurd to blame its relative poverty on incompetent trade-policy negotiators.

One country’s relatively low standard of living would trace to technological and entrepreneurial backwardness and perhaps to bad government.

In the real world, conceivably, Robotland technology might displace many American workers, inviting Luddite arguments. I do not want to get into that issue here. I merely ask what the difference is between the scenarios of foreign competition and robots.

I wish that today’s vapid political debates could give way to ones with candidates testing one another’s policy-relevant understanding by posing questions like the one about robots. Other questions might be: How do your trade-policy proposals square with the principle of comparative advantage? What light might the absorption approach to balance-of-payments analysis shed on a connection between a trade deficit and a government budget deficit? In what sense is the Social Security trust fund a reassuring reality and in what sense a deceptive farce?

Unfortunately, such questions would not faze Donald Trump. He would respond with vicious personal insults and with reiterations of his own excellence. Anyway, allowing such questions could be entertaining. They might even enlighten some voters.




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