Will Donald Trump be the next Ronald Reagan?

Marcus's picture
Submitted by Marcus on Mon, 2011-04-18 19:53

In episode-long special interview with Hannity Trump sounds like he's going to run.


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US Manufacturing Has More Than Doubled Since 1975

darren's picture

http://mjperry.blogspot.com/20...
Mark Perry, Carpe Diem, Economic Data: US productivity is not in decline (from 7/2010)

Ron Bullock, chairman of Bison Gear & Engineering Corp, writing in the Washington Examiner:

"More effective foreign competition has led to increasing manufactured-goods trade deficits and the loss of 7 million U.S. manufacturing jobs since 1980."

Don Boudreaux responds:

"This account – repeated ad nauseam – would be more plausible if it were also the case that U.S. manufacturing output, during this same time, had declined. But this output rose. Manufacturing output today is nearly 100 percent higher than it was 30 years ago (see chart). Importantly, manufacturing output is up while manufacturing employment is down for a reason that is cause not for the pessimism that universally attends accounts such as Mr. Bullock‘s but rather for optimism. That reason is substantial growth in productivity, which is the only source of sustained and widespread prosperity."

(Mark Perry): The graphs above tell the story. U.S. Manufacturing output has more than doubled since 1975 . . . while manufacturing employment has decreased by about 8 million jobs (data here), resulting in more than a three-fold increase in worker productivity (output per worker) since the 1970s. Therefore, it's the dramatic increase in the productivity of American workers that helps explain the loss of millions of manufacturing jobs, and this a a cause for optimism, not pessimism, as Don points out.

See link above for data.

Barack Obama takes revenge on Donald Trump in White House speech

Marcus's picture

Barack Obama takes revenge on Donald Trump in White House speech

"Mr Obama speaking at the White House Correspondents' Dinner, the annual gathering of the Washington political establishment and glitterati, revelled in what his aides view as a major victory over his critics last week by releasing his full birth certificate, as Mr Trump had demanded.

"Donald Trump is here tonight," said Mr Obama, beaming. "Now, I know that he's taken some flak lately, but no one is prouder to put this birth certificate to rest than The Donald. Now he can get to focusing on the issues that matter.

"Like, did we fake the moon landing? What really happened at Roswell? And where are Biggie and Tupac?"

Roswell refers to an incident in Roswell, New Mexico, where, according to some theories, an object that crashed in 1947 was an extraterrestrial spacecraft carrying alien occupants. Biggie Smalls and Tupac Shakur were rap stars whose deaths are the subject of continuing controversy.

Mr Trump laughed initially but the smile soon faded from his face. "All kidding aside, we all know about your credentials and experience," Mr. Obama said...

Mr Trump has fared well in early opinion polls of the Republican 2012 election field. However, party operatives dismiss his chances, pointing out his liberal stances, three marriages, donations to Democrats and penchant for the outrageous. Last week, Mr Trump spoke in Las Vegas and let fly with a string of expletives.

The White House appears to have calculated that the more it can portray the Republicans as the party of Mr Trump, the better.

Following a visit to Alabama on Friday, Mr Obama also spoke of the devastation in the state where 250 died when tornadoes struck.

He said: "It's going to be a long road back and so we need to keep those Americans in our thoughts and in our prayers. We also need to stand with them in the hard months and perhaps years to come," he added. "I intend to make sure that the federal government does that."

Obama Trumps Donald

Marcus's picture

Bill O'Reilly's Talking Points

Marcus's picture

The truth of Trump...

Marcus's picture

...would be exposed in the bright spotlight of the primaries if he does indeed run.

I guess he'll have to answer such charges and either refute them, apologize for them or try to justify them - either way it will interesting to see.

It does however touch on one point that Trump made that I think rings true - whether you're Obama, Bush or Reagan. It is much harder to become President if you have been successful in business, than if you have been unsuccessful.

More truth about "The Donald" from Michelle Malkin

darren's picture

http://www.nationalreview.com/...

Michelle Malkin
National Review Online

APRIL 22, 2011 2:00 A.M.
Trump’s Eminent-Domain Empire
This faux conservative scoffs at fundamental private-property rights.

Don’t be fooled by the Donald. Take it from one who knows: I’m a South Jersey gal who was raised on the outskirts of Atlantic City in the looming shadow of Trump’s towers. All through my childhood, casino developers and government bureaucrats joined hands, raised taxes, and made dazzling promises of urban renewal. Then we wised up to the eminent-domain thievery championed by our hometown faux free-marketeers.

America, it’s time you wised up to Donald Trump’s property-redistribution racket, too.

(article continued at above link)

Thai capitalism in action...

Marcus's picture

Harley Davidson...

Marcus's picture

To the extent this latter might have happened -- i.e., a reduction in the overall consumer demand for motocycles -- that might have affected employment at Harley Davidson, since there might have been less demand for workers, or fewer hours needed for their labor.

This is what Reagan wrote:

"To preserve the last American motorcycle company, we had imposed temporary tarriffs on Japanese motorcycles, making them more expensive in this country.

But when I visited the Harley Davidson plant in York in the spring of 1987, company executives informed me that I could cancel the tarriffs a year ahead of schedule, because they had made a turnaround and no longer needed protection to compete with the Japanese...

The Harley Davidson workers told me they now could compete with anyone in the world. What a difference, I thought, between a factory worker like that and one in a Communist factory, who is given no incentive to make a decent product or excel in any way...

"That's not a factory," I told someone after the visit, "that's a religion."

Many thanks!

darren's picture

Have bookmarked the blog-page you linked to, and will definitely take a look. After a very casual reading, however, it does seem as if McVey is admitting that FRB is fine as long as banks are transparent about the practice with their depositors.

As an aside:

You understand, of course, that there's no question of inflation occurring with "time deposits", such as an ordinary savings account. When someone deposits $100 into a savings account, he is agreeing not to have instanteous access to it for the sake of spending. So when the bank loans it out at interest, there's only one person spending that capital (the borrower). So time deposits are not inherently inflationary the way checking deposits are.

Reagan, tariffs, etc.

darren's picture

"There was plenty of evidence that the Japanese weren't playing fair in the free trade arena...I believed in free, but fair trade."

Reagan, I believe, had majored in economics in college, so he perhaps should have known better: as long as trade is free, it is ipso facto fair. No "market corrective" measures need be taken.

Reagan imposed tariffs on Japanese motorcycle imports to protect Harley Davidson (the last US motorcycle manufacturer)

Right. And by protecting Harley Davidson, he hurt American motorcycle consumers, who now (i) had to pay more for motorcycles, or (ii) might therefore be excluded from the motorcycle market altogether because they could simply no longer afford one. To the extent this latter might have happened -- i.e., a reduction in the overall consumer demand for motocycles -- that might have affected employment at Harley Davidson, since there might have been less demand for workers, or fewer hours needed for their labor. There are all kinds of "unseen" effects that might occur, or might have occurred, because government decides to "help" a particular business, or a particular industry, by restricting free trade. As Mises, et al., pointed out, the problem with these sorts of interventions is not that they aren't "well intentioned"; they might be so. The problem is that, since everything in a division-of-labor economy is intimately interconnected to everything else, the moment government interferes with that, it creates a result that is less satisfactory than it would otherwise be, even from the self-interested point of view of the parties supporting the intervention.

and coerced the Japanese Government into voluntarily reducing their export of cars to the US by 25% in order to protect US car manufacturing jobs.

And why, pray tell, do US car manufacturing jobs require protection, when lots of other US manufacturing jobs do not? Because the damn labor unions had (and still have) the auto industry by the throat. So Reagan caved to U.S. labor unions in the auto industry. (So what else is new.)

Chrysler benefited in particular from this policy.

Yep. And today Chrysler and General Motors are de facto owned by the government -- the "people's car companies".

Apparently in Japan they revered Reagan as a hero and invited him to give speeches on the benefits of the free-market system.

Well, they could do worse, of course, but it nevertheless is ironic, no? Similarly, the good people of Ohio "punished" the former mayor of Cleveland -- a New-Age loony-tunes leftie named Dennis Kucinich, who purposely bankrupted that city -- by enthusiastically electing him as their senator.

Maybe they respected his firm, but fair actions?

Maybe. But as Ayn Rand once wisely advised: Don't bother analyzing a folly; just ask what it accomplishes.

Don't misunderstand me. I like Reagan. I voted for him both times. I think he was our last great President, and his overal libertarian leanings and tax-cutting policies steered the country sharply away from the abyss of socialism that both Carter and Nixon (who, don't forget, imposed price controls on the economy, as well as burdened us with the "Enviromental Protection Agency") were driving us toward. I greatly admired his actions regarding the former Soviet Union. But he wasn't perfect (no one is, especially in politics) and wasn't able to complete much of the "conservative revolution" that had been fomenting since the days of Barry Goldwater.

Here are some more links you might find relevant:

http://www.cato.org/pub_displa...
A highly critical "Policy Report" by the free-market CATO Institute from 1988 on the Reagan administration policy of tariffs on Japanese products (cars, semiconductors, etc.).

http://www.cato.org/multimedia...
A recent video clip of Don Boudreaux (of "Cafe Hayek") speaking at CATO about the "trade deficit." Extremely lucid.

http://www.youtube.com/watch?v...
Amusing and interesting clip on how the U.S. subsidizes its domestic cotton industry and the upshot of that policy: big "hush money" payoffs to the Brazilian cotton industry in order to entice the Brazilian government away from trade retaliation, such as tariffing or boycotting U.S. pharmaceuticals. The U.S. government has long been doing with its domestic cotton industry what the Japanese government had been doing during the Reagan years with its own domestic car and semiconductor industries: subsidizing them so that they could sell "below cost."

Darren

Doug Bandler's picture

Awesome reply. Its what I thought. Its the bailment vs loan contract issue. I've seen this debated before by both O'ists and Von Miseans and I've also seen both sides taken. I agree with you.

Interesting point about the banks inflating their private currencies at different rates during the 19th century. By doing that, they all but invited the government to nationalize the currency. I've read Rothbard's history of the creation of the FED and it seems just like 'Atlas Shrugged'. All the villains were the top businessmen of the day, especially J.P. Morgan. They all begged the government to create a central bank.

I also agree that FRB shouldn't be banned by government; let the market handle it. I wonder if there would emerge two types of checking accounts; a FRB and a non-FRB one. Perhaps the money of FRB accounts would trade at a discount?

Lastly, here is a pretty smart O'ist that defends FRB. I'll link to a blog post which has links to a 4 part defense of FRB. I think he's wrong but you know more about this subject than me. I link to it for reading at your leisure:

http://jjmcvey.blogspot.com/20...

Reagan writes...

Marcus's picture

...in his autobiography.

"There was plenty of evidence that the Japanese weren't playing fair in the free trade arena...I believed in free, but fair trade."

Reagan imposed tariffs on Japanese motorcycle imports to protect Harley Davidson (the last US motorcycle manufacturer) and coerced the Japanese Government into voluntarily reducing their export of cars to the US by 25% in order to protect US car manufacturing jobs. Chrysler benefited in particular from this policy.

Apparently in Japan they revered Reagan as a hero and invited him to give speeches on the benefits of the free-market system.

Maybe they respected his firm, but fair actions?

Fractional Reserve Banking

darren's picture

Quick question. What is your view of Fractional Reserve Banking? This is a big controversy in both O'ist and Austrian circles. Is it legitimate or inherently fraudulent? I can never make up my mind on that one. Reisman says its fraud yet some other Austrians say it is legit. Confusing.

It's a quick question, but I'm not so sure my reply can be quick. I'll at least try to be clear . . .

First: absolutely it's a fraudulent practice.

Look, paper money evolved in the market as simply a receipt -- a "claim" -- on commodity money (like gold) that was supposed to be stored by, and in, the bank for safekeeping. When you made a purchase, rather than exchanging your receipt for your gold, handing the gold over to the merchant, who would then redeposit the gold and obtain a similar receipt, the perfectly sensible practice evolved of simply exchanging the paper receipt for the merchant's goods. Saved time and effort, and greatly increased the speed and number of economic exchanges that could be made. There's no problem with any of this from an economic point of view . . . as long as the hard commodity money was actually still there in the bank's vault, available for redemption on demand. But what if the bank were lending out that hard money at interest under the assumption that it was pretty unlikely that both you and the merchant would both appear at the same time and at the same bank to redeem paper receipts for the real goods? Unless you had given permission beforehand to the bank for it to engage in this practice, wouldn't it be fraud? Since the bank is printing more receipts for hard money than it has hard money in its vaults, doesn't that make the bank inherently insolvent?

Of course it does.

Here's an analogy:

If you put some furniture in one of those monthly storage places for safekeeping until you want or need it, you will receive a receipt; when you want your furniture back, you hand in the receipt and collect your goods. While in storage, however, suppose the owners of the facility were lending out your furniture and charging a rental fee on it, under the assumption that you probably wouldn't be retrieving your property any time soon. Wouldn't that be fraudulent? Of course.

Unless, of course, you had previously specified in your contract with the storage facility that it would have the right to do so. In that case, there's nothing wrong with it.

The problem with fractional reserve banking is that it is bad economics that rests on a fraudulent practice that long ago was granted legal sanction. At issue is this: what, precisely, is the legal status of your money when you hand it over to a bank and open, specifically, a checking account? It's not so simple to answer, and -- unfortunately -- the law (in England) resolved the issue in favor of the banks rather than in favor of the liberals (meaning "libertarians") of the 17th/18th centuries. Here's an example of what's at issue:

When you go on a business trip and stay in a hotel, you might decide to let the concierge store your fancy $5,000 Rolex watch in its safe while you go to a nightclub in the evening. When the hotel is temporarily in possession of your watch, can we say that the value of the hotel has suddenly increased by $5,000? After all, a moment ago, their safe was empty; now they possess a watch -- temporarily, to be sure -- valued at $5,000. Shouldn't the value of the hotel go up by the equivalent of the value of the watch that it now stores?

Again: If your wife hands over her $10,000 fur coat to a dry-cleaner's, does the value of the dry-cleaning enterprise increase by the value of the coat?

In both cases, the answer is no. The legal relationship that the hotel has in relation to your Rolex, and that the dry-clearner's has in relation to the fur coat, is known as bailment. In the case of the hotel, it in no way legally "owns" your watch, and it "possesses" it only in the most literal physical sense; ownership resides 100% with you, and the moment you want the watch back -- "on demand" -- the hotel must hand it over to you. In the case of the dry cleaner's, it in no way legally "owns" the fur coat, and it "possesses" it only in the most superficial and literal physical meaning of the word; ownership resides 100% with your wife, and the moment she wants it back -- "on demand" -- they have to hand it back to her.

But what about a bank?

When you hand over $100 to a bank to open up a checking account, in which the bank promises to hand back to you any amount of your money, up to the full amount, "on demand", whenever you write a check or swipe your debit card -- which is why checking accounts are called "demand deposits" -- is this also an example of legal bailment? In other words, is the bank's relation to your checking account money the same sort of relation as that between the hotel concierge and your watch, and the dry-cleaner's and your wife's fur coat?

If it is, then banks have NO right to do a thing with your checking account money except store it and make it available to you "on demand." They certainly cannot lend it out at interest (which would be the same as the storage facility above renting out your furniture).

Unfortunately, the English courts that looked at this issue decided otherwise. They concluded that the relation between a bank and your checking account money was one of implied contract, not bailment. Under the former, the courts were affirming that, although you retained the right of "instant demand" over your funds, you were implicitly giving up a certain amount of control -- hence ownership -- of your money when you opened the checking account. The bank's obligation (said the courts) was simply to make available to you "an" amount of money up to your original deposit; it was not obligated to return precisely "your" money. That, of course, left it open for banks to print up bank notes -- paper money; receipts -- to cover withdrawals, without the necessity of having the full amount that was originally deposited on hand at all times. Since you presumably "gave up some control" of your money when you opened the account, banks could now legally lend out demand-deposit money at interest . . . as long as it could create enough bank notes to cover a possible 100% withdrawal of funds by you.

So, if you deposit $100 in cash to get a debit card that you can swipe at various places and spend up to $100, your bank can take that $100 deposit and loan it out at interest to someone else. The borrower of your funds will not, of course, receive your physical money; he will receive -- like you -- a debit card, with a $100 limit imposed by the bank. So observe: you can demand $100 of goods by swiping your card; the borrower can demand $100 worth of goods by swiping his card . . . but you are both accessing the same $100! Obviously, prices must rise because of the borrower's additional spending.

So this is the essence of fractional reserve banking, made worse, of course, when high-powered fractional reserve banking occurs via a central bank. One thing you might be interested in is this:

Before the creation of the Federal Reserve, commercial banks used to create -- as in print up -- their own bank notes. Thus, there were "Chase Bank" notes and "Bank of New York" bank notes, etc. Everyone's bank notes competed with everyone else's bank notes, and they all circulated freely in the economy. Now, because of fractional reserve practice, each bank would inflate its own bank notes at rates that were different from other banks. When people wrote and deposited checks, and it came time for banks to clear their accounts, they would find that some banks couldn't cover their transactions -- they hadn't inflated to the same extent that other banks had. So one of the reasons concocted by statists for creating a central bank that would, in effect, cartelize the banking industry, is that a central bank, by setting and enforcing "reserve requirements", would ensure that all banks inflate at the same rate.

You can see that the inflationary mindset, even without the existence of a central bank, is very old and very established. In the mid-1970s, Hayek admitted that the monetary situation in the west was probably hopeless and that the only remedy was to permit freely competing monetary systems within economies -- in other words, repeal the legal tender laws, so that people can freely negotiate the kind of money they wish to receive as compensation.

However, as for the practice of fractional reserve banking itself, I agree with Reisman on this: as it is practiced currently, it is fraud; but the corrective is not to have government declare it illegal and require 100% reserve requirement -- we're not even on a gold standard, so I don't know what real good that would do. What government can do is require that banks simply be honest and make clear to depositors upon opening an account, that when a new customer deposits $100 in a checking account, he is, in effect -- in FACT -- making a loan to the bank in the amount of $100, which the bank (i) will make instantly available to the depositor "on demand", but which (ii) the bank will also loan out to others at interest ( which interest the checking depositor will not see, though there are such things as "interest bearing checking accounts"). The bank should make clear to the depositor that there is, therefore, a chance -- perhaps a small chance, but nevertheless a real one -- that the depositor is exposing himself to risk by opening a checking account and therefore might not be able to reclaim the full amount of the deposit.

Now, if depositors started hearing that from banks -- and notice that no force is being applied by government on banks in order to make them practice banking a certain way -- how much incentive would depositors have to open accounts in such institutions? And how much incentive would banks have to continue the practice of fractional reserve?

I favor this sort of approach -- usually called "Free Banking" -- more than one in which government simply declares the whole thing illegal mainly because government mandates almost always backfire in weird, unintended ways, even when they are done for a seemingly "good" or "just" cause. Certainly, preventing fraud is a cause both good and just, but I think it's one of those things can be better regulated through the market than it can through the use of force.

Thanks, Amigo!

darren's picture

I spotted Trump's neo-mercantilism crap a mile away.

Because you're conversant with economics and know what to look for in someone's arguments and statements. The majority, alas, are not so lucky.

And of course, many Conservatives are lauding him for this; calling it "economic patriotism."

Yep. Conservatives. (sigh.)

Sad thing about protectionism is that Bastiat was refuting this shit 160 years ago!

Absolutely. And his arguments, especially those small gems in his "Economic Sophisms", are still relevant, still unanswerable, and for the most part, still ignored.

Damn Conservatives still believe in it!

Yep. It's even spawned a minor trend in revisionist economic history: more than a few academic economists -- who should know better -- have published articles and books on the "benefits" of protectionism in U.S. history, and how the country actually owed its spectacular economic growth to tariffs and quotas, and not to economic liberty.

This is academia I'm talking about.

Here is where Leftists and Conservatives agree but for slightly different reasons. Leftists want protectionism to protect the unions who all vote Democrat.

Yep. It's even worse with "public-sector unions", which, frankly, should simply be illegal: by what right are my taxes being used to subsidize the dues of public-sector union members, who then, in turn, donate the money to the Democratic Party? I wouldn't approve even it were the Republican (or Libertarian) Party; that it ends up subsidizing a party with which I have lots of major ideological dissonance, is frankly intolerable . . .

. . . But let's not get started on that one. That's deserves a dedicated thread.

Libs often have another angle on the protectionism racket that's unique to them alone. Many libs believe we should tariff and quota Chinese goods (to take a very current example) -- if not outright boycott Chinese goods -- because of "unfair labor practices" in China, such as sweatshops, long hours, etc., all of which they subsume under the term "slavery." I just shake my head and think "You fucking hypocrites. Where was all your concern for human dignity and rights when the average Chinese worker lived and suffered under REAL slavery during the brutal communist regime of Mao? I'll tell you where it was; it was up your ass, because you didn't even admit that close to a billion Chinese were, in fact, living under conditions of slavery at that time -- in fact, you thought the whole communist system was just great, so you said nothing! And now that there is at least some degree of economic liberalization, now you're claiming that the Chinese system is 'slavery'"!

Conservatives want protectionism especially in labor laws to keep out the Mexicans and to save "American jobs." Its all fucking ignorance.

Yep. It was actually Miss Rand who first showed me that what many businessmen really fear is not government regulation; they fear free-market competition from some little pipsqueak upstart with a new idea, who threatens to knock them off their perch. The established businessman/pragmatist can always strike some sort of deal with the government or the regulating agency -- not even necessarily in the way of a direct bribe (though that probably happens more than we know), but more in the way of, e.g., offering a great sinecure for the regulator after he or she "retires" from "public service": after all, who better to run the "Department of Government Regulatory Compliance" in the corporation than the very person who was supposedly regulating it from the other side? And all for a nice 6-figure salaray plus perks! This happens ALL the time -- it's actually, probably, the usual scenario. Additionally, an established company, confident of its revenue stream and its market share, can afford to comply with various moronic regulations by government -- pointless laboratory testing of certain materials, for example -- that the company knows damn well would be financially impossible for its smaller competitors to meet. The upshot is that the regulatory agency winds up helping the large established companies to cartelize and form de facto monopolies in their industry, with government regulations acting as the "protection" to keep out new competitors.

A great Chicago economist named George Stigler won his Nobel by studying this occurrence and writing about it. Since the regulatory agency winds up protecting and serving the economic interests of the corporation in question, he called such agencies "captured", and his writings on this topic are generally known as "Capture Theory." Essential reading.

Regarding Trump. He says that he believes in MediCare and MediaCaid and that taxing Chinese imports will help pay down the deficit. He also says that he wants to cut taxes. He's a mix, but as Darren said, he is an economic ignoramus. As is Warren Buffet, as is Bill Gates, as is... ...pretty much everyone.

Yep. Buffett, I believe, is an outright socialist. Great investor; lousy economist. Gates . . . well, like most billionaires, he's a Democrat, despite the fact that it was the demRats under Clinton who tried to do in Microsoft by means of antitrust. Apparently, Gates was very apolitical before all that happened; never made contributions. Now, he makes lots of contributions . . . wanna bet to which party?

I had also heard a story that when Gates was first called to Washington D.C. for the antitrust hearings, he didn't even know that he was supposed to bring a lawyer -- I mean, a lawyer? What for? He just sat there, being grilled by the antitrust goons, and finally responded with something like "Thank you for showing me what Washington politics really means." Could be just apocryphal, of course, but who knows?

Here's an interesting tidbit about the Gates affair: the whole thing was planned and plotted by a fucking REPUBLICAN named Orrin Hatch, the senior senator from Utah (a very conservative state, by the way), because one of Hatch's biggest constituents was a corporation based in Utah that was having trouble competing its own browser against Microsoft's Explorer. Which corporation?

Netscape.

So the whole antitrust caper was hatched by Hatch in order to prop up a less able competitor in the web-browser sector -- Netscape -- that happened to headquarter in his state and which also happened to be a major constituent.

So much for Republicans being advocates of unfettered capitalism.

Finally, regarding Trump:

Yes, you're absolutely correct. He touts himself as a "tax cutter" and the very next moment, he's bragging that he would tariff Chinese imports. Hello? A tariff is simply a tax. I don't know how he squares these two statements (or if he even tries), but some interviewer should call him out on it by pointing out that imposing tariffs on Chinese imports would further burden every housewife and middleclass worker who shops at Wal-Mart, Home Depot, Staples, Best Buy, and most malls and supermarkets.

As you said above: "In other words, pretty much everyone."

Trump

RLKocher's picture

Will Donald Trump be the next Ronald Reagan?

Trump will be the next Donald Trump.

He has an insatiable lust for publicity and will make a lot of noise to get it.

Darren

Doug Bandler's picture

Quick question. What is your view of Fractional Reserve Banking? This is a big controversy in both O'ist and Austrian circles. Is it legitimate or inherently fraudulent? I can never make up my mind on that one. Reisman says its fraud yet some other Austrians say it is legit. Confusing.

Darren

Doug Bandler's picture

Awesome stuff on economics dude. I agree totally. I spotted Trump's neo-mercantilism crap a mile away. And of course, many Conservatives are lauding him for this; calling it "economic patriotism." Sad thing about protectionism is that Bastiat was refuting this shit 160 years ago! Damn Conservatives still believe in it! Here is where Leftists and Conservatives agree but for slightly different reasons. Leftists want protectionism to protect the unions who all vote Democrat. Conservatives want protectionism especially in labor laws to keep out the Mexicans and to save "American jobs." Its all fucking ignorance.

Regarding Trump. He says that he believes in MediCare and MediaCaid and that taxing Chinese imports will help pay down the deficit. He also says that he wants to cut taxes. He's a mix, but as Darren said, he is an economic ignoramus. As is Warren Buffet, as is Bill Gates, as is... ...pretty much everyone.

I have no interest or control . . .

darren's picture

. . . over your subjective fantasies and arbitrary, Freudian, free-associations that occur in that vast empty space between your ears. If Trump reminds you of Ronald Reagan or reminds you of Nancy Reagan, that's your business entirely. Enjoy!

As for your crap about exchange rates, pegged and floating -- so what? Makes zero difference to Trump's argument -- or the argument of any neo-mercantilist -- regarding a so-called "trade deficit." It's as irrelevant to the issue as pointing out that Trump has light brown hair and Wen Jiabao has black hair. So what?

You've certainly been proving my point: that you're an economics illiterate.

Congratulations. Seems you're the future of Objectivism.

(We're in trouble!)

China...

Marcus's picture

...has a fixed exchange rate, pegged to the US dollar.

The US has a floating exchange rate.

I said Trump reminded me of Reagan and you're not disproving that point yet.

A "level playing field"? What's that?

darren's picture

That phrase is usually a mantra of the left.

The U.S. actually lost thousands of jobs in the auto industry, thanks to the "anti-dumping" policy of the Reagan administration. It was not the Gipper's best move.

The same sort of charges could be made against China today who have a regulated currency

Not sure what you mean by a "regulated currency". Everyone has a "regulated currency", including the U.S.

much more restrictive on the import of goods into China.

China's restriction of foreign imports only hurts China. How does it hurt the U.S.?

The "Single Tax" economist, Henry George, made an interesting observation about trade protectionism. He wrote that, in wartime, many think it is destructive of a country when its enemies enforce an economic blockade, forcing it to do without imports, and forcing it to rely strictly on its own natural resources and native industries. And they are right; it is destructive to use such a tactic on another country. Yet in peacetime, many of the same people think it's great to apply the very same policy to one's own country; but instead of calling it an economic blockade, they call it "protecting domestic industry" or "leveling the playing field" or "evening out the trade imbalance."

Reagan's argument...

Marcus's picture

...was he was all for free trade, but there was not a level playing field with Japan.

The same sort of charges could be made against China today who have a regulated currency tied to the US dollar and are much more restrictive on the import of goods into China.

The real sign of the times . . .

darren's picture

. . . is that Direct Foreign Investment (the amount that foreigners are spending on capital goods) in the U.S. is about $1.7 trillion -- 162% more than the DFI in China. So much for the economic sophism that low-wage, devloping countries draw investments away from high-wage, industrially-advanced and developed ones. What investors really seek is a high return on their investment, which one only gets by investing in high productivity. China may have lower wages than the U.S., but it also has far lower productivity. That's why China is not as profitable a place as the U.S. for foreigners to invest their money.

* * * * * * * * * * * * * * * * * * * * * * * *

Bernie Sanders is a Democratic senator from the great state of Vermont. He is also a self-declared socialist. Lately, he's been campaigning against that famous state-subsidized business, The Smithsonian Institution because it sells little "chachkas" and nicknacks in its gift shop that all say "Made in China", when the museum itself is supposed to be dedicated to preserving and displaying aspects of U.S. history and American culture. Sanders believes this is a contradiction and therefore unacceptable.

The socialist senator is therefore trying to force the Smithsonian to sell only American-made gift items (these items, of course, are all in the way of Americana: little Statues of Liberty; baseball caps; "bobble-heads"; etc. ).

In this YouTube clip, the lovely and learned Sallie James of the Cato Institute schools Sanders in basic free-market economics.

http://www.youtube.com/watch?v...

Sign of the times...

Marcus's picture

I understand your...

Marcus's picture

...mercantile argument regarding Trump.

When he said things were not equal with China, I wasn't quite sure what he had in mind.

This did however remind me of Reagan.

One of the first things Reagan did when he got into office was to threaten he would impose tariffs on Japanese cars if they did not voluntarily restrict their own exports.

Soon afterwards the Japanese Government complied and announced a voluntary cap on the export of cars to the US.

I think what Trump is trying to do is get the US to start hitting above its weight internationally. That large economic muscle is one of the greatest assets the US has.

Of course all the liberals will be crying into their lattes that everyone hates the US again, but so what?

Beck and O'Reilly debate...

Marcus's picture

...Trump.

Just like Olivia, for now, I take O'Reilly's side.

Trump is a chump

darren's picture

Boudreaux is obviously a liberal

"Liberal" in the pre-Woodrow Wilson progressivist meaning of the word? Yes. So was Rand. So was Mises. So was Hayek. So was Reagan. So am I. So what.

who is complaining that Trump is dissing the economy

It's OK to "diss" the economy as long as one "disses" the correct malady. Trump seriously misdiagnoses the problem, and either has no idea what he's talking about (a strong possibility) or he's simply trying to capitalize on anti-China hysteria.

Trump is an old-fashioned mercantilist who commits old fashioned mercantilist fallacies that were long ago exploded by Adam Smith, David Ricardo, Nassau Senior, and others. This is not even Austrian economics; this is plain-vanilla Econ101 British Classical School economics. Don't believe me? Ask George Reisman.

Trump asserts (as do other mercantilists) that when U.S. consumers buy $100 worth of Chinese-manufactured consumers goods at, e.g., Wal-Mart, Chinese consumers must purchase $100 of American-made goods in order to avoid a so-called "trade deficit." He then asserts (as do other mercantilists) that he doesn't see this parity occurring. He asserts (as do other mercantilists) that he sees U.S. consumers purchasing $100 of Chinese-made consumers goods, and Chinese consumers (or the Chinese government, it makes no difference to the logic of the argument) purchasing only $80 worth of American-made goods, thus leading to a "$20 trade deficit" (I'm inventing numbers here for the sake of argument. Use any numbers you want.). This is completely incorrect, and you should read -- or reread -- Henry Hazlitt's chapter on "trade deficits" in "Economics In One Lesson" for a longer discussion of the issue. Look:

When U.S. consumers spend $100 on Chinese-made goods at a Wal-Mart in Kansas, that $100 obviously goes first to Wal-Mart, then to a distributor, then to an importer, then back to the manufacturer in China. Once the Chinese have it, what can they do with it in their own country? Nothing! Can they use that $100 to buy tea in Shanghai? No. In Shanghai, providers of tea accept only Chinese yuan, not U.S. dollars. Can they spend it on a dinner of Peking Duck in Peking (I mean Beijing duck in Beijing)? No. Restaurateurs in Beijing do not accept U.S. dollars, they accept only Chinese yuan. So -- calling Captain Obvious -- where's the only place the Chinese manufacturers can spend the US$100 they just earned? BACK IN THE U.S. That same $100 has to come back to the U.S. if it's to be spent at all. Now here's where Trump (and other mercantilists) go wrong, and part of their error -- but only part -- is based on the idiotic definitions used in various international bookkeeping metrics: Trump assumes that unless the Chinese use all of the $100 to buy $100 of American-made consumer goods, then it would mean that Americans "spent more" in China than the Chinese spent in the U.S. (thus apparently causing the dreaded "trade deficit"). So, in other words, if the Chinese decide to use that $100 to purchase only $80 of American-made consumer goods, and use the remaining $20 to buy, e.g., stock in a U.S. corporation (or a government treasury bond, or real estate, or any sort of capital investment), the government's definition of "balance of trade" would NOT include the $20 the Chinese spent on a non-consumer good -- or what the Austrians would call a "higher-order good" -- such as any investment instrument (stocks, bonds, real estate, etc.).

Again, Henry Hazlitt in "Economics In One Lesson" is extremely lucid on this issue. If you don't own a copy of it, there are free PDF versions of it floating around the Internet.

Now, does it hurt the U.S. economy if the Chinese return our $100 by purchasing $80 of consumer goods and $20 of producer goods? No, of course not. Just replace the word "Chinese" with the equally valid (economically speaking) words "citizens of Missouri" to see why: If the good people of Kansas buy $100 worth of consumer goods from the good people of Missouri; and the good people of Missouri, in turn, spend only $80 on consumer goods in Kansas and $20 on producer goods in Kansas (such as real estate, stocks, bonds, or just putting the $20 in a savings bank in Kansas), how does that hurt the people of Kansas? It doesn't. So what difference does it make where we draw the border between Kansans and those with whom they trade? It doesn't.

And what would anyone think -- especially someone who's read Hazlitt and taken at least an Econ101 course -- of a Kansan, perhaps with the name "Trump", who shouted "WE MUST STOP ENRICHING THOSE GREEDY MISSOURIANS AT THE EXPENSE OF KANSANS! WE'VE SPENT $100 OF KANSAS MONEY ON MISSOURI-MADE GOODS, AND MISSOURIANS HAVE SPENT ONLY $80 OF THEIR MONEY ON KANSAS-MADE GOODS! OUR FREE TRADE POLICY HAS LED TO A $20 TRADE DEFICIT! WE MUST PUT A STOP TO FREE TRADE! VOTE FOR ME BECAUSE I BELIEVE IN "FAIR TRADE", NOT FREE TRADE!"

There's plenty to "diss" the U.S. economy about, all of it involving government intervention: (i) the combination of minimum wage + coercive labor union laws is probably the chief cause of "structural" (a buzzword in economics for "persistent" or "intractable") unemployment; (ii) the federal reserve's constant "easy money" policy -- fiat-money inflation -- is responsible for the boom-bust business cycle; (iii) even without the federal reserve, the mandated "legal tender" laws, forcing all economic actors to accept paper money in payment of any and all debt, forces everyone, ultimately, to submit to the fiat-money expansionary games of commercial banks -- "fractional reserve banking" -- which also leads to business cycles; (iv) government licensing requirements restricts competition and in some cases leads to de facto monopolies; (v) government regulation of businesses (setting rates, establishing "safety practices", etc.) restricts competition and in some cases leads to de facto monopolies.

There's more, of course, but none of it has anything to do with trade -- voluntary trade! -- with China.

Trump may claim that he's a "tax cutter" but since he favors import restrictions, such as tariffs, then it means putting a tax on inexpensive goods coming to us from China; such taxes not only hurt American consumers, but by artificially encouraging U.S. production of goods that Americans would normally NOT purchase (because they're too expensive), it distorts the entire structure of production, causing scarce resources -- including labor -- to flow into sectors, industries, and businesses, that are actually NOT productive. The whole thing causes a net loss in wealth to the economy.

It's the sort of thing James Taggart would approve of, not Dagny.

Personally, I think Rush Limbaugh is too economically knowledgeable to fall for Trump's demagoguery. Limbaugh knows all about Mises, Hayek, and Sowell (Tom Sowell has even filled in for Rush on a number of occasions), so I've always found him to be pretty reliable on economic issues. I think Rush, Hannity, et al., might be handling Trump with kid gloves because, for the moment, Trump is the only one making big waves with the "birther" issue, which is starting to resonate with many people. The problem with the birther issue is -- obviously -- that it's literally explosive. If it were ever generally accepted by the majority of people that Obama was not a "natural born" citizen (which I believe he is not), as necessitated by the Constitution, it would completely invalidate everything he's done since he took office in January '09; it would mean that he was not a constitutionally legitimate POTUS and that we actually never had a 44th President!

Smiling

when according to him it is robust and manufacturing is growing.

Manufacturing is robust and it is growing. All economists who have looked at the data are clear on this: the U.S. is still the world's leader in manufacturing output; i.e., manufacturing productivity, NOT number of manufacturing jobs. The NUMBER of manufacturing jobs has decreased . . . but the reason is not "cheap labor from China"; the reason is "progressively better (and more) technology used to replace labor." Here's an example with similar reasoning: in the early 1700s, over 90% of the workforce were employed on farms in agricultural jobs -- over 90 workers out of 100. Today? A little over 2% -- around 2 workers out of every 100 work on farms. Why? Were American agricultural jobs "outsourced" to cheap Chinese farm labor? No, of course not. The NUMBER of agricultural jobs drastically shrank because the PRODUCTIVITY of agricultural labor drastically increased because of better (and more) technology: chemical fertilizers, pesticides, mechanized farm equipment, better and faster transportation to market, refrigeration, genomics, etc. Do we hear people bitching and complaining about the loss of farm jobs? No. Yet when precisely the same pattern -- known as economic progress -- is repeating itself in the manufacturing sector, we get the Trumps of the world crying "Boo hoo! It's the fault of the Chinese and their cheap labor!"

Anyway, Trump is a chump. If he can step on the right toes by talking up the birther issue, that's great. But there are far better candidates than he when it comes to economic issues.

I am heartened...

Olivia's picture

that Trump is going to be in the race. He is a great antidote to Obama's simpering apologies for being an American. Trump is proud to be an American - and oozes that confidence naturally. It will up the competitive edge of the whole election, making it a truly interesting one to watch.

Darren...

Marcus's picture

...that's a strange criticism you have linked to.

Boudreaux is obviously a liberal who is complaining that Trump is dissing the economy when according to him it is robust and manufacturing is growing.

Even if you happen to think Trump is technically wrong that the US is not working, surely as a libertarian/ objectivist you would have to share his sentiment?

If his slogan last time was "soak the rich" this time he's saying taxes should not be raised and spending should be cut.

Haven't you got anything better than this to attack Trump on?

Reagan trumps Trump

darren's picture

Trump is a moron. He's not so much a "tax and spend" guy; he's just a "tax" guy. The last time he announced he was running, his slogan was "soak the rich."

Anyway, it doesn't take any bravery whatsoever to publicly criticize Zerobama on his policies or even on the birth certificate issue -- especially when you're as wealthy as Trump (the 2012 election is expected to cost each candidate close to a billion dollars).

Much as they despise Zero, however, libertarians are nailing Trump on his anti-free-market position, and general ignorance of basic economics. Below is a link to "Cafe Hayek," a libertarian / Austrian-economics blog by Don Boudreaux and Russ Roberts, both professors of economics at George Mason University in Virginia (with one of the strongest pro-liberty economics departments in the country). Roberts always posts straightforward essays, but Boudreaux usually posts in the form of brief "open letters" to some newspaper or magazine (which occasionally publishes them). Below is an open letter he sent to Rush Limbaugh after the latter interviewed Trump at the beginning of March.

http://cafehayek.com/2011/03/o...

I agree...

Marcus's picture

...that there is a lot of wig.

What reminded me of Reagan is that he seemed very open in this interview.

Maybe he was just pulling the wig over my eyes, but I thought the attacks he made against Obama were quite courageous for someone considering running.

He also seems very sure of himself and his business and negotiating skills.

I don't know what his stated political views are, but at the moment you really need a president who is for cutting the deficit and regulation and will knock some heads together.

You do not need another career politician as President, you've had too many of those already.

Reagan said his union negotiating skills served him well in politics, so maybe Trump's business negotiating skills will do the same?

Trump

Kasper's picture

is painful. He's Obama in reverse. Lots of empty rhetorical noise! Remember his neutrality when asked whether he backed McCain or Obama and he said he liked both guys? This when Obama was openly declaring his socialist policies in his pre-election speeches?

Trump doesn't stand for anything.

Trump verus morality?

Sandi's picture

All of a sudden he is presidential material?

I can't see the meat because there is a whole lot of wig coverage.

Ronald Regan, upon what basis Marcus?

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