President Donald Trump and Wilbur Ross Drop A MOAB on Canada

Posted: April 28, 2017 in FRONT PAGE

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It all started with a visit to Wisconsin on April 18, 2017; a speech at Snap-on tools. (If you haven’t seen the speech; you should. HERE. Donald Trump learned about recent financial hardship caused by protectionist Canadian trade tariffs Canada imposed on Wisconsin dairy farmers; to summarize the problem, Canada imposes an unfair tariff on American milk exports of over 200%! Ouch. President Trump vowed to solve that problem quickly:

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There’s TEETH in this largely ignored tweet by POTUS:

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Enter America’s tough-as-nails Commerce Secretary Wilbur Ross:

There are TWO key issues Wilbur Ross’s press conference addresses:

Bad Trade Deals.
Leverage: Lumber. Dairy. FTA.

The Canadian soft-wood tariff has not gotten the attention it deserves. Donald Trump is the smartest, most capable Chief Executive America has ever had; as Candidate Donald Trump put it: POTUS will nominate the “best and brightest” to negotiate America’s trade deals, instead of “stupid people” instead of “political hacks” which have been running our country for so long. To understand President Trump’s genius, first understand the Canadian soft-wood lumber tariff for what it is: 4d chess-


Bad Trade Deals.

The US has many bad trade deals, with many countries – why? Why so many bad trade deals? Why have we allowed them for so long?

That is the key question – why? Why would America allow other countries to rape US in trade? The answer to this key question is multi-faceted, but I’ll talk about a few of the reasons.

The first answer: The Milton Friedman/Club For Growth myth: that bad trade deals, that corporate dumping actually helps us. Let me start out by saying on most issues, I’m an Ayn-Rand/Milton Friedman capitalist. Milton Friedman on most issues was a genius, on international trade he was flat-out wrong. Shock. Gasps. Crowd goes silent. Attacking Milton Friedman is verboten. Milton Friedman did a video series that many so-called conservatives have embraced as Biblical truth, kind of like the political left in this country embraces the climate change myth, the political right embraces Milton Friedman’s view of trade and dumping.

Again Milton Friedman is a genius – every American who has the time, aptitude, and interest in economics should watch Friedman’s series called Free To Choose on Youtube. It’s a must-see; pure genius. It will change the way many view the world. Unfortunately just like communism makes assumptions about human nature, so did capitalism. Milton Friedman is as much a scientist as Einstein, but like Einstein he is fallible.

On international trade, Friedman’s hypothesis, which I share, is that a global, free-trade, capitalist system would benefit everyone involved – it would create unprecedented global technological growth, which would in a few decades eliminate poverty from Earth. Unfortunately, at this point in time, this world is entirely theoretical. A global free-trade marketplace has never happened, and may never happen, so, we’ll just have to wait and see on this hypothesis. There are many reasons I support this hypothesis, a full study of human-nature and economics are beyond the scope of a blog post.

Where I differ with Friedman is on another hypothesis he proposed: Trade deficits and another nation’s dumping of their products on our shores are actually good for America. This was a shocking, controversial assertion at the time; unfortunately many on the right believed this horse-shit then and still believe it to this day. It’s such a broad, strange, backwards belief system that I must explain how it works, and how Friedman’s mind works.

Let’s take Friedman’s theory on dumping. What is true dumping? Dumping would be the practice of selling a product at a loss with the goal of driving a strategic competitor out of business. How would that work? Let’s say the South-Korean nation wanted to own the global ship-building industry. The national leaders many decades ago decided, if we can own the global ship-building industry, we can employ millions – not just making ships, but eventually all the side business such a monopolistic ownership would create. Ever hear of Hyundai? That’s a South Korean ship manufacturer. The potential for spin-off business is very real. How it works:

  • Nation state decides on strategic multi-year goal. (South Korea decides it will own ship manufacturing.)
  • To accomplish this goal, South Korean government decides to subsidize the cost of ships. (South Korea decides to sell ships at a loss, dumping.)
  • American ship-builders go bankrupt.
  • South Korean ship manufacturers, now the world’s premier ship-makers can then raise their prices and make a profit.
  • South Korean workers gain higher wages.
  • The South Korean government gains new tax revenues.

Nice scam, huh?


 

According to Friedman, America should not fight dumping, but rather embrace it. “If the South Koreans want to sell ships at a loss, let them.” By allowing dumping, American companies will figure out something else to do, and ultimately come out on top. Quite a statement, quite a belief system. Let American ship builders go bankrupt, our nation will gain in efficiencies elsewhere.

This process took decades, but it worked. America lost an entire industry. Millions of jobs. But, Friedman was 100% correct, all those young men who used to make ships can now go get a job at Starbucks manufacturing coffee. We can really make some great fucking coffee. Although you can’t purchase a house making coffee. You can’t purchase a car making coffee. See the problem?

America lost high-wage manufacturing jobs and ships.

Welders earn $60K + a year.

Steel Workers Earn $60k + a year.

Baristas earn $18K a year.

But, it’s really a lot worse than that. Wages for welders are artificially low because of supply and demand – quite simply, when there are more people than jobs available, wages go down. So, if there was a manufacturing boom in America, then welder’s salaries would go even higher. But also, think about this. When a welder earns a good wage, he buys a house, furnishes it with appliances; buys a car, and buys more coffee. So, a welder employed making ships, creates a demand for homebuilders, auto-plant workers etc-

Carpenter $50K year.

Auto-worker $50K +

Of course all of these gainfully employed individuals pay taxes, so our national debt disappears, but that’s even another dimension to this equation. Baristas do not pay taxes, period. In fact, the government pays them EITC. In a manufacturing-based economy, the wages of baristas will go up, as there are less unemployed people available to work for nothing. My point?

Friedman grossly underestimated the cumulative effect on so many industries that dumping creates. When we allowed South Korea to take our ship-building industry, America destroyed ourselves.

There are other reasons why America allowed our manufacturing jobs to go overseas:

  • Political bribes- (follow the money, it will be there.)
  • Traditional Republicans hated the unions, wanted to break them.
  • Traditional Democrats hate the union workers, because a person making a living is hard to control. Far easier to control a barista and get him to vote for Bernie.
  • Traditional American politicians have no interest in the long term. By the time the damage is complete, the politician is long gone.
  • The unemployment-rate is the traditional way success is measured, rather than purchasing power of working-class.
  • Globalists do not care about working class- an educated capitalist can make a good living in any economy.
  • The media is owned by global corporations.
  • Titans of industry are focussed on their bottom line, low wages are good for profits.

Ever hear of the Dow Jones “industrial” average? Back in 1885, Charles Dow created an average of 30 “industrial” stocks.




Take a look at America’s current Dow “industrial” components- see a problem? Those are some great Dow companies, BUT, most of them don’t manufacture anything. A true manufacturing index would show how sick America’s industrial base had become after globalization decimated us:

 

So if the Dow stocks change every year, and the new Dow index goes up every year, and the unemployment rate stays low, and the controlled globalist media continues lying – NOTHING CHANGES. Well, President Donald Trump is change. He will bring America’s manufacturing jobs back!

In summation on this first section, America has allowed bad trade deals to continue year after year for many reasons – America has allowed dumping for many reasons – Wilbur Ross’s decision to hit Canada is huge, and it’s a sign of great things to come –


Leverage.

I remember reading a quote from Lee Iacocca in this ^^ book, (an analogy Iacocca used about trade barriers and America’s willingness to fight back when taken advantage of,)  unfortunately, I no-longer own the book, nor can I find the exact quote online. But, my best memory of his quote: “Rape is uncommon among porcupines – for obvious reasons – but a female porcupine without her quills – WATCH OUT.”

A nation needs to be able to defend itself from dumping, and from unfair tariffs. If America gives free access to our markets, other nations should allow US the same access to theirs. Fair trade VS free trade, or as POTUS Trump would put it “stupid trade.” This is not Milton Friedman’s belief. Again, he saw no reason to protect domestic companies from overseas competition, ever. If others can make stuff cheaper, let them. Iacocca’s belief was simply that we should allow other nations free access to our markets, but we must be willing to defend ourselves.

Iacocca, like Trump, feels that if another nation targets a domestic industry- we must fight back. But how?

Leverage. Leverage is the ability to impose your will on someone else. To force another to yield to your will. So if Canada tries to protect its dairy farmers by imposing tariffs, we must be willing to defend ourselves. But how?

Canada dumps trees below cost. America has plenty of trees – that’s where to hit them! Hit one of our industries worth millions, dairy – we’ll hit one of theirs worth billions – lumber. Beautiful!

In the time it takes to stroke a pen, President Donald Trump and Wilbur Ross have leveraged Canada; they have no choice but to yield to our will. Canada will yield, they must. Prediction, this one bold move will mean other trade disputes will be easy to solve.

What else was leveraged?

  • Donald Trump will gain the ability to negotiate from congress, quickly.
  • NAFTA will be a much easier negotiation.
  • Japan, China, and South Korea will all be much easier negotiations.

Congress has been dragging its feet in granting president Trump Fast Track Authority – this changes now. POTUS has leveraged Congress, by making it clear: he can negotiate with CANADA and MEXICO with Congress’s help or without it. Trump will make Mexico pay for The Wall. Trump will renegotiate NAFTA. Trump will negotiate free trade deals globally, to the benefit of American manufacturing.

4d chess:

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