The Washington Post (on Monday on p. A11) has a revealing story about how President Trump has essentially shafted an important world leader who may have tried harder than any other to please and appease Trump from the moment he became president, with the story ironically reporting that supposedly Trump views the friendly feeling as mutual and has said much more respectful things about this leader than almost any other, with perhaps Vladimir Putin being the prime exception. This world leader is Japanese prime minister, who rushed to the US to be the first world leader to meet Trump after his inauguration and who has spoken on the phone with him more than any other, as well as playing lots of golf with him and even giving him a gold-plated golf club worth $3800.
But it seems to have been largely for naught, with Trump basically giving Abe next to nothing he has asked for and actually engaging in policies on trade that seriously damage the Japanese economy and certainly Abe politically in Japan, with his refusal to make an exception for Japan on the steel and aluminum tariffs, even as Abe held back from retaliating against US exports as pretty much all of the rest of the US’s major trading partners did when they were it with them. And Trump is threatening to impose tariffs on Japanese cars and demanding that Japan unilaterally open up more to US agricultural goods while offering zero in return to Japan. This reportedly came to a head in late June when Trump apparently went on and on about Pearl Harbor and made numerous simply false statements about Japanese policy and its economy, all of this on top of the US withdrawing from the TPP, which has been especially important to Japan, with Japan leading the remaining ten nations to follow through on it despite the departure of the US under Trump. The Japanese have pulled back and all but given up on Trump being remotely reasonable on these issues, with Abe very frustrated that Trump is acting as he has been dong.
President Trump’s administration has pursued a policy aimed at getting North Korea to give up their nuclear weapon systems. Surely no one can doubt the benefit to everyone if that objective was achieved. If President Trump fails he will have done no worse that previous administrations.
The US and South Korea have been conducting large military exercises for decades. Skipping them while North Korea is dismantling its nuclear facilities will not change military preparedness very much. And I would bet the South Korean government argued in favor of skipping them.
Japan does have valid concerns about the kidnapping of their citizens by North Korea and their return to Japan. But I see no good reason for the US to inject that into talks about much more important issues.
And TTP is another trade treaty which would have achieved exactly what previous trade treaties had already achieved. In the aggregate those have been a disaster for the US working class. The theory that other countries would produce what they are better at producing and the US would produce what it was best at producing had a serious flaw. THERE WAS NO REQUIREMENT THAT ANY OTHER COUNTRY PURCHASE GOODS FROM THE UNITED STATES! And our trade partners have avoided purchases from the US as much as possible. Previous US administrations have allowed that to continue as trade deficits soared.
Surprise, surprise! Having achieved this distorted trade and extremely profitable access to US consumer markets, our trade partners are extremely reluctant to give it up.
When it comes to international trade, China, Japan, Germany and other countries need us much more than we need them. WE HAVE THE LARGEST CONSUMER MAKET IN THE WORLD.
HFCE is Household Final Consumption Expenditures in millions and % of World HFCE is my calculation since it was not included in their table.
Year——Country—————-HFCE———% of GDP % of World HFCE
2017——World————— 43,799,056——- 58%
2016——United States —— 12,820,694——- 69%———- 29.3%
2017——China—————- 4,697,723——– 38%———- 10.7%
2016——Japan—————- 2,756,596——– 56%———- 6.3%
2017——Germany———— 1,952,625——– 53%———- 4.5%
2017——United Kingdom— 1,724,051——— 66%———- 3.9%
Data from: https://en.wikipedia.org/wiki/List_of_largest_consumer_markets
If the US stat for 2017 was available then the US % of World HFCE would be even higher. FRED is reporting $13,321,407Millions for 2017 which would raise the US % to 30.3 percent.
See: https://fred.stlouisfed.org/graph/?g=l4p4
Largest consumer market in the world inflated by debt expansion. Stop the debt and the US wouldn’t have near as large consumer market. Trade is irrelevant. It is a creation of debt expansion.
What you want is less consumption and better made products which last longer and sell less. Self sufficiency requires less consumption and more investment per person. Jim, you cannot fathom that. You live a fantasy that only exists because of debt. Stop whining about trade when that trade exists to support debt expansion. When that trade ends, US financial markets will liquidate, doing exactly the opposite of what you want.
President Trump is a traitor and a globalist zionist jew who lies about his ancestry. He and his children should be arrested given to Iran as basis for a new treaty against zionism.
JimH bleats: “President Trump’s administration has pursued a policy aimed at getting North Korea to give up their nuclear weapon systems.”
BWHAHAHAhahahaha! That’s hilarious.
Trump hasn’t pursued any coherent policy on NK. He’s pursued media coverage. And he’s presided over the final stages of NK’s ballistic missile development program.
Bert:
You were doing pretty good until the three letter word appeared. Lose that type of comment as it destroys any integrity you might have or had. You remind me of a taxi cab driver who went by the name of “Days” and was heavy into sabotage of the WTC and the Rothchilds taking over the economy.
Jim:
Labor intensive manufacturing goes to Labor intensive countries and capital intensive manufacturing goes to capital intensive countries. It is that simple. You can figure out what we are. Fewer people in the US makes more things because of process improvements and more capital being applied to the production process. Your argument should be about productivity gains going to Labor. NDD has been all over the low income growth for non-management people. I would be more concerned about Overhead in the US as opposed to China and the magnitude of it applied to Labor.
The last time we messed with trade and Japan, they snuck up on us and almost destroyed the navy. Now it is a bigger world with more participants. The impact is in economics, a different type of war.
JimH – the US doesn’t have to purchase goods from other countries either. Old time Republicans called it Free Trade. No one was forced to trade or not trade, the parties came to a mutual agreement – or not.
Americans bought cleaner air and water by exporting polluting industries. They lived high on the hog by using credit to import cheaper goods from overseas. I don’t think they want to go back to air you can see and 1000 sf homes for families of 5.
Sad that the best ally American factory workers have had in the Oval Office since 1980 is the likes of Trump. Maybe if previous presidents had taken a tougher stance on the exporting of American jobs to Asia, Trump would not BE president.
@Jane E–tell that to a hopeless, unemployed factory worker whose kids are dying of opioid abuse. For voters it always has been about the stupid economy–meaning THEIR personal economy.
Poor does not translate into drug abuse.
Run75441,
JaneE,
So neither of you believe that there ought to be more balance in our foreign trade.
You don’t mind seeing Americans purchasing more and more trade goods and financing a growing Chinese navy which is used to threaten their neighbors in the South China Sea. (Vietnam, Indonesia, Philippines, and Brunei )
Where do you suppose that will end? In 1950 China invaded and conquered Tibet, a peaceful country which was no threat to them whatsoever! They did it because they could.
Currently we have a Personal Savings Rate that primarily applies to the wealthiest Americans. And we have Total Household Debt that primarily applies to everyone else.
From the New York Fed statistics for Total Household Debt and Credit
Year ———— Increase in Total Household Debt
2014 ————— $306Billion
2015 ————— $289Billion
2016 ————— $460Billion
2017 —————$572Billion
Apparently the Republican tax cut dropped the increase in borrowing to $145Billion over the first half of 2018. That doesn’t solve the problem, it just buys time and increases the federal debt faster. Those individual tax cuts will expire in 2025. What then?
How economically weak does the United States have to get, before those who have profited the most from foreign trade, accept that unbridled free trade was never the correct answer?
Jim:
Manual labor the way it existed in the fifties and the sixties is gone forever unless you are a plumber, electrician, carpenter, machinist, etc. Assembly work such as making a wire harness has gone to Mexico, Thailand, China, Malaysia, Vietnam, Philippines, etc. I have been in those plants. We send them the terminals, connectors, Christmas tree push pins, etc. (more than likely made in the US) which are the more complex components. They assembled the harness and sent it back to us. It is that simple. Manufacturing since the sixties has become extraordinarily efficient and cheap hence the rise in cost of services as PGL pointed out.
You can stomp your foot all you want, it is not coming back. Indeed it will move from those countries to other countries as the Overhead is cheaper. If you want to fix Labor, work 32 hours a week at 40 hour pay. More people working with a small increase in cost. Sandwichman does a good job of explaining this.
Trumps tax break bill will get dumped on the Middle Income bracket in about 8 years and the 1% will walk away.
Trump doesn’t give a flying shit about “manufacturing workers”. If he did, he wouldn’t have jacked up commodity inflation and destroyed manufacturing profits like he has. Reminds me of the mid-70’s a bit.
Nor does that “drug use” matter. Most of those areas have always been poor. My Grandfather and Grandmother on my father’s side lived in WV(one of the druggie areas I suspect you mentioned) until the late 30’s when they bailed out……….fast. I remember those Grafton holiday trips in the 60’s……….the drugs and alcohol were there then as well(instead of Oxy, you had the “Ludes”). The same woe is me mentality.
I can’t help it the Marshall Plan era is over. The material extraction boom is over and the conditions that created the US as the only power left standing after a major global war, is over. Self-Sufficiency requires living more frugal and less natural resource wasting. Or you can be like Run and just accept the globalized dollar racket and continuing to destroy Midgard(or Earth as it is more commonly known) via pollution.
Just two points.
The US has been running a chronic trade deficit since the 1970s. This is a macro issue tied to the US dollar being the dominant world currency that everybody wants for doing any international trade. Until that ends (and the US savings rate increases), the US will run trade deficits.
The other is that Clinton with the help of Carter cut a deal with the NKs on nukes to havee them not get them. They were following that. It was W. Bush who undid that two months after he entered office. Most people do not know this although I have posted on this numerous times on Econospeak.
Run75441,
I am trying to point out that changes will have to be made. The current status quo can not continue over the long term. Either we maintain a democratic form of government and force change on corporations or our form of government will evolve into something else. (Something oppressive)
Look back at the labor movement in the 1920s and 1930s. There were outbreaks of violence and the government had to step in or allow private warfare. In the 1930s, President Roosevelt’s administration changed laws to empower labor. That was not done on a whim, how was a democratic government to survive once it was perceived as favoring one segment of the population over another?
We are seeing waves of increasing Total Household Debt. The last one peaked in Q3 of 2008 at $12.675Trillion. Then it dropped to a low point of $11.153Trillion in Q2 of 2013. From there it began to rise again and at the end of Q2 2018 it was $13.293Trillion. Currently it appears that the Republicans tax cut is reducing the increase in total household debt, but it is still increasing.
This has been occurring at times of historically low interest rates. What happens to working class spending power as interest rates increase and then in 2025 as the individual tax cuts expire? Seventy percent of our economy is driven by consumer spending. When consumer spending falls, the day of reckoning will arrive.
I believe that free trade was and still is damaging the US domestic economy. In order to maintain their standard of living, US consumers increased their debt levels from about 1996 to 2008. That effectively hid the effects of free trade until consumers’ ability to borrow more money ended. Then came the bankruptcies, the realization of fraud, a recognition that the banks had been reckless, and then the bailout of the banks and the economy in general. Almost a trillion dollars in stimulus and a 0.25% Fed Funds Rate.
From 2008 to 2017 inclusive, the national debt had increased by $11,237Billion. During the previous 10 years the national debt had increased by $3,595Billions and that period included very expensive wars.
Where do you think that additional $7.642Trillion of federal spending went if not to prop up the US economy?
National debt in billions at the end of the 3rd quarter of the year.
Year ———- Debt ———- % of GDP —- Increase in Dollars —– Increase in %
1998 ———- $5,526———-61% ———- $113 ———————- 2.09%
1999 ———- $5,656———-58% ———- $130 ———————- 2.35%
2000 ———- $5,674 ———- 55% ———- $18 ———————- 0.32%
2001 ———- $5,807 ———- 55% ———- $133 ——————– 2.34%
2002 ———- $6,228 ———- 57% ———- $421 ——————– 7.25%
2003 ———- $6,783 ———- 59% ———- $555 ——————– 8.91%
2004 ———- $7,379 ———- 60% ———- $596 ——————– 8.79%
2005 ———- $7,933 ———- 60% ———- $554 ——————– 7.51%
2006 ———- $8,507 ———- 61% ———- $574 ——————– 7.24%
2007 ———- $9,008 ———- 62% ———- $501 ——————– 5.89%
2008 ———- $10,025 ——— 68% ——— $1,017 —————— 11.29%
2009 ———- $11,910 ———- 83% ——— $1,885 —————– 18.80%
2010 ———- $13,562 ———- 90% ——— $1,652 —————– 13.87%
2011 ———- $14,790 ———- 95% ——— $1,228 ——————- 9.05%
2012 ———- $16,066 ———- 99% ——— $1,276 ——————- 8.63%
2013 ———- $16,738 ———- 99% ———- $672 ——————– 4.18%
2014 ———- $17,824 ——— 101% ——— $1,086 ——————– 6.49%
2015 ———- $18,151 ———- 99% ———– $327 ——————– 1.83%
2016 ———- $19,573 ——— 104% ——— $1,422 ——————- 7.83%
2017 ———- $20,245 ——— 103% ———- $672 ——————- 3.43%
2018 ———- $21,478 (est.)— 107% ——— $1,233 ——————- 6.09%
From: https://www.thebalance.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287
I added the ‘Increase in Dollars’ and ‘Increase in %’ columns in the table in my last comment.