Thursday, March 09, 2017

How can it be good business if losses are $500 billion per year?

Donald Trump won the election by promising to bring jobs back to the US. Since his victory a host of experts, especially foreign ones, have written numerous articles on why it will harm the US more than its trading partners. Professor Koichi Hamada conflates globalization and international diplomacy with democracy. About Trump he writes,"He has, after all, shown a clear preference for personal, bilateral deals, like those he makes with his businesses, rather than engaging in formal, much less multilateral, diplomacy. In a democracy, such personal deals don't necessarily work." Confusing. 'Bilateral deal' does not mean Trump will be negotiating alone, he will have his team with him. And democracy at home has nothing to do with international diplomacy. After all, Trump was elected by US citizens to protect their interests, just as Shinzo Abe was elected to protect Japanese interests. Matt O'Brien wrote that NAFTA cost only 0.3% of manufacturing jobs, which is negligible. Jobs were lost mainly due to automation and the strong dollar. Maybe, but if you take other countries, especially China, a lot of jobs have been lost. China is Germany's largest trading partner, but Germany imports the most from China and exports the most to the US. Professor Jim O'Neill advised that the US and Britain, after Brexit, must increase trade with China, never mind the negative trade balance. The Chinese have been the most aggressive. Professor Keyu Jin wrote that the US has more to lose in a trade war with China because China will stop imports of aircraft and soybean products and dump US treasuries. Illogical. If China dumps a trillion dollar worth of US treasuries the renminbi will become much stronger relative to the dollar and exports will plummet. That is what Trump wants anyway. Professor Yasheng Huang is savage. "There is no method in Trump's madness," he wrote. "His knowledge of international economics is either non-existent or 10 years out of date." Indeed. Working at MIT, in the US, he can be uncouth about Trump, would he write the same about Xi Jinping while working inside China? Indians say that restricting H1B visas would be harmful for the US because it would increase costs. Alok Sheel wrote an essay on globalization in which he says that the Roman and British empires were examples of globalization. No wonder the global GDP stayed at the baseline for thousands of years, until industrialization brought colonization and loot of resources, when western countries became wealthy. Every expert warns that the US will suffer if it abandons the present system. Why is it so good if the US trade deficit is around $500 billion every year, reaching a high of $762 billion in 2006? Being a businessman Trump wants to stop the losses. Naturally.

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