Protectionism

[worthy]

And who can argue with the authority of a guy who in a good year rakes in US$2 billion in personal income betting on the direction of the energy market? (Even if he loses most of it the following year.)

Buying oil from "furriners" evidently makes "them" rich and "us" poor. Just like when I spend money at the supermarket, giving them my money while I get nothing but food and drink in return!

In contrast, when I pay, say double, for the same product from a fellow subject of my resident master, it enriches me. I got that straight?

[WishingWealth]

RE: T Boone: Is he still at it with his sophisticated scam trying to get the The Leader to invest in windmills?

The beautiful ads bring tears to your eyes: Former [dirty oil] tycoon saw the light and he now wants to plant a windmill in every backyard.
The People will supply ze moneys to TB, TB builds the WM, reaps the benefits and shares the loot with his Merry Men.
Money 101 all over again.

WW

[FinEcon]

....Just like when I spend money at the supermarket, giving them my money while I get nothing but food and drink in return!

.....best example ever!

[worthy]

Yep, old Windmill Pickens is still at it, even while deflecting brickbats from left and right.

Daniel Plainview with a smiley face. No need to slant drill when you can get Uncle Sam to put his hands in everybody's pockets for your benefit risk free.

[worthy]

More coming, said worthy on 27 March.

Right on time comes the Blessed Barack with a 35% tariff on passenger and light truck tires manufactured in China. (Or as the geniuses at CNN call it, "some" tires.) That would include products made by American companies there too.

China is, of course, helpless in face of any and all actions taken by God's Chosen People.

[WishingWealth]

Of course China is open to all goods, no restrictions on foreign property ownership, the rule of law applies equally to foreign and native investors bla bla bla...

Send a product there for manufacturing and a year and a half later, copycats* are for sale in your market; sometimes with just a slight variation on the trade name.**

Yes, cry me a river for the poor Chinese having to face someone ( a country) that still has some balls - albeit rather atrophied by now.

Not to worry worthy, when it comes to commerce rules, the score is still:
China: 10000
ROW: 1

WW

* of much inferior quality but usually a buncha lies and a bow is all your protests will bring.

** No, I did not have to read that from Mr. Dr. Krugman and the NYT, I/we went through it oftentimes where I used to work.

[worthy]

Ah, yes, the hell with economics. It's a war for the Homeland. Nationalism over consumerism. International trade is a fraud. (In fact, I'm not too sure about inter-city trade either.) Sneaky, slitty-eyed Nips, Chinks (and 905ers, for that matter) fooling us all with their lousy merchandise made with slave labour. Until all the world is the same, I'm waving the Raccoon City rag forever and paying through the nose. It's the way to true wealth.


Raccooon City Über Alles

[WishingWealth]

Hyperbolating again?

I do my share of buy China. I do it for my bottom line and because I know they have done a lot to remove lots of fat* from the systems.
And I'm all for more. Be it from China, India, 'Nam, or Mars (I believe there's a tribe there willing to work for less than the Bangla Deshi.)

It does not mean that my head is buried in the sand or somewhere it's dark.
Contrary to the see no evil, hear no evil religion/diktats according to The Worthy One.

WW

* I believe there's a claim that WM (with mostly imported goods) is responsible for almost 1.5% reduction of inflation on a year over year basis. Just from memory; I could be out of left field on the number.

[parvus]

Ah, yes, the hell with economics. It's a war for the Homeland. Nationalism over consumerism. International trade is a fraud. (In fact, I'm not too sure about inter-city trade either.) Sneaky, slitty-eyed Nips, Chinks (and 905ers, for that matter) fooling us all with their lousy merchandise made with slave labour. Until all the world is the same, I'm waving the Raccoon City rag forever and paying through the nose. It's the way to true wealth.


Raccooon City Über Alles

Hmm, does this mean coal carted from Nannycoke, fetching energy at its source in Oil Springs? Hibernation for vegheads as FLA and CA transports are banned, and root cellars regaining popularity?

Obligatory youtube reference:
http://www.youtube.com/watch?v=Q95rcdH0 ... re=related

Years ago
I was an angry young man
I'd pretend
That I was a billboard
Standing tall
By the side of the road
I fell in love
With a beautiful highway
This used to be real estate
Now it's only fields and trees
Where, where is the town
Now, it's nothing but flowers
The highways and cars
Were sacrificed for agriculture
I thought that we'd start over
But I guess I was wrong

[ghariton]

From the Wall SAtreet Journal"

The smell of trade war is suddenly in the air. Mr. Obama slapped a 35% tariff on Chinese tires Friday night, and China responded on the weekend by threatening to retaliate against U.S. chickens and auto parts. .....
U.S. Energy Secretary Steven Chu, who has endorsed a carbon tax on imports, and the U.S. House of Representatives, which passed a carbon tariff as part of its cap-and-tax bill. This in turn followed the "Buy American" provisions of the stimulus, which has incensed much of Canada; Congress's bill to ban Mexican trucks from U.S. roads in direct violation of Nafta, prompting Mexico to retaliate against U.S. farm and kitchen goods; and the must-make-cars-in-America provisions of the auto bailouts. Meanwhile, U.S. trade pacts with Colombia, Panama and South Korea languish in Congress.

Through all of this Mr. Obama has either said nothing or objected so feebly that Congress has assumed he doesn't mean it. Despite his pro-forma demurrals, Mr. Obama's actions and nonactions are telling the world that the U.S. is abandoning the global leadership on trade that Presidents of both parties have worked to maintain since the 1930s. His advisers whisper that their man is merely playing a little tactical domestic politics, but he is playing with fire, as the last 80 years of trade history should tell him.

Interestingly, from the same issue of the WSJ, this article:

President Barack Obama swept into union country to rally organized labor behind his push to overhaul the health-care system, with campaign-style speeches in Ohio and at an AFL-CIO convention here urging workers to get behind him.

<snip>

Outgoing AFL-CIO President John Sweeney hailed Mr. Obama's decision Friday night to impose stiff tariffs on Chinese car and light-truck tires.

But there is hope:

China is threatening to cut off imports of American chicken, but poultry experts have at least one reason to suspect it may be an empty threat: Many Chinese consumers would miss the scrumptious chicken feet they get from this country.

“We have these jumbo, juicy paws the Chinese really love,” said Paul W. Aho, a poultry economist and consultant, “so I don’t think they are going to cut us off.”

I particularly liked this quote within the article, which I dedicate to parvus

“If we are playing a game of chicken with China we are going to be big losers.”

George

[WishingWealth]

And the trade deficit USA<=>China would be: Tada

And no, I do not play Lou Dobbs on TV.

I don't care a rodent's rectum* that the TD is + $1Trillion or minus $1 trillion.
OTOH, the other crowd should just try to contain the manufactured hysteria when one item is hit with some duties.
Regardles, China must have done something wrong, otherwise the US of A would not act this way. **

WW

* thanks to Nemo2

** You never know, better add 4 of them here.

[ghariton]

I don't care a rodent's rectum* that the TD is + $1Trillion or minus $1 trillion.

I strongly agree. At some point the Chinese will get tired of giving the Americans real goods (of whatever quality*) in return for paper with pretty pictures of presidents on it (or promises of paper later). At that time they will let the yuan float upwards. Then the Americans will buy less Chinese goods and the Chinesae will buy more American ones.

The real danger is that the revaluation of the yuan might be abrupt, with all the dislocations (and crashes) that would cause. There is reason to believe, however, that neither the Chinese nor the Americans want that. I would bet on a jointly managed float.

The downside of a gradual float is that some industries will disappear and others will be born or will expand -- in both China and the U.S. That will mean some temporary distress, as people have to retrain and recycle and relocate. Governments should help with the transition. But trying to freeze the status quo is just silly. (Just what does the term "reactionary" mean?)

Until then, if the Chinese are willing to work hard in exchange for, in effect, pretty American dollars, that's great.

*I still remember when Japanese goods were synonymous with shoddy, poor quality, etc. If the Japanese were able to improve, why not the Chinese?

George

[apater]

Some descriptions of comparative advantage rest on a necessary condition of capital immobility. If financial or labour resources can move between countries, then comparative advantage erodes, and absolute advantage dominates.

from wikipedia: http://en.wikipedia.org/wiki/Free_trade_debate

[ghariton]

Some descriptions of comparative advantage rest on a necessary condition of capital immobility. If financial or labour resources can move between countries, then comparative advantage erodes, and absolute advantage dominates.

from wikipedia: http://en.wikipedia.org/wiki/Free_trade_debate

Capital and labour are not the only sources of comparative advantage. In an oft-given example, all the capital and labour mobility in the world would not enable Iceland to make French wines. Climate may be obvious, but other very important factors, such as institutions, often are not.

Anyway, while capital mobility is largely achieved, we are still very, very far from labour mobility.

Finally, it is misleading to speak of "capital" and "labour" as if these were homogeneous. They are not.

George

[ghariton]

From The Economist:

Last year the fear was that Mr Obama would give in to enormous protectionist pressure from Congress. By introducing the levy, Mr Obama has pandered to a single union, one that does not even represent a majority of American tyre-industry workers, and he has done so against the interests of everyone else (see article). America’s tyre-makers, who have more or less given up making low-end tyres at home in favour of importing them (often from joint-ventures in guess where) declined to support the application for import “relief”. Consumers will have to pay more. The motor and garage trades will be harmed. And no one can seriously imagine that any American tyre-making job will be saved; firms will simply import cheap tyres from other low-cost places like India and Brazil.

<snip>

Nor is the potential fallout from Mr Obama’s wrongheaded decision limited to trade. Evidence of a weak president being pushed leftward might cause investors to worry whether he will prove similarly feeble when it comes to reining in the vast deficits he is now racking up; and that might spook the buyers of bonds that finance all those deficits. Looming large among these, of course, are the Chinese. Deteriorating trade relations between the world’s number one debtor and its number one creditor are enough to keep any banker awake at night.

George

[WishingWealth]

After reading The Economist piece some days ago (and some others on same subject) I believe that what's happening is more than a simple 'tyre' story.
I see it as a 'Can we get your attention' warning.

China is protectionist; against stuff coming in and more and more about stuff going out.
There are some duties on the export of some strategic raw materials*. Those duties are levied in order to raise the raw matls prices; raw materials for which China has secured some dominant role. Straight textbook economics perhaps but the duties on the tires could simply indicate some annoyance at China's bully tactics in other areas.
And as the article rightly says:
"China is incandescent with rage; but China is a master of theatrical overreaction."


The fact there are no winners in a trade war does not mean that trade needs to be a winner takes all game.

* China has become a dominant player in some of those products often by cutting prices (probably to below cost) over the years with the result that no one else could stay open. Now they're raising the prices as they wish. I'm sure you can notice the pattern following your (George's) work/studies in monopolistic behavior.

A close to home example would be the closing of the Norsk Magnesium plant in QC. I realize this is probably not a black and white case but here again we can see the pattern.

WW

[Peculiar_Investor]

According to a number of sources, Deal would exempt Canada from Buy American provisions. Which got me to wondering:

Which stocks have been significantly hurt by the provision and will now stand to benefit?

Or does this really mean that most of the US stimulus spending is now done and therefore it doesn't matter?

[ghariton]

Ontario's showing its hypocrisy, this time on free trade

With much fanfare lately, the McGuinty government has been painting itself green, praising its new renewable-energy policies, while adopting a Buy Ontario policy.

At least 25 per cent of wind projects and 50 per cent of large solar projects must contain Ontario goods and labour, according to the new policies. These shares will increase for solar on Jan. 1, 2011, and for wind on Jan. 1, 2012. A 25-per-cent-content rule already applies for public-transit vehicles.

<snip>

This Buy Ontario policy is being introduced at the very moment when Ontario and other provinces are badgering the United States to make Canada an exception to Buy America policies. Asked about this obvious contradiction, Mr. McGuinty calls Buy Ontario an "exception," which is what political protectionists, including the U.S. proponents of Buy America, always say.

Buy Ontario also lands just before 35 negotiators from the European Union begin talks on Oct. 19 in Ottawa toward a comprehensive EU-Canada economic and trade agreement. Provinces, including Ontario, signed off on the launch of these negotiations, promising in particular that they would end preferential provincial purchasing policies - one of the EU's major objectives in the talks. But already Buy Ontario underscores an old Ontario pattern: Talk free trade out of one side of the mouth, protect local producers out of the other. The Europeans have seen this act before, and they agreed to start these negotiations only after being assured by provinces that they would not scuttle a Canada-EU deal.

<snip>

In theory, both the EU and Canada insist that "everything" is on the table in these ambitious negotiations; in practice, Canadian ministers (backed by protectionists in Ontario and Quebec) have already made it clear that no deal will touch supply-managed agricultural products, such as eggs, dairy and poultry, that put Canada in league with the world's biggest agricultural protectionists: South Korea, Japan and France.

Here was a real chance to put a dent in supply management in Canada and the Common Agricultural Policy in Europe, but that chance has already died. Sorry, Canadian cattle producers, no increased access to the European market for you.

Once again, therefore, Canada will miss out on potential trade action because of one sector of the economy that has a noose around every political neck in Ontario and Quebec.

<snip>

If Ontario, having already bailed out the auto sector with billions of dollars, really wants to expand its "industrial policy" by using Buy Ontario, the province should at least have the courtesy to withdraw from federal-provincial demands for an end to Buy America and tell the Europeans to return home, because previously given commitments on which the negotiations began are no longer valid.

However, such intellectual honesty will be overwhelmed by the easy politics of protectionism from which local groups benefit, and the apparently irresistible temptation to speak from both sides of the mouth.

I dunno. Some tell us that government must regulate the private sector because the private sector neglects the public interest. But it seems to me that government neglects the public interest just as much, tied as it is to the promotion of special interets. (Cross-reference to the thread: The Government is Not My Friend.)

George

[ghariton]

Will Canada-EU trade talks be cowed by dairy farmers?

As 200 officials from Europe and Canada gather in an Ottawa meeting room today to begin the most comprehensive trade talks in Canadian history, there is great fear on both sides that the whole thing could become bogged down over the price of butter.

Negotiators will hold the first of five planned rounds of intensive talks this week to negotiate the Comprehensive Economic and Trade Agreement, a major trans-Atlantic treaty between Canada and the 27-nation bloc that would extend far beyond free trade and investment into the integration of manufacturing standards, government contracting, food standards and possibly labour mobility.

<snip>

The toughest sticking-point in negotiations this week, both sides say, will likely be the dairy farmers of central Canada, who are threatening to derail the entire deal over the relatively small matter of agricultural subsidies and the sale of butter and cheese across the Atlantic.
<snip>

There are beef shortages in European markets, for example, and the beef-cattle industry is lobbying for more open access, along with most other farm sectors, which see Europe's 500 million people as a highly desirable market.

But dairy farmers in central Canada, who represent a small share of agriculture, are pushing hard for protection of the government-subsidy program known as supply management. European farmers generally don't receive subsidies for the production of food, and provincial supply-management programs, which mainly apply only to dairy, would be seen as an unfair competitive advantage.

Canadian government, the champion of narrow special interests...

The government is NOT my friend.

George

[Contrarian]

Globalization/free trade has built up places like India and china to the point they are threatening military powers. Globalization has caused nuclear proliferation and the destruction of the environment in places like Brazil. Globalization has sped up the rat race where we now all have to work ourselves to death competing against the Japanese workaholics.The USA needs to take military action against polluter and job stealers. We have something like 35 million people living in a sea of 6 billion people who want our land , jobs, and resources. Its not too late to act preemptively.

[ghariton]

So the solution is autarky, eh?

But what if the US decides we are part of the problem? Should they take military action against us?

(We would respond by occupying Duluth, according to old war plans.)

George

[ghariton]

Jeffrey Simpson in the Globe & Mail:

Canada isn't looking to lead in the stalled world trade talks, just as it isn't trying to lead in next month's Copenhagen climate-change negotiations. In both cases, Canada is among the laggard countries, holding back change, hoping, actually, for very little progress in order not to upset domestic interests.

One of the best things that could happen to the sluggish world economy would be a world trade deal. It would not only spur trade but would improve productivity in the developed world, and give the developing countries a better shake in product areas where they might have a competitive advantage.

The major stumbling block remains agricultural subsidies

<snip>

But then there are the supply-managed farmers who hold in thrall Canadian politicians of every stripe. How much in thrall? Before the last WTO sessions, the House of Commons voted unanimously to instruct negotiators not to yield an inch so as to maintain the stratospheric tariff rates that protect dairy products, poultry and eggs.

It's a racket that hurts Canadian consumers, especially low-income ones for whom food takes up a large share of total family income, and processors. But the merest hint of a lessening of the tariffs brings the supply-management lobby swarming over Ottawa, and to the international negotiating sessions, holding Canadian negotiators' feet to the fire.

<snip>

Supply management arose in the 1970s as a direct response to the separatist threat in Quebec, where farmers are hugely consequential and exceedingly powerful. The Trudeau Liberals essentially tried to buy them off with supply management. Dairy, poultry and egg farmers elsewhere immediately saw how helpful protectionism could be for them.

The Harper Conservatives, nominally free marketeers, ought to abhor supply management, except they have lots of rural Quebec and Ontario MPs. And remember that the government's principal political preoccupation was to tickle Quebec's tummy, at least until Quebeckers kicked them in the privates in the last election.

We do it to ourselves....

George

[newguy]

Well, we all know the chicken tariff's happened, but now this
The U.S. will charge a 231.4 percent duty on ribbons from China. Oh the humanity.
Valentines day is coming up and I don't know what I'll tie the gift with.
I'm not sure if the trade war is escalating or turning ridiculous.

newguy

[Bylo Selhi]

I'm not sure if the trade war is escalating or turning ridiculous.

Or maybe someone in the US has come up with a creative way to reduce red tape?

[Bylo Selhi]

I'm not sure if the trade war is escalating or turning ridiculous.

Or maybe someone in the US has come up with a devious way to simultaneously reduce red tape stateside and increase the supply in China?