Author: s.zerpa

It has become pretty clear that Donald Trump is still figuring out what it means to be president. But, in trying to report on a man with no political history or experience, the press is still figuring out how to cover Donald Trump.

In trying to understand what will happen to policy in the new administration, the press tries to reconcile a RINO (Republican in Name Only) president and a republican controlled Congress. With a long tradition of championing free markets and capitalism, the current republican controlled Congress seems poised to either publicly challenge on trade and commerce what very much resembles a third-party president that lost the popular vote by over 2.5 million votes, or fully embrace what feel like pre-WWII trade policies.

Today we saw headlines across many major news outlets proclaiming that “Top House Republican won’t back Trump’s tariff proposal,” “House G.O.P. Signals Break With Trump Over Tariff Threat,” and “Trump’s tariff plan hits a hurdle: Congressional Republicans.” The press was reporting on vague statements made by a couple of House Representatives that still show signs of uncertainty and trepidation on how to deal with a RINO president that even seems fearless in attacking members of his own party. Republican Representative Kevin McCarthy said when asked by reporters about Donald Trumps proposal to levy a tax on goods entering the U.S. from American companies offshoring jobs:

“‘I think the point the president-elect was trying to make was he wants to create jobs in America,’ McCarthy said of Trump’s latest comments about tariffs. ‘Today, the best way to make that change is through tax reform … I think there are other ways to achieve what the president elect is talking about, but the only way you can do any of this is you’ve got to have tax reform.’…Asked if Trump’s tariff plan made him uneasy, McCarthy merely added: ‘I don’t want to get into some kind of trade war … I think creating an incentive where you have a tax structure [that’s attractive to companies ] in American, that means lower corporate taxes, you won’t have’ companies leaving.'”

When asked the same question, Republican Representative Paul Ryan stated that:

“…an overhaul of the corporate tax code would more effectively keep companies in the United States than tax penalties. ‘I think we can get at the goal here,’ he said, ‘which is to keep American businesses American, build things in America and sell them overseas — that can be properly addressed with comprehensive tax reform.'”

The truth is that, regardless of vague comments, no one really knows what will happen. It’s highly doubtful that a republican Congress will go to war with a republican president in the middle of a propaganda campaign aimed to convince America that the Republican Party was given a mandate by the electorate. So, there are few clues in the wealth of innuendo and speculation.

A victim of its own ambitions, the Republican party has a choice to make; commit suicide by mistaking Donald Trump’s election as some kind of mandate to adopt populist policies, or stay true to conservatism.

In a not so surprising and UN-Republican move, Donald Trump issued to the public his version of an extensive policy paper. In a scathing and detailed rebuke to capitalism, The Donald issued on Sunday a presidential threat on Twitter to every American corporation thinking of making the strategic business decision of shifting jobs to overseas factories. He warned every company moving jobs overseas that they would automatically be slapped with a 35% tariff.

In making his case for the “policy”, Mr. Trump showed that he, like most Americans on the right and left, hasn’t really grasped the main reasons for manufacturing job losses in America. Offering a future corporate tax rate to rival that of most states sales taxes, he believes it to be incentive and reason enough to keep manufacturing jobs in the U.S. As so many economist and journalist have already noted exhaustively, most of the manufacturing job losses in America have been due to modernization and automation. Even in cases where American companies have decided to return production to the U.S., they don’t bring back all of the jobs. They usually have been able to return jobs to the U.S. only after automation has taken over most of the production process making the costs feasible.

Useless facts and reason aside, it appears that Donald Trump will continue to pursue, at least in public, his populist policies. The question then becomes, are Republicans afraid of him enough to pull the trigger on the gun they hold to their own heads? The fact is that if they choose to support his anti-capitalistic and populist policies of tariffs and unchecked deficits, the republican party will be admitting that their platform is dead. They will signal loud and clear that deficits, national debt, and free markets are as irrelevant as the Republican party will be the second they concede. The sound will be of bullet being fired into the heart of the party and its ideology.

 

 

 

For all the talk of nationalism and isolation, the world’s economies still want free trade zones. In the wake of the United Kingdom’s vote to exit the European Union (Brexit), the U.K. is anxiously pursuing access to the European Union’s single market after their departure. In a bid to retain foreign corporations and manufacturing, the U.K. is making promises to pursue full access to the E.U.’s single market during their Brexit negotiations. The Brexit vote has made many international corporations nervous and led them to second guess their decision to base operations in the U.K.. Believing that Brexit will restrict the UK’s access to the EU, many companies are considering moving operations into the E.U. Zone.

The reality that will be facing the U.K. and the U.S. is that for all their talk about protecting their economic interest and retreating from the world, they are relying on accessing the world’s markets in order to fuel their economic growth. Even if the adoption of regional trade agreements cease for a while, singular agreements will continue to be pursued. Donald Trump has promised to pursue bilateral agreements which will continue to create unfettered access to markets and allow for the free movement of both goods and jobs. The fact is that trade is as old as human civilizations and there is no stopping it.

In the race to embrace a feel good and overly simplistic message, Americans on both sides of the spectrum flock to Bernie Sanders and Trump as the present and future solutions to what is hurting the American “middle” and “working class.” It’s easy to convey a message where the fix to what ails America is the building of walls and the tearing down of trade agreements, but it’s harder to deal with the complexities of a tax, campaign finance, and electoral system reforms.

Both Trump and Sanders promised to leverage tariffs, taxes and government contracts in order to hinder globalization. Sanders has already proposed withholding government contracts from companies that move operations overseas. While Trump spent some of his time over the thanksgiving weekend trying to convince Carrier Corp, a division of United Technologies Corp, from moving 1,400 jobs to Mexico. What sanders and Trump fail to realize that even if they kept those jobs here, business will eventually find a better and cheaper way to make things because, at the end of the day, our corporate and capital gains tax laws encourage the maximization of profits for shareholders at all cost. Meaning that some sort of automation will eventually take place and The Donald and Bernie will feel the burn to do something about that too. And when they fail to obstruct progress, which they will, Americans will claim that they too are in the pockets of big business which, to a large extent, the government is.

When Bernie and Trump fail to bring manufacturing jobs back by impeding free trade, Americans will clamor for an even bigger populist than the last one and cycle of incompetence will continue. Why? Because in failing to address campaign finance and electoral college reform, the American people will continue to elect representatives that pander to their lowest common denominator. In the absence of real reform, these elected officials will continue to fail to address the true obstacles to job growth and income equality, choosing instead to remain in a constant fundraising loop while promising to turn back the clock and failing to embrace the future.

“President-elect Donald Trump would be hard-pressed to deliver on his promises to ‘bring back’ large numbers of America’s lost manufacturing jobs, even if he does renegotiate the nation’s trade deals. The reason: Manufacturing work is increasingly carried out by robots, rather than people….The problem for Trump and blue-collar workers is that when manufacturing returns to the states (and several trends favor that), the associated job-creation will not be what it once was.  Nor will the difference be just a minor effect – it’s going to be major.“

Free trade and globalization are not the perpetrators of job losses in America, but the mere victims of automation and a misguided populist movement.

Trump, after weeks of vague and elusive answers to questions regarding the TPP, has finally delivered what appears to be the final and merciful deathblow to the Trans Pacific Partnership agreement. After secret meetings with the Japanese prime minister and the presence of pro TPP transition team members over the last two weeks, Trump finally gave a definitive answer to the question “Will Trump walk away from the TPP?” In a message delivered via a short video, Trump laid out his vision for his first 100 days and stated that he would withdraw from the TPP on his first day in office should it be ratified. Citing the agreement as “a potential disaster for our country”, he noted that he would instead “negotiate fair bilateral trade deals that bring jobs and industry back.”

Trump, like most politicians on both sides of the aisle, continue to undermine their own credibility by erroneously blaming most manufacturing job losses on globalization. Instead of informing the public to the fact that many of the jobs were lost due to automation in factories, they continue blame free trade and to promise a return to manufacturing days that will not be returning anytime soon.

In an article published by The Brookings Institution trying to explain the upset win by Trump over Clinton, it notes “‘racial resentments’ and xenophobia as the deepest sources of Trump’s appeal. And such explanations cannot be dismissed.” But it also goes on to say that “the decades-long decline of U.S. manufacturing employment and the highly automated nature of the sector’s recent revitalization should also be high on the list of explanations. The former is an unmistakable source of the working class rage that helped get Trump elected. The latter is the main reason Trump won’t be able to ‘make America great again’ by bringing back production jobs.” And this is where politicians will keep on losing the faith of the people. Unable to deliver on promises made on false assumptions, politicians on both sides will continue to face the same backlash which Clinton experienced on November 8th.

In what feels as one of the most agonizing deaths to a piece of legislation, it appears that the much touted death of the Trans Pacific Partnership (TPP) agreement has not yet come to pass or is in serious doubt. It’s been shot, stabbed, battered and lambasted to an apparent death, yet after being declared deceased on 20 different occasions, no one can confirm its actual status. In taking a page right out of Donald Trump’s playbook, I and the rest of America demand that Trump produce the TPP’s Long Form Death Certificate! After promising us its murder, he, along with his still forming cabinet, have followed the promises up with vague statements as to its current status and have failed to yield any concrete evidence of its legitimate death. With the presence of some lobbyist in his original transition team, which have now departed, it has become increasing difficult to estimate Trump’s level of commitment to killing the trade agreement.

“Trump denounced the TPP as a ‘disaster’ being “pushed by special interests who want to rape our country.” Yet he appears to have included Rolf Lundberg Jr., a former lobbyist from the TPP-friendly U.S. Chamber of Commerce, to head up ‘trade reform’ on his presidential transition team, according to an organization chart obtained by The New York Times…Trump’s transition team has been notoriously fluid.“

This influence on the transition team along with last weeks “emergency” meeting with the Japanese Prime Minister who desperately wants to salvage the TPP agreement, has made it increasingly impossible to establish the TPP’s level of dead, much like establishing a woman’s level of pregnancy. This is why we demand the death certificate so, like with the email news stories, we can finally move on with our lives and mission to bring back 1960’s type of manufacturing.

In its attempts to pressure and influence the income Trump administration, Chinese press continues to issue warnings against an isolationist trade agenda.

“‘Turning his trade-bashing campaign talks into actual policies could bash any hope that the Asia-Pacific will finally have its much-wanted free trade deal,’ said a commentary in the official Xinhua news agency on Saturday…’Worse, it could drag his country and the wider world into deeper economic distress,’ added the agency, which is a barometer of government thinking.”

By its own admission, China recognized that the TPP was the Obama’s administration attempt to curtail a growing Chinese power.

“Xinhua also said that the exclusion of China from the proposed Trans-Pacific Partnership (TPP) free trade agreement was not about boosting trade and instead was U.S. President Barack Obama’s strategy to make sure Washington ‘rules supreme in the region.'”

But, what many American forget is that as the agreement grew in influence and success, it could have enticed China into complying with all the economic regulations and intellectual property protections that the west has been urging China to implement. It could have done to a large degree what The Donald has promised to do through a series of ill advised trade-wars with the world.

It appears that in the wake of Donald Trump’s election, Japan took Trump’s words seriously enough to send its Prime Minister Shinzo Abe to speak directly with Trump prior to his inauguration. AS a result of Trump’s isolationist rhetoric, the international community has been left in disarray as to what the world’s most powerful nation will do next on the world stage. Will it retreat as it has threaten? Will it break international mutual defense agreements? Will it break long standing free trade agreements and walk away from already negotiated ones like the TPP? Or, will Trump disappear during a lame duck session of Congress if it passes and allow it to exist once he is in power with the promise that he will fix it?! Fix it much later, but fix it nonetheless. For those of us counting on the corruptive influence of money and corporations, we are looking for ANY ray of light in this dark time. Perhaps corporate America’s influence is so strong that it will influence Trump and Congress into bringing the agreement into a vote during the lame duck session of congress. Perhaps that is why Japan’s Prime Minister was quoted as saying after the meeting that “As an outcome of today’s discussions, I am convinced Mr. Trump is a leader in whom I can have great confidence.“

If Trump is to be believed, TPP and perhaps NAFTA are dead. How vital is the U.S. to global trade? Indispensable! Or so the indispensable nation seems to think. The truth is that the weight that the U.S. economy brings to any table is unmatched. No one nation brings that kind of bargaining and purchasing power that the U.S. economy does when it comes to trade negotiations. However, the world economies have their lives to live and probably won’t sit around waiting for Americans to stop crying about the world that was and how they wish they could bring it back. So, unless the Japanese Prime Minister secured a secret assurance that the TPP will not be stopped should it pass in a lame duck session of congress, the rest of Asia should move on with the Trans Pacific Partnership agreement without the U.S. making their own pivot towards China.

The absence of the U.S. in Asia will leave a massive hole that Japan and China may look to fill which could potentially be more beneficial to both nations had the U.S. remained in the agreement. Japan would gain a bigger role in the region which would also increase its leverage should Trump revert to bilateral type of trade negotiations in the future. Japan would have a stronger position for those negotiations. It would also keep the TPP alive should America ever regain its now populist, isolationist, racist, and xenophobic infected mind and decide to join in at a later date. So what could go wrong if the U.S. goes full cave dweller? The world moves on realizes that life goes on with or without America.

It appears that China is ready to strike at the heart of America’s tech industry should the Trump administration go through with its threats to impose tariffs on Chinese goods and declare China a currency manipulator. Throughout the campaign Trump promised to reign China in and play hard ball. Well, it sounds like China is ready to do the same. The Chinese government recently made it clear that if the U.S. were to begin slapping tariffs on Chinese goods, it would heavily tax Apple’s iPhones being sold in China. It also noted that it would not stop there. It would retaliate further by:

“China will take a tit-for-tat approach then,” it added. “A batch of Boeing orders will be replaced by Airbus. US auto and iPhone sales in China will suffer a setback, and US soybean and maize imports will be halted. China can also limit the number of Chinese students studying in the US. Trump, as a shrewd businessman, will not be so naïve.”

China does not believe that the U.S. would risk breaking the U.S. economy’s expansion streak under Obama and begin a potentially damaging trade war with them. Instead, it maintains that the best course of action is to continue with the status quo set under Obama and past administrations. Only time will tell if Trump is really the negotiator and adversary he claims to be or if he will be once again smacked down like he was during the debates. In the end, he may do what he always has which is blame others for his failures and count on his disciples to warp facts into conspiracies explaining his failures.