Category Archives: Economy

A Losing Economic Battle

10 Monday Dec 2018

Posted by in China, Economy

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Many times in history a smaller population has stood up to a larger population but not often have they won. Even those victories were short-lived. The United States has about 320 million people and our economic rival, China has almost five times as many Chinese. Our economy is based on a loose set of democratic ideals and China’s is a loosely directed model where private and state businesses co-exist.

The purpose of the current trade tariffs is to hold down the Chinese economy from exceeding ours and dominating the world’s economy as we have done for the last seven decades. With a directed economy the government can pick what industries will dominate, which will struggle, and which will be cut off from state support. Many of China’s basic industries, like it’s steel and aluminum, are run by the Chinese Army and subsidized by the government. That’s the reason they can flood the world with steel and aluminum cheaper than any corporation. Is it fair? No, it isn’t but they don’t have shareholders or worry about quarterly reports.

We support our industries with tax incentives, tariffs, and laws. We help with special financing like Chrysler in the 1970s, or General Motors in 2006. China’s way is much more direct and capable.For all of Trump’s sound of wind and fury, the United States is no longer the world’s economic driver and by assaulting our allies,we are reducing our chances of coordinating with them. All the President and his trade advisors are doing is creating a lot of bluster which may lead to a worse situation for our country in the future.

Is Any Job Safe

10 Monday Dec 2018

Posted by in Economy

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I never thought deeply of the economic impact electric cars will have on the economy until I read an article in a business magazine. They have about a third to half less parts than an internal combustion car. Ultimately that means most parts manufacturers must find other business because cylinders, fuel systems, engine blocks and crankshafts won’t be needed. Tens of thousands of workers will be out of work. The service businesses depending on those workers will close or be cut back. Less workers means less appliances sold and houses foreclosed or sold at depressed prices.

John J. Rockefeller made his money refining petroleum into gasoline for the growing automobile industry. Electric cars don’t need gasoline so the refiners, distributors, and others will reduce workers causing area businesses to be hurt. Of course we won’t need many oil well drillers either but we will have pumped most of the petroleum out by then.

Both of these examples won’t happen at once but will slowly happen over the next couple of years to a couple decades. The many ethanol refiners may have to close but the corn farmers will have billions more people to feed so they won’t be badly hurt. Gasoline stations will convert to being electrical charging stations. I bet soon or later battery packs will be more like those I have for my tools. A fill-up will be sliding the old pack out and the new one in.

I don’t think anyone can foresee how all this retrenchment will work out. Other jokers in the deck are artificial intelligence and robots. I don’t think any job or economy is safe.

Tariffs — The Truth

10 Monday Dec 2018

Posted by in Economy, Tariffs, Uncategorized

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President Donald Trump has repeatedly said he is hurting the Chinese with his tariffs. Last quarter was the biggest trade deficit with China possibly ever. Companies have pre-bought Chinese products in case Trump won’t back down on his promised raises in the tariffs. He has made it him against the Chinese government and they can’t back down so the Chinese will go to their closet of retaliations.

He has said the billions in tariffs are going into the U.S. Treasury. That is true! The money isn’t paid by the Chinese but by the American Companies purchasing the items. Companies don’t eat that money they paid to import the item, so they pass along the tariff money to the consumer–the American consumer. We, the American consumer will pay this back door tax, wiping out any minimal tax we may have gotten. The steel and aluminum tariffs cost GM $1.4 billion, not China.

The Chinese have put tariffs on many exports to China. Farmers have been especially hit hard. Soybeans have been hit hardest. Corn, wheat, other grains, pork, beef, turkeys, and chicken prices have dropped–Good for consumers, bad for farm communities, farmers, and businesses.  The U.S. Government is going to partly subsidize the soybeans and to a smaller amount the corn farmers, and others. The Agriculture Department just released the meat in storage numbers. They are the largest in years or ever depending on who read the release and their research. When the freezers burst our costs at stores will plummet and so will the price farmers get.

The President thinks in a time span of days and maybe weeks when he destroys markets that were carefully nurtured. China can buy products elsewhere and leave us out for years. Many industries are worried if China will come back.

Seek Answers Before November

09 Sunday Sep 2018

Posted by in Deficits, Economy, Taxes, Voting

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The average worker has had an 11% raise over inflation since 1977. The average CEO had that much last year alone. The average professional baseball, basketball, football, and hockey player got much more with the stars getting outrageous increases. Many CEOs make over a thousand times more than the median worker. Why aren’t the workers of America rightly upset?

The massive corporate tax cut that was to wend its way down to those median workers who desperately need sizeable raises didn’t make it. Less than ten percent have used the money to help their workers. Most directly or indirectly raised their salaries, increased their stock price using stock buy-backs, or purchased another company. Since almost 90% of our country’s wealth is owned by less than 1% of us, the massive tax cut did nothing for 99% of us.

The trickle down economic philosophy means the fire hydrant water floods into the fire hose but a trickle comes out the nozzle. If that happened at a fire people would demand answers. Why not now? If the economy is doing so well why are millions of workers getting little or no pay increases? Why are the workers on bicycles when the upper managers are in Ferraris? Newspapers, magazines, and TV have shown only a small interest in the situation. The administration and the Republican congress said their tax cut would help low and middle class Americans more than the rich before the cut and while campaigning. Why aren’t they asked why you aren’t being given raises like the upper managers and CEOs? Also ask who is going to pay for the massive debt and deficit of over 1.5 trillion this year. Those are good questions to ask. Let’s see if we get truthful answers.

Buy Now And Save

09 Sunday Sep 2018

Posted by in Economy, Trade Agreements

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Why will your next vehicle cost more? The new trade agreement with Mexico may add a few thousand more to your cost. Every Mexican working on the parts or final assembly will have their pay at least doubled to $16.00. Many make less than $8.00 per hour now. Imagine a Mexican worker getting more than $30,000 each year. They will live like drug lords at the American consumer’s expense.

The agreement may cut back on the number of parts from other countries like Japan, Guam (American possession), China, and Eastern Europeans like Poland. If the parts were currently made cheaper elsewhere they will be moved to Mexico raising the vehicle prices more.

As of Thursday, August 29, the Canadians have our negotiators over a barrel since the negotiating power expires tomorrow night. The Mexican agreement goes away tomorrow night. Congress requires all three to agree. It is all three or nothing and the Canadians know it. Let’s see how far they can push their Canada first policy. Even Republicans in Congress are beginning to rebel against his tariffs.

If I was going to buy another vehicle, I would buy one setting on the car lot now to save the increase caused by the great new trade agreement.

Illinois Didn’t Lose On Foxconn

02 Thursday Aug 2018

Posted by in Economy

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I think people are making too much of the Foxconn location. In fact I think it worked out great for Illinois. If it were on this side of the border we would probably have the same number of Illinoisans at the plant as we will do now.

We will not be responsible for the huge bonds backed by Wisconsin. We will not have the surrounding communities in Wisconsin urbanized by too many out-of-stater residents and hundreds of Chinese driving up real estate prices. If Foxconn closes like the Mitsubishi plant in Bloomington, the loss is mostly on Wisconsin.

I am sure the Chinese learned from the Japanese where to build their plants. By building their plant on the border they have two senators locked in and two more involved. At the time they had the Speaker of the House by the throat as well as other Wisconsin and nearby Illinois Representatives. The location provides political support from both parties in Madison, Springfield, and Washington, D.C. Their “investment” isn’t mostly Chinese money, its investor’s money with state and federal support. How much of the Chinese yuan has gone to grease the palms of officials and lobbyists will never be known.

I think in the competition for the plant, we got the gravy for free and Wisconsin is paying for it.

The Consumer Tax

02 Thursday Aug 2018

Posted by in Economy, President Trump, Taxes

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The congressional budget office and independent economists have said the tax cut could add a trillion dollars to our already red ink ocean. Has the administration come up with a sneaky way to reduce the tax cut’s red ink? Yes, it’s called a tariff war! The administration says any tariff will be absorbed by the companies and little if any will be passed on to the consumer. We know the corporations received about 80% of the cuts and aren’t going to eat the tariffs. They will pass the tariffs taxes on to us.

So consumers, suck it up, and if you manage to keep your job, you will spend more to buy those consumer products you enjoy. The President said the stock market has gone up during his tenure so if it goes down because of tariff wars, it is okay.

Since he believes he is the Supreme Being then the usual words at a graveside service are appropriate. “Trump giveth and Trump taketh away.”