It is time, Twenty-Twenty To inaugurate new endings To empty overflowing buckets of outdated lists and to cease engaging in boxing matches between scientific upper-cuts and data-driven jabs. To halt our heavenly appeals and civil discourse with polluted leaders.
It is our time, in Twenty-Twenty To tackle modern fairytales Projected on big and small screens To choke on sweet habit-forming doses derived from earth’s bounty To speak about down-sizing our selfies and our first-world loves.
It is time, homonins of Twenty-Twenty To replace elegant gourmandise and delicious distractions with simple loaves and fewer fishes. To gather in home and hearth to hunt for sincere solutions ignited through collective caring.
It is time, believers in Twenty-Twenty To listen to Thunberg and Attenborough To become quiet, see, feel, and hear songbirds and re-read Carson’s Silent Spring To incinerate 20th century sins To compost productive soil and grow lighter footprints together.
At night, you plan. You count your money, select durable shoes, plot paths and snacks, and are seized with fear.
In bed, you cannot sleep. So, you quietly go outside and sit in silence. Under stars, you encode a lifetime of mental selfies and breathe in the unknown.
Before dawn, you wake. You prepare breakfast, wake your child, take their hand and begin your journey North. All so you can sweep floors or care for American kids or sell Big Macs or maybe become a business owner and help that little hand in yours to reach higher.
To stay or go? You commit your life and dreams to theirs, because without hope life shrinks down to a binary choice.
You are not naive. To enter America means waiting in cages, waiting on hard floors, waiting in close quarters, cruelty, disregard, torture, boredom and more despair.
Somehow, you arrive. At the border, you line up, claim your place, and try to smile. Inside a grim room, you keep your head down, comply, discover the patience of sorrow, the obsession of separation.
6 hours a day you dream of release and entry into a land of excess. Bewildering supermarkets, large cars and large people, late night TV, sugary drinks, backyards, playgrounds, and schools.
You only need a few drops of excess to spill into your life and run into your child’s life. The smallest chance is still a chance. Hope vs. despair. Binary.
I am coming out as a news junkie. I am also initiating a recovery program.
First a little about my addiction. Since 2016, I have been consuming 2-4 hours a day of news, delivered by these MSNBC news hosts: Joy Ann Reid, Rachel Maddow, Chris Matthews, Chris Hayes, Chuck Todd, Nicole Wallace, Laurence O’Donnell, Mika and Joe, Ali and Stephanie, and Ari Melber. My TV news is augmented by my subscriptions to the NY Times, The Washington Post, and Slate. I receive the New Yorker and the Atlantic Magazines. I dabble in CBS, CNN, PBS, and even give Fox News some of my eyeball time. While doing this, I also scroll through my Twitter feed to see what my favorite pundits are saying. For me, these include: Jill Wine Banks, Clint Watts, Maria Theresa Kumar, and Michele Goldberg. Via Twitter, I follow 1,000 people and organizations. I bought the Mueller Report and The Plot to Hack America. To be honest, when not working, I am often too busy watching news to engage in more meaningful or productive activities.
I think that the top three dangers of living inside the echo chamber are. 1. Acceptance of the hosts’ priorities. 2. Adoption of host and pundit narratives. 3. Loss of time for deeper reflection, action, and cause specific engagement.
1. I think that my favorite hosts’ #1 priority is to ensure that every last piece of dirt about Donald Trump is presented, examined and discussed, largely as a lens to reflect on our divided nation. I have enjoyed the collection process — thinking it would lead to a collective awakening, collective disgust, and citizen actions. I do credit this focus on galvanizing groups and the activism that aided the Democrats to regain the House. I like to think that by sitting in front of my TV, and tuning into MSNBC, that I am part of this movement. If you watch as much as I do, you realize that there are daily repeating stories and and pundits and that only rarely do you learn something new.
The dark shadow of such “narratives of the day” can be symbolized by the recent story of E. Jean Carroll. Credible? Sort of. Interesting? Maybe. Game changing? Doubtful. We all lived through the Kavanaugh hearings, right? Didn’t we already learn that credible allegations made years after the fact are not actionable? Christine Blasey Ford was braver and more compelling to me, and yet the we are stuck with Kavanaugh, the frat-boy supreme court justice.
I think E. Jean Carroll’s story is ONLY on TV because it adds to the narrative dirt pile we have on Trump. Judge your own interest. My own lesson is — watching it once is enough.
2. Adopting the hosts’ narratives comes pretty easily when you watch the same story 6 or more times a day. What else might you think? Ask yourself how many times you think of a different angle that is not being explored? I blame the talking head circuit for this unity of narrative. Most nefarious is the fact that you may no longer notice that you have become your own hybrid of these hosts. Are you a “MikaMaddowMelber” mouthpiece like me? Do you miss old news, with interviews of real people, footage from actual locations, different points of view? Do you miss journalism that forced you to think through the information and form your own opinion? My own diagnosis is that opinions and punditry are the causes for my own acute case of “Media Malaise.”
3. So, if you, like me, have been a willing accomplice to the crime of giving your time away, of allowing the media to co-opt your thoughts and reinforce your rage, I think you might want to consider a “detox.” To detox requires a Weight Watchers (WW) style media diet. You need not stop watching all TV — but think of each show as “15 points.” In WW speak this means about half your daily calories. I know this is shocking but take a minute to think about it: 1 show – 15 points! That’s a medium dipped DQ soft-serve ice cream. Not much nutritional value. Short-lived pleasure. Addictive and hard to give up. If you were having 6 of these a day — you would be in a health crisis! If you recalibrate your schedule you can devote more time to more nourishing choices. You can make time for learning, exploring, engaging with the world. Think of these activities as veggies, fruit and lean protein. Oh, and maybe read the Mueller report…so we can find out why Donald Trump was not exonerated. 400 pages of dirt for the Trump pile. Who can resist?
You may have heard the news that we are in a red lights blinking state related to Russia and it’s cyber security threats. On Monday, Dan Coates, the Director of National Intelligence (DNI), warned that cyber threat warnings are “blinking red” with daily attempts by Russia and other foreign actors trying to undermine American democracy as well as water, aviation and electric systems.
For those of you who seek to defend Trump’s actions in Helsinki, or even for those of you have your hair on fire like me — let’s pause to think about what this means.
If the Russians can control our water, aviation and electric systems, and we need to recover basic infrastructure capability, do you think that is a simple matter? What if “Puerto Rico” post-hurricane was our daily reality? Let’s put water aside for a moment. Assume you lose electricity for more than a week. Not only will you be uncomfortable without a fan, A/C or heat, you will not be able to charge or use your electronics or televisions or radios, unless you have a generator. You will need to be able to get to your nearest gas station to get more fuel for your generator. Hope you have one.
These are just the few systems he mentioned. We already know that the Russians hacked our elections. Some people like to say “They have always interfered in the elections, what’s the big deal?” Really? I had totally missed that. Where is that evidence, and how is that comforting in any way? The same apologists also like to invoke the Trumpian Quid Pro Quo — in which he equates an adversary’s behavior with our own. What comes to my mind is his statement to Lester Holt “Do you think our country is so innocent?” Even if we are not so innocent — that does not mean we should accept the behavior from an adversary.
My own little tiny, minuscule to be precise, blog, which is written mostly for my own peace of mind has come under significant attacks from a wide range of nefarious and disgusting actors. In a week’s time, I am receiving about 50+ Russian comments to my blog! All in Russian.They are my main audience! So, I greet them as the title for this blog and also tell them politely in Russian to Отвянь!
I was hoping to add a nice graphic from the Cagle.com website which shows Putin popping out from inside the Donald matrioshka doll — but was very interested/sympathetic to find out that he has been hacked so much that he cannot keep up with it. Free speech? I think we are beyond blinking — that almost sounds cute. Oh yeah, when the power-grid gets hacked the red lights will stop blinking.
The Department of Housing and Urban Development has several mission statements, including “Maintain and expand homeownership, rental housing and healthcare opportunities.” In the last quarter of 2016, home ownership increased slightly from 63.5% to 63.70%. The all time high of 69.20% was reached fin the second quarter of 2004, according to data provided by the Trading Economics website. In February of 2017, sales of new single family homes rose 6.1% for a seasonally adjusted rate of 592,000, whereas sales of previously owned homes dropped 3%. This may seem like a largely positive trend in the direction of home ownership. I do not disagree. Yet, if you look at the United States MBA Mortgage data, you will find that in March, both applications for new mortgages and refinancing fell 1.6 and 4.2% respectively.
CNBC’s Diana Olik (@DianaOlick) reported this story with the following headline, ” Trump’s first housing move tanks mortgage applications 3.2%.” To view the story click on the image below, which highlights the FHA fee cut and impact of $480/year to a buyer with a $190K mortgage. Volume was was 18 percent lower than the same week one year ago.
The report further details that there was a 13 percent drop in FHA applications, which they attribute to the Trump administration reversing a cut in the FHA’s annual mortgage insurance premium, just hours after the inauguration. Expressed succinctly by Mother Jones, “FHA loans enable homebuyers—often those with lower incomes and who have fewer assets or bad credit—to bypass conventional lenders who would likely deny them loans by taking out a mortgage that’s insured by the federal government. (Trump’s First Move as President: Screwing Over Homeowners, January 20, 2017)
To be clear, just hours after the inauguration, President Trump signed an executive order that reversed a cut in the FHA’s annual mortgage insurance, that would have decreased monthly payments for thousands of new, lower-income borrowers. Presidential executive orders require no congressional approval to pass or overturn. Earlier this year, CNBC’s Diana Olik (@DianaOlick) reported that Obama signed this final Executive Order after after assessing that the FHA insurance fund, which had gained $44 million in reserves, could afford to pass on some of the savings to working families.
(CNBC, Obama lowers borrowing rates, claims Trump won’t reverse). Many Republicans in Congress were not happy about this, suggesting that
The mostly rural, middle-American areas that helped propel Donald Trump to victory in the presidential election, are also the areas of the country that have seen little growth in home ownership according to Laura Kusito’s (@LauraKusisto) Wall Street Journal’s article, Housing Gains Highlight Economic Divide. In this article, she talks about how these regions, with home prices between $100,000 -$150,000 on average, have been especially hard hit after the economic crisis of 2008, when the requirements for obtaining a mortgage became more stringent.
The National Association of Realtors article Hidden Demographics of First Time Home Buyers reveals that the percent of first-time home buyers varies by region of the country. In the Mountain region of Montana, Idaho, Wyoming, Nevada, Utah, Arizona, Colorado, and New Mexico, all red states, first-time home buyers were only 21 percent of the total number of buyers in 2015, the lowest of any region. First-time home buyers made up 43 percent in the Middle Atlantic in New York, Pennsylvania, and New Jersey; and 42 percent in New England.
In assessing the impact of these actions on our national economy, and its economic stability, I think that you could make a case that it is risky to ease requirements for lower income and first-time home buyers. Yet, this runs counter to the mission of HUD to maintain and expand home ownership. It also runs counter to the narrative of our current President who promised the economically hardest hit new opportunities. For a President who promised to get the economy going again, it is a bit hard to understand Trump’s decision to undo the Obama-era rate reduction. It qualifies as a “Robbing Hood” because it has little effect on wealthier mortgage holders, and harms those with low incomes, middling credit scores or who have less than a 20% down payment on their homes. Haley Sweetland Edward’s article in Time, How Donald Trump Just Raised Many Mortgage Bills(January 2017), provides pros and cons for reversing the Executive Order. Whatever the pros are, they must be balanced against the reality of 40,000 Americans potentially losing their chance for a new home, a potential reality captured by Elizabeth Warren’s Tweet on January 20th:
“.@POTUS suspended a planned cut in FHA mortgage insurance premiums,” she tweeted on Inauguration Day, “which @nardotrealtor says will cost 40k families a shot at a new home.”
Shattered. Shaken. Shifting.
Salaries. Smokes. Six-packs.
Ephemera of solace
Daily breath and demons
Left. Left-out. No one’s Right.
Now ground zero
Happiness in waves
Standing. Stirring. Stepping.
Two if by land
One if I see
The same flag
Like you, I am not sure where we are headed. Like you, I am struggling to find the bonds and the lifelines that we share as a nation. Our destiny is shared and our honor is at stake. It is no longer about Trump. Like all great entertainers he is continuing to provide weekly if not daily episodes that invoke our rage, our outrage, and our fear. We live in an era of “Edge of Our Seats TV” that has made reality TV a quaint concept. We always knew reality TV was not real. It may have had moments that touched on the real, or occasional real moments, but we always understood that if you put a camera in front of real people, they become a little fake.
So now, we cling to that hope, that our Commander-in-Chief is a little fake. Don’t laugh! We know he is made-up. He scowls to look mean, he lies to keep all eyes on him, he fabricates, prevaricates, and maybe negotiates. I am not sure any of us actually want to know who the real guy is anymore. It is quite possible that it could actually be more terrifying than the fake one.
To those who say “Give him a chance,” I say, “Let’s talk infrastructure, by damn it!”
Why, oh why, didn’t he just start there? It would have made so much sense. Building is his business, financing these buildings with other folks’ money — his comfort zone. At the end of the day, we have lived through enough Republican administrations to know that they like debt just as much as the Democrats. Reagan, Bush and deficits. Remember? Clinton was the last guy who ran a surplus. Democrat.
Have you found yourself drifting towards thoughts of your past lately? Perhaps, you are in the middle of your daily life, trying to work, to concentrate, to get something done, and instead you pause. In that pause, find yourself a bit terrified, a bit distracted, a bit discombobulated. Bobbing about on a little life-raft of hope and nostalgia, you may wonder if the ideals that mattered yesterday still matter today?
More than ever they do! This mixture of fear and nostalgia is your compass. What is your North Star today? Science? Social justice? Healthcare reform? Living wages for all? Better roads? Disruptive innovation? Artistic expression? Stronger abs? So much work to do and so little time! While you do it, do not forget that we are still in this together. We have to heal our nation and we must stare down the bully!
The topic of “jobs” was addressed by President Trump, in his February 21st CPAC speech. He said, “It’s time for all Americans to get off of welfare and get back to work. You’re going to love it. You’re going to love it. You are going to love it.” Many people on welfare are already working, which highlights the fact that what American workers need is the ability to earn a living wage. This blog briefly considers the idea of a living wage, and who earns one.
In a 2015 Washington Post article, by Emily Badger, titled “When work isn’t enough to keep you off welfare and food stamps” the author cuts to the chase about many people’s assumption that poor people have not bothered to find work. She disproves this assumption by citing research from the UC Berkeley Center for Labor Research and Education, which has found that 73 percent of people who benefit from major public assistance programs in the U.S., live in a working family where at least one adult earns the household some money.
Below, is a graphic from the UC Berkley Center for Labor Research, that shows the percentage of workers who work, but who also receive some form of public assistance in several key categories.
These data reveal the difficulty of getting people into work that allows them to make a living wage vs. simply getting “back to work.” When workers cannot make a living wage, should we try and encourage them to exit these professions and find other professions that allow them to survive without public assistance? Who would replace them? Are there enough teenagers or part-time workers to take these jobs if the current labor force progresses to new professions? Or, should we expect people who eat McMuffins, place their children in daycare, or who have home care assistance, to pay more for these services? Or, should the owners of these small businesses give more of their own profits to their workers and live more modestly? All of these are very difficult questions to answer because they ask us to look at our own values and what we think is important.
I believe that most Americans are in favor of all workers earning a “living wage.” In this blog, I provide a look at a living wage calculator built by an MIT Professor and some data from the Bureau of Labor and Statistics. In subsequent blogs, I will try and consider some of the potential consequences of aspiring to a living wage for all workers.
A living wage provides sufficient income to cover the minimum necessary costs to live including: shelter, food, clothing, medical expenses, child care, personal necessities, and also should include transportation to and from work, and a way to go to the grocery store or to medical appointments. Dr. Amy K. Glasmeier at MIT first developed a living wage calculator in 2004. The MIT calculator takes into account parameters including whether the family has one or two workers, and how many children are in the family. All calculations use geographically specific data, and the data sources and assumptions are clearly documented. You need two formulas to calculate the living wage. The first is to calculate the basic needs budget. Once you have that, you need to calculate the tax burden on this budget. Both formulas follow:
Basic needs budget
Food cost + child care cost + (insurance premiums + health care costs) + housing cost + transportation cost + other necessities cost
To get a sense of how this works, let’s look at some of the data from Hartford, CT. If you click on the Hartford, CT link in the prior sentence, you can observe that: The more members in a family, the higher the wage needs required to achieve a living wage. Whereas, in Hartford, a single adult can survive on $11.00 per hour, a single adult with one child needs to earn $25.55 per hour, and a two adult household with one child, and only one adult working, needs slightly less at $22.59 per hour.Logically, we can assume the single parent household with a child has more child care requirements than the one with a parent who stays home. Now, look at the bottom row of the same table, and you can see that the minimum wage in Connecticut is $9.15 per hour.Not even a single person with no dependents can achieve a living wage on $9.15 an hour.
It is also useful to look at data from the Bureau of Labor Statistics. By looking at the May 2015 Occupational Employment and Wage Estimates, you can get a quick idea of which professions could make a living wage in Hartford, CT.. Scroll down past the major occupational groups by category number to the table that lets you sort by any header category. If you click on the header row titled Median hourly wage, you can sort the professions in ascending or descending order according to their median wage.
The MIT calculator told us that a family of three with one stay at home parent need to earn $22.59 per hour to make a living wage. You might be surprised to learn how few occupational categories satisfy this requirement. Starting with our lowest earning category 35-201, which is for food preparation and serving workers, including fast food, who earn an average hourly wage is $9.09, you will have to scroll all the way down to category 13-1121 to approach this hourly wage, arriving at the meeting, convention, and event planners who earn $22.52 per hour. You will have passed by many many people in your community.
Some of the occupations which do not earn a living wage include: librarians ($22.10), brick masons ($22.32), real estate brokers and sales agents ($21.93), precision instrument repairers ($21.94), rail yard engineers ($22.01), and healthcare support workers ($17.20). I think we might agree that these categories of work are important to all of us and that we need people to do this work. Don’t they deserve a living wage? Also, can we really blame the fact that they do not earn a living wage on outsourced work or the global economy? How does renegotiating trade deals help these workers? Our current unemployment rate is 4.8% yet approximately 73% of those on public assistance are already working.
So, to put a finer point on it — for the remaining 4.8% unemployed workers in our economy, hopefully the new Republican policies will help them roll off of welfare onto a job that provides them a living wage. Having good skills and no children, may make it easier for them to survive and thrive.
Those who like the sound of “workers getting off of welfare,” will also need to like the sound of “Paying more for products and services.” This is likely the easiest way to reduce worker’s reliance on the public assistance that helps them achieve a living wage.
We’re all going to love it, I’m sure!
(One final note for data geeks: The Bureau of Labor Statistics has a vast variety of detailed data that are worth studying, even briefly, to gain a clearer picture about the pain points within the American workforce.)
Dedicated to the robber in chief, leading his merry band of GOP thieves, I hereby proclaim, via the first Robbing Hood blog, a new series focused on how the GOP and 45 plan to rob from average Jane and Joe and give to Billionaire Bob!
To all the average Joe’s and Jane’s out there: watch your wallets! 45’s plan to Make America Great Again depends on the “richies” being “nice.” Ahhh yes, that’s it…all those hedge fund folks who destroyed our retirement accounts last time, who packaged up a bunch of toxic real estate assets like they were botox for the bottomline and sold them off to the banks to help the “getting by’s” buy a larger home than they probably needed. Remember the fun and frolic, when the Chinese bought our Treasuries, and credit was loose, and everyone bought more than their fair share of stuff? Oh yeah, those were the good old days of 2002-2008, before we had to pull the rip-cord and parachute to reality.
A bunch of stuff happened after that, including the formation of an organization called the Consumer Protection Agency. As stated on its website, “The FTC’s Bureau of Consumer Protection stops unfair, deceptive and fraudulent business practices by collecting complaints and conducting investigations, suing companies and people that break the law, developing rules to maintain a fair marketplace, and educating consumers and businesses about their rights and responsibilities.” Definitely something we should want to get rid of, right? Woohoo! Soon everyone can engage in the type of business practices that have distinguished 45 as one of the only “77’s” out there. What is a 77 you ask? Someone who has filed Chapter 11 7 times.
Ponder that for a moment and the possibility that we may all be headed for an “88” collectively. But hold onto your hats you “getting by” types because you can definitely count on the “richies” and the businesses who now have full and unfettered access to fraudulent practices to do the right thing, right? I am sure they would never take advantage of or engage in practices at the expense of us pesky consumers to make extra money. Hey maybe they will even employ us and create a whole bunch of awesome jobs, right? You trust them, don’t you? So when you follow Fraulein Conway’s dictate to buy Ivanka’s stuff, because its “So great” — you will definitely be helping both Ivanka and the U.S. economy. I mean, hey, the Chinese who manufacture her clothes may even buy our Treasuries again….
You trust 45, and Fraulein Conway, and Putin, and you hate people like me. I’m the enemy – one of those crazed liberals who reads the news, believes in facts, pays my damn student loan bill ($900) a month because I went to MIT for an MBA to become an eleet.
So what does it feel like to be an “eleet?” Ah…let me count the ways. Ooops. Yes, see the thing is, my friend, — WE — yes you regular Joe, and you regular Jane, are ME. That’s right, I am regular Jane too, and I struggle to pay for that student loan and my other monthly payments, and wonder if my retirement account will crash because we certainly want to make darn sure that those Koch brothers and their industries are deregulated, and that we can pollute again, and that we can vvvvv-OUCH-erize the hell out of public education so that our billionaire baby DeVos can gut public education like she did in Michigan. Watch out for the bears!
But, I get it, its soooooooo unfair to be sooooooo mean to the Tweeter in Chief. I call bullsh*t and ask you to think about who might be taking steps, marching in the streets, blogging, and barking on your behalf? Yes me, the liberal version of regular Jane. Oh, and did I mention that my great grand-daddy was a coal miner, and my grandpa sold spam for Hormel, and my husband is in the local carpenter’s union. His family came here from Germany after WWII. He is the opposite of eleet, and spent most of his time toiling with his body to make a living. But, hey just remember, I am a snotty liberal jerk out to get you by suggesting that fair labor practices, clean air, and regulations on business serve our purposes.
If we are headed to 88 with 45 (aka 77)…let’s try and do things bigly. Grammar is so Obama. See you at Nordstrom. That’s where the eleets like to hang out.
Last Friday, the macroeconomic elephant in the room stomped on our microeconomic realities. Senator Lindsey Graham’s tweet, on January 26th, saying, “Simply put, any policy proposal which drives up costs of Corona, tequila, or margaritas is a big-time bad idea. Mucho sad!” summarized part of the problem — that trade wars drive up prices on consumer goods. In other words, microeconomics, which looks at the markets where goods and services are bought and sold, is impacted by macroeconomic policies on global trade and tariffs. Within hours of announcing the new policy, President Trump and his administration back-pedaled on the proposed 20% tariff on goods imported from Mexico. If we enter a trade war, there are downsides to consider, not least of which is our own economic growth. Let’s take a deeper dive into 3 top concerns resulting from protectionism.
1. Trade Barriers Depress Growth
In a recent lecture to Sloan alumni, MIT Economics Professor Simon Johnson, provided an overview on the state of today’s economy and the prospects for global economic growth over the next year and decades. In discussing the United States and protectionism, he said “The overwhelming preponderance of evidence suggests that trade wars depress growth.” He cited a Wall Street Journal (WSJ) analysis of the increases and decreases in trade resulting from freer trade vs. protectionist periods. The WSJ measured global trade relative to Gross Domestic Product (GDP) using 1947 as the base point of the index. If you take a look at their chart below, you will see several periods of growth. The first occurs between the 1950’s to the 1970’s, as General Agreements on Tariffs and Trade (GATT) nearly doubled the level of trade by 1970. The next bump up occurs after the 1990 Canada U.S. Free Trade Agreement and 1992 North American Free Trade Agreement (NAFTA) took effect. This period of growth continued through 2007, with a severe drop-off due to the financial crisis of 2008. Since that time, there has been slower growth, but it was anticipated that the Transpacific Partnership (TPP) was going to provide another boost.
The period between 1979 and 1990, when the line is relatively flat, was characterized by a period of increasing oil prices which also drove demand for lighter more fuel efficient cars, the kind largely produced in Japan. Students of history, or those who lived it, may recall a moment of crisis in the auto industry. As the industry collapsed, politicians, on behalf of their constituents, tried to pressure other markets to open up and be more fair.
An in-depth analysis of this period can be found in chapter 8 of the National Bureau of Economics Research (NBER) bookPolitics and Economics in the Eighties. The author I.M. Destler describes that while Congressional trade activism multiplied, trade protection only increased marginally. Among the increases in American trade protection were the “voluntary” export restraints (VERs) in steel and automobiles. He further concludes that, “The auto VER remained technically in force through the decade, but it had lost its bite by the late eighties. It had been enlarged by 24 percent, and the combination of the weaker dollar and increased production by Japanese firms on American soil made it increasingly difficult for the quotas to be filled.”
Today, as members of the World Trade Organization, we are bound by preexisting agreements. In a WSJ article by James Bacchus, on January 4th, “Trump’s Challenge to the WTO” the author says that, “Under the WTO treaty, the U.S. is legally bound by the tariff commitments it made on thousands of traded products. These commitments can be renegotiated. But they can’t legally be ignored.” Decisions designed to appease the political base of President Trump, such as in the case of Mexico or with the TPP, may not take into consideration prior negotiated agreements. No doubt those negotiators also sought to provide certain advantages to the U.S. consumer, or to our own exporters.
For a good source of information on the existing tariffs between Mexico and the United States, visit the World Trade Organization website and refer to the current Schedules of WTO Members. When you open this page, you can scroll to the United States, and download a .pdf file, that contains many details on current tariff rates by product type.
2. Unintended Consequences: Winners and Losers
One downside of tit-for-tat trade policies is calculating the complexities of who might gain and who might lose. At the macro-level, what seems easy, to add a tariff to goods manufactured outside of the United States as a way of encouraging domestic companies to increase their manufacturing in the United States, may have some unintended consequences. A few questions we might ask include:
1) Will these manufacturing plants be located within states that have unions or not? As described in Wikipedia, the UAW has been credited for aiding in the auto industry rebound in the 21st century and blamed for seeking generous benefit packages in the past which in part led to the automotive industry crisis of 2008-2009. According to Bloomberg, UAW members produced only 54 percent of the cars and trucks made in the United States in 2013. That compares with 85 percent of cars and trucks built in the U.S. in 1999.
2) Assuming the plants are built in non-union states, will there be incentives to help relocate workers to lower paying manufacturing jobs in the South? There is already an unofficial trade war among states in the U.S. who create incentives to lure companies to their state. New protectionism may exacerbate this, as states increasingly compete to provide incentives to automakers to relocate. As long as labor as plentiful and willing to move, this might work. As soon as labor markets tighten, and the dynamics shift in favor of the worker, relocating for cheaper labor will no longer be cost-effective. CEOs who continue to evaluate which is the best economic environment in which to do their manufacturing, will factor in protection of jobs and workers only as long as they can achieve competitive market advantage.
3) How will consumers react to higher prices and less choice? Perhaps, there will be a migration of the displaced union workers from Ohio and Michigan to the South, where they can take advantage of these new non-union job opportunities. Or, if companies choose to build the factories in union states, then we can expect that the increased wages of these union workers might impact to the prices of the automobiles produced. This takes us back to the 1980’s — when the automobiles produced were higher priced than the imports, and potentially less attuned to consumer desires. Thus, two of the benefits of this global competition, more choice and better prices, may decline.
Another aspect of this story is how our politicians respond. In 1991, The National Bureau of Economic Research’s published volume of conference proceedings includes a chapter titled: “U.S Trade Policy-making in the Eighties.” One interesting finding concerns the role politicians played during this time: essentially embracing protectionist views to appeal to their constituents without taking specific concrete protectionist actions. Generally, the article finds that in spite of protectionist rhetoric during this period, the measures taken were weaker than the rhetoric espoused.
Economist Anne O. Krueger offers the following insights on this topic: “In this light, one can adopt a demand-and-supply framework. There is a “demand for protection,” which is presumably a function of voter concerns, lobbyist pressures, and other considerations. Simultaneously, there is a “supply of protection,” which is a function of the economic and political costs of providing protection. The demand for protection is higher the less well informed voters are about economic policy, the less economic knowledge supports a free-trade stance, and the larger the negative net trade balance in individual economic activities. The supply of protection is greater the smaller the negative impact on other producers (and hence greater for consumer goods than producer goods and greater for activities in which domestic firms do not have overseas operations from which they supply part of the domestic market) and the smaller the negative side effects (such as foreign policy considerations) of protection. In this framework, the 1980s experience could be interpreted differently. Clearly, the demand for protection increased. It increased because negative net trade balances emerged and/or increased for a large number of economic activities. It increased because the economics profession was willing to give more credence to considerations of “strategic protection” than it had earlier, thus undermining the professional consensus that had stood as a partial barrier to protectionist measures. ”
Put simply, it is our own non-specific demand for general protectionism which may cause the most harm. Blanket policies may help some, but these will also likely hurt others. Swapping Mexican tequila for American-made bourbon may be palatable, but will it be palatable to pay more for domestically produced automobiles? Furthermore, will a global company such as Ford, which sold 1.27 million vehicles in China in 2016 (Melissa Burden, The Detroit News, January 6, 2017) face retaliation on the world stage that causes a decline in their growth? If that happens, will the impact on their value and evaluation as measured by indicators such as the stock market face downward pressure? Will other countries with less cumbersome trade policies fare better on the global stage?
3. Fair Labor Practices and Environmental Standards may Erode
While some manufacturing jobs may return, they are no guarantees that they will be at the former UAW compensation levels. Michelle Maynard, a contributor to Forbes, writes in “The UAW Is Losing Its Grip On Auto Industry Labor” about how the increase in foreign automotive manufacturing plants has caused a decline in UAW influence. She says that “While many of the older foreign plants pay wages similar to those earned by senior UAW members, the newer companies have been paying less, especially those located in the Deep South, from Texas to Georgia. Meanwhile, the UAW has agreed to more-significant differences in wages for new hires at the Detroit companies in recent contract negotiations, moving it farther away from its vow that workers will be treated equally. These two-tier wage systems have helped create new jobs, but mean that newer workers earn substantially less than their veteran counterparts.”
Without delving into climate change, and whether it exists, it is not hard for Americans to remember times when companies and factories were freer to pollute than they are today. Among the checks and balances that we take for granted today, are the measurement of toxic releases by these companies. The EPA produces something known as the Toxics Release Inventory which offers analyses and interactive maps showing data at a state, county, city, and zip code level. The EPA describes the purpose as follows:
“We all have the right to know about the chemicals we may be exposed to in our daily lives. The Emergency Planning and Community Right-to-Know Act of 1986 and the Pollution Prevention Act of 1990 require certain industrial facilities across the country to report annually to EPA’s Toxics Release Inventory (TRI) about toxic chemicals they release* and what they’re doing to prevent or reduce pollution. TRI includes data about more than 22,000 facilities across the country and covers more than 675 toxic chemicals.”
Simply by inputting my zip-code, 06489, I was able to generate a snapshot of what is going on in my own backyard. The EPA is vitally important to our country and to its citizens. We have paid with our tax dollars to gather rich and important data which can be used by all US Citizens to learn about what is being done to their environment in their backyards and farther afield. If you think that this impact is only domestic, I know first-hand that many countries also analyze these data to assess what kind of neighbor the company might be, when/if they move in.
But, let’s not assume that American companies take with them all of the good practices that are required here by the EPA when they locate internationally. In fact, they may relocate precisely to avoid regulation and reduce costs, which also allows US consumers to benefit from cheaper goods manufactured with less environmentally friendly practices, while also removing job opportunities.
As we ponder how to make America great again, maybe we can figure out how we can afford to purchase goods which are manufactured in accordance with the best environmental practices required here in the United States, whether produced here or off-shore. Environmentally sustainable production may decrease the advantages of relocating to avoid regulation, but we will not be trading our values for lower priced goods that harm our own economic prospects. If we are really are so concerned about Chinese pollution, perhaps we might want to export our environmental practices as a way of protecting our workers. If we gut our own environmental protections as a cost saving measure to encourage manufacturing at home, we may face our own pollution crisis. It is not coincidental that a climate change denier will soon lead the EPA, industries will be de-regulated, and we will seek to shore up U.S. industry by putting up trade barriers. We should therefore expect, higher-priced products, more polluted environments, and less economic growth. If those are the goals we have, then we are on the right path.