Playing Chess With World Trade

America has been on the wrong end of bad trade deals for a long time. We watched our manufacturing jobs leave America after NAFTA. We watched the steel industry disappear after being undercut by Chinese steel held up by subsidies by the Chinese government. President Trump is a businessman. As a businessman, he is trying to level the trade playing field. In some areas he is getting cooperation at home and abroad; in some areas he is not. China has been a difficult country to deal with regarding trade. The uneven playing field they have enjoyed for years has been very profitable for them. Because their economy is based on an uneven playing field, they are reluctant to make changes. Their economy is currently struggling, and if President Trump stands his ground, the Chinese economy could face serious challenges. That’s where we are. There is, however, some positive news about where we might be headed.

Ed Morrissey at Hot Air posted an article today about a possible breakthrough in the talks with China.

The article reports:

Did China finally blink in Donald Trump’s trade war? Trump himself seems to think so. At the G-7 summit, Trump told reporters that a statement earlier in the day from a top official in Beijing showed that China had finally expressed a real interest in redefining the trade relationship between the world’s top two economies. It’s “the first time” that Trump sees China acting in good faith, he said

The article continues:

After rapid-fire escalations in tariffs by both sides, China’s vice premiere called for “calm.” Liu He also declared Beijing’s willingness to conclude a trade agreement and called for talks to begin immediately:

“We are willing to resolve the issue through consultations and cooperation in a calm attitude and resolutely oppose the escalation of the trade war,” Liu, who is President Xi Jinping’s top economic adviser, said, according to a government transcript.

“We believe that the escalation of the trade war is not beneficial for China, the United States, nor to the interests of the people of the world,” he added.

U.S. companies are especially welcome in China, and will be treated well, Liu said.

“We welcome enterprises from all over the world, including the United States, to invest and operate in China,” he added.

“We will continue to create a good investment environment, protect intellectual property rights, promote the development of smart intelligent industries with our market open, resolutely oppose technological blockades and protectionism, and strive to protect the completeness of the supply chain.”

The last time we thought we had a deal, the person who made the deal was executed when he returned home. Hopefully this time will turn out better for everyone.

Killing A Growing Economy One Law At A Time

On January 4th, Investor’s Business Daily reported:

Since President Donald Trump took office nearly two years ago, some 4.8 million new payroll jobs have been created. That’s more than four times as many as created during President Obama’s first four years.

Hold on, you say, didn’t the unemployment rate jump from 3.7% to 3.9%? It did. Yes, but not because more people were unemployed, but because more people entered the labor force, seeking opportunities that didn’t exist before.

It’s actually a bullish sign. Some 419,000 people entered the workforce during the month, driving the labor force participation rate to 63.1%, up from 62.7% a year ago. That bellwether employment figure declined pretty consistently during the job-poor Obama years, from 65.7% when Obama entered office to 62.9% when he left. It stabilized under Trump. Last month’s 63.1% tied for the highest point since September 2013.

This rapidly improving economy is the result of President Trump’s deregulation and tax cuts. Cutting the corporate taxes and regulations resulted in manufacturing jobs returning to America (after President Obama told us they were never coming back). So why is the Democrat House of Representatives trying to undo this progress?

The Hill reported yesterday:

Rep. John Yarmuth, the new House Budget chairman, said his chamber’s budget blueprint will aim to claw back lost revenue by boosting the corporate tax rate from its current 21 percent to as high as 28 percent, with rate increases also possible for high-earning individuals.

The Kentucky Democrat said Friday he wants to mark up a fiscal 2020 budget resolution, which will outline his party’s vision for taxes and spending over the next decade, in time to reach the House floor in early April. Yarmuth said Democratic leaders have told him they want to be ready so they can set the procedural stage for passage of all 12 appropriations bills before the August recess.

Are they simply economically badly informed or is there another motive? Well first I would like to mention my favorite Milton Friedman quote, “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.” I think there are two forces at work here–first of all the Democrats love taxes. They believe that the more of everyone else’s money they have to spend, the more powerful they are. Second of all, Democrats with brains realize that increasing taxes will slow economic growth. Slowing the Trump economy is the only chance the Democrats have of taking the presidency in 2020. That is the plan. Hopefully the Senate will not pass the House of Representative’s budget plans. They will be harmful to average Americans. President Trump has helped average Americans economically. President Obama helped Wall Street but ignored Main Street. The House Democrats seem determined to go back to that model which ignored average Americans.

When You Wish You Could Eat Your Words

In June 2016, then President Obama made the following comment about then candidate Donald Trump:

“When somebody says like the person you just mentioned who I’m not going to advertise for, that he’s going to bring all these jobs back. Well how exectly are you going to do that? What are you going to do? There’s uh-uh no answer to it. He just says. “I’m going to negotiate a better deal.” Well how? How exactly are you going to negotiate that? What magic wand do you have? And usually the answer is, he doesn’t have an answer.

President Obama stated many times that the manufacturing jobs lost to Americans weren’t coming back. He is now faced with the problem that the policies of the Trump administration have brought many of those jobs back. He is also trying to take credit for the economic growth under President Trump. I am not sure how many people are willing to believe that. However, there is something that does need to be mentioned here.

President Obama said that manufacturing jobs were not coming back to America. In a sense that was a true statement–if Hillary Clinton had become President, manufacturing jobs were not coming back to America. So what would a President Hillary Clinton have done differently that would have prevented those jobs from coming back to America? Let’s look at the things that determine where a corporation manufactures its product–a low cost of doing business–things like the cost of energy, taxes, wages, etc., economic stability–the idea that taxes will not substantially increase the year after relocation (another reason to make the tax cuts permanent as soon as possible), reasonable business regulations, a dependable, conscientious workforce, and infrastructure that provides a reliable way to move a product. Hillary Clinton would not have cut taxes, cut regulation or increased energy production to bring the price down. Hillary Clinton’s economic policies would not have attracted businesses to America.

The economic growth we are seeing is the result of policy changes made since President Trump took office. In November, Americans have to make a choice. Do they want our current economic growth to continue or do they want to go back to President Obama’s economy? A vote for a Republican is a vote for the Trump economy, a vote for a Democrat is a vote for the Obama economy. We have a choice.

Slowly But Surely Things Are Changing

On Friday, CNS News reported that according to the Bureau of Labor Statistics, the number of people working for the federal government declined by 13,000 in 2017.

The article reports:

At the same time, overall government employment in the United States increased by 7,000 as the number of people working at the state government level and the local government level both increased.

The following chart is from the article:

I realize the chart is difficult to read, but basically, the intersect of manufacturing and government jobs took place about 1989. That is when government jobs began to outpace manufacturing jobs in America. It should be noted that every dollar spent by the government on employment or anything else is a dollar taken away from the private sector. Since the private sector is responsible for growing the economy and increasing employment, increased spending by the government is not a wise long-term strategy.

The article concludes:

Despite losing 1,000 jobs in September, the manufacturing sector has still gained 104,000 jobs in this year. In December, there were 12,343,000 employed in manufacturing in the United States. In September, there were 12,447,000.

Despite the gain in manufacturing jobs since the start of this year, government jobs continue to massively outnumber manufacturing jobs in the United States. As of September, the 22,337,000 employed by governemt in the United States outnumbrered the 12,447,000 employed in manufacturing by 9,890,000.

The first time government jobs outnumbered manufacturing jobs in this country was August 1989, prior to that–going back to 1939 (the earliest year for BLS’s sector-by-sector employment numbers)–manufacturing jobs had always outnumbered government jobs in this country.

Slowly, but surely, things may be getting back under control.