We now live in a world where a trade war is creating economic havoc throughout the world. Regardless of the lies being perpetrated by the supporters of this trade war, most notable the president. The Trump administration is attempting to deceive and propagandize the public into believing that there is a pot of gold for everyone once the rainbow appears after all the trade war chaos ends. There will be a pot of gold but only for those with the most risk capital (risk capital is the funds that are expendable in exchange for the opportunity to generate outsized gains). The wealthy almost always gain (Great Depression is the most noteworthy exception) during time of economic chaos and there will be real economic chaos for months or years, so look for the very wealthy to get much wealthier.
Most economists and financial experts have been outspoken about instigating a trade war as a bad decision. It will have negative economic consequences on the American public for an unknown time frame and will negatively impact those most vulnerable (poor, elderly, lower middle income) more than any other segment of society. Pay close attention to how much the very wealthy accumulate during this self-inflicted and foolhardy economic experiment.
Last time this country made a series of risky economic decisions that defied logic, the country experienced The Great Depression. Coupling the reckless and illogical gutting of the federal operations, randomly and haphazardly laying off tens of thousands of federal employees, and reckless budget cutting with creating economic chaos in this country and worldwide can’t be a very good idea. Yet here we are staring into the abyss of the unknown hoping that the whims of our wannabe dictatorial president are well thought out and reflect much research and discussion among a wide range of knowledgeable individuals, just kidding. There is no real plan, there is no vision, just what the president has formulated in his mind that he believes is the right thing to do even if everyone knows this is very bad for the country.
The notion that somehow if trade balances are equalized then jobs will simply gravitate back to U.S., and we will become the manufacturing juggernaut that we were in the middle of the 20th century is something only a fool would believe. In the latter part of the 20th century, manufacturing fled the country to overseas locations to exploit an increasingly educated underemployed workforce and escape U.S. regulations. Why pay American workers livable wages in the U.S. when you could use and often abuse cheap labor in China and other Asian countries where huge labor pools had little opportunities for employment. Foreign workers would work long hours for little pay in huge sweatshop environments that few American workers would tolerate. There were numerous news stories, remember China is a very closed media environment, of employees committing suicide due to the harsh and deplorable working conditions in these huge highly controlled factories. This exodus of American manufacturing was aided by tax provisions inserted into the U.S. tax code which provided financial incentives for companies to move their manufacturing overseas.
So, the return of manufacturing is very likely not going to happen during this trade war because corporations don’t just change their long-term growth strategy because some trade war caused chaos for several months or a few years. Corporations are looking for the next location to exploit cheap labor and operate with relative freedom from governmental oversight. My guess is that Africa is perhaps in need of more corporate exploitation as their population becomes increasingly more educated. Trade war advocates are attempting to rationalize this massive tariff gambit on the return of manufacturing to the U.S., which is not going to happen in any significant way.
Tariffs are a sales tax on the citizens of the U.S. which are paid for by those that use most, if not all their income, consuming goods and services. Because the very wealthy use a far lower percentage of their income on consumption, those tariffs will not greatly impact their lives. The very wealthy will respond to the chaos of the trade war to grow their wealth while 90+% of the population will struggle to maintain the standard of living they had prior to the president starting this ill-advised and ridiculous act of economic self-destruction.
What we all want is enlightened and thoughtful decision making by those we elected to represent our collective interests in order to make the country a more perfect union reflecting a government that operates by, for and of the people. We don’t want an experiment by a dictatorial president and a few of oligarchs that turns the U.S. into some third world declining nation.
