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A major story in the news these last few days is the US president's declaration of intent to impose large tariffs on imports of steel and aluminium to the US. General economic opinion appears to be against this idea and worried that it will result in a needless lose-lose trade war. The EU, China and other countries are threatening retaliatory measures. But if the tariffs were imposed only on China, would they be justified? Is it true that China is "dumping" steel on world markets by selling it at artificially low prices?

In my naivety, I thought it might be possible to find an objective true/false answer to this particular question relatively quickly without having to take a degree in global economics. I had a quick look. One of the articles I found discussing the subject was this:

http://theconversation.com/fact-check-i ... teel-76916

At first, the answer seemed to be clear: Yes China is indeed harming global markets by dumping steel, so maybe the proposed trade war with China, at least, might be justified. But the answer doesn't seem to be as clear as that because, according to the review at the bottom of the article, it doesn't seem to be possible to objectively define a global fair market price for steel.

Given that even apparently factual questions are open to debate, do we the economically semi-literate public have any hope of deciding whether or not we agree with our leaders' economic decisions?

So my first thought is that if you know nothing about economics (I think you're being kind saying semi literate) then you should expect not to be able to agree or disagree with your representatives economic decisions.
Then I think well wouldn't it be nice if they laid out the key principles and philosophies which guide their economic decisions and attempt to clarify and explain to the public in terms that could be understood.
Then I think economics by necessity must be hidden from public knowledge. After all if you are predictable you can be turned into a money pump. In the real world an eye for an eye is necessary.
Then I think the average politician doesn't understand economics any better than the average illiterate person. But they do understand taking advantage of people, so in many ways they are 'better' economically than the average.
I'm not sure what all that adds up to though.

Eduk wrote:So my first thought is that if you know nothing about economics (I think you're being kind saying semi literate) then you should expect not to be able to agree or disagree with your representatives economic decisions.

Yes, sounds logical so far. (Although it's interesting that you appear to be down with this modern trend of beginning sentences with the word "so". It's even been remarked on by such people as Stephen Fry and John Humphrys on Radio 4. Sorry. Completely irrelevant. Do go on.)

Then I think well wouldn't it be nice if they laid out the key principles and philosophies which guide their economic decisions and attempt to clarify and explain to the public in terms that could be understood.

Yes. Trump kind of does that, I suppose. Some of our politicians do it on subjects like Brexit and the funding of public services. It still doesn't tell us how likely the proposed legislative actions are to achieve the ends of those principles and philosophies.

Then I think economics by necessity must be hidden from public knowledge. After all if you are predictable you can be turned into a money pump. In the real world an eye for an eye is necessary.

You mean, life is game of poker and our leaders should keep their economic cards close to their chests so our rivals don't see them?

Then I think the average politician doesn't understand economics any better than the average illiterate person. But they do understand taking advantage of people, so in many ways they are 'better' economically than the average.

Yes, so as long as the gut instinct of the street fighter translates successfully to a country's economic policy, everything should work out.

I'm not sure what all that adds up to though.

Me neither.

Steve3007 wrote: ↑March 2nd, 2018, 8:34 am A major story in the news these last few days is the US president's declaration of intent to impose large tariffs on imports of steel and aluminium to the US. General economic opinion appears to be against this idea and worried that it will result in a needless lose-lose trade war. The EU, China and other countries are threatening retaliatory measures. But if the tariffs were imposed only on China, would they be justified? Is it true that China is "dumping" steel on world markets by selling it at artificially low prices?

In my naivety, I thought it might be possible to find an objective true/false answer to this particular question relatively quickly without having to take a degree in global economics. I had a quick look. One of the articles I found discussing the subject was this:

http://theconversation.com/fact-check-i ... teel-76916

At first, the answer seemed to be clear: Yes China is indeed harming global markets by dumping steel, so maybe the proposed trade war with China, at least, might be justified. But the answer doesn't seem to be as clear as that because, according to the review at the bottom of the article, it doesn't seem to be possible to objectively define a global fair market price for steel.

Given that even apparently factual questions are open to debate, do we the economically semi-literate public have any hope of deciding whether or not we agree with our leaders' economic decisions?

Your post brings up a good point, namely what is the appropriate role of and respect for "expert opinion"? In these complicated areas we cannot expect to substitute a quick review for the knowledge professionals have acquired over their careers. Having said that, experts have a longstanding track-record of being poor predictors of future events. I am speaking of the soft sciences of biology and medicine to a minor extent as well as the downright squishy sciences like economics and sociology to a huge extent.

Steve3007 wrote: ↑March 2nd, 2018, 8:34 am A major story in the news these last few days is the US president's declaration of intent to impose large tariffs on imports of steel and aluminium to the US. General economic opinion appears to be against this idea and worried that it will result in a needless lose-lose trade war. The EU, China and other countries are threatening retaliatory measures. But if the tariffs were imposed only on China, would they be justified? Is it true that China is "dumping" steel on world markets by selling it at artificially low prices?

In my naivety, I thought it might be possible to find an objective true/false answer to this particular question relatively quickly without having to take a degree in global economics. I had a quick look. One of the articles I found discussing the subject was this:

http://theconversation.com/fact-check-i ... teel-76916

At first, the answer seemed to be clear: Yes China is indeed harming global markets by dumping steel, so maybe the proposed trade war with China, at least, might be justified. But the answer doesn't seem to be as clear as that because, according to the review at the bottom of the article, it doesn't seem to be possible to objectively define a global fair market price for steel.

Given that even apparently factual questions are open to debate, do we the economically semi-literate public have any hope of deciding whether or not we agree with our leaders' economic decisions?

Steve, Ricardo's Law of Comparative Advantage settles the matter decisively, which is that China is not harming anyone by producing cheap steel. Do less competitive industries lose jobs? Yes, but then money is freed up for other uses instead of higher steel prices.

With that said, there is concern with China's artificially boosted economy, which is unstable. If they collapse, steel production will not be able to be maintained, especially considering it is a heavy capital goods industry which is hit hard from credit expansion-induced artificial booms. Such bust would produce a temporary readjustment period. So there is legitimate beef with China in their artificially stimulated economies, but the U.S. certainly cannot complain about that. Just remember the Great Depression that started in 1929 which was a global problem because of the U.S. inflating its currency to try to help Britain post WW1.

It looks like Trump is keeping his promise and escalating the trade war with China. It will be interesting to see how that plays out. (In the "may you live in interesting times" sense of the word.)

It's been pointed out that China simply can't match the proposed additional $200 billion worth of sanctions because they don't actually import that much from the US. I presume that's why Trump thinks he can win and force concessions from the Chinese. But China does hold a trillion dollars of US government debt (bonds). I wonder if they could seek to rock the boat by selling this.

Funny that Trump had no qualms about using Chinese steel to build his hotels and casinos.

But China does hold a trillion dollars of US government debt (bonds). I wonder if they could seek to rock the boat by selling this.

Yes, if the Chinese were to start selling them, or just stop buying them for that matter, the U.S. would be unable to pay the interest on their massive debt (which they are barely managing now by continually increasing the debt ceiling) and be in big economic trouble.

The thing is, Trump can't even explain what he's trying to achieve with all these tariffs, I don't think he really knows, he seems to be clueless about economics.

Trump doesn't need to explain what he hopes to achieve: it's obvious:
He says he's protecting American jobs. He says he's encouraging American industry.
He's making public, widely-reported opportunities to look "tough"; confront America's rivals and stand for America's interests.
As long as his voter-base falls for it, mission accomplished. Remember, he never stopped campaigning. He likes campaigning.

Of course, a lot of jobs will be lost. The US steel industry has been moribund for decades and would be far too costly to resurrect - manufacturers will relocate, rather than make the necessary investment. They can find more reliable regulating agencies, more modern premises and more skilled workers elsewhere. Plus, foreign investors in steel-dependent industries will pull out when the price of supplies goes into orbit.

The tariffs would have a significant adverse effect on America auto production, regardless of manufacturers' home countries are, and regardless of the American-made cars bound for export. http://www.thedrive.com/news/18999/auto ... um-tariffs

The American people will start feeling the effects in a few months, but not everywhere at once, in various ways - prices rising, layoffs, scarcity of select goods, retailers going bust, factories closing - and always indirectly, so they probably won't see the connection.
And Trump will always find somebody else to blame. Obama, probably.

Yes, it will be interesting to see how far Trump's followers will go with him, maybe right over the fiscal cliff if he promises to provide them with parachutes. I guess you really can fool some of the people all of the time?

I'm from Milwaukee. You know... the so-called "Rust Belt" (a title created to make reference to rusting factories and machines when US manufacturing jobs began leaving in the 1980s). Milwaukee during the 1960s had the highest black male employment rate of any large city in the country. Today it has the highest black male unemployment rate or one of them. This all occurred *decades*--let me repeat that--*decades* before Trump got in office. It occurred under the watch and guidance of the "experts" that disagree with Trump.

The steel issue I'm not certain of but more broadly speaking the EU imposes over a 10% protective tariff on US cars coming into Europe whereas the USA had only imposed before Trump under a 3% protective tariff on European cars coming into the USA. So, how come the asymmetry of those tariffs did not wreck the entire global economy? Eh?

As for China, some have argued that China played the Trump role before Trump ever ran for President and by that I mean some say China played hardball with both Europe and the USA by putting up protective tariffs. And then forcing--by way of protective tariffs--the Europeans and Americans manufactures that wanted to have access to over a billion Chinese as potential consumers/customers, to open manufacturing plants in China (thus they closed in the USA). But the Chinese did not stop there. They went Donald Trump on Europeans and Americans and stipulated our companies had to do joint business ventures with the Chinese Government. Again, that was not all the Trump-like demands they made on the lawyers of the US Government that were never businessmen, they made the European and US companies agree to turn over strategic technology to the Chinese if the Chinese allowed them to open up manufacturing plants in China.

Trump viewed all this as bad business deals for the people--workers--of the USA if in fact said "politics" was conceptualized through the eyes of a career businessman. Trump is a graduate of the Wharton business school (alumni includes Elon Musk, Warren Buffet, and many top CEOs of the USA) which is one of the most selective business schools in the world. But most American politicians--statistically--are lawyers or their degrees from college are in law (not economics or business or philosophy or medicine). Trump be he right or wrong on these issues actually cut his teeth in one of the world's most cutthroat real estate markets as a businessman: New York City.

Supine wrote: ↑July 17th, 2018, 4:49 pm I'm from Milwaukee. You know... the so-called "Rust Belt" (a title created to make reference to rusting factories and machines when US manufacturing jobs began leaving in the 1980s). Milwaukee during the 1960s had the highest black male employment rate of any large city in the country. Today it has the highest black male unemployment rate or one of them. This all occurred *decades*--let me repeat that--*decades* before Trump got in office. It occurred under the watch and guidance of the "experts" that disagree with Trump.

You say occurred, as if no human agency were involved and "under the watch" as if some expert were responsible. These are quite misleading constructions. What actually happened? Nothing simple enough for Trump to understand or fix with a big scrawly signature on a piece of paper.
Cheap labour in the southern states and Mexico; cheap material coming in from China and Korea; deregulation; a couple of wide-spread economic slumps; automation; shifting markets; less demand for the product; poor competitive position. Here is one analysis you might find useful _https://www.minneapolisfed.org/research ... -rust-belt .
More profit could be made elsewhere, so the corporations and their investors took their money elsewhere. http://www.jiesworld.com/international_ ... _china.htm
No "experts" run that show; governments can do no more than levy taxes and raise impediments to the movement of capital - and not all that much of the latter anymore: all the big venture capitalists diversify globally.
The main thing, of course, is that business changes all the time; every industry has boom and bust periods and a life cycle. Like cotton-gins and corset-making, like blacksmithy and and coal-mining, there comes a time when the industry has simply run its course. Every time an industry declines and is replaced by a more modern one, there is net loss of employment, because increased technology needs decreased manpower.
Nobody can fix that; nobody can turn back time.
The USA rose and economic power by supplanting England, France and Belgium, but kept on exploiting the middle and far east. Europe was kick-started by the Roman Empire, which disappeared, but its successors kept on exploiting Africa and the Americas - and on it goes.

Whether a nation survives the decline and fall of its empire depends on how its leaders deal with changing conditions.
There are possible intelligent responses to the present crises --
but Trump isn't one of those.
He has investments all over the world. Whatever happens to American workers is never going to be his problem.

Trump be he right or wrong on these issues actually cut his teeth in one of the world's most cutthroat real estate markets as a businessman: New York City.

And that's basically all you need to know about capitalism.

Trump is a graduate of the Wharton business school (alumni includes Elon Musk, Warren Buffet, and many top CEOs of the USA) which is one of the most selective business schools in the world.

Selective in the sense that you need connections and money to get in, scholastic ability is less important, as evidenced by the fact that Trump has declared corporate bankruptcy 6 times - he's aiming to make the U.S. economy #7.

Interesting to see Trump intervening in interest rate decisions again. This time to call for lower rates. During his campaign he criticised the Fed for keeping interest rates low. Clearly, now he is in power, he wants pure glucose to be injected into the veins of the US economy to give it a super boost which lasts just long enough for him to be able to claim a Trump-led economic miracle and blame the corresponding crash on his successor. I would undoubtedly work, too.

Typo: "I would undoubtedly work, too." should read "It would undoubtedly work, too.".

Steve3007 wrote: ↑July 20th, 2018, 6:01 am Interesting to see Trump intervening in interest rate decisions again. This time to call for lower rates. During his campaign he criticised the Fed for keeping interest rates low. Clearly, now he is in power, he wants pure glucose to be injected into the veins of the US economy to give it a super boost which lasts just long enough for him to be able to claim a Trump-led economic miracle and blame the corresponding crash on his successor. I would undoubtedly work, too.

That would be plausible, if he hadn't started campaigning for a second term, even before he took office. No way anyone with three functional braincells can imagine that boost lasting six years. And he's grooming a dynasty; he might throw the older boys under a Russian tank, but he wouldn't deliberately screw things up for Ivanka and Barron.
Naw, he hasn't got a clue. Somebody who brings him a burger in gold foil says "raise interest rate", he does; then that minion falls out of favour; another FUX pundit whispers, "lower interest rates", so he does that. Get tough, be nice, perpetrate crimes against humanity, but "we do it with love"... whatever.... just so the spotlight shines brightly.