The horizon is not so far as we can see, but as far as we can imagine

Category: Trump Era Page 2 of 16

Absolutely Massive Collapse In Travel From Canada To America Incoming

I have to admit, I didn’t think it would be this big:

Using forward booking data from a major GDS supplier, we’ve compared the total bookings held at this point last year with those recorded this week for the upcoming summer season. The decline is striking — bookings are down by over 70% in every month through to the end of September. This sharp drop suggests that travellers are holding off on making reservations, likely due to ongoing uncertainty surrounding the broader trade dispute.

Parts of Florida will be hammered by this. But I’m shocked: seventy percent plus! I hadn’t realized just how unified Canadians are in this.

I suspect it isn’t all the tariffs and Trump’s annexation threats: there’s been significant press of US border services snatching foreigners who are crossing legally but perhaps don’t have their paperwork all right and instead of just sending them back, abusing them and locking them up.

I certainly won’t be traveling to America, probably ever again: after all I’ve insulted Trump repeatedly and said that Israel is committing a genocide and customs officers often search social media. Nothing in America is worth the risk of wind up in some prison camp because I think Palestinians are human beings and shouldn’t be mass murdered.

So far I don’t see evidence of a big drop in European bookings, but if that happens, and there’s plenty of reason to believe in might, well… bad time to be in tourism in America and a good time to be in tourism in alternatives. I think Mexican and Canadian destinations are doing very well out of Canadian’s refusal to visit America.

America wants to be alone, and without allies, and soon it will be. Trump’s hilarious attempts to cozy up to Russia are ridiculous. Putin will do business with America, but he will never, ever trust the US, no matter who is President. Meanwhile America’s real allies are mostly deciding, quite rationally, that one can’t trust America and therefore America can’t be a useful ally.

This will lead to a variety of knock on effects, like diversification from the dollar and use of local currencies in trade, and the American standard of living will collapse by at least a third. Americans have been living way beyond their means, and Trump is bringing that to an end.

So sad.

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Trump Doesn’t Have A Master Plan

There are a lot of smart people who think Trump has a plan. For example, that he’s deliberately reducing America to a regional power to avoid full Imperial collapse. Or that he’s using tariffs to rebuild American industry.

No.

Trump isn’t the type, he doesn’t have a master plan. Trump is driven by the idea that other countries are taking advantage of America: by a sense of grievance. He wants good deals, by which he always means that the US gets more than it gives, and he’s willing to end a deal if he thinks it isn’t good.

Trump has virtues (not all virtues are moral virtues.) Yeah, he started rich, thanks to Daddy, but he shits into a gold toilet, got a lot of good looking women, and became the President of the United States. He has a weird sort of charisma and tons of energy, as long as what he’s doing gets him attention of the right kind.

But he’s not a deep thinker. He doesn’t know much about the political economy, and he doesn’t make and execute policy plans. His purge of the “deep state” is driven by grievance: they went after him during Biden’s reign, so he’s going after them.

His tariffs are driven by looking at trade balances and feeling they’re unfair: Europe has about a 235 billion trade surplus with America, for example. That, to Trump is unfair. (The balance of payments is about 40 to 60 billion, which is far less.) Canada has a trade surplus, so that’s Canada taking advantage of the US to Trump, never mind that the US actually sells more goods to Canada than vice-versa and the surplus is essentially all energy trade.

If his tariffs were part of a master plan to re-industrialize he wouldn’t have gutted Biden’s industrial policy, which was actually working, and he wouldn’t be waffling back and forth on them. He’d institute them. (The smartest way would be to set a goal, and increase the tariffs by 1% every month or two to give companies time to reshore.)

Likewise his attack on NATO is primarily driven by this sense of grievance: the US is paying much more than everyone else and other NATO nations haven’t met their promise of spending 2% of GDP. (Which is fair enough, they did say they would, and they haven’t.) In the case of Europe there’s something there: the Euros are terrified of Russia and if they think Russia is really a threat (I don’t) they should be willing to spend on their military.

There are certainly people in Trump’s administration or outside planners with influence who do have master plans related to tariffs, reindustrialization, and ending the America Empire, but Trump? No. He’s too undisciplined a thinker and trying to work thru him must be endlessly frustrating to them.

Trump is also self-defeating in his fickleness. It’s impossible to make a deal with him, because you can’t be sure he’ll stick to it. Take his pressure on Egypt (which has massive fiscal issues caused by the Houthi blockade and Ukrainian war, since they got much of their grain from Ukraine, and thus is in a bad position to resist pressure) to take Palestinian refugees. To make it worthwhile he needs to not just offer the stick (we’ll end subsidies) but also a carrot—increased subsidies.

But Sisi has to figure that Trump might cut those subsidies off in a few months or a year or too, after he’s got 700K Palestinians refugees in his territory.

Now, even without a plan, Trump may wind up reducing America to a regional power. I’d say he probably will as a result of what he’s doing. But that he’s deliberately doing as part of a master plan based on a sound understanding of global political economics?

Seems unlikely.

And that matters, because there are smart ways to do things, and stupid ones, and stumbling into the end of America as the global hegemon will have some fairly serious costs like a crash on American arms sales, countries likely refusing to enforce American copyright and patents, national ownership laws taking much of America’s overseas ownership of land and industry, and so on. Plus, if you want to reindustrialize, the clumsy attack on universities and research is exactly the wrong thing to do when China is ahead in 80% of fields. (To be clear, American research needs to be fixed, but you don’t do it by defunding it massively all at once: you slowly change how funding is done so that there aren’t mass layoffs of scientists who then leave the US or stop being scientists.)

Trump isn’t some great statesman who has looked carefully at America’s position and come up with a brilliant master plan, he’s a deeply flawed man whose primary skill is self-promotion and who is driven by a negative sum view of the world based on the idea that if he’s winning someone else has to be losing, a deep sense of grievance at the idea anyone is taking advantage of him (because he takes advantage of others all the time) and who needs attention, adulation and ass kissing.

Too many people are reading into Trump want they want to see, not seeing what is actually there—and not there.

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MAGA Are Fundamentally Morons

The simple fact is that Trump isn’t going to “make America great again”. He’s speed running collapse. The most telling bit is his attacks on America universities at the same time as China has taken the lead in eighty percent, or more, of technologies and appears to have the lead in science as well. He’s dismantling the few good things Biden did, like his industrial policy and his appointment of Lina Khan to attack monopolies and oligopolies.

The shuttering of the Consumer Financial Protection Bureau will massively hurt low and middle income earners. The postal service changes will lead to many rural Americans having no mail service. Trump’s budget requires massive cuts to Medicaid, which disproportionately helps Red State Republicans.

Trump isn’t making America Great Again: he’s speed running the decline of America. There was a way to withdraw from the American Empire and become semi-isolationist again which would have been good for both Americans and everyone else, but that’s not what Trump is doing.

Anyone delusional enough to think Trump is good for America or most Americans is a moron. It’s that simple.

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How To Do Tariffs Right (Trump The Moron Edition)

One of the ways that Trump reminds me of Bush Jr. is that you never want him to do anything you agree with, because he’ll fuck it up and discredit it. Trump’s tariffs are the platonic essence of fucking up a good idea.

Let’s run thru this:

Companies and individuals need predictability. Everyone has pointed this out, but it’s still true. You can’t lay on new production if you don’t know if the tariffs are here to stay or not.

It takes time to increase production so tariffs should come in like a lamb. Personally I’d have most tariffs increase by 1% every month or two, depending on how long a specific type of production takes to increase, until it reached my target. Companies can’t just spawn in new production, this isn’t a video game.

If you can’t produce it you shouldn’t tariff it unless you have hard currency issues. Mostly self-explanatory: tariffs are used to make domestic production economically viable. If you can never produce it tariffs don’t make sense unless you don’t have enough hard currency to import things you really need, usually capital machinery. This last part doesn’t apply to the US.

If domestic production has a better use, tariffs may be a bad idea. Right now the US is ramping up energy production to it can concentrate on AI. Putting tariffs on Canadian energy is thus stupid, since the US can’t build enough energy fast enough. Related: aluminum production is massively energy intensive. Tariffing Canadian aluminum means you need to use American energy for refining. Is that the best use of American energy right now? (I mean, a case could be made that AI is overhyped bullshit, but Trump isn’t saying that.)

Maybe you want to export goods to another country, and they’ll tariff you if you tariff them. Tariffs often need to be negotiated between countries. If everyone just tariffs everything, that’s the end of international trade. Generally the idea is “you specialize in X, we’ll specialize in Y and we’ll trade.” Comparative advantage is overstated and only works when there are no significant free capital flows, but it’s also true that no one can produce everything they need: not even China right now, or the US in 1950. So “tariffs on everything” is moronic.

Tariffs without industrial policy rarely work. If no one can afford to build up industry, or if the regulatory environment makes it hard, all the tariffs do is increase prices. Biden actually had pretty decent industrial support programs going and Trump is dismantling them. He should, instead, have left them in place while putting strategic tariffs in place to further support them.

Needless to say Trump is bad on all these issues, because he’s a tard.

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The End Of The American Brain Drain

This admission of abject surrender and powerlessness from Colombia University is something I appreciate. Some actual honesty:

America’s in the middle of another of spasmodic crackdown on the free speech like McCarythism or the Red Scare. In this case so that Israel can commit genocide because a controlling number of American elites are scared of Israel, in many cases most likely because Israel has proof they’re baby-fuckers. (Can you say “Epstein”?)

The slightly less depraved ones are just scared of AIPAC funding their opponents. Others genuinely love the idea of mass murder, and probably have screenshots of dead Palestinians and Israeli soldiers wearing Palestinian women’s underwear saved for times when their palms get sweaty and they started breathing fast.

But, let’s bring this back to the more usual themes of this blog. There’s another interesting news story: it seems there’s a bill proposed to ban all Chinese students from studying in America.

Sweeeeet.

You know one of the main reasons why the US took the tech lead so decisively before and after World War II? A massive influx of European scientists and intelligentista, many Jewish, but plenty not. The smartest people in the world disproportionately wanted to live in America.

This continued for generations: you’d be some other nation, you’d train up smart people, educate them, and the ungrateful fucks would go to the US to finish their education, then stay in America. Endlessly frustrating for everyone but America.

So, of course, current American elites, scratching under their armpits, hooting about foreigners, grunting out “Uhmerika, grate” have decided to add to their broad attack on research, brains, intelligence, universities, teachers and books by banning even more smart people coming from other countries.

They will glare at you and tell you it’s “so them Chinese fellers can’t learn our secrets.”

Weird thing, last survey I saw had the Chinese leading in 89% of tech fields, up from 80% and there are more top Chinese AI researchers working in America than American AI researchers.

So, if you go to America you can’t say “mass murder is bad”, and no one can protect you from the government’s thugs if you do, but, fortunately for some, soon you won’t be able to study in the US, so hey, it’ll be a moot point if you’re lucky enough to be Chinese.

American universities are only massively dependent on foreign students and Americans, scared of catastrophic, life long student loan debt increasingly don’t want to to go to university, so I’m sure this won’t hurt America at all. Who needs scientists, engineers, professors, intellectuals, and all them fancy folks who think they’re better than MAGA chuds? I hear some of them academic types say evil worlds like sexism and racism and nasty phrases like settler colonialism, CIS, justice, fairness, genocide and so on.

Yup. Ban ’em or make ’em terrified. Don’t give academics any freedom, they think bad thoughts about how killing brown people might be wrong or that women might be worth something when they aren’t cooking or spreading their legs. They might say “abortion isn’t always evil” or suggest that God isn’t real or something.

Anyway, I’m pleased to notice that America is 110% (as an American manager or coach would say) dedicated to driving itself into the dirt and ensuring China buries it there.

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Musk’s Empire Is Looking Even More Shaky

So, we’ve talked before about problems with Tesla. Musk’s competitors are, to put it simply, producing better cars which cost less, especially but not only, the Chinese like BYD. Meanwhile, Musk’s politics, like denying climate change and throwing a Nazi salute, while tying himself to Trump just as Trump is pissing off almost every country whose consumers buy Tesla vehicles, has made customers a lot less interested in buying Tesla. He’s trashing his own brand with the people who supported it most.

Musk’s riches are based primarily on Tesla, but he also has SpaceX, which currently has the lowest cost space lift and pretty much guaranteed business from the US government. But a large part of Musk’s SpaceX income comes from Starlink. It looks like SpaceX made about 13 billion in 2024, and of that Starlink provided 8.2 billion. However, in terms of profit, Starlink seems to have provided only about a third of SpaceX’s three billion profits.

That said, Starlink is still in the fairly early stages, with high capital costs, and the revenue numbers indicate it’s a big deal for SpaceX and Musk.

Then we see this:

But here’s the thing: There is an onrushing competitor to Starlink — a Chinese one, Qianfan. They’re far behind Starlink right now, but as they scale, they seem likely to wind up larger than Starlink, and the price for access may be $50 versus $120 for Starlink, though it’s unclear what the terminals themselves will cost.

Musk seems determined to lose Starlink customers, too. He accused oligarch and billionaire Carlos Slim of being tied to Mexican cartels, for example, and Slim immediately cancelled his deal with Starlink, and indicated he’d be pursuing the Chinese alternative.

So, in two to three years, it seems likely that Starlink will not be the only game in town, and the other game will be cheaper. At which point, all Elon Musk has is his political moat; some countries may make it illegal to choose Qianfan.

But… that political moat is looking very leaky outside of the United States since Musk has tied himself to Trump, and Trump has pissed off almost all of Europe, including serious American allies like Poland (see above), Canada, Mexico, and even Japan. China may look like the lesser evil — after all, they rarely tariff anyone unless the tariffs are retaliatory, and they aren’t threatening to annex any countries.

That means the only remaining moat Musk has is his space launch, which is genuinely cheaper. But a cursory search showed me eight Chinese private space-lift companies. They’re all behind SpaceX right now, but then, a few years ago, so were China’s EV manufacturers, and Chinese smarphone producers were behind Apple and Samsung.

Anyway, a company with 13 billion annual revenue isn’t why Musk is so rich. It’s mostly Tesla. Canada, for example, put a 100 percent tariff on Chinese electric vehicles. China has now counter-tariffed, hitting Canadian agriculture hard. It might not seem worth keeping those tariffs going. Europe is similar. No one likes Musk right now other than MAGA, and they prefer gas-guzzlers.

I can’t remember ever seeing someone as rich self-destruct the way Musk is. He’s mishandled Tesla for years, he’s lost his first-mover advantage, he’s destroying his brand value, and pissing off both consumers and governments in almost every country he sells cars or internet in.

So if you don’t like Musk, well, get ready to enjoy a rich harvest of schadenfreude.

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Understanding America’s Betrayal Of Ukraine

Let’s start with this: Ukraine is losing the war, and the longer it goes on the worse the peace deal will be. I absolutely agree with Trump that there needs to be a peace deal, and soon.

But the rhetoric coming out of the Trump administration and its proxies suggests that America owes Ukraine nothing, and that indeed, Ukraine owes America for all its support. This sounds reasonable, on the face of it, but only if you don’t know any history.

Let’s start with the 2014 Maidan protests which overthrew the Ukrainian government. They were a color revolution, heavily supported by the Americans and Europeans. Say what you will about Yanukovych, he was the elected President. There’s decent evidence that the sniper massacre was done by Maidan itself (see this academic study), and, post-coup, Ukraine was essentially run by Victoria Nuland.

The Maidan coup came in response to Yanukovych’s decision to accept Russia’s aid package instead of the West’s. This was the correct decision: Russia offered more money and aid with less strings, while the Western aid came with IMF restructuring. If you know anything about the IMF you know that their restructuring is always painful, and it doesn’t improve host nations economies. It does, however, increase inequality, and opens up the economy so foreigners can buy in.

Back in 2008 there was a brief Georgian/Russian war. Georgia had regions which were ethnically Russian, and they were de-facto independent, and recognized as such by Russia. When Georgia invaded South Ossetia, Russia counter-invaded. At the time, I wrote an article for FireDogLake predicting the next Russian war would be over Crimea and Sevastopol. Sevastopol is Russia’s main Black Sea port, and a Russian “hero city,” — much beloved. Ukraine leased it to Russia, and if Ukraine ever moved to kick the Russians out I predicted the Russians would go to war rather than comply.

Put simply, Sevastopol was and is a key Russia interest.

After the coup, Ukraine threatened to end the Russian lease. Russia invaded Crimea, and took it over. (Don’t cry too much, most Crimeans, except the Tatars, would much rather be Russian). Meanwhile, the East of Ukraine went into revolt, because they are mostly, actually Russian and had supported the ousted President. A small war was fought over that. The Russians intervened, routed the Ukrainians, and they set up a peace deal called the Minsk accord, which basically gave Donetsk and Luhansk semi-autonomy.

Notice that without the coup, which was backed by the US, there would have been no 2014 war between Ukraine and Russia, no loss of Crimea, or and no semi-independence for the far East of Ukraine.

The coup was anti-democratic, overthrowing a legitimately elected government which was accepting the best deal offered. (And folks, I’ve studied IMF deals. They are always bad. Always.)

Of course, having lost a war and territory, Ukraine now becomes very anti-Russia, at least in the West of the country. Understandable. Then there’s a HUGE military buildup. And, although Minsk was sold as the end of the matter, it was negotiated in bad faith by the West. This has been confirmed:

The West didn’t want peace, it wanted a chance to build up the Ukrainian military for the next round.

That next round came after Ukraine spent a lot of time shelling the hell out of Luhansk and Donetsk; this was a violation of the Minsk agreement. Then Ukraine and NATO started talking about Ukraine joining NATO, which Russia had made clear was a red line.

Now here’s the thing: Absent the US backed Maidan coup, there would be no Ukrainian war. It wouldn’t have happened. Additionally, absent the huge build up of the Ukranian military, again US- and EU-backed, there would have been no war, because Ukraine wouldn’t have risked it.

The US used Ukraine in a proxy war, after an anti-democratic coup. The West genuinely believed that sanctions would break Russia and allow Ukraine to win the war, and hoped that the loss would cause a break-up of Russia. Unfortunately for them, China needed Russia as an ally, and kept the Russian economy running, and it is Europe that was damaged by the sanctions, while Russia’s economy is, overall, booming.

Back near the start of the war, a peace offer was on the table, far more generous than anything Ukraine can expect now. Boris Johnson, Britain’s Prime Minister, with US support, told Zelensky not to take it — NATO would back him to the hilt, and Zelensky could win the war.

Fast forward: Ukraine is losing the war. On a map, Russian gains over the last year aren’t all that large, but the Ukrainian army is running out of manpower, and is being pushed past its line of prepared defenses. When the Ukrainian army breaks, and it will, the Russians will start making huge advances very quickly.

Now, Trump comes in, and acts as if America had nothing to do with all this and, further, acts like Ukraine has taken advantage of American generosity instead of Ukraine being an American proxy, which has been devastated after an American coup pushed it into a war with a much stronger country and America and the UK told Ukraine not to take a better peace deal.

Trump’s attempting to get Ukrainian minerals in “repayment” for America pushing Ukraine into a war it couldn’t win, and is not even offering security guarantees in exchange. I loathe Zelensky, but he’s right to reject this one-sided “deal.”

This is despicable. This is honorless. The very least Ukraine deserves from America is a sincere effort to cut, for Ukraine, the best peace deal they can get.

Now Zelensky is delusional. Threats to fight on and a refusal to negotiate are insane. Russia’s BATNA (best alternative to a negotiated agreement) is to just continue the war, win it, and impose an unconditional surrender. Think Japan and Germany at the end of World War II.

But American negotiation seems to be about making the best deal for America, not for Ukraine.

My suggestion would be that Zelensky ask the Chinese to host negotiations. Yes, they’re Russia’s ally, BUT they’ve always supported a peace deal, and more importantly, they’re the only nation which really does have leverage over Russia; without China, Russia cannot survive economically. And, unlike America, China has said it is willing to put peacekeepers in Ukraine. Russia is NOT going to target Chinese troops.

Further, if China promises to rebuild Ukraine, it will do so, and do so quickly and competently. The Chinese are the best in the world at building roads, railways, ports, power plants, and all other types of infrastructure.

Ukraine’s government was effectively controlled by the West, and pushed into a war it couldn’t win. They need to end their Western alliance, and cut the best deal they can get. That means, especially, not letting Trump negotiate, because he’s not negotiating for them, but for America.

It’s a bad hand, an awful one. But it’s the hand Ukraine has to play.

As for American claims that Ukraine used them, rather the other way around, they are without merit and beyond dishonorable.

Let’s give Kissinger the final word:

“It may be dangerous to be America’s enemy, but to be America’s friend is fatal.”

 

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Understanding Trump’s Tariffs Effects on World Trade & How He’s Ending the American Era

To understand how tariffs are going to hit various economies, you need to understand how neoliberal era trade and production was set up. In the old world supply chains were much less integrated. In general, if you made it in your country, your supply chain was in your country. There were always some exceptions, especially for resources like nickel, copper, uranium, etc., but these were the exception to the rule. Trade deals and laws in the old era usually required foreign companies which were set up for production in a host country to source a minimum amount of parts from said host country. Almost always this was over 50 percent. If the infrastructure didn’t exist, the company, usually with government help, would set it up.

Understand clearly that the neoliberal era came out of the inflation crises of the 70s. It had two goals: 1) To reduce consumer inflation and thus growth in petrochemical use, and; 2) To make the rich much richer.

In the post-war era, most production in most Western countries was meant for the internal market. If you needed it, you made it, with some exceptions: The smaller you were, the more you needed to import some goods, and of course, if you’re Norway or Canada you import bananas and coffee, and you imported any resources you couldn’t produce enough of yourself, like wood, oil, gas, and minerals. The high imports of oil were the old world’s achilles heel, and the inability to import substitutes away from them killed it.

So, most things ordinary people bought have an oil input cost, and the more money ordinary people had, the more they’d do things which had an oil cost. There was almost nothing the Arabs needed to buy from the West at the time: They had small populations, and didn’t have consumer economies. We could sell them military goods, but other than that their needs were modest. They had us over an oil barrel.

I remember the post-war world well, it died in stages. In the 70s and 80s, my family lived in Malaysia, Indonesia, Singapore, and Bangladesh at various times. In all these countries, even Singapore, everything was cheaper than in Canada or America. Ex-pats who had incomes denominated in first world currencies lived very well. When in Canada, we were lower middle class. Overseas we had servants.

Yet despite having cheap goods and services, all those countries except Singapore were third world. Poor.

The post-war developed country play was to keep both prices and wages high, and to make sure wages went up faster than prices, while controlling asset prices, which included home prices and rent. Wages were high because prices were high, and because most production was done in country, or in another high wage country, and because there were tariffs on goods from low cost domiciles, and as they didn’t have much industry anyway, it didn’t matter. Even as late as 1980 or so, America made 97 percent of everything it needed, and the Japanese export surge which changed that still came from a first world, high wage/high cost nation.

In this world, there was certainly trade, but countries still strove to make and grow as much of what they needed as they could at home.

Then came the inflation crises, when due to the oil shocks, wages grew slower than prices — a lot slower. I remember the price of a chocolate bar going from 25c to a dollar in the period of two years (I was a kid, so that’s the sort of price that was important to me. Paperback prices also went from about 99c to $2.50 and then up to $3.50).

So, if you’re going to tackle this, you need to reduce the use of oil, which means reduce ordinary people’s use of oil, which means restraining their income growth. This is why, during the 80s and 90s, every time wages grew faster than inflation, the Fed would slam on the brakes and cause a recession.

But the other play, which also helps keep domestic wages down, is to manufacture and grow and produce in really low wage domiciles. You can slowly crush European, American, and Canadian wages, but people in China, Bangladesh, Mexico, India, and so on are already earning one-tenth of what you have to pay first world workers. They were a lot less efficient workers, too, but even so, if you offshored production, you could reduce the price of goods.

So offshoring became a way to reduce inflation. It also juiced profits, since much of the price decreases weren’t passed on to first world consumers, but hey, win/win if you’re a first-world capitalist or financier. Because production was being increasingly farmed out to developing nations, first world economies financialized and the financial elites took control from the old manufacturing elites (who were, for all their flaws, actually capitalists. Financiers are the lowest form of capitalist life.)

This, of course, lead to first-world countries de-industrializing, and eventually to the rise of China, and the loss of the West’s tech lead, along with the evisceration of the middle class, a huge homelessness crisis, and in Europe, sclerosis.

Now here’s the irony: China has very low costs, so low that I’d argue that the idea that they’re still middle income is false. Their ostensible salaries look low to us, but cars in China can be had for 10K. Earbud equivalents can be had for less than $10. Smart phones are cheaper. Almost everything is cheaper. It’s a weird inverse of the old first world situation: Wages are lower, but costs are lower vs. wages are higher, and so are costs.

Either equilibrium, of course, works for prosperity. What the first-world now has is high-ish wages and higher costs. I saw a factoid the other day that claimed that rent has increased 350 percent more than median wages in the US since 1985, for example.

Now, let’s take closer look at the structure of trade in the neoliberal era: It was based around trade agreements like NAFTA and the WTO which made it essentially illegal to run old-style economies where most production for internal markets was domestic. You couldn’t tariff, you couldn’t subsidize, and you couldn’t enforce ownership rules, domestic content rules, or even rules requiring primary processing of raw resources before export (for example, Canada didn’t used to ship raw logs and canned salmon before selling it overseas.) If you did, the independent trade courts would hit you with huge multi-billion dollar fines. You also had to enforce American IP laws, and thus pay a portion of most profits to America.

What this lead to is countries becoming cogs in production networks; they had part of the supply chain for a product without having most of the supply chain. Their economies were dependent on trade because even if they assembled the final product, most of the supply chain was outside their country.

Let’s take an example from Canada’s current dilemma with regard to American tariffs. Canada’s government made some big bets on EVs, especially batteries. It seemed to make sense: We produce the minerals which go into batteries, so why not manufacture them here and ship them to the US?

This was a BIG bet in Canadian terms. Ontario and the Feds put up about 16 billion of subsidies, perks, and land to get VW to build a battery plant in St. Thomas. This plant, if it goes into full production will produce a million batteries a year. Stellantis’s battery plant in Windsor had 15 billion dollars in subsidies. Honda is retooling to make EVs in Canada, and to produce batteries, and other parts, for EVs — with a 2.5 billion tax cut deal and 2.5 billion in direct and indirect subsidies.

Now here’s the issue, which you may have spotted: They’ll make way more batteries than Canada could possibly need for domestic EVs. Way, way more. With tariffs and uncertainty (after all Trump, could increase them again) none of these projects are viable. Perhaps we could re-tool one of them and really push Canadians to switch en-mass to EVs. If the Feds are smart, that’s probably what they’ll do. (Spoiler, the Feds are not always smart.)

But no matter what, Canada’s taking a huge hit.

In the old world, where you produced primarily for yourself, and if it was more expensive than foreign alternatives said “eat tariffs”, and maybe subsidized, a foreign government couldn’t just decide one day to destroy your industry. Trade was usually in products the other nation didn’t make or grow itself, or genuinely couldn’t make or grow enough of.

The neoliberal trade structure was designed to make national autonomy, in anything (food, energy, manufactured goods) extremely difficult to obtain. It was a giant hostage situation.

It broke down because of stupidity and greed. The full story is long, but the essence is simple: Americans gave China the full stack. The entire supply line for a lot of goods is domestic for China with smaller chunks in close by allies like Vietnam. They were low cost, they had real competitive markets which kept prices low, and, because the manufacturing floor was in China, they eventually took the tech lead. This required about 20 years.

So China’s now the only nation in the world that has an old style “post-war” economy: It now produces primarily for the domestic market, but it also gets the neoliberal era advantage of selling huge amounts of goods overseas. Win/Win. For them.

What Trump’s team (not so much Trump as certain advisors) is trying to do is to re-shore a full manufacturing stack to America. They noticed that everyone industrializes behind some form of price supports, and that usually those are tariffs (China used currency controls), so they’re instituting tariffs. Given that the market for a lot of goods is in the US, they figure, correctly, that a lot of manufacturing will be forced to move back to America.

All those batteries Canada is making.

This screws every single American ally who allowed their economies to be restructured by American lead trade deals in the 80s and 90s. Every single one.

That’s why Canada and Mexico are in for a world of hurt, and also the EU. It’s also why China is not in for a world of hurt — they’ve got the full stack, and a massive domestic market. Plus, because their goods are cheap, they’ve got almost the entire global South plus most of the SE Asian economies as customers.

And here’s the problem for America: All its got is the US market, because it’s fucking every major trade partner it has. The allies (ex allies?) have to go back to an old style economy too, or form a much smaller and stupider neoliberal bloc, and if they can’t sell to America, they aren’t going to buy from America either. So America can get some full stack back, but only what it’s economy can afford.

And the American economy is much smaller than it looks. Much, much smaller. GDP numbers are massively over-inflated by asset price bubbles, much of the income from foreign assets is going to dry up, almost certainly eventually including IP. If you can’t sell to the Americans, why enforce their IP laws and pay them? Foreign ownership rules will start popping back up, and US assets overseas will be sold to locals — often at cents on the dollar. Of course, the same will happen to foreign assets in the US, but the “world” the US inhabits economically will shrink.

And then, if you can’t sell to the US, why the fuck are you using the US dollar for trade? Trump has made huge threats of tariffs against anyone who moves off the dollar for trade, but if you already effectively can’t sell to the US, again, who gives a fuck? Tariff away, asshole.

And when dollar’s hegemony disappears, the US economy will deflate to its actual size — at least a third, and probably half as large as the official numbers. Think someone pricking a water balloon. It’s going to be amazing to watch.

And that, children, is the end of the American era and Empire. It is very close now, and Trump is making it happen much faster. All praise Trump.

(There’s a lot more to unpack about the effects of Trump’s trade wars but this article is already over 2,000 words. For example, will Trump successfully reindustrialize America and make America, if not great again, at least a decent place to live? More on that soonish.)

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