Make them do it

As usual, the big US corporations have learned absolutely nothing from the disruption of the production and supply chains as a result of the coronavirus.

Large US companies operating in China don’t want to move production and supply chains from the country in the near future, even though the coronavirus may force them to adjust their business strategies, a recent survey found.

Around 70 percent of 25 firms with global revenue of over half a billion dollars have no relocation plans, despite the effect the coronavirus outbreak has had on their business, according to a joint poll conducted by the American Chamber of Commerce in China and the American Chamber of Commerce in Shanghai. The results of the March survey, published on Friday, also show that around 40 percent of the respondents would rather keep their long-term supply chain strategy for China unchanged.

While more than half of the firms polled say it’s too early to make any decisions on relocation, only four percent of the companies are planning to shift all production outside China, while 12 percent of the respondents intend to move part of their facilities.

It's time for President Trump to start imposing massive penalties on US firms manufacturing anything outside the USA, and for Congress to do the same. And any firm that lobbies against the penalties or opposes them in any way should be deemed ineligible for any bailout money or federal funding for its employees.

David Ricardo is dead. Free trade is the most expensive and destructive kind of trade. There is no comparative advantage. And this is why no nation that plans to survive can afford it.

Prestige Ameritech.  The North Richland Hills company is America’s No. 1 maker of hospital surgical masks.

During this crisis, you’d think the company would be pushing forward on all cylinders, working 24/7 to manufacture the one commodity that Americans and the rest of the world want so badly.

Nope.

When there's an outbreak -- like last time, with Swine Flu -- he gets orders.  He ramps up to fill them.

Then the outbreak passes, and guess where the hospitals go?  Back to China.

This leaves him with capital equipment leases and people. If he doesn't lay them off he goes out of business.  If he does lay them off he get's hammered with much higher unemployment insurance premiums, the leases on the equipment he has no use for, and he goes out of business.

The last time he nearly did.

This time, he's demanding long-term contracts. Good for him.

Guess how many he's gotten?

I'll bet you can figure that out.

Corporatism not only isn't capitalism, it is pure and unadulterated short-term-preferenced evil.

Deglobalization begins

It won't happen overnight, but people are finally beginning to grasp the vital importance of making things in their own nations, with their own people:

Japan has earmarked hundreds of billions of yen of its coronavirus stimulus relief to go toward helping its manufacturing companies move their production plants out of communist China and back to Japan or to other countries.

“The extra budget, compiled to try to offset the devastating effects of the pandemic, includes 220 billion yen (US$2 billion) for companies shifting production back to Japan and 23.5 billion yen for those seeking to move production to other countries, according to details of the plan posted online,” Bloomberg News reported. “That has renewed talk of Japanese firms reducing their reliance on China as a manufacturing base. The government’s panel on future investment last month discussed the need for manufacturing of high-added value products to be shifted back to Japan, and for production of other goods to be diversified across Southeast Asia.”

David Ricardo is finally, at long last, being buried for good.

And what we’ve — what we’re learning from that is that no matter how many treaties you have, no matter how many alliances, no matter how many phone calls, when push comes to shove you run the risk, as a nation, of not having what you need.

Re-employing the natives

Corona-chan even has the agriculture industry in Britain looking to hire young British workers:

Farmers say the fall-out of the coronavirus chaos means they desperately need an army of Land Girls - and boys. Travel bans brought in to prevent the spread means they have lost the thousands of foreign workers they need to pick fruit and veg crops. The industry trade body British Summer Fruits is warning that produce will rot in the fields and orchards unless they can find replacements....

"Last year 98 per cent of harvest staff were from outside the UK. We are now very concerned about securing enough workers to help harvest our vital crops and get fresh fruit and vegetables to the public. To help, in the next few days the berry industry will be mounting a large-scale recruitment campaign to encourage people who are in the UK and looking for work because of the current economic impact of the coronavirus to come and work on our farms."

If you ever wondered why all those lazy young people can't seem to find work these days, perhaps it's not due to their laziness or lack of a firm handshake, perhaps it's because 98 PERCENT OF THE ENTRY-LEVEL JOBS have gone to foreigners.

Addio, open borders

At long last, the rotting intellectual corpse of David Ricardo is finally buried:

France, Germany and Bulgaria today blocked travel even within the free-moving Schengen zone as the EU proposed barring all overseas visitors from entering for 30 days to stop the spread of the coronavirus.

Border guards were seen across the continent tonight locking off the crossings between Spain and France, Portugal and Spain, Switzerland and France, and in Germany's northern coastal states police prepared to block tourism.

It's probably too optimistic to assume that the econonazis will not start pushing for open borders and the free movement of people the moment the health crisis is over, but at least we will have a powerful rhetorical argument to utilize against them.

A desirable extinction

And long overdue. If the primary casualty is globalism, the winner is humanity:

Globalists May Soon Become an Extinct Species

The disruptions caused by the spread of the coronavirus mean supply chains will be moved closer to home rather than in foreign lands.

The coronavirus’s depressing effects on the global economy and disruptions of supply chains is no doubt driving the last nail into the coffin of the globalists.

They believe in the theory first articulated by Englishman David Ricardo (1773-1823) that free trade among nations benefits all of them. He argued for the comparative advantage of free trade and industrial specialization. Even if one country is more competitive in every area than its trading partners, that nation should only concentrate on the areas in which it has the greatest competitive advantage. He used the example of English-produced wool being traded for French wine—and not the reverse.

But Ricardo’s simple trade model requires economies in static equilibrium with full employment and neither trade surpluses nor deficits, and similar living standards. These aren’t true in the real world. Also, Ricardo didn’t consider countries at different stages of economic development and different degrees of economic and political freedom, or exchange rate manipulations and competitive devaluations since gold was universal money in his day.

Ricardo also didn’t factor in trading partners with huge wage differences such as the U.S. and China.

Corona-chan is demonstrating the truth of Big Bear's sophisticated critique of free trade. Ricardo retardo. Thank you, Corona-chan!

The blessings of free trade

It's interesting to see that the West is suddenly discovering the intrinsic dangers of free trade when it is China providing services to other nations:

China could shut off the Philippines' power grid at will, a report has warned - highlighting fears about Beijing's role in infrastructure around the world. A report for Philippine lawmakers found that the country's national security 'is completely compromised' by China's access to the power grid.

Chinese engineers have exclusive access to parts of the system and could shut it down remotely, the report seen by CNN reveals. The findings will spark alarm in the West where China is helping to build a new nuclear power station in the UK and has already faced sanctions from the US.

But why would this cause any problems? Surely the New Filipinos who happen to be of Chinese descent love their new country and are just as Filipino as those whose great-great-grandparents were born in Manila are!

Paper nationalism is, and has always been, a shameless lie told by immigrants to advantage themselves vis-a-vis the native populations. 

And who cares if China can shut off the Philippines' power grid anyhow. The important thing is that the arrangement is more economically efficient, right? And nothing is more important than economic efficiency!

Gladstone on free trade

A reader sends an informative quote from the great 19th-century British advocate of free trade, Prime Minister William Gladstone:

Advocacy of Free Trade goes back to the United Kingdom of 1846-1860.  However, what William Gladstone actually said as a defense of free trade is "It is a mistake to suppose that the best way of giving benefit to the labouring classes is simply to operate on the articles consumed by them. If you want to do them the maximum of good, you should rather operate on the articles which give them a maximum of employment."

However, in 1846-1860 English manufacturing was the best in the world, though America had surpassed them in some fields. Free trade meant far larger markets abroad for English goods, and cheaper foodstuffs at home, meaning that the English labouring classes had more money to spend on their own manufactures.

For precisely the same reason, the French have rigorous protections of their somewhat inefficient agriculture, namely it creates a maximum of employment.

For the United States of 2019, our labor is relatively expensive, so in many areas our industries are not competitive with places where labor costs little. Gladstone's rationale for free trade thus indicates for us that protectionism, not free trade, is to our advantage.

Translation: it is a fundamental mistake for economists to focus on providing the US population with access to cheap imported goods instead of jobs that permit them to pay for more expensive domestic goods.

The continuing decline of empire

Whatever happened to the imperial policy of free trade uber alles?

The US-India defense ties will be put at risk should New Delhi purchase Russian S-400 air defense systems, a senior American diplomat warned, noting that India should think very carefully about making such strategic choices.

“At a certain point, a strategic choice has to be made about partnerships and a strategic choice about what weapons systems and platforms a country is going to adopt,” Alice Wells, US principal deputy assistant secretary for South and Central Asia, said this week at the hearings on US interests in South Asia and the budget for the fiscal year 2020. India’s procurement of the S-400s “effectively could limit India’s ability to increase our own interoperability,” she said, explaining that Washington has “serious concerns” about the implications of the $5 billion deal signed with Russia in October on India-US defense ties.

If it's not my business that my neighbor hires a Nicaraguan gardiner, how is it a senior American diplomat's business if India buys Russian air defense systems? If I were an Indian official, I would simply throw Washington's idiotic free trade rhetoric right back in its face. As well as, of course, this amusingly ironic news concerning the manufacture of F-35s.

Exception PCB, a Chinese-owned company based in Gloucestershire, England, manufactures the circuit boards that control the engines, lighting, fuel and navigation systems of the F-35 Joint Strike Fighter.... Exception PCB was bought by Shenzhen Fastprint in 2013, has never concealed its Chinese ownership and has also worked on the Eurofighter Typhoon fighter jet and the Apache attack helicopter, among other sensitive programs. A director from the company told SkyNews there are “clear firewalls in place” between the Exception and its Chinese owners, that the company only produces bare circuit boards, and that no additional electronic information is supplied. But Lockheed Martin didn’t seem so sure, informing Sky that “like all components of the F-35,” the circuit boards “are inspected repeatedly at each stage of manufacture.”

What's to worry about? Countries that trade don't fight, right? Anyhow, the continuing decline of US influence is becoming more apparent every day. No wonder the neocons are desperate to trigger a war between the US and Iran while the US is still capable of fighting one.

Go home already

President Trump finally starts to get serious about immigration:

A five percent tariff on all goods coming from Mexico will go into effect on June 10, and will gradually increase up to 25 percent until the illegal immigration problem is resolved, US President Donald Trump has announced.

This appears to be the “big league” announcement on the border Trump had teased earlier in the day, prior to delivering a commencement speech to the US Air Force Academy in Colorado Springs.

Invoking the International Emergency Economic Powers Act, Trump said the US will start at five percent, but keep ratcheting up by another five percent every month, culminating with 25 percent beginning in October.

I look forward to hearing the screams of the free traders.... Now build the Wall.

Economic patriotism and winning the trade war

Pat Buchanan was correct all along:

If you choose not to purchase Chinese goods and instead buy comparable goods made in other nations or the USA, then you do not pay the tariff. China loses the sale. This is why Beijing, which runs $350 billion to $400 billion in annual trade surpluses at our expense is howling loudest. Should Donald Trump impose that 25% tariff on all $500 billion in Chinese exports to the USA, it would cripple China's economy. Factories seeking assured access to the U.S. market would flee in panic from the Middle Kingdom.

Tariffs were the taxes that made America great. They were the taxes relied upon by the first and greatest of our early statesmen, before the coming of the globalists Woodrow Wilson and FDR.

Tariffs, to protect manufacturers and jobs, were the Republican Party's path to power and prosperity in the 19th and 20th centuries, before the rise of the Rockefeller Eastern liberal establishment and its embrace of the British-bred heresy of unfettered free trade.

The Tariff Act of 1789 was enacted with the declared purpose, "the encouragement and protection of manufactures." It was the second act passed by the first Congress led by Speaker James Madison. It was crafted by Alexander Hamilton and signed by President Washington.

After the War of 1812, President Madison, backed by Henry Clay and John Calhoun and ex-Presidents Jefferson and Adams, enacted the Tariff of 1816 to price British textiles out of competition, so Americans would build the new factories and capture the booming U.S. market. It worked.

Tariffs financed Mr. Lincoln's War. The Tariff of 1890 bears the name of Ohio Congressman and future President William McKinley, who said that a foreign manufacturer "has no right or claim to equality with our own. ... He pays no taxes. He performs no civil duties."

That is economic patriotism, putting America and Americans first.

Anyone who claims that free trade is good for America is either a) lying, b) does not understand economics, or c) both. I pointed out when this US-China trade dispute began that any so-called trade war would be good for the US economy because imports (M) are an intrinsic statistical drag on the economy.

Do the math. Since GDP = C+I+G + (X-M), does GDP grow or contract when M gets smaller?

And on the logical side, if Chinese imports are so good for America and its workers, then why is China shrieking in outrage over mere prospect that it will not be able to export as much to the USA in the future?

Then there is the key question asked by Mr. Buchanan: What great nation did free traders ever build?

Foreign investment

This destruction of the housing stock by rich foreign owners is the sort of consequence the free traders never factor into their "it's good for the economy" arguments when considering the free flow of capital:

Drained whirlpools, decaying walls and foliage creeping up the stairs can be seen on a North London street called Billionaires' Row. Bishops Avenue in Hampstead, north London, is one of the most exclusive roads in the country, but many of its 66 mansions lie vacant. Footage taken by 'urban explorers' shows moss growing up the once pristine white walls of the huge rooms and swimming pools with a shallow layer of murky water. The gardens rise high and in many the decor is clearly a few decades behind.

They include a selection of residences worth £73 million, reportedly bought for the Saudi royals between 1989 and 1993. In those days the homes caught be purchased for a cool million, now prices rise to around £20 million. In 2014, an estimated £350 million worth of mansions could be found on the prestigious street, the Guardian reported.

An Iranian resident told the paper: 'Ninety-five percent of the people who live here don't actually live here. It is a terrible place to live really.

So, the best housing stock in the most desirable areas is being destroyed, but on the plus side, the natives can't afford to live there anyway. And the cycle will only continue as new developments are built to house the people who now live elsewhere and are building up a desirable neighborhoods that will attract more foreign "investors".

Mailvox: free trade and satanic sovereignty

They have no response to the free mobility of trade argument and they know it. It's very amusing to see how they are thrashing about and repeating their rhetorical dogma as if it is even relevant. A reader emails concerning a pair of Gene Epstein's appearances on Tom Woods's show:

Vox Day if you think that people should not buy foreign goods, foreign made goods, then exercise your individual sovereignty and stop buying foreign made goods. There is no argument there. The only argument is, do you have a right to not tell me to buy foreign goods. Of course you do not. But you certainly have the right to tell others, join me, in not buying foreign made goods.That’s your choice. So in a way, there should be no argument, between the likes of us and Vox Day, so long as he recognizes that he has no right to pass a law forcing us to not buy foreign made goods. So that approach, the understanding of individual sovereignty, I think is at the core of any vision that you want to live."
- October 31, 2018

To which I respond: the concept of individual sovereignty is quite literally satanic. And a nation absolutely has the right to pass a law forcing its nationals to not buy foreign-made goods or utilize foreign-provided services, because if it does not do so, it will cease to be a nation. And every nation has the right to a) exist, and, b) defend itself.

When you had me on to address the protectionism of VOX DAY awhile back, I made the same point. My point, in this case again, is that Dan(McCarthy) is free to start a company called Buy American. A website that would sell consumer goods that are domestically produced and that back ventures that only employ American workers. He might get Ross Perot himself, who is still alive, to back it, along with the Sharks( TV Show Shark Tank). I would not participate, mainly because I regard myself as a Citizen of the World and from that position, I observe that the poor people of the world do not reside in the U.S. but in countries like China and I regard it as an inspiring win-win, that stores like Walmart can lift the living standards of Americans by selling them cheap goods, made by cheap labor abroad , while also lifting that cheap labor out of grinding $2 a day poverty.

So as a libertarian, I would have no right to object to Dan’s privately backed, buy American, American nationalism, conservatism venture. But what Dan is actually proposing, again, as VOX DAY was, as so many of the protectionists do, always, is to use the iron fist of government to force me to buy American against my will. As a flexible libertarian, I will tell Dan that he bares a very heavy burden of proof, if he wants to deny my rights in this way.

So our disagreement is hardly a level playing field, but even if there were a level playing field between us, Dan’s arguments are not convincing. So again, having established that Tom, and again, it’s the sort of thing I want us all to say to socialists and protectionists, the free market offers you the opportunity to practice your values. Get enough people to agree with you and you’ll become a powerful force in the free market. We might disagree but we have no right to object to what you are doing, so long as you do not impose the iron fist of government on us. Now, of course, now we can get to the consequentialist side of the argument....

Notice that Gene Epstein is not an American. He has no interest in the American nation. He is, to the contrary, "a Citizen of the World". So, he has absolutely no rights that Americans need to respect. Protectionism is not merely beneficial economically, it is not merely necessary for a nation to thrive, it is a necessary policy for any nation that wishes to survive.

Economics vs biology

Free trade theory is about to be put to a large-scale empirical test:

South Africa’s and Togo’s parliaments this month ratified the agreement establishing the African Continental Free Trade Area (AfCFTA). The total number of countries committing to the deal has thus grown to 49.

Once the agreement comes into effect, it will create a tariff-free continent, covering a single market of 1.2 billion people in 55 nations with a combined gross domestic product of about $3 trillion. It will constitute the largest free trade area globally, according to South African Trade and Industry Minister Rob Davies.

The agreement is expected to reduce export tariffs which currently average 6.1 percent, and boost intra-African trade by more than 52 percent after import duties are eliminated. It is focused on diversifying trade exports away from just extractives and enhancing the chances of small and medium enterprises to tap into more regional destinations.

Economists say that tariff-free access to a huge and unified market will encourage manufacturers and service providers to leverage economies of scale.

If the free traders are right, the African economy is about to explode with trade, economic growth, and rising per capita incomes. If the biologists are right, none of this will make a damn bit of difference, as the biological limits of the populations will outweigh any structural improvements.

Of course, all of this is probably irrelevant, as the conspiracy theorists who believe China is going to colonize Africa and put blacks on reservations in imitation of the European treatment of the North American continent are the most likely to be correct.

Darkstream: the labor mobility problem

This mass-firing by Ryanair of all its Dutch personnel is an excellent example of the problem that labor mobility poses the ideology of free trade:

Ryanair has fired all its pilots and cabin crew members based in the Netherlands after they did not agree to be 'voluntarily' relocated to bases as far-flung as Morocco and Belarus.

The Irish low-cost airline officially filed for the collective firing of all personnel at the Dutch Employee Insurance Agency (UWV), an autonomous government administrative authority that handles unemployment benefits.

Ryanair cites bad economic results for its Dutch base at Eindhoven, which was closed on 5th November, as the reason for the mass-dismissal.

To realize the full benefits of free trade, there can be no limits upon workers moving to where they can be most efficiently employed. It doesn't matter if you don't speak Ukrainian, if your family doesn't want to relocate to Morocco, or if your ancestors have lived in Eindhoven for hundreds of years. If it is more efficient for the airline to fly from Belarus or Rabat, then you must go and live there or lose your job to a more cost-effective Moroccan pilot.

That's not merely how free trade works, that's what they mean by the necessity of immigration and the free movement of peoples. Of course, it will, incidentally, result in the complete destruction of every family and every national bond, but then, as Jordan Peterson reassures us, group identities are pathological anyhow, so it's really for the best.

I addressed the issue in tonight's Darkstream.

Trade and war

One argument I often hear from free traders is that free trade is necessary because trading partners do not fight wars. Like every other argument for free trade, this argument is false and readily disproven by history.  Consider the 10 largest US trade partners:

1. China
2. Canada
3. Mexico
4. Japan
5. Germany
6. South Korea
7. United Kingdom
8. France
9. India
10. Italy

The USA has fought wars against six of those countries and currently considers its largest trade partner to be its primary military rival. But perhaps these wars preceded the trade? No, not at all.

In 1931, Japan’s resources were inadequate, and its rural poverty became severe, so it invaded Manchuria, China to obtain natural resources.  The US wanted to keep China free from Japanese control and was competing for natural resources—especially oil, rubber, and tin—from Southeast Asia, while at the same time Japan and the US had significant trade with each other.

In fact, during the Napoleonic Wars, France was Britain's largest trading partner, which is why Napoleon attempted to create the Continental system to harm Great Britain.

Napoleon also attempted economic warfare against Britain, especially in the Berlin Decree of 1806. It forbade the import of British goods into European countries allied with or dependent upon France, and installed the Continental System in Europe. All connections were to be cut, even the mail. British merchants smuggled in many goods and the Continental System was not a powerful weapon of economic war. There was some damage to Britain, especially in 1808 and 1811, but its control of the oceans helped ameliorate the damage. Even more damage was done to the economies of France and its allies, which lost a useful trading partner. 

In fact, Japan's three largest trading partners, the United States, China, and South Korea, are also three of the very small number of countries against which it has waged war. Trade does not reduce the likelihood of war, to the contrary, the stresses it necessarily causes the relationship between to countries tends to increase the probability of war taking place.

Financial nuke or dud?

There are dire warnings about a financial nuclear option in the dawning US-China trade war:

It took China just 11 hours to retaliate against the United States for proposing tariffs on some 1,300 Chinese products, but Chinese officials are holding back on taking aim at their largest American import: government debt.

In a tit-for-tat response to the Trump administration’s plan for 25 percent duties on $50 billion of Chinese imports, China hit back with its own list of similar duties on key American imports including soybeans, planes, cars, beef and chemicals. But officials signaled no interest for now in bringing their vast holdings of U.S. Treasuries to the fight.

China held around $1.17 trillion of Treasuries as of the end of January, making it the largest of America's foreign creditors and the No. 2 overall owner of U.S. government bonds after the Federal Reserve. Any move by China to chop its Treasury portfolio could inflict significant harm on U.S. finances and global investors, driving bond yields higher and making it more costly to finance the federal government.

But a reader explains why the bond threat is toothless.

It’s hilarious reading Drudge headlines about how the Chinese owning US Treasuries is some kind of “nuclear option” for Beijing.

Presumably, China thinks it will somehow crash the value of its Treasury holdings by dumping it on the open market. This is somehow supposed to destroy the value of these bonds…or something. It’s almost as if no one understands how bonds actually work.

Bonds have an intrinsic value, the face value of the bonds which is the amount of money that is returned to bondholders when the bond matures.

This is the par value. If I sell a bond to you for $1,000, then I am obligated to return $1,000 to you plus interest when the bond matures. If I sell a $1,000 bond to you at an interest rate that is lower than the market rate, then I may only collect, say, $950 for the bond, but, at maturity, I am obligated to pay $1,000 back to you plus interest.

If you decide to sell the bond that I sold to you on the open market, then you may get a premium above the $1,000 or you may get a discount below $1,000, but the face value of the bond, the money owed, does not change. Upon maturity, $1,000 is owed to the bond holder.

The value of the bond may oscillate on the secondary market because of the risk of default or because interest rates have changed, but, absent the risk of default, the value of the bond is purely mathematical. Since US Treasuries have virtually zero risk of default, the value of the bond is simply the interest rate paid by the bond, vs. the interest rate of competing securities of similar risk vs. the duration. These can all be calculated in Excel using amortization tables.

There is nothing China can do to devalue US Treasuries by dumping their holdings. If they decide to sell for an artificially low price, then they are simply creating arbitrage opportunities for the buyers and frenzied trading will quickly bid back up the value of those bonds to their mathematically determined price.

See how important bonds and interest rates are in understanding the economy?

The financial trade media is heavily invested in arguing that there can be no winners in a trade war. But they are ignoring the fact that the trade war has been ongoing for decades and the USA has been continually surrendering.

They are also ignoring the uncomfortable fact that if comparative advantage were legitimate, the correct response to tariffs and other trade restrictions would be to do nothing. According to free trade theory, a country is economically better off if it enacts no trade restrictions regardless of what its trade partners do. The fact that various US trade partners are threatening retaliation for US tariffs is further evidence that, despite their free trade rhetoric, they do not genuinely believe in the concept. Nor should they, because it does not work as advertised.

Voxiversity 004

This is a bonus Voxiversity video, which we decided to release after CGTN graciously granted me permission to release the video of my appearance on Dialogue with Yang Rui earlier this month, in which I was asked about the prospects for trade war between the US, China, and other US trading partners.

Episode Four: Tariffs & Trade with China

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• YouTube

To watch any of the three previous videos, links are listed at Voxiversity. Also, if we can sort out the schedule, I will be back on Dialogue again later this week. As for Voxiversity itself, we appear to be off to a reasonable start, as not counting Facebook, the first three videos have racked up just over 40,000 total views.

That is well short of what Stefan Molyneux's or Jordan Peterson's average videos do, but then, we haven't been at this very long. It will be interesting to see how long it takes to reach the 100k views/video mark. So, please continue to spread the word and share the links.

The math of trade war

As I predicted, China responds in a measured and mostly symbolic manner, with 128 tariffs affecting less than 2 percent of US exports to China:

China is 'firing back' after US announces tariffs on steel and aluminum. The world's second-largest economy has responded to President Donald Trump's controversial trade tariffs.

China's commerce ministry proposed a list of 128 U.S. products as potential retaliation targets, according to a statement on its website posted Friday morning.

The U.S. goods, which had an import value of $3 billion in 2017, include wine, fresh fruit, dried fruit and nuts, steel pipes, modified ethanol, and ginseng, the ministry said. Those products could see a 15 percent duty, while a 25 percent tariff could be imposed on U.S. pork and recycled aluminium goods, according to the statement.

The statement did not go into greater detail. U.S. agricultural products, particularly soybeans, have been flagged as the biggest area of potential retaliation by Chinese President Xi Jinping's administration.

Just to keep it simple and understand the most extreme scenario, let's pretend that these tariffs will be enough to completely kill the US ability to export these goods to China. That is $3 billion removed from GDP that represents 1.7 percent of US exports to China and 0.00148 percent of total US exports. Against that, let's pretend that the US tariffs were sufficient to entirely shut down the Chinese ability to sell the $60 billion in goods that are affected by them in the USA.

The net means the US economy just grew by $57 billion. A bit more if the domestic goods are more expensive.

See how this works? And notice how the media never explains any of this, or even bothers to try to work out the price elasticity of the tariff-affected products.

Voxiversity 003

The third Voxiversity video is now live! This is another short video, and one that conclusively disproves the oft-heard assertion that trade wars are always bad for the economy.

Episode Three: Trade War: What is it good for?

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We will be following this up shortly with a bonus fourth episode thanks to CGTN graciously granting permission for me to upload an edited version of the appearance on Dialogue that is referenced here. If you are interested in supporting us making more of these videos, consider becoming a Voxiversity backer. Some initial comments:

• Vox Day hits it out of the park again.
• Awesome Video - they just keep getting better!! I will be sharing this with everyone. 
• These just keep getting better, especially in terms of production quality. Happy to be a monthly Voxiversity support. Keep em coming!
• The learning curve here is working far, far beyond any reasonable expectations. I know you are uncomfortable in front of the camera, but this video is absolutely fantastic. Your collaborator has figured out how to work around whatever deficiencies you may feel you have and is making your point for you marvelously. 
• I am impressed how much these improved since the first one, primarily on the audio side. Good stuff.

You should find that a link to this will serve as an effective rebuttal to anyone who is running around shrieking about Smoot-Hawley, David Ricardo, and how Trump's tariffs are inevitably going to lead to a trade war that will lead to a second Great Depression.

I think this is my favorite comment so far: I almost feel sorry for the free traders...

Mailvox: government and tariffs

Zaklog the Great poses a trivial objection:

So, Vox, what would you say to someone who hasn’t studied economics enough to seriously parse through these arguments, but has observed that, almost without exception, the government is a terrible way to get things done? There seem to be very few things the government is capable of doing effectively, and therefore, the idea that managing the economy is one of those very few seems doubtful.

1. Tariffs are no more "managing the economy" than any other form of taxes are. Falsely equate the two demonstrates that you are engaging in dishonest rhetoric rather than honest dialectic. 
2. Getting what done? Governments have historically done a better job of defending borders than any other form of organization, and are certainly a damned sight better at it than international corporations, which, by the way, are government-created entities. Tariffs are a form of border defense, in more ways than one.
3. Tariffs are considerably less intrusive, and cause less economic disruption, than any of their three primary alternatives, income taxes, consumption taxes, and wealth taxes. If you believe that government is a terrible way to get things done, why would you rather have it interfere on a holistic and daily basis with the economic activity of every single domestic citizen rather than on a far less frequent basis with the cross-border shipments of a limited number of foreign corporations?
4. Tariffs don't require effectiveness, and domestic governments have proven to be far more susceptible to control by the will of the people than international corporations.
5. Even if one assumes government corruption and inefficiency, it is still preferable to convey legal advantage to manufacturing companies that employ large numbers of people in a tariff system than to financial companies that do not in a free trade system. (Courtesy of Jack Amok.)

Satisfied? Note that if you are not contemplating the question of tariffs in light of their various alternatives, you are not engaging in either honest inquiry or discourse. This is not a hypothetical debate about funding governments through the voluntary contributions of unicorn farts. It is the actual real-world U.S. economy that is under discussion here, not the Austro-libertarian Platonic ideal of a unicorn fart economy.