Can the United States prevail in a Trade War?

For the simple-minded and impatient, all problems have a simple and quick solution. Problem is, when you try to impose simple-minded and quick solutions to complex problems, you only make matters far worse.

There is majority agreement in this nation that too many of our manufacturing jobs are now overseas and that trade agreements often don’t work in our favor. Some will make compelling arguments to the contrary, but I’m going to focus on the premise there is a problem, but the solution being presented by the Trump administration will only make matters worse.

The issue with Trade dates back before President Obama, in fact it dates back before Ronald Reagan who opened the door to corporate deregulation and tax incentives that became part of Trade agreements he started. Most blame Bill Clinton for NAFTA, but in reality the negotiations began under Ronald Reagan, pushed under George H W Bush and signed into law by Bill Clinton with a Democratic Congress. To be fair, the goal of NAFTA and other international trade agreements is to improve our standing in the world, increase exports of what we do grow/manufacture and help consumers here, pay less for items. In short, we can have our toys and not have to pay a lot for them. Unfortunately as we moved into a more consumer orientated economy from a manufacturing economy, better paying jobs were lost in the process. But hey, you can buy that huge 72 inch LED Television for a song. But I digress.

When we severed our ties from Great Britain, the nation actually didn’t have much of an industrial base. Under British rule (to maintain the British economy) the colonists were required by law to buy textiles and other goods from Britain and her allies. Under Alexander Hamilton’s plan, George Washington and Congress implemented our nation’s first Tariffs. The purpose was twofold. Tariffs would actually fund our fledgling government as opposed to taxing the people (although Tariffs do that too) and inspiring local entrepreneurial minded citizens to open shop and manufacture the goods and items the nation needed for a cheaper price than to buy abroad and pay a tariff on those goods and items. And it worked, but that isn’t the end of the story.

Our industrial base did not grow overnight, it in fact took several generations. All during that time, trade remained a divisive issue in this country throughout the early nineteenth century to today. Early on it was the Northern manufacturers who sought the protection of high tariffs on competing imports while the southern cotton producers backed open-trade policies to promote their exports.

Our nation, throughout the nineteenth century and early twentieth century wanted to remain isolationist. Despite our involvement in the Great War, we rejected the League of Nations and their call to end tariffs throughout the world in order to improve the economies of member states. The United States never ratified our membership in the League (despite it being created in part by President Wilson). The attempt to end worldwide tariffs failed and the major European powers enacted higher tariffs on more products. The United States followed suit and in 1930 passed Smoot Hawley that increased tariffs on over 20,000 imported goods.  Higher tariffs were placed on agricultural goods to aid our farmers and slightly smaller tariffs were imposed on manufactured goods to keep our nation competitive with Europe and Canada. However Europe and Canada retaliated and imposed higher tariffs on our goods. The trade war could not have come at a worse time as we were already in the Great Depression. Smoot Hawley made the depression worse due to our inability to sell abroad. US imports did decrease by 66% but our exports also decreased by 61%.

Under the Franklin Roosevelt administration, Free Trade took the driver’s seat in Washington as one of many projects to pull us out of the depression. In 1934 Secretary of State Cordell Hull, (who was a free trader) contemplated how best to remove the high tariffs under Smoot Hawley. Instead of going to Congress to reduce the tariffs (for fear they would only be raised again) he opted to begin to negotiate trade agreements with foreign nations. This became possible because Roosevelt was able to get Congress to pass the Reciprocal Trade Act of 1934. Since we had a surplus of manufactured goods, we were able to increase exports with the nations we negotiated with. Although trade barriers still remained high during the 1930’s, the trend was reversing.

After World War Two as a continuation of negotiating limited bilateral agreements with individual nations and in an effort to rebuild the post war economy, the United States led the creation of the multilateral General Agreement on Tariffs and Trade (GATT). Trade barriers were lowered around the participating nations. A series of “negotiating rounds” to reduce trade barriers continued through 1994. As a result United States Tariff rates fell from Smoot Hawley on average of 60% in 1930 to 5.7% by 1980. They are currently at 2.7%. In addition to improving our economy, these trade agreements helped bind free-market democracies together during the Cold War and effectively blocked the Soviet Union and People’s Republic from gaining a foothold around the world.

As noted above, by the Reagan administration, a concern developed with competition with Europe and Canada ending her economic isolationist policies to compete worldwide. Treaty negotiations between the US and Canada began as a way to improve our leverage in the growing Global Economy. Before the negotiations were ended, Mexico became part of the plan and NAFTA was born. Much has been said about manufacturing jobs moving to Mexico as a result of NAFTA and it’s true. However what many fail to recognize is that it also improved Mexico’s economy with minimal impact on our economy. In fact, with a more vibrant Mexico; California, Arizona, New Mexico and Texas had more trade opportunities with a growing consumer class in Mexico.

As bilateral accords shifted to regional accords that brought us NAFTA, CAFTA and the TPP, coupled with Republicans deregulating US based corporations and giving them tax breaks to move overseas where labor was cheaper, we began to lose more manufacturing jobs. In fact, over the course of the last 60 plus years, we have been transforming from a primarily manufacturing  based economy to a consumer based economy.

Since 2001 when China entered the World Trade Organization, American manufacturers have been shipping jobs overseas at an increased rates. As of 2009 we had lost 42,400 factories (including 36% of factories that employed over 1000 workers) to overseas nations that provide cheaper labor. In case you weren’t aware, President Trump and Ivanka Trump’s merchandise are manufactured overseas, not in this country.

By October 2009 manufacturing employment dropped to 11.7 million. The last time we had less than 12 million manufacturing jobs was in 1941. Further, October 2009 is the first time more people were unemployed (15.7 million) than were working in manufacturing.

In the eight years since, there has been improvement with unemployment dropping to 4.6%. However most of those jobs are in the service professions and government. Some manufacturing has returned but nowhere near what we once had. Further, the middle-class (the driver of our consumer based economy) income is stagnant and many believe it is shrinking. Despite increase in wealth among the wealthy few, the middle-class has been stagnant for over 25 years. Further, costs in housing, food, energy, healthcare, childcare, energy, etc. continue to increase. Since the middle-class is the driver of our consumer economy, without more disposable income available to them, our economy becomes stagnant and will crash.

I apologize for how long the preceding information was but it is important to recognize that our current problem is well over 80 years in the making and is very complex. Americans like cheap goods to spend their money on. However, to have your Flat Screen TV’s, cell-phones, tablets, gadgets and gizmos manufactured here significantly increases the costs to you. Like it or not, labor is cheaper overseas. Further, we’ve been losing manufacturing companies over a span of over 30 years. It’s unlikely you can bring back manufacturing overnight or even over one Presidential Administration. Historically it took generations for this nation to even create its first manufacturing economy.

Here’s the dilemma of President Trump’s simplistic solution to a complex problem. A trade war implemented now by imposing huge “Smoot Hawley” tariffs on any nation is in fact a tax increase on the consumer. We are a consumer based economy and will remain so until manufacturers return to our shores. Even if they did, it would take years and the costs of what they manufacture will also be higher than what consumers pay now. So spending decreases in our already fragile economy. As a result, we lose more of our disposable income due to job loss, increased cost of living and taxation. Less spending, fewer jobs in a consumer based economy.

We live in a global economy years in the making and as a result, we are almost fully dependent on goods manufactured elsewhere. With a fragile middle-class and a manufacturer base that has been decimated over the past 30 years, we would lose a Trade War with any other nation. We’re simply not armed to fight one and it would take years of government investment in infrastructure and people to get us to a place where we could even begin such a war.

It’s easy to say we’ll impose Tariffs, Jobs will come back, and American (will) be Great Again. However as with anything Trump, talk is cheap and we already “know how complicated” trade is in a Global economy that’s not going away anytime soon.

Trump has only recently discovered how complicated healthcare is. Healthcare is nothing compare to world trade and the underpinnings of our economy. However, what can you expect from a businessman who has no MBA and has declared bankruptcy four times in a business he inherited from his dad, not built himself.

Any efforts to improve our economy in the manner he proposes will certainly cost more jobs and drive us into another depression. No Donald, we cannot win a Trade War.

Trade Warus_china_trade-wartradegraph


How Nationalism Destroys a Nation

From Merriam-Webster

Na·tion·al·ism: noun,

1:  loyalty and devotion to a nation; especially :  a sense of national consciousness (see consciousness 1c) exalting one nation above all others and placing primary emphasis on promotion of its culture and interests as opposed to those of other nations or supranational groups Intense nationalism was one of the causes of the war.

2:  a nationalist movement or government opposing nationalisms

We have all heard of the “Alt Right” movement and the nationalist tendencies of Donald J. Trump’s inner circle, especially well known White Supremacist and Nationalist Stephen K. Bannon, formerly (though still influencing) the Right-Wing propaganda site known as Breitbart.

Nationalists gain support by claiming that a national identity in of itself makes you great, and if (in their minds) a nation is not great, it is because of the devious actions of other groups and/or nations belittling and sabotaging their nation. Control of the message, use of propaganda, “alternative facts”, vitriol and hate towards others touches the fear and anger of those caught up in their rhetoric.

History gives us numerous examples of great nations caught up and taken over by nationalist movements. In 19th Century Europe “popular sovereignty” grew out of the wars of conquest initiated under Napoleon, who himself inspired a French Nationalist Movement destined to rule all of Europe. French culture was seen as separate of the other ethnicities of Europe and of course, superior. This in turn led to German Nationalism after being conquered and occupied by France. Throughout Europe, individual nations coalesced over the threats of other nations and internal nationalism thrived, especially in Germany. Historians believe this was a major contribution to the Great War. Germany was united under a Nationalist movement where Prussia was considered the core of the “German Spirit” and Germany was superior to all other nation states in Europe.

Despite the numerous treaties that existed, the nationalists who controlled the aggressor nations of 1914 saw themselves as superior and used the pretext of the assassination of Archduke Ferdinand as the excuse to wage total war. The end result was they bit off more than they could chew and created annihilation across Europe, with Germany and the remains of the Austrian-Hungarian Empire devastated. The power of the European monarchs almost entirely dissolved to be replaced in many cases with new nationalist people’s parties. In Russia, the Tsarist regime was replaced by the nationalist communists and of course in Germany, the Kaiser Wilhelm regime was replaced by the Weimar Republic, who couldn’t hold down the new growing nationalist movement in Germany led by the Nazis. In Italy, the nationalist fascists took over under Mussolini.

The end of “The Great War” set the stage for more extreme and powerful nationalist movements throughout Europe because the victorious nations imposed harsh restrictions on the defeated powers. This provided grounds for nationalists to say “outsiders are responsible” for your terrible existence in what was once a “Great Nation.” Worse yet, the harsh policies imposed on Germany bled over to other nations in Europe and even here in the United States by (with the help of deregulated banks) and led to the Great Depression.

Both Europe and the United States suffered and nationalist movements grew and were in full swing everywhere and used the same message to gain influence and power. “We were once ‘Great’ but other ‘lesser’ nations and people (Jews) deceived us and are destroying us for their own good.”

They were successful from the end of World War 1 through the beginning of World War Two in gaining nationalist control in Germany, Austria, Italy and Spain. Germany and Italy are prime examples of the techniques used to gain control. They told their people that other nations were supplanting the greatness of their people with dishonest use of banking and media (Lügenpresse) to fool the citizens. They convinced their native purebred nationalists that “subhuman” groups such as Gypsies, Homosexuals, immigrants and Jews were responsible for their lot in life. They convinced the people that under pure German, or Italian control of government their nations would be “Great Again” especially when their leaders negotiate “better deals” with other nations rather than the bad treaties they currently have.




german bund

Italy was first to go nationalist under a fascist regime followed by Germany in 1932. What is interesting to note is that during the same time there was a nationalist movement in the United States. We were in the same Great Depression that Europe was in. While Franklin Roosevelt was being realistic about the true cause of the nation’s woes (unregulated banks and powerful money interests) he cautioned a nation by saying at his inaugural address (which was upbeat by the way) that “the only thing we have to fear is fear itself”, and told Americans to be hopeful and get to work with your neighbors and world community to get out of the mess we were in. Germany on the other-hand told her people that their nation was in terrible trouble and that they should be afraid and respond in anger to the immigrants, gypsies, homosexuals and Jews who conspired against them.

When your power is based on nationalism, which is to say based on “we’re the greatest” and the rest of the world is substandard and dangerous to our rightful place, people tend to go after their neighbors, after the Gypsies, Homosexuals, Immigrants and Jews have been dealt with resulting in society becoming fearful, unstable and violent. A nation starts to renege on treaties, using threat of force to negotiate other treaties that favor mostly and then such nations will bite off more than they can chew and go to war. This is what happened in Germany, Italy and Japan. The rest of the world, a community of nations working on a common goal against a common enemy fought back and destroyed the Nationalist governments and people of Germany, Italy and Japan.

In the aftermath of World War Two, instead of repeating the mistakes of the Great War by harshly punishing defeated nations and their people indefinitely, not only was the United Nations created to give all a voice in international affairs, Europe was rebuilt by the American people in the spirit of fostering a world community where we all helped each other (The Marshall Plan). They were allowed back into the community of nations and worked with each other for their own national good, at least in Western Europe and Japan. Eastern Europe unfortunately fell under the control of Stalinist communism.

Eastern Europe was made to suffer for generations. The Soviet Union was in their own way nationalistic by placing themselves apart from the rest of the world and claiming superiority. They kept their citizens convinced that outside “western” influences were harming their success. However their rule and nationalist economic policies were untenable in a global economy and like so many nationalist states, bit off more than they could chew. The Russian economy collapsed and the Soviet Union disintegrated. However, the fall of the USSR gave talking points used by Vladimir Putin to gain a new nationalist control of Russia. Under Putin, though much more strategic

On the other hand, in the years following World War Two, because the United States worked on equal footing with the nations of Europe and the European nations began to work on equal footing with each other, all prospered economically and socially. At least until Putin began to sow the seeds of discontent among European nations by supporting new nationalist movements there in an attempt to break up the European Union. By destroying democratic Western Nations via creating a lack of confidence in their electoral processes and governments, Russia comes off greater and more powerful in world affairs.

It is no coincident that White Supremacists in this nation echo the same talking points and advocate for the same policies as the Nationalists of fascist Germany, Italy and Japan of 80 years ago. They claim inherent superiority over all other nations and outsiders. The blame immigrants, Muslims, Jews, Homosexual, bad treaties, for all the woes they “say” exist whether they exist or not.

History shows us that within a nation state, nationalism sews the seeds of division, distrust in others and existing government. By claiming all is horrible when it isn’t, those who do feel left out, whether they are left out or not blame others. In our case they’re blaming Jews, Muslims, Homosexuals and Immigrants. By outlawing and removing them the nation will be “Great Again”. This is a historically proven way to gain power, but history also shows it is a poor way to maintain power and often leads to catastrophic results.



What nationalists fail to understand is that by outlawing and removing “others” you weaken the economic base of a nation leading to real problems in terms of financial security, job growth and spending power. By using fear, anger, hate and violence society crumbles leaving “strong men” to pick up the pieces and consolidate power over everyone. Such a government, as history shows us, tends to battle other nations while it’s battling itself. Their economy becomes unsustainable in a world economy and collapses upon itself over time. Nationalist nations that exclude others only serve to isolate themselves while taking on more than they can effectively handle without willing help. Such an existence, especially as a governing philosophy is untenable and doomed to failure.

The Trump Nationalist Regime, orchestrated by Stephen K. Bannon created a false narrative that the nation wasn’t great anymore, that immigrants, Muslims and Jews were to blame. This gave them a bigoted base to begin their movement to take over the nation. Then they said government lied to you about jobs, economic growth and pushed conspiracy theories to a gullible group. They pushed the premise that the media is dishonest whether they supported their regime or not, like Germany harped on the “Lügenpresse” (lying press) to place doubt in the minds of the public and open the door for them to accept their own propaganda via sites like Breitbart, The Daily Caller, NewsMax, Drudge Report, InfoWars, etc. to confuse and indoctrinate a growingly uneasy population. This is how nationalist regimes begin, and history shows us they all end up like Germany, Italy, Japan because of their overreach and lust for power using citizens as pawns and props.

The Trump Nationalist Regime is already working on weakening our nation by deregulating the banking industry, deregulating big oil and coal allowing them to pollute our water and air. They are working to weaken our healthcare system and economic security of our nation. They are weakening our national security system that will eventually allow a terrorist attack to occur giving them their own “Reichstag” fire to consolidate control. They are already working to grow military spending to place American troops in harm’s way overseas thus needlessly adding to our national debt. They are weakening the underpinnings of our nation created and expanded over the last 227 years since our constitution was ratified. The Nationalism of the Trump Regime is textbook in its creation, growth and ultimate destruction. Problem is, we as a nation could be destroyed too if we allow it to go on too long.

No Elected Office is Unimportant

Over a generation ago, conservative think tanks, financially backed by corporate interests like the Koch Brothers taught the Republicans an important lesson that they have followed to this very day. Namely, no elected office is unimportant. Over the years Republicans have ran for school boards, corporation commissions, Justices of the Peace, city council, mayors, county boards, and all down-ballot offices in all jurisdictions while Democrats have only focused on National offices and a few Governorships. In fact, under former DNC chair Debbie Wasserman Schultz they haven’t even ran for all Senate & House seats that were within reach. As a result, by running the table up and down the ballot, Republicans have today an almost intractable grip on most every city council, school board, county board and State Legislature across the country. This represents the greatest danger to our democracy, even more so than having Donald Trump as president.

Under Article V of the U.S. Constitution:

“The Congress, whenever two thirds of both Houses shall deem it necessary, shall propose Amendments to this Constitution, or, on the Application of the Legislatures of two thirds of the several States, shall call a Convention for proposing Amendments, which, in either Case, shall be valid to all Intents and Purposes, as part of this Constitution, when ratified by the Legislatures of three fourths of the several States, or by Conventions in three fourths thereof, as the one or the other Mode of Ratification may be proposed by the Congress; Provided that no Amendment which may be made prior to the Year One thousand eight hundred and eight shall in any Manner affect the first and fourth Clauses in the Ninth Section of the first Article; and that no State, without its Consent, shall be deprived of its equal Suffrage in the Senate.”

Most who understand basic Civics already know what’s needed to “amend” the constitution. What few understand is that under Article V, if two thirds of the several States (34 States) Legislatures call for it, our nation, (separate from interference of Congress or the Executive Branch) can call for a new Constitutional Convention and if three fourths of the several States (38 States) ratify what the convention comes up with, we have a new nation.  As of this year, 32 State Legislatures are completely controlled by the Republicans.

A simple search of right-wing blogs and sites reveal that they want those two more States to call for that Constitutional Convention. It doesn’t take a genius to figure out what the corporate sponsors of the Republican Party would push under a new Constitution. They would push to remove the Commerce Clause, used by the Executive Branch and Congress to keep individual states from imposing discriminatory laws, abiding by national standards for clean air, water, food, pharmaceuticals, etc. And that would just be the start.

Each election year I’m amazed of the lack of Democratic candidates for not only congressional districts in Arizona, few even try to run for our State legislature. I suspect that much like most “Red States” local Democratic parties won’t spend time and effort running candidates for these down ballot races. However, despite Arizona being a Red State, there is a very noticeable Democratic influence. We have elected in the recent past Democratic Governors, Secretaries of State, Attorneys General, Senators. This past year in “conservative Republican” Maricopa County we elected a Democrat (Paul Penzone) to replace Joe Arpaio. I do not believe Arizona is unique among Red States. In fact, more people across the country are becoming more aware of the broken promises and pro corporate, Wall Street, 1% agenda of Republicans and would give an alternative serious consideration.

Article V should scare everyone in this nation, liberal, moderate and conservative. If we allow the GOP to take two more State legislatures, there most likely will be a Koch Brothers-ALEC call for that convention and all could be lost for ordinary Americans who struggle to work and survive in this nation. The sad thing is that currently (from what I observe) the DNC is still doing little to focus on individual State legislatures and other down ballot races across the country, focusing instead on the Senate, House and Executive Branch.  Keep in mind, if there’s a new convention, those three branches could be changed along with the Supreme Court. The Republicans, on the other hand continue to fund all these down ballot races across the country.

Thom Hartmann points out the success of the “Tea Party” (sponsored by the Koch Brothers mind you) to infiltrate and take over the Republican Party to do their bidding. He says the best way to counter is for liberals and I hope moderates to infiltrate and take over the Democratic Party in much the same way. Now would be a good time to start. In addition to telling Tom Perez and Keith Ellison to divert resources to down ballot races, we individually should take the bold state to run for those offices ourselves.

I have hinted in my Twitter timeline my ongoing consideration of formally registering as a Democrat and running for our State House. I’m not there yet, but I suspect I’ll be making my formal announcement before year’s end. For me, there are several personal and financial considerations to deal with, not the least of which being would I have Arizona Democratic Party support for such a run? If not, can I pull it off myself? However the dangers to my State and Nation are certainly pushing me in the direction to run for office. My hope is that nationwide, in the Red States around the nation there are others like me willing to make the same sacrifice.

More to follow.