by Mish
So am I.
If we are right, Donald Trump is wrong.
I do not agree with everything Gates says in the following article, but his overall thesis is correct.
Please consider Bill Gates Hits Out at Protectionist Rhetoric in US Elections.
Microsoft founder Bill Gates has attacked Donald Trump’s brand of protectionist politics, arguing that as “the biggest beneficiary by far” of globalization, the US would suffer from any move to hinder international trade.
Mr Gates said he was also worried about the prospect of UK voters in June voting to leave the EU and other signs of Europe turning inward.
“I’m not a UK voter and they get to decide,” he said in an interview with the Financial Times. “[But] the benefits to the UK of being in [the EU], in my view, greatly exceed the benefits of being out.”
“Who is the monster winner of all time in scale economic business — software, airplanes, pharmaceuticals, movies? Mmm. I wonder who that is?” he asked rhetorically.
“We’ve taken for granted too much that people understand that consumers being able to buy a variety of goods and having price competition on those goods and us being the big winner in these scale markets . . . is a huge thing,” he added.
He compared some policies advocated in the US campaign with the attempts of countries such as Nigeria and Venezuela to erect trade barriers to defend their currencies.
“Shutting down international trade has real costs and somebody — it shouldn’t have anything to do with either of the parties — but somebody really has got to remind people why this has been good,” Mr Gates said.
“I’m an unabashed pro-free trade person.”
Jobs Not Coming Back
Donald Trump claims he will negotiate deals that will bring back the jobs. He can’t and he won’t. A couple of charts will show precisely why.
Manufacturing Employees
Since the peak in July 1979 the US has shed 7,240,000 manufacturing jobs. Where did they go? Mexico? China? North Korea?
Since January 1992, manufacturing has shed 4,548,000 jobs. I highlighted 1992 because that’s how far back manufacturing shipments go.
Manufacturing Shipments
In roughly the same time period in which manufacturing employment declined by 4.548 million workers, US manufacturing shipments rose from $227.721 billion “per month” to $462.907 billion “per month”.
This is a massive productivity improvement.
Inflation Adjusted Shipments
Inquiring minds may be wondering what about the effects of inflation?
That’s a legitimate question. Here’s the answer.
The above from the BLS CPI Inflation Calculator.
In inflation-adjusted terms, shipments are up roughly 20% per month while employment fell by 4.548 million workers.
It takes far fewer workers today to produce the same amount of goods as years ago. Blaming this all on NAFTA or China is seriously misguided.
Most of those jobs don’t exist “anywhere”.
Minimum Wage Hikes Won’t Help
The hike in US minimum wages, especially in California, will demolish what is left of US clothes manufacturing.
Donald Trump is actually on the correct side of the minimum wage debate. ‘Having a low minimum wage is not a bad thing for this country’ said Trump.
Trump’s Appeal
Trump cannot change his opinion on tariffs because it would cost him the election, assuming he wins the nomination, as has been my call for quite some time.
For my latest election analysis, please see Trump Soars in Latest CA, NY, CT, MD, PA Polls.
Donald Trump and Bernie Sanders appeal to the alleged free-trade losers (a small but significant minority).
Bernie Sanders and Hillary Clinton also appeal to the public unions, a group hell-bent on turning the US into France.
Bill Gates and Brexit
Gates uses a free trade argument to justify his belief the UK should stay in the EU.
But the EU is not about free trade. In fact it is precisely anti-free trade. The EU sets ridiculous tariffs, protects inefficient French farmers, and seeks all kinds of socialist redistribution scheme taxes.
The obvious irony lost in the debate is the “vote yes” campaign tells everyone the UK will be locked out of European markets if Brexit succeeds.
What part of “free trade” and “locked out” go hand in hand?
Mish Free Trade Proposal
My free trade proposal is simple: I would abolish all tariffs and protectionist measures immediately whether any other country did so or not. The benefits are obvious.
Please don’t whine about “fair trade”. If China wanted to give everyone on the planet free solar panels or free electric automobiles, we should take them up on it. To do otherwise would be like taxing the sun because the sun hands out free energy.
Free is the ultimate in improved standards of living. Productivity improvements should decrease costs. That productivity hasn’t decreased costs is why people mistakenly seek higher minimum wages.
Instead of seeking higher minimum wages, people ought to be picketing the Fed for its inflationary policies.
Curiously, for all the absurd concerns over global warming, the EU imposed massive tariffs on Chinese solar panels instead of welcoming the Chinese effort.
Squawking Parrots
Unfortunately, most people take the benefits of free trade for granted. All the while, the minority sound like squawking parrots with a megaphone.
I am for Trump for other reasons, namely his stance on US military intervention, NATO, Israel, and Russia.
Hillary Clinton and Ted Cruz are the warmonger candidates and Cruz is just plain unelectable for numerous reasons as I have explained elsewhere.
The squawking parrots are poised to carry the election. Only Trump (or last-minute rules change) can stop Trump.
Mike “Mish” Shedlock
