Jo Jorgensen on Trade
Several of my readers have asked me “What is Jorgensen’s trade policy? Is she really Libertarian?”
Let’s take a look at Jorgensen on Trade and Immigration.
Five Key Ideas
- History shows that peaceful commerce prevents conflict. When goods don’t cross borders, troops do.
- This Republican administration has raised prices for Americans, provoked retaliatory tariffs, and harmed American industries. Meanwhile, his opponent in the Democratic Party promises more of the same protectionism. I am the only free trade candidate for president.
- Protectionism has been tried before and has been shown time and again to lead to lower productivity, more unemployment, and higher inequality.
- It is true that other countries have imposed trade barriers. But reflexively adding barriers of our own as retribution harms no one but ourselves. Higher costs are simply passed on to consumers and workers in the name of this economic nationalism. Tariffs are nothing more than another tax.
- As President, I will dismantle all tariffs and any other trade barriers which prevent the flow of goods and services into our country.
Those are Jorgensen’s precise words. I put numbers to what I believe are the 5 key ideas, adding emphasis to points 1, 3, 4, and 5.
My Take
- The first country that implements free trade coupled with low or no corporate taxes, regardless of what any other nation does, will see a boom in capital, growth, and jobs.
- Fair trade is free trade, nothing else.
- Corporations that hide behind fair trade excuses want protectionism, handouts, and higher prices for their own benefit, not the benefit of US consumers.
Manufacturing Jobs
Trump Promised to Bring Back Manufacturing Jobs: How is He Doing?
Trump’s trade war with China had the expected results. This happened well before Covid hit.
Trade Wars are Good and Easy to Win
In March of 2018 Trump boldly announced in a series of ridiculous Tweets “Trade Wars are Good and Easy to Win”.
Trump Blames Nafta
Trump blames NAFTA. But US manufacturing peak employment occured 15 years earlier.
Robots have replaced people leading to greater productivity.
Increased productivity means more goods at lower prices to the benefit of all.
Fed Fights Productivity
The Fed has foolishly waged a battle on productivity and lower prices creating stock market bubbles and excess inequality on top of it.
Nixon Closed Gold Window
Trump wants to reduce the trade deficit but the cause of consistent deficits dates to Nixon closing the gold window on August 15, 1971.
Balance of Trade vs Gold Window
The Census Department changed the way they reported the balance of trade in 1992, dropping the old method entirely in 2014.
However, a chart of both methods clearly shows what happened.
Trade deficits prior to 1971 were self-correcting. They clearly are not self-correcting now.
There is considerable debate among economists as to whether the current trade deficit is even meaningful, but Trump is not going to solve anything via his policy of tariffs.
One Candidate Understands Trade
One candidate and one candidate alone has a grasp of good trade policy.
That candidate is Jo Jorgensen.
Like Jorgensen, I am strongly anti-war and strongly free trade.
As Jorgensen accurately states, “When goods don’t cross borders, troops do.”
Vote For Change!
I Endorse Jo Jorgensen for President
If You Want Change There is Only One Choice: Jo Jorgensen
Mish
Testing for ability to post.
“Increased productivity means more goods at lower prices to the benefit of all.”
Except to all those who were earning good money producing those goods in American factories, that are now closed, decimating communities across the so called rust belt.
Free trade between countries is a utopian concept. It can never occur in a real world where the bulk of the countries are either outright or garden variety dictatorships, or socialist paradises. The ruling class of those countries would always use the free trade to self preserve and gain unfair advantage over their trading partners.
The idea of the trade and open markets somehow turning those countries into democracies has been proven wrong time and time over again. The only thing that it led to for the other side was a corruption, on a giant scale, of the elite, hollowing of the industries and a total loss of self reliance.
If Japan, South Korea, Taiwan, and now China didn’t have protective tariffs and other barriers, they would still be agrarian economies. Even at this stage, Japan is watching the exchange rate of the Yen.
GDP = C+I+G + (X-M)
Reduce M. Solve.
So Mish advocates for unfair trade because a response to unfair trade harms.
The tariff argument is idiotic. Tariffs have been used successfully to protect trade interests for hundreds of years. To say they do not work is simply a blatant lie. Globalists are against tariffs because globalists have created the greatest divergence in wealth in history by exploiting both third world labor, and first world markets.
How has globalism worked for you? Did you get rich from globalism? Or are you struggling to make a too high mortgage payment? What was the cost of an average home before globalism? Are you satisfied trading cheaper trinkets at Walmart for the ability to own a home and send your kids to college? The purpose of government is to protect the interests of the citizens. Globalism protects the interests of multi national corporations, Wall St, and the wealthy.
well mish, if only we didn’t have new world order called WTO were china openly stole 100% of our PATENTS
President Trump is attempting to do something but is STIFLED BY OUR DO NOTHING TO HELP TRUMP congress – 100% corrupt and more corrupt after election
Free trade only works if countries don’t intervene in Forex.
I’m in favor of free trade without forex intervention, but there are a few exceptions. The US needs to make sure it can produce all the food, basic medical supplies, and energy it needs. If it has to apply tariffs to do so, then so be it.
I expect we will get back to that status within several years, regardless of who gets elected and no matter what that person’s views on trade happen to be. And that’s a good thing, in my view.
From this I infer she would not remove tariffs. If she was against the tarriffs she could have easily said she would remove or at least reduce them
Jo Jorgensen’s campaign website says she opposes adding or increasing tariffs on products imported into the country.
According to some people I read, the US is probably headed into a future much more isolationist and less dependent on global trade generally, over the next several years, based on changing demographics worldwide…to lower consumption in many countries. Not only that, but the global energy balance has shifted back in favor of US manufacturing.
The upshot is that free trade, as we have known it for the last 40 or more years, may increasingly become a thing of the past, no matter who takes the helm.
Canada and Mexico are our best trading partners….we surely need to maintain good trade relations with those two. The rest basically need us more than we need them, going forward.
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“When goods don’t cross borders, troops do.”
This quote is actually attributed to Bastiat originally. Also, free trade is difficult to define when legal tender laws coupled with fiat currency are in play.
Records Show Trump’s Border Wall Is Costing Taxpayers Billions More Than Initial Contracts https://www.propublica.org/article/records-show-trumps-border-wall-is-costing-taxpayers-billions-more-than-initial-contracts
And worth every single penny.
I agree with her free trade ideals. Attempts to protect a country’s industries with tariffs are no different to attempts to protect dying industries within countries due to technological change, they don’t work and only prolong the decline.
The libertarian position on free trade is too simplistic. Trump is a backlash product of decades of free trade policy that has left many Americans behind. Free trade is not politically viable without also having a plan to address inequality, which is itself a politically difficult topic. This is the problem with libertarianism – it has a great ideal, but does not provide a workable solution.
What about arms trade – do libertarians believe in free trade of military technology? For example to Saudis etc? War, or threat of war is a big compoent of US trade.
“Trump is a backlash product of decades of free trade policy”
Nonsense. America has not had free trade policy in a very, very long time.
“Free trade is not politically viable without also having a plan to address inequality”
Free trade helps reduce inequality, it is the poor who are helped the most by free trade, as they are able to buy goods for cheaper without having to pay ridiculous tariffs on imported goods, improving their standard of living.
We believe in individual rights. In second amendment terms, “fuck around and find out”.
Trump does not understand trade!! A billionaire does not understand but Mish understands it!!!
Do you support the Trans-Pacific Partnership (TPP)?
JO JORGENSEN VOTERBASENo, there are too many hidden provisions in this specific agreement
Great post Mish! Oh how I wish…
Anyone who would say tariffs cause inequality…while NOT mentioning the elephant in the room – super massive tax cuts for the ultra rich…is not being intellectually honest.
“2. This Republican administration has raised prices for Americans, provoked retaliatory tariffs, and harmed American industries. Meanwhile, his opponent in the Democratic Party promises more of the same protectionism. I am the only free trade candidate for president.”
Huh ??????????????
What planet does Jo live on?
THIS REPUBLICAN ADMINISTRATION HAS SLASHED TAXES ON THE ULTRA ULTRA ULTRA RICH AND STARVED PUPLIC SPENDING AND REGULATIONS.
Jo Jorgensons = 100% Fake News.
“5. As President, I will dismantle all tariffs and any other trade barriers which prevent the flow of goods and services into our country.”
So Jo is going to let 1 billion Indians, Chinese, Yemens, all the nations we’ve bombed and govt’s we’ve overthrown….into America?
So what does leave us?
Making $.20/hr?
Somebody needs to tell Jo that she’s totally clueless.
“3. Protectionism has been tried before and has been shown time and again to lead to lower productivity, more unemployment, and higher inequality.”
Like in Japan? Germany? Because free immigration raises wages for American workers?
I think no further comment is needed.
Your statements are self evidently anti reality based.
Thank you for these. They are motivating others. A lot of people feel sidelined in this election.
I’ve come to think our trade policy is really good.
The Fed types some numbers on a computer, the US government ‘borrows’ the numbers and issues the Fed ‘bonds’ in exchange. (hard to really call them bonds since Merriam Webster’s definition of a bond is “an obligation made binding by a forfeit of money” but since it’s not really money…) anyway,
The government passes these computer numbers out to people, companies, etc. and they pass them back and forth among themselves in the US and also pass the numbers to foreigners in other countries. Foreigners get the numbers in their computer and we get real stuff in exchange, like cars, and refrigerators and anything you can buy at walmart, all for some numbers created in a computer. so what if we run a ‘deficit’ right? It’s all good (until it isn’t).
there might be some sarcasm in there someplace for those of you who want to freak out when they read this.
Claiming that fiat is not money when all nations use fiat belies a lack of education as to what “MONEY” actually is. There is not one single commodity backed currency in use today.
Money must act as a medium of exchange, a store of value, a unit of account, it must be portable, divisible, and scarce.
While it is true that the Fed is busy making the printing presses smoke during this time of multiple global emergencies bringing into question the store of value and scarcity (which I see as the same property; you cannot have one without the other) it is in this case all relative. True that billions and trillions are being created out of thin air, and so some believe that it will devalue the currency to the point of zero worth, but in fact every nation is doing the same thing at more or less the same rate. So a better way to look at it is they are borrowing from the future.
Who are you or I or anyone to say we should not have had a more aggressive money creation over the years as productivity rose as a sort of dividend to share that rise in wealth creation? Maybe all we are doing is catching up to where we should have been all along. In that light one could say that the financial powers that be restrained themselves in order to save for a future event that would require massive stimulus, like perhaps a pandemic.
Electronic fiat is as portable as it gets. Divisibility only matters when goods or services are priced lower than lowest value of a basic unit of the currency, but something that cheap would be sold not by the unit but by the number of units it takes to reach the lowest value of the money, for example if you are selling building materials you would not be selling sand by the grain and require infinite divisibility of the money to accomodate your pricing practices. For years I no longer accept pennies in my change from vendors since as I say “they are like sand, they are dirty, get into everything, and you can’t buy anything with them.” And I am getting to the point where I will not accept coins at all.
One of the nitty gritty meanings of money and where the current regime does not really hold together well is as a unit of account. Without uniform accounting practices a single unit of money does not mean the same thing in all places. That is a mjor weakness but it is not the fault of the fiat currency, that is a fault of accounting practices. And I will also say that it is our accounting practices that are, especially since the GFC when banks and TBTF corporations that act as quasi banking institutions (mainly money market debt distribution firms like Ford, GM, GE, and Borg Warner) were not allowed to fail as they should have been, the FASB has lost control of accounting rules in the west.
Remember that while the gold window was closed under Nixon he had no choice at all. Our external debt was threatening to take all of our gold and still leave us with debts because of the deranged Bretton Woods Agreement that fixed the price of gold at an absurdly low rate. Other nations in the wake of two world wars had devalued immensely while we remained at a “stable and fixed rate” that allowed them to walk in with their Francs and Marks and Pounds and Rupees, and Lira and just trundle out with as much of Ft. Knox’s contents as they could arrange transport for.
Everyone here says our fiat dollar is not backed by anything and so it must be worthless. That simply could not be more false, in fact it is backed by our gold, and our silver, and our iron, and our land, and our Ag commodities, and our technological superiority. By everything that the United States is or holds claim to, because what backs the US dollar is the “full faith and credit of the United States of America.”
I don’t know about you but I am far more comfortable with a massive devaluation rather than forking over our goods and services to foreigners who manipulate their currencies then come to our shores demanding payment. If the world is going to rig their economics and money we damned well better keep up.
The true threat to us now is not the form of money we use, it is the inequality of its distribution. I have no problem with prices going up, as long as incomes in general also go up. That has not happened since the late 90’s, since then more than 100% of all new household wealth in real terms has gone to the top 10% and nearly all of that to the top 1%. THAT IS WHERE THE PROBLEM LIES! Prices have to be rational and we are rapidly losing that.
Example, the reason I no longer want pennies or any coin change anymore, I once had a pocket with change in it, sitting in my car driving along some pennies came out and dropped into the fancy gear works in the driver’s seat of my BMW, like 128 way electric seating. It cost me $130 to have them remove a single penny. That is 13,000 pennies to get rid of one. They had to get a special boroscope to find it.
It was at that point I realized that carrying pennies was a bad idea, they are like sand, they have no value and get into everything. You can have a jug of them you cannot even lift and they still won’t buy you a pack of smokes. If they lose anymore value the zinc in them will be worth more than their face value. Five years ago 69 of them would have bought you a candy bar or a disposable lighter, now both those take more than 150 such coins. In real terms inflation has been wildly out of control for years. Anyone that thinks this is limited to a few items really should check out the rental markets in the EU and US.
That is an accurate and well articulated explanation of the prevailing historical view of money. A view that tries to justify todays role for the Fed in the monetary system and their virtual printing press. However, I disagree that their Fed money creation can be a way to “share the wealth creation” caused by productivity gains. It can only have the opposite affect, that is unequal, as those with first access get the greatest wealth gains. And emergencies bring out the most horrible Fed practices of all, privatizing gains and nationalizing losses.
Money is credit, always has been, always will be. And so gets created with or without the Fed, rendering their role completely unnecessary. In fact, credit was the very first form of money long predating coins. The very nature of money is as transferable credit, and not as any sort of commodity. That is not my opinion, but is based on fairly modern research which interpret many early writings as tallies of debt.
Private credit money creation can probably better keep up with productivity gains than Fed money creation can, and way better than any sort of one government mandated monetary standard.
TonGut. If a person like Jeff Bezos has a net worth of $200 billion bucks and you have a net worth of $2 million dollars, and I have a net worth of $2, think about this for a minute.
The Fed creates XYZ number of trillions in made up cash. Say they introduce a 10% increase in electronic cash, suddenly Bezos is worth $220 billion, you are worth $2.2 million and I still am sitting behind at $2.20 and cannot buy a half pound of hamburger.
In that context you are right, and probably it would work out with Bezos going to $280 billion, you going to $2,000,002 million, and me going to $1.88. That is how it has worked for the last more than 20 years.
The main reason for this inequality is that the Fed creates money and channels it into Wall Street. As a result prices rise, not just in equities but in the entire economy that those equities control. So Hertz has to go out of business because of the games they played in private equity deals that the other rental car companies did not. It was profitable for them at the time, but along comes something like Covid and they cannot meet their debt repayments and arcane legal set up.
Maybe the pain will not all come at once, maybe bumpy rather than smooth. Maybe it is because policy demands that the Fed is in charge of macroeconomics while the federal government that spends all this money is focused on political demands that require them to focus on microeconomics.
No matter how you calculate it the USA is still in relatively great shape. From a political perspective Obama did the right thing in the wake of the GFC which was George Bush’s gift to him when Bush left office.
Our markets are worth a lot more to the global economy than most people realize.
But, and this is really critical, standards of living for the actual people who produce this nations wealth have dropped in real terms to the lowest they have been in many dacdes. In fact they may actually be the lowest they have ever been because we do not know the true size of legal obligations authorities have allowed to be put in place in the form of derivatives.
I keep seeing sites and even Mish himself saying that we cannot possibly pay our debts, our pensions, he even moved from IL to UT to get away from the impending disaster of Chicago debt that will allegedly bankrupt the state because nothing adds up anymore. I tease him that it is really because he wants a couple more nubile wives.
I see how social security will be bankrupt by this or that date, and my response is simple enough, the social security trust fund has more than $6 trillion in its account and is not going bankrupt anytime soon. As long as it is still taking in payroll taxes at 12.6% it will be viable and can even increse payouts.
What the right claims and seems to believe or is using as propaganda is this, that trust fund money is gone. It is not gone at all, it is held as bonds backed by the full faith and credit of the USA.
Republicans are using a mismatch between cash accounting and accural accounting along with some very suspect assumptions about demographics to claim social security under democrats is going to go away or be slashed. In fact social security trust funds are only hurt by negative real interest rates. And even at that they will not fail to pay because just as the SS trust fund is getting depleted so will the number of beneficiaries of the pig in the snake demographic of the baby boom. It was 1983 when the congress realized that this pig in the snake demographic of so many people born after WWII would bankrupt social security that they moved in bipartisan manner to augment the trust fund to deal with that. It worked.
The thing is where others work on an accrual basis the government is forced to work on a cash basis. If you know anything about accounting you would know that the GOP scare tactics about social security are on an accrual basis, the realit is on a cash basis of accounting. By accrual accounting you can project out some 60 or 70 years and say the trust fund will be empty in 2023. But on a cash basis of accounting the trust fund is actully over funded. The baby boomers will all be dead by the time those trillions are paid out.
I am not even an accountant and I can see that at the current rate of drawdown the surplus of more than six trillion at current benefits will outlive the people drawing it down.
But the bottom line is our standards of iving are falling fast even as the rich are making out better than they ever have. The solution is obvious, if “money” represents standards of living give money to the low end of the economic scale. If you double my income as a disabled vet or double minimum wages then prices will rise, but they will also halve the wealth of the rich. Just rinse and repeat till the wealth inequality exists but not at current levels. And with inequality bieng what it is now it will take a lot of this rinsing and repeating.
That is in fact why the Fed is urging the congress to “go big” on Covid relief, because if the government does not issue debt in record amounts soon they will have to find a way to issue new debt without the government to actaul people, and they can in the form of negative real rates that slash interest payments on debt for such things as mortgages where your PITI monthly payments become PTI with no interest at all. I am in the process of refinancing my 3.75% home loan to 2.25% which is by my degree in finance UNHEARD of. It says financial institutions still think they can make a profit by lending out over 30 years even when they only charge 2.25%.
Herkie: “The main reason for this inequality is that the Fed creates money and channels it into Wall Street”
TonGut: “It can only have the opposite affect, that is unequal [distribution]”
Sounded like we were saying the same thing on the first part of your quote regarding the reason for inequality. Spot on. But then you seem to contradict yourself when you go on to say how Obama was “right” for doing just that, channeling money into Wall Street. You’re okay with that, if I understand you, as long as you give more to the “low end”? During ordinary periods I guess, to counterbalance the unequal distribution that happens when crises come along?
Then, you talk about how it will raise incomes and that will raise prices. If they both go up, what does that gain? Sure your changing who gets first access, but I don’t see how it helps in the long run. The idea of productivity is to produce more with as little labor as possible. That’s the only way to increase the standard of living. Printing won’t accomplish that.
My solution is to not get taxed in the first place. If preventing deflation is just a simple matter of pumping money into the economy then pump it back to the taxpayers. Give them first access since it is their money, and let creative destruction take it’s course. Then end the Fed. For good! Granted it has yet to be tried but we did pretty well when didn’t have one. There is no way of knowing for sure, but I fail see how it could be this big economic catastrophe, mass starvation, etc. that all the politicians and bankers and businesses men all rail about. Of course they rail, they want to survive. It’s time we stop falling for it hook, line and sinker.
Also, there might be something said for a negative tax or something along those lines for your “low end.” But minimum wage? How does that help the low end? How about the homeless? If so, then why are you minimum wage advocates so stingy? Why not $100? If the $15 will help the low end, wouldn’t $100 dollars help the middle class? No, you want there to be a job market hurdle of some sort. Just high enough to keep the ultra low end form competing, but not high enough that it throws you out of work.
Also, It’s not a trust fund and the SSA and everyone else needs to quit calling it that. Implying that it is a fund that people pay into, and separate from the treasury, just confuses everyone. It is simply just one of many fiscal accounts. It currently has a credit balance which will become a debit balance in 2023. So what? It’s all spent. Completely irrelevant. The payroll tax is also just that, it’s just tax revenue. The most horribly regressive kind of tax but a tax nonetheless. What’s more, the Treasury’s obligation to pay the SSA benefit is a risk free obligation because they can print the money (inflate it away). Thus, accrual pension accounting where you write off discounted future pension obligation against current income does not apply.
Another excellent post.
“first country that implements free trade” Hong Kong in days of yore comes to mind.
Vote Jorgensen and vote for the winner of the election. Be a dope.