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Tuesday, March 13, 2018
Monday, March 12, 2018
Re: [socialist-econ] Joseph Stiglitz: When Shall We Overcome?
Good very brief remarks on 50 years after the Kerner Commission and America's original sin.
On Mon, Mar 12, 2018, 8:49 AM John Case <jcase4218@gmail.com> wrote:
When Shall We Overcome?--
Mar 12, 2018 JOSEPH E. STIGLITZMar 12, 2018 JOSEPH E. STIGLITZ
In 1968, the year after riots erupted in cities throughout the US, the Kerner Commission, established by President Lyndon B. Johnson, famously concluded that the country was "moving toward two societies, one black, one white – separate and unequal." Sadly, it is a conclusion that still rings true.
NEW YORK – In 1967, riots erupted in cities throughout the United States, from Newark, New Jersey, to Detroit and Minneapolis in the Midwest – all two years after the Watts neighborhood of Los Angeles exploded in violence. In response, President Lyndon B. Johnson appointed a commission, headed by Illinois Governor Otto Kerner, to investigate the causes and propose measures to address them. Fifty years ago, the National Advisory Commission on Civil Disorders (more widely known as the Kerner Commission), issued its report, providing a stark account of the conditions in America that had led to the disorders.
THE YEAR AHEAD 2018
The world's leading thinkers and policymakers examine what's come apart in the past year, and anticipate what will define the year ahead.
ORDER NOW
The Kerner Commission described a country in which African-Americans faced systematic discrimination, suffered from inadequate education and housing, and lacked access to economic opportunities. For them, there was no American dream. The root cause was "the racial attitude and behavior of white Americans toward black Americans. Race prejudice has shaped our history decisively; it now threatens to affect our future."
I was part of a group convened by the Eisenhower Foundation to assess what progress had been made in the subsequent half-century. Sadly, the Kerner Commission report's most famous line – "Our Nation is moving toward two societies, one black, one white – separate and unequal" – still rings true.
The just-published book based on our efforts, Healing Our Divided Society: Investing in America Fifty Years After the Kerner Report, edited by Fred Harris and Alan Curtis, makes for bleak reading. As I wrote in my chapter, "Some problematic areas identified in the Kerner Report have gotten better (participation in politics and government by black Americans – symbolized by the election of a black president), some have stayed the same (education and employment disparities), and some have gotten worse (wealth and income inequality)." Other chapters discuss one of the most disturbing aspects of America's racial inequality: inequality in securing access to justice, reinforced by a system of mass incarceration largely targeted at African-Americans.
There is no doubt that the civil rights movement of a half-century ago made a difference. A variety of overt forms of discrimination were made illegal. Societal norms changed. But rooting out deep-seated and institutional racism has proven difficult. Worse, President Donald Trump has exploited this racism and fanned the flames of bigotry.
The core message of the new report reflects the great insight of the civil rights leader Martin Luther King, Jr.: achieving economic justice for African-Americans cannot be separated from achieving economic opportunities for all Americans. King called his August 1963 march on Washington, which I joined and at which he delivered his ringing, unforgettable "I Have a Dream" speech, a march for jobs and freedom. And yet the economic divide in the US has grown much wider, with devastating effects on those without a college education, a group that includes almost three-quarters of African-Americans.
WHEN SHALL WE OVERCOME?
Mar 12, 2018 JOSEPH E. STIGLITZreflects on how racism has persisted in the US in the half-century since the Kerner Report.
0Add to Bookmarks
PreviousNext
Beyond this, discrimination is rampant, if often hidden. America's financial sector targeted African-Americans for exploitation, especially in the years before the financial crisis, selling them volatile products with high fees that could, and did, explode. Thousands lost their homes, and in the end, the disparity in wealth, already large, increased even more. One leading bank, Wells Fargo, paid huge fines for charging higher interest rates to African-American and Latino borrowers; but no one was really held accountable for the many other abuses. Almost a half-century after the enactment of anti-discrimination laws, racism, greed, and market power still work together to the disadvantage of African-Americans.
There are, however, several reasons for hope. First, our understanding of discrimination is far better. Back then, the Nobel laureate economist Gary Becker could write that in a competitive market, discrimination was impossible; the market would bid up the wage of anyone who was underpaid. Today, we understand that the market is rife with imperfections – including imperfections of information and competition – that provide ample opportunity for discrimination and exploitation.
Moreover, we now recognize that the US is paying a high price for inequality, and an especially high price for its racial inequality. A society marked by such divisions will not be a beacon to the world, and its economy will not flourish. The real strength of the US is not its military power but its soft power, which has been badly eroded not just by Trump, but also by persistent racial discrimination. Everyone will lose if it is not addressed.
The most promising sign is the outpouring of activism, especially from young people, who realize that it is high time that the US lives up to its ideals, so nobly expressed in its Declaration of Independence, that all men are created equal. A century and a half after the abolition of slavery, the legacy of that system lingers. It took a century to enact legislation ensuring equal rights; but today, Republican-controlled courts and politicians often renege on that commitment.
As I concluded my chapter, "An alternative world is possible. But 50 years of struggle has shown us how difficult it is to achieve that alternative vision." Further progress will require determination, sustained by the faith expressed in the immortal words of the spiritual that became the hymn of the civil rights movement: "We shall overcome."
FEATURED
Will China Out-Innovate the West?
Mar 5, 2018 EDMUND S. PHELPS
Economists vs. Scientists on Long-Term Growth
Mar 2, 2018 KENNETH ROGOFF
Jean-Claude Juncker's Dangerous Defense Strategy
Mar 1, 2018 ANA PALACIO
Bibi's Faustian Bargain
Feb 27, 2018 SHALOM LIPNER
Cold War II
Feb 23, 2018 RICHARD N. HAASS
JOSEPH E. STIGLITZ
Writing for PS since 2001
242 Commentaries
Subscribe
Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University and Chief Economist at the Roosevelt Institute. His most recent book is Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump--John Case
Harpers Ferry, WVThe Winners and Losers Radio Show7-9 AM Weekdays, The Enlighten Radio Player Stream,Sign UP HERE to get the Weekly Program Notes.Check out Socialist Economics, the Enlighten Radio website, and
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Enlighten Radio Podcasts:The Moose Turd Cafe: The Trump Tariff Turd Not Served
John Case has sent you a link to a blog:
Blog: Enlighten Radio Podcasts
Post: The Moose Turd Cafe: The Trump Tariff Turd Not Served
Link: http://podcasts.enlightenradio.org/2018/03/the-moose-turd-cafe-trump-tariff-turd.html
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Post: The Moose Turd Cafe: The Trump Tariff Turd Not Served
Link: http://podcasts.enlightenradio.org/2018/03/the-moose-turd-cafe-trump-tariff-turd.html
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Interview:Leo Gerard: Steelworkers want a crackdown on "cheaters" in the global steel industry
Steelworkers want a crackdown on "cheaters" in the global steel industry
Economists are worried about the Trump administration's recently announced plans to raise tariffs on all imported steel by 25 percent and all imported aluminum by 10 percent. From the European Union to China, there's already talk of retaliation, leading analysts to worry about an impending trade war which could have unpredictable effects. Tariffs could hurt profits in industries that use these metals leading to higher prices for consumers.
But steelworkers have had enough of what they say is cheating on international trade rules. Leo Gerard studied economics and by some accounts once talked about becoming an economics professor before becoming a steelworker. Gerard is the international president of the United Steelworkers Union and spoke with David Brancaccio about why countries like China that produce and distribute excess steel and aluminum need to be reigned in, but noted that the White House tariffs also need to be more specific so as to not target the countries that, in his words, "playing by the rules."
Below is an edited transcript.
David Brancaccio: Now we've often noted on this program that 84,000 U.S. workers — not just in steel, but in all metal — have lost their jobs in the last decade given these trading conditions. Yet you saw steel-using industries, including the car industry, are freaking out about these tariffs. Where do you come down on this announcement?
Leo Gerard: Let me back you up a bit. Way more than 80,000 workers have lost their jobs. In fact 60,000 factories have closed since 2012, and the minor increase in price — if it happens at all — will be minimal. We checked out — we weighed a can and put it against the price of aluminum. If anything, it came out to one-tenth of a cent per can.
Brancaccio: For instance, we heard from Budweiser that that's going to put up the price of beer, for instance, and you're saying, not really.
Gerard: No, it's factually not true. But let me say this: In 15 years, China went from 500 million tons of steel to 1.2 billion — billion with a "b" tons of steel. Over that period of time, there were five what they call high-level meetings to get China to play by market conditions. Now we have 500 million tons of excess steel capacity just from China floating around the world and being dumped and thrown into any place where they can get somebody to pay the cheated price. What we encourage the president to do is to bring the cheaters in line. We're not necessarily enamored with the broad-brush approach. We think we ought to go after what we euphemistically call the "evil-doers."
Brancaccio: In other words, the sanctions announced yesterday cover all aluminum and steel imports from any country — not just, for instance, China. And you'd like to see that, perhaps, a little bit more targeted.
Gerard: Exactly. Part of the concern that I have is that if you give everybody the same remedy, then those that were cheating are still going to be cheated. Only their cheating will now be subsidized by having the same tariff as a non-cheater. Look, this has been our fight for 40 years. The steel industry in America went from 135 million tons 15 years ago to 85 million tons. Where did those 40 million tons disappear to? They disappeared to those countries that dump into the American market, force us to file unfair trade complaints, and when we succeed in the unfair complaint, they go and find a way to do transshipment. Someone has to ask the question. Some of these economists who are saying we can't do anything because we'll be in a trade war — we're in a trade war now. We've had year-over-year record breaking trade deficits with China, with South Korea, with Mexico. And year-after-year of accelerated trade deficits. A trade deficit is nothing more than a wealth transfer. When you buy something from China, you're buying it on credit, and the credit you're getting it from China. It's a double wham-o. People lose their jobs in America because China's dumping, and we're giving them our wealth to pay off our trade debts. In the last 30 years, we'd have accumulated somewhere between $7 and $10 trillion of accumulated trade deficits. So we're talking to the president, not only about steel, but getting the trade deficit in line and demanding that our trade agreements are fair. We're not anti-trade we're just anti-trade with cheaters that won't play by the rules.
Brancaccio: So that's your answer about the danger of sparking a wider trade war: you're saying we're in one already.
Gerard: If you're acquiring a $500 billion trade deficit, and as a result of taking some action, the country that's cheating is going to have to quit cheating. If you're not cheating, you shouldn't be part of the problem. But if you continue to cheat, you should assume that you're going to be penalized. Apply that to any other part of life, David, just not even about steel. Some economic idiot who continuously wants to raise we'll be in a trade war, my question to them is: what do you think we should do about the $500 billion-a-year trade deficit with China to close the $120 billion-a-year trade deficit we have now with South Korea, where before we had balanced trade. The trade deficit that we have with Mexico, that before NAFTA was a balanced trade agenda. And so what's happened is, global financiers, global corporations are addicted to working in industries and in sectors and with countries that cheat and don't play by the rules. And as soon as you say they have to play by the rules, they start crying poverty. They start crying this and that. I can guarantee you this: in 2001, when we succeeded in an overall remedy in steel with President Bush, the price of steel went up few cents. The price of steel went down after. You never saw one change in the cost of a can of beer.
Brancaccio: You don't sound like you're in the mood to let the World Trade Organization just handle this moving forward, "stay within the rules." You think the time is now for these tariffs imposed by the White House?
Gerard: David, we've been working with OECD [the Organisation for Economic Co-operation and Development], WTO [the World Trade Organization], high-level government meetings for 15 years. Over the 15 years that there's been what is called euphemistically "high level meetings" or "high level consultations" — they happen both between the United States and China, between the United States and South Korea. And they happen at the OECD steel consultative body. During that period of time, China was over producing steel, but they were producing 500 million tons — probably a million tons more than they needed or thereabout. In each one of those consultations, China promised the American consultors that they would reduce their capacity. We reduced ours from 135 to 85. China has broken the promise every one of those five consultations. In this last year, they produced 1.23 billion tons of steel, which puts almost 5.5 to 6 million tons of steel out on the market, depressing prices and depressing capacity. And in order to stay in business, we've got facilities that are shut down. In Conshohocken, [Pennsylvania], we had to shut the facility down. They make the last armor plates in America. AK Steel is in desperate condition. They make the last electrical steel in America. I mean, so you go two facilities that make the last of that product. So we're going to have to do what — ask India to send it to us, ask Russia to send it to us, ask China sends it to us if we need it. And so we're really just saying that we'll support playing by the rules. But none of them are playing by the rules.
Follow David Brancaccio at @DavidBrancaccio.
John Case
Harpers Ferry, WV
Harpers Ferry, WV
The Winners and Losers Radio Show
7-9 AM Weekdays, The Enlighten Radio Player Stream,
Sign UP HERE to get the Weekly Program Notes.
Check out Socialist Economics, the Enlighten Radio website, and
Joseph Stiglitz: When Shall We Overcome?
When Shall We Overcome?
Mar 12, 2018 JOSEPH E. STIGLITZ
Mar 12, 2018 JOSEPH E. STIGLITZ
Mar 12, 2018 JOSEPH E. STIGLITZ
In 1968, the year after riots erupted in cities throughout the US, the Kerner Commission, established by President Lyndon B. Johnson, famously concluded that the country was "moving toward two societies, one black, one white – separate and unequal." Sadly, it is a conclusion that still rings true.
NEW YORK – In 1967, riots erupted in cities throughout the United States, from Newark, New Jersey, to Detroit and Minneapolis in the Midwest – all two years after the Watts neighborhood of Los Angeles exploded in violence. In response, President Lyndon B. Johnson appointed a commission, headed by Illinois Governor Otto Kerner, to investigate the causes and propose measures to address them. Fifty years ago, the National Advisory Commission on Civil Disorders (more widely known as the Kerner Commission), issued its report, providing a stark account of the conditions in America that had led to the disorders.
THE YEAR AHEAD 2018
The world's leading thinkers and policymakers examine what's come apart in the past year, and anticipate what will define the year ahead.
ORDER NOW
The Kerner Commission described a country in which African-Americans faced systematic discrimination, suffered from inadequate education and housing, and lacked access to economic opportunities. For them, there was no American dream. The root cause was "the racial attitude and behavior of white Americans toward black Americans. Race prejudice has shaped our history decisively; it now threatens to affect our future."
I was part of a group convened by the Eisenhower Foundation to assess what progress had been made in the subsequent half-century. Sadly, the Kerner Commission report's most famous line – "Our Nation is moving toward two societies, one black, one white – separate and unequal" – still rings true.
The just-published book based on our efforts, Healing Our Divided Society: Investing in America Fifty Years After the Kerner Report, edited by Fred Harris and Alan Curtis, makes for bleak reading. As I wrote in my chapter, "Some problematic areas identified in the Kerner Report have gotten better (participation in politics and government by black Americans – symbolized by the election of a black president), some have stayed the same (education and employment disparities), and some have gotten worse (wealth and income inequality)." Other chapters discuss one of the most disturbing aspects of America's racial inequality: inequality in securing access to justice, reinforced by a system of mass incarceration largely targeted at African-Americans.
There is no doubt that the civil rights movement of a half-century ago made a difference. A variety of overt forms of discrimination were made illegal. Societal norms changed. But rooting out deep-seated and institutional racism has proven difficult. Worse, President Donald Trump has exploited this racism and fanned the flames of bigotry.
The core message of the new report reflects the great insight of the civil rights leader Martin Luther King, Jr.: achieving economic justice for African-Americans cannot be separated from achieving economic opportunities for all Americans. King called his August 1963 march on Washington, which I joined and at which he delivered his ringing, unforgettable "I Have a Dream" speech, a march for jobs and freedom. And yet the economic divide in the US has grown much wider, with devastating effects on those without a college education, a group that includes almost three-quarters of African-Americans.
WHEN SHALL WE OVERCOME?
Mar 12, 2018 JOSEPH E. STIGLITZreflects on how racism has persisted in the US in the half-century since the Kerner Report.
0Add to Bookmarks
PreviousNext
Beyond this, discrimination is rampant, if often hidden. America's financial sector targeted African-Americans for exploitation, especially in the years before the financial crisis, selling them volatile products with high fees that could, and did, explode. Thousands lost their homes, and in the end, the disparity in wealth, already large, increased even more. One leading bank, Wells Fargo, paid huge fines for charging higher interest rates to African-American and Latino borrowers; but no one was really held accountable for the many other abuses. Almost a half-century after the enactment of anti-discrimination laws, racism, greed, and market power still work together to the disadvantage of African-Americans.
There are, however, several reasons for hope. First, our understanding of discrimination is far better. Back then, the Nobel laureate economist Gary Becker could write that in a competitive market, discrimination was impossible; the market would bid up the wage of anyone who was underpaid. Today, we understand that the market is rife with imperfections – including imperfections of information and competition – that provide ample opportunity for discrimination and exploitation.
Moreover, we now recognize that the US is paying a high price for inequality, and an especially high price for its racial inequality. A society marked by such divisions will not be a beacon to the world, and its economy will not flourish. The real strength of the US is not its military power but its soft power, which has been badly eroded not just by Trump, but also by persistent racial discrimination. Everyone will lose if it is not addressed.
The most promising sign is the outpouring of activism, especially from young people, who realize that it is high time that the US lives up to its ideals, so nobly expressed in its Declaration of Independence, that all men are created equal. A century and a half after the abolition of slavery, the legacy of that system lingers. It took a century to enact legislation ensuring equal rights; but today, Republican-controlled courts and politicians often renege on that commitment.
As I concluded my chapter, "An alternative world is possible. But 50 years of struggle has shown us how difficult it is to achieve that alternative vision." Further progress will require determination, sustained by the faith expressed in the immortal words of the spiritual that became the hymn of the civil rights movement: "We shall overcome."
FEATURED
Will China Out-Innovate the West?
Mar 5, 2018 EDMUND S. PHELPS
Economists vs. Scientists on Long-Term Growth
Mar 2, 2018 KENNETH ROGOFF
Jean-Claude Juncker's Dangerous Defense Strategy
Mar 1, 2018 ANA PALACIO
Bibi's Faustian Bargain
Feb 27, 2018 SHALOM LIPNER
Cold War II
Feb 23, 2018 RICHARD N. HAASS
JOSEPH E. STIGLITZ
Writing for PS since 2001
242 Commentaries
Subscribe
Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University and Chief Economist at the Roosevelt Institute. His most recent book is Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump--
In 1968, the year after riots erupted in cities throughout the US, the Kerner Commission, established by President Lyndon B. Johnson, famously concluded that the country was "moving toward two societies, one black, one white – separate and unequal." Sadly, it is a conclusion that still rings true.
NEW YORK – In 1967, riots erupted in cities throughout the United States, from Newark, New Jersey, to Detroit and Minneapolis in the Midwest – all two years after the Watts neighborhood of Los Angeles exploded in violence. In response, President Lyndon B. Johnson appointed a commission, headed by Illinois Governor Otto Kerner, to investigate the causes and propose measures to address them. Fifty years ago, the National Advisory Commission on Civil Disorders (more widely known as the Kerner Commission), issued its report, providing a stark account of the conditions in America that had led to the disorders.
THE YEAR AHEAD 2018
The world's leading thinkers and policymakers examine what's come apart in the past year, and anticipate what will define the year ahead.
ORDER NOW
The Kerner Commission described a country in which African-Americans faced systematic discrimination, suffered from inadequate education and housing, and lacked access to economic opportunities. For them, there was no American dream. The root cause was "the racial attitude and behavior of white Americans toward black Americans. Race prejudice has shaped our history decisively; it now threatens to affect our future."
I was part of a group convened by the Eisenhower Foundation to assess what progress had been made in the subsequent half-century. Sadly, the Kerner Commission report's most famous line – "Our Nation is moving toward two societies, one black, one white – separate and unequal" – still rings true.
The just-published book based on our efforts, Healing Our Divided Society: Investing in America Fifty Years After the Kerner Report, edited by Fred Harris and Alan Curtis, makes for bleak reading. As I wrote in my chapter, "Some problematic areas identified in the Kerner Report have gotten better (participation in politics and government by black Americans – symbolized by the election of a black president), some have stayed the same (education and employment disparities), and some have gotten worse (wealth and income inequality)." Other chapters discuss one of the most disturbing aspects of America's racial inequality: inequality in securing access to justice, reinforced by a system of mass incarceration largely targeted at African-Americans.
There is no doubt that the civil rights movement of a half-century ago made a difference. A variety of overt forms of discrimination were made illegal. Societal norms changed. But rooting out deep-seated and institutional racism has proven difficult. Worse, President Donald Trump has exploited this racism and fanned the flames of bigotry.
The core message of the new report reflects the great insight of the civil rights leader Martin Luther King, Jr.: achieving economic justice for African-Americans cannot be separated from achieving economic opportunities for all Americans. King called his August 1963 march on Washington, which I joined and at which he delivered his ringing, unforgettable "I Have a Dream" speech, a march for jobs and freedom. And yet the economic divide in the US has grown much wider, with devastating effects on those without a college education, a group that includes almost three-quarters of African-Americans.
WHEN SHALL WE OVERCOME?
Mar 12, 2018 JOSEPH E. STIGLITZreflects on how racism has persisted in the US in the half-century since the Kerner Report.
0Add to Bookmarks
PreviousNext
Beyond this, discrimination is rampant, if often hidden. America's financial sector targeted African-Americans for exploitation, especially in the years before the financial crisis, selling them volatile products with high fees that could, and did, explode. Thousands lost their homes, and in the end, the disparity in wealth, already large, increased even more. One leading bank, Wells Fargo, paid huge fines for charging higher interest rates to African-American and Latino borrowers; but no one was really held accountable for the many other abuses. Almost a half-century after the enactment of anti-discrimination laws, racism, greed, and market power still work together to the disadvantage of African-Americans.
There are, however, several reasons for hope. First, our understanding of discrimination is far better. Back then, the Nobel laureate economist Gary Becker could write that in a competitive market, discrimination was impossible; the market would bid up the wage of anyone who was underpaid. Today, we understand that the market is rife with imperfections – including imperfections of information and competition – that provide ample opportunity for discrimination and exploitation.
Moreover, we now recognize that the US is paying a high price for inequality, and an especially high price for its racial inequality. A society marked by such divisions will not be a beacon to the world, and its economy will not flourish. The real strength of the US is not its military power but its soft power, which has been badly eroded not just by Trump, but also by persistent racial discrimination. Everyone will lose if it is not addressed.
The most promising sign is the outpouring of activism, especially from young people, who realize that it is high time that the US lives up to its ideals, so nobly expressed in its Declaration of Independence, that all men are created equal. A century and a half after the abolition of slavery, the legacy of that system lingers. It took a century to enact legislation ensuring equal rights; but today, Republican-controlled courts and politicians often renege on that commitment.
As I concluded my chapter, "An alternative world is possible. But 50 years of struggle has shown us how difficult it is to achieve that alternative vision." Further progress will require determination, sustained by the faith expressed in the immortal words of the spiritual that became the hymn of the civil rights movement: "We shall overcome."
FEATURED
Will China Out-Innovate the West?
Mar 5, 2018 EDMUND S. PHELPS
Economists vs. Scientists on Long-Term Growth
Mar 2, 2018 KENNETH ROGOFF
Jean-Claude Juncker's Dangerous Defense Strategy
Mar 1, 2018 ANA PALACIO
Bibi's Faustian Bargain
Feb 27, 2018 SHALOM LIPNER
Cold War II
Feb 23, 2018 RICHARD N. HAASS
JOSEPH E. STIGLITZ
Writing for PS since 2001
242 Commentaries
Subscribe
Joseph E. Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University and Chief Economist at the Roosevelt Institute. His most recent book is Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump--
John Case
Harpers Ferry, WV
Harpers Ferry, WV
The Winners and Losers Radio Show
7-9 AM Weekdays, The Enlighten Radio Player Stream,
Sign UP HERE to get the Weekly Program Notes.
Check out Socialist Economics, the Enlighten Radio website, and
Dani Rodrik: Trump’s Trade Gimmickry
Trump's Trade Gimmickry
The imbalances and inequities generated by the global economy cannot be tackled by protecting a few politically well-connected industries, using manifestly ridiculous national security considerations as an excuse. Such protectionism is a gimmick, not a serious agenda for trade reform.
CAMBRIDGE – US President Donald Trump's bark on trade policy has so far been far worse than his bite. But this may be changing. In January, he raised tariffs on imported washing machines and solar cells. Now, he has ordered steep tariffs on imported steel and aluminum (25% and 10%, respectively), basing the move on a rarely used national-security exception to World Trade Organization rules.
Many commentators have overreacted to the possibility of tariffs, predicting a "trade war" and worse. One expert called the steel and aluminum tariffs the most significant trade restrictions since 1971, when President Richard M. Nixon imposed a 10% import surcharge in response to the US trade deficit, and predicted that, "It will have huge consequences for the global trading order." The Wall Street Journal wrote that Trump's tariffs were the "biggest policy blunder of his Presidency" – a remarkable claim in light of the administration's missteps over Russia, the FBI, North Korea, immigration, taxation, white nationalism, and much else.
The reality is that Trump's trade measures to date amount to small potatoes. In particular, they pale in comparison to the scale and scope of the protectionist policies of President Ronald Reagan's administration in the 1980s. Reagan raised tariffs and tightened restrictions on a wide range of industries, including textiles, automobiles, motorcycles, steel, lumber, sugar, and electronics. He famously pressured Japan to accept "voluntary" restraints on car exports. He imposed 100% tariffs on selected Japanese electronics products when Japan allegedly failed to keep exported microchip prices high.
Just as Trump's policies violate the spirit, if not the letter, of today's trade agreements, Reagan's trade restrictions exploited loopholes in existing arrangements. They were such a departure from prevailing practices that fear of a "new protectionism" became widespread. "There is great danger that the system will break down," one trade lawyer wrote, "or that it will collapse in a grim replay of the 1930s."
Those warnings proved alarmist. The world economy was not much affected by the temporary reversal during the 1980s of the trend toward trade liberalization. In fact, it may even have benefited. Reagan's protectionism acted as a safety valve that let off political steam, thereby preventing greater disruptions.
And once the US macroeconomy improved, the pace of globalization accelerated significantly. The North American Free Trade Agreement, the WTO (which explicitly banned the "voluntary" export restraints used by Reagan), and China's export boom all followed in the 1990s, as did the removal of remaining restrictions on cross-border finance.
Trump's protectionism may well have very different consequences; history need not repeat itself. For one thing, even though their overall impact remains limited, Trump's trade restrictions have more of a unilateral, in-your-face quality. Much of Reagan's protectionism was negotiated with trade partners and designed to ease the economic burden on exporters.
The voluntary export restraints (VERs) of the 1980s in autos and steel, for example, were administered by the exporting countries. This allowed Japanese and European companies to collude in raising their export prices for the US market. Indeed, these companies may even have become more profitable thanks to US trade restrictions. There is little chance that South Korean exporters of washing machines or Chinese exporters of solar cells will fare as well today. Trump's unilateralism will cause greater anger among trade partners, and thus is more likely to generate retaliation.
Another contrast with the Reagan-era measures is that we are living in a more advanced stage of globalization, and the problems that have accompanied it are greater. The push for hyper-globalization in the 1990s has created a deep division between those who prosper in the global economy and share its values, and those who do not. As a result, the forces of nationalism and nativism are probably more powerful than at any time since the end of World War II.
While Trump's policies purportedly aim to restore fairness in global trade, they exacerbate rather than ameliorate these problems. As Jared Bernstein and Dean Baker point out, Trump's tariffs are likely to benefit a small minority of workers in protected industries at the expense of a large majority of other workers in downstream industries and elsewhere. The imbalances and inequities generated by the global economy cannot be tackled by protecting a few politically well-connected industries, using manifestly ridiculous national security considerations as an excuse. Such protectionism is a gimmick, not a serious agenda for trade reform.
A serious reform agenda would instead rein in the protection of drug companies and skilled professionals such as physicians, as Bernstein and Baker argue. It would address concerns about social dumping and policy autonomy by renegotiating the rules of the WTO multilaterally. And it would target areas where the gains from trade are still very large, such as international worker mobility, instead of areas that benefit only special interests.
But it is in the domestic arena that the bulk of the work needs to be done. Repairing the domestic social contract requires a range of social, taxation, and innovation policies to lay the groundwork for a twenty-first-century version of the New Deal. But with his corporate tax cuts and deregulation, Trump is moving in the opposite direction. Sooner or later, the disastrous nature of Trump's domestic agenda will become evident even to his voters. At that point, an old-fashioned trade war may seem irresistible, to provide distraction and political cover.
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Dani Rodrik is Professor of International Political Economy at Harvard University's John F. Kennedy School of Government. He is the author of The Globalization Paradox: Democracy and the Future of the World Economy, Economics Rules: The Rights and Wrongs of the Dismal Science, and, most recently, Straight Talk on Trade: Ideas for a Sane World Economy.
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Mar 9, 2018 DANI RODRIK
CAMBRIDGE – US President Donald Trump's bark on trade policy has so far been far worse than his bite. But this may be changing. In January, he raised tariffs on imported washing machines and solar cells. Now, he has ordered steep tariffs on imported steel and aluminum (25% and 10%, respectively), basing the move on a rarely used national-security exception to World Trade Organization rules.
Many commentators have overreacted to the possibility of tariffs, predicting a "trade war" and worse. One expert called the steel and aluminum tariffs the most significant trade restrictions since 1971, when President Richard M. Nixon imposed a 10% import surcharge in response to the US trade deficit, and predicted that, "It will have huge consequences for the global trading order." The Wall Street Journal wrote that Trump's tariffs were the "biggest policy blunder of his Presidency" – a remarkable claim in light of the administration's missteps over Russia, the FBI, North Korea, immigration, taxation, white nationalism, and much else.
The reality is that Trump's trade measures to date amount to small potatoes. In particular, they pale in comparison to the scale and scope of the protectionist policies of President Ronald Reagan's administration in the 1980s. Reagan raised tariffs and tightened restrictions on a wide range of industries, including textiles, automobiles, motorcycles, steel, lumber, sugar, and electronics. He famously pressured Japan to accept "voluntary" restraints on car exports. He imposed 100% tariffs on selected Japanese electronics products when Japan allegedly failed to keep exported microchip prices high.
Just as Trump's policies violate the spirit, if not the letter, of today's trade agreements, Reagan's trade restrictions exploited loopholes in existing arrangements. They were such a departure from prevailing practices that fear of a "new protectionism" became widespread. "There is great danger that the system will break down," one trade lawyer wrote, "or that it will collapse in a grim replay of the 1930s."
Those warnings proved alarmist. The world economy was not much affected by the temporary reversal during the 1980s of the trend toward trade liberalization. In fact, it may even have benefited. Reagan's protectionism acted as a safety valve that let off political steam, thereby preventing greater disruptions.
And once the US macroeconomy improved, the pace of globalization accelerated significantly. The North American Free Trade Agreement, the WTO (which explicitly banned the "voluntary" export restraints used by Reagan), and China's export boom all followed in the 1990s, as did the removal of remaining restrictions on cross-border finance.
Trump's protectionism may well have very different consequences; history need not repeat itself. For one thing, even though their overall impact remains limited, Trump's trade restrictions have more of a unilateral, in-your-face quality. Much of Reagan's protectionism was negotiated with trade partners and designed to ease the economic burden on exporters.
The voluntary export restraints (VERs) of the 1980s in autos and steel, for example, were administered by the exporting countries. This allowed Japanese and European companies to collude in raising their export prices for the US market. Indeed, these companies may even have become more profitable thanks to US trade restrictions. There is little chance that South Korean exporters of washing machines or Chinese exporters of solar cells will fare as well today. Trump's unilateralism will cause greater anger among trade partners, and thus is more likely to generate retaliation.
Another contrast with the Reagan-era measures is that we are living in a more advanced stage of globalization, and the problems that have accompanied it are greater. The push for hyper-globalization in the 1990s has created a deep division between those who prosper in the global economy and share its values, and those who do not. As a result, the forces of nationalism and nativism are probably more powerful than at any time since the end of World War II.
While Trump's policies purportedly aim to restore fairness in global trade, they exacerbate rather than ameliorate these problems. As Jared Bernstein and Dean Baker point out, Trump's tariffs are likely to benefit a small minority of workers in protected industries at the expense of a large majority of other workers in downstream industries and elsewhere. The imbalances and inequities generated by the global economy cannot be tackled by protecting a few politically well-connected industries, using manifestly ridiculous national security considerations as an excuse. Such protectionism is a gimmick, not a serious agenda for trade reform.
A serious reform agenda would instead rein in the protection of drug companies and skilled professionals such as physicians, as Bernstein and Baker argue. It would address concerns about social dumping and policy autonomy by renegotiating the rules of the WTO multilaterally. And it would target areas where the gains from trade are still very large, such as international worker mobility, instead of areas that benefit only special interests.
But it is in the domestic arena that the bulk of the work needs to be done. Repairing the domestic social contract requires a range of social, taxation, and innovation policies to lay the groundwork for a twenty-first-century version of the New Deal. But with his corporate tax cuts and deregulation, Trump is moving in the opposite direction. Sooner or later, the disastrous nature of Trump's domestic agenda will become evident even to his voters. At that point, an old-fashioned trade war may seem irresistible, to provide distraction and political cover.
_________________________________________________________________________________________________-
Dani Rodrik is Professor of International Political Economy at Harvard University's John F. Kennedy School of Government. He is the author of The Globalization Paradox: Democracy and the Future of the World Economy, Economics Rules: The Rights and Wrongs of the Dismal Science, and, most recently, Straight Talk on Trade: Ideas for a Sane World Economy.
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John Case
Harpers Ferry, WV
Harpers Ferry, WV
The Winners and Losers Radio Show
7-9 AM Weekdays, The Enlighten Radio Player Stream,
Sign UP HERE to get the Weekly Program Notes.
Check out Socialist Economics, the Enlighten Radio website, and
Sunday, March 11, 2018
China Churns Out Half The World's Steel, And Other Steelmakers Feel Pinched
But the industry is under threat from steelmakers in competing countries, especially China, which has emerged as by far the largest and most powerful producer on earth.
China now produces about half of the world's steel. It singlehandedly churns out as much steel in one year as the entire world did in 2000.
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During the same time, the U.S. share of global production has fallen from 12 percent to 5 percent today, says Eswar Prasad, a senior fellow at the Brookings Institution and professor of trade policy at Cornell University.
Steel has long occupied a special place in the way the U.S. and other nations see themselves. It's both a source of national pride and a symbol of a country's industrial might.
"When it comes to a time when our country can't make aluminum and steel — and somebody said it before and I will tell you, you almost don't have much of a country," Trump said last week at the White House.
This veneration of steel is common all over the world, but it has been particularly strong in China, says Linda Lim, a professor of corporate strategy and international business at the University of Michigan's Ross School of Business.
"They had this very sort of Marxist notion that you have to have manufacturing and you have to have steel," she says.
"Way back in the '50s and '60s, it was such a fetish of theirs that they had what were called backyard furnaces. People melted down their silverware in order to produce steel for the national good," Lim says.
Most but not all of the steel China produces today is used domestically, in buildings, autos, railroads and bridges, Prasad says. But it sells part of its product on the global market, which tends to depress prices, he says.
"It needs to export about 10 to 15 percent of its steel, and given how much steel China produces these days, that tends to have a pretty big effect on world steel prices," Prasad says.
Other countries have long accused China of dumping steel at artificially low prices. Washington imposes duties on Chinese steel, which is why a relatively small portion of imported steel comes from the country. (Canada is the top U.S. provider of the material.)
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U.S. Workers Are Skeptical, But China Says It Will Restrain Steel Output
In recent years efforts have been made by steel-producing countries to cut back on production, Lim says. China says it now employs 1 million fewer steelworkers than it did at its peak.
But the world still has far more capacity than it needs.
"Everybody agrees global excess capacity must be cut, but nobody can agree on who's to be cut," Lim says.
Lim notes that capital costs for building steel mills are very high, but once plants are up and running, companies have little incentive to cut back on production. In fact, because of economies of scale, it makes sense to churn out as much steel as possible.
And because steel is a global commodity, an oversupply in one place tends to affect producers everywhere.
Trump's tariffs may protect U.S. steelmakers from dumping and in the long run raise the profits of individual companies, but they will hurt other industries that use steel, Prasad says.
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"The profits of some of those manufacturers will be squeezed, or — what is more likely — a lot of those costs will get passed on to American consumers," Prasad says.
Because the steel industry has become so automated, the tariffs are unlikely to produce many jobs, and even if they do, they won't necessarily be in the Rust Belt towns where the jobs used to be, Lim adds.
But it will send a message that the U.S. remains a globally competitive manufacturing power.
"It's not really about jobs, and it may not even be really about politics," Lim says. "It's about something deeper."
John Case
Harpers Ferry, WV
Harpers Ferry, WV
The Winners and Losers Radio Show
7-9 AM Weekdays, The Enlighten Radio Player Stream,
Sign UP HERE to get the Weekly Program Notes.
Check out Socialist Economics, the Enlighten Radio website, and
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