Resistance News:Stewart Acuff’s Inaugural RESISTANCE RADIO Show

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Blog: Resistance News
Post: Stewart Acuff’s Inaugural RESISTANCE RADIO Show
Link: http://resistance.enlightenradio.org/2017/01/stewart-acuffs-inaugural-resistance.html

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Arrivals To U.S. Blocked And Detained As Trump's Immigration Freeze Sets In [feedly]

Arrivals To U.S. Blocked And Detained As Trump's Immigration Freeze Sets In
http://www.npr.org/sections/thetwo-way/2017/01/28/512158238/arrivals-to-u-s-blocked-and-detained-as-trumps-immigration-freeze-sets-in

Less than a day after President Trump suspended immigration from seven countries, airports in the U.S. and abroad are seeing the effects. Several passengers have been held or blocked from entry.

(Image credit: Olivier Douliery-Pool/Getty Images)

VISIT WEBSITE
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Real GDP increased at 1.9% Annualized Rate in Q4 [feedly]

Real GDP increased at 1.9% Annualized Rate in Q4
http://economistsview.typepad.com/economistsview/2017/01/real-gdp-increased-at-19-annualized-rate-in-q4.html

Calculated Risk:

From the BEA: Gross Domestic Product: Fourth Quarter and Annual 2016 (Advance Estimate)

Real gross domestic product (GDP) increased at an annual rate of 1.9 percent in the fourth quarter of 2016, according to the "advance" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 3.5 percent. 
...
The increase in real GDP in the fourth quarter reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, residential fixed investment, nonresidential fixed investment, and state and local government spending that were partly offset by negative contributions from exports and federal government spending. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the fourth quarter reflected a downturn in exports, an acceleration in imports, a deceleration in PCE, and a downturn in federal government spending that were partly offset by an upturn in residential fixed investment, an acceleration in private inventory investment, an upturn in state and local government spending, and an acceleration in nonresidential fixed investment.

The advance Q4 GDP report, with 1.9% annualized growth, was below expectations of a 2.2% increase. ...

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Links for 01-27-17 [feedly]

Links for 01-27-17
http://economistsview.typepad.com/economistsview/2017/01/links.html

• Border Tax Two-Step (Wonkish) - Paul Krugman
• LaTeX reduces writing productivity - The .Plan
• DeLong on Rodrik on Delong on NAFTA - Equitable Growth
• The Price of U.S. Imports From China Keeps Falling - Brad Setser
• Do Political Institutions Still Rule? On Acemoglu and Trump - Jared Rubin
• Why currency devaluations are losing power - Microeconomic Insights
• Trump May Delay a Factory's Exit, but He Won't Stop It - Justin Wolfers
• Financial Trust Index: Low-Income Whites are Angry - ProMarket
• How Should Regulators Deal with Uncertainty? - Bank Underground
• he UK's 1976 IMF crisis in the light of modern theory - mainly macro
• Why Latin America and Africa Struggle to Grow - Noah Smith

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Thinking straight about fair trade [feedly]

Thinking straight about fair trade
http://rodrik.typepad.com/dani_rodriks_weblog/2017/01/thinking-straight-about-fair-trade.html

In the previous entry, I discussed the real-world distributional effects of trade agreements, in the specific case of NAFTA. Why should we care about such redistribution and how should we deal with it?

It is useful to distinguish between two different versions of an argument as to why trade may be problematic from a social or political perspective.

1. Trade is problematic because it redistributes income.
2. Trade is problematic because it violates norms and understandings embodied in our institutional arrangements – it undercuts domestic social bargains.

The first case is no different than a million other things in a market economy that can have distributional implications. It does not in general require that we target trade specifically.

But the second case is different, and may require trade remedies. I associate the valid core of fair-trade or social-dumping concerns with this particular possibility.

I elaborate on this argument here. Here is a teaser:

Economists like to claim that the purpose of free trade is to eliminate barriers that impair the efficient global allocation of resources, while helping some of the world's poorest people. It's an argument undermined by a simple thought experiment. Suppose we wiped the slate clean of the Trans-Pacific Partnership, the Transatlantic Trade and Investment Partnership, and other similar trade deals, and the world's trade negotiators banged their heads to figure out the best way of achieving their stated goals. What would they be negotiating about?

Tariffs? Rules on intellectual property rights? Investment regulations?

Read the rest here.

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Trade War Threat Grows [feedly]

Trade War Threat Grows
http://triplecrisis.com/trade-war-threat-grows/

Jomo Kwame Sundaram

New American President Donald Trump has long insisted that the United States has been suffering from poor trade deals made by his predecessors. Renegotiating or withdrawing from these deals will be top priority for his administration which views trade policy as key to US economic revival under Trump. What will that mean?

The new administration promises 'tough and fair agreements' on trade, ostensibly to revive the US economy and to create millions of mainly manufacturing jobs. The POTUS is committed to renegotiating the North American Free Trade Agreement (NAFTA), signed in 1994 by the United States, Canada and Mexico. And if NAFTA partners refuse what the White House deems to be a 'fair' renegotiated agreement, "the President will give notice of the United States' intent to withdraw from NAFTA".

Constraints?

Presidential fiat may well be extended in radically new ways by the incoming president with, or perhaps even without the support of a Republican-controlled Senate and Congress. However, in terms of trade, Trump may be constrained by his own party's 'free trade' preferences, while the minority Democratic Party is likely to remain generally hostile to him. 

Many informed observers doubt the ability of the US President to unilaterally impose trade policies, as the POTUS is subject to many checks and balances, conditions and constraints. But a widely held contrary view is that existing legislation allows the president considerable leeway. But as such ambiguity can be interpreted to grant the president broad authority over trade policy, Trump is likely to use this to the fullest. 

Worryingly, Trump and his appointees often appear to see trade as a zero -sum game, implying that the only way for the US to secure its interests would be at the expense of its trading partners. Their rhetoric also implies that the most powerful country in the world has previously negotiated trade deals to its own disadvantage – a view almost no one else agrees with. 

Thus, Trump's belligerent rhetoric threatens trade wars or acquiescence to the US as the only means to change the status quo. But future deals even more favourable to the US can only be achieved with weaker partners, e.g., through bilateral treaties, or those with ulterior motives for accepting even less favourable terms and conditions. 

Unequal effects

Of course, the real world is more complicated than one of competing national interests. For example, while US corporations and consumers may benefit from relocating production abroad, American workers who lose their jobs or experience poorer working conditions will be unhappy. Clearly, there is no singular national interest. 

Trump's rhetoric so far implies an opposition of American workers to the 'globalist' US elite with scant mention of consumer interests, the main source of support for the globalists. The unequal effects of freer trade have long been recognized by international trade economists except globalization cheerleaders who insist that freer trade lifts all boats – a myth belied by the experiences of increasing numbers of American workers and others in recent decades. 

Meanwhile, US protectionists have been in denial about labour-displacing automation throughout the economy. They also fail to recognize how 'laissez faire' American capitalism has let the devil take the growing ranks of the hindmost. In contrast, 'managed' capitalism has often ensured less disruptive and painful transitions due to trade liberalization and automation, e.g., through government retraining schemes.

Trade rules biased

Nevertheless, it remains unclear how the Trump administration's trade strategy will unfold. While trading system rules are skewed to favour the powerful, US relations with trading partners have sometimes become dysfunctional and perhaps less advantageous. Hence, a more aggressive Trump administration may well secure better deals for US interests. Some options favouring US companies would only involve minor disruptions, while others could disrupt the US as well as the world economy, possibly precipitating another global recession.

Besides renegotiating or rejecting bilateral and plurilateral deals, the US could also bring more cases before the World Trade Organization (WTO). After all, the US and Europe wrote most WTO rules after the Second World War, and the US has almost never revised its trade rules and practices, even after losing cases. The US has long used the WTO dispute settlement mechanism to great effect until it began disrupting its functioning recently after losing a case.

Trump has long threatened targeted duties to ensure compliance and more favourable deals. While trade lawyers debate the scope for and legality of such actions, most trade economists have argued that US consumers will pay much higher prices to save relatively few jobs.

Triggering trade war

However, instead of imposing duties on specific products, as allowed for by WTO rules, emergency authority may be invoked to impose broad-based tariffs on exports from specific countries, as Trump has threatened to do. 

Such an escalation risks causing significant economic damage all round, especially if it provokes retaliatory actions, with no guarantee of securing a more favourable deal. A relatively minor trade dispute can thus easily spin out of control to become a very disruptive global trade war.

After Trump's inauguration, the White House announced US withdrawal from the Trans-Pacific Partnership (TPP) trade deal, effectively killing the agreement. Ironically, the Obama administration had claimed the TPP would enable the US to write economic rules for the region instead of China, Trump's favourite bogey. Thus, even presidential one-upmanship can trigger the new world trade war.

Bullying as global trade strategy?

In yet another irony, in Davos last week, a Goldman Sachs veteran announced the sale of a majority stake in his multibillion dollar business to a Chinese group before joining the Trump administration as senior trade adviser. Perhaps as a foretaste of what to expect, in response to Chinese President Xi's reminder that "No one will emerge as a winner in a trade war", he warned that China stands to lose 'way more' than the US if it retaliates when the new administration imposes selective tariffs on its exports.

Originally published by Inter Press Service.

Triple Crisis welcomes your comments. Please share your thoughts below.

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As I always say, don’t conflate trade deals with trade (or the trade deficit) [feedly]

As I always say, don't conflate trade deals with trade (or the trade deficit)
http://jaredbernsteinblog.com/as-i-always-say-dont-conflate-trade-deals-with-trade-or-the-trade-deficit/

Over at the NYT.

Special for OTE readers, parts that had to be cut for space:

"Since the mid-1970s, the US has regularly imported more than we've exported. Net exports (exports-imports) have averaged just under -4 percent of GDP since 2000. Trade deficits are by definition a drag on growth, and that's especially true in sectors, like manufacturing, that drive the deficit. By linking the trade deficit to manufacturing job loss, Trump made a legitimate argument that resonated with some of his core voters.

There are, of course, many moving parts in the economy, and the trade deficit's drag on growth has often been offset by other components of GDP. In 2007, the trade deficit was -5 percent of GDP while the unemployment rate was a low 4.6 percent. But the offset in play—the housing bubble—came at a great cost (and was itself, through inflows of cheap capital, related to the trade deficit)."

The idea here is to explain why targeting the economically large and persistent US trade deficit is a reasonable policy goal.

This view is not widely accepted among economists. Everyone gets the by identity, the trade deficit is a drag on growth, but numerous arguments push back on the idea that it's a problem.

Dean Baker and I tackle the issue here. The punchline, as suggested above, is not that the drag impact of the trade deficit never gets offset. It clearly does, at times. But when offsets are less forthcoming–the Fed's run out of ammo; the fiscal authorities have gone all austere–the demand-reducing drag from trade imbalances is a problem.

Second, even in flush times, the trade deficit, which is exclusively in manufactured goods, affects the industrial composition of employment, and it is in this regard that Trump has been able to so effectively tap its politics. While high-ranking democrats were running around pushing the next trade deal, he was talking directly to those voters who clearly perceived themselves far more hurt than helped by globalization.

Third, the parenthetical reference above to cheap capital inflows plays a central role in my analysis. Details here and in links therein, but I find that many economists who view the trade deficit as wholly benign fail to deal with these macrodynamics.

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