China’s trade numbers look certain to trigger Trump backlash [feedly]

China's trade numbers look certain to trigger Trump backlash
http://www.atimes.com/article/chinas-trade-numbers-look-certain-to-trigger-trump-backlash/

These are strange and dark days. In a barrage of rhetoric and a slew of economic data, China's exports to the United States hit a record high last month, which is certain to fan the flames of the trade war between Washington and Beijing.

As tensions continue to rise between the world's leading economic powers, the US was branded a "bully" by Vice-Minister of Commerce Wang Shouwen at the World Trade Organization in Geneva, while US Ambassador Dennis Shea insisted there was a "reckoning" coming over China's membership of the WTO

Claim and counterclaim swirled around the closed-door, three-day policy review in the picturesque Swiss city as both nations took a tough line.

"China's failure to fully embrace the open, market-oriented policies on which this institution is founded must be addressed, either within the WTO or outside the WTO," Shea said in prepared comments released by the US mission on Thursday.

"This reckoning can no longer be put off," he added.

Less than 24 hours later, official statistics released by China's General Administration of Customs showed the country's trade surplus with the US in June swelled to a record high of US$28.97 billion for a single month.

May's figures

It was also an increase of more than $4 billion on May's figure of $24.58 billion, with the January through to June number coming in at $133.76 billion compared to $117.51 billion for the first six months of 2017.

Naturally, the data will make unpleasant reading in the White House. President Donald Trump has mounted a personal crusade to bring the US deficit down with the world's second-largest economy, which was a record $375.2 billion last year.

He has also targeted the "Made in China 2025" policy involving advanced technology.

But as Beijing hardens its approach toward Washington, the Ministry of Commerce blamed the US for the deficit, insisting the "imbalance was overestimated" and caused by US "domestic structural problems."

"This trade dispute will definitely have an impact on China-US trade and will have a very negative impact on global trade," Huang Songping, a spokesman for the General Administration of Customs, said.

The data comes just a week after Trump rolled out 25% tariffs on the country's imports worth $34 billion before threatening another round of duties worth $200 billion. This, in turn, prompted a tit-for-tat response from Beijing after accusing Trump of starting the "largest trade war" in economic history.

Since then, the Ministry of Commerce has gone into overdrive. Spokesman Gao Feng urged major US companies to start applying pressure on Washington in "defense of their own interests," without going into further details.

"We don't want to have a trade war," Gao said at a press briefing which was reported by the Chinese media group Caixin. "[But] we are not afraid of one, and we will fight one if forced to."

Earlier on Friday, the annual China Business Climate Survey of the American Chamber of Commerce released its annual survey in Shanghai with almost 69% of the 434 companies polled opposing tariffs, despite concerns about doing business in the country and intellectual property rights issues.

Still, US firms plan to increase investment there this year. "Resolving these [trade] challenges in an equitable manner is essential for the United States and China to have a healthy commercial relationship that brings benefits to both our peoples," AmCham said in a statement.

Toning down the verbal barbs appears unlikely in the near future. At the WTO, Vice-Minister Wang talked about Beijing "taking the moral high ground," and made it clear that the world's second-largest economy would "mobilize global forces against the US."

But his comments failed to impress Ambassador Shea, who responded by pointing out that China was simply paying lip-service to WTO rules when it came to state support for major private companies. "China provides massive, market-distorting subsidies and other forms of state support to its domestic industries," he said.

Trade dispute

His remarks resonated with representatives from the European Union, Japan and Canada. They have all aired concerns about President Xi Jinping's administration and its role in all aspects of the economy, as well as excess capacity and cyber-security.

Despite its ongoing trade dispute with the US, the EU is just as concerned with intellectual property rights and China's constant pledges to further open its markets with few tangible results.

The EU Chamber of Commerce in Beijing has called  this "promise fatigue." "[We] urge China to follow through on its promises of reform and opening-up that have been repeatedly stated since President Xi's speech to the World Economic Forum in January 2017," the business group, which represents more than 1,600 foreign firms, stated in a report.

"While some of these pledges have been written into legislation, European companies have yet to see much real concrete implementation," it added.

Significantly, a glance at last month's China trade data showed a 7.9% surge globally for the first half of the year to 14.12 trillion yuan ($2.12 trillion). General Administration of Customs Spokesman Huang said "growth" had been fueled "by the recovery in the global economy," and "new measures" to open up "trade and investment."

Yet those observations are unlikely to placate Washington as the trade war starts to reach a crucial second stage. Expect sparks to fly.

 -- via my feedly newsfeed

Europe, migrants and trade [feedly]

Europe, migrants and trade
http://piketty.blog.lemonde.fr/2018/07/10/europe-migrants-and-trade/#xtor=RSS-32280322

Europe, migrants and trade

While European leaders are preparing to tighten the conditions of entry into the European Union it is worth trying to get a clearer picture of the current patterns of migration and more broadly of Europe's positioning in the globalisation process.

The data available are incomplete but are sufficient to establish the main orders of magnitude. The most comprehensive data are those gathered by the United Nations Population Division on the basis of demographic statistics provided by each country and a patient labour of homogenisation. They serve to indicate the trend of the migratory flows entering and leaving the different countries in the world; they also include the sensitive issue of the World Population Prospects established for the decades to come. If we consider the most recent data available, two facts clearly stand out.

In the first instance, the migratory flows entering the rich countries (net of outflows) have fallen since 2010. From 1990 to 1995 they stood at approximately 2 million persons per year, from 1995 to 2000 at 2.5 million and subsequently from 2000 to 2010 exceeded 3 million; the numbers then fell to around 2 million persons per year between 2010 and 2018, the level on which the United Nations base their forecasts for the years to come. The population of the rich countries is in the region of one billion persons (500 million in the European Union, 350 million in the United States and Canada and 150 million in Japan/Oceania). This means that the migratory flow was below 0.2% per annum in the 1990s, before rising to almost 0.2% per annum since 2010. These flows may seem minuscule and, in a way, they are: the globalisation of the years 1990-2018 is primarily financial and commercial and has never reached the levels of migration observed in the 1870-1914 period.

The difference however is that the new migratory flows lead to greater multicultural exchanges involving people of different cultural origins (whereas in the past the migratory flows were primarily internal to the North Atlantic) and that these migratory flows take place in a context of demographic stagnation: the annual number of births is now less than 1% of the population in a number of rich countries. This means that an annual contribution of 0.2 or 0.3% leads in the long run to an appreciable change in the composition of the population. This is obviously not a problem per se, but recent experience demonstrates that this may unfortunately generate successful bids for the political exploitation of issues of identity, particularly if adequate policies have not been set up to promote the creation of jobs, housing and the requisite infrastructures.

The second striking conclusion which emerges from the United Nations' data is that the fall in the migratory flows is mainly due to the situation in Europe. The number of migrants entering the European Union (net of outflows) has been halved, falling from almost 1.4 million persons per annum between 2000 and 2010 to less than 0.7 million per annum between 2010 and 2018, despite the influx of refugees and the peak in 2015. In the United States, where the recovery from the recession in 2008 was easier than in Europe, the flow remained stable (1 million per annum between 2000 and 2010, and 0.9 million between 2010 and 2018.

There is a third fact that is worth bearing in mind alongside the first two. According to the most recent ECB (European Central Bank) data the trade surplus of the Euro zone stood at 530 billion Euros in 2017, or almost 5% of the GDP of the Euro zone (11,200 billion Euros) and the trend is the same in 2018. In other words, each time the countries in the Euro zone produce 100 units of goods and services, they only consume and invest 95 in their own country. The gap may seem narrow but, repeated year by year, it is in reality considerable. Never in economic history, or at least never since the existence of trade statistics (that is, since the beginning of the 19^th century) have we found evidence of such a huge trade surplus for an economy of this size.

Some oil-producing countries have sometimes had surpluses greater than 5% or 10% of the GNP but these are much smaller economies relative to the world economy and are often countries with very small populations (with the result that the happy owners of these resources do not really know what to do with them, apart from accumulating them abroad).This highly abnormal situation, or in any case totally unprecedented, is driven to a large extent by Germany, but Germany is not alone: Italy for example has had a trade surplus in excess of 3% of its GNP since 2015.

For those advocates of the market as being all-knowing and ever efficient, this situation is the rational consequence of aging; European countries anticipate the future scarcity of labour and production to come – possibly even their total disappearance – and are simply saving for their old age. The truth is that we must above all see there the consequence of exacerbated competition with no political guidance and excessive wage stagnation which has led to compressing growth and boosting trade surpluses.

We should also bear in mind that at the moment the Euro zone has a primary budgetary surplus. Tax payers pay more in taxes than they receive in expenditure, with a gap greater than 1% of GNP. Just as Trump's budgetary deficits only make the American trade deficit worse, the European budgetary surpluses exacerbate our trading surplus.

If there does come a time when Europe wishes to revive the policies for integration, it will have to begin by learning how to invest and how to consume once again.

NB: the data series on migratory flows referred to are taken from the UN « World Population Prospects » ; all details are available in this excel file. Data on euro zone trade balance comes from the june 2018 ECB economic bulletin (table 3.1, p.S8). Latest series on Italian and German balances are available here and there

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Unicorns, Creativity and Artificial Intelligence: East Asia’s Modern – High-Tech Entrepreneurship – Brand of Industrial Policy [feedly]

Unicorns, Creativity and Artificial Intelligence: East Asia's Modern – High-Tech Entrepreneurship – Brand of Industrial Policy
https://www.globalpolicyjournal.com/blog/10/07/2018/unicorns-creativity-and-artificial-intelligence-east-asias-modern-high-tech

On September 19, 2014, Alibaba completed its IPO on the New York Stock Exchange. It was an instant classic, as the IPO produced three records. First, it was the largest IPO of all time, with Alibaba (under the ticker: BABA) raising $21.8 billion (on a total valuation of $168 billion).

Just as remarkably, the Alibaba IPO is said to have created the richest men in two countries that day: Jack Ma, the founder of Alibaba, became the wealthiest man in China, and Masayoshi Son, the founder of SoftBank and an early investor in Alibaba, the richest man in Japan.

The tale of Alibaba's record-breaking IPO is notable not only for these headline accomplishments. It is emblematic of the rise of technology entrepreneurship and venture capital in East Asia. Suddenly, the accolades that substantiate the ephemeral success of Silicon Valley as the global beacon of technology entrepreneurship and venture capital investing were endowed on a tenacious and exciting Chinese entrepreneur and a risk-loving businessman turn game-changing Japanese venture capitalist. And, extreme wealth can be created through tech entrepreneurship, rather than maintained amongst corporate dynasties.

September 19, 2014 was not a one-off in East Asia's technology, entrepreneurship and venture capital ascent. In 2017 Masayoshi Son announced the launch of the SoftBank Vision Fund. The Vision Fund was not to be yet another venture capital fund. The Vision Fund would raise a previously unheard of amount for the purposes of venture capital investing: $100 billion. Son quickly assembled large tickets from global investors; $45 billion from Saudi's Public Investment Fund, $9.3 billion from Abu Dhabi's Mubadala, and $5 billion from Apple, FoxConn (and Sharp, though Sharp is now owned by Foxconn, which I will talk about later). In May 2018, news came that the remaining $7 billion would come from a combination of investors, including German car markers (Daimler and Mercedes Benz) and three Japanese banks (MUFG, Mizhou and Sumitomo Mitsui Banking Corp).

It is not only the size of SoftBank's fundraising that grabs headlines. Son is shaking up the Silicon Valley investment arena with his decisiveness and large checks. The Vision Fund was reportedly involved in more than half of the top 10 biggest investments in VC-backed startups. Its largest single investment was in Uber, at the tune of a whopping $9.3 billion in the ride-sharing company.

It's not only SoftBank. Venture capital investing and entrepreneurial activity have been on the rise in East Asia in the 21st century, and especially in the last five years.

In 2013, when Park Geun-hye came to office, she launched the Creative Economy Action Plan from her inauguration address. She spoke of a "2nd miracle on the Han River" – one that would be led by nimble startups, by creativity and innovation. For many, the primacy of creative economy activities has raised the profile of entrepreneurship, which is increasing both the quantity and quality of startups in Korea.

"Made in China 2025" has grabbed headlines globally, since it was issued in 2015. The aim is simple: to advance China's high-technology prowess, with particular emphasis on artificial intelligence, robotics and other frontier technologies. On the 4th of July, a New York Times article asserted that Made in China 2025 will succeed despite Trump and a looming trade war. The confidence in the strategy's ability to deliver in manufacturing advances stems both from the large government support and the buy-in of Chinese companies.

The latest country to grab headlines for its support of high-tech entrepreneurs, and their successes, is Japan. In May this year, Mercari achieved the status of "Japan's first unicorn" – a privately-held company with a valuation in excess of $1 billion – as it filed for a Tokyo IPO worth $1.1 billion. This came two months after The Guardian asked if Osaka was becoming "Japan's Silicon Valley" given the efforts to turn the Grand Front – a stunning complex with a large mall at the bottom – into a tech entrepreneurship cluster through efforts such as "Knowledge Capital" and "The Lab". Consumers, innovators and the broader community would all come together to develop and test new technologies and products.

This all comes as seed funding has been on the rise in Japan since the Global Financial Crisis. Japanese venture capital wasn't just growing, the earliest –stage – and highest risk – form of venture capital was taking off. But venture capital is not a 21st century addition to the Japanese economy; the first venture capital fund was created in 1972, as the Kyoto Enterprise Development, and then in 1982 JAFCO formed the first limited partnership fund in Japan (see Yusuke Asakura's excellent materials).

In fact, the popular "Dragon's Den" and "Shark Tank" format did not originate in Silicon Valley, Route 128, or Silicon Roundabout. The global phenomenon was first created in Japan, as "マネーの虎" ("Money Tigers") and ran from 2001 to 2004.

I wanted to learn more about "Japan's Silicon Valley" and this stunning advance of technology entrepreneurship and venture capital. Last month I visited Kyoto, Osaka and Kobe to see: do you see the buzz? What is the government doing to promote local technopreneurship and equity investing?

I met with city government officials to get a sense of how much the "SoftBank effect" resonates with activity in Japan. I found that innovation, entrepreneurship and venture capital are at the fore of policymakers' minds. There are remarkable efforts around bringing globally-renown accelerators – such as 500 KOBE, the Kobe City instalment of 500 Start-ups – tax subsidies for commercialisation and entrepreneurship, changes to regulations, etc. Notably, in late June the Economy Ministry launched the J-Startup initiative with the aim of producing 20 unicorns by 2023, an aim that certainly feels Silicon Valley-like. 

Why the push – or embrace – of global, high-tech entrepreneurship? And why now? Based upon my recent interviews and research on Japan's ecosystem, I argue that there are three main reasons, and implications:

 

1. Fear of the "Galapagos syndrome": In an earlier period of tech boom, in the 1990s and early 2000s, Japan's cell phone industry is said to be world-leading. But, the great advances did not diffuse, and since the rest of the world did not take up the technologies, Japan's cell phone innovations became an island rather than a leader, or a beacon. It was like the Galapagos: remarkable, but distinct from everywhere else. In explaining the global orientation of Japanese technology today, policymakers speak of wanting to make a concerted effort to be globally relevant – and leading. For this, getting users in China and the US is just as important as the technology itself. So Japan's current startup boom has a distinctly international, and globally interested character.

 

2. Flailing giants and open innovation: Much of Japan's phenomenal economic success stemmed from the tremendous growth of its conglomerates, either the horizontally integrated keiretsu or its vertically-linked zaibatsu (think Mitsubishi and Sumitomo). But in recent years, holes have been spotted in these giants' armour. In July 2017 creditors plead with Toshiba to file bankruptcy following a massive accounting scandal in 2015. In August 2016, Taiwanese firm Foxconn acquired Sharp at a discount. Back in 2012, Sony had reported its largest losses ever, while Nintendo, Toyoto and Kobe Steel all flirted with disaster. The takeaway – for many – is that large firms can't do it on their own. They need the ideas, the innovativeness, and the nimbleness of startups. So they have embraced the idea and practice of open innovation.

 

3. Less Permanent Employment: Along with the challenges faced by leading firms, the notion of "permanent employment" has taken a lashing. The corporate environment in which employees stay as "company men" for life, as the company takes care of the individual just as the worker gives their loyalty, has changed. The troubled performance of what were previously considered steady leaders has shaken the psyche associated with permanent employment. As a result, there is now more mid-career movement. It is not considered (as) uncouth to leave a job mid-career, and to either try to build a startup, or to be recruited elsewhere. In a system where university recruitment was a crucial entry point into high-profile firms, graduates of elite universities sought out a top job and then intended to stay with the company. But increasingly, recent university graduates start businesses, join startups. And, there are now markets (and even apps) for job searches throughout the career.

 

The Japan Times said in a May 2018 headline "Japan shouldn't try and replicate Silicon Valley to spur innovation". I agree. There are certainly Japanese characteristics that are – and should be – distinct, just as elsewhere.

What is undeniable is the fervour in favour of supporting technology entrepreneurship across the region. The aims are familiar across Japan and Korea: to aid the innovation capacity of former giants, to diversify the provision of high-quality (if not permanent) employment, and to foment competitive positioning in the global technology sector. In the case of China, as epitomised by Made in China 2025, the aim is to upgrade capabilities as a crucial driver of development.

It may also be about creating more East Asian role models, along the lines of Jack Ma and Masayoshi Son. The availability of such high-profile, influential business leaders such as Steve Jobs is, of course, part of the Silicon Valley recipe in the 20th century.

 

 

Robyn Klingler-Vidra, a Lecturer in Political Economy at King's College London and author of The Venture Capital State: The Silicon Valley Model in East Asia

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Six Lies on Trade [feedly]

Six Lies on Trade
http://cepr.net/publications/op-eds-columns/six-lies-on-trade

Six Lies on Trade

0 Comments

Dean Baker
Truthout, July 9, 2018

See article on original site

After 500 days of Donald Trump's presidency, it is clear that any relationship between his statements and the truth are purely coincidental. He even boasts about his lack of interest in the truth, touting the fact that he had no idea what our trade deficit was with Canada when he confronted Canadian Prime Minister Justin Trudeau over our "$100 billion trade deficit." (The actual figure is around $20 billion.)

But Donald Trump's contempt for the truth should not cause the rest of us to become liars also. In fact, it is more important than ever that progressives ground arguments in reality.

This is especially the case with trade, where lying was standard fare long before Donald Trump entered politics. Here are six common lies which deserve major pushback any time they appear. 

1. Everyone gains from trade.

This is not even the textbook story. The textbook tells us there are winners and losers. In the standard story, the winners gain more than the losers lose. This means that the winners could compensate the losers so that everyone is better off. In the real world, this compensation never takes place, so the losers just lose.

If this is hard to understand, suppose we arranged for 300,000 highly qualified doctors from other countries to start practicing in the United States. This influx would probably lower our doctors' pay by around $100,000 a year each to roughly European levels. This would save us close to $100 billion annually ($700 per family) on health care costs. That's a big gain to the rest of us, but a big loss to US doctors. That's basically the story of trade, but the competition has been for manufacturing workers.

2. The loss of manufacturing jobs was due to productivity growth, not trade.

This is a classic economist's sleight of hand. Manufacturing productivity typically increases at the rate of 2-3 percent annually. (It has been much slower in the last dozen years.) This is also roughly the rate of growth of demand, which means that increased demand for goods typically offset the jobs lost to productivity growth.

The data are clear. In the three decades from December 1970 to December 2000, manufacturing employment only fell by 100,000, less than 1 percent. By contrast, we lost more than 3.4 million manufacturing jobs from 2000 to 2007 (before the crash), which was more than 20 percent of total employment.

This was due to the explosion of the trade deficit in these years, which peaked at almost 6 percent of GDP in 2005 and 2006. That would be equal to $1.2 trillion annually in today's economy. There were benefits from getting cheap imports, but it is incredibly dishonest not to acknowledge the enormous job loss associated with the expansion of the trade deficit in those years.

And of course, over the last 50 years, many more manufacturing jobs were lost to productivity than trade. This is true, but completely irrelevant.   

3. It is inevitable that less-educated workers lose jobs to the developing world.

This is a great example where the classism of our elites obstructs clear thinking. It is absolutely true that there are hundreds of millions of people in the developing world who are willing to work in factories at a fraction of the wages that US manufacturing workers receive. This means that opening to trade puts downward pressure on the wages of US manufacturing workers, and less-educated workers more generally, as they either accept large pay cuts or lose their jobs.

The complication is that there are also tens of millions of very smart hard-working people in the developing world who would be happy to work in the United States as doctors, dentists, lawyers or as other highly paid professionals at a fraction of the pay of our professionals. They could train to our standards and learn English where necessary. This would drive down the salary in highly paid professions, and thereby lead to savings to consumers, but we don't allow it. Trade deals have been about lowering the pay of less-educated workers, while highly paid professionals continue to enjoy protection from international competition.

4. Trade deficits don't cost jobs.

It is very popular among pundits to claim that trade deficits don't cost jobs by pointing to our current 3.8 percent unemployment rate, even as the deficit is on a course to exceed $600 billion (3 percent of GDP) this year. While it is true that a trade deficit does not necessarily cost jobs, in a period where we are below full employment, a $100 billion increase in the trade deficit reduces demand and employment in the same way that a $100 billion reduction in investment would reduce demand and employment.

The large trade deficit in the last decade was certainly a big factor in the weak labor market recovery from the 2001 recession. We eventually filled the demand gap from the trade deficit with the demand generated by the housing bubble. This is hardly a good model for the future.

5. It is important that other countries respect "our" intellectual property.

This is a line that has come up repeatedly in Trump's trade war with China. We have been told that we have an interest in making China pay for the intellectual property of US corporations that it allegedly steals.

Okay, it is clear that Pfizer has an interest in having its drug patents respected by China, as does Microsoft with its software copyrights and patents. But what about the vast majority of us who don't own lots of stock in these or other companies that have intellectual property claims at risk?

The standard trade theory tells us that if China and other countries have to pay less money to Pfizer and Microsoft due to patent and copyright monopolies, they have more money to spend on other items we produce. In other words, the money they pay to these companies increases the trade deficit in other areas.

We do have to support innovation, but that is a separate issue. There are far more efficient mechanisms than patent and copyright monopolies for financing innovation in the 21st century.

6. The developing world needed to kill US manufacturing to allow people to escape poverty.

Hundreds of millions of people in the developing world have seen huge improvements in living standards over the last three decades, especially in China. These people went from living near or below poverty levels to enjoying middle-class living standards.

This is indeed a great story, but it is not true that this rise in living standards had to come at the expense of manufacturing workers in the United States and other wealthy countries. In the 1990s, the countries of East Asia (the big success stories) had even more rapid growth than they did in the last decade. This was a period in which they were running large trade deficits, with the important exception of China, which had nearly balanced trade.

In principle, there is no reason these countries could not have continued on a path where domestic demand fueled growth and was funded by foreign investment flows. However, the East Asian financial crisis hit in 1997. The United States led the bailout organized by the International Monetary Fund (IMF) and essentially required that these countries run large trade surpluses as a condition of getting aid.

The shift from running trade deficits to running trade surpluses was a requirement of the IMF, not a law of economic development. If these countries were allowed to continue to be importers of foreign investment (the standard textbook model), and sustained the 1990s growth path, they would be far richer today. In fact, countries like South Korea and Malaysia would now be richer than the United States on a per person basis.

In short, it is simply not true that the pain to factory workers, who lost their jobs in the United States, was somehow a necessary condition for hundreds of millions of people in the developing world to escape poverty. Other paths would have allowed for even more rapid growth in these countries.

Getting to a Reality-Based Trade Policy

It seems likely that Trump's trade war will go down in flames when Trump eventually loses interest and goes back to the hunt for President Obama's Kenyan birth certificate. His reckless actions deserve all the ridicule and contempt they have received.

However, we should not go back to a trade policy that was based on lies. We need a trade policy that is about raising the living standards of working people in the United States and the developing world, not just giving all the money to the rich. 

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Trump, Tariffs, Tofu and Tax Cuts [feedly]

Trump, Tariffs, Tofu and Tax Cuts
https://www.nytimes.com/2018/07/09/opinion/trump-tariffs-tofu.html

Trump, Tariffs, Tofu and Tax Cuts

By Paul Krugman

Opinion Columnist

• July 9, 2018

According to early indications, recent U.S. economic growth was full of beans.

No, seriously. More than half of America's soybean exports typically go to China, but Chinese tariffs will shift much of that demand to Brazil, and countries that normally get their soybeans from Brazil have raced to replace them with U.S. beans. The perverse result is that the prospect of tariffs has temporarily led to a remarkably large surge in U.S. exports, which independent estimates suggest will add around 0.6 percentage points to the U.S. economy's growth rate in the second quarter.

Unfortunately, we'll give all that growth back and more in the months ahead. Thanks to the looming trade war, U.S. soybean prices have plummeted, and the farmers of Iowa are facing a rude awakening.

Why am I telling you this story? Partly as a reminder of the unintended consequences of Donald Trump's trade war, which is going to hurt a lot of people, like Iowa farmers, who supported him in 2016. In fact, it looks as if the trade war is in general going to hurt Trump's supporters more than his opponents.

Meanwhile, Trump's trade war will benefit some unexpected parties. Was making Brazil great again part of his agenda?

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But mainly I offer the parable of the soybeans as a warning against what's going to happen later this month, when the advance estimate of second-quarter G.D.P. comes in. The headline number is probably going to look good, possibly over 4 percent growth. If so, Trump will trumpet the news as proof that his economic policies are working — and some gullible journalists may go along with his claim.

So what you need to know is that (a) quarterly fluctuations in growth are mainly noise, telling you very little about long-term economic prospects, and (b) more fundamental indicators show that Trump's main policy achievement to date, last year's tax cut, is basically delivering none of what its backers promised.

About those quarterly growth rates: By historical standards, the economic recovery since the end of the global financial crisis has been remarkably consistent. If you look at job growth you see a steady upward trend, seemingly unaffected by political events. Quarterly G.D.P. growth has, however, fluctuated wildly, with a couple of negative quarters and a high of 5.2 percent in the third quarter of 2014.

The moral is clear: Pay little or no attention to short-term growth wobbles, which can be driven by transitory stuff like the reshuffling of world soybean trade.

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But in that case, how can we evaluate Trump's economic policies? The answer is, by looking at how those policies were supposed to work, and comparing that with what's actually happening.

Let me damn the 2017 tax cut with some faint praise: While the logic of the Trump trade war is completely muddled — never mind how it's supposed to work, it's not even clear what it's supposed to achieve — the drafters of the tax bill did have a theory of the case. The story went like this: Lower taxes on corporations would lead to a huge surge of investment, which would raise productivity, which would eventually be passed on to workers in higher wages.

By the way, the idea that workers would see an immediate benefit was always obvious nonsense, and sure enough, they didn't. In fact, adjusted for inflation, the hourly wages of ordinary workers were slightly lower in May than they were a year earlier.

Anyway, when I say a huge surge in investment, I mean huge. Last year I looked at estimates from the Tax Foundation, the only independent institution (well, supposedly independent, anyway) willing to endorse highly optimistic assessments of the tax cut. Those estimates, it turned out, implied a boost in business investment of around $600 billion a year, or 3 percent of G.D.P.

Nothing like that is happening, and leading indicators of business investment, like orders of capital goods, show no sign of an investment boom ahead. Corporations have gotten a really big tax cut: The tax take on corporate profits has fallen off a cliff since the tax cut was enacted. But they're using the extra money for stock buybacks and higher dividends, not investment.

As a result, there's no reason to believe that the U.S. economy's potential growth — the rate of growth it can achieve on a sustained basis — will rise from the 2 percent or less expected by most analysts. The tax cut has been good for stockholders — about a third of whom are foreigners, by the way. Working Americans, not so much.

So how is the Trump economic policy doing? The tax cut is utterly failing to deliver on its advocates' promises. It's early days in the trade war, but the administration's strategy seems designed to inflict maximum self-harm, and first reports suggest that trade conflict is leading to reduced, not increased, investment.

Against that background, how much should we care about whatever headlines are generated by the next set of growth numbers? Very little, if at all. (To be clear, this statement also applies if the quarterly numbers come in worse than expected.) Short-term growth is noise, signifying nothing.

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