Category Archives: Capitalism

Trade Deficits In The Context Of State-Managed Trade And Systemic Debt

Capitalism, Debt, Economy, Free Markets, The State

THE NEW COLUMN is “Trade Deficits In The Context Of State-Managed Trade And Systemic Debt.” It’s now on  

An excerpt:

…  What goes for “free trade,” rather, is trade managed by bureaucratic juggernauts—national and international—central planners concerned with regulating, not freeing, trade; whose goal it is to harmonize labor, health, and environmental laws throughout the developed world. The undeveloped and developing worlds generally exploit and pollute as they please.

One of the promises Candidate Trump had made and hasn’t yet violated was to simply make these statist organs and trade agreements work for the American people. To wit, the president believes in reducing trade deficits.

Far be it from me to endorse tariffs as a means of reducing trade deficits. I am only here questioning the totemic attachment free-traders have to trade deficits, given that Americans live under conditions of systemic debt and state-managed trade that is anything but free.

If free trade is an unknown ideal, it is quite appropriate to question the alleged glories of an aggregate, negative balance of trade, in this “rigged system,” as Trump would say.

As to systemic debt: Yes, libertarians ought to oppose tax increases, which is what tariffs are. We hold that voluntary exchanges are by definition advantageous to their participants. Trader Joe’s, my hair stylist and the GTI dealer—all have products or skills I want. Within this voluntary, mutually beneficial relationship, I give up an item I value less, for something I value more: a fee for the desired product or service. My trading partners, whose valuations are in complementary opposition to mine, reciprocate in kind.

Ceteris paribus (all other things being equal), there’s nothing wrong with my running a trade deficit with Trader Joe’s, my hair stylist or my GTI dealer, as I do—just as long as I pay for my purchases.

And there’s the rub: The data demonstrate that we Americans, in general, are not paying for our purchases.

Americans, reports, actually have more debt relative to income earned than Greeks. “Indebted U.S. households carry an average credit card balance of $15,706, according to NerdWallet.”

Corporate America is likewise heavily leveraged.

The Federal government is the definition of debt. The U.S. national debt is over $20 trillion without federal unfunded liabilities. Those exceed $210 trillion, by Forbes’ 2017 estimate. Total public debt as a percent of Gross Domestic Product, announced the Federal Reserve Bank of St. Louis, is 104 percent.

Our improvident government’s debts, liabilities and unfunded promises exceed the collective net worth of its wastrel citizens.

Given these historic trends, it seems silly to dismiss the yawning gap between U.S. exports and U.S. imports as an insignificant economic indicator.

Because of decades of credit-fueled, consumption-based living, the defining, current characteristic of our economy is debt—micro and macro; public and private. Unless one is coming from the pro-debt Keynesian perspective, is this not an economically combustive combination? …

… READ THE REST. Trade Deficits In The Context Of State-Managed Trade And Systemic Debt” is now on

The Mercer Column can be read on WND, as well, titled “State-Managed Trade Is Not Free:” “The defining, current characteristic of our economy is debt.”

It’s also on The Unz Review, America’s smartest webzine.

Trump Changing Corporate Culture; Media Start Loving On Free-Market Capitalism

Business, Capitalism, Donald Trump, Free Markets, Left-Liberalism, Media, Trade

The exuberant, America-First patriotism of President-elect Donald Trump is likely causing a chain reaction of sorts. Despite the gush and tosh from the deranged media, Trump has done nothing to pressure corporations to remain in the US—nothing but reiterate his campaign promises. But a powerful persona’s mindset is infectious, especially when coupled with the promise of a better economic climate. Trump is changing corporate hearts and minds about investing in America and its people. In order to frame this good thing as bad, the media have suddenly discovered a love of free-market capitalism. By triggering a change in corporate culture; Trump has the media louts decrying his assault on capitalism and his fostering of crony capitalism.

LOL: Free-market capitalism has been an “unknown ideal” in the US for a long time.

Via CNN:

Ford is canceling plans to build a new plant in Mexico. It will invest $700 million in Michigan instead, creating 700 new U.S. jobs.

Ford (F) CEO Mark Fields said the investment is a “vote of confidence” in the pro-business environment being created by Donald Trump. However, he stressed Ford did not do any sort of special deal with the president-elect.

“We didn’t cut a deal with Trump. We did it for our business,” Fields told CNN’s Poppy Harlow in an exclusive interview Tuesday.
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The $700 million investment will go to the Flat Rock, Michigan plant to produce more electric and self-driving cars. Ford believes electrified vehicles will outsell gas-powered vehicles within the next 15 years.

Ford is planning to roll out seven new electric vehicles in the next five years, including a Mustang Hybrid.

This is a major U-turn for Ford. Trump repeatedly slammed Ford on the campaign trail for shipping U.S. jobs to Mexico (a claim the company said was wrong). The president-elect has kept up the pressure. Just hours before the Ford announcement, Trump criticized GM (GM) for producing cars in Mexico. All of the big car manufacturers currently have some production in Mexico. …


EpiPen Protest Should Be Directed @ FDA & Patent Protectionism

Business, Capitalism, Free Markets, Government, Intellectual Property Rights, Regulation

And it’s the people’s fault, too.

Most Americans have zero understanding of free-market capitalism, and are interested only in government “protections,” namely the regulation of production, in the belief that government interference can reduce costs and get Big Bad Business to behave.

If only Americans, brainwashed in the nation’s government-controlled schools, understood the less intuitive truth and aimed the arrows in their quiver at Big Bad Government, the real bad actors.

In the case of the “EpiPen sticker shock,” bureaucrats at the FDA (US Food and Drug Administration)—beholden to keeping the bureaucracy alive, not getting innovation to market—practically gum-up the process whereby other makers of the product can enter the allergy antidote market and trigger competitive forces.

Then there are the patent grants of government privilege. By granting EpiPen makers patents for posterity—yes, this is government’s fault—these lengthy grants of patent privileges prohibit manufactures of generic drugs from entering the market to make comparable products.

Via Slate Star Codex:

… when was the last time that America’s chair industry hiked the price of chairs 400% and suddenly nobody in the country could afford to sit down? When was the last time that the mug industry decided to charge $300 per cup, and everyone had to drink coffee straight from the pot or face bankruptcy? When was the last time greedy shoe executives forced most Americans to go barefoot? And why do you think that is?

The problem with the pharmaceutical industry isn’t that they’re unregulated just like chairs and mugs. The problem with the pharmaceutical industry is that they’re part of a highly-regulated cronyist system that works completely differently from chairs and mugs.

If a chair company decided to charge $300 for their chairs, somebody else would set up a woodshop, sell their chairs for $250, and make a killing – and so on until chairs cost normal-chair-prices again. When Mylan decided to sell EpiPens for $300, in any normal system somebody would have made their own EpiPens and sold them for less. It wouldn’t have been hard. Its active ingredient, epinephrine, is off-patent, was being synthesized as early as 1906, and costs about ten cents per EpiPen-load. …

Golden oldies:

* “Should Policymakers Trust The Free Market To Meet Urgent Demand For Prescription Drugs?”
* “Patent Wrongs”

To further explore the topic from a libertarian propertarian perspective, click the “Intellectual Property Rights” search category.

On Trump Tribalism And Clinton’s Sinophobia

Africa, Capitalism, China, Democrats, Donald Trump, Economy, History, The West

“On Trump Tribalism And Clinton’s Sinophobia” is this week’s column, on The Unz Review, America’s smartest webzine. An excerpt:

Hillary Clinton, the Democratic Party’s presumptive presidential nominee for 2016, has something in common with Donald Trump: Sinophobia.

During a 2011 visit to Zambia, she warned about “a new colonialism in Africa.” This time, the Chinese were to blame. As Clinton sees it, the Chinese are extracting wealth from the continent by buying its raw materials. “We saw that during colonial times it [was] easy to come in, take out natural resources, pay off leaders and leave,” she griped.

Clinton was adamant. She did not want to see a European-style colonial redux in Africa.

Certainly Chinese state capitalism is not free-market capitalism. But is Chinese mercantilism not preferable to American militarism, an example of which is Libya, a north-African recipient of madam secretary’s largess? Not according to Mrs. Clinton.

As Clinton sees it (as do, no doubt, the Paul-Ryan Republicans and the Bernie Sanders socialists), the “old colonialism” saw underdeveloped nations “bilked by rich capitalist countries,” a phrase used by Lawrence E. Harrison and Samuel P. Huntington in Culture Matters: How Values Shape Human Progress.

According to these highly politicized, socialist, zero-sum formulations regarding colonialism, class warfare and “income inequality,” one person’s plenty is another’s poverty. The corresponding antidote invariably involves taking from one and giving to the other—from rich to poor; from North to South.

The notion, however, of a preexisting income pie from which the greedy appropriate an unfair share is itself pie-in-the-sky. Wealth, earned or “unearned,” as egalitarians term inheritance, doesn’t exist outside the individuals who create it; it is a return for desirable services, skills and resources they render to others. Labor productivity is the main determinant of wages—and wealth. People in the West produce or purchase what they consume—and much more; they don’t remove, or steal it from Third Worlders. Wrote the greatest development economist, Lord Peter Bauer, in Equality, the Third World, and Economic Delusion: “Incomes, including those of the relatively prosperous or the owners of property, are not taken from other people. Normally they are produced by their recipient and the resources they own.”

Not unlike Obama’s Republican predecessor, George W. Bush, who “dramatically increased U.S. foreign aid” (as reported approvingly in Foreign Affairs magazine); Mrs. Clinton also committed more funds to the Agency for International Development during her tenure as secretary of state.

When it comes to Africa, it’s worth noting, however, that four or five decades since decolonization; colonialism, dependency and racism no longer cut it as explanations for Africa’s persistent and pervasive underdevelopment. “Pseudo-scholars such as [the late] Edward Said and legions of liberal intellectuals have made careers out of blaming the West for problems that were endemic to many societies both before and after their experiences as European colonies,” noted Australian historian Keith Windschuttle, in a 2002 issue of American Outlook.

The truth is that colonization constituted the least tumultuous period in African history. This is fact; its enunciation is not to condone colonialism or similar, undeniably coercive, forays, only to venture, as did George Eliot in Daniel Deronda, that “to object to colonization absolutely is to object to history itself. To ask whether colonization in itself is good or bad is the same as asking whether history is a good or bad thing.” …

READ THE REST. “On Trump Tribalism And Clinton’s Sinophobia” is this week’s column, on The Unz Review.