tariffs

The Bigger Story from Rare Earths

/ ontheoutside / 1 Comment

The Rare Earth affair tells us a very important simple truth:  contrary to the endlessly-repeated Republican message, the unfettered private sector (AKA the “free market”) does NOT solve all problems.  The private sector by itself is not sensitive to national security concerns and isn’t terribly worried about single sourcing so long as the price is right. After all there has never been a problem.  Tough luck.

This isn’t some strange outlier issue—it’s the main story.  The business community serves its own interest and generally with a short-term focus.  No one gets promoted for wasting money on what isn’t going to happen, which includes low probability events and any significantly different futures.  The private sector is good at optimizing its own operation.  It’s not good at providing for the population, the environment, or even the conditions for its own long-term success.  There is no “free market” magic to make that happen.  If the government doesn’t do it, it won’t get done.  And that is terrible for the future of the country.  We’re going to get one Rare Earth problem after another (and not just for security reasons), because we’re making sure not to look out for them.

We should be very clear about what we have today.  Trump wants to run everything, but that doesn’t mean we have government doing its job.  On the contrary what we have is business capture of government, so government is making sure that what business wants and nothing else gets done.  That’s why we can’t have government-sponsored basic research or any consideration of consequences of climate change.  Instead we have a whole bunch of protectionist tariffs and business tax cuts—just what business always wants.  There’s a juicy story of golden futures for everyone, but that comes cheap.  There’s no serious logic behind it, just what businessmen always want to believe.  Trump wants to mess with the business environment, but he hasn’t taken his businessman’s hat off.  He just thinks he’s such a genius he can tell all those big shot execs how to run things. Even the H1B affair fits here—there’s no strategic issue, since those pointy-headed engineers are a dime a dozen.

You don’t have to be a PhD economist to understand this.  Adam Smith understood it in 1776. I won’t give the usual long quote.  We just need a shorter one: “The government of an exclusive company of merchants is, perhaps, the worst of all governments for any country whatever.” — Book IV, Ch. VII

Trump’s Tariffs are a Dry Run for the World’s Future

/ ontheoutside / Leave a comment

As the Trump administration ramps up its efforts to sabotage climate action, we have to think about what that means.  There is only one atmosphere, and the consequences of climate change are becoming ever more obvious.  Our policies are not just putting the US at risk, we’re putting everyone at risk.

So it is only a matter of time before the rest of the world will have to react.  The US has become not just a rogue state but a criminally insane one.  The only reasonable action is a global embargo.  The US has to be treated as a matter for quarantine.

Fortunately for the rest of the world, Trump is providing an excellent transitional strategy.  As exports to the US become subject to draconian and unpredictable risks, the world has a chance to live without us. The supposed lifeline we’re throwing to the rest of the world is actually worthless—building factories in the US just increases the exposure to Trump’s whims, and further the fossil-fuel-privileged industries of the US (e.g. cars) will have little future elsewhere.

There is a remarkable consistency in US policy—we are doing everything we can to turn ourselves from a world power into an afterthought.  That’s not just the tariffs, it’s the attacks on education, healthcare, and forward-looking research.  The demonizing of all immigrants. It’s amazing what dreams of past imperial greatness can do.

Maybe it’s in part an Anglo-Saxon thing.  The parallels with Britain are close, although our fall is much greater.  Brexit was Britain’s effort to restore its nineteenth century dominance by withdrawing from cooperation with the EU.  The result was an instantaneous economic downturn that took about five years for the population to understand.  There may well be no way back—with more Farage populism in the offing, the downward spiral could continue.

We voted for Trump to bring back the glories of the post-war fifties.  He has promised to make everyone rich by shaking down the rest of the world.  With tariffs, we are in essence doing our own Brexit with everyone else. Whatever the evangelicals may believe, there is no God protecting us from folly.