The Cheapest Way For Trump To Save U.S. Oil — Lourcey Sams

Protectionism. This would be a kiss of death for free trade, one of the three pillars of economic liberalism, the other two being free markets and free capital flows.

Oilprice
The Cheapest Way For Trump To Save U.S. Oil
Lourcey Sams

Lars P. Syll — Paul Krugman — finally — admits he was wrong!

Globalization not as represented by the free traders, who now have egg on their faces and have to eat crow. To boot, trade was supposedly Paul Krugman's specialty, even though he is best known for witing a popular macro textbook. So he was one of "the experts."

Will the inapplicability of the ISLM "gadget " be next? So far, Paul Krugman is hanging onto it as it crashes and burns.

Lars P. Syll’s Blog
Paul Krugman — finally — admits he was wrong!
Lars P. Syll | Professor, Malmo University

In the modern world, it is not tariff reduction but regulatory harmonization that is required for grasping increased be... — Brad DeLong

In the modern world, it is not tariff reduction but regulatory harmonization that is required for grasping increased benefits from the world division of labor. We need to work to level up rather than level down or level stupid, but we need to work to level the regulatory landscape. The Brexit hope is for a free-trade zone with the United States but also with "national sovereignty" over regulatory matters. That is just not how it works:

The real issue at the back of "free trade" is regulatory convergence.

Grasping Reality
In the modern world, it is not tariff reduction but regulatory harmonization that is required for grasping increased be...
Brad DeLong | Professor of Economics, UCAL Berkeley

“Across-the-Board Tariffs on China with Retaliation and Federal Spending Create Over 1 Million Jobs in Five Years” — Menzie Chinn

I’ve read the “working paper” (and the preceding paper) a couple of times, and am not clear what happens — the results are based on splicing two models (REMI and BCG data) and running out the results.

Alarm bells went off in my head when I read this:

You decide.

Econbrowser
“Across-the-Board Tariffs on China with Retaliation and Federal Spending Create Over 1 Million Jobs in Five Years”
Menzie Chinn | Professor of Public Affairs and Economics, Robert M. La Follette School of Public Affairs, University of Wisconsin–Madison, co-editor of the Journal of International Money and Finance, and a Research Associate of the National Bureau of Economic Research International Finance and Macroeconomics

Kenneth Rapoza — Trump’s Base in Panic Over 25% Tariffs on China Goods

“I don’t think people really understand what is at stake,” says Alex Camera, CEO of Audio Control, a privately held, small business manufacturing audio sound equipment near Seattle, Washington. He imports electronic components from China and makes things like power amplifiers for cars. They design it and put it together in Washington. “Trump says China is paying these tariffs, but they are not. I am. U.S. companies are paying it at the port.”

Tariffs are port taxes due at the time of delivery and paid to the U.S. government. At best, companies like Audio Control can renegotiate its contract with its China supplier in order to lower — or in some cases — zero out the impacts of the current 10% port duty. But the hike to 25% is the real game changer. To say the business community, long seen as one of the key voter bases of the Republican Party, are terrified of an escalating trade war would not be an understatement.

“The 10% tariff required us to curtail some of our investments,” Camera says. “The potential of a 25% tariff from tonight would have a major impact on our investment and on our pricing. It frustrates me a little bit about how people see tariffs as an attack on the Chinese economy. Tariffs are an attack on my ability to use my cash to grow my business.”...

Checkpoint Asia
Trump’s Base in Panic Over 25% Tariffs on China Goods
Kenneth Rapoza

Bill Mitchell — IMF changes tune on industry policy – shamelessly – Part 2

In Part 1, I introduced the discussion about the use of industry policies in the Keynesian period after World War 2. Most nations adopted a mixed planning-market based system for allocating productive resources and the state was always central in setting out planning parameters, direct ownership and employment, and regulation. It was a system that researchers described as being “highly successful”. Two approaches to industrialisation were taken: (a) export-oriented (for example, South Korea); and (b) import-substitution (for example, India), although in most cases, nations used both strategies. As neoliberalism emerged and the fixed exchange rate system broke down in the early 1970s, the IMF, whose purpose was intrinsically tied to providing foreign reserves to nations under the fixed exchange rate system, no longer had a purpose. They reinvented themselves as the neoliberal attack dog for corporations and global capital. They also provided cover for governments who were embracing the Monetarist ideas of Milton Friedman and intent on imposing fiscal austerity. These governments had become captured by corporate interests and by appealing to external demands from bodies such as the IMF, these governments could depoliticise harsh policy shifts away from Keynesian full employment. I used Britain as an example. Tony Benn, a Left Labour member in the British Parliament and Secretary for Industry, proposed an alternative industrial plan to revitalise British industry in 1975. It was rejected at the time by Harold Wilson and Denis Healey, who were intent on imposing fiscal austerity and deregulating. They used the scare that the IMF would have to bailout Britain as a ruse to force their Monetarist ideology onto the British Labour Party. It was no surprise that in an era where governments started abandoning fiscal support to maintain full employment, deregulated labour and financial markets, and abandoned domestic protections for their industries, many industries would go to the wall. The IMF claimed that this shows industry policy focused on import-substitution can never work. But the culprit was not flawed industry policy. Rather, it was the withdrawal of all the accompanying support structures that made it work, but which ran counter to the neoliberal ideology of ‘free markets’. Now the IMF is having a rethink based on the devastation that neoliberalism has caused. On March 26, 2019, the IMF published a new working paper (19/74) – The Return of the Policy That Shall Not Be Named: Principles of Industrial Policy. Now, we are reading that the IMF has conceded that industry policy interventions that were the basis of economic planning in the Keynesian era were highly successful and only stopped being so, in some cases, when fiscal austerity was imposed and trade controls were abandoned in the 1970s. This is Part 2 of the two-part series on this topic.…

Bill Mitchell – billy blog
IMF changes tune on industry policy – shamelessly – Part 2
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

Dean Baker — Trade: It’s Still About Class, Not Country

It is truly incredible that most of the advocates of this trade policy do not even seem to understand the class nature of their agenda, equating the interests of a tiny group at the top with the interests of the whole country....

Truthout
Trade: It’s Still About Class, Not Country

Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C

See also

Robert Reich
China Tariffs are a Regressive Tax on Americans, and Risk a Recession

David Fields — Imperialism in the 21st Century

With respect to to this post, readers might be interested in a long set of follow-up debates below. h/t Patrick Bond, whose contribution was just published here at Human Geography.

David Harvey Denies Imperialism

In a major critique of David Harvey’s work, the radical political economist John Smith takes on Harvey’s claim that the “East” is now exploiting the “West,” a statement, he argues, that is backed up by nothing more than his authority. Harvey could not be more wrong, or about a bigger issue. The root of Harvey’s error is his denial that the global shift of production to low-wage countries represents a major deepening of imperialist exploitation….

Short summaries of moments in an ongoing debate over neo-imperialism.

Radical Political Economy
Imperialism in the 21st Century
David Fields

Jayati Ghosh — The Real Problem with Free Trade

Even if free trade is ultimately broadly beneficial, the fact remains that as trade has become freer, inequality has worsened. One major reason for this is that current global trade rules have enabled a few large firms to capture an ever-larger share of value-added, at a massive cost to economies, workers, and the environment.... 

The only significant exception to these trends is China, which has designed industrial policies specifically to increase the share of domestic value-added and to improve workers’ conditions. Ironically, it is these measures, which have helped offset some of the negative effects of free trade, that Trump has condemned in his pursuit of policies that will do little to protect workers....

Globalization’s detractors are right that free trade has created serious imbalances. But a trade war completely misses the point. The problem is not that free trade has led to too much global competition, but rather that it has enabled a few companies to secure monopolies or near-monopolies. This has given rise to massive inequalities, blatant rent-seeking, and predatory behavior. Only by addressing these trends can the benefits of trade be increased and equitably shared. 

Project Syndicate
The Real Problem with Free Trade
Jayati Ghosh | Professor of Economics at the Centre for Economic Studies and Planning, School of Social Sciences, at the Jawaharlal Nehru University, in New Delhi

Frank Sellers — SHOCKER: US sides with Moscow over Kiev in WTO case

Typically, Washington is against anything that benefits Moscow, and is for anything which bolsters the position of US puppet regime Ukraine. But, at ongoing cases before the World Trade Organization, that narrative isn’t applicable. This is so because if Washington slam Moscow for its actions relative to Kiev, it would provide a case against Trump’s metals tariffs. However, by standing with Russia on this issue, Washington thinks that it can save its own trade actions, namely Trump’s metals tariffs.…

National security trumps WTO regs. Both the US and Russia are claiming national security supervenes in their cases, and the US is supporting Russia on this.

In effect, this is the recognition that the national sovereignty supersedes international agreements in certain cases. The nation state is not dead yet.
The Duran
SHOCKER: US sides with Moscow over Kiev in WTO case

Frank Sellers

Ramanan — Misinterpretation Of Joan Robinson’s Quote On Dropping Rocks

Keeper Joan Robinson quote on trade.

The Case for Concerted Action

Misinterpretation Of Joan Robinson’s Quote On Dropping Rocks
V. Ramanan

Bill Mitchell — Donald Trump’s tariff hikes are not good policy

I am generally not in favour of trade protection. I grew up in a country that had very extensive protection (tariffs, import quotas) on manufacturing goods, which was justified on a number of grounds – capacity to shift to defense industries; stable employment; and more abstractly, an expression of becoming a ‘modern’ nation, leaving our agrarian roots behind. The initial move to impose high tariffs was that a young industry would take time to develop – the so-called infant industry argument, which goes back to the 1790 Report on Manufactures written by American economist Alexander Hamilton. The problem is that the infant never really grew up and the tariffs just became a cosy rent-sharing margin for unions and multinational corporations. Meanwhile consumers paid excessive prices for deficient-quality motor vehicles (among other products). It is clear that as trade opens up there are workers and regions that lose – and lose badly. The answer is not try to reinvent the past through protection. Rather, it is to use the government’s fiscal capacity to create new opportunities in these regions to ensure that workers disadvantaged by import competition can transit into new jobs with stable incomes. That option is often overlooked because modern governments have become obsessed with austerity. And, as I argue below, that obsession will in the context of Donald Trump’s tariff hikes, work against the European nations that are running ridiculously large current account surpluses....

Bill Mitchell – billy blog
Donald Trump’s tariff hikes are not good policy
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

NewDealdemocrat — China, not automation, is by far the biggest factor in the decline of prime age labor force participation

Perhaps the biggest mystery in economic analysis in the last few years has been trying to find an explanation for the big decline in labor force participation since 1999. A recent NBER working paper by Abraham and Kearney has posited the most comprehensive answer to date. Since it was summarized in this Washington Post article, I’m just going to quote a few paragraphs and suggest that you read the entire article....

Angry Bear
China, not automation, is by far the biggest factor in the decline of prime age labor force participation
NewDealdemocrat

See also

As is clear from the chart above, the employment-population ratio (the blue line) has collapsed from a high of 64.4 in 2000 to 59 in 2014 (and had risen to only 60.1 by the end of 2017).* During the same period, the average real incomes of the bottom 90 percent of Americans have stagnated—barely increasing from $37,541 to $37,886.

That should be indicator that the problem is on the demand side, that employers’ demand for workers’ labor power has decreased, and not the supply side, that workers are choosing to drop out of the labor force.

But, as I explained back in 2015, that hasn’t stopped mainstream economists from blaming workers themselves—especially women and young people, for being unwilling to work and turning instead to public assistance programs and raising children and being distracted by social media and digital technologies, as well as Baby-Boomers, who are choosing to retire instead of continuing to work....

Occasional Links & Commentary
Where have all the workers gone?
David F. Ruccio | Professor of Economics, University of Notre Dame

See also

EconoSpeak
Begun the Trade War Has
ProGrowthLiberal

also

Michael Roberts Blog
Robots: what do they mean for jobs and incomes?
Michael Roberts

Ramanan — More Free Trade Orthodoxies

Nice post on trade, citing Joan Robinson and Nicholas Kaldor.

The Case for Concerted Action
More Free Trade Orthodoxies
V. Ramanan

Reuters — Trump administration says U.S. mistakenly backed China WTO accession in 2001

The United States mistakenly supported China’s membership of the World Trade Organization in 2001 on terms that have failed to force Beijing to open its economy, the Trump administration said on Friday as it prepares to clamp down on Chinese trade.

“It seems clear that the United States erred in supporting China’s entry into the WTO on terms that have proven to be ineffective in securing China’s embrace of an open, market-orientated trade regime,” the administration said in an annual report to Congress on China’s compliance with WTO commitments.

“It is now clear that the WTO rules are not sufficient to constrain China’s market-distorting behavior,” the report said.... 

The report also points at Russia’s behavior, saying Moscow had no intention of complying with its WTO obligations, a trend the administration said was “very troubling.”

Getting ready to ramp up economic warfare.

Reuters
Trump administration says U.S. mistakenly backed China WTO accession in 2001

Lesley Wroughton

See also

The Communist party believes that, "Russia has obtained no preferences, benefits or even stimuli for economic development" as a result of its WTO membership.

TASS
Communist party again prepares bill on Russia's exit from WTO

Brad DeLong — Ricardo’s Big Idea, and Its Vicissitudes

Brad DeLong shows how Ricardo's version of economic liberalism based on free trade explained by comparative advantage is bourgeois liberalism that enriches the ownership class.

Washington Center for Equitable Growth

Ricardo’s Big Idea, and Its Vicissitudes

Brad DeLong | Professor of Economics at the University of California, Berkeley

Nick Johnson — The ‘organised hypocrisy’ of US industrial policy

Maintaining the core-periphery dichotomy of imperialism and colonialism under neoliberalism, Neo-imperialism, and neocolonialism.
The Political Economy of Development
The ‘organised hypocrisy’ of US industrial policy
Nick Johnson

Asia Unhedged — China represents ‘unprecedented’ threat to world trading system, says US trade czar

US declares economic war on China.

“The sheer scale of their coordinated efforts to develop their economy, to subsidize, to create national champions, to force technology transfer, and to distort markets in China and throughout the world is a threat to the world trading system that is unprecedented,” Lighthizer said.

“We must find other ways to defend our companies, workers, farmers, and indeed our economic system,” he implored. “We must find new ways to ensure that a market-based economy prevails.”

Asia Times
China represents ‘unprecedented’ threat to world trading system, says US trade czar

Asia Unhedged

Sputnik International — The Boeing-Bombardier Feud

Boeing claims huge Canadian government subsidies allowed them to sell a new fleet of planes at substantially less than the market price.

​But David Collins, a professor of international economic law at City University of London, said the case smacked of "double standards."

"It's a bit rich of the United States to say that Canada is subsidizing Bombardier, because the US has been doing the same for Boeing for years," Professor Collins told Sputnik.

"Lots of industries are subsidized. The convention is that everybody is doing it and you just turn a blind eye to it. Now there is a worry that this could escalate," he added....

Sputnik International
The Boeing-Bombardier Feud: 'Rich of US to Accuse Canada of Subsidizing'

China's Xi says BRICS must promote open world economy

The BRICS group of emerging economies must promote trade liberalization and an open world economy, Chinese President Xi Jinping said at a business meeting on Sunday at the start of a three-day summit being held in southeastern China.

The heads of state from Brazil, Russia, India, China and South Africa will gather in the city of Xiamen through Tuesday, giving China as host its latest chance to position itself as a bulwark of globalization in the face of U.S. President Donald Trump’s “America First” agenda.

How the worm turns (and ideology changes) in the face of interests.

Reuters
China's Xi says BRICS must promote open world economy
Yawen Chen and Michael Martina