(01-24-2018 06:47 PM)Frizzy Owl Wrote:  

(01-24-2018 06:36 PM)Brookes Owl Wrote:  My econ-for-cheerleaders view re solar panels is the president just restricted supply in an industry that already has artificial demand. Business friendly in the crony-capitalist sense, I guess. But consumer unfriendly.

He hasn't restricted supply. It's a tariff, not a quota.

The increase in price for imported goods will result in fewer of them being imported, right?

(01-25-2018 12:02 AM)Brookes Owl Wrote:  

(01-24-2018 06:47 PM)Frizzy Owl Wrote:  

(01-24-2018 06:36 PM)Brookes Owl Wrote:  My econ-for-cheerleaders view re solar panels is the president just restricted supply in an industry that already has artificial demand. Business friendly in the crony-capitalist sense, I guess. But consumer unfriendly.

He hasn't restricted supply. It's a tariff, not a quota.

The increase in price for imported goods will result in fewer of them being imported, right?

Chinese ones yes; overall no. The increase is solely for Chinese. There is a veritable flood of panels out there. There is no shortage of solar panels being produced worldwide. To a massive extent the reduction in demand for Chinese only means better market share for the others.

(01-24-2018 04:58 PM)Frizzy Owl Wrote:  There will be no trade war. Don't believe the hype.

How does a VAT counter dumping?

Because you have to pay it on imports. And it doesn’t count as a tariff for WTO/GATT purposes.

(01-25-2018 10:27 AM)Owl 69/70/75 Wrote:  

(01-24-2018 04:58 PM)Frizzy Owl Wrote:  There will be no trade war. Don't believe the hype.

How does a VAT counter dumping?

Because you have to pay it on imports. And it doesn’t count as a tariff for WTO/GATT purposes.

Not exactly. For WTO purposes domestically-produced goods can be VAT-exempted only if they are exported. The same VAT applied to import goods must also be applied to domestically-produced and sold goods, or else it isn't a VAT, but a tariff disguised as a VAT.

(01-25-2018 10:41 AM)Frizzy Owl Wrote:  

(01-25-2018 10:27 AM)Owl 69/70/75 Wrote:  

(01-24-2018 04:58 PM)Frizzy Owl Wrote:  There will be no trade war. Don't believe the hype.
How does a VAT counter dumping?

Because you have to pay it on imports. And it doesn’t count as a tariff for WTO/GATT purposes.

Not exactly. For WTO purposes domestically-produced goods can be VAT-exempted only if they are exported. The same VAT applied to import goods must also be applied to domestically-produced and sold goods, or else it isn't a VAT, but a tariff disguised as a VAT.

Understood. But the VAT replaces other taxes and perhaps other costs that are embedded in the cost of domestically produced goods, so that the ex-VAT cost of producing domestic goods should be lowered. In the approach I have proposed, the VAT would replace embedded health care costs, and its budget balancing impact should reduce borrowing costs, plus potentially replacing some embedded taxes. And the VAT exemption on exports eliminates embedded tax costs, just as imported goods have been relieved of those embedded tax costs.

Right now, our domestic taxes are fully reflected in the cost of domestically made products (including individual income taxes of employees). But only a small portion of foreign domestic taxes are reflected in the cost of imported products, and no US domestic taxes. A VAT levels that playing field.

Ceteris paribus, the effect is not there, granted. But ceteris won't remain paribus very long in a real world situation.

One little nuance lost in this now-defunct discussion was the distinction between business-friendly and American business-friendly.

All too often the Democrats cast business-friendly as citizen-unfriendly. Look as the furor over the tax reform "benefiting the rich" at the expense of regular citizens.

Trump's focus is to benefit all Americans by benefiting American business at the expense of Chinese business, Irish business, Mexican business, et al. He could not care less about business if it is not American or does not benefit America and Americans.

So maybe the question should have been, who are the Democrats who are American business friendly?

Peter Zeihan pulls a lot of it together in interesting fashion. We think of Bretton Woods as a currency arrangement. But a lot more went on there. Basically we told the rest of the western nations, "You country and your military are both in shambles. You focus on rebuilding your country and your economy. We'll police the world and protect your trade, and we'll give you free or cheap access to US markets. In return, we get to fight the Cold War our way, and you do as you are told." Problem is, nobody figured out what to do if we won. So we were unprepared for 1990, and almost 30 years later we still haven't figured it out.

Russia and China are land powers. They don't have the ability to invade us, and God knows I hope we aren't crazy enough to invade them. The only existential threat they pose is nukes. The existential threat to us--and to them--is a rogue nation or terrorist with a nuke. So we have common interests in preventing that. They have the ability--and perhaps the desire--to dominate their region, as does Iran. So it seems to me that our focus should be on containing any regional conflict within the region, and helping our allies hold their own within their regions. That calls for a different--and cheaper--military focus. We don't need a large standing army. We don't need to be defending everybody else--they have to defend themselves. And we don't need to bribe the rest of the world into letting us control them.

If we remove the government-induced additional costs of doing business in the US, our natural advantages--resources, climate, transportation, demographics--will cause our economy to prosper greatly. All we need to be business-friendly is just to place no greater hurdles for domestic business to overcome than do other countries. We can have the things like family leave and additional vacation that Lad has mentioned (I actually think those are good things), we can have a comprehensive welfare safety net, we can have strict regulation without unnecessary make-work regulations and draconian regulatory processes, and we can have worldwide competitive tax rates, and we will still prosper. But when that safety net becomes more of a collectivist redistribution scheme, and when we have the highest corporate tax rates in the world, plus excessive and nonproductive or counterproductive regulatory processes, eat away at our advantages and drive businesses away.

Europe has the safety net without the collectivist redistribution, because their tax structure does not attack the "rich" or corporations as much as ours has done, thanks largely to their extensive use of consumption taxes. Everybody benefits, and everybody pays. They can offer a better deal to both the truly poor and those seeking to invest in businesses. We can still compete because of our natural advantages, but we do shoot ourselves in the foot to some extent.

Trump has put pressure on them to pick up more of their defense burden, although that got treated by the press as attacking NATO, he has pulled back a lot of regulations, and we now have a corporate tax rate near world class levels. Those are business-friendly moves that stop some of the self-inflicted wounds. I'm not fond of his positions on immigration and his apparent appetite for trade wars. I think the next steps should be a consumption tax, infrastructure improvements, and education improvements. He is talking infrastructure, but I'm not sure about the other two.

(01-27-2018 10:46 AM)OptimisticOwl Wrote:  Trump's focus is to benefit all Americans by benefiting American business at the expense of Chinese business, Irish business, Mexican business, et al. He could not care less about business if it is not American or does not benefit America and Americans.

That may be his intent, but using tariffs as an example, there is a strong argument that the harm done to consumers outweighs the benefit given to a select handful of businesses.

(01-27-2018 12:48 PM)Brookes Owl Wrote:  

(01-27-2018 10:46 AM)OptimisticOwl Wrote:  Trump's focus is to benefit all Americans by benefiting American business at the expense of Chinese business, Irish business, Mexican business, et al. He could not care less about business if it is not American or does not benefit America and Americans.

That may be his intent, but using tariffs as an example, there is a strong argument that the harm done to consumers is outweighs the benefit given to a select handful of businesses.

Like I said, intent.

A person may have good intent and make poor choices in pursuit of that intent.

I wonder about some of the things he does, but I have no doubt that, in his opinion, they are beneficial to Americans and America.

Was Obama's Iran deal beneficial to America? IMO, no, but in Obana's opinion, maybe yes.

In any case, I think "America First" is more than just a campaign slogan to Trump - it is a policy statement.

I thought we discussed the Chinese solar panel tariff.
Are there others we need to consider? Or other economic measures, like the tax bill?

(01-27-2018 12:48 PM)Brookes Owl Wrote:  

(01-27-2018 10:46 AM)OptimisticOwl Wrote:  Trump's focus is to benefit all Americans by benefiting American business at the expense of Chinese business, Irish business, Mexican business, et al. He could not care less about business if it is not American or does not benefit America and Americans.

That may be his intent, but using tariffs as an example, there is a strong argument that the harm done to consumers outweighs the benefit given to a select handful of businesses.

Only if you think the sole output of the United States should be financial and non-tangible services, you might be correct. To be honest, I would love to see the nuts and bolts of the 'harm done to consumers' by Trump tariffs as opposed to what appears to be a very broad, and generalized statement.

I guess you dont think that tariffs should be used to be 'burnline' for foreign dumping practices? That goes hand in hand with your 'harms the consumer'..... even a 1-2 per cent increase in cost for solar projects would 'harm the consumer', but only if you see the 100 billion or so in advantages pumped by China into their solar industries as a 'benefit to consumers'. I guess strictly speaking they are, but I dont think issues like that are anywhere a net benefit overall to the US economy when you think of literally the close to at least 13,000+ jobs and potential jobs that were lost in the US space in solar manufacturing aspect alone to the 'Chinese consumer benefit' there.

(01-27-2018 12:48 PM)Brookes Owl Wrote:  

(01-27-2018 10:46 AM)OptimisticOwl Wrote:  Trump's focus is to benefit all Americans by benefiting American business at the expense of Chinese business, Irish business, Mexican business, et al. He could not care less about business if it is not American or does not benefit America and Americans.

That may be his intent, but using tariffs as an example, there is a strong argument that the harm done to consumers outweighs the benefit given to a select handful of businesses.

I still think a consumption tax helps. It puts domestic industries on the same tax footing as foreign. And if it goes to fund a health care program that lifts all or most of that cost off the shoulders of American businesses, it puts us on an even footing there. Improve education and infrastructure, and American workers can outproduce any wage differential that exists by comparison with any serious competitor. We don't need to be sewing up our own Nikes--let Cambodia do that. But we don't need to importing robotics and high-end machinery and equipment from places like Germany either. That's where we need to go.

(01-27-2018 04:13 PM)Owl 69/70/75 Wrote:  

(01-27-2018 12:48 PM)Brookes Owl Wrote:  

(01-27-2018 10:46 AM)OptimisticOwl Wrote:  Trump's focus is to benefit all Americans by benefiting American business at the expense of Chinese business, Irish business, Mexican business, et al. He could not care less about business if it is not American or does not benefit America and Americans.

That may be his intent, but using tariffs as an example, there is a strong argument that the harm done to consumers outweighs the benefit given to a select handful of businesses.

I still think a consumption tax helps. It puts domestic industries on the same tax footing as foreign. And if it goes to fund a health care program that lifts all or most of that cost off the shoulders of American businesses, it puts us on an even footing there. Improve education and infrastructure, and American workers can outproduce any wage differential that exists by comparison with any serious competitor. We don't need to be sewing up our own Nikes--let Cambodia do that. But we don't need to importing robotics and high-end machinery and equipment from places like Germany either. That's where we need to go.

Agreed. I am a proponent of a national sales tax to replace the income tax and others, but as long as we are going to bitterly cling to the outdated notion of a graduated income tax, then the Trump Tax Reform is a step in the right direction.

(01-27-2018 03:34 PM)tanqtonic Wrote:  

(01-27-2018 12:48 PM)Brookes Owl Wrote:  

(01-27-2018 10:46 AM)OptimisticOwl Wrote:  Trump's focus is to benefit all Americans by benefiting American business at the expense of Chinese business, Irish business, Mexican business, et al. He could not care less about business if it is not American or does not benefit America and Americans.

That may be his intent, but using tariffs as an example, there is a strong argument that the harm done to consumers outweighs the benefit given to a select handful of businesses.

Only if you think the sole output of the United States should be financial and non-tangible services, you might be correct. To be honest, I would love to see the nuts and bolts of the 'harm done to consumers' by Trump tariffs as opposed to what appears to be a very broad, and generalized statement.

I guess you dont think that tariffs should be used to be 'burnline' for foreign dumping practices? That goes hand in hand with your 'harms the consumer'..... even a 1-2 per cent increase in cost for solar projects would 'harm the consumer', but only if you see the 100 billion or so in advantages pumped by China into their solar industries as a 'benefit to consumers'. I guess strictly speaking they are, but I dont think issues like that are anywhere a net benefit overall to the US economy when you think of literally the close to at least 13,000+ jobs and potential jobs that were lost in the US space in solar manufacturing aspect alone to the 'Chinese consumer benefit' there.

I admit I'm doing a lot of arm waving here, but I'm troubled by a couple of things. Easy one first: Trump as a protectionist. I don't generally like protectionist trade practices, and the way the president is going about this is a top notch example of crony capitalism. Whirlpool whined and wheedled, err, lobbied the administration into a tariff on foreign washing machines. Almost immediately, to no one's surprise, LG announced an increase in washing machine prices. To your point about nuts and bolts, I'd similarly like to see the nuts and bolts of the benefits to the economy delivered by this tariff. I see the benefit to Whirlpool. Are they going to hire/retain enough employees (and vendors) to compensate for the increased prices that are sure to propagate through this sector? I'm dubious.

Re solar, I'm more troubled but it's at a broader level than just panel manufacturing. This is an industry with artificial demand (would this market even exist if not for subsidies?), and now we're meddling on the supply side. (To your earlier point about it being only a 1.5% price increase at the installation end, well, it may not be a deal breaker or maker on ROI but somebody's still gonna pay that 1.5%; it's going to make an impact somewhere.) It's just a ton of monkeying around with the market. And guess what - Elon Musk (via Gigafactory) is getting yet another government gift.

I certainly understand your concern about dumping. But if China wants to tax its citizens so it can sell lower cost panels in the US, US buyers DO benefit. Finally, for panels as well as washing machines, or any other overseas good, the folks making them are earning money they can spend on US goods. I'm just not convinced that protectionist trade practices do as much good as intended.

(01-27-2018 11:38 AM)Owl 69/70/75 Wrote:  If we remove the government-induced additional costs of doing business in the US, our natural advantages--resources, climate, transportation, demographics--will cause our economy to prosper greatly. All we need to be business-friendly is just to place no greater hurdles for domestic business to overcome than do other countries. We can have the things like family leave and additional vacation that Lad has mentioned (I actually think those are good things), we can have a comprehensive welfare safety net, we can have strict regulation without unnecessary make-work regulations and draconian regulatory processes, and we can have worldwide competitive tax rates, and we will still prosper. But when that safety net becomes more of a collectivist redistribution scheme, and when we have the highest corporate tax rates in the world, plus excessive and nonproductive or counterproductive regulatory processes, eat away at our advantages and drive businesses away.

Which underscores the general point, made in other posts, that the primary policy motive for the American left is NOT to better the lives of the many, but rather to attack the few and to increase governmental power, regardless of whether it does any good. I'm not sure there is any other way to rigorously explain the leftist predisposition for envy and power instead of results.

Pyschologically it seems that leftists typically imagine themselves -- or people like themselves -- as the ones who would wield governmental power, and leftists generally are delighted by the idea of telling people what to do; while conservatives generally imagine the wielders of governmental power as being people other than themselves, and conservatives generally don't like being told what to do.

Got a link to this thread when searching for something else, so I reread a bit of it and have a couple of thoughts.

One, the Brownback/Kansas thing brings back a memory. In the 1980s I worked for a company that was looking to expand by building a new plant. The two locations being considered were Normandy, in France, and Kansas, near Wichita, to include relocated corporate headquarters. Note the time frame, the US was pretty close to the height of Reganomics, and France had a socialist government. Corporate wanted the US, and there was some pressure on us to make the numbers work better for Kansas. We could make Kansas look better pre-tax (our product line was used in the oil patch, and Kansas positioned us well to market to the Mid-Continent region). But here was the kicker, the socialist French tax structure was so much more favorable than the US Reaganomics structure that we couldn't make Wichita better after taxes. The corporate tax rates were virtually identical, but the French offered some special tax incentives that were huge. I asked the VP in charge of our existing French operation about this, and he replied, "We understand that socialism does not work without jobs." Anyway, the staff recommended Normandy, but corporate overruled us. They scheduled a ceremony to break ground on a Monday in late winter, and the preceding weekend was set up as a big celebration and entertainment deal for our corporate bigwigs. They all flew to Wichita Friday night. Later that night, a huge ice and snow storm hit, and the city did not have adequate snow removal equipment. Our senior executives spent the weekend holed up in a hotel without power, and many staff could not make it in, so they literally heated beanie-weanies over sterno. Sunday night, our CEO's wife told her husband, "I refuse to live here, so if you put this facility here, I'm divorcing you." They scaled back the plant in Wichita, had to do something to save face, and the main expansion went to Normandy. And the company was acquired shortly thereafter, so the corporate headquarters were never moved to Wichita.

Two, the real problem Brownback faced is that US federal corporate taxes already had Kansas priced so far out of market that the state really couldn't do much. With federal corporate taxes running 35%, compared to a world average of 24-25% all-in, whether Kansas adds 5% or 10% at the state level is pretty much irrelevant. He can compete against other states, but even there a marginal difference of a 1-3% is not going to sway many decisions. Nowadays, with the federal rate cut to be in a more competitive range, his strategy might be more successful.