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 Richmans' Trade and Taxes Blog



Bubbles are popping - a recession is coming!
Howard Richman, 8/26/2015

An economic bubble occurs when people have been bidding up something because they think that the price will keep going up. Once the price starts heading down, it goes down fast. There have been several famous bubbles in history including:

1. The Tulip Bubble

2. The South See Company Bubble

3. The U.S. House Price Bubble

David Stockman, former budget director under President Reagan, writes (Bubbles Don't Correct, They Burst):...

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How Trump could get the Economy Going -- we were published in the American Thinker this morning
Howard Richman, 8/25/2015

We began:

The Dow Industrial Average fell by 358 points on Thursday and 531 points on Friday. Yesterday, after plunging more than a thousand points, it recovered to a “mere” 588 point loss. Economic growth has been slow, and another recession appears to be on the horizon. Could a President Donald Trump get the economy going again? So far he has only laid out the bare bones of his economic plan. But it has the makings of an excellent program.

Read the rest at:

 http://www.americanthinker.com/articles/2015/08/how_trump_could_get_the_economy_going.html

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GM and the Balance of Trade -- Ray was published in the American Thinker on Monday
Howard Richman, 8/24/2015

Here's a selection:

The problem is not with importing foreign cars. It is the fact that we have huge trade deficits with China, Germany, and Japan, and trade deficits with Korea and Mexico. China, Germany, and Japan sell to us but do not buy enough from us, resulting in trade deficits and a decline of jobs in the U.S. Apple produces its major products in China and has closed its factories in the U.S. It is more Chinese than it is American. So are Hewlett-Packard and dozens of other American companies. There is nothing wrong with that so long as the countries in which they produce their products buy as much from us as we import from them. The five countries mentioned above do not. We have trade deficits with each of them, which has led to the loss of millions of job and a slowing of the growth of the U.S. economy.

Click here to read it.

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An Economist's Plan to Increase Economic Growth And Create Jobs
Raymond Richman, 8/22/2015

Mortimer Zuckerman, Chairman and Editor-in-Chief of U.S. News and World Report asked in an opinion piece in the Wall St. Journal, 8/21/2015, “Who Will Get the Dreary Economy Going?” We face another recession on the horizon, he says. “Yet there is little urgency from the White House these days regarding the economy. And what is the focus of the current presidential candidates and the media covering them?” They are focused on Hillary’s email, on illegal immigration and immigration reform, overturning the Affordable Care Act, and a wide number of domestic issues none of which have anything to do with economic growth or increasing employment. Little has been accomplished since 2009. Millions are employed part time, millions have left the labor force and given up on finding a job. “..(W)hat we need is a public discussion of where, precisely, America is headed economically.”

The rest of this article is an attempt to show how economic growth can be stimulated, good jobs can be created, prosperity regained, and, as Donald Trump claims, America can be great again. This is what he and the other candidates can pledge to accomplish.

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"Free trade" Is Not supported By Economic Treory. Balanced Trade Is.
Raymond Richman, 8/19/2015

General  Motors is planning to import cars from China, Ford is planning to import cars from Mexico. What’s the beef? Mercedes, Volkswagens, and BMWs are being imported from Germany, Toyota and Nissan are being imported from Japan, Hyundai, Samsung, and Kia are being imported from Korea, Fiat, Maserati, and Lamborghini from Italy, Renault and Citroen from France. Why shouldn’t GM and Ford import autos they make abroad?

The problem is not with importing foreign cars. It is the fact that we have huge trade deficits with China, Germany, and Japan, trade deficits with Korea and Mexico. China, Germany and Japan sell to us but do not buy enough from us, resulting in huge trade deficits for the U.S.. Apple produces its major products in China and has closed its factories in the U.S. So has Hewlett-Packard and dozens of other American companies. Nothing wrong with that so long as the countries in which they produce their products buy as much from us as we import from them. The five countries mentioned above do not.

The problem can be easily dealt with without violating the rules of international trade. ...

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Fed Official Says Fed's Quantitative Easing Policy Failed to Achieve Any of Its Recovery Objectives
Raymond Richman, 8/18/2015

Jeff Cox of CNBCcom reports that the Federal Reserve is putting some of its post-crisis actions under a magnifying glass and not liking everything it sees. Stephen D. Williamson, vice president of the St. Louis Fed, finds fault with three key policy tenets. Cox writes:

”Specifically, he believes the zero interest rates in place since 2008 that were designed to spark good inflation actually have resulted in just the opposite. And he believes the "forward guidance" the Fed has used to communicate its intentions has instead been a muddle of broken vows that has served only to confuse investors. Finally, he asserts that quantitative easing, or the monthly debt purchases that swelled the central bank's balance sheet past the $4.5 trillion mark, have at best a tenuous link to actual economic improvements.”

“Williamson is quick to acknowledge that then-Chairman Ben Bernanke's Fed, through liquidity programs like the Term Auction Facility that injected cash into banks, "helped to assure that the Fed's Great Depression errors were not repeated."

"There is no work, to my knowledge, that establishes a link from QE to the ultimate goals of the Fed—inflation and real economic activity. Indeed, casual evidence suggests that QE has been ineffective in increasing inflation," Williamson wrote.

We all know that wages have not benefitted at all under the Fed’s policies and that the economy’s growth has been less that 2% per year and the growth in GNP for the 2nd quarter of 2015 is projected to be 1½ percent of less. We appear to be on the verge of another recession.  ...

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Property Taxes as a Percentage of Value by State
Jesse Richman, 8/13/2015

The Tax Foundation posted a cool info-graphic on their blog showing variation in property tax rates by state.

http://taxfoundation.org/sites/taxfoundation.org/files/docs/property_taxes-01.png

One of the striking things about this graphic is the extent of variation in property tax rates, with some states imposing property tax rates that are on average several times as large as those imposed by other states. 

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Globalization Has Been a Disaster for U.S. Manufacturing and U.S. Workers
Raymond Richman, 8/11/2015

It is time to end the globalization foolishness begun by Pres. Woodrow Wilson and executed by Pres. Franklin Roosevelt.  The former created the League of Nations and the latter, the United Nations, a much more serous subversive entity. Globalization has reduced the United States from its status as the world’s leading creditor to the world’s leading debtor, reduced its status as the world’s leading manufacturer to second place to China, cost the US millions of manufacturing jobs, caused the loss of millions of American jobs, and caused real wages of American workers to stagnate. The latest trade statistics show that the trade deficit in July was $43.8 billion but the details are even worse for American workers. The trade deficit on goods was $63 billion, an annual equivalent of about 6 million manufacturing jobs. The burden borne by US workers who lost their jobs can be conservatively estimated at $300 billion.

We’ve created huge international bureaucracies that are expensive to the American taxpayer and what they do that is worth doing can be done by agencies of the US government at much lower cost. Here is how much some of them cost us:

In 2012, the US contributed $7.5 billion direct to international organizations. This does not include the Department of State’s own Agency for International Development. The principal   beneficiary was the UN which received $637 million in support of the UN itself plus an additional $75 million to UN’s Capital Master Plan or 22% of the cost of administering the UN, plus contributions to dozens of UN entities. This does not include the dozens of UN programs, some of which are listed below. Where possible, the list includes the principal contributions of the US to all international agencies and in some cases the proportion of the budget of the organization financed by the US contribution. Where no percentage appears, one can assume that all or nearly all of the cost is borne by the U.S. ...

 

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Gloabalization Has Been a Disaster for the U.S., Especially American Manufacturing Workers
Raymond Richman, 8/8/2015

It is time to end the globalization foolishness begun by an academic, Pres. Woodrow Wilson and executed by an effete politician, Pres. Franklin Roosevelt.  The former created the League of Nations and the latter, the United Nations, a much more serous subversive entity. Globalization has reduced the United States from its status as the world’s leading creditor to the world’s leading debtor, reduced its status as the world’s leading manufacturer to second place to China, cost the US millions of manufacturing jobs, caused the loss of millions of American jobs, and caused real wages of American workers to stagnate. The latest trade statistics show that the trade deficit in July was $43.8 billion but the details are even worse for American workers. The trade deficit on goods was $63 billion, an annual equivalent of about 6 million manufacturing jobs. The burden borne by US workers who lost their jobs can be conservatively estimated at $300 billion.

We’ve created huge international bureaucracies that are expensive to the American taxpayer and what they do that is worth doing can be done by agencies of the US government at much lower cost. Here is how much some of them cost us.

UN programs, some of which are listed below. Where possible, the list includes some the principal contributions of the US to all international agencies and in some cases the proportion of the budget of the organization financed by the US contribution. ...

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Republican Opposition to the Ex-Im Bank is foolish.Time for Presidential Candidates to Declare Themselves
Raymond Richman, 8/3/2015

Nothing shows the incompetence of the Republican rank and file in Congress than their opposition to the Ex-Im Bank on purely ideological grounds. The Ex-Im Bank is an independent government agency that finances the purchase by foreign companies of American products. The Ex-Im Bank does not cost the American taxpayers a dime. Not a word of complaint against the World Bank, an international socialist bank that lends money to foreign businesses and governments to finance foolish global warming projects and costs American taxpayers billions of dollars. Not a word against the waste of billions of dollars supporting the U.N., a basically anti-American world government. No proposal to eliminate US Department of Education or the US Department of Housing and Urban Housing and ousing andHHDevelopment, or to reduce the subsidies to wind and solar plants, luxury hybrid electric autos, businesses that invest in solar panels, etc., etc.  Education and urban housing are state and local responsibilities under the US Constitution and both departments have abysmal records of accomplishment. And taxpayers are forced to pay higher electric prices because utilities are required to overpay for wind and solar energy. but none of this comes in for criticism from Republican from the Republican candidates.    

The Ex-Im bank states that by financing the export of American goods and services, it has supported 1.3 million private-sector, American jobs since 2009, supporting 164,000 jobs in FY 2014 alone. There is no reason to question its claim.

Here in Pittsburgh, PNC Bank has been using the Ex-Im Bank to ensure some of its loans to foreign importers of American goods from its American clients, supporting American jobs.

Nothing shows the incompetence of the Republican candidates for president all of whom pledge to reduce the size of the federal government. What federal expenditures would they cut?  They offer no specifics. As for increasing private employment, only   Donald Trump offered a specific proposal, balanced trade instead of free trade which has produced mushrooming trade deficits costing millions of private jobs.

Isn’t it time for the presidential candidates to indicate their priorities, what federal expenditures they propose to cut. ...

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Senate Voluntarily Cedes U.S. Sovereignty to the United Nations
Raymond Richman, 7/28/2015

David B. Rivkin, Jr. and Lee A. Casey, constitutional lawyers at Baker Hostetler LLP served in the Justice Department under Presidents Reagan and GHW Bush. In an op-ed in the Wall Street Journal, July, 27, 2015, they wrote:

The Obama Administration had help in its end-run around the Constitution. Instead of insisting on compliance with the Senate’s treaty-making prerogatives , Congress enacted the Iran Nuclear Agreement Act of 2015. Known as the Corker-Cardin, it surrenders on the constitutional requirement that the president obtain a Senate supermajority to go forward with a major international agreement. Instead, the act effectively requires a veto-proof majority in both house of Congress to block elements of the Iran deal related to U.S. sanctions relief. The act doesn’t require congressional approval for the agreement as a whole.

Last week, the U.N. Security Council endorsed the Iran deal. The resolution, adopted under Chapter VII of the U.N. Charter, legally binds all member states, including the U.S. … The Security Council gambit has enabled the administration , without Senate consent, to bind the U.S. under international law.

The Republican leadership has to explain to the American people why it waived U.S. sovereignty in favor of world government. ...

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A Column This Week by Thomas Sowell
Raymond Richman, 7/24/2015

Thomas Sowell is the Rose and Milton Friedman Senior Fellow on Public Policy at the Hoover Institution at Stanford University.

His most recent books on economics include Housing Boom and Bust (2009), Intellectuals and Society (2009), Applied Economics (2009), Economic Facts and Fallacies (2008), Basic Economics (2007. Sowell's journalistic writings include a nationally syndicated column that appears in more than 150 newspapers from Boston to Honolulu. Over the past three decades, Sowell has taught economics at various colleges and universities, including Cornell, Amherst, and the University of California at Los Angeles. Sowell received his bachelor’s degree in economics (magna cum laude) from Harvard in 1958, his master’s degree in economics from Columbia University in 1959, and his PhD in economics from the University of Chicago in 1968.

His column points out, as we have done on this site in several blogs, on the racist, anti-black nature of the federal minimum wage. Before the minimum wage was enacted under Pres. Roosevelt and before it was increased in the  1950s. black teen-age unemployment was in the single digits. He writes:

As the minimum wage kept getting raised, so did the unemployment rate for black 17-year-old males. In 1971 it was 33.4 percent and it hasn’t been under 30 percent since. It has often been over 40 percent and, occasionally, over 50 percent. ...

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Free trade in an Unfree Trade World is Economic Suicide For the USA
Raymond Richman, 7/23/2015

eorge Washington in his farewell address urged the US to “Avoid foreign entanglements”. How right he was. US foreign entanglements began with a vengeance under Presidents Wilson and Franklin D Roosevelt especially the latter. The Bretton Woods agreements which were negotiated by Harry Dexter White, as the U.S. representative, later exposed as a Communist spy, created the World Bank  and the International Monetary Fund.

Benn Steil, senior fellow and director of international economics at the Council on Foreign Relations in New York, founding editor of International Finance, a top scholarly economics journal, in his book, The Battle of Bretton WoodsJohn Maynard Keynes, Harry Dexter White, and the Making of a New World Order (Council on Foreign Relations, (Princeton University Press, 2013), discussing the creation at Bretton Woods of the World Bank and the IMFwrites,

Together with the United Nations, they marked the beginning of Post WWII’s march toward global government and simultaneously the march toward state capitalism, a political mixture of a powerful state, socialist enterprises, and state-dominated private capitalist enterprises. Mussolini, a former Communist, and Hitler, a national socialist were the first world leaders to recognize the power of the new economic system. Both freed themselves from the ideology of Marxism and both recognized how a socialist state could dominate private enterprises and bend their will to the service of the state.

New Deal innovations included the minimum wage and the Davis-Bacon Act, two laws to advantage labor unions, which returned blacks to conditions worse than slavery by denying Blacks equal opportunities for employment since the unions at that time were nearly all lily-white.  Black rates of unemployed males are twice those of whites and in the 1st quarter of 2014 the unemployment rate of black male teenagers reached the astronomical level of 44 percent. Until 1950, blacks had lower rates of unemployment than whites. ...

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The Economics of the Greek Crisis and Its Economic Solution
Raymond Richman, 7/15/2015

Greece has been portrayed as a country living beyond its means and the recommended corrective action is for Greece to consume less, a policy of austerity. The world faced a similar crisis in 1930 and the Keynesian solution was for governments to spend more, not less. Greece could not spend more even though the Greek people voted against a policy of austerity because it does not have the money to spend more. It needs Euros and Germany will not lend it any Euros until it agrees to tighten its belt. It is caught between Scylla and Charybdis. Prof. Peter Morici of the University of Maryland has a solution for Greece. In a column published July 13, 2015 in the Pittsburgh Trib-Treview, he calls on the Greek Parliament to reject the $86 billion bailout, offered by Germany, dump the euro, and reintroduce the drachma.

Prof. Morici castigates German economic policy as mercantilist, which is true, writing that “Germany and its northern neighbors pursue growth strategies premised on exports – in particular, running trade surpluses.” This mercantilist policy is often called a “beggar-ones-neighbor policy. Germany has employed the policy not only against its Eurozone neighbors but against the USA as well. According to the US Bureau of the Census, Germany’s trade surplus with the US amounted to $74 billion in 2014. Its trade surplus with the world was $250 billion, exceeded only by China. Germany ran a trade surplus every year with Greece and many other Eurozone countries, principally its Southern neighbors from 2002 to 2014, including Portugal, Italy, and France. Mercantilist policies promote employment and prosperity in the trade surplus countries and unemployment and slow growth in the trade deficit countries.

Unfortunately, Greece does not have the wherewithal to return to the drachma. It would need money that has a known purchasing power, like a Euroloan of some billions of Euros.  But there is a solution. ...

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Economics Does Not Favor Free Trade; It Favors Balanced Trade.
Raymond Richman, 7/10/2015

Economists have been virtually unanimous in their belief that the policy of free trade benefits all trading partners since Adam Smith endorsed the policy of free trade in his famous work, the Wealth of Nations. At that time, countries were pursuing a policy of building up gold reserves by exporting more they import, a policy called mercantilism. A policy of free trade was a revolutionary idea at that time in opposition to the mercantilist practices of that time. But today, a policy of free trade is a suicidal policy for a country. The only policy that economic theory justifies today is a policy of balanced trade with the rest of the world which can be shown to be beneficial to all trading partners. About the only case in which free trade in an appropriate policy in the long-run is when both trading partners employ a common currency, there is free movement of capital and labor, and there are no trade barriers. These conditions hold among the States of the USA in their trade with one another.  

Under current economic conditions free trade is a suicidal policy as the recent history of the U.S. demonstrates. The U.S.A. has experienced chronic international trade deficits for decades, which have converted the U.S. from the world’s leading creditor nation to the world’s leading debtor nation, decimated its manufacturing sector, and caused the loss of millions of U.S. jobs in manufacturing. Prof. J. M. Keynes was a realist when he wrote that when a trading partner uses mercantilist practices to keep trade unbalanced in its favor, called a beggar-ones- neighbor policy, he would recommend that Britain take counter-measures. We suggest a counter measure that any nation could use under World Trade Organization rules, the Scaled Tariff, a single-country-variable-tariff, whose rate rises as the trade deficit increase and disappears as trade becomes balanced.  ...

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Nobel Laureate's "Emperor's New Clothes" speech about global warming
Howard Richman, 7/8/2015

At the July 3 Nobel Laureates conference on Mainau Island, 30 of the 65 attendees signed a media-reported letter urging action against global warming. Not reported by the media: the attendees listened to Norway's 1973 Nobel Physics Laureate Ivar Giaever give a truth-telling "Emperor's New Clothes" speech; also, the majority of the Nobel Laureates refused to sign the alarmist global-warming letter.

Giaever gave a great speech. His explanations were clear. His graphs were persuasive. He took the part of the boy in the Emperor's New Clothes folktale. The boy saw the Emperor parading around naked and cried out, "The Emperor has no clothes on!" Giaever was saying that the fraction of a degree differences in temperature upon which global warming theory is based are as invisible as the Emperor's new clothes. He said (6:45 mark):,,,

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Free Trade Policy Is Not Good Economics
Raymond Richman, 7/3/2015

As Prof. Milton Friedman has written, “Ever since Adam Smith there has been virtual unanimity among economists, whatever their ideological position on other issues, that international free trade is in the best interests of trading countries and of the world.” I disagree with my former mentor but that there are circumstances when free trade is a suicidal policy, as is currently the case with the U.S. A Keynesian, Prof. Alan Blinder of Princeton University, is quoted as having written as recently as 2007:  "Like 99% of economists since the days of Adam Smith, I am a free trader down to my toes."  This is a foolish observation since the trade deficits that the U.S. was experiencing when he wrote had converted the U.S. from the world’s leading creditor to the world’s leading debtor and caused the loss of millions of U.S. jobs in manufacturing. These statements reflect discredit on the economics profession which asserts that Economics is a science.  

There are circumstances in which free trade is a country’s appropriate policy, e.g., when the conditions for a free trade policy exist, namely a common currency and free movement of labor and capital. These conditions hold among the states of the USA so free trade is an appropriate policy for the USA. But where these conditions do not exist, free trade is likely not to be a good policy. Prof. J. M. Keynes must have been among Prof. Blinder’s one percent of economists who question free trade as an appropriate policy.. He wrote that when a trading partner uses mercantilist practices to keep trade unbalanced in its favor, he would recommend that Britain take counter-measures. ...

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What Is the Remedy When the Supreme Court Exceeds Its Constitutional Authority? (version 2)
Raymond Richman, 7/1/2015

The Constitution of the U.S. made no provision for judicial review of federal or state legislation. Articles III, of the Constitution of the U.S. created the federal judicial system, but made no provision for declaring unconstitutional Congressional legislation or Presidential actions. In the  case of Marbury v. Madison (1803), the Supreme Court  arrogated to itself the power to declare actions of the President and the Congress and the several states unconstitutional. But the power is not unlimited. The Court has no power to legislate as it has done in cases stemming back to Pres. F. Roosevelt when the President attempted to pack the Court. It has the power to interpret laws and the constitution when there is ambiguity in the letter of the law or conflicting legislation. The President and the Congress are entitled to challenge any excessive arrogation of power.

Amendments to the Constitution have weakened the States. The U. S. constitution created a republic with the federal government having limited powers with all rights not granted to it being reserved to the states or to the people under the 10th amendment. The first of the amendments to weaken the States was the 14th amendment ratified in 1868. Section 1 recites that “no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.” Of course, the Civil War denied the States the right to secede from the union. The 14th Amendment went further; it reduced the rights of states even those that had not attempted to secede. The Supreme Court in its making marriage between homosexuals indicates how much this amendment weakened the States, 32 of which have laws banning marriage among homosexuals. ...

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Is it 1929 again? - reposted from August 29, 2003
Howard Richman, 6/30/2015

[Note: I first posted this on this blog on August 29, 2003. With the Chinese stock market in free fall, it is becoming more and more apparent that I was correct.]

In today's Daily TelegraphAmbrose Evans-Pritchard explained why U.S. Treasury interest rates have been rising:

As Indonesia, India, Ukraine, Brazil, Turkey, Venezuela, South Africa, Russia, Thailand and Kazakhstan try to shore up their currencies, the effect is ricocheting back into the advanced world in higher borrowing costs. Even China felt compelled to sell $20bn of US Treasuries in July.

"They are running down reserves by selling US and European bonds, leading to a self-reinforcing feedback loop," said Simon Derrick from BNY Mellon.

This is very close to my June 26 analysis  (see Why US Interest Rates have been Rising since May 1). At that time, I quoted an article which said that Chinese banks were selling their U.S. Treasury bonds, due to a liquidity crunch in China. Apparently, the liquidity crunch is emerging-market wide....

 

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What Is the Remedy When the Supreme Court Exceeds Its Constitutional Authority?
Raymond Richman, 6/29/2015

The Constitution of the U.S. made no provision for judicial review of federal or state legislation. Articles III, of the Constitution of the U.S. created the federal judicial system, but made no provision for declaring unconstitutional Congressional legislation or Presidential actions. In the  case of Marbury v. Madison (1803), the Supreme Court  arrogated to itself the power to declare actions of the President and the Congress and the several states unconstitutional. But the power is not unlimited. The Court has no power to legislate as it has done in cases stemming back to Pres. F. Roosevelt when the President attempted to pack the Court. It has the power to interpret laws and the constitution when there is ambiguity in the letter of the law or conflicting legislation. The President and the Congress are entitled to challenge any excessive arrogation of power.

The U. S. constitution created a republic with the federal government having limited powers with all rights not granted to it being reserved to the states or to the people under the 10th amendment. The 14th amendment ratified in 1868 reduced states’ rights. Section 1 recites that “no state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.” Of course, the Civil War denied the States the right to secede gainst states’ rights to secede from the union. The 14th Amendment went further; it reduced the rights of states that had not attempted to secede.

The States created the Constitution and established a republic. The States and the Federal Government were not created co-equal with the States. The States retained the power to determine the members of the Senate. Until the 17 Amendment was adopted in 1913, the legislatures of the States appointed the members of the Senate. That amendment marked the end of any state control over the actions of the federal government, including the Supreme Court. ...

 

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Today is the big vote on Obamatrade -- we were published in today's American Thinker
Howard Richman, 6/23/2015

We began:

Today’s Senate cloture vote is the last and best chance for conservatives to stop Obamatrade. Just 41 Senate votes against cloture would stop it in its tracks. During previous votes, the Republican leadership had enough votes sewed up. Not this time.

Opposition has been growing. The first time Obamatrade was voted upon in the House, only 34 Republicans voted against it. The second time, 50 Republicans voted against it.

Conservatives believe in free trade. But free trade works only when it is balanced. Obamatrade enables currency manipulation, the chief method through which Japan, Malaysi,a and Vietnam, three of our Trans-Pacific Partners, give hidden subsidies to their products and charge hidden tariffs upon U.S. products so as to give their countries increasing trade surpluses and give the U.S. worsening trade deficits.

To read the rest of what we wrote, go to:

http://www.americanthinker.com/blog/2015/06/today_is_the_big_vote_on_obamatrade.html

 

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Donald Trump: When was the last time the U.S. won on a trade agreement? -- I'm published in the American Thinker blog this morning
Howard Richman, 6/19/2015

I begin:

In his speech announcing his presidential run, Donald Trump posed a question that resonates with the American people. Trump said:

Our country is in serious trouble. We don't have victories anymore. We used to have victories, but we don't have them. When was the last time anybody saw us beating, let's say, China in a trade deal? They kill us. I beat China all the time. All the time.

President Reagan was the last U.S. president who won a war. Not only did he win the Cold War, but he also beat Cuba in Grenada. Reagan may also be the last President who won in a trade deal....

Click here to read the rest.

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Trump on Trade
Frank Kirkland, 6/18/2015

Whatever one may think of newly-announced Presidential candidate Donald Trump and his positions on issues, there is no denying his acumen and success as a businessman. He clearly brings a pragmatic approach to developing business strategies and negotiating business deals. So what has he said about international trade and how the US conducts it?

Using OnTheIssues.org as a convenient source, we first see that he strongly embraces globalization and international markets. He is clearly "pro trade" (just as are most of the opponents of TPA/TPP who are unfairly characterized as being anti-trade.) But not surprisingly, the strategy and tactics reflected in his statements on trade reflect those of a goal-oriented businessman who takes positions consistent with being the CEO of "America Incorporated", not of a lifelong USTR bureaucrat. (I.e., acting just like the leaders of our trading partners already do.)

Specifically, he says trade must be "fair" as well as free and that it is now not fair...

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Donald Trump and the Currency Manipulators -- I'm published in American Thinker blog this morning
Howard Richman, 6/17/2015

I conclude:

As President, Trump would use the threat of tariffs to negotiate trade agreements that would benefit the United States. In contrast, President Obama weakly buckled to Japan’s demand that the Trans Pacific Partnership permit currency manipulation.

 To read the whole thing, go to:

http://www.americanthinker.com/blog/2015/06/donald_trump_and_the_currency_manipulators.html

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Book Review: Ha-Joon Chang, Economics, the User’s Guide (New York: Bloomsbury Press, 2014.
Raymond Richman, 6/9/2015

The author, Ha-Joon Chang, Reader in the Political Economy of Development, Faculty of Economics, University of Cambridge, states in the Prologue that this is a book without the economic jargon that makes economics appear to be more difficult than it needs to be. Economics, he writes, cannot be a science like physics or chemistry. In this regard, he fails to distinguish between economic theory and economic policy. Determining economic policies is not a science. But in theorizing about economics, economics uses scientific methodology just as the physical sciences do. The prologue is a bad beginning.  So is the first chapter which is entirely devoted to defining economics. Prof. Paul Samuelson in his introductory textbook, Economics, which was the leading bestseller in the world for many decades takes half a page and his definition, five lines, includes the essentials of all textbook definitions, economics is the study of the conditions for an efficient allocation of the world’s scarce resources among alternative uses. To Chang, economics is the study of “money, work, technology, international trade, taxes, and other things that have to do with the ways in which we produce goods and services, distribute the incomes generated in the process and consume the things thus produced --  rather “than ‘Life, the Universe, and Everything’ or ‘almost everything’, as many economists think.” Try urging people to “economize” using Chang’s definition. No wonder he thinks economics is not a science?

He defines capitalism, as Karl Marx did, as an “economy in which production is organized in pursuit of profit.” Most individuals spend yeas and substantial money to educate themselves in pursuit of a higher income. They make an investment in themselves. Producing products that people want requires an investment by an entrepreneur, who provides the capital, thereby a capitalist. The economy should be called the investment economy or, as I prefer, a competitive market economy in which anyone can compete to distinguish it from socialism which is a closed market economy, permitting no competition. Nowhere does Chang refer to monopolistic competition or to Prof. Chamberlin who described our economy as a monopolistic competitive economy. Instead he devotes less than a page to what Prof. Ursula Hicks called icksHicks “imperfect competition” but he seems unaware that there is nothing imperfect about a monopoly and few, if any, firms that are perfectly competitive. Every firm has some monopoly power ranging from nearly perfect monopoly in cases of patents and copyrights to illusory product differentiation achieved as a result of advertising to hardly any monopoly power, individual farmers. ...

 

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Ben Shapiro does a brilliant job of explaining why Congress keeps ceding its power to Obama
Jesse Richman, 6/4/2015

Shapiro's argument came in a piece at Breitbart entitled "Obama's Trade Agreement Leaks While Republicans Cower." He writes:

The idea behind fast-track authority is that the president will not feel free to negotiate, and no one will negotiate with him, if any agreement is subjected to the prospect that a negotiated agreement could be renegotiated by a third party – namely, Congress. But this is a particularly odd argument, because it assumes that the president wants to give away more than is in the United States’ interest to give away. After all, the president can use the possibility of Congressional wrangling as a leverage point in negotiations: “How can I go back to Congress with this proposal? You know they’ll simply amend it. If you give me X, however, then I can fairly assure you that we’ll get this deal done.” Congress provides a convenient and useful “bad cop” for any president hoping to negotiate an international agreement....

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  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

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  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

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  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]