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 Richmans' Trade and Taxes Blog

Morici: 8.5% unemployment may be as good as it gets
Howard Richman, 1/31/2012

In his latest commentary, University of Maryland economist Peter Morici predicts that the unemployment rate won't go below 8.5% in the near future. Here's his reasoning:

Fourth quarter growth was exceptionally strong as the global economy recovered from first half disruptions such as the earthquake in Japan, but going forward economists expect growth to slow to about 2 percent.

Job growth in the range of 130,000 should be expected to accommodate labor force growth, but it won't do much to lower the unemployment rate. That is hardly a pace that will restore economic health or validate President Obama’s heavy intervention in the economy and industrial policies in the upcoming presidential campaign.

What could the U.S. government do? He writes:

Gains in manufacturing production are not accompanied by stronger improvements in employment largely because so much of the growth is focused in high-value activity. Assembly work, outside the auto patch, remains handicapped by the exchange rate situation with the Chinese yuan.

The situation with the yuan is the single largest impediment to more robust growth in manufacturing and its broader multiplier effects for the rest of the economy; the Obama administration indicated over the holidays it has no intention of challenging China on this issue, and it enjoys the unlikely support of House Speaker John Boehner.

The current Washington establishment is oblivious to reality. So long as China and almost all of the other emerging market countries are allowed to continue their currency manipulations, there will be little manufacturing job growth.

The only hope on the horizon is that likely Republican presidential candidate Mitt Romney might balance trade if elected president. His current trade position is:....


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CNBC TV, Bloomberg TV, Fox Business Channel, the Wall Street Journal and the New York Times Mislead Investors on Initial Claims for Unemployment Compensation
Raymond Richman, 1/22/2012

Are the media mentioned above deliberately deceiving investors as to the initial claims for unemployment compensation during the week of January 14, 2012? Secretary of Labor Hilda Solis’s Bureau of Labor Statistics reported that seasonally adjusted initial claims were 352,000, a decrease of 50,000 from the previous week’s revised figure of 402,000. This was the data reported by CNBC TV, Bloomberg TV, and Fox business channel on January 19, and by the Wall Street Journal and the New York Times and other print media on January 20.

The same report in which the BLS reported the seasonally adjusted data also reported the actual number of claims and the total number receiving unemployment compensation but the media did not report it. ...


Comments: 6

Switching fleets to CNG is a no-brainer
Howard Richman, 1/19/2012

When I was in Boston for my youngest daughter's college graduation, I noticed that all of the within-airport buses were running on CNG (Compressed Natural Gas). They looked the same as other buses, except that they did not give off diesel smoke. Since CNG burns cleaner, their engines will probably last longer without requiring oil changes.

The switch of Boston Airport buses to CNG is part of a growing switch of fleets to CNG. Eventually, the increasing number of CNG filling stations will make it possible for households to switch to CNG. (Click here to see the GM pick-up truck that I plan to buy once a CNG filling station opens up in my area.)

The main drawbacks of CNG are: (1) filling stations are not readily available everywhere, and (2) the fuel tanks take up more room on the vehicle. Neither of these drawbacks applies to public buses. In a January 18 blog entry on the Pike Research website, Anissa Dehamna (In D.C., Running on Natural Gas) suggests that the switch-over can save the public transportation companies money, even if they have to build their own filling stations:...


Comments: 2

Emmanuel Goldstein makes the case for our Scaled Tariff in his blog
Howard Richman, 1/17/2012

On December 14, Emmanuel Goldstein endorsed our scaled tariff in a blog commentary entitled "The case for a scaled tariff." His writing is clear and powerful.

He begins by discussing the American jobs crisis, not only the high unemployment, but also the growing income inequality and the stagnating median income. He points out that the solutions provided by the right (lower taxes and regulation) and the left ("a large federal entitlement for everyone") would not solve the problem.

He understands the classical economic argument against tariffs, but also understands that it does not apply in the United States today. He writes:

[A]ccording to classical economic theory, high tariffs only serve to protect inefficient import-competing industries while inviting retaliatory tariffs that hurt more efficient exporting industries.

The thing is, that theory only holds when trade is fairly balanced. The problem is that the US has a massive trade deficit with a number of developing countries (led by China) who limit their imports. So while we lose lots of jobs to outsourcing and imports from countries with lower labor costs, because of the trade deficit we gain a comparatively tiny number of jobs in exporting industries.

In his final paragraph he recommends our Scaled Tariff as a possible solution. He writes:...


Comments: 15

Growing trade deficit quashing recovery -- again!
Howard Richman, 1/13/2012

The November data, just reported this morning by the Commerce Department, shows a rising overall trade deficit ($47.8 in November up from $43.3 in October). This worsening trade picture is spearheaded by declining net exports to China ($293.0 billion for the 12 months ending in November) as shown in the graph below:


In the summer of 2010 (the so-called "summer of recovery"), President Obama's massive stimulus would have produced an economic recovery, but it leaked abroad as growing trade deficits due to the adoption by many U.S. trading partners of China's mercantilist currency-manipulation strategy, as shown in the chart below:...


Comments: 2

Investors Are Entitled to Better Reporting of Unemployment Insurance Claims
Raymond Richman, 1/12/2012

While no one ever went broke underestimating the intelligence of the American voter, why should the media underestimate the intelligence of the American investor by reciting statistically manipulated data rather than the original data when the latter is readily available. Readers of this blog were made aware months ago that the figures issued by the US Bureau of Labor Statistics of the number of initial claims for unemployment insurance made during the preceding week include one doctored set of data called “seasonally adjusted” (SA)and another set of unadjusted data (NSA), i.e., the actual number of claims. In its notice to subscribers of the availability of the Report for the week ending January 7, 2012, the BLS  included this single paragraph:

"In the week ending January 7, the advance figure for seasonally adjusted initial claims was 399,000, an increase of 24,000 from the previous week's revised figure of 375,000. The 4-week moving average was 381,750, an increase of 7,750 from the previous week's revised average of 374,000."

Most reporters evidently did not go on to read the report itself. If they did they would have been amazed to find that the actual number of initial claims filed amounted to 642,381, 143,381 higher than the seasonally adjusted number. The difference is so great that it requires an explanation from the BLS. But none has been forthcoming.  ...


Comments: 1

Romney ad hits Obama for letting China counterfeit US intellectual property
Howard Richman, 1/9/2012

The other Republican candidates give Obama a pass on trade policy, because they plan to adopt the same policy if elected. Romney is making it an issue.

And this should be a huge issue! Since Obama took office, his trade policy has cost American workers 800,000 manufacturing jobs, not to mention the jobs lost that would have provided services to these productive workers. Then, in the summer of 2010, he let the growing U.S. trade deficit abort his economic recovery (see Obama Fiddles While Economy Falters). And the utter incompetence continues. For the past 21 consecutive months he has let the Chinese government grow its trade surplus in goods with the United States, as compared to the same month the previous year....


Comments: 1

Jack Davis commentary may have given Romney the win in Iowa
Howard Richman, 1/8/2012

In a December 28 commentary in the Des Moines Register (Romney's business experience will help him take on China), Jack Davis, founder of I Squared R Elements and, like us, a balanced trade advocate, endorsed Governor Mitt Romney for president. Here is how he began:

“We can’t just sit back and let China run all over us. They’re stealing our jobs.”

That’s a direct quote from Mitt Romney, reported by the Wall Street Journal.

I couldn’t have said it better myself. My company, serving the manufacturing supply chain worldwide, has watched the number of manufacturers in this country steadily decrease. Product we used to ship to the Midwest we now send to the Far East.

Romney is the only major presidential candidate to tell it like it is when it comes to China’s grand theft of our jobs, our industries and our children’s future....

Davis especially lauded Romney for taking on more than just China's currency manipulations, he wrote:...


Comments: 0

Long Term Predictions: CNG, manufacturing and house prices -- Listen to Howard on The American Entrepreneur with Ron Morris
Howard Richman, 1/7/2012

Follow the following link to download the MP3:


Comments: 64

Santorum emphasizes bringing back U.S. manufacturing in his Iowa victory speech
Howard Richman, 1/4/2012

In the Iowa caucus votes on Tuesday, the two major Republican presidential candidates who who have presented plans for bringing back American manufacturing, Santorum and Romney, tied for first place. Here is what Santorum said in his victory speech:


Comments: 90

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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]

    Journal of Economic Literature:

  • [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....

    Atlantic Economic Journal:

  • 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]