From a small northwestern observatory…

Finance and economics generally focused on real estate

Posts Tagged ‘Trump

WordPress v. Facebook

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Loyal readers will note that I’m frequently on Facebook and less frequently here.  You may have also noted (or not….) the very different tone of my two sets of writings.  My pure FB posts are generally either my (fairly strident) political views or mental meanderings about family, travel, restaurants, and bars.  In other words, normal stuff.  My blog posts lean to business, finance, and the economy, with a bent toward real estate.  By construct, the “voice” on this blog is different than the “voice” on FB.

Here’s where life gets interesting.  I had the honor last week to speak to a small audience at a luncheon at Seattle’s historic Rainier Club about the economy.  It’s quite impossible now-a-days to separate “economy” from “politics”, much as I might like to.  Calvin Coolidge, I believe, said that the “business of America is business”, and the current government in D.C. has adopted that mantra.  Sadly, the current government in D.C. appears to know quite little about mainstream business.  they know a bit about a few things, and almost nothing about most things.  That said, they’ve sold a bill-of-goods to many mainstream business folks.  I saw a truck heading into Seattle today with InfoWars and “Arrest Hillary” bumper stickers.  The driver was a bearded young man who appeared to be a hard working fellow.  He’s been sold on the notion that the government in D.C. is on his side now, and they’re going to make everything a lot better.  I’m waiting to see that.  I haven’t seen anything yet out of D.C. that suggests this government is representing anyone other than Russian bankers and the Koch brothers.

At my Rainier Club talk, a questioner — clearly a Trump supporter — commented that the benefit of the new administration was that they were dismantling onerous regulations which affect small business.  I reminded the questioner that I’m Chair of the Board of a business headquartered in Seattle, and that nearly all of our regulations are imposed by the City of Seattle and the State of Washington.  I further reminded him that these regulations make Seattle the sort of place where creative people wanted to live, and since my bread and butter is hiring creative people, I’m happy to put up with these regulations in order to hire creative folks.  I noted that Amazon, Starbucks, Nordstrom, Weyerhaeuser, Expeditors International, Expedia, Alaska Air, Microsoft, Boeing, Costco, the Russell Group, Symetra, F5 Networks, Paccar (who make Peterbilt and Kenworth trucks) and a host of other global companies were also willing to put up with these Washington State regulations in order to be able to tap into the brain trust that wants to live here.  Intriguingly, the most “regulated” cities and states in the nation tend to be homes to the most forward-thinking and growing businesses.  Indeed, New York and California have over 20% of the Fortune 500 headquarters, and the states which are generally the least regulated have no Fortune 500 or even Fortune 1000 companies (Montana, Maine, South Dakota, Wyoming, West Virginia, New Mexico, and Alaska).  You go figure….

Unilateral tariffs

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It occurs to me that a few people might not understand why unilateral tariffs against Mexico might be a suicidially bad idea, the global equivalent of “Hey, hold my beer while I try this!”

Here are a few random reasons, just off the top of my head, why this is an amazingly stupid idea… in no particular order…

  1. Any tariffs on imports from Mexico will be born, 100%, by American consumers, and generally those at the bottom tier of the consumption curve.
  2. It pisses off our one of our two nearest trading partners, and will undermine our relations with the other one.
  3. It opens the door for China to create and expand a hedgemony in the Pacific Rim….
  4. …which, in effect, nullifies the Monroe Doctrine (3 & 4 being the most devastating problem — no one in the Pacific Rim will trust us ever again).
  5. Since the left coast of our country is vitally dependent on Pacific Rim trade, it’s…. well… I’ve already used the word suicide.  Given that Washington, Oregon,  Hawaii, and California didn’t vote for Trump, why does he care???
  6. We export zillions of things (trucks, airplanes, software, indie movies, timber, building products, video games, wine — just to name the things that come from MY ZIP CODE) to the Pacific Rim.  Kiss those asses goodbye.
  7. Google “Smoot Hawley Tariff Act of 1939” and see what you get.
  8. Unilateral shifts in complex demand curves are theoretically unsupported (OK, that one requires a bit of graduate level econ, but bear with me here.)
  9. On a practical level, I can now import anything I want from El Salvador at a price 1% higher than I previously received from Mexico.  Thus,  I’ve simply baked in a 1% consumer inflation to be borne entirely by folks who shop at Wal Mart (see #1 above).
  10. Oh Christ it’s such a stupid idea….

Written by johnkilpatrick

January 26, 2017 at 3:42 pm

Posted in Economy, Finance, Inflation, Uncategorized

Tagged with , , ,