Everything that rises

    ...must converge.


    ."..............is a collection of short stories written by Flannery O'Conor....The ...eponymous  story derives its name from the work of  Pierre Teilhard de Chardin".

    Moat could probably tells us if not all we need to know  at least enough so we could fake it about Teilard de Chardin.

    I certainly can't but it's irrelevant because I'm heading in a different direction (sighs of relief from both  readers).

    Over the last couple of days there's been a typically and unnecessarily  ill natured  discussion here over Trump's MAGA tariffs which -as with almost every Dagblog topic- was   quickly diverted into the ever popular Hal vs all comers re "Whither the Democratic Party. ?" Every participant in which (except Peter) wants "whither" to be

    A onward and upward and

    B according to  -or perhaps in  the contrary direction of-the Gospel according to Bernie.

    Fortunately for this forum I've been unable to "contribute" thanks to the fact that high winds cause trees to fall and the non-nationalized power company is always surprised by that. Reducing the communication alternatives   to shouting out the window . Or smoke signals.

    Having been finally empowered (pun), on the nominal subject of exchange of  insults here : Tariffs. I'll come down firmly on the side of "Yes". 

    "Yes what?" you ask .   You would. Why not just accept Yes for an answer? E.M. Forster claimed that whatever question you asked of  an Hindu    the answer would sooner or later involve a cow. So similarly my Tariff answer involves " Yes".

    The old sexist joke went:

    Riley : "How's the wife ?

    Sheen: "Compared to what?"

    So ,high tariffs combined with  what ?

    A. The 1978 tax code ;  B The 1988 code C What we have now.

    And in each case combined with  ?

    1. A fully implemented Obamacare; 2.The W Health System.3. The coming Trump insult to those poor and ill?

    That gives you 9  alternatives if you're  counting. Or even reading which seems unlikely.

    And under each of them you might come to a different conclusion depending on whether you're indifferent to or very concerned about the welfare of inhabitants of , say,Zaire. That makes 18 possible choices.

    If we had Carter's tax code generating revenues, and (Obamacare+)  keeping the ERs open,  a  Zero  tariff regime would certainly cause Joe Lunchpail to  stop producing things in Youngstown that could be bought in Kinshasha. Meanwhile his family wouldn't starve or die of treatable diseases. Meanwhile  young Jimmy , freed from the dire prospect of 9 to 5 at the Jones & Laughlin drill press ,might catch on at Kate's new dress shop , sewing for the Kinshasha market. Or they need  help at the power company.


    Under the MAGA regime with no health care and a government with Zero desire to employ the unemployed , we'd better have high tariffs so whatever Joe did consume either was made here or at least generated employment for the custom agents collecting the 500% tariffs  and  the stevedores unloading  those  coconuts for consumption in the Hamptons. 

    In a fit of generosity I'll spare you an analysis of the other 17 choices.





    Or translated from Flavius-speak to real language a tariff can be good or bad . 

    For a country . And for the world as a whole.  

    I recall standing with  my nose pressed  against the glass of display window  in some German town in the 50s. A model train  promoting the advantages of the "European Coal and Steel Community" the very first stage of

    what became the Common Market. It chugged around a representation of the map of Europe, stopping at each border until it the funny black and white barrier was raised. 

    Then went the circuit  again without interruption- demonstrating the virtues of internationalism. . "Globalism " if you think that's a  bad idea. As Trump does.

    And Keynes did. Ultimately. Not at first

    "What an extraordinary episode in the economic progress of man that age was which came to an end in August 1914.......The inhabitant of London could order by telephone ,sipping his morning tea in bed, the various products of the whole earth  and reasonably expect  their early delivery upon his doorstep.......He could secure forthwith .....comfortable  transit to any country without passport and proceed to foreign quarters without  knowledge of their religion or customs ...But most important ...... he regarded  this  as,,,,,,,, normal , certain and permanent  except in the direction of further improvements." Keynes: Economic Consequences of the Peace.

    But  by  1930 " The virtue of Protection is  " it does the trick".

    And  at great length , in  1933 : "most modern production can be  performed in most countries  with  equal efficiency."  ,i.e. there's no real economic advantage  moving  work from  Harrisburg to Sri Lanka.  

    And he had long ceased to  believe that "when goods cross  boundaries , gun's don't ."  . In fact the  opposite  that free trade combined with the mobility  of capital was more likely to start wars than stop them. " I sympathize with those who would minimize economic entanglements between nations......let goods be homespun and above all  finance should be primarily  national.  We each have our own fancy.  Not believing  we are saved already we each would like to have a try at working out our salvation..........not trying to work out some equilibrium according  to the ideal principles of laissez faire capitalism."

    Enough to make you make think Donald and Maynard might have agreed on that .




    Maynard spoke often of a combination of free trade and the mobility of capital.
    I do not recall the Donald ever mentioning the latter component in a bad light. It would be odd if he did as his prosperity would not have been possible without it.

    (Sorry, it is true that I have an unexplainable taste for religious expression but I also accidentally read General Theory when I was young and didn't know better.)

    Yup. Donald certainly approves of Capital mobility in the right direction (his).

    In the somewhat more important case of Maynard, his ultimately  jaundiced view of   international  capital mobility rather than being an   OBTW   was  the basic  holdings of  his   1933   lecture on  National  Self-Sufficiency to  which Skidelsky gives a boffo review on page 495 of his JMK biography. .

    Happened at  a feverishly anticipated  Dublin  event  where Keynes was  expected to sprinkle some holy water on the standard  Marshall-ite sanctification of  Free Trade , hotly divisive in Ireland then ( and maybe now) . And instead  unveiled his    " Just one minute....No." revision.

    In other words A revolutionary speech at a near revolutionary moment.

    Who knows , maybe Keynes changed  position again  later and  forgot to tell me. Happens all the timel

    I am not sure what restraining the movement of capital would look like in the present volume of money. The "location" of assets and liabilities is described thusly by the Bank of International Settlements:

    Much of international macroeconomics assumes that national borders delimit currency zones and decision-making units. Just as the national accounts do, it assumes that those borders define the relevant economic territory: different currencies do not compete within a given country and firms operate exclusively within national borders. In reality, neither is the case. Not only does the domain of major currencies extend outside their country of issue (Boxes V.A and V.B), but multinational firms, be they financial or non-financial, operate across borders. Management focuses on group-wide profits and risks, and balance sheets span national boundaries. A consolidated perspective better reflects the reach of multinational firms and the extent of global integration.

    This box uses the US example to illustrate how such a consolidated view of foreign assets and liabilities differs from the official international investment position (IIP) recorded on a residence basis - the defining criterion of the national accounts and balance of payment statistics. These are denoted "locational" in the first two columns of Table V.E. The process of consolidation aligns balance sheets with the nationality of ownership rather than with the location where the assets and liabilities are booked. This amounts to redrawing the US border to include the foreign balance sheets of US-owned firms, and to exclude the US balance sheets of foreign firms. This consolidation is performed here for the banking sector and the non-bank business sector (multinational companies).

    US international investment position: from locational to consolidated

    The first step replaces the banks' external positions with consolidated BIS data (three rows under "bank-reported" in Table V.E). This removes all cross-border claims of, say, BNP Paribas New York on the rest of the world (these being French assets), and adds JPMorgan's consolidated foreign claims, yielding a total of $3.330 trillion for reporting US banks combined. Similarly, on the liabilities side, out goes any cross-border liability of BNP Paribas New York, and in comes JPMorgan's global foreign liabilities, to give an estimated $2.958 trillion for US banks. Moreover, foreign banks' local operations in the United States, which are not part of the US external position, further add to US consolidated assets and liabilities, respectively, to the extent that US residents provide funding ($2.465 trillion) to, or receive credit ($3.150 trillion) from, the US offices of foreign banks. Consolidating banks raises the sum of US foreign assets and liabilities from $40 trillion (IIP) to $45 trillion.

    The second step consolidates foreign-owned multinational companies (excluding banks) in an analogous, though coarser, way (owing to data limitations). The cross-border direct investment positions of non-banks, assets and liabilities, are replaced by the (larger) total assets of US multinationals outside the United States and by those of foreign multinationals in the United States, respectively (rows under "direct investment" in Table V.E). Out goes General Electric's equity position in its French subsidiary, and in comes that subsidiary's total assets, resulting in $20,250 billion for all US-owned multinationals combined. These assets exceed the corresponding ownership claims (consisting of $5,078 billion worth of equity and equity-like inter-affiliate debt in the IIP) because US multinationals also borrow abroad; these liabilities (an estimated $15,173 billion) in turn add to US foreign liabilities. As for foreign multinationals, French firm Total's stake in its US subsidiary is removed, and its US assets are added - yielding $9,920 billion for foreign multinationals. Foreign multinationals' liabilities ($6,863 billion) count as a US foreign asset. This step sextuples directly held corporate assets and liabilities, but leaves US net assets unchanged.

    Together, consolidating banks and multinational companies more than doubles the gross foreign position of the United States. US external assets and liabilities combined jump from $40 trillion on a residence basis (IIP) to an estimated $89 trillion when measured on a consolidated basis. The example reveals that the US economy is more open, and its foreign balance sheet larger, than is apparent from the external position derived from the balance of payments. The calculation of the US current account, on the other hand, should not be affected by consolidation, since foreign earnings are included in net investment income whether they are repatriated or not.

    More than double. What would Maynard do about that?

    In late 43 as the allies were moving up Italy , when they got about  20 miles from  Milan the chief communication  officer left them, drove his jeep through the bands of  Resistance finghters and entered the large telephone  manufacturing factory and declared he was occupying it.  Which was accepted  by the Resistance.who might otherwise have trashed it as representative of the old Mussolini regime.

    Interestingly , almost the same thing happened later outside  Stuttgart . As I was told.  I suppose its true. I've never attempted to validatee.. Anyone have contrary info?  I'd like to hear.

    The background  goes to the early 20s. ATT divested itself of its foreign subsidiaries to International Telephone & Telegraph , The ITT ceo,Sosthenes Behn was anti fascist and as the local dictators took over   Behn provided  the US  with many of the top guys who had run those companies. They became signal officers. High level ones.

    Until the forces with which they were attached were on the verge of occupying a former ITT  factory when those guys did as above.

    As Keynes would have expected.



    I don't understand what this anecdote says about having 89 trillion dollars staked out in " the gross foreign position of the United States." Are you suggesting "repatriating" all foreign investment? Or suggesting that Keynes would have suggested that action?

     Caught ? I was  taking evasive action as usual .But OK , OK , I'll come clean. It "all depends". 

    o Tariffs    can be useful or harmful  for a particular country and an intelligent government ( I'm not going to discuss the other kind) has to decide. In the particular case of the US :Tariffs , Health "Policy" and tax rates are all subsets of wealth  distribution. Some argue here for equal distribution ,not me. My test for this country   is that wealth should be distributed sufficiently so there is not a single child homeless or not receiving an education.After that I return to considering how a particular law  would incent a new Steve Jobs.  

    In Nepal both  tests  would be different. 

    o Foreign investment is  probably  more often than not useful for the recipient . On balance.  But even  useful foreign investment can cause  discord .  cf Naipaul's  " In a Free State".  To the extent that it does, it can make overwhelming sense for the host  country to cause the "foreign devils"  to leave . Whatever past agreements might have been made.  Even then  it should honor most outstanding agreements because chaos  prevents wealth generation. But every rule has an exception (including this rule!).

    There's nothing about the current absolute level of US foreign investment  that makes it  an index. The "foreign devils" may well  be introducing  a  vital technology that might  otherwise have taken years to arrive. But it's a safe guess that in the process the local ethical standards are being tested.  The worst thing about Willy is  not what happened in  Boston, it's that he'll  offer a bribe in Peru  he'd never have considered in Indiana 

     I'm  attracted by  Keynes': "Let all goods be homespun""






    How are tariffs a redistribution of wealth? I understand how they protect one set of producers from another set. Producers in a market include both the owners and workers in an enterprise. The discussion of mobility of capital has to some degree be about how much those two groups are stuck in a place. Having such a large sum of money that the owners own outside of the country may not be an index for transactions that happen in a nation but it must have an effect on incentives to invest.
    If one's wealth is not constrained by a change in market value in a particular nation, then tariffs are not a tax but a price and wages program in the hands of whoever profits the most from the changes at a particular time.

    I, too, am attracted by the idea of homespun goods. I may be the only Communitarian participating on this site. I am skeptical of strategies that would address these matters by just slapping different price tags on things.

    The search for "Communitarian" on Google just spiked.  ;-)  I'm curious about your personal definition, if you choose to describe it, since I doubt anything you consider is necessarily standard.  Overall, I guess I'm just interested.  Something like this?

    That page frames the ideas as all about resisting "liberal ideas." There are many who take the Establishment of Religion point of view that groups have a right to live the way they want to and raise their children accordingly. In that vein, Buber talked about communities of communities as way to not legislate morality on a global level. I am liberal enough to not be happy with just everybody doing crazy stuff because they have made it a tradition.
    On the other hand, Ivan Illich asked the question about how much influence does an individual have on the situation around them in real time. How does a person have that influence? I want that.

    So my point of view is not a conviction but more of an acceptance that nothing I have seen presented so far has caused me to think there is a solution that will give me what I want.

    I could try and maintain that In some cases.. they  redistribute  wealth t workers from 

    capital i.e. from any  shareholders whose company  absorbs the  cost  differential.    

    I'm sure there's a counter argument and at the end of the day I  really only believe it because Keynes once said so. Maybe he took it back later. 

    To a minor extent the increased worker wealth financed by decreased  transportation cost,

    Re  overseas capital ,it's overseas because investors think they  earn more that way .If they're forced to repatriate it their wealth decreases .  In parallel interest rates go down  and borrowers  wealth goes up.


    What's Jimmy doing in a dress shop? Should we seek help, or let him express himself?

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