Trump is gaslighting the public

Courtesy of our blogging friend Gronda, I was reading several tweets from Nobel Laureate Economist Paul Krugman. He called on the carpet the media for not condemning the US President for blaming his most recent tirade on the Canadian Prime Minister. In his tweets, Krugman used the term “gaslighting.”

This term set the bells off in my mind. For those not familiar with the term, it comes from the movie “Gaslight,” where a man who turns out to be the antagonist has been tricking the female homeowner to believe that she is crazy, as he tries to steal some rare jewels in her attic. To convince someone of something not real became known as “gaslighting.”

This term is so appropriate to define the modus operandi of the US President. He oversimplifies the cause of problems or invents nonexistent ones playing off people’s fears. He misinforms or disinforms to gaslight people into believing a simple solution is the answer.

The US is a consumer economy moreso than other places (we buy more stuff), which is why we run trade deficits, eg. Yet, he tells only part of the story because when investments and services are counted, we actually have a trade surplus with Canada. But, the President said….

Certain pockets of America have retrenched, but it is not only due immigration. In fact, it is mostly due to technology and companies searching for cheaper labor by moving plants oversees. We produce much much than we used to with much fewer people. Immigration is actually accretive to the economy making it larger. Should we be smarter about our immigration issues – of course – but let’s have reasonable conversation about what is wanted and needed. Let’s not gaslight people into demonizing others.

And, if you don’t like gaslighting, I have another term that defines the President – he is a spoiled brat.

 

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Please contact your Senators to support the Corker Tariff Bill

Senator Bob Corker (R) has posed a bill to assume Congressional governance over tariffs the President is imposing on allies as a matter of national security. Ironically, harming our relationships with allies makes us less safer, not more. It also makes us untrustworthy.

If you agree with Senator Corker, I encourage you to send a letter to your Senator and Congressperson. Here is a sample to modify as you see fit.

“Senator (or Congressperson), please support Senator Corker’s efforts to have Congress govern all tariffs. My long time fear that our President would cede our global leadership role is coming to fruition. Considering the introduction of tariffs on China is understandable, but doing so brazenly on our allies is just poor form. The tariffs, if not altered, will back fire on the US, but the worst part is we have made the US less trustworthy and unreliable.

Please rein in this President who has oversimplified and misused data to strong arm our friends. His belligerence is not helpful and demeans the office he holds. He also fails to consider the number of foreign companies who make things here – BMW, Doosan, Nissan, Mercedes, Hyundai, Toyota, Michelin, Fiat-Chrysler, Husqvarna, etc. Two of these companies are German, two are South Korean, two are Japanese, one is French, one is Italian and one is Swedish. This is what a global economy looks like.

We have trade deficits as we are a consumer economy moreso than others. Plus, the President is not factoring in the investments made in US Treasuries and buying of services. While he cited a deficit with Canada, we actually have a surplus, with these factored in.

Thanks for your consideration.”

 

The unraveling accelerates

The finance ministers of the G7 met in British Columbia last week and gave the US Secretary of the Treasury, Steve Mnuchin, an earful. They told him the US is forsaking its global economic leadership.

Not only are we treating our allies and trading partners poorly, the chaotic style of the US President has worn thin. Depending on which fractious voice is in favor on a given day, the President is routinely changing his mind. This quote from Hua Chunying, the Chinese Foreign Minister, which was reported by The New York Times, is telling:

“In international relations, every time you change your face and turn your back is another loss and squandering of your country’s credibility.”

In the same article, an anonymous European official noted the short-sighted nature of the President and his Commerce Secretary Wilbur Ross, who are looking for “photo opportunities at American steel factories.”

The official noted “European negotiators regard that stance as an unsophisticated, zero-sum view of trade, in which one country that sells more goods to its partner is the winner – an outlook that makes a trade deal difficult to achieve.”

There is a sadness in reading these words. Many have seen this retrenchment tactic as troubling. Conservative pundit David Brooks called the tariffs on allies as “ruinous” on PBS Newshour. On the same show, more liberal pundit Mark Shields called them “reckless.” Shields added that Trump has tended to not respect relationships and views the world as “me and the enemies.”

Zero-sum transactional thinking is a narrow minded view. In global trade, the deal must be fair to stand the test of time. Of course, any deal must be reevaluated over time, but it must be done out of mutual respect. In Trump’s view on anything, he must defeat the other. That is not conducive to building a relationship.

 

 

A few more Sunday sermonettes

Happy Sunday. No, I won’t be preaching this morning, but I will be trying my best to speak a few truths.

It easy to blame someone else or some other entity for your troubles. The European Union is not perfect, but has helped many countries through hard times. When they are helpful, country leaders pat themselves on the back. When times are tough, it is nice to have a scapegoat. Relationships are hard work, but countries need to think hard if they want a divorce from the EU before they have the “what do we do now moment?”

Speaking of relationships, the man in the White House tends to have transactional ones. A pundit said he counts few friends saying he touts a “me against the world” mindset. If he keeps on ticking off our allies, this description will be very apt. Unfortunately he will drag the US down with him.

Two of the worst terms in America are RINO and DINO. They mean Republican (or Democrat) in Name Only. They are used by tribal party members as an insult to someone who is not towing the party line. As an unaffiliated voter who has been a member of both parties, I find these labels offensive. We pledge allegiance to the country, not some party. If someone uses this term, do yourself a favor and pay attention to what the target of their labeling is saying. It likely has more veracity than the claimant’s argument.

The United Nations came out with a report Friday defining how Trump’s policies are detrimental to the poor in America. America has a poverty problem that predates Trump. Too many are living paycheck to paycheck and some are even beneath that. This President and Congress’ solution is to give a huge tax break to wealthy people and companies. And, if the repeal of the Affordable Care Act went through, it would have been even worse. America has fallen in the global ranks on upward socio-economic mobility. It matters more to whom you were born than merit in getting ahead.

On a positive note, Costco raised its minimum wage from $13 to $14 an hour and Walmart increased theirs from $9 to $11 an hour. And more states and cities are making planned and new increases. These are steps in the right direction. It would have been nice for Congress to have increased the minimum wage along with the tax decrease which impacts corporations annually. It would have helped pay for some of the lost tax revenue if companies had to increase pay for those in greatest need, plus this money would be spent as they need it more than the 1% group.

Thanks for letting me preach. Any Amens or rebuttals? Other truisms?

Ports, trade and jobs

In Steven Solomon’s book “Water: the Epic Struggle for Power, Wealth and Civilization” he notes two of the greatest water decisions that helped make America a global power are the building of the Erie Canal and Panama Canal. Both gave the US the ability to conduct trade more easily. I mention these decisions as many east coast US ports have dug deeper channels to permit larger ships to enter their harbors. And, non-port cities have developed trans-modal distribution facilities to get goods on and off planes, trains and trucks often going to or from ports.

The leaders of ports and these trans-modal facilities have concerns over the tariff wars that are beginning because of the short-sighted decision of the US President. While some industries will see job increases, peripheral and other industries will see job losses. But, the ones who see red flags are those who handle the distribution of goods.

The port leaders are concerned the return on the investment to dig deeper ports may be watered down. But, less trade also means fewer truck drivers, rail workers, dock workers and distribution handlers. This is on top of industries specifically hit by tariffs.

Nick Hanauer, a venture capitalist spoke on a Ted Talk about his frustration that business leaders called themselves job creators. He asked “Do you know who creates jobs? Customers.” It should be noted the first and third Presidents who witnessed the most jobs were Bill Clinton (22.9 million) and Ronald Reagan (16.1 million). Per David Smick, an economist who worked for both, this was in large part due to their emphasis on free trade.

Tariffs hurt the wrong people. They may help some targeted industries, but they end up hurting far more employees than they help.They do hurt business owners, but in the end, they reduce the number of customers. And, fewer customers cause fewer jobs. The math is that simple. Any decision that adds to customers is job accretive, while the converse is also true. And, one thing is certain – we cannot shrink our customer base to greatness.

Relationships with countries are vital

There are no perfect people, so we cannot expect perfect leaders. There are also no perfect countries, so we cannot expect perfect agreements among countries. To respond to these short-comings, we must do our best to value relationships.

This works for people as it does for countries. An ambassador noted America’s strengths are its military might and its relationships with other countries. Our relationships predate the existing leadership team, so it is imperative to nurture them. This will help us resolve problems as they arise.

This is not just a US problem where its current front man acts rashly and chaotically, breaks commitments and agreements and lies more than he does not. He has made America less trustworthy and other countries are finding a need to seek better agreements with others that do not include the US.

The imperfect European Union is experiencing significant tension with the pending Brexit, the current difficulties in Italy and the growing nationalistic movements in EU countries. This is made worse by targeted social media efforts by countries that would benefit from a dysfunctional EU and US. Russia is one of those countries and they have been accused of such targeting.

A key part of these relationships is a financial one. The global economy is larger than it otherwise would be due to these relationships. If each country only tried to maximize its own profits in a zero-sum effort, the total pie is smaller and we all lose. This concept is called the Nash Equilibrium, which won John Nash a Nobel Prize in Economics.

Yet, it is more than that. These relationships make the world more secure and safe. The nationalists argue the opposite, but the more commerce is intertwined, leaders work harder to nourish those relationships. A strong EU makes Europe safer and prosperous. A strong relationship with the US and other countries does the same.

Yet, these agreements are imperfect. Not every citizen within a country may benefit equally from a global economy. There is a graph called the “Elephant Curve,” which is a silhouette of an elephant with its trunk raised. The body forms the rampant growth in income of the poorest workers around the world, while the trunk represents the even more significant growth in the highest income earners. The trough inbetween represents the middle income earners who are seeing stagnant incomes, who are in more flourishing economies. This trough has led to populist politicians who over-simplify the problems and come to short-sighted solutions.

Their needs must be addressed, but first we must understand the causes are more than the global economy. The larger threat is techonology advancements. Through our relationships we must invest together on addressing these issues. If we do not, we will create zero-sum contrasts, that will cause even more tension. The rise of fascism in Germany evolved out of dire economic circumstances after WWI.

This last example should inform us of why working collectively is so important. We must value our relationships and make them as beneficial as possible. Going it alone may seem like a good idea to some, but we need to think through the benefit of trade and mutual investment in each other.

If this concept sounds theoretical, let me explain it better by BMW, Mercedes, Hyundai, Toyota and Nissan making cars in America, with GM and Ford making cars around the world. And, Chrysler is owned by Fiat, an Italian company. Jobs are created as we invest in each other’s countries. This is true for other industries and suppliers. And, we may be less inclined to create war, when so much is invested in each other.

Messers. Trump and Pruitt – it is the Environmental Protection Agency

Almost one year ago, the President of the United States announced a plan to withdraw from the Paris Climate Change Accord making the US a very isolated country on the world stage. That announcement both betrays and galvanizes further the significant efforts and science behind America’s push toward renewable energy and conservation.

Yet, that is only part of the attack by this administration on our home planet. Under the tutelage of Scott Pruitt, the Environmental Protection Agency, has decided to have an all out war on science and the environment. The orchestrated removal of climate change science data accessible by the EPA website and the repositioning, demotion or firing of some scientists, is indicative of a parent wanting to mask the fact they do drugs from their kids.

Pruitt has also tried successfully and unsuccessfully to let companies pollute waterways and the environment with fewer repercussions. The fact we have a global water shortage is irrelevant. He has also championed the ability for industry to question the EPA’s data. That may sound good, but industry has challenged data for years and, as a country, we do not adhere to the Precautionary Principle.

This principle states that if it is believed an industry is polluting the environment, then they must prove they are not before going further. In the US, industry has to be proven they wronged people many years after the fact. The reason Erin Brockovich is so famous is it is rare to win against industry. The sad part is people have died or been made ill by then. The Pruitt change is to let industry cherry pick data more easily. I should note the flame retardant industry used a study that had nothing to do with that issue to show the retardants were safe – it was proven they cause cancer in firefighters, toddlers and mothers.

Last week, a new report came out that noted the Outer Banks of North Carolina will be the hardest hit region by rising tides by the end of the century. Yet, the report eliminated any reference to man’s influence of climate change. It should be noted a few years earlier, the NC General Assembly refused to accept a similar finding, but paid for a report that used the past 100 years sea level increase as a guide for the future showing an increase of 8 inches versus 39 inches per the scientists. Apparently, that report has been proven faulty.

Finally, a report by the United Nations has estimated the failure to address climate change will cost the world $100 trillion in US dollars. Some have cried foul over this number, but I would add a study sanctioned by the world’s largest pension scheme (plan) investors in 2010 estimated the cost of repairing climate change problems in the $10 trillion to $20 trillion range. The key word in both is trillion.

We should recognize these numbers are guesses backed by science and some rationale. I would quibble less if the numbers are toward either end and focus on the observation that doing nothing will cost money and a lot of it. Hurricanes are more severe now when they hit shore from elevated sea levels. The costs to fix the damage run in the tens to hundreds of billions range. When you multiple just the hurricanes by these cost fixes, then one can see how the numbers can rise.

If that does not scare, there is a new term that should called “sunny day flooding.” These are days when high tides flood the streets of coastal cities when no storm is present. These days are increasing significantly in places like Miami, Hampton Roads, Charleston, New Orleans, etc. In the next fifteen to twenty years, some of these cities may have fewer non-flooding days than flooding ones.

So, Messers. Trump and Pruitt, you can choose to play ostrich all you want, but the people that care about our home need to move forward. It would be nice if you were an enabler rather than a blocker.