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.

A lesson that continues to evade someone

A certain man in a global leadership position continues to avoid learning an important lesson. Not only does it hurt his efforts, but it is harmful to this country’s relationships around the globe and within its leadership ranks. The lesson is his failure to vet decisions and communications of such with key people before a broader announcement.

Yesterday, this man decided to walk away from a summit with North Korea without giving advance notice to a key ally in South Korea. As a result, the US relationship with South Korea is strained. Now, he may be whipsawing them again as he has done all week saying the summit may still be on.

But, this is not the first time he has done this. After pleas from our European allies, he walked away from the Iran nuclear deal. ┬áThe echoes of that change continue to strain relationships with our allies to the point an EU leader said “with friends like these, who needs enemies?”

His first major change was so horribly vetted and communicated, it was pulled after two days. He failed to discuss with Congressional leaders in his own party that he was instituting a travel ban. He also failed to gain input and buy-in from affected agencies who had to implement the change. It was as he likes to say a “disaster,” but this one was on his shoulders. Soldiers often refer to poor decisions like this with a word beginning with “cluster.”

But, there are many more examples. What may turn out to be his Waterloo is he fired James Comey without telling him. Comey found out from a TV news report. Further, he failed to give advance warning to his communication team, leaving them to make plans in the White House bushes while the reporters waited. That may be the best metaphor for his Presidency.

Yet, for a man who used to have a faux-reality show where he fired people, he has a hard time doing this face to face. He fired Rex Tillerson without telling him. He had Andrew McCabe fired as he cleaned out his desk to retire, an especially vindictive move. Not telling people they are fired beforehand is extremely poor management. And, for someone who likes to talk tough, it reveals those words are part of a false bravado.

His followers like to say what a great businessman he is, but while he is accused of being a great merchandiser, he is rarely accused of being a good manager. Managing a multi-organization business or government is complicated. It requires diligence, input, time, communication, planning and a dose of compassion. For someone who makes decisions on the fly and bullies people, he is at odds with the tools for successful implementations or relationships.

But, as the man once said. “I, alone, can solve this.” With all due respect, no you cannot, but you sure can screw it up.

Global Trade and Tariffs

While the US President proceeds with tariffs, 11 countries sans the US just signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership that will reduce tariffs among theses countries. This is the infamous TPP that the President pulled out of early in his Presidency.

David Smick, an economic advisor to Presidents Ronald Reagan and Bill Clinton said both Presidents loved global trade. It should be noted that more jobs were created under these two Presidents with Clinton #1 at 22.9 million and Reagan at #3 at 16.1 million (FDR was second). While we need to be mindful of and help employees impacted by job loss, we need to recognize global trade is accretive to the US economy and creates more jobs. We do well when we all do well.

As one global economist said, tariffs and trade wars are how recessions start. So, in protecting some jobs, we will likely be impacting negatively a much greater number.

The demise in influence has already begun

I believe historians will look back at this period of time, unless it is reversed, as the time when the US ceded its leadership role in the world. They will also speak of how China easily transitioned into that role.

On the first show of the new season, John Oliver highlighted what is happening on his news-based comedy show “Last Week Tonight.” Although it is a comedy show, the news covered is envied for its depth and veracity. I have seen topics covered here that other sources will later pick up.

On this show, Oliver repeated a Pew survey result that has shown trust in the US leader has fallen from 48% to 30% since the leadership reins have changed. Looking past the ridicule the President is getting from comedians and even leaders around the globe, Oliver discussed two concerning news items.

First, we do not have ambassadors in many countries under this President, including important countries like South Korea, Turkey and Saudi Arabia per Oliver. General Mattis said in 2013 before the Senate Intelligence committee that we need funding for diplomacy because if we don’t then he has to buy more bullets. The current President said in an interview that he is the only diplomat that matters. That is scary to me as he does not know what he does not know. Nor does he want to do the necessary homework.

Second, an equally scary concern is because of our retrenchment, the US is sending only a a couple people to global meetings, while China sends two dozen. The Chinese officials cover all of the meetings to build relationships, where it is difficult for the Amercans to do the same. It should not be lost on people that Xi Jingping has twice now followed Donald Trump at global forums in Davos and Hanoi giving the speech that the US President usually gives. Xi speaks of global trade, whereas Trump speaks of bilateral agreements.

When I hear Trump’s strident fans say what a great job he is doing, I think of his reducing our influence around the globe. Pulling out of the Paris Climate Change Accord is just one example. We must have relationships with our allies to build consensus. The sad truth is this is supposed to be Trump’s strength. Instead we are shooting ourselves in the foot.