Readers: this blog is set in the future (sometime after the year 2020). Each entry assumes there has been a 5th revolution in the US — the Revenge Revolution. More about the Revenge Revolution and author, Entry #1. Most entries are formatted as conversations. Characters appear in a number of entries, with many entries building on previous conversations.
Occasionally I break from the normal formatting and do a “sense check.” Auditing one’s own work is problematic but I try to be objective. Entries #300 and #301 are the most recent “sense checks.” Your thoughts are welcomed and appreciated. Thanks for your time and interest…and comments, please.
Scene: Jordan’s office, Washington, DC, start of workday. “Can We Talk about Economics” conversation began Entry #308.
Gelly: “Professor Jordan, now that you’ve had a break, ready to explain more economics?”
Jordan: “Professor, hardly, but yes, let’s continue. Any topic in particular?”
Gelly: “I’d like to know more about tariffs. I think I understand the concept but not sure how effective tariffs really are, especially for worker bees.”
Jordan: “OK, tell me your understanding of tariffs. Why would a country implement a tariff?”
Gelly: “First, let me make sure I understand the idea of trade between two countries. I get the part where one country might have stuff the other country needs, or makes some product more efficiently than the other country. That all seems logical. What also seems logical is that trade should be fair. Maybe I’m being naïve but shouldn’t trade between countries be like what we were all supposed to learn as kids…you know, treat your neighbor as you want to be treated?”
Jordan: “Gelly, how do you boil complex issues down to such basic ideas? You’re right, trade should be fair to both sides.”
Gelly: “Like most any relationship, sometimes trade probably gets out of whack and one country has an advantage that needs to be adjusted. Is that what tariffs are supposed to do? Provide a balance? Or maybe protect some industry or set of products?”
Jordan: “Yes, that’s the theory. However, for trade to work long-term, the industries being protected should be considered ‘critical’ for some legiimate strategic reason.”
Gelly: “Critical such as growing and exporting coffee beans might be critical to the economy and welfare of the people of say Costa Rica? Coffee’s probably a big deal to Costa Rica but hardly of any importance to the US…other than maybe Hawaii.”
Jordan: “Right. Because coffee has such a major impact on its economy, Costa Rica could add tariffs to any coffee imported from say Brazil or Columbia in order to protect its economy.”
Gelly: “I get that part. Then what impact would a tariff have on exports from Costa Rica? People in Costa Rica can’t drink all the coffee grown there. If Costa Rica added tariffs to products imported from other countries…and those countries then added tariffs to Costa Rican coffee…wouldn’t that hurt exports? Tariffs seem like a two-edged sword to me.”
Jordan: “For countries with only a few products to export and where those products do not have much competition, tariffs might work. But, for most countries, tariffs are a high-risk poker game. While coffee can’t be grown in every country, in can be grown in many countries. Unless your country is a real big dog for that product or commodity, the country adding tariffs runs the risk of losing exports.”
Gelly: “For countries with lots of different kinds of products – Germany, Canada, China, the US – tariffs seem a lot more complicated.”
Jordan: “I said earlier you were becoming an economist. Keep talking.”
Gelly: “Isn’t trade between countries also affected by currency rates?”
Jordan: “Yes, but put currency rates aside for a few minutes. We’ll cover that later.”
Gelly: “OK, so if the US say claimed China was selling steel at too low a price, the US might put a tariff on steel made in China or goods produced with steel made in China. But what really happens after the tariff is implemented?”
Jordan: “Well, for one thing, China can then decide to add tariffs to some goods imported in China from the US – say corn or soybeans, which is exactly what they did after Trump put tariffs on Chinese steel.”
Gelly: “Those tit-for-tat tariffs can go on for a long time. And what do they accomplish?”
Jordan: “Good question. To answer your questions let’s look at what happened after Trump put tariffs on raw steel and aluminum from China…and Canada, of all places.”
Gelly: “Did the price of Chinese steel increase after the tariffs?”
Jordan: “Yes.”
Gelly: “Did American companies start selling more steel?”
Jordan: “Some but the US steel companies did what often happens in the US when tariffs are implemented – the US companies immediately raised prices.”
Gelly: “C’mon, how much could that increase really cost a company? Couldn’t have been that much, could it?”
Jordan: “Soon after the tariffs were announced, Ford said tariffs on steel and aluminum would increase their cost at least $1,000,000,000 per year. And that’s the cost to just one company.”
Gelly: “This might sound dumb but if a company’s costs keep going up, wouldn’t the company raise prices? For Ford, they would have to increase prices of cars and trucks, right?”
Jordan: “You got it.”
Gelly: “Then, unless I’m missing something, the tariffs really end up being a tax on consumers. The government might collect revenue from the tariffs but the consumer – the working stiffs – are the ones who gets screwed.”
Jordan: “Now, remember what happened to the corn and soybean farmer after Trump put tariffs on Chinese steel and then China retaliated?”
Gelly: “The Chinese didn’t stop consuming corn and soybeans…but the Chinese began buying corn and soybeans from other countries. So the tariffs caused US farmers to lose exports to a major market…and the same farmers ended up paying more for their tractor and pick-up truck. So why do tariffs like the ones Trump imposed seem so stupid?”
Jordan: “A lot Trump’s tariffs were head scratchers. In fairness, sometimes trade between countries does get out of whack. And tariffs can help resolve the issue. But tariffs are like a Band-Aid, for small wounds and to help only temporarily. There’s a better way to solve issues when trade gets out of whack…and a better way to manage trade.”
Gelly: “You mean like trade agreements? Agreements such as Nafta or whatever Trump tried to rename it?”
Jordan: “Yes, trade agreements. The agreements usually include what you might call a trade court. That court helps revolve issues and avoids tariffs.”
Gelly: “I’m interested in learning more but need to put this conversation on hold, please. I’ve got a conference call in a few minutes and need to get ready. Let’s continue later, OK?”
Jordan: “Deal.”
(Continued)
JC: “Look, I like the idea of ‘treat thy neighbor as thyself’ as the standard for behavior. But let’s not be naïve. What do we do about those people who don’t follow the rules?”
Greenie: “Until Trump. Then he and his gang basically gave the finger to everyone. He even trashed people in his cabinet who supported him from the get go. Some display of appreciation and loyalty, huh?”
Greenie: “A start would be to reinstate the 60-vote rule in the Senate for approving appointments, whether for the agencies or the courts. A 60-vote rule would force the White House to offer nominees toward the middle politically…not the extremes.”
Jordan: “On the Judicial side, even with the 60-vote rule, what about limiting tenure of Senate-approved judges? Right now these judges have lifetime appointments.”
Jordan: “Re-upping.”
Greenie: “I don’t know if the limit should be at the court level or in total. For now, let’s assume the limit applies to a specific level. Otherwise someone might get to SCOTUS with only 6-7 years left out of the 30-year limit. That doesn’t seem fair.”
Greenie: “OK, Jordan, any ideas how to stop such behavior? And what about all the obvious ethics violations by Trump, the Trump family and some cabinet officials? How do we stop that going forward?”
JC: “More teeth and more transparency. I realize there’s some information cannot be disclosed. But, and this should be a big but…no comments, please about personal appearance…the baseline should be to make the public as aware as possible of the shenanigans and unethical behavior by people inside the government, especially members of Congress and high-ranking agency personnel. The disclosures might force some people to stop.”
Greenie: “Make it in addition to impeachment. Some of the behavior will be illegal. Why shouldn’t that behavior get punished like the rest of us are subject to?”
Greenie: “I agree the president and cabinet need to pass the same end-of-year test given to 8th graders. Let me add another, ‘Duh, are you serious?’ idea.”
JC: “You mean the idea of treating your neighbor the same way you want to be treated?”
Greenie: “I don’t know if Sessions had kids or grandkids but do you think he’d want his kids or grandkids separated from their parents?”
JC: “Maybe there would a cabinet officer or some high-ranking staffer whose job it is to go around and ask ‘Would you want this whatever-idea-is-being-discussed to happen to your family?’ The person could be titled the ‘sanity-check maven.’”
JC: “Let’s hope going brain-dead is past tense. We have a new opportunity to begin rebuilding American values post Revenge Revolution. Even if it is kindergarten like, using ‘treat thy neighbor’ as a check mark for policies and legislation seems like a good way to keep things from getting too out of control again.”
Greenie: “You mean like when public pressure force king Trump to stop separating children from families at the border?”
JC: “Don’t make me laugh? Not know what an 8th grader know? Still not sure what you’re talking about.”
JC: “Now I think I see where you’re headed. What about Trump implying…or at least asking…if Canada burned down the White House in 1812? No that was the British. Gee, Donald, in case you didn’t know Canada has been a long-time friendly neighbor. Canada is north of the continental US, except for one area near Detroit, and a major trading partner until you tried to ruin the relationship.”
Jordan: “So, Greenie, exactly what are you proposing?”
Greenie: “I don’t know how we’d test for some things but by forcing candidates for Federal office and Cabinet nominees to take 8th-grade end-of-year exams, you can assume that those who pass at least paid some attention to teachers along the way. And anyone who failed…”
Greenie: “Why not be straightforward? No reason to sugarcoat. I think we give some examples of basic information that Trump and the Cabinet members did not know. There are lots of examples where it looked as if they hadn’t graduated from 8th grade and/or should have been wearing dunce caps. It was embarrassing for the country.”
JC: “Alright, now I have an idea for how to make America great again.”
Greenie: “I shouldn’t even smile at that one…but it was pretty good. Now, JC, stop the puns and tell us your idea.”
JC: “Two prongs. (i) Reconfigure existing roads into smarter roads. Smarter roads can carry more traffic with a lot less congestion; (ii) rebuild and expand the rail system to handle more passenger trains and freight traffic.”
Jordan: “Commuting by rail in metro areas is easier, more pleasant, less expensive and faster. Plus, you can work on the train.”
Jordan: “High-speed rail needs to be defined given the barriers that exist. High-speed in the Northeast corridor is not going to be like a bullet-train in Japan. Making that happen would be outrageously expensive and disruptive.”
Jordan: “Don’t know exactly but I’ll bet you’re pushing 85-90%.”
JC: “This sounds great but what about resolving the conflict between freight and passenger traffic? The little that I know about rail, the freight railroads seem to keep resisting any efforts to add passenger traffic to certain rail lines…in fact, most rail lines.”
Jordan: “Other than difference in speed between freight trains and passenger trains, I don’t know of a technical reason the two can’t share the tracks.”
Jordan: “The article was in the Harvard Business Review and written by Theodore Levitt. The title was ‘Marketing Myopia.’ An example of the myopia was the railroads viewing themselves as being in railroad business and turning thumbs down to considering being in the transportation business. As a result, the railroads lost a huge share of the logistics business to the trucking industry.”
Gelly: “Jordan, you have a call from a guy named Willie. Want to take it or should I…”
Willie: “Your voice mail said you wanted to talk about crypto-currency.”
Jordan: “In a way, the crypto-currencies remind me of the US prior to the creation of the Federal Reserve. Lots of variation in value and no one quite sure who’s in charge?”
Willie: “Another good question. A lot of the so-called crypto-currencies vanished early on. Some never got any momentum and some were never issued even after investor funds were taken.”
Willie: “A couple of crypto-currencies were backed by some assets. One was even backed by gold, but most were backed by nothing.”
Jordan: “While true that governments might have gone off the gold standard, governments do have assets…and a way to generate revenue. Governments can collect taxes. Save one or two, crypto-currencies had no assets and none had authority to collect taxes.”
Jordan: “Over the years you’ve dealt with the Federal Reserve. How did they view crypto-currency?”
Willie: “Two primary roles of the Federal Reserve are managing monetary policy and controlling the banking system. The already difficult job of managing monetary policy became much more difficult with the alternative-currency universe.”
Willie: “Most people did not fully appreciate how crypto-currencies forced the Fed’s hand. Crypto-currencies took a bigger and bigger slide out of the Fed’s monetary pie. In order to achieve the same result as before crypto-currencies, the Fed was forced to exaggerate changes in interest rates, both up and down. The exaggeration also affected Wall Street. As a result, the Fed was unhappy, Wall Street was unhappy, many investors were unhappy and the general public was unhappy.”
Willie: “Federal revenue. While the Fed is not responsible for collecting taxes, in order to manage monetary policy, the Fed needs to have a good idea of sources and uses of Federal funds.”
JC: “Grande, medium roast.”
JC: “And, so what?”
Sandy: “Hi, Jordan. If I recall, it’s JC, right?”
Sandy: “Sure you did. You wanted to ban the sale of all assault weapons…and even make owning one illegal.”
JC: “You’re right. I don’t understand. The assault ban still allowed ownership of all kinds of hunting rifles, shotguns, pistols. I’m not a hunter but why would you need an assault rifle to kill a deer? Where’s the sport in that? Maybe we should arm the deer. That would make it more fun.”
Sandy: “So why have a ban on owning assault weapons?”
First, it appears more and more people are realizing what the military and gun enthusiasts have known for some time – the AR-15 is not a sport rifle, is not a hunting rifle but is an assault weapon designed for killing as many people as possible in as short a time as possible.
Why such a harsh recommendation? First and foremost, these type weapons are not needed outside the military. For those who insist on firearms to protect self and/or property, hunting rifles, shotguns and pistols are more than adequate. For hunters, using AR-15’s is hardly sport, even if hunting elephants, lions, tigers or bears, which you shouldn’t be doing anyway.
Banning assault weapons is not unprecedented. Beginning in 1994 Federal law banned the sales of newly manufactured assault weapons. Former presidents Gerald Ford, Jimmy Carter, and Ronald Reagan, wrote to the U.S. House of Representatives in support of banning “semi-automatic assault guns”. The law passed with bi-partisan support. Congress let the law expire in 2004.
ll not be infringed.”
In that context, the Second Amendment seems perfectly logical. Guys, get it? The regular citizens of the country made up the military when the Constitution was written. And, if you’re a strict “Constitutionalist” and interpret the Constitution as originally written, the weapons were single-shot flint locks, not AR-15’s.
Get serious conservatives. If you understood government, you might realize that you already live in a country where the government allows you basic rights. That piece of property you think you own? Your right to ownership is a function of government. The freedom to travel? That freedom is a function of government. Hate to burst your conservative bubble, but the freedoms that you have are because the government lets you have those freedoms.
I hope these students ask their grandparents to coach them about how the grandparent protested the Vietnam War. Then the kids can go to Washington, march in front of the White House and chant, “Hey, hey, Donald J! How many kids did you kill today?”
Gelly: “JC, I’ll get you some coffee, then I need to get back and work on a project.”
JC: “Greenie, is this info for your articles about the causes of the Revenge Revolution?”
Greenie: “Mmm, you thinking the military culture is that much different?
Greenie: “What still gnaws at me is the behavior of John Kelly when he was chief of staff for Trump.”
Greenie: “What galls me even more is Trump’s press secretary Ms. Congeniality Susan Huckabee told the press they should not challenge a 4-star Marine general. BS Sarah.”
Jordan: “OK, we’re even. I think the military culture started to change with the elimination of the draft.”
Jordan: “With the draft there was a reasonably good cross-section of ethnic groups, backgrounds and education. Yes, some wealthier guys chickened out of the draft and bought off doctors to get an exemption…”
Greenie: “I’ll go with 13 years…finished one year college.”
Jordan: “Nope. Just regular guys like me. I don’t recall many of us being really gung-ho, rah-rah types. We were in the Army doing our time.”
Greenie: “What about the SEALS and those Special Forces guys? Aren’t they really professional?”
Greenie: “Yikes. Not good. Know anyone else?”
Greenie: “Your pal? Well, your something or other. But let’s be fair. You know some other guys in the military, right? I mean your top-gun buddy and some other guys in the group that designed those jet fighters.”
Greenie: “So the quality of recruits is so-so. Let’s go back and talk about the big-dog generals…specifically General John Kelly. When chief of staff for Trump, Kelly claimed that military personnel were superior and the general population should, in effect, bow down to them.”
Greenie: “So do you think to make the culture of the military more like the US population as a whole, we should reinstitute conscription?”
Greenie: “You mean about the crab barrel?”
Greenie: “Your question might be the answer?”
Gelly: “The tribes experienced more than just moving. If I understood Wolf Man correctly, he said the tribes on the reservations…apparently for many years…were prohibited from practicing many of the customs and ceremonies central to the respective tribes.”
Gelly: “If they built a new culture, would they still have a tribe?”
Jordan: “And you have an example?”
Jordan: “But why didn’t Indians keep their traditions…the glue…that held them together.”
Greenie: “Yes, independency is a real word. And your point is well taken. Have we…the victors in the Indian Wars…so restricted the tribes that the original culture has been lost? By our own actions, have we destroyed one culture and replaced it with a culture of dependency? That’s a depressing thought.”
Greenie: “Not finding the right balance between what part of a culture should melt in the US melting pot and what part of a culture should not melt might have larger impact on the cause of the Revenge Revolution than I first thought.”