Trade Deficit Madness, From Ancient Rome To Modern Trump Card

Warning; Roman Semi Direct Democracy Collapsed Because Of Global Trade:

Trade is a crucial subject: it’s about who has work, thus who has power, and who has an occupation deemed worthy. In the last massive global trade system we had, with 25% of world population, the core, Italy and Greece got emptied, in nearly all ways, by global trade.

This made “We The Peoples” of the core of the empire weak, unmotivated, incompetent, and finally completely impotent in all ways, especially politically: Rome went from a somewhat Direct Democratic Republic to  a military and then dynastic dictatorship.

I explained all this in great details in many essays: the similarities with the present planetary situation are more than alarming. Roman plutocracy exploded, when the wealthiest and their corporations were able to evade Roman laws by going global. Just as US and EU laws are evaded by going global.

Unsustainable. This is not just dinero they are taking, or work, or power, its the very substance of the essence of democracy.

Obama, in particular, put lipstick on that global pig, by passing outrageous, highly visible banking laws which amounted to saying that only plutocrats could span the world: everybody else who pretended to live on both sides of an ocean, was a criminal.  

Unfortunately most people talking about the subject of trade are hyper partisan: they just want their own networks to gain, or conserve power so they can profit from it. It’s true from the right wing globalist exploiters long in power and their servants (Krugman, etc.) and its associated overlords of the Deep State.

There is also the fact that seriously deranged hyper partisanship has become big business…

***

So Trump imposes tariffs on Europe. Europe retaliates, as threatened, imposing, among other things, tariffs on (extremely polluting) Harley Davidson motorcycles. Harley Davidson CEO Matthew S Levatich says:

Our decision to move some of our operations is 100% based on President Trump’s tariffs. Mr. Trump knows nothing about economics and even less about trade. The man is a moron.

Supposedly left-wing organization like “Occupy Democrats” are so happy:

Complete anti-Trump hysteria by ignorant twerps. The owners of that site are making money hand over fist.

Occupy Democrats” is actually a for profit site. It was founded by twins born in Mexico, one of whom became an investment banker.  They won’t talk money, but they are thriving. BuzzFeed’s Silverman estimates they could be making six figures in advertising revenues every month. The site is dogged by fact-checkers, sued by a competitor, mocked by conservatives. But nevermind, hordes of the tribally hating march in unison, excoriating Trump… for things Obama did, or the US long did.

US has a gigantic trade deficit with… Ireland! Why? Tax evasion! Ireland is one of many tax havens within Europe, encouraged by the EU, so many US corporations use it that way. Per head the deficit of US with Ireland is 32 times what it is with France…

Trade deficit US with EU is $122 billion. With China, $375 billion. EU-China deficit: $176billion. Are those irresisted increases in deficit sustainable? No. What’s the main cause? Evasion by EU & US corporations of tax & work laws in EU and US. Harley claims it has to leave the US because of European tariffs, but it  is going to India, not Europe! Wrong! And an obvious lie: Harley long prepared its move to India.

Now agreed, India, a high tech country with cheap labor should be freed to receive Harley, and Harley to go there. So far, so good. However the trade with India should be balanced. Otherwise it is colonialism, pure and simple. Not just colonialism, bad colonialism.

 

Why is the situation with China alarming? The ignorant out there, have been properly misinformed by the plutocratic media which loves them to death. Total sales of Chinese products in the USA is above 500 billion dollars. What’s the total sales of products in the USA? 1.5 trillion dollars, triple that. So for the value of three products sold in the US, one third of this value is made in China. And typically this represents high added value. And the reciprocal is just 20%. How long can the working class take this?

 

The globalists who engineered Obama and his ilk are besides themselves with anxiety at this point: the global trade system is how they are gathering power, same as their predecessors in Rome, 21 centuries ago. Collapse them, collapse the future they had set-up for themselves and their descendants.

Globalism, its tax avoidance, and avoidance of laws and regulations, its exploitation of oversea territories, making deals with local potentates, is how plutocracy is getting ever more powerful. Yes, they demonstrated their power by giving a Nobel Prize to Obama which the whole planet could see he didn’t deserve. So Obama did what they wanted him to do: demonstrate further power by droning babies to death in countries the USA was not even at war with. Yes, they are mighty, but the struggle is not over. We are mighty too, we are mighty still, and enough with their lies!

Patrice Ayme

35 Responses to “Trade Deficit Madness, From Ancient Rome To Modern Trump Card”

  1. Rick Bentley Says:

    If you watch the stocks Harley Davidson has been struggling selling their products here the last few years. Their main clientele has been aging and they are losing traction with the younger generation Their products are selling better in Europe at this time. They have been talking of doing this for sometime. This gave them the excuse.

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  2. Rick Richardson Says:

    It has nothing to do with Trump. Just another lib attempt to destroy America all fake news crap

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  3. SDM Says:

    Globalism is an obvious way for capital to exploit lower labor costs but has it truly reduced the price of goods for the “average” consumer to the point of being beneficial especially if this has reduced the income of that consumer? Despite lower prices and low inflation, the US middle and working classes are under duress.
    While wages have been stagnant to falling for US workers while productivity has risen together with corporate profits. Will capital come back and wages again be tied to productivity with tariffs? Probably not without strong labor rights and unionism. Trump does not appear inclined to support either. He promised to eliminate the carried interest deduction but reneged on that and then supported a tax plan that favored the wealthiest. He is a plutocrat.

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    • oatmealactivist Says:

      Wages aren’t going to rise until we have sound monetary policy and fake Democrats abandon favoring illegal immigrants over American workers. Why would wages rise while we continue importing hundreds of thousands of virtual slaves who will work for pennies?

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      • Patrice Ayme Says:

        Agreed. That Trump is a plutocrat is irrelevant, indeed! No work, no pork! The drum beat for ILLEGAL immigrants is astounding. I am a legal immigrant, and had to go through many many loops, still do. Also always respected the law 100% (as immigrants tend to WHEN legal!)
        The working for pennies, while doing what SHOULD BE illegal work overseas impoverishes the West. Meanwhile the Chinese dictatorship does everything right… (From its point of view).

        The frantic campaign by Plutos against Trump is a sight to behold. Especially overseas in places like UK, France, Germany: I follow the media there… However the head of a German pro-refugee organization just said Europe was as bad as trump. Actually it is WAY WORSE: Officially 35,000 have drowned trying to make it to Europe (and Europe could have prevented this EASILY, by just going to the Libyans and giving them the means, instead of blocking them… The EU just said it would FINALLY support Libya… The vicious PC types wanted to show France had been wrong in Libya; fortunately Macron just realized the solution, and intervened in Libya in several ways, and forced the EU to follow….)

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    • Patrice Ayme Says:

      See my remark to Eugen: I have to go for now.
      But we clearly have a model in history: the emptying of the Greco-Roman core… The pattern also exists in China, with multiple cores and multiple emptying… Didn’t happen in western Europe, because I think, democracy was just strong enough.

      Also London and Paris, nearly twin cities, the two most formidable, most militarized cities in Europe, could argue to no end, while separated by a moat… That, BTW is not far from a remark Picard made recently…

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    • Patrice Ayme Says:

      It goes without saying that Trump is a plutocrat. Yet, a dissonant one. I used to write, and rile against Trump, decades ago. However bad the situation was in the collusion of the wealthiest with banks, it got infinitely worse when Clinton scored an incredible number of victories for plutocrats by enabling banks to play derivatives, massive self-dealing…

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      • SDM Says:

        Dissonant plutocrat or not he seems focused on keeping power by throwing red meat to his fearful anxious base. In the meantime, he has been found to be willing to cave to wall street, fossil fuel, insurance, big money generally while encouraging white supremacy and racism. Now the establishment is with him too.

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        • Patrice Ayme Says:

          I would have expected Obama to be disruptive. Instead, he was submissive. Thus we found ourselves in an unsustainable situation, in many ways. It’s not clear how things will turn out. China should submit, after faking rebellion. What makes them furious is the IP stuff. Well, ;-)! We will see.

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  4. EugenR Says:

    Dear Patrice, let me add to your commentary:

    1. Continued trade deficit degrades the US merchandise production capacity, and what’s most important, its population will become instead of matterial merchandise product producers to service suppliers. Even if most of the employees in both, merchandise and service industries are rather low wage, low educated workers, the mentality difference between these two is immense. While the merchandise producers at the low level occupation are usually part of the production process,  that needs cooperation,  and are unionised, the service employee,  usually acts individually,  be it a shopper,  banker or even post office clerk. While the merchandise producer’s attention is concentrated on the product,  the service provider on the final consumer. These differences are psychologically deep. Service provider has to be always positively oriented to clients,  even if in bad mood,  merchandise producer, doesn’t. It makes a good service supplier a natural faker, while the merchandise producers can hold his integrity and pride of belonging to the producers community. 

    2. As to US trade deficit, it is result of US global position as world power, giving to the world after WWII, Pax Americana, with which came also the all mighty US dollar,  leaning on US military dominance,  and US democratic political system, unchanged since its independence, protecting free competitive market economy and unchallenged right for private property and wealth. But this cased trade deficit as explained in triffin dilemma.

    https://www.investopedia.com/financial-edge/1011/how-the-triffin-dilemma-affects-currencies.aspx

    3. All mighty dollar is not result of US merchandise industries producers competitivness and contribution of merchandise products to foreign countries, but attractiveness of US as world power,  with stable political system, protecting individual property rights.

    After WWII, the West European countries,  devastated by war, still threatened by despotic Soviet, millitarily aggressive regime,  had very little choice,  but accepting the US dictate for new post war economic order, based on free trade, (dismantling the mercantilism in colonies) and US dollar as reserve currency for International trade and anchor of currency exchange. These brought too strong dollar,  that until early seventies was also supported by US merchandise production capacity,  that had no competitors.  

    Since the seventies, Germany and Japan,  recovered from WWII, took over the position of world industrial producers. From the late eighties China and other East Assian countries joined them and became the major  merchandise producing economies,  while the US provided for the system huge market to absorb all the overproduction capacity,  and also an economic platform for reinvestment of US dollars accumulated in the merchandise exporting countries.  

    4. Also US, due to it’s open emigration policy, attractive universities,  and world dominance of English language, succeeded to become almost a sole leader country, introducing new technologies, new popular culture,  and global service consumption chains and brands. It drew not only many skilled young people to US, but also capital investments. Yet, the leading US corporation, acting on the global scale, are incorporated mostly in tax shelter countries, and it reducas the tax basis for US government spending, that creates public deficit in US budget, causing US debt to Asian merchandise exporting countries. 

    5. The US global corporations, even if incorporated in tax shelter countries,  they reinvest their profits mainly back in US. So eventually enable the whole global economic system to continue to exist. But this “foreign ” investment of US based global companies causes also huge inequality in income, when concentrating on one hand the wealth in global corporation managers and owners, and on other heand causing degradation of the local merchandise production capacities.  

    6. Even if economically this system is sustainable,  probably politically not, mainly if there is political opposition to foreign trade deficit and political need for millitarily adventurous US foreign policy. The result is elections,  that brought to power politicians with short term populist agenda. Such a policy can’t be sustainable on the long run. Even if the popular masses many times find short term solutions attractive,  when the pay day comes, they tend to be revolutionised and are looking for the scapegoat to sacrifice it. We are still in the process of disastrous choices of the majority in the USA and in G.B. The masses still didn’t get it, that the consequences of drastic change in economic policy to wrong direction, (that still didn’t happen in acts, just in proclamations), will appear not less than in two years from the policy shift, unless the business community will panic and bring to collapse the whole system, that may happen in any moment.  Such a collapse is unpredictable,  and its cure is not always obvious, since it is in fields of psychology and sociology,  and not economy, and these fields of science are even less equipped to bring solution than economics. 

    7. Still it is understandable that politically majority of the people in the US and GB want to bring back the merchandise producers capacity,  and with it this industry occupation. So how to do it? Definitely not by economic policy of segregation and anti global trade policy.  This can only bring to reduction of global wealth,  with all its consequences.  The solution has to come in new world wide currency order, where the anchor currency will not be a national currency,  not of US, not of EU or China, but some global currency solving the Triffen dilemma problem. 

    But any such solution needs an US President of very different skills and vision  than the last Presidents of US, nominated since the presidency of R. Nixon, who was with the courage to disconnect the US dollar from the gold standard and prevented by this act the world monetary system from potential collapse that existed at the time.

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    • oatmealactivist Says:

      Surely fully abandoning the gold standard was not the only way to avert potential collapse. Since it was dropped in the US, inflation has been rampant. Great for plutocrats swimming in cheap money; awful for the middle class.

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    • Patrice Ayme Says:

      Wow! Hi Eugen. You and other commenters are giving me lots to chew on here, thanks! Unfortunately I’m hours behind my bed time… I was writing an essay (fr days, even weeks) about “FRENCH THEORY” this sounds completely disconnected from economics and trade deficits, but it’s completely connected… So I present my excuses to everybody, and will try to catch up on the comments. For now though, bed! And relaxation (reading about Themistocles…), I have had lots to do these days…
      Thanks again to all, and I will catch up!

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    • Patrice Ayme Says:

      Specialists say that the dollar as reserve currency creates the deficit. I don’t understand it, it smells false to me, and, even if I did, it’s irrelevant considering what is at stake. Employment is the essence of civilization.

      I was direct witness of massive IP theft from USA by China (they had massively financed a company employing US state employees; things were set-up to make believe it was a US company; we had secret documents we found in devious ways translated from Chinese by a friend, a top Chinese engineer, exposing the scheme…)

      Europeans are imbeciles, economically and strategically speaking: they think they can go transferring massive Intellectual Property to China. Your analysis above is correct, and confirms that fact. However the USA, its leading Pluto class, pretty much plotted the 20C the way it went, helping out STALIN and HITLER, Mussolini, Franco, CRUCIALLY, and dumping them when they had been useful.

      At this point, China is invading Africa. Only the US and France resist that, but their approach is mostly military: at this point they give cover to the Chinese… The Chinese research budget is greater than the GDP of nearly all European countries… The Chinese sales in the USA amounts to 1/3 of all product (not services) sales…. Unsustainable…

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      • EugenR Says:

        Even if its hard to believe, that you Patrice don’t understand how reserve currency will necessarily create deficit, i will do my best to explain to you and to your followers in a very easy way, why reserve currency necessarily creates deficit in US.

        Reserve currency means,  that the currency is saved in other countries, than country of its origin. It can be done by private or public entities,  or even private people,  who prefer to hold the reserve currency,  as media of savings,  because of the trust in it, compared to the local currency.  By doing so, they create demand for the money itself, as if it would be commodity or item of value by itself. And the truth is the reserve currency is an item of value, because of the trust people all over the world put in it. This trust is result of long history of reserve currency origin country’s military dominance,  democratic political system, free competitive market economy and unchallenged right for private property and wealth. China,  even with its size of economy,  (bigger economy than that of US, not in nominal but real terms) doesn’t have a reserve currency,  because it couldn’t create the trust in its sincerity in most of the above mentioned issues.  Europe succeeded only partly in making the Euro a reserve currency, because of it’s history of because of the world wars it initiated, and their economic consequences on Europe.  Even 70 years of peace was not enough to create enough trust in Europe, to make from its currency a reserve currency comparable to US dollar, that has history of continuous respect for these values mentioned above, since its decleration of independence.

        The need for reserve currency exists,  to create trust in local currencies, based on these reserves. Just as in the past precious metal reserves, like gold or silver, made the currencies trustworthy, today holding of US dollars makes local currencies trustworthy.

        But then if there is demand for reserve currency,  not as media of exchange, but as value holding item, its price, or exchange value will be influenced by this demand, without the question if exists enough additional production capacity to satisfy the value of potential demand that reserve currency promises. But then the relative prices in the country of origin of reserve currency,  have to be higher than in countries who accumulate the reserve currency, that has to create surplus in trade with reserve currency origin country, to be capable to accumulate these reserves. Such a surplus can be created only if the local currency value is undervalued compared to the reserve currency. Then the other side of this surplus has to be the deficit of the reserve currency origin country. 

        And here comes my warning, such a trust can be easily destroyed by irresponsible acts of politicians,  who make big mistakes like, a. making wars destructive to economy,  b. budget deficits creating debts, that are not invested into the increase of potential of production capacity, c. Not fulfilling the obligation given to the holder of the reserve currency, to supply against the reserve currency  the promised value in form of products, whenever demand to its fulfilment will come, d. many more issues, known and unknown,  that the reserve currency promise represents in the eyes of the reserve currency holder. 

        Irresponsible president, who acts out of urge of the moment,  without understanding or without caring of the possible consequences of his acts, and proving that after all, the legal -political system of reserve currency origin country has no instruments to stop such a policy of one man, can be a very good reason to undermine the trust in the reserve currency. 

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        • Patrice Ayme Says:

          No time to answer now. But will, Except to say Trump is not “spur of the moment”. He has held these ideas aloud for years, even several decades… And also people have been suffering

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        • Patrice Ayme Says:

          So that’s the reasoning I saw allusions to, many times. Your explanation is very clear, Eugen, thanks…
          However, I have a number of objections.
          I will put them in another comment…

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  5. oatmealactivist Says:

    One addition to your excellent analysis: US tax policy – arcane, corrupt, regressive – has over-taxed producers of physical goods (the manufacturing jobs that were once the mainstay of the middle class) while under-taxing the emergent services and digital economies. Consider that when you “trade” personal data for use of Google, Facebook, etc, the exchange is untaxed. And it’s much easier for tech firms to dodge tax than for manufacturers who often wind up in Harley Davidson’s position.

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    • EugenR Says:

      There is more of that, when part of the production, like most of the on line products are very cheap or free of charge, it reduces the measurable GDP, and this means less taxable revenue.

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  6. Picard578 Says:

    Reblogged this on Defense Issues and commented:
    Globalism works against democracy. Doesn’t matter whether it is technocratic European Union, United Nations, or massive international corporations, globalisation is the greatest danger to democracy – not populism, not nationalism, but globalism, regardless of what plutocratic media says.

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    • Patrice Ayme Says:

      Indeed. This is why Switzerland, an increasingly DIRECT DEMOCRACY, is made of 26 Cantons, each one with its own constitution… This localization of democracy is leading to direct democracy, increasingly. Fascinatingly, CALIFORNIA has also a DIRECT DEMOCRACY part in its “California” REPUBLIC constitution… California, one of the fastest growing states in the world, now with 40 million people, has arguably the world’s 5th GDP… And leads the rest of US by the nose, except perhaps Trump…

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  7. G Max Says:

    Much above my pay scale. But we need work, and when people go see shows in Vegas, they need beaucoup bucks. It doesn’t help me if the guy with the job and the bucks is in China. OK, lots more very upscale Chinese around. But we have to take care of our own first. I prefer to buy a Tesla made in California and Nevada than a Chinese car

    Like

    • Patrice Ayme Says:

      Yes, California is experiencing a Chinese invasion… I have, BTW, nothing against it: I welcome the stimulation…

      Like

    • EugenR Says:

      Tesla made cars, hmmm. It seems Alon Musks car factory is close to bankruptcy. It is one thing to produce batteries, and other thing to produce cars, with all the thousands of components working perfectly to gether for amazing few thousand dollars. The only US car producing factory that didn’t go bankrupt was Ford, and this happened also because Ford sold all its real estate for very high price few month before the 2008 collapse of the global economy. By the way the biggest manufacturer of cars in North America is Magna corporation, incorporated in Canada and producing mainly in Canada, Europe and Mexico.
      https://en.m.wikipedia.org/wiki/Magna_International
      There are no car manufacturers left in US worth to mention after Delphi bankrupted .
      http://www.nbcnews.com/id/9644882/ns/business-autos/t/auto-industry-rocked-delphi-bankruptcy/
      Since car production industry is major user of steel and aluminium, no new jobs will come from costume taxes on metal industry. The truth and devil is in the details, and this is not exactly in what Donald the Great is good at.

      Like

      • G Max Says:

        In Nevada and California we have plenty of electric cars thanks to Elon Musk, Grimes’boyfriend! Real all American cars. You will drive an electric car some day too. Also Grimes boyfriend has a space company w rockets which land and then fly again

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        • EugenR Says:

          If you don’t mind, that Elon Musks electric car costs you at least double compared to electric cars with similar qualities from other brands, and so is their environmental impact, then be it your way. I’m not against Elon Musks activities. In contrary. He pushed technology few steps ahead and this is a lot. I’m just opposing misinformation based on slogans propagated by adds, while the reality is neglected.

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          • G Max Says:

            Elon Musk has the world BEST BATTERIES. Also Teslaoder X and S are much larger than the tiny sardine cans Europeans enjoy

            Like

          • Patrice Ayme Says:

            I agree with GMax that, so far, the Teslas have no competition: bigger, better, etc. We see lots of them in the Bay Area, where they are made.
            Jaguar, British engineered, Indian financed (Tata) is coming out with the first real competitor for Tesla, a very nice looking crossover… Others will follow… After 2019 (????)

            Like

      • G Max Says:

        Lots of cars made in the gran old USA by Honda BMW Toyota

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        • EugenR Says:

          Reality will not change by making a claim on no or very partial evidence. By the way if the US manufacturing industries are in such a good shape, why you need to put on imports customs taxes?

          Like

          • G Max Says:

            More than 12 million cars made in USA last year, 17 millions sold. US is number one! Import tax needed because Germany cheats with subsidies, Patrice explained that for years

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  8. Patrice Ayme Says:

    [Sent to NYT]
    There is an interest for those who hold political powers and those who support them to make the people weak and despondent. No better way for that than to deprive them of QUALITY work. Massive employment can be slavery, if the work is not quality enough.

    As it is, in value, 1 product out of 3 sold in the USA is from China… That’s excessive and could have the same effects as happened in the Greco-Roman empire (or China, a few times…) It’s important to re-establish a balance…

    It is also not correct to claim that the trade deficit comes from dollar being a reserve currency… It’s Reagan who got it launched… The dollar has been reserve for a century…

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