Gary Cohn out.

He left GS with a nice chunk of change and hung in the Trump Administration longer than most. Will his seat next to Lloyd be warm or will he ride into the sunset? Predictions. Winner one month out will receive a prize.

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Comments (62)

Mar 6, 2018

Stormy Daniels will take the helm

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Mar 6, 2018

No chance he's welcome back at GS. He's going to take some time off and then set up shop himself. Or potentially join a first generation shop that is currently succession planning.

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Mar 6, 2018

If free market believers like Cohn are being shown the door and the Peter Navarros of the world are receiving promotions that does not bode well. Prepare for trade battles (not going to call it war quite yet). Markets should be down tomorrow.

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Mar 6, 2018

Cohen isn't a free market believer in anything. Goldman benefited from endless government largesse.

And please explain to me the free market that occurs between China and the US? Or between anywhere.

Mar 6, 2018

I wonder how long Kelly hangs around? I feel like this administration will ebb and flow with the people going and coming. I can't imagine 3 more years--three more identities--of this leading to 4 more years in a second term.

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Mar 6, 2018

We are absolutely at war with China. They steal our IP and military secrets. They steal our jobs without allowing free trade. They fight our economic and political agenda everywhere and Xi now wants to be president forever.

Please tell me why we value "free" trade with China so much?

Fuck off Cohen. Thanks for the tax cuts. Hit the bricks.

Mar 6, 2018
TNA:

We are absolutely at war with China. They steal our IP and military secrets. They steal our jobs without allowing free trade. They fight our economic and political agenda everywhere and Xi now wants to be president forever.

Please tell me why we value "free" trade with China so much?

Fuck off Cohen. Thanks for the tax cuts. Hit the bricks.

We would do better focusing on stopping or slowing China's ability to buy treasuries, not institute tariffs, because it hurts all world trade, which isn't what anyone wants, and it hurts our relationships with allies. Continuity is no small thing.

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Mar 6, 2018

So you advocate a different type of battle plan. Fine.

China dumps through other countries. Do I agree on XYZ tarriff? Not necessarily. But I do not think China is a friend, China is an open economy or China is to be treated kindly.

And while we are demonizing Russia, China is building islands, enhancing their military and experience economy with stolen IP and research and becoming a menace.

Trump, as usual, is 90% correct, just off on the execution. Cohen did his job, tax cuts are solid, now its time for him to go back to enjoying the "free market" aka accepting pay for play and other forms of government goodies.

Read the last 4 issues of the economist to see globalists waking up to the last 3 presidents failed policies towards China.

Mar 6, 2018
TNA:

Trump, as usual, is 90% correct, just off on the execution. Cohen did his job, tax cuts are solid, now its time for him to go back to enjoying the "free market" aka accepting pay for play and other forms of government goodies.

Trump is 100% wrong all the time because he works on 50% or less information. Shooting from the hip is not strength, it's a weakness.

But, he doesn't actually understand the things he thinks he's going to fix. Most of us don't have a full understanding all the time. It's the reason people like Obama come in and focus on certain "hot button" topics they think are equally important, leaving much larger, more important social problems broken. If Trump had better information he'd be a lot smoother and his ideas would be executed with success.

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Mar 6, 2018

China is the issue. That is his focus. China is building islands. I knowing WTO rules, open sea rules, etc. Xi is paving the way to be a president for life. China is stealing endless IP. Their markets are not open.

Obama didn't do anything. Let's not pretend he was cerebrallly analyzing anything. Clinton, yes. Obama jammed through shitty healthcare and then signed endless EOs.

I fully support free trade when both parties are open. China is not. Even big business has cooled on China.

Mar 6, 2018
TNA:

China is the issue. That is his focus. China is building islands. I knowing WTO rules, open sea rules, etc. Xi is paving the way to be a president for life. China is stealing endless IP. Their markets are not open.

Obama didn't do anything. Let's not pretend he was cerebrallly analyzing anything. Clinton, yes. Obama jammed through shitty healthcare and then signed endless EOs.

I fully support free trade when both parties are open. China is not. Even big business has cooled on China.

Because of WTO and MFN a tariff cannot focus on countries--it focuses on favoring industry. Technically, it comes at the expense of consumers through higher priced goods.

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Mar 7, 2018
iBankedUp:

Trump is 100% wrong all the time

I'm highly critical of Trump, but this is just wrong. Great Supreme Court pick, awesome UN Ambassador, very good tax cut, and brave and moral decision on Jerusalem. He's also done a truly phenomenal job with ISIS, obliterating them from the face of the Earth.

But Trump is a self-destructive individual. I really don't understand him.

Mar 6, 2018
Troll - Aged 18 Years:

I'm highly critical of Trump, but this is just wrong. Great Supreme Court pick, awesome UN Ambassador, very good tax cut, and brave and moral decision on Jerusalem. He's also done a truly phenomenal job with ISIS, obliterating them from the face of the Earth.
But Trump is a self-destructive individual. I really don't understand him.

There's the Trump you see on t.v., behind the armies of staff who support him. I'm talking about the real Trump: @RealDonaldTrump. We all know who Trump is thanks to Twitter.

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Mar 7, 2018

Trump, as usual, is 90% correct..hahaha....This is bonkers...Don't know who is/are more retarded....Trump or his supporters..

MBB employee and alumnus
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Mar 6, 2018

BTW - for everyone who thinks building a wall is a joke, Pakistan is building a wall in Waziristan to stop the Jihadists from coming in from the ungoverned Afghan provinces.

woke

Mar 7, 2018

And don't forget: China is America's biggest creditor!
So, bad people in living in China! Bad country! Bad Xi!

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Best Response
Mar 7, 2018

What's being proposed is a sweeping tariff on steel and aluminum, not a unilateral economic sanction against China for violating trade agreements.

Your question is obviously intended as rhetorical, but you seem to be in sore need of a reminder. It wasn't long ago that conservatives were righteously decrying the government's role in picking the economy's winners and losers. These policies heap windfall on the 140,000 thousand employees of the steel-producing industries at the potential expense of 300 million U.S. consumers and the 6.5 million employees in the steel-consuming industries. It defies the principles at the heart of conservatism.

Applying even a modicum of critical thinking reveals this policy and approach for the free-wheeling, political pandering and placebo that it is. China is not even a top 10 exporter of steel to the United States. If you want to target China for legitimate market-distorting practices, fair, but let's be explicitly clear, that is not what this proposal accomplishes. It primarily impacts NAFTA trading partners and more bluster and brinkmanship than anything else.

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Mar 6, 2018

You should learn to get to the point.

No where in my post did I support steel or aluminum sanctions. I simply said that China is not a free economy or our friend. And Trump is correct generally on this topic, but wrong specifically.

We are in economic war with China. There actions are aggressive towards their neighbors. Inviting them into the WTO was a mistake and Trump is rightfully calling attention to them.

As for the steel and aluminum tariffs, it's probably a play to get better NAFTA terms under the guise of China. In fact, these emergency tariffs needed an economic war declaration to happen, something you couldn't get with Canada.

And who cares what "conservatives" said or think. Trump is a populist. Nothing conservative about him.

Mar 7, 2018
Schreckstoff:

It wasn't long ago that conservatives were righteously decrying the government's role in picking the economy's winners and losers. These policies heap windfall on the 140,000 thousand employees of the steel-producing industries at the potential expense of 300 million U.S. consumers and the 6.5 million employees in the steel-consuming industries. It defies the principles at the heart of conservatism.

Right on all points, but we conservatives still do oppose idiotic tariffs.

Mar 7, 2018

You're now gonna get downvoted by teenagers who can't imagine paying a few extra CENTS for their illicit 6pack of beer, or having to buy a few less shitty plastic Chinese imports because prices went up marginally.

Consumerism and neoconservatism views on "Muh free markets" have infected this country, and to hell with those decent paying middle class jobs if it means 16yo Chinese girl labor at a sweatshop like Foxconn can save me $10 on that new $1,000 iPhone (although I only upgraded to the previous version 11 months ago).

The best part is that no one, even those vaunted ECONOMISTS among us, think about the secondary and tertiary costs of annihilating jobs that pay modest middle-class wages. Increased welfare, drug abuse, opioid clinics, single moms, broken homes, criminality; these are all downstream consequences of policies that disproportionately alter the availability of jobs that would otherwise have allowed societal contribution through family formation, stable homes, and community engagement. I've LITERALLY had a professor in my M7 MBA class shush me when I brought this up in class because "well, while you do have a valid concern, these things are simply too difficult to measure!" WHY CAN'T THAT 45yo STEEL WORKER WHO JUST LOST HIS JOB SIMPLY LEARN TO CODE AND UPROOT HIS ENTIRE FAMILY TO SAN FRANCISCO!!??? wails the academic while he enjoys the sinecures of his lifetime tenure. Pathetic.

It's legitimately a disease of the American soul, and it's not like China in any way reciprocates with "free trade."

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Mar 6, 2018

Bingo. China takes our jobs and never buys our shit. They lure companies to their soil by providing spave labor and law environmental laws. In exchange Americans lose their jobs and the Chinese simply steal their IP.

Mar 7, 2018

This has little to do with China. China isn't even in the top 10 sources of steel imports. If you want to go after China, there are a million other ways that are way more rational than going after steel imports.

Canada, Brazil, South Korea, Mexico, Russia, Turkey, Japan, Taiwan, Germany, India (in
that order) are the top import sources of steel.

Mar 7, 2018

Hi supply, let me introduce you to demand. China floods the market with an excess supply of state subsidized steel. You really don't think this has any effects on the worldwide market? And you think that China has no purpose behind what they are doing? C'mon man!

Mar 7, 2018
Pmc2ghy:

Hi supply, let me introduce you to demand. China floods the market with an excess supply of state subsidized steel. You really don't think this has any effects on the worldwide market? And you think that China has no purpose behind what they are doing? C'mon man!

So we tariff Canada because China floods the rest of the world with subsidized steel? That's a great way to poison your trade relationships--to cut your nose off to spite your face. It doesn't even really hurt China.

Mar 7, 2018
TNA:

We are absolutely at war with China. They steal our IP and military secrets. They steal our jobs without allowing free trade. They fight our economic and political agenda everywhere and Xi now wants to be president forever.

You can't "steal jobs." Jobs aren't property that belong to anyone. Labor is a resource that the market directs to its most warranted uses. Many of those uses, in particular industries, is in China. This is called comparative advantage and it promotes national and global economic growth. Yes, Chinese companies "steal technology." But so do American, German, Brazilian, Japanese companies etc. They rip each other off, poach talent, etc. Welcome to competition.

TNA:

Please tell me why we value "free" trade with China so much?

Fuck off Cohen. Thanks for the tax cuts. Hit the bricks.

Because, as consumers, we get high quality goods at super cheap prices. That's why we buy them. And, as producers, we get access to super cheap credit (i.e., the current account deficit shows up as a capital account surplus which provides excess funds to our capital markets, pushing down yields and stimulating US investment).

So just because China fucks over their own people with oppressive protectionist policies doesn't mean we have to as well. We didn't do it when Japan was the boogey man and it worked out fantastically for us (and not so much for them).

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Mar 7, 2018

This is where you libertarians part ways with reality. Free trade is good and Trump's tariffs are asinine and counterproductive and do little, if anything, to hurt China, but to not acknowledge that China is a bad actor in trade is to ignore reality. China is one of the most abusive trade partners in the world. Not only are they abusive in trade, but they have made it increasingly difficult for the U.S. to realize the silver lining of a trade deficit, which is an investment surplus, because China has instituted oppressive controls on foreign investment. Chinese investors have to literally sneak money out of China to invest overseas. China is bad all around.

Mar 7, 2018
Troll - Aged 18 Years:

This is where you libertarians part ways with reality. Free trade is good and Trump's tariffs are asinine and counterproductive and do little, if anything, to hurt China, but to not acknowledge that China is a bad actor in trade is to ignore reality. China is one of the most abusive trade partners in the world. Not only are they abusive in trade, but they have made it increasingly difficult for the U.S. to realize the silver lining of a trade deficit, which is an investment surplus, because China has instituted oppressive controls on foreign investment. Chinese investors have to literally sneak money out of China to invest overseas. China is bad all around.

I do acknowledge that China is a bad actor in trade. My point is that their policy only hurts China. It favors their elite manufacturing class at the expense of their whole society. Their trade policy fuels real estate bubbles, increases unemployment, lowers the purchasing power of their citizens and forces them to save when they don't want to (consumption tends to increase as middle class emerges).

My point is that we don't need to follow this destructive policy to "win." I gave you a very specific and recent analog: Japan. Japan engaged in a similar sort of behavior (continue to today) and people like Trump (and presumably you) went on an on about how unfair it was. Well, what's happened? Japan has had a massive bubble which popped in the 80s and now has 3 lost decades. America, on the other hand, has grown fairly well (though would have been better if we didn't have the two worst American presidents simultaneously with Bush 2 and Obama).

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Mar 6, 2018

I disagree with you on many political items, but we generally agree on trade. It's pretty simple, these tariffs will hurt the american consumer/ american companies while simultaneously not having the effect of actually creating jobs. Propping up dying industries with government action generally doesn't work. I just hope this isn't a harbinger of further protectionism, the economy is doing well (and has been since Obama's 2nd term) and protectionism would derail that. It's essentially the fear I outlined on the thread regarding Trump's economic performance.

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Mar 7, 2018

Well yeah, because you're emotionally attached to liberalism and now support free trade because Trump (who has an R next to his name) is against it. If Bernie wins in 2020 and slaps on some tariffs I'm sure you'll find some rationalization for protectionism.

This is the problem. People are emotionally attached to ideology. We have republicans now that are suddenly against trade and capitalism.

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Mar 6, 2018

I'd rather Trump win in 2020 than Bernie become president. Don't presume to have me placed on whatever "side" you need me to be on for your partisan battles. I support free trade because, economically, it works to the benefit of most citizens.

p.s. you're emotionally attached to supply-side economics/ reaganism, which is bullshit.

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Mar 7, 2018
BobTheBaker:

I'd rather Trump win in 2020 than Bernie become president. Don't presume to have me placed on whatever "side" you need me to be on for your partisan battles. I support free trade because, economically, it works to the benefit of most citizens.

p.s. you're emotionally attached to supply-side economics/ reaganism, which is bullshit.

Supply side economics is a form a of Keynesianism which, I promise you, I do not support.

Mar 7, 2018
Esuric:

Supply side economics is a form a of Keynesianism which, I promise you, I do not support.

What??? Supply side economics is NOT Keynesianism....

Mar 7, 2018
StreetFoodLover:
Esuric:

Supply side economics is a form a of Keynesianism which, I promise you, I do not support.

What??? Supply side economics is NOT Keynesianism....

Yes it is. This might be a too nuanced/sophisticated discussion for this board, where the understanding of economics is extremely limited (usually to CFA 1 curriculum), but it operates within the Keynesian aggregate demand framework. Tax cuts are a component of expansionary fiscal policy, though Keynes emphasizes government spending as the primary variable. Either way, the supply-siders, Monetarists and Keynesians all use an aggregate demand framework (ISLM) with exogenous demand variables, multipliers and Knightian capital theory.

This is what prompted Milton Friedman to declare, "we're all Keynesians now."

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Mar 7, 2018

Yes it is. This might be a too nuanced/sophisticated discussion for this board, where the understanding of economics is extremely limited (usually to CFA 1 curriculum), but it operates within the Keynesian aggregate demand framework. Tax cuts are a component of expansionary fiscal policy, though Keynes emphasizes government spending as the primary variable. Either way, the supply-siders, Monetarists and Keynesians all use an aggregate demand framework (ISLM) with exogenous demand variables, multipliers and Knightian capital theory.

This is what prompted Milton Friedman to declare, "we're all Keynesians now."

So then do you side with the classical school of economic theory, aka the Austrian School? I would consider myself to be one who subscribes to the Austrian School of thought and, as you've pointed out, disagree with the aggregate demand framework. BUT, I've always assumed the term "supply-side" to be colloquially synonymous with "classical" or "Austrian". I can't think of any "supply-side" economists who aren't expressly against the idea of the FED, an inherently Keynesian body. Not sure if we're confusing terminology or something, but I've never heard of supply-side economics associated with Keynesianism. PM me if too off topic. Also, I've provided a link to a very good book that I just recently read critiquing Keyne's General Theory line by line, maybe you would find it interesting

https://www.amazon.com/Failure-New-Economics-Henry...

Mar 7, 2018
StreetFoodLover:

Yes it is. This might be a too nuanced/sophisticated discussion for this board, where the understanding of economics is extremely limited (usually to CFA 1 curriculum), but it operates within the Keynesian aggregate demand framework. Tax cuts are a component of expansionary fiscal policy, though Keynes emphasizes government spending as the primary variable. Either way, the supply-siders, Monetarists and Keynesians all use an aggregate demand framework (ISLM) with exogenous demand variables, multipliers and Knightian capital theory.

This is what prompted Milton Friedman to declare, "we're all Keynesians now."

So then do you side with the classical school of economic theory, aka the Austrian School? I would consider myself to be one who subscribes to the Austrian School of thought and, as you've pointed out, disagree with the aggregate demand framework. BUT, I've always assumed the term "supply-side" to be colloquially synonymous with "classical" or "Austrian". I can't think of any "supply-side" economists who aren't expressly against the idea of the FED, an inherently Keynesian body. Not sure if we're confusing terminology or something, but I've never heard of supply-side economics associated with Keynesianism. PM me if too off topic. Also, I've provided a link to a very good book that I just recently read critiquing Keyne's General Theory line by line, maybe you would find it interesting

https://www.amazon.com/Failure-New-Economics-Henry...

I'm not an economist, though I did almost go down the PHD route in the history of economic thought (parent's urged me to do something else). I am familiar with the Austrians, who most definitely are not supply-side economists. Austrian's do not ascribe to the aggregate demand framework (the concept to them is actually incoherent. They talk about effective demand. Aggregate demand has no limits in their framework) and outright reject Knightian capital theory (support Bohm-Bawerkian capital theory).

In the context of modern economics, they both fall under "conservative economics," but conceptually, they operate very differently. Really all of American economics is very different from Austrian economics.

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Mar 7, 2018
Esuric:

I do acknowledge that China is a bad actor in trade. My point is that their policy only hurts China.

No, it doesn't. This is demonstrably false. From stolen IP, to viral attacks on American software systems, to making it almost impossible for Chinese investors to invest in America (except for those close to the communist party), to literally building artificial islands in order to control sea trade ways by force. China is indisputably the worst trading partner in the world and its actions don't just harm the Chinese.

Esuric:

My point is that we don't need to follow this destructive policy to "win."

That's true. Steel tariffs are non-sensical. But there is plenty the U.S. should be doing to counter China's bad actions, and that isn't being anti-free trade.

Mar 7, 2018

Let me add this anecdote. Last year I was at my friend's office, who owns an IT security firm outside of D.C. I was in one of his conference rooms that has a big, electronic map on the wall. This map shows the constant flow of cyber attacks going on around the world--the location the attacks originate from and the location of the attack victim. An overwhelming number of the cyber attacks were originating from China with the overwhelming number of victims in the U.S. China not only does nothing about this, they actively encourage it.

China needs to be dealt with harshly. On the other hand, we should not be punishing our trade allies (Canada, Mexico, Taiwan, et al) out of mis-guided spite. That I totally agree with. In any other context or era, China's actions on trade would be considered acts of (real) war.

Mar 6, 2018

You really need to just add your rejection of the nation state and borders.

Everything you're talking about sounds nice, and might be, but when you have voting citizens demanding their elected officials serve citizens, you can't pretend like the one way street economic relationship we have with China will not be the focus of their ire.

Your opinion isn't supported by history, reality or even most business leaders.

Mar 7, 2018
TNA:

Your opinion isn't supported by history, reality or even most business leaders.

No it really is actually. Look at Bush's steel tariffs in the early 2000s. Clear cut case of dead-weight loss. It's taught in most undergrad and grad business schools when discussing the benefits of trade.

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Mar 6, 2018

This post isn't just about steel. I am not agreeing or disagreeing about steel tariffs.

I am saying trade with China is a one way street. Nothing open or free or fair with them.

Mar 7, 2018

You're really eating up the neocon BS. The last thing this country needs is more shitty quality (not high quality) shit, just because it's cheap.

The last 100 years of economics is entirely based on the premise that MORE = BETTER, but psychology of human behavior, as well as behavioral economics, has started to push back against this idea. It's simply a false premise. There are significant diminishing returns to having more and more shit, and that's not what makes a developed nation better off. People are more than BEEP BOOP robotic consumers.

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Mar 6, 2018

By high quality, is he talking about bad baby formula, the lead based paint, cheap furniture with fermeldhyde, etc?

Japan, Korea, Europe, Taiwan, all provide high quality goods and services. They all have at one time been accused of dumping or being unfair and the US has worked with them.

China is a whole other story.

Mar 7, 2018
Pmc2ghy:

You're really eating up the neocon BS. The last thing this country needs is more shitty quality (not high quality) shit, just because it's cheap.

The last 100 years of economics is entirely based on the premise that MORE = BETTER, but psychology of human behavior, as well as behavioral economics, has started to push back against this idea. It's simply a false premise. There are significant diminishing returns to having more and more shit, and that's not what makes a developed nation better off. People are more than BEEP BOOP robotic consumers.

The term "neocon" is a reference to Trotskyites that support a hyper-aggressive foreign policy, large deficits and high government spending. That doesn't apply to me.

Now, you can say that Chinese products are shit all you like but it flies in the face of reality. The American people have decided that they like Chinese products, in general. That's why we have the current account deficit (what Trumpian's call the "trade deficit") in the first place. No one is forcing us to buy Chinese products.

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Mar 7, 2018

This reasoning is absurd. The American people didn't decide on anything; they took what was given to them based on the "wisdom" of elites and elected leaders. This type of decision can only come from top-down due to the collective action problem, and that's why we have the system we do in America. The collective action problem is simply too strong in this situation, and globalization provided too much incentive for the few at the top all while sacrificing many at the bottom.

I completely understand that globalization and cheap good from foreign trade increases GDP as a whole, but all the latest economic research has shown that these gains have not even remotely been distributed equally (when policies were put in place economists thought they would be distributed more fairly, and they were wrong with disastrous consequences). And go ahead, ask any normal person "would you rather have another 5 [t-shirts, gym shoes, cell phones, plastic trinkets, coffee mugs, etc.] all made in China/Vietnam/Bangladesh or provide 1 middle class salary on which a person in flyover country can provide for a family?" Non-psychopaths choose the latter every single time. Like how many fucking ipads and cell phones does one person really need?

And still, no one addresses the secondary and tertiary costs associated with quickly annihilating industries or jobs. Assuming we don't go all Darwinian "survival of the fittest" and we continue to have societal protections for those who fall to the bottom, then we're paying for it all one way or another. I'd personally rather pay for it through fewer goods and higher cost goods than through opiod clinics, "job retraining programs" that don't work, welfare assistance, and prison system costs.

American policy over the past 50 years has paved the way for increased inequality, middle-class wage stagnation, low labor force participation overall, and unprecedented labor participation in the low-ceiling service sector. The tide is now changing though.

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Mar 6, 2018
Pmc2ghy:

This reasoning is absurd. The American people didn't decide on anything; they took what was given to them based on the "wisdom" of elites and elected leaders. This type of decision can only come from top-down due to the collective action problem, and that's why we have the system we do in America. The collective action problem is simply too strong in this situation, and globalization provided too much incentive for the few at the top all while sacrificing many at the bottom.

I completely understand that globalization and cheap good from foreign trade increases GDP as a whole, but all the latest economic research has shown that these gains have not even remotely been distributed equally (when policies were put in place economists thought they would be distributed more fairly, and they were wrong with disastrous consequences). And go ahead, ask any normal person "would you rather have another 5 [t-shirts, gym shoes, cell phones, plastic trinkets, coffee mugs, etc.] all made in China/Vietnam/Bangladesh or provide 1 middle class salary on which a person in flyover country can provide for a family?" Non-psychopaths choose the latter every single time. Like how many fucking ipads and cell phones does one person really need?

American policy over the past 50 years has paved the way for increased inequality, middle-class wage stagnation, low labor force participation overall, and unprecedented labor participation in the low-ceiling service sector. The tide is now changing though.

That's not the way it works. 'Americans decided' collectively, when producers liked cheap inputs from China, put them under the value add process (marketing, sales, creative design, etc.), all while charging reasonable prices suitable to consumers. You could do it here, at 10x more costly, and the consumers may not like paying 10x more to purchase. American free capitalism economics works like a system, not like a shoving something down people's throats.

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Mar 7, 2018

Still wrong, the collective action problem is real. Top-down policies decided for Americans all in the hopes greater GDP. I recognize that economists of the time were misguided and really thought that increased growth and prosperity through "free trade" would be distributed across society generally equally (this is the case in emerging economies), but it didn't work out like in developed America.

Let's look at to whom the gains have gone, and we'll see if Americans are still happy. This is idea is substantiated by mass movements like OWS, hipsterism, Bernie, Trump, etc. A lot of America is not happy with how things have turned out after they were promised something different.

Mar 6, 2018
Pmc2ghy:

Still wrong, the collective action problem is real.

Let's look at to whom the gains have gone, and we'll see if Americans are still happy. This is idea is substantiated by mass movements like OWS, hipsterism, Bernie, Trump, etc. A lot of America is not happy with how things have turned out after they were promised something different.

Mostly all of the wealth distribution gap in the past decade or two have come through capital gains, not from higher wages to the top, or even through significantly higher bottom lines.

It's a wages problem that I think can be traced back to financial ingenuity surfacing AROUND the world. Instead of focusing on productivity, we're using cheap capital to fuel growth.

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Mar 6, 2018

OK.

So we outsource it because of cheap labor. Now we have all these people out of work. So what, fuck them?

The left advocates for more social programs to help these people. Because the left realizes you can have large numbers of absolute destitute people. Their solution is rooted in the state.

My solution is that China is dangerous. I'd happily pay more for goods and services made here, employing Americans, and also not give China any help.

All those jobs lost to China for cheap shit employs Chinese, who have improved standards of living off our backs and therefore doesn't press the government to be more free.

China is dangerous. The economist finally realizes this. Foreign affairs finally realizes this. US business leaders now know.

Bring the jobs back and starve China until they decide to open their market, stop building islands and be fair players.

Mar 6, 2018
TNA:

OK.

So we outsource it because of cheap labor. Now we have all these people out of work. So what, fuck them?

The left advocates for more social programs to help these people. Because the left realizes you can have large numbers of absolute destitute people. Their solution is rooted in the state.

My solution is that China is dangerous. I'd happily pay more for goods and services made here, employing Americans, and also not give China any help.

All those jobs lost to China for cheap shit employs Chinese, who have improved standards of living off our backs and therefore doesn't press the government to be more free.

China is dangerous. The economist finally realizes this. Foreign affairs finally realizes this. US business leaders now know.

Bring the jobs back and starve China until they decide to open their market, stop building islands and be fair players.

China, along with most of the developing world, does not consume enough to soak up an increase in American goods on the market. If you don't balance the system while encouraging free trade, where do you expect these exports to go that are supposedly going to employ all of these people?

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Mar 7, 2018
TNA:

OK.

So we outsource it because of cheap labor. Now we have all these people out of work. So what, fuck them?

You make it sound like we have Marx's labor reserve armies just hanging around. I think unemployment is like 4%?

TNA:

The left advocates for more social programs to help these people. Because the left realizes you can have large numbers of absolute destitute people. Their solution is rooted in the state.

So is yours. You want the state to tell us who we can and cannot sell to/buy from. You want the state to prohibit us from engaging in free commerce with certain parties because they don't belong to this country. Your solution is as statist as theirs.

TNA:

My solution is that China is dangerous. I'd happily pay more for goods and services made here, employing Americans, and also not give China any help..

Cool man, but most American's won't pay more, as evidenced by their actions.

TNA:

All those jobs lost to China for cheap shit employs Chinese, who have improved standards of living off our backs and therefore doesn't press the government to be more free.

Capitalism and trade isn't a zero-sum game. One party does not win at the expense of the other. Trade has made the entire world wealthier collectively. Look how much we've benefited from the development of Japan, South Korea, Taiwan, Germany, etc. since the 2nd world war.

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Mar 7, 2018
Esuric:
TNA:

OK.

So we outsource it because of cheap labor. Now we have all these people out of work. So what, fuck them?

You make it sound like we have Marx's labor reserve armies just hanging around. I think unemployment is like 4%?

You might as well admit that you've lost this debate now. The conservative's/libertarian's last grasp at winning an argument is to finally proclaim "But, but, but unemployment is down to X!" I'd expect morons on some site like reddit to not understand how to break down a data set, but not finance professionals on WSO.

While unemployment is indeed down to 4%, please respond to the facts now...

1) Labor force participation is hovering around 30 to 40 year lows. As I'm sure you know, but so conveniently left out, those who are no longer looking and no longer participating are not counted in unemployment stats.

2) Over the last generation millions upon millions of middle-class jobs w/ benefits (health insurance, pensions/401(k)s, paid vacation, etc.) have been replaced by low-wage, no benefits service sector jobs such as retail, food, and hospitality. This fact is super easy to confirm with BLS data.

I won't even get deep into the "gig" economy and how people are being scammed there, but the latest and biggest academic study on Uber showed that drivers, after accounting for all hidden expenses, are making around $3-4/hour! Insane, but hey, at least the plebs have flexibility!

https://www.npr.org/sections/thetwo-way/2018/03/02...
3) Income inequality has soared in the last 30 to 40 years

How are any of these things good for the US economy or the morale of the population as a whole?

Esuric:
TNA:

My solution is that China is dangerous. I'd happily pay more for goods and services made here, employing Americans, and also not give China any help..

Cool man, but most American's won't pay more, as evidenced by their actions.

I still don't think you understand what a collective action problem is. Americans never had a real choice, it was decided for them. While their overarching ideas may be misguided at times, if Americans didn't care about these issues then how can you explain tens of millions of votes for people like Trump and Bernie?

Esuric:
TNA:

All those jobs lost to China for cheap shit employs Chinese, who have improved standards of living off our backs and therefore doesn't press the government to be more free.

Capitalism and trade isn't a zero-sum game. One party does not win at the expense of the other. Trade has made the entire world wealthier collectively. Look how much we've benefited from the development of Japan, South Korea, Taiwan, Germany, etc. since the 2nd world war.

Your lack of knowledge regarding the history of trade and these listed countries is upending your entire argument. South Korea and Taiwan had extreme protectionist policies and government intervention for decades in order to build up their economies, provide their populace with jobs, and grow internally rather than externally. They still to this day have greater protective measures in place than most European nations and, of course, the US.

Germany, well they were a shit show if there ever was one, and their industries benefited tremendously from US and European largess post-WWII. This wasn't exactly "free-trade". Also, Europe RIGHT-NOW has substantially more trade protections in place with all of the world, including the US, than the US has ever had over the past 70 years.

Japan, well their economy and history is quite complicated, and would deserve its own thread, but they've certainly gone through an international welfare stage and a protectionist stage.

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Mar 6, 2018

1.) LFPR lows have alot to do with the fact that we have the largest contingent of people reaching retirement age as a % of the population than at any point in modern American history. Additionally, we have the highest % of the population getting bachelor's and post-graduate degrees than at any point in modern American history. These two factors explain most (not all) of the low LFPR.

2.) The question is not whether these jobs pulling levers for 60k/ year with great benefits are gone (they are). The question is where they were ever SUSTAINABLE. Indications are that they are not sustainable (China is now losing factories to the likes of Laos as their labor force becomes more expensive). Certainly, with the advent of automation they are even more unsustainable. Government protectionism is likelier to hurt the average citizen than help the average citizen in this context. If I'm a steel producer in the U.S. and these tariffs make my business viable again I am spending the money investing in robots not workers.

Given these realities the government needs to pivot towards lowering the cost of healthcare and education in this country (which would put money in the pocket of every citizen) as well as improving the social net we have here. Less money on bombs and more money on education and welfare would be great.

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Mar 7, 2018
BobTheBaker:

1.) LFPR lows have alot to do with the fact that we have the largest contingent of people reaching retirement age as a % of the population than at any point in modern American history. Additionally, we have the highest % of the population getting bachelor's and post-graduate degrees than at any point in modern American history. These two factors explain most (not all) of the low LFPR.

Aging population has a bit to do with this, but this low LFPR has been consistent since about 2013 when the very oldest of the Baby Boomer cohort would have just hit retirement age. Also, as far as education, a majority of the population still does not seek a degree of any kind, let alone an advanced degree, and this would end up being a blip on the stats.

Now, let's just look at age 25-54 (prime) males. Post WWII their LFPR was 98%. In 1980 it was around 95%. In 2000 it was still at 92%. Today it is around 88%. Something has happened here...

BobTheBaker:

2.) The question is not whether these jobs pulling levers for 60k/ year with great benefits are gone (they are). The question is where they were ever SUSTAINABLE. Indications are that they are not sustainable (China is now losing factories to the likes of Laos as their labor force becomes more expensive). Certainly, with the advent of automation they are even more unsustainable. Government protectionism is likelier to hurt the average citizen than help the average citizen in this context. If I'm a steel producer in the U.S. and these tariffs make my business viable again I am spending the money investing in robots not workers.

Given these realities the government needs to pivot towards lowering the cost of healthcare and education in this country (which would put money in the pocket of every citizen) as well as improving the social net we have here. Less money on bombs and more money on education and welfare would be great.

I do agree that some industries were not sustainable, but the US went from 0 to 100 (real quick). Massive offshoring literally decimated entire towns and industries overnight, when there could have been protections put in place to make this transition much smoother with much less collateral damage.

Like I've said before, we're paying for it in one way or another. Want a bunch of cheap shit from Mexico and China and think it will save you money? Not so fast...let's compare the savings to the costs associated with healthcare, retraining, welfare, drug addiction and criminality that come from millions of men and women whom have lost jobs. How about the tertiary effects on kids who grow up in broken homes with a struggling parent? If we don't want to leave these people to fend for themselves then the money is coming from somewhere. Economists never seem to account for these realities, which is honestly shocking.

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Mar 7, 2018

China's "competitiveness" results from the confluence of a devalued currency, a devalued labor force, and strict capital controls. This makes for a strong cocktail of economic growth but like chemo, it comes with a seriously toxic effect on the domestic populace. As China continues to transform from a backwards agrarian state to a world power, and as it's middle class, which is the largest in the world, continues to desire for more and more these practices will become less and less tenable.

Fueling economic growth through the process of making goods progressively less affordable for your own citizens is not a sustainable system. It's only an amenable arrangement while the majority of the population lives hand to mouth. In other words, it's a workable template to go from a third world country to a second, but not a second world country to a first. China will soon become a victim of it's own success as capital will eventually seek out cheaper labor markets and it will turn towards services.

Countries are not employers, companies are. For every China you extinguish, there will be another emerging economy desperate for jobs, however menial and at any price. Without forcing corporations to participate or to recognize a global standard for labor laws and practices, then the race will always be to the bottom. Otherwise, you are just playing the global equivalent of wack-a-mole while perpetuating false hopes that rest on jobs and some vague, ill-defined notion of winning.

Mar 6, 2018
Esuric:
TNA:

We are absolutely at war with China. They steal our IP and military secrets. They steal our jobs without allowing free trade. They fight our economic and political agenda everywhere and Xi now wants to be president forever.

You can't "steal jobs." Jobs aren't property that belong to anyone. Labor is a resource that the market directs to its most warranted uses. Many of those uses, in particular industries, is in China. This is called comparative advantage and it promotes national and global economic growth. Yes, Chinese companies "steal technology." But so do American, German, Brazilian, Japanese companies etc. They rip each other off, poach talent, etc. Welcome to competition.

TNA:

Please tell me why we value "free" trade with China so much?

Fuck off Cohen. Thanks for the tax cuts. Hit the bricks.

Because, as consumers, we get high quality goods at super cheap prices. That's why we buy them. And, as producers, we get access to super cheap credit (i.e., the current account deficit shows up as a capital account surplus which provides excess funds to our capital markets, pushing down yields and stimulating US investment).

So just because China fucks over their own people with oppressive protectionist policies doesn't mean we have to as well. We didn't do it when Japan was the boogey man and it worked out fantastically for us (and not so much for them).

People don't understand that the capital account balance does more damage than the protectionist schemes China has in place. In fact, China's protectionist schemes are in place to hurt households in favor of industry. Wages are low, unemployment is high, and the average networth of Chinese people is mere pennies.

If you look at other developed countries like Japan or in Europe, they don't allow China to flood their accounts with easy capital. It's because cheap credit fuels growth in America instead of low unemployment and higher savings. The capital account surplus here is directly related to the account deficit.

If you implement protectionist policies, the only thing that will happen is the world becomes more divided, but even more importantly, households will feel more burdened, and I would assume people will take on more debt or otherwise savings will drop.

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Mar 7, 2018

I think Cohn was a valuable influence on Trump, who notably only listens to rich, male advisors over six feet tall. Unfortunately it wasn't enough to stop him from enacting a tariff on one of the key input goods for American manufactures. Protectionism = Bad.

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Mar 7, 2018

Very sad news. Trump unfortunately is moving in a direction that many on the right hoped he would avoid. I guess we're not that lucky.

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Mar 7, 2018

If nothing else, this is a great litmus test to find out who the actual, principled conservatives are versus simply Trump sycophants.

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Mar 7, 2018
Mar 7, 2018

when you're accustomed to privilege, equality feels like oppression

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Mar 7, 2018
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