Posted on 01/18/2017 5:19:10 AM PST by expat_panama
Imagine a short person spending his days cursing the strong inch for it robbing him of impressive height? Better yet, please contemplate a compulsive eater who blames his substantial weight on a pound that is too weak.
Wise minds would mock the unhinged individuals who would rage at the foot ruler, inch, pound, and scale for revealing reality. Such people would logically be the object of our ridicule and scorn, or maybe just pity. Scales, rulers, inches and pounds are measures. Nothing else. They dont weaken or strengthen us. They just are.
Whats important about them is that if the inch were weakened as it were to half its original length, and the pound were strengthened to double its present weight, neither would alter reality. The person of diminutive stature would still be small even if a newly defined inch rendered this person 10 feet tall. Just the same, a strong pound wont suddenly loosen clothes that used to be tight.
So while we would properly laugh at people inclined to curse reality, economists and politicians who blame economic performance on a strong dollar are viewed as wise. Who cares that the economically prosperous U.S. had a strong, stable dollar for almost all of its first 200 years of existence; to believe the President-elect and most economists, devaluation is the sale-inducing path to prosperity according to modern thinkers operating free of reason. Our new president says the dollar is too strong, that Our companies cant compete because our currency is too strong. See above and laugh. Or cry.
Back to reality, the obvious problem with the much-beloved devaluation scenario is that when we individuals trade, its products for products. Thats the sole reason we produce in the first place; to get what we dont have. To import. Money just facilitates our getting. Nothing else. Yet to our new president and countless economists, prosperity is all about exporting things. No, prosperity is all about importing things.
Think about it. Do any of you readers get up and go to work each day just for dollars? Is your sole purpose to export your labor? Not by a mile. You export so that you can import. Thats the only reason you work. Some of you might save the proceeds of your work for a later date, or to pass on to husbands, wives, children and grandchildren, but even then it remains the truth that youre saving so that someone else can import, or get. Its all so basic, right?
Not to our incoming president, and all manner of economists on the left and right. They cheer on dollar devaluation because it supposedly renders the goods and services we produce cheaper; thus easier to export. Ok, but we earn dollars. If the dollar is devalued as Trump et al desire, and we get back cheaper dollars in return for our toil, then the sole purpose of our work is taken from us. Its taxed away by devaluation. We get cheapened dollars that buy less in return for our work. Devaluation robs us.
Yet Trump thinks the dollar is too strong. Ok, but if its cheapened we have a reduced incentive to produce in the first place. Why work for dollars that dont buy very much? Also, if were not buying from others, how can they buy from us? These minor little details are never asked by a political class so intent on devaluing the money we earn.
Of course, thats only part of the story. There are other realities to consider.
Its said that companies with an eye on exporting (meaning, they have an eye on importing) benefit from a weak currency. But a weak dollar cant alter reality any more than can a shrunken inch or expanded pound change whats true. Money is a veil, to quote the late, great Robert Bartley, longtime editorial page editor of the Wall Street Journal.
This is important because when companies produce goods for sale, they import inputs from across the street and around the world. This matters simply because a devalued dollar logically drives up the price of everything necessary to produce marketable goods. Indeed, does any mildly sentient being believe that Treasury can shrink the purchasing power of the dollar without those who produce for dollars asking for more of them in return for what theyre selling? Only to economists and politicians untouched by reality does devaluation cheapen exports! What a laugh.
What about shipping? Trump and his crowd are made giddy by the word export, export of goods manufactured in the states really makes them giddy despite the reality that rich countries generally design goods while enlisting poorer countries in the low-value work of manufacture. But shipping costs a lot of money. And it becomes quite a bit more expensive in dollars when the dollar is being weakened. Figure that in the 70s and 00s the dollar was severely devalued, and the prices of oil, airplane fuel and all other transportation commodities soared.
And then theres labor. Trump and his protectionist friends love labor-intensive industry, they in particular get frisky when the labor is based in the United States, but last this writer checked these workers earn dollars in return for their toil. And if Trump is to be believed, these dollar-earning everymen were his base of support in the most recent election. Do these average people realize that Trump wants to devalue the dollars they work for each day? Wheres the media coverage of this? Trump, the alleged populist, is out to devalue the dollars earned by common people who frequently lack the hedging knowledge to mitigate governments theft of their earnings. Some would call it a scandal.
While the president-elect talks a good game about the importance of economic growth, talking down the dollar measure amounts to fakery. To believe it works is as silly as a real estate developer believing he can command more for his properties by devaluing the square foot. This is not the stuff of a serious country.
John Tamny is editor of RealClearMarkets, Political Economy editor at Forbes, a Senior Fellow in Economics at Reason Foundation, and a senior economic adviser to Toreador Research and Trading (www.trtadvisors.com). He's the author of Who Needs the Fed?: What Taylor Swift, Uber and Robots Tell Us About Money, Credit, and Why We Should Abolish America's Central Bank (Encounter Books, 2016), along with Popular Economics: What the Rolling Stones, Downton Abbey, and LeBron James Can Teach You About Economics (Regnery, 2015).
Don’t be silly. Transport drivers and retailers don’t create wealth. They all should get jobs at plants making stuff that can’t be transported or sold.
They have a VAT on everything sold in the country but waive it for exports. It always amazed me that you could buy a BMW for less in Dallas than the comparable car would cost in Nuremberg.
Dollar strength is only a concern for those in the import/export business.
When we are importing more than exporting a strong dollar is needed, but how does one get a strong dollar if it is economically weak??
I don’t want unnecessary imports, and I could care less about exports. If we get exports that’s just gravy for the economy, but to manage our economy solely on export is retarded.
For all this talk about strong American exports, we’ve lost that battle so far and now import far more than we export.
Let’s try something else now, shall we?
All you chickenhawks claiming America must be weak and cower need to F yourselves.
The purpose of a tariff is to artificially hike the price of the import making the domestic source more profitable resulting in more Americans working and reducing the welfare money spent. Win-win. It's the whole point which is to reverse the bias from middlemen profits obtained importing goods into the USA to real wages and benefits for Americans making goods.
The petulant Free Traitors have to realize that there are two sides to this issue. Trump is going to teach them the hard way.
I have to admit that was a good question. Which is a surprise coming from you.
No let's not. Show me the money or drop it.
“If so, youre being rather disingenuous.”
Anyone claiming to be an expatriate is disingenuous by definition. They made their money here but then left with it to spend it elsewhere. expat_panama does nothing but anti-American threads that state America should be weaker to be better. Typical liberal agenda.
Pse tell me if you're aware that we always sell the same amount of stuff overseas that we buy -that even while some goods may be in surplus or deficit that trade as a whole will always balance.
Once a new car reaches the customer all that shipping, marketing, retailing added NOTHING to the value of the car. Who sat in their new car and thought about the cool train it shipped on or the car dealers furniture? Nobody. Those services didn’t create anything.
“Speaking of tool, how will your vaunted 10% tariff affect the jobs at those domestic U.S. manufacturers that rely upon imported materials?”
Well, why don’t we ask all those other nations you support that do it? It doesn’t seem to hurt them any.
“Their material cost will go up 10% like all of their competitors. Maybe a domestic source will come online if the material is available locally. “
Exactly!
The bigger question is why the hell are we importing in the first place?? We used to export steel to Japan and now we import it from Japan? Since when did Japan get iron ore reserves??
This upside down “hate America” crap has got to stop.
As you said, tariff imports and watch domestic production explode.
Almost two-thirds of the rubber in the world is produced in three countries: Thailand, Indonesia and Malaysia. How much is that rubber worth in those countries, and how much is it worth after it is transported to a production facility?
To be fair, maybe you are a really, really drunk Alexander Hamilton.
Can you name any industry that isn't involved in imports and/or exports?
Try putting that in English.
Besides, I couldn’t give a sh*t what some anti-American expat thinks, especially you since you always post that America must be weaker to be better!
Your liberal agenda is well known here. I am surprised you haven’t been zotted by now.
Tariffs also generate lots of revenue and if we can use it to balance the budget then the dollar strengthen even more. The trick is austerity.
It sounds like you have no idea what it means for a product or commodity to be more valuable in one location than another. Take a Honda that is rolled off the assembly line in Marysville, Ohio. If those cars could only be sold to people who walked to the plant, the company wouldn't even be able to sell enough cars to justify building the plant in the first place.
I don't care what the customer "thinks" the value of the shipping process may be. The reality is that when they sit in a new car, they are sitting in something that they never would have been able to own without the shipping process that brought it to the dealership where they bought it.
....which has nothing to do with offshoring and importing back to the USA duty free.
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