Tuesday, July 24, 2018

Grabbing subsidization as an attempted quick fix for protectionism

First, take in the full pettiness, boorishness and economic ignorance of this tweet from the Very Stable Genius:

Tariffs are the greatest! Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs. It’s as simple as that - and everybody’s talking! Remember, we are the “piggy bank” that’s being robbed. All will be Great!
Now, consider what the pointy-heads feel it's necessary to do with your tax dollars in order to deal with the fallout from this kind of "thinking":

The White House is expected to announce a plan to provide $12 billion in government aid to farmers harmed by the administration’s multi-front trade war, the Washington Post first reported Tuesday morning.
Under the plan, which could be announced as soon as Tuesday, farmers whose products have been hit with retaliatory tariffs as a result of President Trump’s tariffs on other countries will be provided access to three distinct forms of aid: direct assistance, a food-purchase program and a trade-promotion program.
The announcement is expected to come as President Trump continues to escalate his protectionist rhetoric on U.S. trade with China.
The administration has already implemented tariffs on $34 billion in Chinese exports and Beijing has retaliated in kind, down to the dollar. In recent weeks, Trump has repeatedly threatened to implement tariffs on the entirety of China’s more than $5 billion export market, placing Beijing at a distinct disadvantage, given that it only has roughly $120 billion in U.S. exports available to hit with tariffs.
Soybean farmers have been hit particularly hard by the trade war as prices have plummeted. The president has repeatedly vowed to help soften the blow as Midwestern farmers, a key part of his base, have increasingly turned against his protectionism.
The aid proposal, which relies in part on a depression-era Department of Agriculture program designed to bail out farmers, is the product of a three-month research effort intended to help the administration see its trade war through by warding off domestic opposition in the farming community.
The depression-era program, known as the Commodity Credit Corporation, is empowered to borrow $30 billion from the Treasury Department absent Congressional approval.
So, the hand of Leviathan is brought in to shore up the pricing hose-up that was caused by our current boneheaded trade policy.

Here's a novel idea:

How about if we just let theses farmers sell their products at whatever their true market value is? 

Again I ask, what do Larry Kudlow and Stephen Moore have to say about this in their private discussions?

This gets us pretty far afield from free-market behavior.

In a very real sense, this country is being held hostage to the VSG's personality quirks. In two vital realms - security and trade - it leads to a day-by-day crapshoot.

UPDATE: Just came across this press release from Farmers for Free Trade:

Farmers for Free Trade, the bipartisan coalition working to oppose trade policies that hurt American farmers today released the following statement from Executive Director Brian Kuehl. 
"Farmers across America depend on open markets and stable contracts for their livelihood.  The best relief for the president’s trade war would be ending the trade war. Farmers need contracts, not compensation, so they can create stability and plan for the future. This proposed action would only be a short-term attempt at masking the long-term damage caused by tariffs.." 
“Farmers can and do weather many storms, but this economic cyclone of tariffs is creating long-term, irreversible damage to the heartland. The $20 billion trade surplus in agriculture is due to decades of effort by American farmers who’ve opened new markets and developed world class supply chains.  Unfortunately, a one-time check won’t replace the deterioration of long-term contracts and relationships. Nor will it address the many sectors of agriculture impacted – from producers, to grain bin operators, to shippers. Farmers need stable markets to plan for the future.  As such, we urge the Administration to take immediate action to stop the trade war and get back to opening new markets." 
Amen.









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