A huge number of journalists continue to talk about a “Trump administration” with things called “policies” that it “plans”. They know better. They should act better…
I especially love the coverage of the stock market with "Market regains on Trump comments."
The Masters of the Universe traders remind me of playing fetch with an eager puppy where 3/4 of the time you just feint throwing the ball.
I think historians (assuming any exist) 80 years from now (the duration since der Führer died) will describe this time as a masterpiece of Russian асимметричная война (asimmetrichnaya voyna) — "asymmetric war" By merely cockteasing a Trump Tower Moscow, Putin has destroyed the US.
Barely competent at logic, John Authers and others imported from the FT and the Economist, repeatedly hop over the premise that there is a plan, often too eager to discuss why it isn't working. You must write about this, pointing out these clowns each time. But I'm warning you: stop rolling your eyes. I have long stopped because they're getting stuck on the top.
TY for all this. The gaslighting is quite hard to cut through and shake off, crude as it is. Our media ecology has its biases, and this whole solemnifying of established power structures even when they're in the hands of chaos itself is indeed such a huge problem.
Agree entirely. There's a whole cottage industry of the "commentariat" making up fantasy worlds in which Donald Trump and his cabinet of enablers and stooges have long-range plans and strategies. They need to repeat to themselves slowly and often: "Donald Trump is a lifelong cheat. He never ran a business venture he didn't run into bankruptcy. Trump is a Russian asset and has been one for decades. He has no philosophy or world-view or logic, Trump is demented, his mind is going, such as it was. Donald Trump is incapable of understanding anything, knowing anything, or even being aware that there is something to know."
If you think the financial reporters are bad, you should hear the financial analysts at the investment houses/banks who are desperate to spin the tariff chaos as "negotiating genius" that is doing what it was intended to do: bring investment and manufacturing jobs back to the U.S. As a client with a modest portfolio I sat thru an entire 'pitch' that did manage to mention the bond market but utterly ignored the cratering of the dollar.
The financial analysts' job at their investment houses/banks is to convince clients to buy stocks. Only their absolute top clients ever get advice to sell.
On your point about the deficit, I've been checking the daily Treasury briefings and we are $282B ahead of last fiscal year's deficit at this point.
If instead of placing $130B in debt a month we need to place $175B (also increased by the backloading of the auctions due to the debt ceiling increase delay) things could get nasty, quickly.
As an ex-Brit, my sense of the US is that it has increasingly turned to belligerent action rather than diplomacy. The huge US military is deployed, often in a "shock and awe" approach to solve some problem. Vietnam was the forerunner, but Gulf War I was the main onslaught, followed by the Iraq/Afghanistan in the 21st century. It seems to me that this mindset has taken over in the US, especially with the Trump Party that tries to exude "strength" as a bully. Thus, the aggressive bullying of allies in NATO, then of everyone with tariffs. Congress could have stopped Trump if it were sane and recognized that Trump's actions were for revenge rather than good policy. But no. As you point out, many US companies offshored their manufacturing, especially to China. Now they pay the price. Either US companies absorb the tariff and reduce profits, or they lose revenue and profits. That will not sit well with the CEOs and execs. Will they insist on lower taxes to partially make up for their personal losses? Either way, the US has thrown away many decades of a generally good reputation, which could take a lifetime to repair. I would be very surprised if China doesn't find itself advantaged by this stupidity, accelerating its possible ascent to the most powerful nation. This is sad for the West. Even if the US could manage the equivalent of Germany's de-nazification after WWII, and rapidly repair its institutions, which country/countries are going to support this?
Congress does not have the votes to override a veto. Let it play out; if Europe isn't willing to help with China, I don't particularly care about the hit to reputation. Europe can help by allocating sufficient resources to NATO, and Trump is effectively laying the groundwork for this.
Why should Europe help the US with China? The US is undermining the world order, so what value is there for Europe to surrender to US demands and its aim for a new world order? Anything Europe does with China will be in its interests, not the US's interests.
Why should the US help Europe with Russia (or any other foe)? It has done so on several occasions in the past. Were US citizens suckers for doing so?
The US is also trying to preserve the current global order, but politically, it is impossible without the cooperation of allies. While I would not characterize the US as "tapped out," it will be without something like a VAT, which US citizens are not prepared to absorb. They will accept higher prices if they get more jobs or higher wages.
The alternative is abandoning someone or everyone. Who would you suggest the US abandon? NATO, an organization made up of countries that have, for all practical purposes, been protected by the US? Perhaps Taiwan and other Asian nations? Even if China stops at Taiwan, it brings risks to those who like globalism, as they do not operate under the same set of rules that we do. I believe it threatens the foundations of global order, including trade.
Chinese products pose more supply chain risks than those from other countries. They also bring additional risks to their neighbors as military capacity is being built. I think a significant tariff on China is warranted, although it may be phased in. It puts pressure on China to revamp its economy and helps with additional defense costs that its industrial capacity brings.
Few businesses succeed when huge costs are not allocated to products, and Chinese products often carry a significant portion of these costs. They were ignored for years, but now may be the only opportunity to allocate those costs.
Europe can ignore those costs if it likes. The US can do little about that but I'd peg tariffs on China to US and try to negotiate low tariffs with US. I think that is exactly what would happen but Trump, a politician who will not be around for an extended period of time, will indeed push for higher tariffs but he will not be unreasonable.
"Why should the US help Europe with Russia (or any other foe)? It has done so on several occasions in the past. Were US citizens suckers for doing so?"
Isn't that what allies do? The US and Europe were both working to contain the USSR during the Cold War. The US acted against Europe during the Suez crisis. The US was the main military bulwark against the soviets, but it certainly wouldn't have kept the USSR out of Europe without European help. And let's not forget the US only entered WWII after Germany's ally, Japan, bombed Pearl Harbor. Without that action, the US was not prepared to enter WWII in Europe.
"The US is also trying to preserve the current global order, but politically, it is impossible without the cooperation of allies."
So the US wants help, but won't offer help?
"The alternative is abandoning someone or everyone."
That is exactly what Trump is advocating.
"Chinese products pose more supply chain risks than those from other countries."
Europe understands that, which is why it puts more restraints on China. US corporations embraced China to increase their profits, which is why so many consumer products are made in China. It isn't Europe's fault that US businesses are so greedy. Quotas are one way of limiting trade in certain goods like autos. Europe does not allow hormone-treated beef or GMO crops. That is Europe's option, which could be avoided by suppliers who don't farm this way. And let's not pretend the US doesn't practice unfair trade practices. There is a reason US sugar prices are higher than world prices.
"Few businesses succeed when huge costs are not allocated to products, and Chinese products often carry a significant portion of these costs. They were ignored for years, but now may be the only opportunity to allocate those costs."
The US is already incurring unaccounted-for CO2 and CH4 emissions costs on the planet. What if much of the rest of the world insists on a carbon tax for all US goods and services?
I don't think that you realize how much the US has exerted its influence around the world with military support and soft power. This has all benefited the US, particularly in the 30 years after WWII. It was all getting rather tiresome by the 1980s when the US insisted on going it alone and arm-twisting its allies. Bush II and now Trump have used the US military as leverage. Bush II invaded Iraq without provocation and ended up costing the US treasure in a futile, extended war in Afghanistan as well as disrupting the Middle East. Trump has turned Russia into an "ally" and everyone else into a frenemy subject to Trump's whims. This is anything but "The US is also trying to preserve the current global order".
"I, for one, welcome our new insect overlords. I'd like to remind them as a trusted TV personality, I can be helpful in rounding up others to toil in their underground sugar caves." It works for so many other careers.
'And it makes no sense to say “the administration has taken a big risk”'
Just so. It makes no sense to say that jumping out of a plane without a parachute is "a big risk" because it lacks the element of uncertainty that characterizes risk.
"the US should charge foreigners a fee for the privilege of lending to Uncle Sam"
The US already charges foreigners a fee for the privilege of lending to Uncle Sam. The risk-free rate is unobservable but reasonable proxies like rolled-up SOFR (or previously OIS) historically traded above Treasury yields, no?
Correct. Tariffs change relative prices in ways -- higher prices for substitutes of imports of tariffed goods and service, lower prices for substitutes of imports of non-tariffed goods and service and exports -- that reduce real income. They cannot affect the price level without the assent of the Fed. A clever Fed acting according to a Flexible Average Inflation Target policy will act to create temporarily over-target inflation so as to facilitate the changes on relative prices. It if did not, it would run the risk that relative prices would not, could not adjusts becasue some prices are downwardly sticky and that consequently these markets would not clear an unemployment of resources would occur.
“Miran expected the currency to rise… which he argued would have the effect of putting the burden on to the tariffed country...” :)
Expecting the currency to rise is the standard assumed result of increasing import restriction. The rise woud not have the effect of putting any of the cost on the tariffed country. Tariffs of course also harm the tariffed country; trade, after all, is mutually beneficial. But the appreciating currency of the tariffing country is not the mechanism by whihc the tariffed country is harmed.
I would argue that you are overlooking the legal reasons Trump had to take this risky path. It has to be a national emergency to impose tariffs, and trade deficit doesn't cut it in my mind, but risks from China do. China provided him with the arguments. The short- and medium-term ramifications are harmful, just as the oil embargo against Japan in 1941 was negative.
As for Europe, as of today, I don't see what they bring to the table in Asia other than moral support.
We can maintain our reliance on China and achieve higher corporate profits and living standards in the short and medium term, but I am not willing to take that risk in the long term.
The problem with your argument is that he didn’t impose tariffs on just China. He imposed tariffs on the entire world except Russia. If you’re trying to correct trade with China, you’d want allies. You might even pull China into a negotiation with other countries around the Pacific Rim to create a trade arrangement the also brought improvements to worker rights and environmental protection in all participating countries - a sort of Trans-Pacific Partnership.
Wait - that’s right. We had one, and Trump destroyed it.
I recognize that I'm being somewhat flippant with that statement, as no one will like the US for very good reasons. In my opinion, the ultimate goal is to coordinate tariff rates against China. I would not want to do that, and it would require a giant stick before I would think about it, as it is a sure way to lose the next election.
You cannot negotiate agreements with a large number of countries overnight and huge mistakes will be made along the way. It will look like a disaster periodically along the way as well.
Still, I cannot help but think about the most brilliant business and litigation scenario I have ever seen executed by a manufacturer whose product was defective due to a defect in a product provided by a supplier. There were significant mistakes made by the manufacturer initially, which led to the situation, and the quality issue was not identified for several years after the product was sold. As a result, dealing with product liability issues was an absolute mess, and viability questions arose along the way that made maintaining the business difficult. The litigation took over a decade, but in the end, it literally could not have worked out better. All impacted customers ultimately had their products replaced at a cost that was multiple times higher than the initial sales price. Product sales were maintained throughout the litigation (some negative impacts). Huge losses led the company to appear on the verge of bankruptcy. At the end of that decade, the case was won the supplier paid for the replacement costs.
That litigation was no different than a war for survival, and I am not communicating particular difficulties that existed. There were issues I wanted to ask about along the way, but I could not ask them as they would not have been protected under attorney-client privilege. I did not share them with co-workers either for the same reason.
Because of that case, I am willing to give Trump administration slack as I think Bessent may be as good as the guy (as in single guy ignoring dozens of attorneys, hundreds of contracted attorney staff and thousands of customers) responsible for the execution and let me tell you, he made lots of co-owners of the business furious along the way as he could not share strategy due to attorney-client privilege issues.
Is Bessent the equivalent of that businessman who made so many people angry? I'm not sure, but I'm prepared to consider that possibility. Here, the basic outlines will appear much more quickly (months, not years), but final implementation will take many years, and many people will be angry along the way.
"In my opinion, the ultimate goal is to coordinate tariff rates against China."
- No, the ultimate goal is to level the playing field for trade and to improve the standard of living of people/workers in China as well as developing countries. Tariffs and the threat of them are just one tool in the box.
"You cannot negotiate agreements with a large number of countries overnight and huge mistakes will be made along the way."
- Correct. As I said, we had done the long, painstaking work to create one that created better trade rules around the Pacific, and got China on board. Then Trump killed it for no good reason other than he didn't want his predecessor to get any credit for it.
"Still, I cannot help but think about the most brilliant business and litigation scenario I have ever seen executed by a manufacturer whose product was defective due to a defect in a product provided by a supplier." "That litigation was no different than a war for survival, and I am not communicating particular difficulties that existed."
- Two problems here: 1) Did anybody die? If not, then no, corporate litigation is not like a war for survival; and 2) Companies are not countries. Countries cannot be run like companies. The goals are different and the stakes are much higher if a country fails or goes bankrupt.
"Because of that case, I am willing to give Trump administration slack as I think Bessent may be as good as the guy (as in single guy ignoring dozens of attorneys, hundreds of contracted attorney staff and thousands of customers) responsible for the execution and let me tell you, he made lots of co-owners of the business furious along the way as he could not share strategy due to attorney-client privilege issues."
- Again, a country is not a business. Scott Bessent is not our lawyer. We are not his customers. We (collectively) are his employer. He is the manager of our national treasury. And he doesn't demonstrate any knowlede of the laws or ethics that are supposed to guide his work. He told a private meeting sponsored by JPMorgan Chase that tariffs would be eased soon a few days ago. That's certainly unethical and probably illegal, since it provided a select group of investors inside information not available to the public (AKA his employers). He's not our lawyer, so attorney-client priviledge doesn't have any role here.
Chinese living standards are expected to improve, assuming that changes in China are implemented; however, the transition is likely to be highly challenging. Wish I had some idea of how difficult but I don't.
Regarding business versus government, the procedures of the fight are different, and I agree that very few die. It's not worth discussing, but I think it's similar as in a general feels as responsible.
Scott Bessent is our advocate. Trump is part of it and he is willing to take risks no ordinary President would take. I voted for him in 2024 but I will be happy to see him ride into the sunset too. At this particular point in time, I believe they are the only way to avoid waiting until an emergency arises and everyone finally gathers the courage to take the necessary action. If we wait, I see a material probability that Taiwan and others in Asia will be lost. I agree with Trump that if someone has to be sacrificed in that fight, I prefer a portion of Ukraine be lost.
Maybe Professor DeLong and I are in a Rashomon play. I did not come away from reading the Authers' piece with the same feeling. He was pretty candid about things IMO.
I especially love the coverage of the stock market with "Market regains on Trump comments."
The Masters of the Universe traders remind me of playing fetch with an eager puppy where 3/4 of the time you just feint throwing the ball.
I think historians (assuming any exist) 80 years from now (the duration since der Führer died) will describe this time as a masterpiece of Russian асимметричная война (asimmetrichnaya voyna) — "asymmetric war" By merely cockteasing a Trump Tower Moscow, Putin has destroyed the US.
see also https://link.newyorker.com/view/5bd66d952ddf9c6194380ca6ng2rp.680/f462de97
Cartoon of man with pointer to graph that drops and then goes up very slightly. Caption:
“It was at this point, gentlemen, that the President decided it was his plan all along to reverse course.”
Barely competent at logic, John Authers and others imported from the FT and the Economist, repeatedly hop over the premise that there is a plan, often too eager to discuss why it isn't working. You must write about this, pointing out these clowns each time. But I'm warning you: stop rolling your eyes. I have long stopped because they're getting stuck on the top.
TY for all this. The gaslighting is quite hard to cut through and shake off, crude as it is. Our media ecology has its biases, and this whole solemnifying of established power structures even when they're in the hands of chaos itself is indeed such a huge problem.
Agree entirely. There's a whole cottage industry of the "commentariat" making up fantasy worlds in which Donald Trump and his cabinet of enablers and stooges have long-range plans and strategies. They need to repeat to themselves slowly and often: "Donald Trump is a lifelong cheat. He never ran a business venture he didn't run into bankruptcy. Trump is a Russian asset and has been one for decades. He has no philosophy or world-view or logic, Trump is demented, his mind is going, such as it was. Donald Trump is incapable of understanding anything, knowing anything, or even being aware that there is something to know."
If you think the financial reporters are bad, you should hear the financial analysts at the investment houses/banks who are desperate to spin the tariff chaos as "negotiating genius" that is doing what it was intended to do: bring investment and manufacturing jobs back to the U.S. As a client with a modest portfolio I sat thru an entire 'pitch' that did manage to mention the bond market but utterly ignored the cratering of the dollar.
The financial analysts' job at their investment houses/banks is to convince clients to buy stocks. Only their absolute top clients ever get advice to sell.
Thank you for writing what I've been thinking.
On your point about the deficit, I've been checking the daily Treasury briefings and we are $282B ahead of last fiscal year's deficit at this point.
If instead of placing $130B in debt a month we need to place $175B (also increased by the backloading of the auctions due to the debt ceiling increase delay) things could get nasty, quickly.
As an ex-Brit, my sense of the US is that it has increasingly turned to belligerent action rather than diplomacy. The huge US military is deployed, often in a "shock and awe" approach to solve some problem. Vietnam was the forerunner, but Gulf War I was the main onslaught, followed by the Iraq/Afghanistan in the 21st century. It seems to me that this mindset has taken over in the US, especially with the Trump Party that tries to exude "strength" as a bully. Thus, the aggressive bullying of allies in NATO, then of everyone with tariffs. Congress could have stopped Trump if it were sane and recognized that Trump's actions were for revenge rather than good policy. But no. As you point out, many US companies offshored their manufacturing, especially to China. Now they pay the price. Either US companies absorb the tariff and reduce profits, or they lose revenue and profits. That will not sit well with the CEOs and execs. Will they insist on lower taxes to partially make up for their personal losses? Either way, the US has thrown away many decades of a generally good reputation, which could take a lifetime to repair. I would be very surprised if China doesn't find itself advantaged by this stupidity, accelerating its possible ascent to the most powerful nation. This is sad for the West. Even if the US could manage the equivalent of Germany's de-nazification after WWII, and rapidly repair its institutions, which country/countries are going to support this?
Congress does not have the votes to override a veto. Let it play out; if Europe isn't willing to help with China, I don't particularly care about the hit to reputation. Europe can help by allocating sufficient resources to NATO, and Trump is effectively laying the groundwork for this.
Why should Europe help the US with China? The US is undermining the world order, so what value is there for Europe to surrender to US demands and its aim for a new world order? Anything Europe does with China will be in its interests, not the US's interests.
Why should the US help Europe with Russia (or any other foe)? It has done so on several occasions in the past. Were US citizens suckers for doing so?
The US is also trying to preserve the current global order, but politically, it is impossible without the cooperation of allies. While I would not characterize the US as "tapped out," it will be without something like a VAT, which US citizens are not prepared to absorb. They will accept higher prices if they get more jobs or higher wages.
The alternative is abandoning someone or everyone. Who would you suggest the US abandon? NATO, an organization made up of countries that have, for all practical purposes, been protected by the US? Perhaps Taiwan and other Asian nations? Even if China stops at Taiwan, it brings risks to those who like globalism, as they do not operate under the same set of rules that we do. I believe it threatens the foundations of global order, including trade.
Chinese products pose more supply chain risks than those from other countries. They also bring additional risks to their neighbors as military capacity is being built. I think a significant tariff on China is warranted, although it may be phased in. It puts pressure on China to revamp its economy and helps with additional defense costs that its industrial capacity brings.
Few businesses succeed when huge costs are not allocated to products, and Chinese products often carry a significant portion of these costs. They were ignored for years, but now may be the only opportunity to allocate those costs.
Europe can ignore those costs if it likes. The US can do little about that but I'd peg tariffs on China to US and try to negotiate low tariffs with US. I think that is exactly what would happen but Trump, a politician who will not be around for an extended period of time, will indeed push for higher tariffs but he will not be unreasonable.
"Why should the US help Europe with Russia (or any other foe)? It has done so on several occasions in the past. Were US citizens suckers for doing so?"
Isn't that what allies do? The US and Europe were both working to contain the USSR during the Cold War. The US acted against Europe during the Suez crisis. The US was the main military bulwark against the soviets, but it certainly wouldn't have kept the USSR out of Europe without European help. And let's not forget the US only entered WWII after Germany's ally, Japan, bombed Pearl Harbor. Without that action, the US was not prepared to enter WWII in Europe.
"The US is also trying to preserve the current global order, but politically, it is impossible without the cooperation of allies."
So the US wants help, but won't offer help?
"The alternative is abandoning someone or everyone."
That is exactly what Trump is advocating.
"Chinese products pose more supply chain risks than those from other countries."
Europe understands that, which is why it puts more restraints on China. US corporations embraced China to increase their profits, which is why so many consumer products are made in China. It isn't Europe's fault that US businesses are so greedy. Quotas are one way of limiting trade in certain goods like autos. Europe does not allow hormone-treated beef or GMO crops. That is Europe's option, which could be avoided by suppliers who don't farm this way. And let's not pretend the US doesn't practice unfair trade practices. There is a reason US sugar prices are higher than world prices.
"Few businesses succeed when huge costs are not allocated to products, and Chinese products often carry a significant portion of these costs. They were ignored for years, but now may be the only opportunity to allocate those costs."
The US is already incurring unaccounted-for CO2 and CH4 emissions costs on the planet. What if much of the rest of the world insists on a carbon tax for all US goods and services?
I don't think that you realize how much the US has exerted its influence around the world with military support and soft power. This has all benefited the US, particularly in the 30 years after WWII. It was all getting rather tiresome by the 1980s when the US insisted on going it alone and arm-twisting its allies. Bush II and now Trump have used the US military as leverage. Bush II invaded Iraq without provocation and ended up costing the US treasure in a futile, extended war in Afghanistan as well as disrupting the Middle East. Trump has turned Russia into an "ally" and everyone else into a frenemy subject to Trump's whims. This is anything but "The US is also trying to preserve the current global order".
"I, for one, welcome our new insect overlords. I'd like to remind them as a trusted TV personality, I can be helpful in rounding up others to toil in their underground sugar caves." It works for so many other careers.
'And it makes no sense to say “the administration has taken a big risk”'
Just so. It makes no sense to say that jumping out of a plane without a parachute is "a big risk" because it lacks the element of uncertainty that characterizes risk.
"the US should charge foreigners a fee for the privilege of lending to Uncle Sam"
The US already charges foreigners a fee for the privilege of lending to Uncle Sam. The risk-free rate is unobservable but reasonable proxies like rolled-up SOFR (or previously OIS) historically traded above Treasury yields, no?
"Tariffs Aren’t Inflationary"
Correct. Tariffs change relative prices in ways -- higher prices for substitutes of imports of tariffed goods and service, lower prices for substitutes of imports of non-tariffed goods and service and exports -- that reduce real income. They cannot affect the price level without the assent of the Fed. A clever Fed acting according to a Flexible Average Inflation Target policy will act to create temporarily over-target inflation so as to facilitate the changes on relative prices. It if did not, it would run the risk that relative prices would not, could not adjusts becasue some prices are downwardly sticky and that consequently these markets would not clear an unemployment of resources would occur.
“Miran expected the currency to rise… which he argued would have the effect of putting the burden on to the tariffed country...” :)
Expecting the currency to rise is the standard assumed result of increasing import restriction. The rise woud not have the effect of putting any of the cost on the tariffed country. Tariffs of course also harm the tariffed country; trade, after all, is mutually beneficial. But the appreciating currency of the tariffing country is not the mechanism by whihc the tariffed country is harmed.
I would argue that you are overlooking the legal reasons Trump had to take this risky path. It has to be a national emergency to impose tariffs, and trade deficit doesn't cut it in my mind, but risks from China do. China provided him with the arguments. The short- and medium-term ramifications are harmful, just as the oil embargo against Japan in 1941 was negative.
As for Europe, as of today, I don't see what they bring to the table in Asia other than moral support.
We can maintain our reliance on China and achieve higher corporate profits and living standards in the short and medium term, but I am not willing to take that risk in the long term.
The problem with your argument is that he didn’t impose tariffs on just China. He imposed tariffs on the entire world except Russia. If you’re trying to correct trade with China, you’d want allies. You might even pull China into a negotiation with other countries around the Pacific Rim to create a trade arrangement the also brought improvements to worker rights and environmental protection in all participating countries - a sort of Trans-Pacific Partnership.
Wait - that’s right. We had one, and Trump destroyed it.
Need allies when it comes to dealing with China.
I recognize that I'm being somewhat flippant with that statement, as no one will like the US for very good reasons. In my opinion, the ultimate goal is to coordinate tariff rates against China. I would not want to do that, and it would require a giant stick before I would think about it, as it is a sure way to lose the next election.
You cannot negotiate agreements with a large number of countries overnight and huge mistakes will be made along the way. It will look like a disaster periodically along the way as well.
Still, I cannot help but think about the most brilliant business and litigation scenario I have ever seen executed by a manufacturer whose product was defective due to a defect in a product provided by a supplier. There were significant mistakes made by the manufacturer initially, which led to the situation, and the quality issue was not identified for several years after the product was sold. As a result, dealing with product liability issues was an absolute mess, and viability questions arose along the way that made maintaining the business difficult. The litigation took over a decade, but in the end, it literally could not have worked out better. All impacted customers ultimately had their products replaced at a cost that was multiple times higher than the initial sales price. Product sales were maintained throughout the litigation (some negative impacts). Huge losses led the company to appear on the verge of bankruptcy. At the end of that decade, the case was won the supplier paid for the replacement costs.
That litigation was no different than a war for survival, and I am not communicating particular difficulties that existed. There were issues I wanted to ask about along the way, but I could not ask them as they would not have been protected under attorney-client privilege. I did not share them with co-workers either for the same reason.
Because of that case, I am willing to give Trump administration slack as I think Bessent may be as good as the guy (as in single guy ignoring dozens of attorneys, hundreds of contracted attorney staff and thousands of customers) responsible for the execution and let me tell you, he made lots of co-owners of the business furious along the way as he could not share strategy due to attorney-client privilege issues.
Is Bessent the equivalent of that businessman who made so many people angry? I'm not sure, but I'm prepared to consider that possibility. Here, the basic outlines will appear much more quickly (months, not years), but final implementation will take many years, and many people will be angry along the way.
"In my opinion, the ultimate goal is to coordinate tariff rates against China."
- No, the ultimate goal is to level the playing field for trade and to improve the standard of living of people/workers in China as well as developing countries. Tariffs and the threat of them are just one tool in the box.
"You cannot negotiate agreements with a large number of countries overnight and huge mistakes will be made along the way."
- Correct. As I said, we had done the long, painstaking work to create one that created better trade rules around the Pacific, and got China on board. Then Trump killed it for no good reason other than he didn't want his predecessor to get any credit for it.
"Still, I cannot help but think about the most brilliant business and litigation scenario I have ever seen executed by a manufacturer whose product was defective due to a defect in a product provided by a supplier." "That litigation was no different than a war for survival, and I am not communicating particular difficulties that existed."
- Two problems here: 1) Did anybody die? If not, then no, corporate litigation is not like a war for survival; and 2) Companies are not countries. Countries cannot be run like companies. The goals are different and the stakes are much higher if a country fails or goes bankrupt.
"Because of that case, I am willing to give Trump administration slack as I think Bessent may be as good as the guy (as in single guy ignoring dozens of attorneys, hundreds of contracted attorney staff and thousands of customers) responsible for the execution and let me tell you, he made lots of co-owners of the business furious along the way as he could not share strategy due to attorney-client privilege issues."
- Again, a country is not a business. Scott Bessent is not our lawyer. We are not his customers. We (collectively) are his employer. He is the manager of our national treasury. And he doesn't demonstrate any knowlede of the laws or ethics that are supposed to guide his work. He told a private meeting sponsored by JPMorgan Chase that tariffs would be eased soon a few days ago. That's certainly unethical and probably illegal, since it provided a select group of investors inside information not available to the public (AKA his employers). He's not our lawyer, so attorney-client priviledge doesn't have any role here.
Chinese living standards are expected to improve, assuming that changes in China are implemented; however, the transition is likely to be highly challenging. Wish I had some idea of how difficult but I don't.
Regarding business versus government, the procedures of the fight are different, and I agree that very few die. It's not worth discussing, but I think it's similar as in a general feels as responsible.
Scott Bessent is our advocate. Trump is part of it and he is willing to take risks no ordinary President would take. I voted for him in 2024 but I will be happy to see him ride into the sunset too. At this particular point in time, I believe they are the only way to avoid waiting until an emergency arises and everyone finally gathers the courage to take the necessary action. If we wait, I see a material probability that Taiwan and others in Asia will be lost. I agree with Trump that if someone has to be sacrificed in that fight, I prefer a portion of Ukraine be lost.
Maybe Professor DeLong and I are in a Rashomon play. I did not come away from reading the Authers' piece with the same feeling. He was pretty candid about things IMO.
MMM??
Exoteric vs Esoteric reading?