OPINION – Before you go high-fiving, slapping each other on the back and yucking it up with your buddies about how the United States is going to stick it to Mexico with tariffs, the wall and such because of the trade deficit you might want to go a little deeper than the headlines and educate yourself.
Go open your refrigerator.
There’s a very good chance that most of the produce in your fridge, especially this time of year, came from Mexico.
Go look in your garage.
The vehicle sitting there may have come from Mexico.
Next time you visit the doctor for a minor – or major – medical procedure, look around. The equipment being used to take care of you just might have come from Mexico.
Now, do you really want the cost of your food, your vehicle, your medical care to go up 20 percent?
Expand this whole trade deficit discussion a bit and check out where your computer, television, cell phone, clothing – just about everything you use or touch – is manufactured. Odds are it came from outside of the United States.
Now, tell me how lessening the quality of life for people in this global village is going to make America great again.
There’s a lot of smoke and mirrors going on here, based on a shaky foundation of isolationism and “America First” jingoism that sounds good but isn’t terribly practical.
I mean, if you only buy American-made products, good for you. It means you are near the top of the economic food chain and can afford the overpriced, noncompetitive American goods.
But, even so, you still cannot avoid sending money across borders, whether it be for food or other necessities.
In fact, I’m not entirely sure it is possible to, today, only buy American.
So, as a result, we will have to engage in foreign trade and there will forever be numbers attached to it.
Those numbers, though, can be misleading.
The administration is trying very hard to put the clamps on Mexico.
Why?
Why try to hammer one of your two closest neighbors? Especially when there are trade deficits far larger – the U.S. is out of balance way more with China, Germany and Japan than Mexico.
Still, the United States is treating Mexico as the ghetto of North America, with the administration denigrating the people, culture and, in this instance, the economy.
But look at the economy and the essence of trade and trade deficits and you will understand that the numbers tossed about – particularly in the case of Mexico – do not reflect the whole story.
For example, GM has built cars and trucks in Mexico for years. It has imported those vehicles into the U.S., which counts against the trade deficit for Americans because it is an import. However, the profits from those vehicles goes into the pockets of GM, same as when those vehicles are sold elsewhere in the global marketplace.
Those revenues are not figured into the trade deficit, though. And, it is doubtful how many of those dollars trickle down to the workers. Yes, there is an impact on the job market, but, if you do your homework, you will learn that more American jobs have been lost through automation than from offshore relocation.
If you travel to another country, the money you spend on lodging, food, recreation, travel within its borders and gifts is a part of the trade deficit. That’s a sizable chunk of cash.
Had the voodoo of trickle-down economics worked, we wouldn’t have these concerns today and U.S.-made goods would be, across the board, more competitive.
But, the philosophy didn’t work, except to fill the pockets of investors who pocketed the cash instead of reinvesting or to grossly overpay CEOs who are already compensated outlandishly. It further corporatized industry and all but killed the mom and pop operations and middle class entrepreneurs, from family farmers to small manufacturers. It’s what eventually happens when capitalism runs unchecked and the free market swallows up all competition, creating monopolies that then suck the life’s blood out of our wallets.
Ultimately, the establishment of a 20 percent tariff on goods made in Mexico, ostensibly to finance a wall that is impractical and virtually impossible to construct, places the burden on the American consumer. Even if, as expected, the president drops that to a single-digit figure it is still a ludicrous tax against American consumers. Still, it won’t do much to curb the importation of goods from Mexico, or anywhere else. Consumers will still buy food, cars, booze, machinery, electronics and whatever else they need or desire because they really don’t care who made them or where. Seriously, do you know where your TV, computer or microwave was made? Globalization, the dependency nations have developed on each other, has made that the new reality.
The United States has changed a lot.
Once upon a time, a home was handed down through generations; Dad kept the family car running instead of trading it in on a new model just because it looked fancier; and we had products that were built to last, not just fill the gap until the next year’s model came along.
We worked jobs with the same company for a lifetime, not only out of a sense of loyalty, but a sense of security because we knew there was something at the end of that long road other than a hearty handshake and pat on the back or a pink slip because we had stuck around too long and our paycheck was larger than some kid they can bring in at a fraction of the cost..
Now?
Not so much.
The anger and frustration that has come from that scenario has been misplaced and directed at Mexico or China or any other nation that has exploited our greed and stupidity.
As the observant Walt Kelly, the mastermind of the comic strip Pogo, once wrote, “We have met the enemy and he is us.”
Ed Kociela is an opinion columnist. The opinions stated in this article are his and not representative of St. George News.
Email: [email protected]
Twitter: @STGnews, @EdKociela
Copyright St. George News, SaintGeorgeUtah.com LLC, 2017, all rights reserved.
Geez Ed, calm down. He has only been in office 10 days. It will be okay. Go to Walmart now while you can and stock up on you favorites. As for ” over-priced non competitive American Goods”…you obviously have not done your research. I have found jeans, tshirts and houseware items made right here in America by Americans for about the same price as that garbage being manufactured in Mexico, China and Taiwan. Guess what? It’s actually better quality and melamine free.
Build the wall, build it tall, and tax remittances to Mexico from within the US.
LOL. EK, you got part of correct. We have met the enemy and it is you and the cultural marxists who did very little to create this country and sure as hell have no clue how to keep a free and prosperous society going.
While we may a bit more for some products, that’s okay. There is no rationale why we cannot incentivize the car companies, Apple, etc, to invest in factories in our country. Lowering of the corporate tax rate, slashing regs and forgiveness of a large portion of their capital gains, will bring some very good jobs back to the U.S.
EK, you carry a little too much water for Mexico. Got dual loyalty maybe? That is your business. My business to defend my country against foe, foreign and domestic……I guess you fall into both categories. ?
What you know but will not admit is that Mexico as well as every “developing nation” will do all it can to promote its own culture, interests and progress. Unfortunately, we have been indoctrinated that loving our country to include our Anglo founding is somehow “jingoistic” and “unAmerican”. The Left is wrong on this count.
Trump is not pushing isolationism, for crying out loud. He is a negotiator and will sit down and work out a better deal with other nations, understanding the bedrock principle of nation states…….which is nations do not have friends, they have interests. It’s time to work for the interests of our country.
And finally, it is not practical to flood a modern, developed nation with low skill and low education populations (legal or illegal) that want to keep their culture and believe their culture (Mexican, Somali, Iraqi, et al, is the best) …check it out and write a column on why there are so many nations blessed with natural resources but can’t get off “first base” when it comes to societal cohesion and economic vibrancy.
It is not that these third world folks are necessarily bad people…..but why should I have see parts of my country look like the third world, see blue collar wages depressed and see the lack of respect for my country, language, culture, norms and traditions.
And you want us to follow that path? Sorry, I refuse.
Thank you for listening. ?
Your favorite Mexican beer will cost you 20cents more Ed. Quit crying . Get over it.
Ed, oh never mind.
Globalism and all this “free-market” nonsense have never benefited Americans, Unless of course you count the filth that are already obscenely wealthy globalists and elitists. I’m old enough to have seen lots of products I buy move from US production to Chinese and elsewhere. Every singe time, the quality dropped and the price either stayed the same or went up. Send the illegals home, we can pick our own fruit, thanks. The “jobs that American’s don’t want” might have to start paying a fair wage. The welfare payments we save and crime we don’t have from not having the illegals around will more than make up for it. Amen.
What many Trump supporters fail to understand is that tariffs are taxes, plain and simple. If something is going to be paid for by tariffs, the source of that money is American consumers, not foreign governments. Government interference in the economy is the basis of socialism. If our government is trying to influence our economy using tax policy or trade policy, it is engaging in socialism. Those of us who believe in the virtues of the free market should reject any actions by government officials to insert themselves into the marketplace, regardless of good intentions.
Stop trying to teach these simpletons basic economics. Donald promised it so it must be true. When all these jobs “come back” to America and consumer prices rise 30% and people only have enough money to eat ramen noodle soup Donald will take care of them. He promised!
I have a Bachelors in Economics and 12 hours of graduate-level Economics classes included in my two Masters degrees. What’s your economics background? Don’t include collecting your public assistance check.
And in all your classes they never taught you about dead weight social loss? The loss that comes when markets are not in equilibrium due to things like tariffs and trade restrictions? Maybe you missed that day. Free trade is a net benefit to the economy. NAFTA has increased the quality of life for millions and millions of Americans. The TPP would have the same net benefits.
Voice of Reason, since you omitted listing your economic credentials, I assume they are minimal. Your recitation from Econ 101 is a non sequitur argument. Your charge that the Trump administration is against free trade is as baseless as saying that they are against clean air and water. The true argument is about renegotiating an update to the NAFTA agreement that was implemented 23 years ago.
If you enroll in a Negotiations class, you will learn about the importance of negotiating from a position of strength. The U.S. is much less dependent upon our exports to Mexico than Mexico is upon their exports to the U.S.
In 1993, the year before NAFTA took effect, the United States had sold Mexico $41.6 billion in goods and bought $39.9 billion for a trade surplus of $1.7 billion. By 2015, the U.S. had exported $235.7 billion in goods to Mexico (a 467 percent increase) and imported $296.4 billion (up 643 percent). That created a trade deficit in goods of $60.7 billion.
However, that $296.4 billion that Mexico exports to the U.S. represents 80% of their country’s total exports. The $235.7 billion that the U.S. exports to the U.S. represents only 15% of total U.S. exports. The U.S. negotiating position is obviously much stronger.
Another source of U.S. leverage: remittances from Mexican immigrants in the U.S. to their families back home in Mexico. In fact, this became the largest source of national income for Mexico in December 2014, exceeding even crude oil revenues for the first time in history. These remittances, along with tariffs, give the U.S. considerable leverage in renegotiating NAFTA.
Updating NAFTA and other trade agreements to recognize current economic realities and create truly free and fair markets will benefit all countries.
First of all, thank you for taking time out of your busy schedule to anonymously insult random strangers on a regional message board that sees maybe 1000 views. Public assistance check? nice. Secondly, being it is an anonymous internet site, where anyone can claim anything, I didn’t feel the need to share that unlike you, I do not have a bachelors degree in economics. Sadly, my Econ degree will not be finished until I pass this semesters classes. You were so busy insulting me and bragging of your own accomplishments that you completely missed my point. These manufacturing jobs that Mr. President is so eager to bring back to America simply do not exist as they once did. Globalization and automation have erased many of them and many more will be gone before the Presidents first term is up. His supporters are buying the line of crap he is selling hook line and sinker. They think he can renegotiate these deals and get corporations to return to America and pay middle class wages (whatever that even means anymore) and they don’t realize that if that happened, prices would soar and take more money out of their pockets. We are in agreement that free trade and fair markets will be beneficial to all countries. I’m glad you’ve found reasons to defend this administration. I’m glad you think they are for free trade even though everything he’s said about trade agreements scream he is not in favor of it.
You were the one that first insulted Trump supporters as “simpletons”. So you’re all triggered that you are counterattacked? You then pontificate with unsubstantiated economic claims, so it shouldn’t surprise you to be called out. I cited my background to demonstrate that other readers actually have some expertise about the topic in which you are lecturing us!
You appear unable to differentiate what Trump’s broad goals are, what are negotiating bluffs, and what he’s trying to do. There are many economists that agree with Trump. It’s hard to take you seriously intellectually when you refer to an opposing view as a “line of crap that he is selling hook, line, and sinker”.
You focus solely on the one-way movement of strictly manufacturing jobs FROM the U.S. TO Mexico, when it’s much more complicated than that:
The $235.7 billion that the U.S. EXPORTS TO Mexico breaks down this way:
– machinery ($42 B), electrical machinery ($41 B), services (travel, transportation, and intellectual property) ($31 B), vehicles ($22 B), mineral fuels ($19 B), agricultural products ($18 B), and plastics ($17 B).
The $296.4 billion that the U.S. IMPORTS FROM Mexico:
– vehicles ($74 B), electrical machinery ($63 B), machinery ($49 B), services ($21.6 B), agricultural products ($21 B), mineral fuels ($14 B), and optical & medical instruments ($12 B).
https://ustr.gov/countries-regions/americas/mexico
Bottom line on U.S. – Mexico trade: there’s a lot more than just manufacturing, and trade (including manufacturing) flows in both directions.
Two last points regarding you discussing “dead weight social loss” due to markets not in equilibrium. You cited that occurring because of tariffs and trade restrictions. There is already a de-facto tariff in place: the “value added tax” or VAT. The U.S. has no VAT, compared to 16% in Mexico. When Mexico manufactures domestically and exports goods to the U.S., it receives a rebate on the 16% VAT it has paid – making it an implicit subsidy for Mexican exporters. Similarly, the 16% VAT is imposed on all U.S. goods that are imported and consumed by Mexico – making it an implicit tariff on US exporters
The second point: a loss of market equilibrium also occurs when there are higher pollution and lower labor safety standards in Third World countries, which results in the marginal social cost (MSC) exceeding its marginal social benefit (MSB). I was blessed to have taken a graduate-level class where we actually got to see industrial production facilities in the U.S., Canada, and three Latin American countries. I got to see first-hand that part of the reason for lower-priced goods from Latin America are because they don’t spend anywhere near the same amount of money on pollution reduction or on healthier work environments for their workers.
We need FAIR trade agreements, across all trade sectors, where countries play by the same, equitable rules of competition. I’m glad that you’ll be getting your degree in Economics – be intellectually curious, apply critical thinking, ask your professors questions and challenge them!
Just a side note. If you take generic drugs it is highly likely they are produced in china or india. If you notice these drugs not working as well as they should it isn’t in your head. Their manufacturing processes are often far inferior to the original brand name drug. FDA can only inspect a teeny tiny fraction of the RX drugs coming in from overseas. Got to love globalism and “free trade”–buyer beware.
I’m not at all uncomfortable picking sides….
I’m on the side of a safer, wealthier America.
Treading people in your own country down has been quite profitable for the liberal movement , you know.
And we know that the vast majority of that money, if any at all, ever goes toward helping those become better citizens. As a matter of fact it behoves the liberal politicians to keep their constituents in a “forever needy” state.
I’m tired of scads of people coming here illegally and getting so many benefits that their quality of life is better than the average working person who, by the way, has NO access to those benefits if/when they need them. They’re told ‘just shut up and pay your taxes’.
It’s time for jobs to benefit OUR country and NOT places like Mexico. It’s not America’s fault that THEIR economy is in disarray.
No, those hard earned dollars need to stay HERE, and the jobs need to stay here.
It’s also time for America to stop paying billions of dollars to countries that hate us and want us all dead. And it’s time to stop funding muslim dictatorships that have as one of their agendas the genocide of Christians and Jews.
No, I’m not at all uncomfortable or shy about saying what side I’m on. Right is right and can NOT be equivocated away.
As a democrat and great-grandchild of immigrants, I support those who come here legally. My family came here and respected the laws, learned the language, worked hard and became productive LEGAL U.S citizens. Those that do it legally should be able to reap the benefits of legal residency or citizenship.
Having said that….
I support the wall. We as a country need to be treating illegals as ILLEGALS! Those who choose to come here illegally should be given exactly one choice; either become legal and follow the laws of our country or GET OUT! We are obligated to provide immigrants with a path to citizenship ,yes, but we are not required to support those who choose not to take that path.
Rainbow Dash— Sounds like you got your head screwed on right /your heart planted in good soil. As a Independent, I share your experience & feelings.
Ed Kociela writes what his publisher want him to write, Likes Baha and Mexican beer. Doesn’t want to see anything that might upset his routine. Go easy on him. He does write good. You know? Then again, I bet he sucks at surfing.
Wow, Ed just scratched the surface. If we build a wall how will we get their heroin, their methamphetamine, their cocaine, their crack cocaine, their marijuana or their opium? How will we get their human traffickers or their sex traffickers? How will we get their rapist, murderers, DUI violators? How will we be able to keep our welfare rolls full or our Medicaid costs up? How we be able to keep our prison costs skyrocketing? How will our sanctuary cities continue to deify federal laws?
Wall???
Yes…The WALL !
100% wall
Build the wall!
Quote Ed. “The anger and frustration that has come from that scenario has been misplaced and directed at Mexico or China or any other nation that has exploited our greed and stupidity.” Maybe it’s time we got a little smarter and a little less greedy and built the wall. I hope it’s high enough they can’t throw drugs over it.
The drugs will still come thru the tunnels that are already being dug. The drug war is a failing disaster.
Read “Chasing the Scream”. Its at the library.
Great comments by Common Sense, Wilbur, Eddantes56, NotSoFast, Not_So_Much, Utahguns, damoore, and even Bob!
Ed, your Trump Derangement Syndrome has reached the point where you’re now in agreement with the Koch Brothers, Wall Street, and the other globalists that favor open borders in order to maximize profits. Perhaps you should instead align with your traditional leftist compatriots on this issue:
– “For the last 30 years, we have had a series of trade deals — including the North American Free Trade Agreement, permanent normal trade relations with China and others — which have cost us millions of decent-paying jobs and caused a ‘race to the bottom’ which has lowered wages for American workers. Now is the time to develop a new trade policy that helps working families, not just multinational corporations.” – Bernie Sanders, 23 January 2017.
– “Today’s announcement that the U.S. is withdrawing from TPP and seeking a reopening of NAFTA is an important first step toward a trade policy that works for working people. While these are necessary actions, they aren’t enough. They are just the first in a series of necessary policy changes required to build a fair and just global economy.” – AFL-CIO President Richard Trumka, 23 January 2017.
https://www.washingtonpost.com/news/powerpost/wp/2017/01/23/sanders-praises-trump-for-nixing-tpp-delighted-to-work-with-him-on-pro-worker-policies/?utm_term=.64c6a8d379d6
My comment was still awaiting moderation when Rainbow Dash’s comment was posted – another good comment!
Well if the people in CA get their way then CA will become a separate country which means we will have to build a wall to keep all them illegal Californians out of the country
Did r2 tell you to write that? LOL!!!
That’s it ? That’s the best you can do ? Yawwwwn
You say that as if it is a BAD thing!
If California separated from the rest of the country, the rest of the country would go broke, and starve! California is the one state that actually does produce just about everything people need to survive happily on their own. It is the 5th largest economy in the world, so pull your head out. The country would never miss Utah, Wyoming, Arizona, most of the Southern States, most of the mid-western dives etc. Gimmie a break!
California would never become its own country. It would just be the northern part of Mexico.