Strong Post-Brexit Outlook For UK Economy

Last month, UK automotive components manufacturer Brose installed a new £10 million ($13M) paint line at its factory in Coventry, England. Brose hired an additional 30 workers to staff the paint process, bringing its UK workforce to nearly 1,000. Juergen Zahl, president of the UK branch of German-headquartered Brose called the Coventry expansion a “massive show of faith” in Britain’s position in the global auto industry.

IBM Offshores to India and Business Still Shrinks

IBM CEO Ginny Rometty

Technology giant IBM reported its third quarter results on Oct. 17^th, and extended a stunningly long losing streak with its 22^nd consecutive quarter of declining sales.  In four years, quarterly revenue has dropped 18%. As they say on Twitter: Sad! 

The problems at the computer giant are due mostly to the transition in the corporate world from onsite facilities to cloud computing, in other words shifting their computing needs to centralized operators like Amazon Web Services. IBM is a laggard in that business.

Trump Administration Rattles the North American Cage on NAFTA

US Trade Rep Robert Lighthizer

Three rounds of North American Free Trade Agreement (NAFTA) negotiations came and went without much fanfare. But the fourth round, held in early October, included strong Trump administration proposals which start to fulfill promises to get tough on trade.  Mexico and Canada complained about the proposals. The NAFTA negotiations are now looming as the arena for a major international showdown.

“Bring Me Some Tariffs” New Trade Policies Offer Growth Boost—and Scare Economic Traditionalists

As President Trump talks more openly about aggressive action on the trade front to support the US economy, traditional economists and commentators, especially many on Wall Street, are raising the volume on a scare campaign, aimed at suggesting all sorts of imaginary negative consequences. They fail to recognize that persistent global trade imbalances, whereby trade surplus countries overproduce and excessively rely upon deficit countries’ consumers for growth, pose the most serious risk to global growth and economic stability.

Why Economists Can’t Connect Free Trade and Low Prices to Economic Growth

Economists in the US are overwhelmingly in favor of free trade. But they continue to be frustrated that the public doesn’t buy their arguments. So frustrated are they that last May, one of the leading pro-free-trade think tanks, the Peterson Institute, invited highly respected economist Alan Blinder, now a Princeton professor and formerly Federal Reserve Vice Chairman to give a talk on why the public doesn’t buy the free trade gospel.

High Tech Anxiety: Made in China 2025 Worries Industry, Government

The Trump administration’s rumored Section 301 investigation of Chinese trade practices opens up a new front in the ongoing “trade wars” with China, this time over intellectual property. A key event driving concern over Chinese use or abuse of foreign intellectual property was China’s publication of an ambitious industrial plan, known as Made in China 2025. 

Steel: Famous Economists Get It Wrong

When a large number of famous economists from all sides of the political spectrum agree on something, the odds are that it is wrong. A new letter on the subject of steel tariffs is a good example of that rule.

It’s Time to Amend or Discard U.S.-Korean Trade Agreement

Press reports emerging on Monday, July 3^rd, suggest that President Trump is pushing for a special 30-day review to amend the U.S.-South Korean trade deal known as KORUS. Last week, South Korean President Moon Jae-In said he wanted no change to KORUS, so it’s not yet clear what will happen. But there’s plenty of room to improve upon (or discard) a trade agreement that has delivered little to nothing for the U.S. Five years after it went into effect, KORUS has seen only continued Korean economic growth, but an escalating bilateral deficit for the U.S.

Administration Needs to Defend Our Steel Industry

This past April, on a 92-mile bike ride through the hills of Monterey, California, I met a young man I’m proud to call a friend, Rasheen Malone. Rasheen (pictured, in Team Semper Fi jersey) grew up in a tough section of Brooklyn, not far from where I was born. At 18, Rasheen joined the U.S. Marines. He did four tours of duty in Iraq and Afghanistan. On one of those tours, he stepped on an IED (land mine) and had both his legs blown off. Military surgeons fixed him up—he has two rods and 13 pins in each leg, and to watch him walk you might not know it. As we biked, slowly, up the steepest part of the climb in the Monterey hills, I asked Rasheen how it feels to pull a bike uphill with all that hardware in his legs.

Feds Should Stop Chinese Acquisition of Sole U.S. Rare Earth Mine

A U.S. bankruptcy court has decided to sell a California mine, the sole U.S. source of rare earth minerals, to a consortium including Chinese mining company Shenghe Rare Earth Shareholding Co. If the transaction goes ahead, this would turn over the unique domestic producer of these vital minerals, used in many high-tech electronics products, to a Chinese-affiliated company. 

In Praise of William J. Baumol, Economist Who Identified Market Imperfections

On May 4^th, Professor William J. Baumol died at the age of 95. He was a prodigious writer and innovator in economic theory, author of some 500 papers over the more than half a century he taught at Princeton University and NYU.  At least once, he was reportedly on the shortlist for the Nobel Prize in Economics, and if anyone deserved it, he did. I’ve read a couple of the obituaries of Prof. Baumol and I thought they missed the point of much of his work so I’d like to add my own.

British Trade Boost Shows Currency Devaluation Works

Car assembly at Nissan UK

Establishment free traders often claim trade policy reform is futile, urging us instead to simply trust the free market. Recent experience in Britain shows that one trade policy—currency devaluation—does work, and pretty quickly too. Despite imports growing more expensive, both consumption and exports increased.

China Targets World Leadership in Microchips

The decision last month by microchip manufacturer GlobalFoundries to build a chipmaking plant in China reinforced fears in the U.S. technology industry over China’s ambitious plans to become a major player in the world semiconductor industry. 

Why a Trade War Won’t Happen…But We Would Win If It Did

There has been lots of talk of the danger of “trade wars” in newspapers in recent months. The Trade War Alarmists are likely wrong. 

Economic Analysis: Fixing The Bloated Dollar

Bretton Woods Hotel, site of 1944 monetary conference

As President Trump moves to implement economic policies aimed at increasing U.S.-based production, incomes, and jobs, there’s a growing risk that the dollar will become further overpriced.  The dollar is already way too high, as evidenced by our 41 consecutive years of trade deficit.  

More Economists and Leading Politicians Recognize the Trade Problem

German Finance Minister Schauble admitted euro undervalued for German economy.

Sometimes the victories come so thick and fast, you have to sit down, take a deep breath, and count them. 

And sometimes your victories come wrapped in so many layers of pious self-justifying twaddle that you don’t even recognize them.