Tractors and (upcoming) tariffs?

[WinterDeere]

From 1815 until after WWI Great Britain held the role that the US plays today. They ran massive trade deficits and were able to sustain it for over a century. So it is sustainable.

When you have the world's most productive economy, capital flows to you. Your companies have access to cheaper capital than competitors in other countries, which makes them more productive. It's a virtuous cycle.

Here's an article from Paul Krugman explaining why a trade surplus is a sign of weakness, not strength:

China’s Very Bad, No Good Trillion-Dollar Trade Surplus

It’s a sign of weakness, not strength, but a problem for everyone

paulkrugman.substack.com

I'm not arguing that a trade deficit isn't a sign of strength, I know it is. But I also don't believe in perpetual motion machines, or that once you've "arrived", you can safely abandon the mechansim that got you there.

But I'll admit, I'm just a scientist and engineer, not an economist. Economists have creative math that will never make sense to any scientist or engineer.

 

[Hay Dude]

Yep, and that’s why it’s unrealistic to expect them to buy the same amount of export goods that we import.

Again, it’s China we are really concentrating on here. The rest are small time chicken feed.
And they have 4 times the population we have.

 

[Hay Dude]

From 1815 until after WWI Great Britain held the role that the US plays today. They ran massive trade deficits and were able to sustain it for over a century. So it is sustainable.

But the British empire finally fell.

When you have the world's most productive economy, capital flows to you. Your companies have access to cheaper capital than competitors in other countries, which makes them more productive. It's a virtuous cycle.

Here's an article from Paul Krugman explaining why a trade surplus is a sign of weakness, not strength:

China’s Very Bad, No Good Trillion-Dollar Trade Surplus

It’s a sign of weakness, not strength, but a problem for everyone

paulkrugman.substack.com

Paul Krugman has been wrong more times than hair follicles have fallen out of your head.

 

[quicksandfarmer]

I'm not arguing that a trade deficit isn't a sign of strength, I know it is. But I also don't believe in perpetual motion machines, or that once you've "arrived", you can safely abandon the mechansim that got you there.

The mechanism that got us here was having the world's leading universities, government support for basic research, an educated workforce, an independent judiciary and well-regulated financial markets.

 

[ruffdog]

You can count on the billionaires to go golfing while they tell the commoners to "hang tough".

 

[jyoutz]

Again, it’s China we are really concentrating on here. The rest are small time chicken feed.
And they have 4 times the population we have.

Well then it ought to focus on China, not the whole world.

 

[jyoutz]

The mechanism that got us here was having the world's leading universities, government support for basic research, an educated workforce, an independent judiciary and well-regulated financial markets.

Absolutely

 

[Hay Dude]

Well then it ought to focus on China, not the whole world.

Wouldn’t it be unfair to tariff the nuts off China and let the rest of the world go?

 

[Hay Dude]

The mechanism that got us here was having the world's leading universities, government support for basic research, an educated workforce, an independent judiciary and well-regulated financial markets.

If you think the judiciary is “independent”, then you must have missed a lot of what happened in the courts last year

 

[WinterDeere]

The mechanism that got us here was having the world's leading universities, government support for basic research, an educated workforce, an independent judiciary and well-regulated financial markets.

I hope you don't really believe that, as you're substituting only the last few decades of our history for nearly two centuries of industrial revolution that put us there. We were NOT leading the world in universities or research until well after WW2, and really only as a result of WW2. The only thing that made that even possible was our manufacturing capability.

You could go so far as to say our contribution to WW2 was not so much in the fighting of it, as in supplying the allied forces with steel, ships, tanks, and other manufactured goods. American manufacturing is what won that war of mechanical attrician, the opposition could simply never replace lost planes, tanks, and ships as quickly as the USA.

And when the war ended, and Europe and Asia spent most of the next two decades simply recovering, we were already plowing along in the fast lane. THAT is what allowed America to finally surpass legacy world powers in building the world's leading universities and research.

 

[Hay Dude]

I hope you don't really believe that, as you're substituting only the last few decades of our history for nearly two centuries of industrial revolution that put us there. We were NOT leading the world in universities or research until well after WW2, and really only as a result of WW2. The only thing that made that even possible was our manufacturing capability.

True

You could go so far as to say our contribution to WW2 was not so much in the fighting of it, as in supplying the allied forces with steel, ships, tanks, and other manufactured goods. American manufacturing is what won that war of mechanical attrician, the opposition could simply never replace lost planes, tanks, and ships as quickly as the USA.

We did make a pretty big sacrifice in lives lost and injuries. By the last year of the war, we eclipsed the axis advantages in both war machines and soldiers capabilities. Plus we had to fight in a part of the world we were not familiar with against an enemy that was dug in and established. Think D-Day. We had to overtake entrenched axis men & artillery, and we did it, despite making lots of mistakes in execution.

And when the war ended, and Europe and Asia spent most of the next two decades simply recovering, we were already plowing along in the fast lane. THAT is what allowed America to finally surpass legacy world powers in building the world's leading universities and research.

yeahh, but we did help rebuild those countries while they were recovering.

 

[WinterDeere]

We did make a pretty big sacrifice in lives lost and injuries. By the last year of the war, we eclipsed the axis advantages in both war machines and soldiers capabilities. Plus we had to fight in a part of the world we were not familiar with against an enemy that was dug in and established. Think D-Day. We had to overtake entrenched axis men & artillery, and we did it, despite making lots of mistakes in execution.

Oh, for sure. I shouldn't imply we weren't there fighting it, as well. But Europe needed us much more badly for our manufacturing capabilities, than for our fighting skills. They had the world-class infantry and naval powers, but lacked the ability to build and replace planes and ships at anywhere near the rate they required. Churchill wasn't begging Roosevelt for troops, he was begging him for planes and steel.

Japan was a different story. We were much more on our own, in that front.

 

[Hay Dude]

Oh, for sure. I shouldn't imply we weren't there fighting it, as well. But Europe needed us much more badly for our manufacturing capabilities, than for our fighting skills. They had the world-class infantry and naval powers, but lacked the ability to build and replace plans and ships at anywhere near the rate they required. Churchill wasn't begging Roosevelt for troops, he was begging him for planes and steel.

Japan was a different story. We were much more on our own, in that front.

We had the better aircraft, the norden bombsight, and nightime bombing. By ‘44, nobody had better aircraft. We bombed Germany into submission. The B-17 and its’ crews was arguably the most effective instrument of war in the entire European Theatre.
It was like a club that never stopped clubbing them until there wasn’t much leftv of the German war machine. Then we got the long range fighter escort in the P-51 Mustang that ate Luftwaffe fighters for lunch.
They were defenseless by then and it was just a matter of time.

Early in the war the Axis had the advantage in that they were battle hardened and knew how to use their equipment. Especially the U-boats. They did have better aircraft in the beginning of the war, but we caught up pretty fast.

 

[jyoutz]

I hope you don't really believe that, as you're substituting only the last few decades of our history for nearly two centuries of industrial revolution that put us there. We were NOT leading the world in universities or research until well after WW2, and really only as a result of WW2. The only thing that made that even possible was our manufacturing capability.

You could go so far as to say our contribution to WW2 was not so much in the fighting of it, as in supplying the allied forces with steel, ships, tanks, and other manufactured goods. American manufacturing is what won that war of mechanical attrician, the opposition could simply never replace lost planes, tanks, and ships as quickly as the USA.

And when the war ended, and Europe and Asia spent most of the next two decades simply recovering, we were already plowing along in the fast lane. THAT is what allowed America to finally surpass legacy world powers in building the world's leading universities and research.

We were not a world power until after WW2. The U.S. industrial capacity lagged Europe prior to WW2. And agree that research and universities in the U.S. didn’t really become powerhouses until the post war period.

 

[Hay Dude]

But once they woke the sleeping giant, it was lights out for them.
I fear if that happens again, we won’t be able to win.
We can’t survive unless we return to making things here again.
The world has changed. An attack could be biological, like Covid.
We don’t have the pharmaceutical or PPE capacity to survive.
That is another reason for the tariffs. Our survival depends on it

 

[Mtsoxfan]

I know you guys are off in another direction, but my last question is still out there... Why do we/others need tarrifs?

 

[WinterDeere]

The U.S. industrial capacity lagged Europe prior to WW2.

It'd be interesting to see the numbers on this. I honestly don't know how that would shake out, especially in light of the big red E-stop button that was our 1929 market crash, and how that threw a wet blanket on our quickly-growing manufacturing sector. The impression I get from popular media (historical-context movies, etc.) is that we were very nearly on-par with Europe in the years immediately prior to the war, if not starting to surpass them.

Either way, I'd agree war spending, that massive rush to get everyone pointed in the same direction, is definitely what put us in the dominant position that carried us thru the next few decades.

 

[Hay Dude]

I know you guys are off in another direction, but my last question is still out there... Why do we/others need tarrifs?

There are many reasons for tariffs. The most important thing is the tariffs are fair. Right now they are not fair for us.

 

[WinterDeere]

I know you guys are off in another direction, but my last question is still out there... Why do we/others need tarrifs?

Tariffs are just one more tool for controlling the distribution of domestic versus imported goods. If you can agree that we have some interest in protecting American manufacturing and technology, and outsourcing offers a cheaper path, then tarrifs are one of several tools available to ensure not everything gets outsourced.

Protecting American manufacturing and technology may mean protecting American blue collar jobs to some, or supply line security during a war or pandemic to another. There are many good reasons to protect American manufacturing and technology.

 

[jyoutz]

Tariffs are just one more tool for controlling the distribution of domestic versus imported goods. If you can agree that we have some interest in protecting American manufacturing and technology, and outsourcing offers a cheaper path, then tarrifs are one of several tools available to ensure not everything gets outsourced.

Protecting American manufacturing and technology may mean protecting American blue collar jobs to some, or supply line security during a war or pandemic to another. There are many good reasons to protect American manufacturing and technology.

Another approach to increasing U.S. manufacturing is to offer a ten year federal tax deferral to companies that build and operate new manufacturing plants. And a lot less collateral damage compared to tariffs.