It’s all about investment, not tariffs and trade wars

I’ve been saying this for a while, here is an excellent piece by Shawn Donnan at the FT:

Since it was first created in 1975 as an inter-agency committee, Cfius has been able to review foreign investments only on narrow national security grounds. But if it adopts the broad Trumpian definition of national security as economic security, this could open a whole new range of transactions to its scrutiny. Might a mid-western auto plant that makes components purely for civilian vehicles suddenly be treated as a national security asset and be banned from foreign ownership?

Presidents have for years resisted efforts in Congress to require Cfius to consider an economic benefits test when it approves large foreign investments, as similar bodies do in countries such as Australia and Canada. Mr Trump, however, seems to be embracing the idea.  Legislation to reform Cfius, which the Trump administration will have broad powers to shape in its implementation, is nearing its final journey through Congress.

Maybe they’ll have to revise the Star Wars prequels too…

Comments

Maybe they’ll have to revise the Star Wars prequels too…

Well that is a bonus. I mean it would be the first time Congress didn't make something worse.

I have to say Trump has caused a seismic shift in my thinking. I was actually disappointed by his Supreme Court pick. Imagine that three years ago.

A surprise, to be sure, but a welcome one.

Respond

Add Comment

Respond

Add Comment

Deregulate while simultaneously nationalizing, what a grand bargain.

Respond

Add Comment

Sounds like Trump's chinese friends want to buy a burned out auto plant by the early 2020's.

Respond

Add Comment

California is not only the second leading state (behind only Washington state) in exporting goods subject to Chinese tariffs (mostly agricultural goods such as soy beans, almonds, and pistachios), it is also the largest recipient of Chinese direct investment (half again as large as the second ranked state, New York), mostly in real estate and tech acquisitions. Tit for tat: Trump imposes tariffs on Chinese imports, China retaliates by imposing tariffs on U.S. exports to China primarily affecting Trump (rural) districts, Trump retaliates by restricting Chinese direct investment in the U.S. that will mostly hurt non-Trump supporters in tech. China has replaced the U.S. with Brazil for imports of soy beans, which resulted in an unexpected large surge in soy bean exports as countries that had relied on Brazil for soy beans have replaced Brazil with the U.S. as the source and a large but temporary surge in U.S. exports - the surge is temporary because soy bean prices have plummeted as a result of the trade war. At least for the time being, the investment restrictions will have the greater impact, just as Cowen says. But it's the long-term consequences that are concerning (i.e., a smaller and less stable global economy), as international trade becomes a tit for tat game with unforeseen and unpleasant consequences.

All 12 youthful, Thai soccer players have been saved from the flooded cave. Alleluia!

"Concerning!" the word drives my wife crazy. It's a short drive, but there it is.

I'm old enough to remember the early 1980's when severe regional recessions struck ag and oil states. Farmers had prospered on exports and high prices; many went onto debt, bought additional acreage, and planted fence-to-fence. Then, Australia, Canada, India did the same and prices dropped. Does Willie Nelson still do "Farm Aid" concerts?

Additionally, on this date in 1890, Wyoming (I think not a farm or energy state) became a state. Its constitution guarantied the franchise to women.

Respond

Add Comment

Respond

Add Comment

'Might a mid-western auto plant that makes components purely for civilian vehicles suddenly be treated as a national security asset and be banned from foreign ownership?'
Prior to WWII, this was almost every auto plant. Then, it wasn't. That still holds true today. Here's a quote from an NYT article on a small auto part suppliers that started doing work for the military: "Rather than cranking out high volumes of parts for years, jobs come in small batches and are highly customized."
National security was a justification for bailing out GM and Chrysler. If they went under, the parts suppliers would also go and the military could be crippled while engaged in two active combat actions. I'm not saying the argument is wrong, but the example is weak.
As for the prequels, since the entire Trade Federation plot line made no sense, you don't really have to update anything.

Not just the argument, but the arguwoment and the arguchildrent too.

Respond

Add Comment

Except if you get into a large scale war with an actual serious adversary, you might want some actual production lines.

Good news, is we'd just nationalize them.

Respond

Add Comment

Respond

Add Comment

Finally the US look more and more like France

Respond

Add Comment

Since 1945 U.S trade policy has placed the highest priority on order an stability, both to facilitate trade and to reduce the likelihood of war. That meant multi-lateral trade deals and a united European community (the latter to reduce the risk of war, trade or otherwise, among the many small European countries). That also meant multi-lateral trade deals for the U.S. that may not have been as beneficial for the U.S. as bi-lateral trade deals in which the U.S. due to its size would have far more leverage: the U.S. gave up the temporary advantage of size in return for the long-term advantage of order and stability. Donald Trump is hell-bent on replacing order and stability with disorder and instability, giving the U.S. a temporary advantage due to its size but resulting in a smaller global economy and a much greater risk of war, trade or otherwise, in the long-term. As with everything else with Trump, he has no long-term strategy with respect to trade, it's all transactional. The irony is that Trump is relying on national security in unilaterally imposing tariffs and investment restrictions, which will make make the U.S. less secure as order and stability is replaced with disorder and instability.

Great comment... where can I go online to read more commentary along these lines?

Respond

Add Comment

Respond

Add Comment

This seems like an area where the US would be vulnerable to retaliation even under a Trump theory where a surplus makes you weaker because we earn significantly more on our foreign investments than foreigners earn on their US investment.

Respond

Add Comment

By 2024, all Libertarians will be Democrats.

Tyler is already a Democrat. But there may be five or six other professors who switch. I think the Republicans will consider that a fair trade for the remainder of the white working class.

It is interesting that you made the class argument rather than intellectual one.

From a values perspective what are the Republicans doing for Libertarians?

I hope Scott Pruitt does not look good to anyone with serious values and serious intellect. The dude asked for a soundproof booth so he could do dirty deals in plain sight.

There are rational arguments that this or that environment protectionmay have gone too far, but the whole "abolish the EPA and let our brain damaged children sue for damages" was nuts.

Trump chose and then especially kept Pruitt for the nuts and not the judicious.

And at the same time, Trump isn't making a possibly defensible choice of nuclear over coal. He's making the choice of nuclear and coal in spite of the market!

Plus this trade stuff. Where is a rational libertarian really winning?

It’s treason then.

Respond

Add Comment

Respond

Add Comment

'Tyler is already a Democrat.'

Comedy gold. Next, the Kochs will be declared Democrats too.

Well that is what the original poster was saying wasn't it?

"By 2024, all Libertarians will be Democrats."

Granted, I think it's a pretty stupid idea too and ignore a vast amount of reality. But partisans are prone to ignoring facts they don't like.

Do you think the Koch brothers are happy populists at this point?

https://www.cnbc.com/2018/06/04/koch-network-plans-to-spend-millions-to-fight-trumps-tariffs.html

No, but that doesn't mean they'll become Democrats. Odds are they'll remain highly interested in economic freedom. Which isn't a strong point of populists nor Democrats.

You mean the Democrats who successfully negotiated international trade agreements?

You mean the Democrats who placed wide market-based bets on energy, supporting both renewables and fracking?

That looks much less interventionist and much more effective now.

Respond

Add Comment

It's not exactly a strong point of Republicans anymore either.

The remaining choice is whether you want to be a national socialist, or an international socialist.

And fuck you for making me make that choice.

C'mon Hazel, we have better uniforms. Just think how cool it will feel with the torch-lit marches whilst mile-high image of President Trump is beamed onto the clouds.

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

.... "... to consider an economic benefits test when it approves large foreign investments.."

Duh, Of course the U.S. government must control & approve foreign investments by American citizens -- that Federal power is BOLDLY stated in the Constitution -- Article 13.

National economies cannot function without government interventions -- the citizenry is just too dumb!
(But we totally trust those dummies to vote for the absolute best government officials)

I'm pretty sure that you have this backwards - what's under discussion now is government controls on foreign investors buying assets in the United States.

Also, it's nothing to do with any accusation that the citizenry is "dumb".

Respond

Add Comment

Respond

Add Comment

CFIUS focuses on firms that are already established, but we fail to address a more pressing issue: federal and state supported R&D which results in patents and other IP, which are licensed at very favorable (or given free) to firms to develop. Those firms, supported with government R&D, can be acquired by a foreign firm without any restrictions on the licenses or a requirement for recapture.

We should be focusing on government r&d licensing policies and have in place recapture provisions or goeographic restrictions on licensing. Same may go for foreign graduate student stipends for government sponsored research, although that may be more controversial.

Respond

Add Comment

Can you give some examples ? Just curious as to what government R&D you’re referring to here.

Pretty much all University Research is structured to be captured as intellectual property these days. It is licensed directly by universities, or held by public-private Partnerships of Universities and research consortiums.

(As always the Curious capitalization is supplied by Android voice input. A daily example of why we shouldn't trust the AI too far.)

So can you give some examples? I’m still curious as to what you and bill are referring to.

Clearly you believe this is a large problem, I’d like some examples to evaluate the strength of the argument.

Here ia a big search result

Bill and I might actually view the problem differently. I think University patents just create problems and Corruption. I think publicly funded research should just be pushed in public domain.

More funny Android capitalization.

So not serious then? You can’t think of one example?

You linked a google search and none of the results seem related.

Example of what? As I say, Bill and I might be arguing different things. If you are serious you would be far better off surveying those links.

But for what it's worth, here's one thing I remember, for which I don't have a link. It might have been reported here a few years ago. There was a new medical treatment with a combination of drugs and procedures which required access to a number of patents held by private companies and universities. When the researcher tried to bring it to trial, all of those got in a fight and said "no our patent is most important and we deserve the highest royalty." It proved a Deadlock and the treatment was never deployed.

From a Libertarian perspective taxes are applied to universities to create intellectual properties and ultimately rents.

Universities naturally begin to maximize the rent, rather than education, rather than Broad application of the invention.

So no examples.

Got it.

You're not even a very good troll.

He asked for some examples and you failed to give him even one. I don't think he's the one out of line here.

You aren't even a very good sub-troll.

I told Hmmm that Bill and I were probably talking about different things, and I gave him an example for my thing.

What do guys want? An example for Bill's thing, which I may not fully understand?

It would certainly be unfair for me to put words into Bill's mouth.

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

You know, it's such a shame that the prequels were so poorly written. They had all the right components to the films, a big budget, great actors (maybe not Christiansen but look at what his script was), and also stuck mostly to cannon. All the right pieces that did not become greater than the sum of their parts. So I would be for a congressional mandate that they be remade- with new writers.

Also as far as intervention goes: be a party of the free market or don't.

Well on the other hand, the third trilogy is making the prequels look better in retrospect. The writing is even worse and the plot lines have been thinly veiled rehashes of the first trilogy without the charismatic cast.

Have you ever heard the tragedy of Darth JWatts the wise?

I thought not, it’s not a story the Anons would tell you.

Respond

Add Comment

You missed out the social-justice virtue signalling! I'm sure we all want to see more pan-sexual Stong Womyn Jedi Mary Sues defeat White Patriarchy with The Rebellion, I mean The Resistance. Whatever.

I tell you, watching the complete s**tstorm of unlikeable social justice archetypes on display, you can see why the galaxy yearns for First Order rulership.

Respond

Add Comment

Respond

Add Comment

Respond

Add Comment

I am genuinely surprised at Trump and think he may have a clear understanding and strategy to geopolitics after all. Here are a pair of articles that give more perspective to Trump's use of trade as a foreign policy tool

http://carnegieeurope.eu/strategiceurope/76776?lang=en

https://lobelog.com/trumps-energy-offensive-against-iran-an-expert-analysis/

Respond

Add Comment

Respond

Add Comment