Helen Andrews
Feb 20, 2024
12:04 AM
The year 1994 marked the beginning of the era of globalization. For a short time after the end of the Cold War, it was unclear what would be the driving theme of the next period in history. Then it emerged: borderlessness. The theme of the new era would be the free movement of goods, people, and capital. In a few short months on either side of January 1, 1994, the European Union was formed; the Marrakesh agreement was signed, creating the World Trade Organization; the Channel Tunnel opened; and the North American Free Trade Agreement came into effect.

Hubris was present from the beginning. During the negotiations over NAFTA, union leader Richard Trumka, then of the United Mine Workers of America, later president of the AFL-CIO, asked a Clinton administration official whether he was worried about the effect of free trade on American blue-collar workers. The official said yes, but eventually “wages would start to go up again, and things would even out around the world.” Trumka asked him how long this would take. The official answered, “About three to five generations.”

We are now one generation into this process, thirty years from the start of NAFTA, so we are at a good point to ask: Are things evening out? Is the new equilibrium we were promised any closer, and it is better than the one we had before? //

On the 30th anniversary of NAFTA, its opponents stand vindicated and its defenders are chastened—or at least they should be. In many corners of the left and right, free trade dogma is as strong today as it was the day NAFTA was signed. It is therefore worth looking back to see what exactly went wrong with NAFTA, what made people blind to its flaws, and why its costs proved greater than anyone predicted at the time. //

The U.S. lost 5 million manufacturing jobs between 1995 and 2015. Even in advanced technology products, we now have a massive trade deficit. Globalization has not made our manufacturing sector leaner and meaner. Between 2011 and 2022, manufacturing productivity in the U.S. actually declined. To be clear, these dismal numbers are not mainly the fault of NAFTA. The number of jobs lost to Mexico was relatively small; the China shock dwarfs it. Yet NAFTA set off the chain of events that allowed globalization to run free the way it did. It gave the free traders a big win and reshaped the coalitions to their advantage.

There have also been non-economic costs to NAFTA that don’t show up in economic statistics. For one, NAFTA made Mexico fat. The same cheap corn that pushed the farmers off their land flooded grocery stores with processed food and high fructose corn syrup. Coke became cheaper than water. The result was that Mexico’s obesity rate almost doubled; 17 percent of adults are now diabetic, compared to 9 percent in 1990. In 2016, diabetes was Mexico’s leading cause of death. If you believe the online nutrition gurus, NAFTA exported the same obesogenic diet patterns based on massive corn subsidies that have caused Americans to get fatter in the last half-century, far more than our rates of calorie consumption and physical activity can explain. It also gave an economic boost to the same corn producers fueling that dynamic at home.

NAFTA also made Mexico liberal. Today Mexico has gay marriage, gay adoption, and abortion, all things that would have been unthinkable when the agreement was signed. //

The lawsuit that led to the 2023 Mexican supreme court decision decriminalizing abortion was brought by a progressive NGO funded by the MacArthur Foundation, the Hewlett Foundation, and the Tides Foundation. //

Pork prices surged after the pandemic because, as journalist Rana Foroohar explains in her book Homecoming, “the largest pork producer in the United States, Smithfield, is owned by a Chinese company that takes orders from the Chinese government, which understandably wanted to export to China what pork was available during a time of scarcity.”

“This whole concept is about rebuilding an American economy around American goods, around American industry," she said. "We do already live under a tariff regime in this country, but it’s the tariff regime of China, of Mexico, of Brazil, of Australia, of countries that — Mexico won’t take our corn, Australia won’t take our beef.”

Tapper ran defense for these other countries by suggesting the European Union wouldn't take American beef and pork due to hormones used in the products. Which he presented as a final word before pivoting to another question. Rollins wasn't letting it slide.

“Wait! Hold on, Jake! No, no, no!” she said. “Here’s the bottom line: They are using fake science and unsubstantiated claims to not take our products.”

“So it isn’t just that they have high tariffs - thank you for making this point for me - I meant to make it."

"It’s the way they’ve treated our products,” Rollins added. “‘Oh, sorry, we can’t take your beef since 2002 because you use a certain type of feed.' That’s absolute bull. Our farmers and ranchers produce the safest, most secure, and best food in the world!”

Red in Illinois
2 hours ago edited
Trump is using tariffs (admission price) to the largest consumer market as leverage against other countries to lower their trade barriers. Those trade barriers could be tariffs, import quotas, currency manipulation, regulations etc.

All the “free traders” that are panicking right now apparently haven't been paying attention to Trump for the last 8yrs. This is quintessential “Art of the Deal” maneuvering.
Scare the 💩 out of countries that restrict our imports to the point they cry uncle and lower/eliminate their barriers to our exports. Cut deals that result in something closer to free trade. Where comparative advantage actually guides trade.

Apparently, its already working with several countries as they are preparing to send trade delegations to the WH. //

Outerlimitsfan
2 hours ago edited
Well complete free trade between Europe and United States that Elon desires certainly wasn't going to occur by continuing the same policy of the last several decades.

Europe was quite enjoying the status quo of using some protectionism while we also paid a huge amount for NATO and gave away foreign aid to numerous countries.

Big reason why many European countries had the cash to spend on socialist domestic welfare programs was because they didn't need to spend much on military defense. //

Bring Back Bugs Bunny
2 hours ago
Tariff negotiations (Trumps position) are exactly how we reach zero tariffs with EU (Musks position). Trump Musk disagree on tariffs…my bunny tail! //

Chelan Jim
2 hours ago
Musk and Trump are saying the same thing: There should be no tariffs.

Waiting for other countries to voluntarily give up their tariffs on our goods is fairy tale. We have had low tariffs on them for a considerable time and they are not going to budge without some nudging.

Why is Heinz Ketchup Called "Tomato Seasoning" in Israel—and How Trump's Tariffs could end up being great for Israelis.

The victims might be the monopolies, Netanyahu and the public might be the victors. This presents huge opportunities for the savvy. Here’s how: (1/8)

Shipwreckedcrew @shipwreckedcrew
Everyone should read this link and understand the implications.

We have $29 trillion in debt held by the "public."

33% of that debt, or $9 trillion, will mature in the next 12 months. That means we will need to sell new bonds to raise the money to pay off that $9 trillion to the holders of the bonds that will mature.

Five years ago, the AVERAGE interest rate across all of the national debt was 2.32%. That meant the mix of T-Bills (2-12 months) to bonds (up to 30 years) could be averaged out to 2.32%.

Today, because of the borrowing during the Biden Admin post COVID using mostly 3 and 5 year bonds, the average interest rate across all the debt is now 3.35%

That 1.03% increase is actually a nearly 50% increase in borrowing costs across the entirety of the debt.

That's why interest on the national debt this year exceeds the Pentagon budget.

What Pres. Trump is doing by design is to drive down interest rates so that when we have to sell $9 trillion in new bonds over the next 12 months, the interest rates on the new bonds will be less than the interest rates on the bonds sold that were sold by the Biden Admin to fund the nonsense crapola that DOGE has been exposing.

The Hancock @HancockThe1011
·
15h
In short the Biden administration deliberately attempted to bankrupt America to funnel $ to the DC connected class. Arrest them all and throw away the key.

Uğur Demir @lastpresser1
·
5h
I agree with your points — just want to add one thing:

In a normal year, Treasury issuance is roughly 20% short-term and 80% long-term. But in recent years, it's flipped — around 80% is now short-term. That’s why markets have become hypersensitive to quarterly refunding...

MTM 14 @mtm14
·
13h
It is worse than that too…when rates were zero bound under Yellen’s term that bubble head academic did all short term debt instead of issuing more 30 year bonds. Bessent should bring back 20 year issuance and make many of those bonds callable at specific intervals....

cpindc @cpindc
·
18h
I've said this for months. Yellen and President Ron Klain deliberately rolled debt into short term notes.
Anyone who looks at bond market sees the play.

So, what have we learned from these recent crashes?

1. It’s impossible to predict how long a stock market recovery will take.
2. If you don’t panic and sell your stock holdings when the market crashes, you will be rewarded in the long run. //

When you incorporate the effect of inflation, one dollar (in 1870 US dollars) invested in a hypothetical US stock market index in 1871 would have grown to $30,711 by the end of February 2025.

The substantial growth of that $1 highlights the enormous benefits of staying invested for the long term.

Still, it was far from a steady increase over that period. There were 19 market crashes along the way, with varying levels of severity. //

What does this history tell us about navigating volatile markets? Mainly, that they’re worth navigating.

President Trump has made one intention very clear, that being that he will be working to restore the United States' industrial base. He's been taking steps to do that, and many of those steps have involved tariffs intended to balance trade. This effort has culminated (so far) with the April 2nd "Liberation Day" reciprocal tariffs. Democrats and even some Republicans are opposing the tariffs, but one administration member, Secretary of State Marco Rubio, went on record on Friday in support of the president's plans. //

Granted, tariffs make many uncomfortable, and that discomfort is not limited to the left; free-trade advocates on the right are concerned as well. But, as President Trump points out, free trade has to work both ways, and many nations have heavy tariffs on American goods.

The free-market advocate website Issues & Insights is a little more cautious on the matter, but they are not ruling out the idea that the tariffs may have the desired effect. //

If Trump’s approach works better than all those trade deals at bringing down other nations’ tariffs, who can complain? Certainly not free traders.

You don't get much more free trader than I&I's editorial board. //

The thing is, we're in terra incognita here. The United States has not tried a major tariff reset since Smoot-Hawley in 1930. And, despite what you will hear in some quarters, the Smoot-Hawley tariffs didn't cause the Depression; the market crash that led to that financial disaster happened in 1929. No less an economist than Milton Friedman opined that the effect Smoot-Hawley had on the Depression was minimal. What's more, the global economy is vastly different now than it was in 1930. Britain, in 1930, had the world's largest and most powerful navy on the planet and a powerful industrial base, while the United States was still moving from being a predominantly agricultural economy to an industrialized one - and only ten years later, we would be the "arsenal of democracy." Japan was the primary power in Asia, militarily and economically, while China was an agricultural country mired in what we would now call the third world.

Much has changed since then. //

anon-9s7n
3 hours ago edited
Trump has been right about pretty much everything so far. The status quo of being a services economy (that is pretty easy to compete against given our woeful status of education) is not acceptable to anyone with a functioning cranium. We have to incentivize manufacturing in this country and not one single person at any level of the public square has come up with a better way than this.

All the detractors need to clamp their pie holes shut until they can come up with a detailed, multi-year strategy to achieve the same end of bringing manufacturing back to this country.

I'm far more interested in FAIR trade than free trade. Free trade just means giving other nations a free ride on the back of Americans. Enough! //

Eric R EDMUND
an hour ago
There were 10% drops twice in 2024 with no tariffs and a Dem in the White House, no one panicked, almost no one even noticed. The markets will recover quickly enough and if the number of people working has increased in the mean time, it will based on healthier fundamentals. //

Red in Illinois
2 hours ago edited
Rand Paul is good on alot of things but he should not be in charge of anything. His “principles” will not allow him flexibility to actually get to where his principles are occurring.

We do not have free trade right now. We have free trade for thee but not for me. We allow most countries to import their goods to our shores at little cost while these same countries create barriers to our exports….making them non-competitive in foreign markets. These barriers can be out right tariffs, import quotas, regulations that make thier domestic good more affordable and/or manipulate their currency. They can also subsidize their industries effectively making them undercut our products.

For those that havent learned how Trump operates yet….I’ll clue you in. The end goal is not to collect tons of $ from these tariffs nor to raise prices of imported goods. That may occur during the interim though. The goal is to get these countries to reduce their barriers to our exports by using the admission price to the US consumer market as leverage.

In other words, these tariffs are meant to promote FREE trade between countries…not end it.

I don’t know if it will work but I have learned a long time ago that Trump often ends up proving alot of people wrong. I think he’ll do it again.

JHW252
5 hours ago edited
If tariffs are so bad why is the rest of the world using them against us ? My father was a successful businessman who owned a small engineering firm. He predicted everything that is happening now back in the 80’s.
“If they sign NAFTA that’s the end of manufacturing in the United States”
“There is no substitute in an economy for the blue collar worker and his paycheck”. //

Blue State Deplorable
6 hours ago
In general, I agree tariffs drive up prices and discourage trade or so I was taught as an Econ major.

But, I think that analysis fails to capture what Trump seeks. This is a gambit. He’s leveraging the power of the American marketplace to encourage other nations to trade fairly. If you wish to export to the US, you’ll eliminate the tariffs you impose on American goods (and subsidies to your manufacturers that allow them to compete unfairly) or suffer the consequences in the form of retaliatory tariffs. Trump’s betting most nations will fold. Whether it works, remains to be seen.

At the same time, Trump is wooing investment from abroad to create jobs and reinvigorate America’s manufacturing base. He’s also seeking to incentivize American manufacturers to produce goods in the US. Why? Well jobs, as I said, but it’s more strategic than that.

Trump sees a dangerous world and with it, declining US power. He believes that a weakened US makes the world more dangerous and less stable. To shore up US power, he’s looking to re-establish American manufacturing and wealth (particularly middle class wealth). Why? So that America can continue to project power to ensure a stable, less dangerous world and wield that power lethally when it becomes necessary.

The tariffs Trump’s imposing are designed to reset America’s trade relationship. They are intended to be short term in nature and predicated on the assumption that most of the world will play ball. As I said above, whether it works remains to be seen. //

Blue State Deplorable anon-lier
4 hours ago
Yes, “unequal tariffs” make those imports more expensive for American consumption, but they remain cheaper than goods manufactured here. Why? For a lot of reasons. Some of it has to do with the cost of producing in a first world economy, some of it has to do with direct and indirect subsidies that importing manufactures benefit from like Chinese slave labor and the like.

Trump’s view of the world is a little different though. His goal is not higher prices or reduced trade, it’s trade on an equal footing, it’s more manufacturing in America, it’s more good paying American jobs. Could we see higher prices? Possibly, but if real wages go up, it doesn’t necessarily matter.

It’s a complex issue, but I do heed Thomas Sowell’s warning (see above). Make no mistake, Trump’s gambling. It could pay off handsomely, but there could also be severe consequences. //

Outerlimitsfan
6 hours ago edited
Meanwhile Rand Paul is Saying tariffs and protectionist policy was a political disaster for McKinley in 1890. Yes, McKinley(a Congressman) and his party lost badly soon after.

Rand failed to mention though that McKinley later became President in 1896 and reelection for a second term. Rapid economic growth occurred under his protectionist/tariff policies as President. Highest tariffs in U.S. history occurred in late 1800s/early 1900s.

Also Alexander Hamilton and many of the founders supported tariffs and protectionism. //

surfcat50 Outerlimitsfan
6 hours ago
People forget, or may not know, that prior to the constitutional amendment bringing the income tax to life in the US in 1913 (using the same lies then that only “the rich” would pay it), the federal government was funded entirely through duties, excise taxes and . . . TARIFFS.

anon-rjsc
6 hours ago
President Trump’s tariffs are much more than a simple tool to get concessions and/or collect money. He’s setting a new global baseline for international relations. For 40 years, the baseline has been zero US tariffs, high tariffs into other countries, and we impose sanctions when we want countries to change. The new baseline is a bilateral reciprocal tariff. From there, we reward a country AFTER it does something beneficial to us, like lowering their tariffs. This new baseline opens countless opportunities way beyond tariffs.

Genuine question: what is the purpose of business?

Two of the most influential thinkers—Adam Smith and Milton Friedman—offered on-the-surface competing answers, which not only created capitalism, but have driven some of the biggest debates in capitalism. And, interestingly, one of the most searched topics in our Robinhood Learn library is on
this topic
. Understanding their views isn’t just an intellectual exercise—it’s key to understanding how modern businesses operate and why certain economic policies shape our world.

Let’s start with Adam:

In 1776, Adam Smith, the so-called father of macroeconomics, attempted to answer, publishing the first edition of what came to be known as The Wealth of Nations. In it, he established scientific aspects of economics we still use today. These included:

The division of labor and specialization for increased efficiency.

The wealth of a nation is not calculated by how much money (or gold in his time) is in the bank, but is instead derived by how value is created (through the transformation of raw materials to goods) that then 'flows' through society. This came to be known as gross domestic product (GDP).

Invisible Hand theory: in the pursuit of self-interest to be the best under certain conditions, competitive society benefits from the unintended and uninterrupted consequences of individuals pursuing their own self-interest. Free trade was an intricate part of this.

For anything you read, it’s crucial to understand the author’s frame of reference, so here’s the context behind his theory: Adam Smith’s book was purposefully political, opposing the vested interests who advocated protectionism and who were driving forward Britain’s colonial and slave trades of the time. Smith was also a moral philosopher which came through in his dissonance for over-simplification.

Fast forward nearly 100 years later, to September 1970, Milton Friedman wrote in the NY Times: “
A Friedman doctrine
–The Social Responsibility of Business Is to Increase Its Profits”. As the title shares, he asserted that the only “social responsibility” of a business is to increase its profits within legal and ethical bounds, while any money or time spent on the pursuit of social initiatives was effectively imposing “taxes” on shareholders, employees, and customers. The one cross-over with Adam Smith is that the focus on a free-market system and similar assumption that businesses (vs people) will naturally act responsibly to maintain their reputation, retain customers, and attract employees.

The Simon–Ehrlich wager was a 1980 scientific wager between business professor Julian Simon and biologist Paul Ehrlich, betting on a mutually agreed-upon measure of resource scarcity over the decade leading up to 1990. The widely followed contest originated in the pages of Social Science Quarterly, where Simon challenged Ehrlich to put his money where his mouth was. In response to Ehrlich's published claim that "If I were a gambler, I would take even money that England will not exist in the year 2000", Simon offered to take that bet, or, more realistically, "to stake US$10,000 ... on my belief that the cost of non-government-controlled raw materials (including grain and oil) will not rise in the long run".

Simon challenged Ehrlich to choose any raw material he wanted and a date more than a year away, and he would wager on the inflation-adjusted prices decreasing as opposed to increasing. Ehrlich chose copper, chromium, nickel, tin, and tungsten. The bet was formalized on September 29, 1980, with September 29, 1990, as the payoff date. Ehrlich lost the bet, as all five commodities that were bet on declined in price from 1980 through 1990, the wager period.

USAspending is the official open data source of federal spending information,
including information about federal awards such as contracts, grants, and loans.

Efficiencies
Tracking DOGE wins

In fiscal year 2023, the United States disbursed $72 billion of assistance worldwide on everything from women's health in conflict zones to access to clean water, HIV/AIDS treatments, energy security and anti-corruption work. It provided 42% of all humanitarian aid tracked by the United Nations in 2024. //

NavyVet Largo Patriot
11 hours ago
We should amend the Constitution, if we can't get legislation, that prevents any and all aid, grant, or other funding when the government has a deficit.

If we can't afford to give money away - i.e. government has to borrow money to meet its obligations - then it should be expressly illegal, and, any elected official proposing it should be immediately removed from office and barred from running in the future. //

doctor goodheart Weminuche45
4 hours ago
In my personal experience (Russia 1990's), it's a transfer of wealth from taxpayers to Beltway bandits, with a tiny percent of funds actually hitting the ground in foreign countries.

Per William Easterly's books (e.g. The White Man’s Burden: Why the West’s Efforts to Aid the Rest Have Done So Much Ill and So Little Good), foreign aid has repeatedly been shown to do more damage than good. It creates a large pool of money and therefore power to one tribe vs. another tribe; substitutes US-made food supplies for local growers, thereby perpetuating poverty--and so on and so forth as President Reagan would have said.
Anyway what to the leftists care? They used to be concerned about world poverty. Now they want to worsen it to depopulate the world, or at least keep most of the world unable to have cheap energy, the source of prosperity and health.

I spent many years conducting root cause analyses and teaching major corporate employees, mostly engineers, how to do root cause analysis. One of the tools for root cause analysis is what some call "5 Whys," but I always called a "Why-Why Analysis," as sometimes it may take two "Whys" and others, ten. In this case, there are too few houses. But they don't ask or answer the next question: Why? //

When asked, "How do you know when you've arrived at a root cause," my stock reply was, "When you arrive at the point where some person or group of people made a decision, that's likely to be your root cause." //

Percyisacat
4 hours ago
Where did they find 1100 sq feet for $2500 a month in Campbell?????? My son lived in Santa Clara, and paid over $3,000 a month for rent.

An ironclad law of economics regarding employment is this: To be retained, an employee must return value to the employer in excess of the cost of employment. Minimum wage laws place an artificial floor on the cost of employment; these laws not only price the entry-level job-seekers out of the market but they force employers to seek alternatives to hiring people.

Now, Chick-fil-A, while not citing any minimum wage laws as a reason for implementing this, has introduced the automated lemon squeezer for their vaunted lemonade prep. //

These burger bots and lemon squeezers will price the low-skilled worker out of a range of jobs. True, to some extent, the move to automation is inevitable; automation increases efficiency, which every business seeks. Even so, there was a time, not all that long ago, when many young people's introduction to the workplace as entry-level workers was a job in a fast-food joint. Increasingly, automation, in order-taking and food preparation, is taking over from those young people and depriving them of valuable experience. Minimum wage law accelerates the loss of these entry-level jobs.

This is why, whenever a minimum wage law is proposed, the question to ask is, "Do you want more burger bots? Because this is how you get more burger bots.". //

DarthCY
17 days ago
The minimum wage is there for unions to have something to raise their wages from. That is why Dims covet it so much. Anybody who thinks you need to raise it to be able to sustain yourself off of a single minimum wage job is economically illiterate. //

Steamfish jacktate82
17 days ago
Keypunch operators, highway toll takers, telephone operators, uniformed gas station attendants, and newspaper delivery boys have all joined the jobs you mentioned as positions filled by humans in my youth but vanishing or gone today. The rise of AI will undoubtably be adding to that list soon.

Protectionism worked for China’s Internet companies, which leapfrogged their American counterparts. Online sales comprised 27% of total retail sales in China in 2022, compared to 15% in the United States. Mobile payments in China reached $US 70 trillion with a total of 158 billion transactions, compared to $8 trillion in the United States. //

Washington, DC, in October 2022, banned the export of high-end computer chips (with a transistor gate width of 7 nanometers or less) as well as the tools and software needed to make them. //

It isn’t clear what the Biden Administration was thinking. The official rationale for the chip control was to stop the Chinese military from gaining an advantage. According to a 2022 RAND Corporation study, virtually all military applications employ older chips (see chart below). The older processes are easier to harden, and most military software has been tested for years on existing hardware rather than rewritten for newer chips. //

If the objective was to hamstring China’s economy, it has failed. The chip ban undoubtedly imposed severe costs on China, which is attempting to reinvent large parts of the semiconductor supply chain at high cost. But China can recompense itself for those costs by turning excess supply into a vehicle to dominate semiconductor markets globally in the not-too-distant future.

In Tuesday X post, Musk's DOGE wrote that the U.S. spends about 3 cents to mint each penny, which, of course, is only valued at 1 cent.

"The penny costs over 3 cents to make and cost U.S. taxpayers over $179 million in FY2023," DOGE wrote. "The Mint produced over 4.5 billion pennies in FY2023, around 40% of the 11.4 billion coins for circulation produced."

In pointing out the penny's costliness, DOGE is taking aim at an issue that has sparked debate for years, although the price of manufacturing the cent has only grown over the past several years. In 2016, for instance, the U.S. was spending about 1.5 cents to mint each penny, or less than half of its current manufacturing cost. //

The only question remains this: Will we have to start offering our pensive friends and acquaintances a nickel for their thoughts? And are they worth it?