What was to be Free to Trade

Oh hey kids, it's me old-man Geoff.  Why not turn down the Pit Bulls and Tailors Swift for a minute and let's talk about free trade.  Now, I know most of our interaction up 'til now has been me yelling at you to get off my lawn and to stop stealing all of my WifeFies, but Free Trade is actually an important concept that is being distorted by one-sided articles and populist politicians on both wings of a pretty sick bird, most recently Hillary Clinton who knows better (seriously, Hil, you know better). 

Some examples of global free trade: if I live in Colorado and I make big hats and a guy in Texas and  guy in Chihuahua Mexico each want to buy a big hat (Texans and Mexicans love big hats) I can sell it to each of them and they will pay for the hats and at certain thresholds I may pay (1)the sales tax to State of Chihuahua (2) sales tax to the State of Texas (3) income/corporate tax on my profits to the Colorado and the Federal Guberment.  So it's not really all that free, but we call it free trade because the Mexican government does not charge me an additional tax to sell the hat to their citizen.  When a country charges an extra tax for foreign goods sold in their country that is called  a tariff.  An awful device to remember this term: Tariffs are not tariffic. Or rather, they are...never mind let's move on. 

The argument against Free Trade and for Tariffs being made right now is that there are too many poor people in the world because of either not enough or too much capitalism/socialism.  And these poor people are willing to make the same widget that a guy in Ohio has been making for 30 years  but the poor people will work for $1 to $2 per hour instead of $30. The argument goes that the rich owner of the company who lives in LA and is a racist owner of a basketball team will move his factory to Mexico, fire 400 workers and pocket an extra $3 million a year so he can pay Kim Kardashian and Paris Hilton to come to his daughter's sweet 16 party. The argument also nebulously points out that the free trade initiatives of the last 40 years have disproportionately hurt America and we are net losers for it.  

This is good rhetoric for drumming up votes because there are more people making around $30 an hour than there are millionaires, and neither Kim nor Paris really wake up early enough to vote anyway.  Simultaneously, it is easy to find the face of human suffering in the down side of free trade; there are many thousands who lose jobs every year.  

The upside is harder to find in faces and in personal stories but is stark in terms of dollars.  From 2010 to 2015 alone, the value of a years worth of US exports to Mexico grew by over 73 billion dollars.  This growth is not driven by exports of college students on Spring break or the terrible price of our failed war on drugs but by factory and agricultural machines, electrical equipment, and car parts.  They are buying ways to grow and then they grow and buy more from us.  

We should not be looking for ways to prop up noncompetitive industries, but rather we should be implementing better methods of retraining those displaced workers so they can join those US industries that are growing with the increased trade.     

The costs of free trade are short term as are the benefits of protectionist tariffs. When the cost of foreign goods drops and your protected domestic goods stay stagnant, gradually, your market shrinks to a domestic market only as other global markets purchase the less expensive foreign product.  I don't have a joke for this paragraph, it's just what happens.  In fact, I'm sort of done with the jokes it's going to be pretty dry from here on out, because we're about to start talking about US-China trade relations which is only a funny topic if you are Vladimir Putin.  One of Vlad's favorite jokes is, "The US walks into China's bar, the US says, 'I need to borrow some money to buy a bottle of whiskey from you', China says 'sure'. The US takes the whiskey and runs out side, China hears a small explosion and the US runs back in asking for another bottle on credit 'sure says china' but what are you doing with it?' the US says, 'The Middle East is on fire, I'm trying to put it out." 

Free trade is not always unambiguously good.  It's not really free if it's unilateral or distorted.  We've made some mistakes with China.  We kept trade relations normalized even though they were pretty clearly manipulating their currency.  They have kept out some of our highest margin businesses to protect/develop some of their own.  But in recent years there have been large improvements here and the heated political sputum that the Sanders and Trump rhetoric against China share is about 3 or 4 years too late.  Their currency is floating more freely (it's diving all on it's own now :)   And the ratio of US Imports to Exports with China has grown from 19% to 24% since 2007.  We should still target products and industries where China engages in dangerous or illegal practices, but we cannot define dangerous activity if it's only danger is to US jobs.  

We could go further into how the cheaper goods that we import from China and Mexico lower the cost of the living benefiting the poorest segments of the US population disproportionately.  We could mock out the recession we would be inviting if we implement the Sanders-Trump style protectionist policies.  We could make fun of Hilary's collapsible spine.  But I think I've said enough for now.  I wanted to say something in defense of free trade and I've said it.  A few times.  

 

What was to be a Dead Cartoonist

"Brad Anderson" strikes me as a pretty normal, run-of-the-mill sort of name.  The kind of normal name that Monty Python would use to humorous effect just because it was so ordinary, "Yeah, we get it, you're gluten-free, no one was going to force-feed you the cheesy bread, Brad!"

But don't let the name fool you, because that is the name of the cartoonist who produced a pretty mediocre comic called Marmaduke for over 50 years.  And the only reason that I say mediocre is because I am a pretentious snob.  And because I live within such a thick bubble of pretention I am looking for art and entertainment that cuts through my expectations, that informs, enlightens or subverts my expectations.  But that is not a job that Marmaduke was ever applying for.  At least not since the mid 50s.

I have to imagine that when he was introduced in 1954 the concept of a huge dog and how his size and personality would make every day events a little more humorous broke a kind of mold.  A mule had started talking a few years before, but horses wouldn't start talking for another decade and cats wouldn't start eating lasagna for another 20 years.  But Marmaduke never ever even spoke, except with his eyes and his tail. 

I can't imagine that Brad ever had writers block.  He could go anywhere or do anything and superimpose the idea of a giant Great Dane on the situation, draw it, and then go hit some golf balls or play with his kids.  He had a large following of readers who just wanted to see what the big dog was up to today.  There is little evidence that he ever had a crisis as an artist, that he ever felt that he needed to come up with something new and edgy; he was content to give a group of people what they wanted. 

I'm not sure if that's noble, or lazy; but it was certainly lucrative.  And as someone who has spent the last 10 years in publicly traded companies, there is also a part of me that years for that sort of contented zen of this cartoonist.  The demands to not only grow the revenue this quarter but to grow it by more than anyone could reasonably expect gets tiresome after a while.

Why can't it be enough to just do my job really well?  Why do I always have to be revolutionizing within a fail-fast paradigm?  Why not just be consistently successful with time-tested methodology? 

But the world moves too fast now for those kinds of sentiments.  So maybe it's nice that Marmaduke stays around, just being big and in the way and comforting in his stability.   

What was to be A Long Walk down 20th.

On June 7th, 1494,  Portugal and Spain signed a treaty that divided the non-Christian world between them.  This was adorable, hilarious, and selfish.  94 years later, English fireships (presumably these were wooden boats that launched fire and not an unholy manifestation of hell's navy temporarily aligned with Elizabeth I) and Dutch flyboats (again, we presume these were actually floating boats and not holy manifestations of heaven's flying navy temporarily aligned with the Dutch Republic) destroyed the Spanish Armada and that was the last that anyone ever heard from Spain until Hemingway started drinking there and European Football became popular.

In July 1944, as the Second World War was fitfully winding down, it was time to divide the world up again, not to decide who would plunder which indigenous people's homes but to divide up the responsibility of ensuring global order and prosperity (Goldman and Sachs would come by later for the plundering).  730 delegates from all 44 allied nations met in a hotel in New Hampshire and established two main organizations

International Monetary Fund (IMF) tasked with fostering economic growth and cooperation by providing policy, advice, and financing to its members; and later, funding Mr. Phelp's Impossible Mission Force to defeat evil organizations and make Tom Cruise look taller than he is.

International Bank for Reconstruction and Development (IBRD) Which we know better today as part of the World Bank, tasked with providing loans to devoping nations and providing riots to cities where it has its meetings.

After these meetings, New Hampshire had largely served it's purpose, but it was decided we would keep it around for sentimental reasons.

I'm not sure that it's in the charter, but traditionally the IMF is headed by a European and the World Bank is headed by an American, but both headquarters are still in Washington D.C.

The IMF has a board of governors that is made up of a Governor from each country (except the smaller ones which gets a governor to represent several of the countries) as well as a Alternate Governor.  For the US, the Governor is the Secretary of the Treasury, and the Alternate Governor is the Chair of the Federal Reserve.


And so, I tell you that story to tell you this one: when the IMF delivers a public report saying that the US Federal Reserve (whose friends call it The Fed not unlike Brittney Spear's ex-husband) should not raise interest rates, we are in part hearing about the recommendation following a thorough analysis, but mostly we are watching the theater of global finance.

The head of the IMF (Christine Lagarde) works for a board that the head of the Fed (Janet Yellen) sits on.  Along with Angela Merkel (arguably the most powerful woman in the world: politically, physically, and magically) these are the two most influential women in global finance.  They work 5 blocks from each other.  It's a $6 to $7 dollar Uber trip down 20th street.  If they don't talk to each other twice a week or more I would be shocked.

If Christine Lagarde really wants Janet Yellen to have her input she calls her; on her cell phone.  The recommendation we read this week is driven as much by political exigencies as economic review, and the decision of the Fed should be largely independent of that.     
   

  

What was to be Self Respecting

On those nights that seem as dark within as without; when the dawn seems impossibly far away and you think there is no way you will make it alone, it is invaluable to know where a dozen warm friends can be purchased for 7.99 before tax.

I know there are other more mature forms of companionship that can be purchased, and look no judgement, but my personal proclivities don't include $200 an hour payments and a course of antibiotics.

So I pull up to the Krispy Kreme drive-thru window after 11 pm and I feign surprise that they are open.  And they kindly explain how their drive thru is open 24 hours a day.  And they humor this pleasant fiction of mine that I am not a repeat offender of good sense and healthy habits.

And similar fictions play out throughout the day all over the place because we live in a society that depends on people being responsible and reasonable, which we know is not always the case, but the continuation of these symbiotic relationships depends on our treating others as if they are responsible professionals and them treating us as if we are the same, and not emotional wrecks who are just waiting for the first opportunity to slink back home to eat donuts and read Alan Greenspan's new Janet Yellen fan fiction (bonus fan fiction content included at the end of the essay!*)

The 'clown' is the exception that proves the rule.  The clown sacrifices the veneer of self-respect to entertain the crowd.  This is an important and valuable role and over the centuries many of our clowns have advanced their art to make their entertainment poignant, informative, and even important.  

But let's be very clear, Donald Trump is not one of those clowns.  He is an oddly personable buffoon who has built his fortune by over-leveraging other people's money in real estate investments which have benefited from strong  overall real estate markets but the over-leveraging is evidenced by his consistent declaring of  bankruptcies  (1991,1992, 2004, 2009).  This is not an unusual or even deplorable approach, but it is consistent with the portrait of someone who garners capital and leverage by promising incredibly ambitious outcomes which he cannot control, and when he cannot deliver, it is not him who bears the brunt of the loss.

For most of the last decade he seems to have been engaged largely as a full-time entertainer where his bluster and outlandish antics have been rewarded with viewers and endorsement deals.

And now (if for no other reason than I don't want to scroll up and down when I proof read this) let's get to the point.  It's fine to love Donald Trump, clowns are lovable.  It's fine to agree with what he says (I don't make a habit of it, but it's fine).  But there is no reason to believe that this particular clown can or will deliver on any of the promises he makes during his performances.

No doubt he will be entertaining, such is the nature of the clown, but let's remember Pagliacci and that "La commedia è finita!" when you give the clown a knife.    
 

*Alan Greenspan's Janet Yellen fan fiction:

Alan's phone began to vibrate and the ringtone began, "I just met you, and this crazy, but here's my number...so call me maybe?"  The photo of Janet's stern face stared back at him as he looked at the caller info, he swiftly slid his finger across the screen to begin the call.

" Hello Janet."
"Hello, Alan, I need your advice again."
"I know Janet. I'm here for you. I will always be here. For all of you."    

What was to be a Volatile Stock Market

You know, over the last few years a lot of people have told me, "Welcome to Jack in the Box. Order when you're ready."  They've told me this because I believe in America and its businesses, and I support them and their efforts to provide jobs and make sure that our purveyance of  Monster Tacos remains the de facto global Monster Taco standard.

Jack in the Box has what we call a competitive advantage compared to foreign suppliers of Monster Tacos, because it has access to me as a consumer.  Because the Parisian based Jacques dans la Boite doesn't have access to my orders it can't grow it's receipts like the domestic Jack.

For years now the world has been watching China (really reading stories and reports about china; we haven't been sitting on lawn chairs in Mongolia and Burma (Yeah that's right, I went there!) with binoculars) with the understanding that it was going to transition from an industrial/export-based economy that relies on other countries buying its products to a service based economy that creates and satisfies much of its demand internally and that this would be a huge engine for growth and would be what would propel it to become the world's largest economy.

Over the last year a lot of investors have felt that the time for this was drawing near enough that they should start investing heavily in local Chinese firms that would have the best access to these growing sources of local demand. This contributed (along with some currency speculation which, let's not even get into this is complicated enough) to an increase in the valuation of publicly traded Chinese stocks of over 135% from last August to early June.  But then a few things happened, investors didn't see the growth they wanted, exports started to decline, and a lot of loans were not being paid back.  All of a sudden Beanie Babies and the loose floor board in the closet started to look pretty good to investors and they started selling their stock, and when others started to see the prices fall they started to sell their stock, and... well you've seen bugs bunny tumble down the mountain and become a huge snow ball.

China's government was adorable though, like kids who set up a lemonade stand but weren't getting any sales and whose parent's ended up buying most of the lemonade, China spent around $156 billion buying up stocks to stabilize the markets, but the stocks continued to fall.

All that said, this isn't as bad as it may sound.  Firstly, China's exposure to its stock market is a lot lower than most Western countries: it's not the same as our stock market experiencing the same drop.  China's property market is a lot more important and makes up about  25% of GDP and the property sales have been doing very well during these same months.  Secondly, the value of those stocks is still up 43% from the same time last year, so while a lot of the gains have been wiped out, the long term investors and prospects of the market itself are still positive in the wider view.

So I think the world will probably be fine, though the story is not over yet, we'll get a better idea of what the new normal looks like over the next few weeks, but I won't be writing about it, this stuff hurts my head.

The lesson for you, if you've made it this far, will be disappointingly familiar: markets everywhere go up and down.  Long term, diversified investment portfolios don't get you those 135% bumps in a year, but you also don't get those 75% drops.  Also, invest in tacos.  No one ever went wrong investing in tacos.

What was to be Life in America

A friend of mine ( I call him a friend, but really he's more of a giant than anything else and the laws of physical comedy almost demand that there be a emotional closeness between us as a counterweight to the physical variance) is getting ready to move to Hong Kong.  He'll be working a lot and I'm concerned that the comings and goings of American life will go unnoticed or unresearched by him, so I'm repurposing the blog to provide a one stop shop of the most important news in America.

I'm going to bury today's lead for a post with a more somber feel and move onto the b story of the ongoing fallout from the Ashely Madison hack.

Ashley Madison is a website on the internet in and around your computer.  The reasons you might visit that website includes at least two scenarios (1) you went to school with a girl named Ashley Madison, and now you are trying to see where she ended up and the BinGle engines sent you there (2) you married someone, but also you are kind of the worst and watch a lot of tv and think that just one or two affairs will have no long term repercussions other than the callouses on your hand from high-fiving all of your buddies.

Unfortunately, the premise is incorrect in both scenarios.  In scenario one, you should be looking for Ashely on facebook: she is married and living in Fort Collins.  In scenario two, you relied on anonymity after providing someone your name, address, and credit card and trusted them to take better care of that information than you took of your wedding vows.

Anyways, a group of hackers (computer scientists who use the internets and energy drinks to access other people's computer boxes without permission) retrieved the user information and let it run free on the internet.

As a newly minted journalist, I am covering this impartially so I'll reserve judgement on the morality of the hackers or the alleged cheaters.  But there are lessons in this story for those of us who fall outside of either group

Lesson the First: never do anything on the internet that you are not comfortable sharing with the entire world.  This may seem unfair, but fair has nothing to do with it.  I am just now coming to grips with the fact that one day my entire Netflix viewing history will be made public and everyone will know that I have tried no fewer than 5 separate times to watch Gilmore girls, but could never get more than 30 minutes into an episode. I encourage you all to try to get out in front of these eventual embarrassments.

Editor's Note: A car alarm is going off outside and has been for about 5 minutes now.  Ideally car alarms would have a time limit and if no one had come to see about the car in that time it would automatically unlock and start itself so the thief could remove the annoyance from everyone's ear shot. 

 Lesson the Second: I can't remember what this one was now.  That alarm drove it right out of my head.  I guess the lesson here is to make a note of what you want to write before tangentially writing a ridiculous editor's note.

What was to be writing in recursive

I leave my phone on vibrate for most of the day.  It is not until I check the alarm and plug it in for the night that I turn the ringer on, so when I close the display it makes a loud click of finality.  The phone is saying that it is time for bed, but tonight the laptop had other ideas. 

I originally imagined that moving to a new a new state away from family and friends would prompt more frequent posts on my part, but my time here in the frozen tundra has not felt conducive to reflection. Life here is about survival.  I have some things to say about the move and selling the house, but the house has not yet closed and my furniture does not get here until Saturday, so it doesn't feel like it's over yet.  And I liked the Genghis Khan quote I heard recently (not from him) "Nothing is good until it is finished." obviously this is not true in all circumstances, (cookies in their dough form jump to mind) but I definitely feel this way about the selling of the house and the move to Denver.

I mean, I'm pretty sure I moved to Denver, but also a small part of my mind wonders if this is all a fevered fantasy, and I am really at the bottom of a hill off a highway in Wyoming; covered in deep snow drifts, destined to be entombed there til spring. 

Purgatory has never really fit into my belief system, though maybe there is something to it after all because that seems to be the state that my furniture is in. I'm told it's in a warehouse somewhere in Idaho or maybe Utah (that the moving company representative is unsure of the State is the kind of surreal texture that lends credence to my dying in a ditch theory).  Today I learned that it is scheduled to arrive on Saturday, but I will continue to visit the cathedral and light candles for my desks and dressers.  Maybe I'm lighting them for myself though, so either I am in that ditch or I took a wrong turn at Cheyenne and ended up in a Christopher Nolan movie.