Tuesday, March 06, 2018

Economics a Flawed “Science”

Trump just issued import quotas on Steel and Aluminum. And then you hear the press talk about trade wars and I am mentally reviewing my 3 semesters of advanced economics. I kind of nod my head but then I remember back to the birth of this country, up to World war I and reflect that tariffs are what funded the Federal Government.

I’ve looked at several economic models and the theory behind them and often marveled at what is holding these bubbles up in place. You throw up you hands and throw in the towel, what makes sense shouldn’t and what shouldn’t violate the models.

Somebody once said that Astrology was made a science so that they could also include economics as a science. If you think about it, economic theory is almost 99% an explanation of what went wrong and why during financial and economic collapses. It in no way explains where we are right now.

A trade war has economic implications that in most cases is undesired. At the same time, a country’s inability to produce steel to support a war could lead to it being conquered by a country with a large steel base. Our country has literally trashed steel production as a part of GDP. Remember Bethlehem Steel or US Steel? They built the ships that won World War II.

Any way we look at all of these economic revelations, is the assumption that tariffs will ruin trade. We have been turning a blind eye to the blatant trade violations of the rest of the world. Right now, I wouldn’t be surprised to learn that probably the USA is the largest consumer of Chinese dry wall in the world and the trouble is, it isn’t dry wall that we are buying, but prescription drugs stuffed full of calcium sulfate dehydrate (gypsum). You buy a Fram oil filter and the name is miss spelled or the directions make absolutely no sense.

We hear that Europe will ban blue jeans and Jim Beam Kentucky bourbon. Why don’t we just set 1000 BMW’s and 1000 US Cars in a group and say you can import 1 to 1. And of course, you cannot forget the VAT tax. Net result, our cars and theirs will not sell.

The net thing we need to realize is that over the long haul of history, economic theory works. The trouble is over the short term is that it is abused to create a desired outcome that can have very bad consequences in the future. It has been glossed over for the last 30 years.

The science of Economics is not exact. It can only judge the past. It’s a mistake to try to use it to portend the future.

Let’s back off and give President Trump his earned 4 years to do his magic –economic theory be damned.


Anonymous said...

No big deal about tariffs. They are all throughout our country's history. This is just noise and bluster coming from the globalists. Screw them. I'm all for Trump, protectionism, America 1st and rebuilding our country back to be the great example that our framers planned it to be. We are the great experiment. It's time to stop letting China and many others get away with all of these unfair activities.

Economics is actually the study of human behaviour, the needs and wants of people, how they respond to occurrences in the market places, the weather/climate, etc. It is not a science now because it has been filled with false data, unworkable principles and misdirection (thanks to governments, their educational system and corrupt corporations).

Trump is a businessman. Doesn't understand economics. He has misunderstandings and actually doesn't know what he is doing on a full basis. But what he is doing is better than any other slimy, effete American career politician would or could ever do. GO TRUMP! Disrupt our corrupt and unworkable systems and make things better to the best of your ability for "we the people".

Jim in San Marcos said...

Hi Anon

I tend to agree. The economistic community is telling everyone that we are going to hell in a handbasket and citing every economic rule as to why what we are doing should fail.

We have listened to a bunch of people for the last 30 years that no one has bothered to question. Everything they said was gospel and now questions suggest that they had it wrong.

We have gotten used to taking their word for it and now someone new comes along.

I'm betting on the new guy. Things are starting to work the way I want them to work. He isn't that new, he's my age 71.

AIM said...

No one knows economic history. If it wasn't for protectionism the USA would never have become the economic super-power and giant that it is. Japan would never have been the 2nd biggest economy in the world in the 80's without... protectionism.

Another point people are not considering is... our country's government survived for a very long time on tariffs and duties. If this form of revenue was reinstated on a larger scale, Trump would be able to lower income taxes again and this time directly benefitting the middle class and blue collar workers.

Leave Trump alone all you globalist commies! He's America's only chance for rebuilding our country, moving away from Socialism, and regaining the respect that this great experiment deserves. Even if he makes mistakes... AT LEAST HE IS DOING SOMETHING!!

AIM said...

Jim --
Note: That was me on the first post. I clicked on Anon by mistake.

Jim in San Marcos said...


Your comments are always welcome.

This blog is getting harder and harder to write, stay out of politics and try to be neutral.

Many people who contribute their two cents worth in the news are just repeating what others have said without even hashing it out in their own minds and offer a valid defense of what they claim.

A case in point, someone the other day stated that we are starting a trade war and that Europe would start tariffs on Harley Davidson, Levi blue jeans and Jim Beam whisky. Peanut butter also got dropped into the fracas by someone else. Jim Beam whiskey is the only one I can think of that competes with a domestic brand in Europe. The rest don't, so a tariff on the other items is meaningless. To a bleeding liberal, truth is repeating what the last person said to you that you agreed with.

Not sure how all of this will work out, but getting rid of the do good liberals seems to be a start. Life is tough, and I didn't learn that sitting on the couch and watching TV. Of course how to you silence a liberal? --give him food and a roof over his head. For some reason the homeless come to mind, go figure.