Everyone Loses in the U.S.-Chinese Clash?

I was just skimming through my old copies of Foreign Affairs and came across this piece, from last year, by Weijian Shan.

It's amazing how quickly it's out of date, and badly wrong, considering the corona epidemic and its effects. President Trump has always been a nationalist on trade, and while he's been woefully uneven on China --- both praising and disparaging Beijing, often during the same press conference --- the strategy that Shan denounces is exactly what the U.S. should pursue.

Here, "The Unwinnable Trade War: Everyone Loses in the U.S.-Chinese Clash—but Especially Americans":

It is in the best interests of both the U.S. and China to move away from zero-sum thinking and put an end to the ad hoc decoupling that the trade war has threatened, argues Weijian Shan.https://t.co/oV4by2z06x

— Foreign Affairs (@ForeignAffairs) October 13, 2019

The trade war has not really damaged China so far, largely because Beijing has managed to keep import prices from rising and because its exports to the United States have been less affected than anticipated. This pattern will change as U.S. importers begin to switch from buying from China to buying from third countries to avoid paying the high tariffs. But assuming China’s GDP continues to grow at around five to six percent every year, the effect of that change will be quite modest. Some pundits doubt the accuracy of Chinese figures for economic growth, but multilateral agencies and independent research institutions set Chinese GDP growth within a range of five to six percent.

Skeptics also miss the bigger picture that China’s economy is slowing down as it shifts to a consumption-driven model. Some manufacturing will leave China if the high tariffs become permanent, but the significance of such a development should not be overstated. Independent of the anxiety bred by Trump’s tariffs, China is gradually weaning itself off its dependence on export-led growth. Exports to the United States as a proportion of China’s GDP steadily declined from a peak of 11 percent in 2005 to less than four percent by 2018. In 2006, total exports made up 36 percent of China’s GDP; by 2018, that figure had been cut by half, to 18 percent, which is much lower than the average of 29 percent for the industrialized countries of the Organ-ization for Economic Cooperation and Development. Chinese leaders have long sought to steer their economy away from export-driven manufacturing to a consumer-driven model.

To be sure, the trade war has exacted a severe psychological toll on the Chinese economy. In 2018, when the tariffs were first announced, they caused a near panic in China’s market at a time when growth was slowing thanks to a round of credit tightening. The stock market took a beating, plummeting some 25 percent. The government initially felt pressured to find a way out of the trade war quickly. But as the smoke cleared to reveal little real damage, confidence in the market rebounded: stock indexes had risen by 23 percent and 34 percent on the Shanghai and Shenzhen exchanges, respectively, by September 12, 2019. The resilience of the Chinese economy in the face of the trade war helps explain why Beijing has stiffened its negotiating position in spite of Trump’s escalation.

China hasn’t had a recession in the past 40 years and won’t have one in the foreseeable future, because its economy is still at an early stage of development, with per capita GDP only one-sixth of that of the United States. Due to declining rates of saving and rising wages, the engine of China’s economy is shifting from investments and exports to private consumption. As a result, the country’s growth rate is expected to slow. The International Monetary Fund projects that China’s real GDP growth will fall from 6.6 percent in 2018 to 5.5 percent in 2024; other estimates put the growth rate at an even lower number. Although the rate of Chinese growth may dip, there is little risk that the Chinese economy will contract in the foreseeable future. Private consumption, which has been increasing, representing 35 percent of GDP in 2010 and 39 percent last year, is expected to continue to rise and to drive economic growth, especially now that China has expanded its social safety net and welfare provisions, freeing up private savings for consumption.

The U.S. economy, on the other hand, has had the longest expansion in history, and the inevitable down cycle is already on the horizon: second-quarter GDP growth this year dropped to 2.0 percent from the first quarter’s 3.1 percent. The trade war, without taking into account the escalations from September, will shave off at least half a percentage point of U.S. GDP, and that much of a drag on the economy may tip it into the anticipated downturn. (According to a September Washington Post poll, 60 percent of Americans expect a recession in 2020.) The prospect of a recession could provide Trump with the impetus to call off the trade war. Here, then, is one plausible way the trade war will come to an end. Americans aren’t uniformly feeling the pain of the tariffs yet. But a turning point is likely to come when the economy starts to lose steam.

If the trade war continues, it will compromise the international trading system, which relies on a global division of labor based on each country’s comparative advantage. Once that system becomes less dependable—when disrupted, for instance, by the boycotts and hostility of trade wars—countries will start decoupling from one another.

China and the United States are joined at the hip economically, each being the other’s biggest trading partner. Any attempt to decouple the two economies will bring catastrophic consequences for both, and for the world at large. Consumer prices will rise, world economic growth will slow, supply chains will be disrupted and laboriously duplicated on a global scale, and a digital divide—in technology, the Internet, and telecommunications—will vastly hamper innovation by limiting the horizons and ambitions of technology firms...

To Survive, Independent Bookstores Get Creative

I'm actually enjoying working from home. I needed a break anyway. I was having anxiety attacks at the beginning of the semester, unrelated to corona, and my teaching was suffering from the decline of my health --- a first in my career.

And while there's no replacement for the dynamic interaction of the classroom setting, I've adapted pretty well to teaching online. Things have been going surprisingly well with my teaching, considering I've never done remote instruction before. I'm kind of proud of my progress. Frankly, it's been mostly self-learning. The training for distance education on my campus was extremely limited --- literally two hours of training on Canvas and faculty members were sent out on their own, the very week of the campus lockdown, to sink or swim.

In any case, amid all the lockdowns and social distancing, I miss going to bookstores perhaps the most. That, and stopping off at the sports bar in the afternoon to quaff an IPA and read a novel before heading home.

The bars will open back up, especially those that offer curbside pickup for food and alcohol orders (like B.J.'s Pizza in Irvine).

I'm not so sure about bookstores, though. In addition to Amazon, I've been buying books at my local favorite, the Bookman in Orange.

In any case, at Business Week, "Independent Bookstores Get Creative to Survive the Long Lockdown":

To survive the coronavirus lockdown, independent bookstores are getting creative https://t.co/EhVhbczE3n

— Businessweek (@BW) April 25, 2020

After several days of hunkering down at home in late March, this reporter decided it was time to seek out a few literary diversions to keep the coronavirus blues at bay—some novels for myself, mysteries for my 13-year-old, a nonfiction thriller for a friend’s birthday. Learning that Walden Pond Books, my favorite independent bookstore in Oakland, Calif., was closed but still taking orders for pickup, I phoned in my list and rode my bike to the normally laid-back shop. On the door was a very unmellow admonition: a cardboard sign blaring “DO NOT TOUCH DOOR HANDLE!!”

After putting on yellow rubber kitchen gloves, I knocked on the window, then stood several feet back. Soon a lone employee wearing a mask cracked open the door and asked for my name. I whispered it. A few minutes later, he reappeared carrying a brown paper bag and handed over the sanitized goods. Before taking it, I looked furtively around, half expecting to see cops.

“Two-thirds of my staff is laid off right now,” says Paul Curatolo, Walden Pond’s co-owner and manager, explaining the reason behind the shop’s speakeasy-like pickup strategy. “I can’t pay them for work I don’t have. But for every day that we’re closed, we are getting more phone calls.”

With much of the nation under strict stay-at-home orders, independent bookstores—which rely largely on foot traffic, browsing, and impulse buying—are struggling like never before. Amazon .com Inc. has long dominated book sales, and many independent shops are Luddite operations that lack robust websites, much less e-commerce operations.

To survive, they’ve had to get inventive in a hurry. Like Walden Pond, many are taking orders over the phone, then providing curbside pickup similar to the virus-impacted restaurants operating carryout only. Wheatberry Books in Chillicothe, Ohio, has launched a virtual storytime for children. Magic City Books in Tulsa is shipping curated “literary care packages” and announced a series of virtual author events. And scores of others, including Taylor Books in Charleston, W.Va., are turning to fundraisers via GoFundMe to stay afloat.

While the number of independent shops in the U.S. belonging to the American Booksellers Association is now more than 1,800, up from about 1,400 in 2009, the business is often fragile even in the best of times. Now the trade group warns that the Covid-19 crisis has put some of its members in grave danger, and many have embraced e-commerce in a bid to weather the long shutdowns.

“There’s been a drop in overall book sales as most bookstores are closed to the public right now, except for deliveries and curbside pickup, but a significant increase in online sales,” says Allison K Hill, chief executive officer of the booksellers’ association. “The online sales aren’t very profitable, though, as the cost to manage them is high and the margin is thin. Many independent bookstores will be dependent on government relief, fundraising, and support from their communities to survive.”

Many independent shops don’t have the staff, or the bandwidth, to constantly update websites, much less manage the inventory, shipping, and customer-service challenges that an e-commerce expansion brings...

Keep reading.

When the Bookman lost its lease at its Tustin Avenue location sometime back, the owners opened up a GoFundMe page to help finance the move to a new location. It took a while, but the store did reopen about a year ago at its current location on West Katella Avenue.

I picked up a book the other day. The store offers curbside pickup. You order by phone or online, and then phone ahead when you're ready to pick up. I got over there to pick up and the guy comes out with a mask on to hand me my book. It was unwrapped. I kicked in a large tip on top of the price, and sometime in the next few days I'm going to make a huge donation of books I'm currently cleaning out of my library.

That's the best I can do right now, other than to make more cash donations. Bookman's not opening up a GoFundMe page this time around, or if so I haven't heard about it. I don't know if a second time around would save the business.

So, support your local bookstores folks. Who knows how long the big corporate chains will last? Barnes and Noble might be going the way of Borders before you know it.

Coronavirus Slams the Behemoths of the Retail World

For department stores, things may never be the same --- particularly for those that survive.

At NYT, "The Death of the Department Store: ‘Very Few Are Likely to Survive’":

All those rumors about Neiman Marcus going bankrupt? They are just the beginning. With @sapna - https://t.co/GrnWzSMciw

— Vanessa Friedman (@VVFriedman) April 21, 2020

American department stores, once all-powerful shopping meccas that anchored malls and Main Streets across the country, have been dealt blow after blow in the past decade. J.C. Penney and Sears were upended by hedge funds. Macy’s has been closing stores and cutting corporate staff. Barneys New York filed for bankruptcy last year.

But nothing compares to the shock the weakened industry has taken from the coronavirus pandemic. The sales of clothing and accessories fell by more than half in March, a trend that is expected to only get worse in April. The entire executive team at Lord & Taylor was let go this month. Nordstrom has canceled orders and put off paying its vendors. The Neiman Marcus Group, the most glittering of the American department store chains, is expected to declare bankruptcy in the coming days, the first major retailer felled during the current crisis.

It is not likely to be the last.

“The department stores, which have been failing slowly for a very long time, really don’t get over this,” said Mark A. Cohen, the director of retail studies at Columbia University’s Business School. “The genre is toast, and looking at the other side of this, there are very few who are likely to survive.”

At a time when retailers should be putting in orders for the all-important holiday shopping season, stores are furloughing tens of thousands of corporate and store employees, hoarding cash and desperately planning how to survive this crisis. The specter of mass default is being discussed not just behind closed doors but in analysts’ future models. Whether or not that happens, no one doubts that the upheaval caused by the pandemic will permanently alter both the retail landscape and the relationships of brands with the stores that sell them.

At the very least, there is expected to be an enormous reduction in the number of stores in each chain, which once sprawled across the American continent like a pack of many-headed hydras.

Department store chains account for about 30 percent of the total mall square footage in the United States, with 10 percent of that coming from Sears and J.C. Penney, according to a January report from Green Street Advisors, a real estate research firm. Even before the pandemic, the firm expected about half of mall-based department stores to close in the next five years.

Even as they have worked to transform themselves for e-commerce with apps, websites and in-store exchanges, the outbreak has laid bare how dependent the department stores have remained on their physical outposts. Macy’s said on March 30 that after closing its stores for nearly two weeks, it had lost the majority of its sales.

The Commerce Department’s retail sales report for March, released last week, was disastrous. Overall retail sales numbers for this month are expected to be even worse, given that some stores were open for at least part of March.

Retailers have begun taking extreme measures to try to survive. Le Tote, a subscription clothing company that acquired Lord & Taylor last year from Hudson’s Bay, said in a memo on April 2 that the chain’s entire executive team, including the chief executive, would be let go immediately. It also suspended payments of goods to vendors for at least 90 days, citing “immense pressure on our liquidity position.”

Macy’s, which also owns Bloomingdale’s, extended payment for goods and services to 120 days from 60 days and, according to Reuters, has hired bankers from Lazard to explore new financing. Jeff Gennette, the chief executive, is forgoing any compensation for the duration of the crisis. The company was dropped from the S&P 500 last month based on its valuation.

J.C. Penney has hired Lazard, the law firm Kirkland & Ellis and the consultancy AlixPartners to explore restructuring options, according to two people familiar with the matter, and confirmed that it skipped an interest payment on its debt last week. It is expected to make a decision on what to do, including potentially filing for bankruptcy, within a few weeks, one of the people said.

But none of them were in as immediate dire straits as Neiman Marcus, which has both an enormous debt burden — about $4.8 billion, thanks in part to a leveraged buyout in 2013 by the owners Ares Management and the Canada Pension Plan Investment Board — and a raft of expensive rents in the most high-profile shopping destinations, signed during boom times.

In late March, Neiman stopped accepting new merchandise and furloughed a large portion of its approximately 14,000 employees as the rumors of bankruptcy began to swirl. Its chief executive, Geoffroy van Raemdonck, announced that he was waiving his salary for April. The brand denied to vendors and its own employees at its sister brand Bergdorf Goodman that it was engaging advisers to explore a bankruptcy filing, but on April 14, S&P downgraded Neiman’s credit rating. Last week, the retailer did not make an interest payment that was due on April 15, angering bondholders and further fueling suspicions that a bankruptcy filing was imminent. A spokesperson for Neiman Marcus declined to comment...

Still more.

The Strange Post-Social Distancing Purgatory

From Juliette Kayyem, at the Atlantic, "After Social Distancing, a Strange Purgatory Awaits":

Over the past week, I’ve been informally contacting friends and colleagues in a variety of fields—sports, travel, architecture, entertainment, arts, the clergy, and more—to ask them how their world might look after social distancing. The answer: It looks weird.

We will get used to seeing temperature-screening stations at public venues. If America’s testing capacity improves and results come back quickly, don’t be surprised to see nose swabs at airports. Airlines may contemplate whether flights can be reserved for different groups of passengers—either high- or low-risk. Mass-transit systems will set new rules; don’t be surprised if they mandate masks too.

Changes like these are only the beginning. After most disasters, recovery occurs days or weeks or a few months later—when the hurricane has ended, the flooding has subsided, or the earth has stopped shaking. Once the immediate threat has abated, a community gets its bearings, buries its dead, and begins to clear the debris. In crisis-management lingo, the response phase gives way to the recovery stage, in which a society goes back to normal. But the coronavirus crisis will follow a different trajectory.

Until scientists discover a vaccine, doctors develop significantly better medical treatments, or both, people all over the world will be working around, sharing space with, and sheltering from a virus that still kills. The year or years that follow the lifting of stay-at-home orders won’t be true recovery but something better understood as adaptive recovery, in which we learn to live with the virus even as we root for medical progress.

During this strange purgatory, places such as schools will be governed by direct orders from public officials, and large corporate employers will have tremendous influence on work-related norms. But Americans spend a good amount of our life and money in other spaces. After basic needs are addressed or met, what will it be like to be you?

Face shields—not masks, but clear plastic full-face shields—will be required for fans at sports games or concerts, to the extent that those happen at all. Golf could become the sport of choice as it’s easy to maintain distance and is outdoors. Not coincidentally, the PGA Tour announced plans this week to restart its season in June.

In some of the rosier scenarios, COVID-19 testing and tracking become widespread enough that most businesses can stay open...

Still more.

Ruchir Sharma, The 10 Rules of Successful Nations

Just out on March 31st, at Amazon, Ruchir Sharma, The 10 Rules of Successful Nations.

Michael Lind, The New Class War

At Amazon, Michael Lind, The New Class War: Saving Democracy from the Managerial Elite.

The End of the World Trade Organization?

Who cares, really?

The conflict between economic regionalism and global economic openness, embodied in the post-WWII multilateral trade regime, has been a longtime topic in international relations theory.

The Trump administration is accelerating the shift to regionalism.

Not to mention Brexit, which should go through on January 31st, thanks to the Conservative triumph in the general election.

All is not lost, as bilateral trade agreements will take the place of wider multilateral pacts.

In any case, at the Los Angeles Times, "House passage of USMCA marks major shift away from free-trade policies":

WASHINGTON —  The House of Representatives on Thursday overwhelmingly passed the new North American trade deal, voting in unusually bipartisan fashion just a day after impeaching President Trump strictly on party lines. 

Approval of the trade bill, which now goes to the Senate for almost certain ratification, did far more than help Trump notch a major achievement: It marked a significant change in U.S. economic strategy toward the rest of the world.

For much of the last 70 years, throughout the Cold War and down to more recent times, Washington used America’s vast wealth and economic power to build friendships and alliances that bolstered national security.

That strategy included a fundamental commitment to free trade — opening the large U.S. market to products from all over the world. For the most part, American companies and their workers had to compete against foreign businesses and labor with little or no protection from the federal government.

As Trump has long complained, that free-trade policy cost millions of American jobs. But leaders of both parties and economic experts considered it worth the price because it boosted American growth, generating many new jobs, and opened new opportunities for many U.S. companies to profit in a global economy. At the same time, it helped cement U.S. leadership in the world.

“In the post-World War II era, we were so much more powerful and so much richer than everybody else that we could improve the living standards at home and still give away the store on trade,” said Clyde Prestowitz, a former top trade negotiator in President Reagan’s administration.

“And we’re now culminated at a moment in which the cost of our old policy is really hard to bear, and so we’re de facto changing our policy,” he said.

The march toward free global markets with lower tariffs and other barriers always had exceptions. Beginning in the 1970s, U.S. companies began to complain about unfair competition: dumping of textiles and steel by foreign producers subsidized by their governments, for instance, or the sale of below-cost television sets, electronics and other consumer goods.

Reagan and his successors responded to these complaints with demands for import quotas and other measures. But overall, the United States remained committed to a broad strategy of free trade — relying on market forces and competition to determine outcomes.

While Republican business leaders complained about specific instances of what they saw as unfair tactics, such as currency manipulation and intellectual property theft, they largely remained committed to the overall free-trade strategy.

Democrats, responding to their union supporters, complained that American workers were paying a heavy price for a system that primarily benefited corporations and upper-income Americans.

The original North American Free Trade Agreement, which passed the House in 1993 by a margin of only 34 votes, highlighted the political unease about trade.

The agreement, however, fit squarely into that strategy of using trade in part for geopolitical reasons. It aimed to make Mexico more prosperous and hence make the United States more secure at a time when radical, leftist regimes seemed to be on the rise in Latin America. Economically, many saw it as a bulwark against rising competition from a unified Europe and Asian tiger economies.

NAFTA tore down tariffs and shaped North America into a powerful economic bloc — three-way trade in goods now reaches $1.3 trillion — but it was in many ways outdated in a global economy driven much more by technology and data.

Trump long attacked NAFTA, calling it one of the worst trade agreements ever and promising to renegotiate it. As president, he has attacked the whole system of free trade, undermining the World Trade Organization, which the U.S. helped create in the 1990s, and starting trade wars not only with China but with longtime U.S. allies such as Europe, Canada and Mexico.

He has enjoyed quiet but significant Democratic support on the issue. Witness the large bipartisan majority for the new version of NAFTA.

Renamed United States-Mexico-Canada Agreement, or USMCA, the measure won approval by the Democratic-majority House 385-41, a remarkable show of unity at a time of deep partisan acrimony.

Not that there wasn’t the usual jostling and one-upmanship which have characterized relations between congressional Democrats and Trump.

“Of course we’ll take credit for it, because what he proposed did not fill the bill of what he described,” House Speaker Nancy Pelosi said shortly before the vote, referring to Democrats’ successful pressure on the administration to amend the trade deal to strengthen enforcement of labor and environmental protections.

Earlier Wednesday night, at a rally in Battle Creek, Mich., Trump insisted that Pelosi and other Democrats had no choice but to pass USMCA.

“She had a lot of pressure, especially from manufacturing areas, farm areas, a lot of pressure to sign it.... I had a lot of union labor vote for me, tremendous amount of labor,” he said...

More.

Dow Drops 623 Points as U.S.-China Trade War Escalates (VIDEO)

At Barron's, "The Dow’s Week Turned Ugly After Trump Sparred With China and Powell."

And ABC World News Tonight. Notice Trump's "I am the chosen one" comments:

....having fun. I was smiling as I looked up and around. The MANY reporters with me were smiling also. They knew the TRUTH...And yet when I saw the reporting, CNN, MSNBC and other Fake News outlets covered it as serious news & me thinking of myself as the Messiah. No more trust!

— Donald J. Trump (@realDonaldTrump) August 24, 2019

Alexandria Ocasio-Cortez is a 'Moron' (VIDEO)

It's Tucker Carlson, who's a regular laugh riot, heh.

AOC does have a point about the economy and income inequality, he points out. The problem is the 29-year-old wants us to give her all the power.



BONUS: At AoSHQ, "Tucker Carlson: Soyboy Beta Bottom Chris Hayes Is What Every "Man" Would Be if Feminists Could Impose Their Weird Asexual Political Agenda on the World."

'Marxism has come a long way, baby, by becoming the politics of choice of spoiled upper-class darlings who have never done any work in their lives...'

From Sarah Hoyt, at Pajamas, "After AOC Chases Amazon Jobs Away, Some New Yorkers Begin to Understand Socialism":

I was highly amused at reading this article: "Poll: 38 percent say Ocasio-Cortez 'villain' in New York losing Amazon HQ deal."

Apparently, New Yorkers are so badly educated that they didn’t understand the side effects of electing socialists.

You see, electing socialists always results in businesses moving away, disappearing, or never setting up in your town at all.

There are reasons for this, reasons usually tied in with how socialists view the world.

For instance, they don’t understand where money/wealth comes from.

It used to be, for old-time Marxists, that money was created by labor. That notion is crazy enough, since you can labor long and hard and not create anything of value. (See, for instance, my 13-year apprenticeship in writing commercially viable fiction.)  Or you can do very little labor and create something of great value. (C. S. Lewis’s Narnia chronicles were written in a freakishly short time for many writers.)

But Marxism has come a long way, baby, by becoming the politics of choice of spoiled upper-class darlings who have never done any work in their lives.

To them – judging by my kids' school books, my leftist colleagues' vagaries and, yes,  Alexandria Occasional Cortex’s eructation – wealth is something that just exists, kind of free-form. It can be stolen and hoarded, but not actually created in any sense of the word.

This is why socialists are convinced that we stole our wealth from the sh**holes of the world. (No, seriously. My kids’ history and geography books all said this.) Also, it’s why poor Occasional Cortex, whom no one ever accused of an overabundance of brains, thought that she was saving the people of New York money by chasing Amazon away...

RTWT.

Plus, more from Pajamas:

Why Doesn't AOC Want to Vote on the Green New Deal?https://t.co/vlrYjH3ewN

— PJ Media (@PJMedia_com) March 25, 2019

The GOP’s whole game of wasting votes in Congress to target others “on the record”, for leg they have no intent to pass, is a disgrace.

Stop wasting the American peoples’ time + learn to govern. Our jobs aren’t for campaigning, & that’s exactly what these bluff-votes are for. https://t.co/ELzpQhlezo

— Alexandria Ocasio-Cortez (@AOC) March 23, 2019

Joseph E. Stiglitz, People, Power, and Profits

Interesting.

Stiglitz is a major economist.

Out April 23rd. Pre-order at Amazon, Joseph E. Stiglitz, People, Power, and Profits: Progressive Capitalism for an Age of Discontent.

Isabel Sawhill, The Forgotten Americans

*BUMPED.*

At Amazon, Isabel Sawhill, The Forgotten Americans: An Economic Agenda for a Divided Nation.

What Conservatives Get Wrong About Labor Markets

I've blogged Oren Cass's new book, The Once and Future Worker: A Vision for the Renewal of Work in America.

I haven't read it yet, so I can't say if it's good or bad, but James K. Galbraith's got a review up at Foreign Affairs.

Caveat Emptor.

See, "The Trouble With the “Working Hypothesis”":

“In calling attention to the centrality and troubles of working people, Cass has a point. Where he goes wrong is in diagnosis, and therefore cure.”https://t.co/cSWUMGL8rs

— Foreign Affairs (@ForeignAffairs) January 20, 2019

Oren Cass, domestic issues director for Mitt Romney’s 2012 presidential campaign and a writer for National Review and other journals, has produced a conservative's treatise on the social and economic ills of America, and what might be done to repair them. The Once and Future Worker, published in November, holds that a social philosophy based on consumption, equality, the welfare state and quality of life achieved through regulation—the essential vision of a liberal century from the Roosevelts through Richard Nixon—should be scrapped for more solid values: work, family, country, one might say. Above all, Cass believes in a society and culture rooted in the pride and pleasures of productive labor. “[The] argument at its most basic," he writes, "is that work matters. More specifically, [the book] offers what I will call the Working Hypothesis: that a labor market in which workers can support strong families and communities is the central determinant of long term prosperity.”

Thus the labor market, in Cass’s view, is the proper medium for delivering a work-friendly world. And the trouble comes when politicians, especially Democrats, “trample” on the market. The Democrats’ “actual agenda,” according to Cass,

centers on the interests advanced by its coalition of labor unions, environmentalists and identity groups. Its policies rely on an expectation that government mandates and programs will deliver what the market does not. This agenda inserts countless regulatory wedges that aim to improve the conditions of employment but in the process raise its cost, driving apart the players that the market is attempting to connect. Better market outcomes require better market conditions. Government cannot command that workers be more valuable or employment relationships be more attractive, but by trying, it can bring about the reverse. The economic landscape is pocked with the resulting craters.

ABANDONING THE WORKER

The vision of a labor market offered by Cass is Deist; it is the idea of the clockmaker, of intelligent design. Its Western roots lie in pre-revolutionary France, which borrowed the theme from classical China and Confucius. In the English language, it owes much to that great figure of the Scottish Enlightenment, Adam Smith. Supply and demand work like Yin and Yang: natural law and celestial harmony prevail in the equilibrium between two fixed and immutable, separate yet inseparable social forces—in this case the employer and the employed, the capitalist and the worker. The latter seeks a job; the former offers one. A bargain is struck at a given wage, when the employer decides that the worker is worth his keep, and the worker decides the wage is worth the leisure foregone. Work and production follow. The “abandonment of the worker” lamented by Cass began when the government intruded in the labor market by, among other things, creating social insurance, supporting unions, and introducing regulations to protect the environment.

Thus Cass criticizes environmental laws, going all the way back to the Clean Air Act of 1970, for killing jobs. He attacks “adversarial” unions and proposes that they be transformed into non-confrontational “co-ops” concerned with how to “optimize workplace conditions.” He finds fault with the U.S. educational system for promising an equal chance for all, and suggests that it should embrace tracking and begin funneling students deemed less able into vocational training at an early age. He supports the exclusion, to a degree, of foreign workers and products. He promotes the big idea of a wage subsidy to persuade employers to take on low-productivity workers whom they might otherwise shun. And he favors decentralizing welfare policies to the states in order to promote experiments, diversity, and local measures appropriate to local needs.

THE NEW JIM CROW

Each of these proposals builds on the mental model of a labor market, in which it is the interaction of supply and demand that set wages and determine levels of employment. Clean air and water (and workplace and product safety) regulations raise costs to business, forcing them to move offshore or close down. Therefore, to cite two examples offered by Cass, standards for particulates or mercury should be rolled back. Unions have already achieved what their members reasonably need, and now only serve to prevent the labor market from reaching its natural balance. The result is wages that are too high and jobs that are too few. And employers should be subsidized to create jobs on the principle that if labor is cheaper, they will hire more of it rather than invest in capital improvements.

These measures would supposedly increase employment. But even if one accepts that premise, one might first ask, “Does America really need more work?” Americans have the highest labor-force participation in the industrial West. They work the longest hours and enjoy the shortest vacations. The United States is, notoriously, a working country. And it has a pretty good record on unemployment too, with by far the fastest recovery to near-full employment from the Great Financial Crisis of any major economy.

Keep reading.

Yellow Vest Update

Clarie Berlinski rattled off a long thread last night on the violence of the yellow vest protesters.

They're anarcho-nihilists, basically, and Berlinski's mad because she thinks Macron's a pussy, he's caving to the street scum, and his political cowardice will strengthen the "far right." So, she calls for more authoritarian responses to the protests as a way to prevent "real" right-wing authoritarians from coming to power.

@threadreaderapp , would you please unroll this? Thank you very much for being a good bot.

— Claire Berlinski (@ClaireBerlinski) January 8, 2019

Hello you can read it here: Thread by @ClaireBerlinski: "I agree completely with @NTenzer when he says that violence is consubstantial with this movement. It's not the word I wo […]" https://t.co/zwj2JwOKf9
Share this if you think it's interesting. 🤖

— Thread Reader App (@threadreaderapp) January 8, 2019

And some of the things that have been happening this last weekend, although given Ms. Claire's animated exasperation, I doubt media reports can replace being on the ground in Paris and watching local media coverage in real time:

At the Local (France), "VIDEO: Protesters attack French ministry with forklift truck."

More:

Yellow vests: France to crack down on unsanctioned protests https://t.co/ACOI7GLrUz

— BBC News (World) (@BBCWorld) January 7, 2019

7 January 2019

Christophe Dettinger: Boxer surrenders after clash with riot police in Paris

PHOTO: A former professional boxer who was filmed at the weekend punching a police officer on a bridge in Paris during a "yellow vest"... https://t.co/yKwxeUvfhC

— Maria Battles (@maria_battles) January 8, 2019

William Easterly, The Tyranny of Experts

At Amazon, William Easterly, The Tyranny of Experts: Economists, Dictators, and the Forgotten Rights of the Poor.

Bethany McLean, Saudi America

At Amazon, Bethany McLean, Saudi America: The Truth About Fracking and How It's Changing the World.

Emmanuel Macron's Nightmare

The worst riots in France in a couple of generations. Folks are being reminded of 1968.

At the Economist, "Emmanuel Macron’s problems are more with presentation than policy."

Emmanuel Macron’s problems are more with presentation than policy
So not a nightmare just a bump pic.twitter.com/m3pN2tZdBy

— Sunchartist (@Sunchartist) December 7, 2018

Arrest of Meng Wanzhou Further Roils U.S.-China Relations

Bloomberg has an excellent piece, "China's Ire Finally Flares as U.S. Opens Huawei CFO Case."

And at the Los Angeles Times, "The arrest of a top Huawei executive is 'a shot into the heart' of China's tech ambitions, analysts say":

The arrest of a top executive at one of the most successful Chinese global companies threatens to upend a delicate detente between the U.S. and China in their months-long trade war.

Meng Wanzhou, deputy chairwoman and chief financial officer of telecommunications giant Huawei, was arrested Saturday during a transit stop at a Vancouver airport and could face possible extradition to the U.S. and an appearance in federal court in New York.

A U.S. law enforcement official, who was not authorized to discuss the case by name, said the action against Meng involves violations of U.S. sanctions against Iran. Another U.S. official described the violations as serious. Neither official provided specifics.

The arrest comes at a sensitive time as Washington and Beijing aim to strike a trade deal before March 1. White House officials told CNN that Meng could be used as leverage in trade talks. It’s unclear whether President Trump knew about the arrest in advance, though national security advisor John Bolton told National Public Radio that he did.

Now any trade agreement has to overcome what will probably be viewed as a provocation in the eyes of China’s leadership, given Huawei’s importance.

“Huawei embodies the existential angst of China hard-liners in the U.S. concerned about China's ostensible grand plan for global domination of new high-tech industries,” said Eswar Prasad, a professor of trade policy at Cornell University. “Meanwhile, such actions by U.S. and other governments crystallize fears among Chinese leaders that the real intention is to hold back China’s economic progress and transformation.”

China demanded the immediate release of Meng, who is among the cream of China’s corporate elite. She is the daughter of tech billionaire Ren Zhengfei, Huawei’s founder and CEO and a former engineer in the People's Liberation Army.

Chinese officials said she had not broken any laws, accused the United States and Canada of violating her rights and demanded an explanation as to why she was arrested.

Huawei said in a statement it was unaware of any wrongdoing by Meng.

Chinese state media accused the U.S. of harassing Huawei to gain advantage in the worldwide competition for control of next-generation 5G cellular networks.

U.S. officials have not officially confirmed the reasons for Meng’s arrest. The U.S. has long considered Huawei a front for the Chinese government and military.

The arrest “wasn't a shot across the bow, but a shot into the heart of the ship” because Meng was basically considered an official of the Chinese government, a former U.S. official involved in national security matters said, speaking on condition of anonymity.

President Trump and Chinese President Xi Jinping agreed Saturday to suspend planned tariff hikes for 90 days to allow negotiations on a deal to end the trade conflict.

In a sign that China wanted to push for a deal despite anger over Meng’s arrest, officials said Thursday that trade talks would go ahead on agricultural products, automobiles and energy.

Meng’s arrest, significant because of her elite connections and prominent corporate position, triggered shock in China. The arrest is doubly sensitive because it threatens the rise of one of China’s top cutting-edge brands, now the world’s second-largest smartphone company, surpassing Apple in sales this year.

The state-owned Global Times reflected Chinese outrage over her arrest in an editorial accusing Washington of “resorting to a despicable rogue approach” in a bid to hurt the company. The paper also tweeted Thursday that China should be ready for an escalation of the trade war, warning that Meng’s arrest was vivid evidence that Washington would not soften its stance against Beijing.

“It is clear that Washington is maliciously finding fault with Huawei and trying to put the company in jeopardy with U.S. laws,” the editorial said.

Washington is demanding sweeping changes to China’s industrial policy, in particular its state support for key high-tech industrial firms, forced transfers of technology by American companies doing business in China, and tolerance or tacit encouragement of intellectual property theft...

Still more.

Paris Riots

These are called the "yellow jacket" riots, because French citizens are required to keep reflectorized vests in their vehicles, and the jackets are universally available, apparently.

At the Guardian U.K., "Paris riots: PM to meet protest groups after worst unrest in decade: Shops and cars set alight after peaceful gilets jaunes protest turns violent":

Macron to hold emergency meeting after worst unrest in a decade in central Paris https://t.co/qxHxmA97gt

— Angelique Chrisafis (@achrisafis) December 2, 2018

The French president, Emmanuel Macron, has instructed his prime minister to hold talks with protest groups after anti-government demonstrations led to the worst violence in central Paris in a decade, with more than 100 people injured as cars and buildings were set alight.

Macron is facing his biggest crisis since taking office 18 months ago after the violence erupted on Saturday following weeks of street protests that began against fuel taxes and have turned into an anti-government movement.

The Élysée and key ministers appeared to rule out imposing any kind of state of emergency after thousands of masked protesters from the gilets jaunes – named for their fluorescent yellow jackets – fought running battles with riot police, torched cars, set fire to banks and houses and burned makeshift barricades.

Macron, who had said he would “never accept violence”, instructed the prime minister, Édouard Philippe, to meet what he has called legitimate protest groups and opposition politicians this week in an effort to calm tensions and stop “professional” rioters from infiltrating street demonstrations.

The Paris prosecutor Remy Heitz said 378 people were in custody, including 33 under the age of 18. He said many of those arrested in battles with police were men aged between 30 and 40, often from regions far from Paris, who had “come to fight police while claiming to be part of the gilets jaunes movement”.

The interior minister, Christophe Castaner, and his head of staff will be questioned by a senate committee on Tuesday over how thousands of protesters were able to play cat and mouse with police through central Paris for hours.

Macron flew back from the G20 summit in Argentina on Sunday and went straight to inspect damage at the Arc de Triomphe. Graffiti all over the base of the 19-century monument read: “We’ve chopped off heads for less than this” and: “Topple the Bourgeoisie.” Scores of used teargas canisters filled the gutters.

Near the Champs Élysées there were splashes of paint on buildings after protesters had paint-bombed police. Used bottles of eye-drops on the ground indicated that some protesters – many of whom wore ski-masks and breathing equipment – stood their ground despite the teargas fired from rows of police behind shields.

Along the Avenue Kléber near the Arc de Triomphe on Sunday morning, passersby peered at scorched pavements where the burnt-out carcasses of cars had been towed away, and where a private residence had been set alight. Graffiti read: “Babylon is burning.”

The far-right leader Marine Le Pen and Jean-Luc Mélenchon, head of the leftwing party La France Insoumise, both called on Macron to dissolve parliament and hold elections.

The violence started on Saturday in broad daylight on the edges of a peaceful demonstration by the gilets jaunes movement, which began two weeks ago in protest at rising fuel prices and a new green fuel tax.

After three successive Saturday citizens’ marches in Paris organised on social media, the security forces seemed at a loss to stop the rioting, with groups of masked men spilling into nearby streets, ripping up benches and traffic lights and hurling bits of paving stones from roadworks...

Warnings of latest crisis facing Macron were in plain sight https://t.co/dHeRWQsE1i

— Angelique Chrisafis (@achrisafis) December 2, 2018

Oren Cass, The Once and Future Worker

*BUMPED.*

At Amazon, Oren Cass, The Once and Future Worker: A Vision for the Renewal of Work in America.