Hughesair (Inflection Point)

Retired physician and air taxi operator, science writer and part time assistant professor, these editorials cover a wide range of topics. Mostly non political, mostly true, I write more from experience than from research and more from science than convention. Subjects cover medicine, Alaska aviation, economics, technology and an occasional book review. The Floatplane book is out there. I am currently working on Hippocrates a History of Medicine and Globalism. Enjoy!

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Monday, June 18, 2018

Trade War

Political economists cry the sky is falling. The stock market shrugs it off, so what can we expect from our imposition of tariffs?
To understand what’s at stake, consider 20 years of unsustainable trade deficits of up to 800 billion a year and beyond stripping the consumer market liquidity not to mention jobs and manufacturing. These same political economists say, the deficit does not matter; we make it up with low cost imports and greater efficiency overall — globally yes but not for us. Greater foreign investment back into the US, less by our adverceries, go all to the oligarchs, but forget all that, what will higher tariffs do to the economy that most of live in?
Short term, expect some dramatically higher prices and stress on US export businesses, mostly the big guys but some small business and farmers with an equally dramatic increase in government revenue from the tariffs. Job creation might be equally dramatic, and the results are probably inflationary.
Mid term and long term, however should see an equally dramatic flood of liquidity back into the consumer market. With the scramble to meet consumer demand with locally manufactured goods and services the energy level should be high as well. Liquidity and energy, turnover of discretionary capital, are the driving forces of the economy. History bears this out.
Furthermore tariffs are not forever. If  used to achieve balance and fairness, relaxation can follow.
Lastly, we can’t loose. We have been providing capital to the developing world. There will never be a thinks, but there is no choice, lest our democracy morph into an oligarchy and we become a third world nation.

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