Tag Archives: GDP rankings

Orange Blossom’s Special: Or How To Bargain Against Your Own Best Interests?

Remember when Orange Blossom told us Russia is our “competitor,” and we looked at the GDP comparisons of our real competitor (China) and our 11th ranked “competitor” in terms of GDP — the Russian Federation?  Then there was the time DB went off on “distributive negotiations vs. integrated negotiations,” and allowed as how the integrated form was just a bit too deep for our Siberian Candidate?  If we put these two concepts together there’s more cause for alarm in regard to our dealing with global trade matters, some of which flow nicely over into global security concerns.

We also need to recall Senator McCain’s observation that the Russian Federation is a gas pump masquerading as a country.  Thus:

“Compared to Canada and Australia, Russia’s export mix isn’t nearly as diversified: About half of its exports in terms of value are a combination of oil and natural gas. (Russia sits atop the third-largest oil reserves in the world, the number one natural gas reserves.) It should come as no surprise, then, that its currency is highly influenced by Brent oil. Where oil went starting in July 2014, so went the ruble.”  [USfunds]

That direction would be down.  Notice the date: 2014.  By December 2014 Russia was in a recession. [CNN money]  As of August 2016 Russia was in the throes of an 18 month recession. [CNN money] It’s not until May 2017 that the World Bank was ready to declare Russia waa in “recovery” mode.

“Growing macro-stability, driven by the government’s policy response package of a flexible exchange rate policy, expenditure cuts, and bank recapitalization – along with tapping into the Reserve Fund – has helped facilitate the adjustment of an economy hit by the double shocks of low oil prices and restricted access to international financial markets. The positive terms-of-trade effect from rising oil prices, coupled with more stable macroeconomic conditions, are expected to drive Russia’s economic recovery going forward.” May 23, 2017 [ WorldBank]

Now, let’s dive into the polite verbiage in this paragraph.  It’s ever so polite.  The second thing the Russians had to do was “make expenditure cuts,”  — can we say “austerity?”  By 2016 the Russian government was well into “austerity:”

Russia is preparing to slash government spending across the board over the next three years as it struggles to bring down a budget deficit swollen by lower oil prices and recession. Deep cuts are looming for health, education and even defence — which is slated for a swingeing 27 per cent reduction in expenditure next year, according to a draft budget that the government submitted to parliament late on Friday. [FinancialTimes]

Yes, even the vaunted military budget of  the Russian Federation was under the hammer in late 2016.  And did we catch that part about “restricted access to international financial markets?”  We now introduce the Magnitsky Act!  First enacted in 2012, and then there’s this bit: “Since 2016 the bill, which applies globally, “authorizes governments to sanctioof n human rights offenders in Russia, freeze their foreign assets, and ban them from entering the signing country.”  Why does the Kremlin care so deeply about the Magnitsky Act? See Slate, see The Atlantic, see the San Diego Union Tribune.   The oligarchs already had problems “accessing” financial markets, and the Magnitsky Act topped off the sundae.  And as for bank bailouts… the US has nothing on what the Russians had to do with their bank “recapitalization.” [Reuters 2015] [Reuters September 2017] [Moody’s 2018]

So here we are.  We have a gas pump masquerading as a country, with a GDP of $1.283 trillion.  Okay it’s not exactly fair to compare US states with entire countries, but who’s playing fair?  Our entire “gas pump masquerading as a country” has a smaller GDP than three individual US states.

state gdp Ouch.

Here we go again.  Mr. Orange Blossom Siberian Candidate, masquerading as  a US president, has been noticeably eager to avoid applying those sticky sanctions against the Russian oligarchs (of the Magnitsky Act variety) and had to get hog tied by a veto proof majority bill applying sanctions.  All bright smiles and twinkly eyes about a distributive bargain in which he gives up those icky sanctions (and facilitates access to financial markets) in exchange for ________________??  In which he slaps trade penalties on our real competitor (China) in exchange for _____________________??  In which he wants to make big deals with a nation with a very narrow economy (did I mention gas pump disguised as a country?)  With which he wants to conduct distributive bargaining while one economy is the largest on planet Earth and the other is smaller than three individual states part of that biggest economy on planet Earth?

So we’re going to get brassy with our top three trading partners, China, Canada, and Mexico [Forbes] and then get obnoxious with the Japanese (did we keep them in the loop when dealing with North Korea?), followed by calling the EU a “foe,” (GDP $17,308,862 million), insult Germany, France, and the UK, while ignoring India and Italy. Oh, and that thing about slapping tariffs on South Korean refrigerators … well, now Whirlpool is upset because those tariffs they applauded on the fridges just got really complicated when the Orange Blossom Special slapped on steel tariffs. [WSJ] [Bloomberg]  Oh well, DB’s been bouncing up and down for a while now complaining that integrated bargaining, nuanced negotiation, and multi-faceted layers of critical analysis and evaluation weren’t something often associated with the Orange Blossom Special.

And, the worst of it all seems to be that OBS never seems to actually GET anything.  We’ve got a big nothing-burger from North Korea, trade dispute referrals from Canada, Mexico, and China, nothing out of the renegotiation of NAFTA, nothing from EU/Japan trade deals, nothing from Australian/Japanese/Chinese regional trade deals.  Nothing so far.

If China is our true competitor, then why are we driving Chinese buyers into Russian soy bean markets?  (See, I told you I could get my soy beans into almost any post!)  If we want to compete with China, then why are we encouraging them to negotiate deals with the European Union?  Don’t WE want the business?

When a country doesn’t carefully evaluate who are its competitors, who are its friendly competitors, who are its adversaries, and who are its enemies; and, then doesn’t engage in the integrated bargaining necessary to cope with the ramifications and results of trade and economic negotiations the results are messy at best, and dismal at worst.  The Orange Blossom Special is off the rails, chasing the Gas Pump into a swamp, and one more metaphor and I will have rendered this paragraph as incomprehensible as Trump Administration Trade Policy.

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And Then Helsinki Happened

Nothing happened yesterday in Helsinki, Finland, which offered anyone any hope for a more peaceful world, a world wherein the behavior of Russia will be restrained from — shooting down civilian aircraft, from invading neighboring nations, from attacking the democratic institutions of free nations, from poisoning and killing people in the United Kingdom, from supporting other egregious regional dictators, from assassinating journalists, from fomenting disorder in western democracies and western democratic institutions both economic and military.

What does Putin want? Does he want to take back control of the Baltic nations? To make further incursions into Ukraine? To increase the influence of the faltering Russian economy?  To fly the Russian flag — physically and metaphorically over the world camouflaging the fundamental weakness Reagan recognized; Russia as a third world nation with a first world military.  Whatever Putin wants, whatever goals he wishes to achieve, he has a willing tool — a useful idiot? an unwilling accomplice? a willing foil? — in the President of the United States of America.  We can rationally assume Mr. Putin wants more than just a press conference with an obsequious President.

There will be many commenters who can provide context and additional information about the geo-political ramifications of the Debacle in Helsinki, some have already weighed in.  I’m going to retreat to my comfort zone — my soybeans if you will — and look at the debacle from that narrower perspective.

Russia’s economy isn’t even in the same ball park with the United States and China.  The US has the world’s largest GDP,  (pdf) China has the second, then it’s downhill.

GDP ranking 2017

Notice that Russia isn’t in the top five, it isn’t even in the top ten; it’s number 11 on the 2017 wold bank rankings.  If we were looking to obvious alliances to maximize economic benefits the US and China have the most to gain by cooperating.  We have the top two economies, by far and away the most powerful economic engines in the world.   Yes, we have differences — intellectual property rights issues in particular — but given the inter- connectivity of modern manufacturing, logistics, and capital, cooperation will get both countries ahead of what they could accomplish singularly.  So, what does the current mis-administration do? Assault the EU and slap trade penalties on China.  So, this is reported this morning:

President Trump is inciting a trade war, undermining NATO and painting Europe as a foe. It’s no wonder, then, that the European Union is looking elsewhere for friends.

On Tuesday in Tokyo, it signed its largest trade deal ever, a pact with Japan that will slash customs duties on products like European wine and cheese, while gradually reducing tariffs on cars. The agreement will cover a quarter of the global economy, and is the latest in a string of efforts either concluded or in the works with countries like Australia, Vietnam and even China.

Now, look back up to the ranking list.   Then, the article continues:

While the president was threatening to rip up the North American Free Trade Agreement, the European Union was putting the final touches on a free-trade pact with Canada. It took effect late last year.

Europe also reached a deal in principle with Mexico to update an existing free-trade agreement, one that should be finalized by the end of the year. Accords with Vietnam and Singapore are going through the final stages of approval.

Lovely, nothing like spurning all the girls at the dance and then wondering why one is  rapidly becoming the world’s wall flower.  So, we’re throwing in our lot with the Russian economy? Why?  The *President may call Russia a competitor, but I can call my dachshund a rottweiler too, all to the same effect. [WBUR]  And, there’s this observation to contemplate:

Two other GDP comparisons are illustrative of Russia’s economic weakness. Its GDP is barely more than that of South Korea, yet South Korea’s population is slightly more than one-third of Russia’s. In effect, the South Korean people are three times as productive as the Russians.

The GDP of the European Union (EU), which Russia is aggressively trying to undermine, is 11 times greater than Russia’s GDP even though the EU has only three-and-a-half times as many people as Russia. Like the South Koreans, the EU population is three times as productive as the Russians.

[…]

In international trade, Russia does not amount to much other than as an energy exporter and, increasingly, selling wheat to China. Ranking just 16th among the world’s exporters, in terms of dollar value, Russia’s impact on global trade is minuscule compared to China or Germany despite its substantial oil and natural gas exports.

On a per-capita basis, Russia is even more deficient as an economic competitor. In 2017, Russia’s per-capita GDP was under $11,000, less than one-fifth of U.S. per-capita GDP and on a par with Turkey and Romania.

Russia’s economic shortcomings long predate the sanctions imposed on it by the United States and other countries. Its economy is hardly a first-class performer for its citizens due to its weakness. In fact, they are not faring well.

In short, Senator John McCain was correct in observing that Russia is a gas pump masquerading as a country.  If someone can take a look at that GDP ranking list and explain to me — in rational terms — why the US would pick fights with Mexico and Canada, with the European Union, with the UK, with China, and then cuddle up to a “gas pump masquerading as a country,” please do so!

In addition to statements being constitutionally deplorable, militarily insane, and morally reprehensible, Orange Blossom added a large dollop of unadulterated economic IDIOCY.

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Competition: GOP announces US is losing when it’s in first place.

The President is on my TV again, telling me tax cuts for corporations and high income individuals will make “America competitive again.”  The unanswered questions: (1) Who says we aren’t competitive NOW? and (2) with WHOM?

Only those who haven’t been paying attention or have a vested interest in painting the US economy as “non-competitive” for the purpose of getting American families to bail out the big boys would have missed this item from USA Today in September 2017:

“The U.S. is the second-most competitive economy in the world, its highest ranking in eight years, the World Economic Forum said Tuesday as the country’s innovation edge and business optimism bolstered its standing.

Switzerland retained its No. 1 ranking, according to the forum’s global competitiveness report for 2017-18. Rounding out the top 10 behind the U.S. among 137 countries are Singapore, the Netherlands, Germany, Hong Kong, Sweden, the United Kingdom, Japan and Finland.

The U.S. moved up from third place last year. It lost its top status during the financial crisis and recession of 2007-09, and fell as low as No. 7 in 2012-2013 before steadily climbing the past few years.”

What’s keeping us at the top of the st?  Business acumen and  innovation. What’s a drag on the economy?  We’re about 19th in health and educational institutions, scratching for points in the categories of public trust and corporate ethics, and 83rd in macroeconomic environment — econ-speak for debt. [USAT] So, the Republicans have a wonderful plan to increase debts by $1.4 trillion?  And, this is going to “make us competitive?”

And with whom are we “competing?”  Is it Switzerland with a GDP of $297 billion? Singapore with a $659.8 billion GDP? Netherlands at $770.8 billion?  Or, Hong Kong at $320.9 billion?  Sweden at $511 billion? Finland at $236.79 billion?  These countries aren’t even close to the American GDP.

Germany is closer at $3.467 trillion GDP,  the UK’s GDP is $2.619 trillion, and Japan’s GDP is $4.939 trillion.  China is closer to the US in terms of GDP at $11.2 trillion.  The US GDP is $18.57 trillion.  If you’ve guessed the three largest economies on this planet are (1) USA (2) China, and (3) Japan you win the prize.  [World Bank]

It’s really hard to argue that the USA isn’t “competitive” when it’s winning the race.  The current GOP contention is rather like arguing the man and woman who won the New York Marathon weren’t “really competitive?”

However, this won’t stop the GOP from beating the drum and continually repeating the assertion that “we aren’t competitive” until they can get people to believe them.  It “feels” like we aren’t competing because manufacturing jobs have moved overseas — but there’s nothing in the GOP tax bill that prevents this, in fact territorial taxation schemes (such as the one in the tax bill) actually encourage overseas investment.  It “feels” like we aren’t competitive because wages have been stagnant — but giving most of the tax cut benefits to those who need them the least (corporations stuffed with cash, high income earners) isn’t going to address that problem either.

I’m waiting for some intrepid reporter to ask the Administration or some of its supporters like Senator Dean Heller and Representative Mark Amodei,  how is it that we are almost at the top of the World Economic Forum’s competitiveness chart, and at the top of the GDP statistics, and yet the GOP still says “we aren’t competitive?”

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