Tag Archives: trade policy

Dear Orange Blossom, Perhaps if you understand titties you can comprehend why we don’t tick off our milk and cheese buying partners?

Dear Pootus, I am taking a page from the good people at the EU who decided that the way to explain trade policy to you was to provide colorful cue cards.  I will not burden you with graphs (and those tricky x and y axes), nor will I encumber you with charts, which you might have to interpret in light of some very common tricks producing “Gee Whiz Graphs” and other illusions.  Let’s just keep this simple.  If you understand the concept of titties, then you should be able to comprehend the idea of international commodity trading — like milk and milk products.

milk cow 1  Step One: COW 

Notes for your experts who can explain more if you feel the need.  The milk comes from the COW, more specifically from the FEMALE.  This happens BEFORE the milk is in the carton in your refrigerator, or the cheese (made from milk) is inside the fridge too!

milk cow 2 Step Two: Female Cow

The titties portion of the female cow is where the milk comes from.  It is called the udder.  There are many cows, and therefore many udders.  Many udders make lots of milk.  Notes for your experts who can explain more if you feel the need.  There are approximately 8.75 million milk cows in the United States.  Female cows — the ones with the udders — produced about 17.2 billion pounds of milk in June 2018.  This is the highest productivity rate since 2003.  You might wish to take credit for all the milk being produced from all those udders — more than under any other President EVER!  Not that your presidency has anything in the world to do with cow productivity, but since you delight in taking credit for everything else that happens — even if it doesn’t — on your watch, why not take credit for milk production?

milk cow 3 Step Three:  Milk Comes From Cows

There is a surplus of milk on the market.  As of last May dairy farms were getting hammered by low prices for milk because there was too much of it on the market.  Therefore, you might want to be very careful about crowing about those production numbers?  Notes for your experts who can explain more if you feel the need.   There were things dairy farmers wanted your administration to do. For example, they suggested putting a floor on milk prices at $20 per hundred pounds.  They suggested stabilizing volatile markets.  They suggested government purchases of milk for public food pantries.  (That’s NOT panties for the udders, that’s pantries for people who need food assistance.) [USAT]

milk cow 4 cheese Step Four: Cheese and other products come from milk.

In order for the dairy farmers to stay in business someone needs to buy the milk produced by their cows.  Some of the milk is purchased for domestic consumption. That means “here at home.” Some of the milk is purchased by our trading partners.  Notice that one of our major trading partners for exported cheese is Mexico. In fact, US Export Data shows Mexico as the Numero Uno buyer for cheese exported from the United States.

Am I getting the message across to you yet?  When all those titties (udders) produce all that milk, the milk must be sold for the dairy farmers to make a profit.  Cheese is made from milk, and Mexico, South Korea, Japan, Middle East/North Africa, Australia, Central America, SE Asia, Canada, and China are our biggest buyers for cheese products.

Have you suggested setting a floor on milk prices?  No?  Or, stabilizing volatile markets (including the international ones)? No? Or creating new markets for American milk and cheese products? No?  Or, supporting the USDA food assistance programs like public food pantries? No?  So, what have you been doing?  Oh, that’s right — slapping tariffs on our trading partners…

“In the past few months, Trump’s administration has proposed steel and aluminum tariffs, and increased tensions with trade allies in Europe, Asia, and North America. This week, reports of a White House proposal that would call on the United States to disregard World Trade Organization rules are making lawmakers on both sides of the aisle fret that the United States could be staring down a trade war — one that is likely to hit the agricultural industry the hardest. On Thursday, Mexico announced 15 to 25 percent retaliatory tariffs on dozens of US goods, mostly on agricultural products — including cheese.”  [Vox 7.5.18] (emphasis added)

One more time: Milk comes from cows; cows have udders; too many udders are producing too much milk; too much milk is being stored as cheese (because it doesn’t spoil like fresh milk); there are not enough buyers for our cheese; and, therefore, the price of milk and cheese decline.  When the prices decline below the break even point the dairy farmer is out of business.   When the farmer is out of business he can no longer buy the Red Hats you had manufactured in China.  NOW, are you getting the point?

I cannot, for the life of me, figure out a way to make this any simpler for you.  I will now return to writing posts for the adults in the room.  Thank you for your limited attention.

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Filed under Economy, Farm Subsidies, trade deficit

There Never Was Any Plan: The Story of the entire Orange Blossom Administration

Return with us now to those days of yesterday, if not exactly yesterday, when the Trump declared his health care plan would be wonderful — “No one will lose coverage. There will be insurance for everybody. Healthcare will be a “lot less expensive” for everyone — the government, consumers, providers.”  [Politico]  That was March 13 2017.  Well now, some people have lost coverage, it isn’t going to be any less expensive to get health insurance. In fact, health insurance premiums are expected to increase in California, Connecticut, and Pennsylvania, and it is just as bad elsewhere:

Rate filings to date show that many insurers are requesting large premium increases for 2019. The average requested rate increase was 30.2 percent in Maryland and 24 percent in New York state. Most insurers have specifically cited the repeal of the individual mandate in their actuarial memorandums. In New York, insurers attributed about half their large requested increases to mandate repeal. Even in states with small rate increases or overall decreases, insurer filings state that premiums next year would be significantly lower in the absence of federal sabotage. For example, BlueCross BlueShield of Vermontrequested a relatively small 7.5 percent increase for 2019 but said that its request would have been 2.2 percentage points lower if not for mandate repeal. Peter V. Lee, the director of Covered California, said that his state’s average rate increase of 9 percent “could—and should—have been much lower.” [CAP]

Let’s be serious here. There wasn’t a health care plan, not one with any specifics. There was a ton of “repeal and replace” rhetoric.  Trumpian campaign slogans never translated into much more than the continual erosion of Affordable Care Act provisions in favor of the insurance industry.  There never was a comprehensive plan to deal with market problems, industry sector issues, and the health care needs of some 330 million people in this country.  This administration doesn’t PLAN.

But wait, wasn’t there an “infrastructure plan?”  It would seem there should be since we keep having infrastructure weeks?   On February 11, 2018 the administration rolled out its grand infrastructure proposal [CNN] albeit without any suggestion about how this would be paid for;

“At the Conference of Mayors in January, Gribbin explained that the Trump administration would not be proposing a specific funding mechanism for the infrastructure plan, saying that will be a conversation with Congress. But that discussion just got a lot harder following the passage of a tax plan that is expected to expand the deficit by over a trillion dollars over ten years.” [MoneyCnn]

So, we got “conversations with Congress” about how to implement the “infrastructure plan,” but no infrastructure plan with much of anything except sops to for profit job training centers, lowered work rule and environmental permitting standards, and precious little else.  There never was a real, a comprehensive, plan in place such that the negotiations (or conversations) with Congress would ever be on a firm foundation. Surprised? We shouldn’t be.

Perhaps we should have been impressed with the trade plan?  After all, isn’t this supposed to put America First?  However, our friends and trading partners have been reduced to using color coded cue cards to explain high school level trade concepts to an American president [Marketwatch] and he doesn’t give any appearance he understands  fundamental concepts.  Reason sums up one area of dissonance:

“As Veronique de Rugy noted here a couple of weeks ago, “This is one policy area where he’s been remarkably consistent over the years.” Even when Trump pays lip service to free markets, she observed, it’s with the aim of increasing exports and reducing imports so as to bring down the number he thinks crystallizes our failure and lack of resolve. Trump is not talking like a mercantilist in service of free trade; he is talking like a free trader in service of mercantilism.” [Reason]

Let’s just operate on the simpler assumption — he doesn’t understand the subject; he doesn’t really have a plan; and, all the “motion” that passes for “action” in this administration’s trade policy is tantamount to economic and monetary plate juggling.  As long as he can make grand announcements about vague promises to eventually do something, and none of the plates fall, he’s all good.  Witness the EU deal:  “In reality, the Europeans gave up little except their prior refusal to negotiate under threat. Juncker’s pledge that the E.U. would import more U.S.-grown soybeans, for instance, formalized something that was likely to happen anyway.” [NewYorker]  Always assume: There is NO Plan.

And, about that Immigration enforcement policy which was supposed to have a plan to reunite children with their parents?   As of June 22, 2018 the Trump Mis-administration had to admit it had NO PLAN to reunite all children with their parents. [NYMag]  Really?  Well, not really completely opaque since the policy was all about punishing people who had the temerity to appeal for asylum in the United States who happened to be people with slightly darker skin than their Caucasian cohorts.   Thus if the policy didn’t meet the needs of the children and their parents, then the children could be conveniently re-categorized as “ineligible”  meaning the mis-administration might side step any accountability for their plight. [MSNBC]

Pick a topic, any topic.  Speak of environmental protections, clean drinking water, the protection of wildlife, or the protection of consumers from banking institution predation.  Speak of plans to provide better housing for married members of the US Armed Forces? Speak of plans to offer better, more efficient educational, medical, or dental services to Veterans?  Speak of plans to insure more cities are not plagued with lead in their water supplies?  Speak of how to provide long term assistance to American ranchers and farmers, and to promote the global trade in the crops and animals they raise for sale? Speak of how to research, study, and restrain the levels of gun violence in this country so that we are a safer place for ourselves and our children?  Speak of how we address matters of election security? To address Russian infiltration and attacks on our political institutions?  Pick a topic. Any topic.  Then rest unassured, this administration HAS NO PLAN.

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Filed under Health Care, health insurance, Immigration, Infrastructure, Politics, trade deficit

Our Weekly Fresh Horrors

Gee, what fresh horror would make for a nice blog post today?

#1. We could start with this analysis of Orange Blossom’s perfectly inane trade policy, as expounded by conservative economist Walter Block in the not-so-failing New York Times:

“The negative consequences of a trade war will soon be felt, if they aren’t already. Even if the United States avoids trade conflict with Europe, tariffs on steel and aluminum from China, Mexico and Canada will raise domestic prices, hurting consumers. And the administration is likely to find itself subsidizing voters who purchase these items or who are hurt when other countries slap tariffs on American goods in retaliation — mainly farmers, manufacturers and builders.”

Perhaps the color coded cue cards were insufficient to explain BASIC economics to our special Orange Blossom during his meetings with EU officials.  Is there an emoji for putting both of one’s hands palm forward into one’s face? I could use one right now.

#2.  Also from the New York Times — the Feds announce they’ve met the deadline for reuniting children with their migrant parents. However, there’s this little Oops paragraph in the article:

“But in a day that saw government officials and community volunteers scrambling to bring families together, multiple reports of failed reunifications raised questions about whether the deadline had in fact been met. Further confusing the issue was a change in the way the government tallied its progress, with the latest report counting children rather than parents, a reversal from prior reports.”

So, if they can’t reunify families, then they simply reclassify the children and/or parents to say they aren’t eligible for reunification!  Whee. How convenient.   Yes Sir, I could say I really stuck to my pledge to make healthier eating choices — IF we don’t count the two chocolate chip cookies, the can of Pepsi, the chips, the cheeseburger, the … you get the idea. There are still some 700 children not reunited with family.  And when the ADL is putting out warnings about what happens to children separated from parents, as in what happened during the Holocaust, maybe we should be paying attention.  I really do need that double face-palm emoji thing.

#3.  The Ruskies are still here. As in still attacking our American electoral system; as in attacking the McCaskill Senate campaign in Missouri.  They also appear to have attacked two other campaigns. This isn’t “history,” this is current events.  There’s more at “The Hacking of America,” on Slate.   The article isn’t exactly pleasant reading, but it’s recommended as a reminder that God helps those who help themselves, and DHS is talking about new initiatives with 90 day timelines.   90 days?  What happened to getting a start on this, say some 1 year, 188 days, and 2 minutes (as of now) ago?

#4.  Special concern for the people in the Redding, California area.  The news on that fire front is horrible. Up here in cheat grass country we lucked out during the Holloway Complex Fire in 2014.  There’s nothing quite so chilling as the sound of a local deputy on a bull horn announcing a preliminary notice of an evacuation order.  I don’t wish it on anyone.  Please, California neighbors, stay safe!

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Filed under Economy, elections, Immigration, Politics

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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Filed under Economy, Politics

Soy Beans: Wherein DB goes off again on her soy beans while readers roll their eyes.

soy beans

A note to patient and loving readers: These are soy beans.  I know, I’ve regaled you with soy beans before.  However, please allow me some latitude to discuss them once again.  The blessed little beans are illustrative of many issues related to the mis-administration of the Angry Man Baby occupying the White House and his minions.  

Let’s begin with what we do with soy beans, and please let’s get past the soy sauce and soy milk bit.  A sixty pound bushel of soy beans will yield about 11 pounds of crude soy bean oil and 47 pounds of soy bean meal.  The beans are about 18% oil and 38% protein.  Trust me, this is good — and it’s especially good for animal feed.  [NCsoy] Thus, most of the commercial use of soy beans goes for animal feed and a smaller amount goes for human consumption wherein we get back to the soy sauce, soy milk, soy flour, and our tofu.  But wait! There are other commercial and industrial uses for soy by-products as well and here’s a partial list:  Biodiesel fuel; biocomposites creating everything from countertops  to furniture to flooring to particle board and even to recycled newspaper. A person could sit at a kitchen counter containing soy while reading a newspaper containing soy, printed with soy ink, while the toddler marks the kitchen wall with a soy based crayon.  A person could escape all this because there are hydraulic fluids and lubricants which are soy based, and even automobile upholstery can be manufactured with soy containing elements.  In short, DB rants about soy beans because they can be environmentally friendly little Glycine Max’s which don’t have just a market, but have several markets — agricultural, commercial, and industrial.

Who grows these things?  We do. The United States of America leads the world in soy bean production with about 108 million metric tons per year.  Brazil produces about 86.8 million metric tons annually.  Argentina grows approximately 53.4 metric tons per year, and China adds another 12.2 million metric tons annually.  India comes in around 5th place in world production with 10.5 million metric tons, then Paraguay chips in another 10 million.  Canada produces approximately 6 million metric tons, Ukraine adds another 3.9 million, and Bolivia grows 3.3 million metric tons.  Last but not least Uruguay comes in with annual production of 3.2 million metric tons.  [WorldAtlas] Notice something about the names of the countries on this list?

One thing that pops out is that one country, China, has been singled out as a competitor, while the others are traditional American allies in diplomatic terms.  Remember that thing about integrated and distributive bargaining?  Recall that integrated bargaining requires negotiators (on trade and other matters) to consider their mutual interests along with the issues upon which they have issues to resolve.  Hold this thought.

Now consider Farmer Jones in eastern Nebraska who grows soy beans and sells his 60 pound bushels to a grain dealer — in dollars.  The financial markets kick in, as with every other commodity there is “future trading.”  At the moment, China, the largest soy bean importer has reduced its purchases of US soy beans, the price of soy beans got so cheap that other countries started to increase their orders from American dealers.  [Bloomberg] Sounds good so far, but caveat emptor.  This puts soy bean values at “fire sale” levels for our allies in Brazil, Argentina, India, Paraguay, Canada, Ukraine, Bolivia, and Uruguay.  So, let’s talk about Brazil for a second or two.

Back in 2011 the US and Brazil signed an Agreement on Trade and Economic Development.  Here comes that integrated bargaining component again, because the framework isn’t just about who sells what individual products to whom, but how the two nations can expand direct trade and investment relationships, incorporating reducing trade barriers and sharing innovations.  It appears to be working, at least if we note the report from the US Trade Representative: “U.S. goods and services trade with Brazil totaled an estimated $88.2 billion in 2016. Exports were $55.2 billion; imports were $33.0 billion. The U.S. goods and services trade surplus with Brazil was $22.3 billion in 2016.”   And, there’s some other nice bits:

The top export categories (2-digit HS) in 2016 were: mineral fuels ($5.0 billion), aircraft ($4.8 billion), machinery ($3.6 billion), electrical machinery ($3.1 billion), and optical and medical instruments ($1.7 billion).

U.S. total exports of agricultural products to Brazil totaled $899 million in 2016. Leading domestic export categories include: wheat ($316 million), prepared food ($54 million), dairy products ($47 million), cotton ($47 million), and feeds & fodders nesoi ($42 million).

U.S. exports of services to Brazil were an estimated $24.9 billion in 2016, 11.4% ($3.2 billion) less than 2015, but 235% greater than 2006 levels.  Leading services exports from the U.S. to Brazil, in 2015, were in the travel, transport, and telecommunications, computer, and information services sectors. [USTR]

Thus, the Brazilians are exchanging their Brazilian reals (current exchange rate 0.26/dollar) to buy US mineral fuels, electrical machinery, processed food, medical equipment, telecommunications systems, computer gear, and IT services from us, among other trade goods and services.  Now, ask the question: Do we really want their soy beans on the market at fire sale prices earning fewer “reals” when we want them to exchange those “reals” into US dollars to buy travel, computer, and IT services?  Fuel? Medical equipment? Aircraft? Our agricultural products? At what point does our “winning” come back to haunt us?

Or, consider this from our competitor’s side of the frame. China.  Again, with our little soy beans:

While the Asian nation is targeting a slew of American farm goods in this round of taxes, soybeans are the top agricultural commodity the country imports from the U.S. by far. The oilseed, used to make cooking oil and animal feed, accounts for about 60 percent of the U.S.’s $20 billion of agricultural exports to China. Before the tariffs were announced, a study by the University of Tennessee forecast that a 25 percent duty would spark a drop in American shipments of at least $4.5 billion. Brazil, already the world’s biggest soybean shipper, is set to be the biggest winner, filling the gap left by the U. [Bloomberg]

Wow, there comes Brazil again! Now the Chinese are exchanging their yuan (current exchange rate 0.15/US dollar) for Brazilian reals in order to buy their Brazilian soy beans.  And those grain deals? — they aren’t being made with US grain dealers in dollars, they are being made using yuan/reals.  Lower demand for the US dollar? There’s a delicate balancing act playing out in international currency markets every day. In our integrated system of international trade the old distributive system of winners and losers doesn’t serve very well. The agricultural market is connected to the futures market, the futures market is connected to the commodities market, the commodities markets are connected to the financial markets, the financial markets are connected to the currency markets… “foot bone connected to ankle bone, ankle to leg, leg to hip, hip to back bone,” right up the economic body with the old song as metaphor for the global economy.

And, we haven’t even talked about whether or not we want China to pick up more of our national treasuries to keep financial markets steady?  So, this is why DB gets excited about her soy beans, and other components of US trade and economic development.  It’s not that I am fascinated with soy sauce on my chow mein, or even on my potstickers, but because the little beans are illustrative of wider, larger, economic issues which seem much more important than whether my soy sauce is embellished with hot peppers.

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Filed under agriculture, Economy, Politics

Distributive Bargaining, or How Not To Make Friends and Influence People

Okay, we know that our baby boy in the White House isn’t exactly one to pore over reports, briefs, and academic papers, but his behavior in several realms is beginning to attract notice from those who do — especially people who muse about such things as distributive bargaining.  This first drew publicity back in August 2017 when experts were dismayed at his use of distributive bargaining in inappropriate settings. [HuffPo] Harken back to the early days of baby boy’s dealings with Mexico and Australia, over The Wall and refugees.

“Nobody wants to feel taken. Effective negotiators recognize that once we understand each other’s underlying interests, we can truly invent options for mutual gain,” said Shapiro, who wrote the book Negotiating the Nonnegotiable: How to Resolve Your Most Emotionally Charged Conflicts. “These leaders behind closed doors need to feel comfortable sharing information with one another so they can start figuring out options that address each of their constituency’s interests.”

Mexico didn’t want to feel “taken” by The Wall, nor did Australia want to be “taken” by being strong armed into breaking a U.S-Australian deal on refugees.  Unfortunately, baby boy’s negotiation style fits into the classic distributive bargaining definition:

‘The ultimate aim, under distributive bargaining approach, is not to come to a win-win kind of situation but that one side wins as much they can. Both parties will try to get the maximum share from the asset or resource which needs to be distributed.”[EconTimes]

Nothing creates instant impasse quite so well as setting out intractable positions and demanding one side accept terms which are in essence a loss in order to appease the more bellicose of the two bargainers. Baby boy is the more bellicose of the bargainers.  At this point, it’s relevant to address the difference between distributive bargaining and integrated bargaining.

In distributive bargaining the Big Point is the Walk Away Position.  That would be the point at which I would walk away from the car dealership if the make, model, and price of the vehicle in question wasn’t what comported with my financial situation and personal needs.  After all there are other dealerships, and I can safely ignore my other competitors.  If I were to consider my competition I’d want to engage in integrative bargaining, also sometimes called productive bargaining.

 “In integrative bargaining, each party works at understanding what the other really needs out of the negotiation. This, in turn, depends on being able to question the other party about their interests, or otherwise discover what they really are (i.e. it is possible for one party to lead into this process even if the other party initially is not cooperative). In integrative bargaining, parties will tend to avoid taking arbitrary “positions,” while still being assertive about their needs. This approach is clearly distinguishable from “distributive” or “positional” bargaining, in which the usual sequence is for one party to start unrealistically “high” and the other to start low, with successive offers narrowing the difference — without either party really understanding what the other seeks to achieve.” [BICK]

While we could say distributive bargaining is product driven, we could assert that integrated bargaining is process driven.  This is a bit too simplistic, but then our baby boy on Pennsylvania Avenue isn’t all that interested in complicated, nuanced, matters, so let’s keep it simple for him.

Much integrated bargaining was done during the negotiating process for the Trans Pacific Partnership — which had its problems, however being intractable and simplistic wasn’t one.  The bargaining also assumed there were not one but several layers and levels of interests involved.  The US wanted to get a handle on Chinese statutes on intellectual property rights. The Chinese were interested in involvement in a regional trade scheme.  The US was interested in Chinese purchases of US debt, thus keeping interest rates under control.  The Japanese were interested in securing their interests in the Pacific region with both the US and the Chinese, and with the Australians.  The Australians were (are) interested in securing markets for goods and services while maintaining strong diplomatic ties to western Europe and the United States.  And so on.  There were 12 nations in on the negotiations.  So, baby boy blew it up.  [BBC] See also: WaPo April 2017.

On the third day of his presidency, Trump signs an executive order withdrawing the United States from the Trans-Pacific Partnership. “Everyone knows what that means right? We’ve been talking about this for a long time,” Trump says as he signs the order. “Great thing for the American worker, what we just did.”  [WaPo]

Not. So. Fast.  First, on July 14, 2017 those 11 other nations which had been involved in the integrated bargaining over the TPP terms signed an agreement without the US.  They get what they wanted…we get to twiddle our thumbs?  And we’ve still not come to any agreement with the Chinese about their handling of intellectual property rights.  Punditty types on my television set are wringing hands and clutching pearls as the US and China descend into trade/tariff war territory — “but but but what about the intellectual property rights — the real issue between the two countries? — they moan into their microphones. What about it?

When Baby Boy shifted US bargaining from integrated to distributive negotiations he shaved off the need to consider the needs of our competitors and our interest in dealing with the issues on a multi-layered basis, and went straight for the Winner Takes All distributive bargaining model. So, if we’re wondering what’s going wrong in regard to our trade relations with our two largest markets, Canada and Mexico, and our problems with China, and our issues with the European Union… look no further than Baby Boy and his one size fits nothing distributive bargaining model.


More information at:

Economic Times, Definition of Distributive Bargaining.  Beyond Intractability, Distributive Bargaining. University of Colorado-Boulder, Distributive Bargaining.  Harvard PON Distributive Bargaining Strategies.  Small Business Chronicle, Distributive and Integrative Bargaining.

 

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Not that nuts? Think again please.

A “top DC trade lawyer” thinks the current occupant of the White House is “nuts,” but not “that nuts.”  Excuse me.  This is an executive who blew up a DACA deal including US funding (not Mexican) for his idiotic wall.  Who withdrew from the Paris Climate Accords — accords which were tailored to meet US demands after Kyoto. Who withdrew from a satisfactory deal with Iran and other European nations on nuclear development because he thought this made his look “stronger.”  Who withdrew the US from the UN Human Rights Council just as he was violating the human rights of asylum seekers.  Who has disparaged NATO and the European Union while Russia occupies Crimea and portions of Eastern Ukraine…  and now the fool wants to withdraw from the World Trade Organization.   Yes, he’s nuts, he’s just that nuts.

This, while Orange Foolious is derailing the NAFTA talks. When the Scottsbluff Star Herald leaps into the fray we have to know this isn’t one of those Inside Wall Street stories.

Time is running out on a renegotiation of the North America Free Trade Agreement. House Speaker Paul Ryan says there’s little time left for Congress to receive a revamped agreement and meet all the timeline requirements under federal law. Meanwhile, Mexico holds its presidential election on July 1, and a leftist candidate unlikely to strike a quick NAFTA deal is expected to win.

Plus, the Trump administration recently undermined the NAFTA talks by slapping hefty tariffs on steel and aluminum exports from Canada and Mexico, spurring the two countries to impose retaliatory tariffs on selected U.S. goods.

and now the fool wants to withdraw from the World Trade Organization.  From Axios He’s [threatened to withdraw] 100 times. It would totally [screw] us as a country,” said a source who’s discussed the subject with Trump. The source added that Trump has frequently told advisers, “We always get fucked by them [the WTO]. I don’t know why we’re in it. The WTO is designed by the rest of the world to screw the United States.”  No, Orange Foolious —  the WTO was not designed by the rest of the world — it was designed by the United States of America.  It was designed to improve on the old GATT system. Message from the Real World:

The “Economic Report of the President” for 2018, which bears Trump’s signature on Page 11, states: “[T]he United States has won 85.7 percent of the cases it has initiated before the WTO since 1995, compared with a global average of 84.4 percent. In contrast, China’s success rate is just 66.7 percent.”

However, the Orange One doesn’t do messages from the real world, just the reality show in his fevered head.  In his reality show version the world is out to get him, and by extension the United States.  Every deal could have been better if he’d made it — just ask the North Koreans who are now happily upgrading their nuclear facility.  He tells Macron to get out of the EU and the US will “cut him a better deal.”  Clearer heads reported the French felt the Orange One had a “basic lack of understanding of Macron’s views.” [Guardian]  This seems a much more diplomatic way of stating the US president is a complete economic moron. “Manque de compréhension” is ever so much nicer than “il est un crétin.”

So, not that nuts?  Think again.  A man who pulls the US out of basic trade and defense agreements, who puts babies in cages without a plan to reunite them with their parents, and who can walk silently away from reporters’ questions about reporters being killed in their newspaper office … yes He’s THAT nuts.

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