Monday, October 1, 2018

The lack of comprehensive political economy goals will create concurrent pecuniary and environmental disasters for the U.S. Gen X and later generations

Part 1 - Introduction

In Christopher Nolan’s science fiction film, Interstellar, set in the year 2067, the first few minutes of the film consists of interviews by survivors of an apocalyptic dust bowl. Those scenes are in fact are from a Ken Burn's documentary, real interview clips of actual survivors from the Dust Bowl which nearly destroyed the middle "Red States" of the United States in the 1930s. The Dust Bowl was the result of decades of individuals acting with full encouragement of the government in a time when we had no "climate scientists." Today Americans, particularly those living in the same "Dust Bowl" states, continue to behave in a similar fashion ignoring climate science, even to the point of assuring their government abandons their grandchildren to a disastrous future.

As noted by Wikipedia, a deal is a financial transaction which is defined as follows: "A financial transaction is an agreement, or communication, carried out between a buyer and a seller to exchange an asset for payment."

Every "deal" is made within a system we call a "political economy" which results in the distribution of income and wealth,  which system includes...
  • legal,
  • economic,
  • political,
  • social,
  • cultural,
  • environmental, and
  • technological
...subsystems that within each country exist and operate uniquely, and within the international community exist and operate pursuant to other rules.

Thus when a deal is made in the auto industry, for instance Fiat acquiring Chrysler on Janury 21, 2014, there were interactions with, and impacts on, all subsystems of the political economy -  legal, economic, political, social, cultural, environmental and technological - and frequently impacting both the national and international political economies, all resulting in alterations to the distribution of income and wealth.

 That was a "deal" by definition.

On the other hand, the United States, Canada and Mexico reaching an agreement in September to replace the North American Free Trade Agreement (NAFTA) with the United States-Mexico-Canada Agreement (USMCA) is not a financial transaction and therefore not a "deal" by definition.

The USMCA, like NAFTA before it, is a restructuring by governments of a political economy system internationally and within all three nations, formally altering the legal, economic, environmental, and technological subsystems likely resulting in future transformation of the political, social, and cultural subsystems. Inevitably it will require within the private sector renegotiation of many existing "deals" and the negotiation of new "deals."

For instance, as explained in a news article:

    Big changes for cars. The goal of the new deal is to have more cars and truck parts made in North America. Starting in 2020, to qualify for zero tariffs, a car or truck must have 75 percent of its components manufactured in Canada, Mexico or the United States, a substantial boost from the current 62.5 percent requirement.
    There’s also a new rule that a significant percentage of the work done on the car must be completed by workers earning at least $16 an hour, or about three times what the typical Mexican autoworker makes. Starting in 2020, cars and trucks should have at least 30 percent of the work on the vehicle done by workers earning $16 an hour. That gradually moves up to 40 percent for cars by 2023.
    While many economists think these new rules will help some North American workers, they also warn that car prices might rise and some small cars may no longer be made in North America because they would be too expensive under the new requirements. There are also concerns that automakers might not make as many cars in North America to export to China and elsewhere overseas because costs would be higher in the USMCA region than making the vehicles in Asia.

If the U.S. goals in the USMCA actually are achieved - and that's a big if considering all the subsystems involved - the required wage increases in Mexico come with the provision that Mexico must make it easier for workers to form unions. The Trump Administration approved this just as a lefty populist took office as President of Mexico (October 1) making the USMCA a pre-midterm elections gift from Trump to the AFL-CIO.

Also, the National Highway Traffic Safety Administration (NHTSA) recently unveiled a 500-page environmental impact statement to justify President Trump’s decision to freeze federal fuel-efficiency standards for cars and light trucks built after 2020 which should keep the cost of those vehicles down.  This is a significant current concern for people living in most Red Congressional Districts.

But for those who living in most Blue Congressional Districts, the issue is a different one.

Regarding Climate Change the document assumes the planet’s fate is already sealed by projecting the planet will warm nearly 4° Celsius (7° Fahrenheit) above the average temperature between 1986 and 2005 regardless of whether Obama-era tailpipe standards take effect or are put on hold for six years.

The document assumes that that the Paris Agreement/Kyoto Protocol international framework with a goal of limiting the temperature change to well below 2° Celsius won't happen stating it “would require substantial increases in technology innovation and adoption compared to today’s levels and would require the economy and the vehicle fleet to move away from the use of fossil fuels, which is not currently technologically feasible or economically feasible.”

This reversal of fuel-efficiency standards, of course, also is not a "deal." It is the use of political economics ostensibly on behalf of an industry at the likely expense of our grandchildren. Not for one minute should anyone think that President Trump is blundering along doing stupid things. In this case, Trump's policy is consistent with a view that the Chinese government's Made in China 2025 plan was based upon the Industrie 4.0 high-tech strategy of the German government initiated and funded by the government of Chancellor Angela Merkel.

The Trump Administration does not see the EU nations, including Germany, as an economic leadership threat to the U.S. But plans to address the Global Warming problem is seen as something of a benefit to China in the economic leadership competition with the United States. It is known that China's President Xi Jinping as long ago as 2005 in support of environmental goals uttered the phrase: "Clear waters and green mountains are mountains of gold and silver." That commitment represents short and long term costs which will slow Chinese economic growth in the 2020's.

By having the U.S. officially accept a disastrous climate change scenario, the Trump Administration is sacrificing the well-being of Gen X and later generations of Americans in the 21st Century and after.

American citizens live in a country in which a late-18th Century Constitutional system, not a majority of the nation's voters, selected
  • President Donald Trump, 
  • the Republican Congressional majority, and 
  • the right-wing Supreme Court majority.
Because of this selection system Americans have a government locked into Victorian 19th Century
  1. cultural values regarding regulating the personal behavior of the American people and 
  2. laissez-faire attitude regarding regulating American individual business and corporate efforts to concentrate wealth.

Leading up to his primary campaign on Wednesday, July 1, 2015, now-President Trump made the following comment on CNN to explain his qualifications for high political office:

    I write a book called The Art of the Deal, the No. 1 selling business book of all time, at least I think, but I’m pretty sure it is. And certainly a big monster, the No. 1 bestseller.

From that point on, we have seen Trump regularly refer to himself as the best negotiator of the best deals. His core supporters believe that and believe it is relevant to his current job. They determine what is good or bad based upon their own personal gains and losses last week, similarly to stock market analysts looking at the performance of a corporation. It is the pain-suppression mentality that created the opioid crisis.

In the end, thinking like this will result in imposing on that portion of the population currently under age 40 severe environmental stress at a generalized level never experienced by prior generations.

Nonetheless as explained in this blog in detail, that NHTSA report probably will be correct because of failures of over-age-55-under-age-90 Americans, the generation that likely will become known as the Trump Generation because of its unwillingness in adulthood to sacrifice income and wealth for the greater good when compared to the Greatest Generation which, among other things, approved high gas taxes to build the interstate highway system.

When considering the latest round of deplorable tariffs on Chinese goods, "round " meaning...
(a) Trump announces additional tariffs on Chinese goods,
(b) China responds with tariffs on American goods is important to remember that in the context  of all the political economy policies of the deplorable Trump Administration,  this action is:

  • an attack by the Trump Administration on U.S. consumers because a "tariff" is a tax on what you buy - not a war against China, Mexico, Canada, the European Union, and other countries - a tax offsetting the revenue loss from the recent Republican tax reduction on the wealthy and corporations;1
  • an attack by the Trump Administration on some U.S. and Chinese companies while favoring others ostensibly with the goal of reducing the interdependence of the two economies resulting from U.S./China commerce, despite the fact that in the fall of 2017 Trump made a trip to China bringing with him 29 representatives of U.S. companies to encourage them to make billions of dollars in investments in the economy of the People's Republic of China and grant the U.S. government's approval of People's Republic of China government-affiliated companies and banks making (a) investments in a natural gas project in Alaska, (b) investments in shale gas development and chemical manufacturing projects in West Virginia, and (c) investments to be managed by Goldman Sachs in American manufacturing, industrial, consumer and healthcare industries;2
  • an attack by the Trump Administration on the 21st Century economies of the Pacific States continuing the 2016 attack by both parties pitting the citizens of the states that are home to Amazon, Microsoft, Nike, Google, Tesla, etc., against the citizens of the states that mine coal and manufacture steel, supported by the population East of the Transcontinental Divide;3
  • an attack by the Trump Administration on the children and grandchildren of current U.S. adults because placing a wedge between all the other nations of the world and the U.S. is an attack on their future within a collapsing environment.4

This is dangerous political economics being conducted either by
  1. someone seeking the appearance of "war status" before the 2020 Presidential election or 
  2. unwise amateurs who primarily seek to bolster America's economic dominance in the world at the expense of other nations, particularly China. 
One could assume that "a." is true as noted in the February 2017 post Why you should fear Trumpism's Steve Bannon: war with China within 8 years and other reasons.

However, in this post it is assumed that "b." is what underlies the actions. Americans who care must learn just how unwise the people engaging in these dangerous political economics are.

Political economy is a complex subject. Nothing informative about it can be offered in a tweet, the President's habits notwithstanding. And in this post we cannot repeat everything that has been written in this blog related to the subject of political economy.

China also is a complex subject. Nothing informative about it can be offered in a tweet, the President's habits notwithstanding. This post cannot repeat everything that has been written in this blog related to the subject of China. Economic competition with the Chinese people in the 21st Century also is not simple.

For their country to be competitively effective in a 21st Century aggressive political economics contest:
  1. Americans must
    1. understand what is meant by the terms "political economy" and "political economics";
    2. understand how the lack of national long-term goals to benefit the generations born in the 21st Century is a major risk in a political economic contest between nations.
  2. Americans must
    1. have some knowledge of the history, culture, government, and political economy of China;
    2. have a realistic awareness of the differences between 21st Century China versus 21st Century U.S. in terms of the mixed socialist-capitalist political economies and autocratic governments of both countries; and
    3. be aware of the Chinese commitment to their grandchildren to use an adaptive, evolving national strategy to achieve their goals for 2020, 2035, and 2049, including the evolving Chinese strategic plans for climate change adaptation to assure that future generations of Chinese will survive and thrive.
These subjects will be explored in two posts in this series that follow Part 2. About Assertive Political Economics and Part 3. About China's most recent 4000 years.


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