Tariffs and growth – two magic notions

Tariffs and growth – terms that are in everyday circulation whenever economy is talked about – are interesting notions. While tariffs is a double-edged sword, so growth is almost useless, but first things first.

The world is all agog in expectation what President Donald Trump is going to do in his dealings with China and Russia. As is known – as he himself has said on many an occasion – tariffs are the means of promoting American economy and preventing foreign economies from dominating the American market. Thus, to take the example that is very often discussed, the United States has imposed tariffs on Chinese electric cars. It was not only Donald Trump who did it during his first term of office: President Joe Biden continued in Trump’s footsteps in this respect. The former imposed a 25% tariff, the latter – 100%. Such a tariff is supposed to bloc the imports of Chinese cars into the United States altogether. How?

While the end customer would have to pay twice as much as the customer in a country where no such tariffs are in force. Hardly anyone is going to pay through the nose for a vehicle from China. Thus, for all practical purposes the American market is closed to Chinese electric automobiles, and the American market is huge. Does that mean that the Middle Kingdom has been economically punished? Well, yes and no.

Beijing may look for other markets but it is obvious that China cannot sell electric cars – certainly not in large numbers – in Somalia or Uruguay since either the country is too poor or too small. Yet, China can sell its electric vehicles elsewhere. It is not 1945 and onwards when the United States was the only economic power while the rest of the world was in ruins or poverty. Today luxurious goods can be sold because they are in demand in many places all over the world: the Arab countries, Europe, Russia and India. To make tariffs effective in depriving China of its profit from selling electric cars (or whatever for that matter), Washington would need to make other countries do the same. American president would have to take measures Napoleon Bonaparte took when he tried to starve the United Kingdom by imposing on it the continental blockade. To do so, Napoleon had first to subjugate the whole of Europe, which translated into numerous wars, and even then the measures that he took against Albion proved to be ineffective. Why?

First, the United Kingdom could rely on its colonies. Second, there was this big country by the name of Russia, which Napoleon could not subjugate and to which he could not dictate his will. Third, the blockade itself was porous: life is life, people need goods on either side of the blockade border, and so they will always find ways to bypass restrictions, any restrictions. As we know, in an effort to make the blockade complete, Napoleon made an incursion into the Russian Empire and… lost everything. Is the United States on the same or similar trail?

A government resorting to measures in its fiscal or monetary policy is similar to a chess player. Every move on the chessboard – whether the player moves a castle or a knight, whether or not the player sacrifices a piece – every such move has its up- and downsides that are not easy to predict. Only time – a sequence of moves made by both players – will show whether a given decision was correct. In the world of international economy there are many players, many moves and many chess pieces. Tariffs may or may not be beneficial, it is hard to tell at the moment of their imposition. For comparison, see how effective are the sanctions imposed on Russia. They may harm a competitive country, they may as well harm the domestic market and domestic production. Again think about the sanctions against Russia that have backfired. They protect domestic manufacturers and simultaneously rid them of an urge to be competitive. That in the long run might prove fatal. Already the American automotive manufacturer Tesla is losing to its Chinese counterpart BYD in terms of quality. If Tesla continues to be manufactured without the competitive pressure from Chinese BYD, it might end up producing a second or third rate vehicle. The cure (tariffs) may become a death toll.

Growth. The modern world of economics seems to be obsessed when it comes to growth. Every year is supposed to be better or at least not worse than the year before. Particular economies are compared in terms of their growth. The data are roughly interpreted in such a way that a country with higher growth is economically better off than a country with lower growth. Yet, is this the whole picture? A man who has already built a house for his family needs only to make occasional repairs to it. Consequently, his economic activity may slow down, his growth will be relatively small or none. Another man is in the process building a house for his family because he has none. Consequently, his economic activity is in full swing and so his growth is much higher than that of the owner of a house. What then do the stats tell us? Why should an owner of a house build another one? Why should he have the same growth as someone who is currently building the house? A country saturated with express and highways, with plants and bridges etc. cannot have big growth in comparison with a country which needs to build all the infrastructure from scratch and is actually building it. Stats are deceptive, especially when taken at face value. China may have impressive growth, yet people from India if they emigrate they do not opt for China but the United States (or Europe). Why? Growth in the United States or Europe is smaller than that in China. Don’t they know it?

America – soon a middle kingdom

President Trump has the ambition of bringing back industry to the United States. He wants to bring it back first of all from China. That’s where once famed outsourcing was directed to. Do you still remember those years? Americans and generally Western entrepreneurs and manufacturers were oh so proud that they had found cheap labour. Out of greed, in search of maximizing profit, they moved much of the industry from the United States (and Europe) to south-east Asian countries. It worked for some years during which the said entrepreneurs and manufacturers lined their pocket handsomely. That Americans had little employment? Who cared about them? The scheme was very ingenious and devellish. Yes, the unemployed needed to be somehow supported or else they were ready to spoil the business of the managers of this world, especially the black and Latino minorities. The plan that the entrepreneurs and manufacturers seem to have forged was the following: the government was to take care of the basic human needs – food, medicinal care and the like – of all those wretched who happened to live in the affluent United States. The government took care of the wretched, which means the middle class and the rest of American society took care of them by means of their taxes. Thus middle class people began to support the poor and the needy while the entrepreneurs and the manufacturers reaped the profit. A wonderful scheme! But back to President Trump.

It has transpired that the real riches of a country and the country’s real strength derives from the skills of its inhabitants and the products that is manufactures. The United States cannot remain a superpower for a long time if its economy is based on providing services, if its riches are calculated by the amount of the speculative capital at various stock exchanges. Imagine a war between the United States and China. The Middle Kingdom is capable of producing all the armament and anything it might need while America…

So, the idea of bringing back industry to the United States is basically good, it serves the national interest. Yet, it is easier said than done. A simple question arises: who is going to work in the factories? Americans have become lazy. Americans have unlearned the necessary skills. The generation of good workers is now mostly retired. The American administration can bring back or purchase the plants and the equipment almost overnight, but it cannot overnight train efficient workers. What then? Is Washington going to import people? That might be the case but then such a policy will run counter to the present trend of ridding the country of foreigners. It would be changing Tweedledum for Tweedledee.

But let us assume that America still has a sufficient number of skilled workers and engineers. Then another problem arises: they are accustomed to good pay and the protection of the trade unions, which means they are not going to toil long hours for a pittance. Contrarily, the Chinese, the Vietnamese, the inhabitants of India are. Whose products then are going to be more competitive: those made in and by the United States or those made in and by the so called Third World?

As we know, President Donald Trump is fond of imposing tariffs. He believes that this is a very efficient instrument of protecting national economy and exerting pressure on other nations. That might be so in theory if we do not scrutinize all the for and against. Yes, a national economy protected by tariffs might survive for long years, but at the same time it receives no incentive to develop, to be outperform the competition from abroad. If the Asiatic businesses continue to compete globally, they will naturally develop. If American businesses enjoy the protection in the form of tariffs, they will stagnate. What then? America – a backward country?

What a historical paradox! Imagine an America set off from the rest of the world by protective tariffs. It might soon become… the middle kingdom! Because that’s what China (and Japan) used to be in the 19th century: backward countries whose backwardness resulted precisely from their isolationism. And you know what? After some time the mighty Chinese fleet might knock on the American door and demand that it be opened… just as it was the case with China – and Japan – when the Europeans (and Americans) forcefully opened those countries to the outside world. 

Romania – Belarus: so similar and so dissimilar

What do the elections that have been recently held in Romania and Belarus have in common? Both have been unrecognized by the European Union. What difference is there between the elections held in Romania and Belarus? The difference is that the European Union has full power over Romania, which – just like all other EU member-states – has lost its sovereignty on day one when it was joined to the Union – while it has no power over Belarus. As a result, the candidate who was likely to win in Romania was barred from becoming the country’s president, while the candidate who – as Brussels maintain – could not have won the election in Belarus if it had been fair, remains the country’s president.

One can ask a question whether a country is independent if the elections held within its borders need to be recognized by foreign powers. That is, formally speaking, it is the “international community” that validates or invalidates an election, but technically speaking it is the few powerful decision-making centres that can effectively do it. Now, no one can effectively invalidate elections in the United States. Yes, one can say they were fraudulent and one can even present evidence, but then that’s it. Nothing whatsoever is going to happen. Who is going to enforce such invalidation on the superpower? So, though many believe that Donald Trump’s victory four years ago was stolen, though there is ample evidence to support this claim, nothing could be done about it.

Yet, everything can be done about an election in one of the 27 EU provinces. Romania is a glaring example. A candidate proves to be successful, the country’s supreme court acknowledges the result on day one only to cancel the election on day two. Why? Well, the country’s supreme court acted under pressure from Brussels, Romanian vassal took orders from the European overlord. Romanians took to the streets and protested the decision of the foreign agents in no uncertain terms, but to no avail. Romania is not the United States.

It is different in a non-EU member-state like Belarus. Lukashenko becomes president and does not care two hoots whether or not the results of the elections are going to be accepted by the European Union. At a press conference, asked about his opinion of the fact that the West does not think he has been elected by the people in a fair way, and as a result is not going to be recognized as a legitimate leader of Belarus, Alexandr Lukashenko answered more or less like this: Well, we, Belorussians, might choose not to recognize the legitimacy of Keir Starmer in his capacity as British Prime Minister, what of it? Will anything change? Will London take it into consideration? Will the British agree with our opinion?

One might be trained to view Belarus in a bad light: all the years of the media brain washing will have surely had this effect on the overwhelming majority of the minds of the citizens of the Western world. Yet, if there are people who have not forgotten how to use their cognitive abilities, the recent events should make them pause. They should think, Ok, Belarus is a politically backward country in a firm grip of a dictator and his gang, but Romania has been an EU member-state for years now, with all the rules of political conduct copied from or imposed by the Western powers. Why then for goodness’ sake was it possible that the election in Romania was so fraudulent that it needed to be invalidated?

One might also think of Romania in unfavourable terms: after all, it is a central European country, relatively poor, known in the recent past for its ruthless communist rule. Evidently, one might continue to think, Romanians – though they have been taught how to elect democratically and prudently – still need a lot to learn. They remain politically immature and need to be guided in this respect by the big brothers from the West who know better. Let us assume that this assumption is correct.

What then shall we do with the local elections in Germany when Angela Merkel decided to invalidate the results because the candidate who had won, Thomas Kemmerich, was not to her and her gang’s liking? What about the serious discussions going on in the same Germany to ban AfD? What about France and the political alliances that have been formed and continue to be formed there habitually only to block the patriots rallied around Marie le Pen from accessing power in the country? How about Great Britain, where political opponents and dissenters are routinely referred to as far-right? What about all the “progressivist” American politicians and “progressivist” political activists who blurt out the name Hitler at about anybody with dissenting political convictions? If Belarus is an undemocratic country where elections are rigged, are the Western countries any – much – in any way – better?

Weak protests of the Belorussian opposition held especially outside Belarus are extensively covered by the media; massive protests in Bucharest, Romania’s capital are not. Why?

Most of us know that we have no influence on the policy making despite all the talk about democracy i.e. the power of the people. As a result, we mostly want to be left alone. There are two buts, though. One is that if there are powers that can effectively invalidate elections in Romania or withdraw recognition for elections in Belarus, the same powers can do it – and sooner or later will do it – to all other small countries. The other but is that the policies that are made by the powerful unelected few ultimately translate into wars during which it is the common man who pays the price, not the powerful unelected few. Thus, millions in Ukraine have had their lives ruined, but a Zelensky and his clique just as the European Union commissioners and other diplomats live it up as they are used to.

Have you ever wondered why the media do not show us day after day after another day the thousands of people with lost hands and arms, feet and legs, jaws and eyes? Because such images would turn the vast majority of us against this war. Have you ever wondered why the media do show us the images of wretched, helpless, poor, sad, crying “immigrants”? Because such images are devised to make us open our hearts, wallets and homes. It’s really as simple as that. We are guided by images, by such images. Carefully selected. With words that act as subtitles. These subtitles make sure that we do not draw inferences other than those that are intended to be drawn.

700.000 Ukrainians, 1.000.000 Russians dead?

As we are expecting the talks between the United States and the Russian Federation over Ukraine to begin in the foreseeable future. After all, Donald Trump promised to end the war within 24 hours of taking the office of the head of state. The American President seems to be preparing for that event, but as for now we can hear statements that are strange. President Trump said a few days ago that that hostilities needed to be stopped because of the huge loss of life. How huge? The President told his listeners how huge: allegedly, the casualties are 700.000 Ukrainians and 1.000.000 Russians. Now these figures need to be looked at.

Where did the American President take those numbers from? From the CIA? From Ukrainians themselves? From President Zelensky? If these numbers correspond to reality, then one would expect that Russia would be losing the war, that the battles and skirmishes would be taking place on Russian rather than Ukrainian territory, and that there would long ago have emerged huge social unrest in Russia. As it is, it is the Ukrainian territory where fights are taking place and the Russian troops are advancing, if slowly.

How can the CIA know the number of the casualties? It is understandable in the case of Ukraine’s losses: just as Kiev is fully subordinated to Washington, so is Ukrainian military intelligence. To know the numbers on the Russian side would have required access to Russian top secret data. Is that possible that the West or the Ukrainian intelligence have such access? Sure, it is. Americans (or Ukrainians) may have an agent – a Russian working for them – who is positioned in the highest military or state circles. Yet, such an agent is too precious to give him away by quoting a more or less precise number of the dead and wounded, because such information would indicate to the Russians that they might have a traitor among their ranks. Americans would not have wanted to alert their opponents for the sheer satisfaction of telling the world that they know the number of Russian losses.

If we exclude these assumptions then two more hypotheses emerge. One is that it is possible that the American President is fed false numbers because the so called deep state – Biden’s followers – wants him to make Ukrainians continue the war effort. The other is that Donald Trump feels that the war against “evil” Russia is somehow popular because Americans and Europeans have been told for at least last three years that they are defending freedom and democracy against totalitarianism and dictatorship, and so the American President has come upon the idea of presenting his peace efforts as a purely humanitarian measure. More to it, Donald Trump might be wishing to be extending a helping hand to President Vladimir Putin, whose concerns about such huge losses of life among the Russian military must be growing with every day of the hostilities. How about that? Then also the public opinion might begin to embrace the idea of the American president becoming a go-between between Moscow and Kiev in his capacity as a saviour of lives. You see, it is the loss of lives that Donald Trump cares about. Consequently, his future peace proposals have nothing whatsoever (or very, very little) to do with the West’s surrender to Russian political and territorial demands.

Deep Seek – the Chinese Sputnik

It happened at the end of December: the Chinese made their chat GPT accessible. Media reports suggest that the solution is cheaper and of better quality than the American one from Open AI. It also turned out that the Chinese open source model cost around 6 million, which is a fraction of the huge sums that US companies had invested in the development of AI. Suffice it to say that just at the beginning of January (probably in response to the Chinese surprise) Microsoft stopped building a huge $3.3 billion data center that was to be dedicated to serving Open AI. If it’s true that the Chinese startup has gone toe-to-toe with Big Tech with less powerful chips… The situation could really shake up the markets.

Deep Seek is backed by the HighFlyer Capital fund, which has co-financed the project from the outset. The company is staffed with talented developers – but lacks the typical American “publicity” surrounding the creators, with the Chinese describing the company as the result of a “collective effort”. While the Chinese became successful in their typical modest, low-budget way, US companies bought hardware (AI chips, server racks and more) in bulk from companies like Nvidia and Broadcom, and the AI makers shone in the media spotlight. Recently, for example, the head of Open AI was shown in a meeting with Trump. Meta recently announced that it will invest more than 60 billion dollars in the new year. AI from China now seems to be like Sputnik in its day. When the Soviets launched their rocket, the West was so shocked that there was even talk of a Sputnik crisis at the time. Sputnik started the era of competition in space, today Deep Seek may be the one to set new standards and cause the crisis in the US stock market, especially the overvalued big tech companies.

Now companies such as Microsoft, Meta Platforms (formerly Facebook) and Alphabet (Google) appear to be overvalued.

Trump’s best from his inaugural speech

The great comeback has has just become reality. Donald Trump reappeared in the Oval Office. He delivered his inaugural speech and signed into law his first decisions. He has put an end to the green deal and withdrew the United States from the WHO. He is on his way to put a stop to the anarchy of open borders that was slowly turning the United States from being a political entity to be reckoned with to becoming a cauldron of disorder, a pandemonium of gangs, lawless mob rule, and endless racial and gender-cum-sex hostilities; a cauldron of atomized individuals at each other’s throat over pronouns and bathrooms, over rights for the multiplying allegedly suppressed minorities and alleged privilege of the white majority. We might entertain a hope that also the American belligerent policing of the world and war-mongering will soon come to an end. That’s at least the hope that Donald Trump’s speech arouses.

Here are some of the best sentences that herald a new era in American history. We could only wish Europe had its own Donald Trump. Maybe one of these days it will.

We have a government that has given unlimited funding to the defense of foreign borders, but refuses to defend American borders, or, more importantly, its own people.

We will not forget our country. We will not forget our Constitution and we will not forget our God. Can’t do that.

We will begin […] the revolution of common sense.

Instead of taxing our citizens to enrich other countries, we will tariff and tax foreign countries to enrich our citizens.

We will forge a society that is colorblind and merit-based. As of today, it will henceforth be the official policy of the United States government that there are only two genders: male and female.

We will measure our success not only by the battles we win, but also by the wars that we end and, perhaps most importantly, the wars we never get into.

We will pursue our Manifest Destiny into the stars, launching American astronauts to plant the Stars and Stripes on the planet Mars.

We will stand bravely. We will live proudly. We will dream boldly […] because we are Americans. 

Democracy is a sham

The sad truth about democracy in Germany is that it doesn’t actually exist, or is only a facade democracy. When Thomas Kemmerich was elected Minister President of Thuringia with AfD votes, to which Angela Merkel reacted like a true dictator with the sentence: “We must reverse this election“, it became clear at last to everyone that those in power are not concerned with democratic values, but merely with maintaining (absolute) power. After the numerous arrests of Reich citizens at the end of 2022, who were allegedly planning a coup d’état, the fear on the part of those in power grew to such an extent that they had a protective trench built around the Reichstag. Erich Honecker would probably have warmly welcomed it as a new anti-fascist protective wall. Who are the people in power afraid of? Of the 70-year-old Reich citizens with resentments?

Now that the AfD is to be the second largest party after the upcoming elections, look what the Federal Minister of the Interior and for Homeland, Nancy Faeser, says: she wants to dismiss the Federal Police officers if they belong to the AfD. I always ask myself: why does the name of the ministry brazenly say “and for the homeland” when its head is using a protective trench and threats to distance herself from the inhabitants of her homeland? Home, Ms. Faeser, is where I understand and where I am understood, as Karl Jaspers once said. The citizens in their homeland do not understand your measures and the majority of citizens hardly understand the current government, as all the surveys say.

Another smart alec who grew up on German soil, Ursula von der Leyen, wants to set up a kind of Ministry of Truth with her commission. Fortunately, the major US internet platforms are resisting the introduction of fact-checkers (i.e. censors). Perhaps the new wind from America will now sweep away all these useless officials, ideologues of the only truth, which must be constantly protected from other truths (fakes) – as if the truth could not defend itself – these advocates of climate change, equality, equalization, the culture of death, and, and, and… These proponents of Orwell’s world.