USW Blog

  • A Top Exec Gets His Kicks Kicking Passengers
    Free-marketeers have been trying to strangle Amtrak, America’s quasi-public passenger railroad, for years now, and the Trump White House has tightened the chokehold, partly by pushing changes that make Amtrak’s food service ever less appealing. The latest victims? Passengers on long hauls who can’t afford Amtrak’s premium tickets. Among other changes, these ordinary passengers can no longer sit in the railroad’s dining cars and buy cooked-to-order meals. Amtrak CEO Richard Anderson, meanwhile, is sugarcoating the railroad’s new economic segregation, describing the widely disliked squeezes as “enhanced services.” No one should be surprised. In his previous life, as the CEO at Delta, Anderson helped turn his airline into a high-profit Wall Street darling by putting the squeeze on frequent fliers. Delta’s SkyMiles program became, as one travel journalist put it, “offensively, aggressively awful,” with good seats for popular destinations more than doubling in mileage price. Anderson himself retired from Delta in 2016. On the way out the door, he collected $72 million in Delta stock awards. *** — Oct 23
  • China Wants $2.4 Billion from the U.S. Over an Old WTO Tariff Dispute
    Amid an enormous trade war between the U.S. and Chinese governments, China’s trying to get $2.4 billion from the United States for its non-compliance with a World Trade Organization (WTO) ruling over the legitimacy of tariffs from the Obama era. Yes, that’s right: In 2012 China disputed the application of a bunch of tariffs on solar panels, wind turbines, and certain steel and aluminum products, and a WTO appeals court agreed that some of the U.S. tariffs were unfair. From Reuters:
    China’s request appears on the agenda of the (Dispute Settlement Body) set for Oct. 28. The United States could challenge the amount of retaliatory sanctions sought, which could send the long-running dispute to arbitration. The office of U.S. Trade Representative (USTR) Robert Lighthizer has said the WTO ruling recognized that the United States had proved that China used state-owned enterprises to subsidize and distort its economy. But the ruling also said the United States must accept Chinese prices to measure subsidies, even though USTR viewed those prices as “distorted”.
    Without having read the text of the WTO ruling, that ruling seems kinda odd ... despite being in a vein similar to previous WTO rulings against the U.S. It’s well documented that China has for years subsidized the friggin’ heck out of these industries, saturating some of them so much that they caused global overcapacity problems. And accepting Chinese prices to measure subsidies would seem to fly in the face of the fact that China remains a non-market economy. The lawyers are gonna wrestle this one out, and we’ll keep an eye on it. This case is illustrative, though, of a larger point: The trade policies pushed by the Chinese government were a problem before Donald Trump became president. And although negotiations toward a comprehensive deal continue, and although it’s a good thing that this guy has (however ham-handedly) squared off with China over its unfair trade practices, these problems are almost guaranteed to continue after him. This is a long game. Whatever deal the USTR is able to reach with his Chinese counterparts needs to be a comprehensive as possible. No settling for soybeans! *** Reposted from AAM     — Oct 23
  • Why Are Indigenous People Dying At The Border?
    Watch the video » — Oct 22
  • WTO Report Revealed: Yes, EU Industries Can Treat China as a Non-Market Economy
    Remember when the Chinese government was beating the drum hard to gain “market economy” status in the eyes of the World Trade Organization (WTO)? It’s been a little while since this last came up. A lot of trade politics has happened since we last wrote about it. Namely; the Trump administration has hit China with a raft of tariffs on Chinese goods, and the Chinese government has responded in kind. Billions of dollars in tariffs tend to distract from questions like “is China a market economy?” But it really is a fundamental question in the context of WTO decisions. Because China is considered a non-market economy (NME), WTO-approved anti-dumping tariffs on Chinese products suspected of being sold at an unfair price can be based on the price of the same product from a third country – where the product is manufactured at a market rate.   China had argued that the terms of the WTO accession deal it made in 2001 granted it automatic market economy status after 15 years (the terms made it clear that other WTO members could treat China as a NME because it was clearly a NME). And as soon as those 15 years were up in December 2016, it took the European Union to the WTO’s dispute settlement – basically, to trade court – over “the method Brussels applied for calculating anti-dumping duties on states seen as non-market economies,” writes Politico. Back then we called this a “divide and conquer strategy.” Well, Politico got its hands on a confidential WTO report on that case. It was was issued earlier this year, and only to the parties involved. China, Politico reports, “conceded that parts of the ruling would have been so detrimental that it suspended the case and asked for the report to not be published, keeping the panel's reasoning locked away.” — Oct 22
  • The Economics and Politics of Financial Transactions Taxes and Wealth Taxes
    Last month, the Washington Post reported that Joe Biden is considering including a financial transactions tax (FTT) as part of his campaign for the Democratic nomination. For those of us who have long advocated such a tax, this is very good news. On this issue, Bernie Sanders has taken the lead among presidential candidates, including an FTT as part of his plan for free college tuition free. Several other candidates also support an FTT, but if the Democratic Party’s leading centrist candidate endorses the tax, it would mark a new degree of acceptance within the mainstream of political debate. It may be somewhat surprising, but Senator Warren is not among those supporting an FTT. This is certainly not due to a reluctance to challenge the interests of the wealthy. Warren has proposed a wide variety of measures that would directly challenge the interests of the rich and powerful. The most ambitious item on this agenda is a wealth tax. Her tax would tax wealth above $50 million at the rate of 2.0 percent a year and wealth above $1 billion at the rate of 3.0 percent a year. (Sanders has an even larger wealth tax.) While there are good reasons for wanting to tax the very rich, an FTT is almost certainly a better economic policy and would have much better political prospects.   We can see the economics of an FTT are superior when we consider the motivation for taxation by the federal government. As the proponents of Modern Monetary Theory remind us, the federal government doesn’t need revenue to spend, it prints money. The purpose of taxation by the federal government is to reduce consumption, so as to create the economic space for spending. The argument is that if the government spent a large amount of money, and didn’t have any taxes, it is likely to create too much demand in the economy, thereby generating inflation. To see this point, imagine that the federal government was to spend another $1 trillion next year on Green New Deal policies (a bit more than 20 percent of current federal spending), such as clean energy and mass transit subsidies. If there were no increase in taxes, we would expect to see a huge surge in demand in the economy, likely leading to inflation. (Assume that the Federal Reserve Board simply prints more money so that interest rates are little changed.) Now suppose we had another big Republican-style tax cut where we handed $1 trillion annually to the very richest people in the country. Also assume that we have no offsetting reduction in spending or increase in other taxes. — Oct 21