Apple Deletes Taiwanese Flag Emoji From Hong Kong iPhones
And another company folds to the woke, SJW “human rights” juggernaut that is China.
According to Bloomberg, the Taiwanese (Republic of China) flag emoji “🇹🇼” has been deleted from all iPhone users living in Hong Kong. It appears Apple banned the Taiwanese flag in the iOS emoji keyboard in the latest iPhone update, emphasizing how the company must cater to all demands of the Communist Party of China or be at risk of being sanctioned and losing some or all of its mainland China revenue (just ask the NBA).
“The change was implemented via software on iPhones sold in Hong Kong and Macau. After Apple released new versions of its iOS 13 operating system in recent days, users in those cities noticed that the Taiwanese flag option was no longer available on the emoji keyboard,” reported Bloomberg.
The banning of the flag emoji was done through a software update on iPhones sold in Hong Kong and Macau late last week.
Apple had catered to China’s demands before, as it removed the Taiwanese flag emoji for all users in China.
Apple has a tremendous presence in China, and it uses factories in the country to produce most of its smartphones. The company must carefully follow all demands by the Chinese government, or risk penalties, and or even expulsion from the country if the violation was severe enough.
We noted on Wednesday that Apple could be marching its way to a retaliation strike by the Chinese, not just because of President Trump’s blacklisting of Chinese technology companies, but due mostly to the US technology company’s involvement in supporting protestors in Hong Kong with a new app that allows people to track police movements across the city.
Apple has “betrayed the feelings of the Chinese people” by allowing the app to be downloaded, said the People’s Daily.
The paper also said Apple had allowed the song Glory to Hong Kong, which advocates Hong Kong independence from China, to be downloaded on iTunes.
“Over and over again, Apple’s actions are incomprehensible, and people have to wonder about their intentions,” the People’s Daily said, adding that, “This reckless behavior will cause a lot of trouble for Apple.”
Apple joins several American companies that have been reprimanded by China for supporting the pro-democracy movement in Hong Kong. One of those companies in the spotlight this week is the NBA. China banned all broadcasts of NBA games earlier this week after Daryl Morey, general manager of the Houston Rockets, tweeted his support for the Hong Kong protesters.
Ukrainian President Insists Trump Did Nothing Wrong: “There Was No Blackmail”
As Democrats and their media allies turn up the pressure on President Trump with this latest report about the president allegedly trying to do favors for his political allies (something that everyone in politics does, to one degree or another), perfectly timed to coincide with the NatSec meltdown over Trump’s decision to let Turkey have northeastern Syria, Ukrainian President Volodymyr Zelenskiy once again denied that he had been blackmailed by Trump during the now-infamous July 25 phone call that’s at the center of the Dems’ impeachment crusade, Bloomberg reports.
At a press conference in Kyiv, far from American soil, and well beyond Trump’s jurisdiction, Zelenskiy insistently replied to a group of reporters that there never was any ‘blackmail’ from Trump, and that Trump must have known Zelenskiy doesn’t possess the power to interfere in Ukraine’s judiciary (as rooting out corruption was one of the tentpoles of his campaign).
Democrats say Trump tried to use $400 million of military aide from the US as leverage to try to strong-arm Zelenskiy and the Ukrainian government to dig up some dirt on Joe and Hunter Biden and their shady business dealings in the country (these include Hunter’s position on the board of a private gas company, and Joe’s involvement in the ouster of a supposedly corrupt prosecutor). We’ve detailed many of Hunter’s shady dealings here.
Zelenskiy claims it’s simply not so.
“There was no a blackmail,” Zelenskiy told reporters at an all-day press event in Kyiv. “It wasn’t a subject of our talk.”
Zelenskiy said he wasn’t aware when he spoke with Trump that the US had put a hold on the military aid that Dems say was used to blackmail Zelenskiy (reports have shown otherwise: Zelenskiy reportedly wasn’t aware of the hold until he discussed it during a later meeting in Warsaw with Vice President Mike Pence).
Ukraine’s new chief prosecutor said that his office would review several important cases that were opened before he entered the office – including an investigation into the company upon whose board Hunter sat. So far, everything looks very preliminary.
To be clear, Zelenskiy has said he’s not against any prosecutions of the Bidens moving forward. He simply just doesn’t want to meddle.
“I don’t want to meddle by any means in the elections of an independent country,” he said. “I won’t do it.”
But assuming Biden manages to secure the nomination (his front-runner status is looking far more vulnerable today than it did at the beginning of the summer), Dems will soon realize: even the whiff of corruption and self-dealing will transform Biden’s campaign into the Clinton 2016 campaign pt. II – that is, if Hillary Clinton doesn’t decide to come out of retirement herself and seek the nomination for a rematch against Trump.
Vice President Mike Pence says he’s working with the White House counsel’s office to release his own transcripts of two phone calls with Ukrainian President Volodomyr Zelensky amid Democrat claims that the Trump administration pressured Ukraine to investigate former Vice President Joe Biden.
Pence said his conversations with Zelensky would exonerate President Trump from Democrat claims of a quid pro quo.
Pence was asked about releasing his transcripts and told reporters, “I’d have no objection to that.” He spoke after an event in Waukee, Iowa, where he addressed supporters about the president’s trade policy.
Pence said he “never discussed the issue of the Bidens” with Zelenskiy. And he again defended the president, insisting that a “plain reading” of the rough transcript of Trump’s call with the Ukranian leader shows “there was no quid pro quo.” –Yahoo!
Watch:
“The fact that my predecessor had a son who was paid $50,000 a month to be on a Ukrainian board, at the time that vice president Biden was leading the Obama Administration’s efforts in Ukraine, I think is worth looking into.” – VP @mike_pence
Meanwhile there were two major developments on Wednesday to keep in mind. First, Ukraine was investigating Burisma Holdings long before President Trump asked them to, and second, a sitting Ukrainian politician announced leaked documents revealing that Joe Biden was paid $900,000 by Burisma.
And President Trump is facing impeachment for simply asking Ukraine to look into it.
Our favorite macro gauge UK credit impulse, which explains economic activity nine to twelve months forward with an “R2” of .60, is going through its eighth quarter of contraction, the longest period since the early 1990s.
The length of the contraction is similar to that of the period 1990-1992 when the United Kingdom entered into recession due to high interest rates, an overvalued exchange rate and falling house prices.
The current situation is profoundly different since it is Brexit uncertainty that is driving the economic downturn. The uncertainty goes hand in hand with low interest rates, a GBPUSD exchange rate undervalued by 23% (chart below) and lower house prices in real terms.
Recession is only a matter of time: The prolonged contraction in the flow of new credit in the economy and the five straight quarters of contraction in business investment are the two key factors usually leading to a recession.
Strategic view :
Our central scenario remains the extension of Article 50, that should be requested by October 19th, and new Parliamentary elections that could take place five weeks after the initial Brexit deadline, ie end of November/beginning of December.
There is still extreme positioning on the GBP. The speculative community remains widely short GBP, though it has slightly compressed since mid-September on the hopes of a new extension. If this scenario is confirmed, it could be immediately followed by a technical rebound of the GBP. However, the long-term view is still gloomy for the British pound as Brexit uncertainty and unsupportive fundamentals (such as the wide current account deficit and negative net FDI flows) remain.
Based on these assumptions, we expect GBP/USD to re-test for the third time this year the 1.21 level, and EUR/GBP to move back to 0.93.
UK ‘Poll Of Polls’ Shows Support For Brexit Faded As Negotiations With EU Stalled
Over the three-plus years that have passed since the Brexit referendum, the fraught process of leaving the European Union has stretched the patience of many voters to the breaking point, while others have been driven to the point of near-hysteria by incessant warnings about the chaotic fallout should the UK leave the bloc without a withdrawal agreement in place.
So, perhaps it’s not all that surprising when researchers and journalists look at the aggregate poll results over the years to see support for ‘remain’ climb while support for ‘leave’ faltered as negotiations became increasingly fraught. In all honesty, the fact that ‘leave’ hasn’t seen a larger drop in support should be encouraging for supporters.
UK PM Boris Johnson and outgoing EU Commission President Jean-Claude Juncker
Whatever the case may be, with support for a second referendum on the rise, the Evening Standard has performed an analysis of more than 200 public opinion polls that have been conducted since the referendum. And it found that support for Leave has slumped while support for Remain has climbed.
The study shows that at the start of 2017, a majority of survey respondents favored quitting the EU, 51% to 49% (though their lead was down slightly compared with the results of the referendum. But during the first six months of 2018, remain was ahead 52% to 48%. By the first six months of this year, after two years of incessant and bombastic coverage of Parliament’s misadventures by the British press, ‘Remain’ led 54% to 46%.
In the most recent batch of polls, ‘Leave’ had bounced back, and was only trailing ‘Remain’ by six percentage points, or 53% to 47%.
These findings were announced together with ‘the People’s Vote”s latest campaign for a second Brexit referendum, entitled “Together for the Final Say.”
Hundreds of thousands of marchers are expected to join the demonstration, which is set to take place on the same day that the Commons is expected to sit for an emergency Saturday session to vote on its preferred path forward for Brexit (if Parliament doesn’t vote in favor of a ‘no-deal’ Brexit, then legally, PM Boris Johnson may be compelled to request another extension from Europe, kicking the Brexit can until early next year).
If Parliament succeeds in blocking ‘no deal’ on Oct. 31, MPs will have successfully delayed Brexit by nearly a year (the original ‘Article 50’ date was March 31, 2019). According to political analysts who have been closely following the situation, this would virtually guarantee a snap election (since Parliament has proven time and time again that it can’t come to an agreement on the withdrawal agreement). But when it comes to an actual vote, polling has been much less clear. According to Goldman Sachs, there’s a decent chance that a snap vote could return Johnson to power with a stronger majority.
According to the FT, which published a probable timeline for the as-yet-unconfirmed vote on Wednesday, Oct. 23 is the soonest possible date that the government could call for a Commons vote on the prospects for an election, with Britons likely heading to the polls on Dec. 5.
But with UK labor productivity falling, jobs leaving and growth slowing – all of which have been successfully blamed on Brexit, despite evidence of a Continent-spanning slowdown – Johnson could have his work cut out for him.
The Church of England is demanding that the United Kingdom use force and violence to ban pointy knives. A religious organization is now insisting that crime be reduced by further enslaving the population.
Last year, London’s murder rate briefly overtook that of New York City, a feat likely to be repeated as crime continues its decline in the U.S. while the latest U.K. figures show an increase in violent crimes committed with both guns and knives. In spite of all the laws restricting ownership of anything that could constitute a weapon, violent crimes are getting much worse. Instead of giving people more freedom and the human dignity of being able to defend themselves against these attacks, religious organizations and the government want to take steps to make sure only those committing violent acts have the means to do so.
“We the undersigned are professionals and community leaders from across the UK who call on Government to see the sale of pointed domestic kitchen knives as a thing of the past,” reads the not-a-parody open letter from the Diocese of Rochester, signed by church leaders, lawmakers, psychiatrists, academics, and the like. “Historically we needed a point on the end of our knife to pick up food because forks weren’t invented. Now we only need the point to open packets when we can’t be bothered to find the scissors.”
When the human condition resists perfection through legislation, the answer always seems to be more – and stupider – laws.
Just months ago, a Conservative member of Parliament made headlines when he took a different, but equally restrictive, approach to regulating sharp pieces of metal, reported Reason.
“Every knife sold in the UK should have a GPS tracker fitted in the handle,”insisted Scott Mann. “It’s time we had a national database like we do with guns.”
Mann took a lot of ribbing for the proposal, and even admitted that it was “a bit of a shit idea.”
But that’s just because he was a step ahead of the mob. If he’d stuck with grinding off the pointy bits, he would likely have been hailed as a model of responsible opinion.
Knife control is supposed to be a joke—where control freaks take their next efforts when gun laws prove unenforceable and criminals decline to discontinue their efforts just because they’ve been rendered even more illegal. But British politicians took that joke and turned it into national policy. Now they want to double down on that policy because the bad guys still won’t play along.
For The First Time Ever, Greece Issues Negative Yielding Debt
As armies of fixed income strategists battle over whether US Treasuries are facing higher or lower yields, Greece has no such qualms and in a historic shift today, the former bond market pariah and Eurozone’s most indebted nation, joined the exclusive club of negative-yielding European nations when bond investors lined up to pay the nation that was at the heart of Europe’s sovereign debt crisis.
A sale of €487.5 million of 13-week bills on Wednesday drew Greece’s first-ever negative yield of minus 0.02% as investors now pay Athens for the privilege of lending it cash, as Bloomberg first reported. Greece joins the likes of Ireland, Italy and Spain – not to mention virtually all core Eurozone nations – which benefit from the ECB’s insane monetary policy and deepening fears of a global recession.
It’s been an unprecedented turnaround for twice bankrupt Eurozone member, whose bondholders suffered massive losses back in March 2012 when the country was forced to accept the biggest bond restructuring in history, bringing the Eurozone to the verge of collapse.
Just a few years and several trillions in bond purchases by the ECB later, the region is grappling with an altogether different problem – the spread of negative yields, which reduces borrowing costs for governments in a form of soft default, one which is crushing savers, pension funds and insurers, and which has prompted some of the most respected names in finance to shriek in terror as the cost of money in even Europe’s most insolvent nations is now negative.
Jon Day, a fixed-income portfolio manager at Newton Investment Management, said the move was “another symptom” of the “global grab for yield, especially in euro-denominated bonds,” pointing out that short-dated Greek bonds were previously one of the few government markets where a positive return was on offer. Indeed, as recently as 2017, the Greek 13-week bills yielded a “generous” 2.70% before they started their journey to NIRP just over two years ago.
Still, despite Europe’s artificial, central bank-propped up bond market, nothing has been fixed with respect to the Greek economy: “There remain substantial risks around Greece’s financial position and it remains vulnerable to a significant economic slowdown,” Day said. “Current yields on their bonds do not reflect this risk.”
Greece foray into negative rates comes after the ECB cut its deposit rates even deeper into negative territory and said it would restart quantitative easing (unlike in the US, the ECB has no qualms about calling “not a QE” by its real name). Investors are also looking toward fiscal stimulus as the ability of monetary policy to stoke growth is tested to its limits, and unlike Germany, we expect Greece to fully take advantage of negative yields to stick it to creditors “investing” with other people’s pensions. Earlier this week, the nation also took advantage of record-low borrowing costs by selling 10-year bonds this week at a yield of 1.5%.
Greece’s government is forecasting 2.8% economic growth in 2020, which it says puts it on track to meet a budget target agreed with creditors while still enacting tax relief measures.
“Greece issuing negative-yielding bills is more evidence of the positive effect that negative interest rates and QE has on debt sustainability for governments,” said Mizuho’s head of rates strategy Peter Chatwell, even though it is not quite clear how Greece accumulating even more debt to “fix” a catastrophe that was the result of record debt actually works out in the long run… but that’s ok, by then it will be someone else’s problem.
“Side effects are large for banks and investors, but for the governments there are very significant benefits.”
Indeed: as the world’s banks and investors founder, at least perpetually corrupt and incompetent governments are rewarded, and all it took was several years of insane monetary policy by a former Goldmanite to unleash the biggest revolution in the European bond market in history, one which will end in the biggest bond bubble crash ever seen.
But – as the supporters of the ECB will tell you – “not yet”…
The British think-tank Policy Exchange, recently published a report,Eroding the Free Press, about a leaked draft of “Guidance for Reporting on Islam and Muslims”. The guidance was drafted by the Independent Press Standards Organisation (IPSO), the UK’s independent press regulator, an initiative that IPSO announced in late 2018. In the past, IPSO has, among other issues, published guidance on the reporting of death and inquests, sexual offences, suicides, and transgender people.According to IPSO, its guidance is “designed to support editors and journalists” and “does not limit or restrict editorial decision making, but may inform that decision making”.
In a January 2019 blog on IPSO’s main priorities for 2019, IPSO Head of Standards Charlotte Urwin laid out the five priorities of the year. “Reporting of Islam and Muslims” was listed as the first priority and described in the following way:
“In October 2018, we began working towards producing guidance for journalists on the reporting of Islam and Muslims in the UK, an area of broad political and social concern. The guidance will help journalists to report on a sensitive area, whilst also ensuring that it does not impinge their right to criticise, challenge or stimulate debate. We have established an informal working group to help us draft the guidance, bringing together academics who have research experience in relation to Islam and Muslims in the UK and representatives of organisations interested in the coverage of Islam…”
Policy Exchange’s report on the leaked guidance gives rise for concern.
In the words of the report, the guidance, “seems designed to bind the hands of UK newspapers when it comes to reporting on stories relating to Islam and Muslims – with potentially serious long-term consequences for the workings of a free and independent press”.
According to the Policy Exchange report, the draft IPSO guidance states:
“Journalists should be aware that their content can have an impact on the wider community and on how minority communities are treated. Inaccuracies and insensitivities can damage communities and prevents their accurate representation. They can also contribute to members of communities feeling divorced from, or misunderstood, by the media. Finally, inaccuracies and unbalanced coverage can work to increase tension between communities, which can make harassment more likely”.
As the Policy Exchange authors write:
“In all of this, there seems to be a suggestion that journalists should take a different approach to covering Muslims than that employed towards other faith groups. This all seems remarkably ill-conceived. If we ruled out reporting on matters specific to Muslims not only would we miss some big issues – not least the threat from Islamist extremist terrorism, which continues to dwarf other global terrorist threats – but we would also be unable to report properly on discrimination against Muslims. More generally, we must ask: is it really the role of journalists to consider community cohesion before truth and accuracy? And what are the potential consequences of such an ethos?”
In addition, the draft guidance has a section on “accuracy in reporting”, which suggests that journalists should do one, or all of the following: “Provide contextualising information; present more than one opinion; verify the information from another source”. While sounding banal and innocuous in and of itself, the guidance goes on to say, more disturbingly:
“Identifying the ‘right’ person to speak to can be extremely challenging and journalists should be aware that individuals and organisations may have different interpretations of a particular belief. Journalists may find it helpful to consider the expertise of the person/organisation, their background and any previous comments on the issues, in deciding who to approach for comment.”
In a previous draft, the Policy Exchange report tells us, the word was not “expertise”, but “representativeness”.
It does appear to be the case that what is uppermost in the minds of the drafters of the guidance is not so much factually accurate reporting, but concerns of a far more political nature, namely those of accommodating religious and cultural “sensitivities” and avoiding the causing of any offense.
Another aspect also concerns the authors of the Policy Exchange report: The “informal working group” under IPSO that has authored the guidance apparently includes members who have publicly supported[3] the new definition of “Islamophobia” as defined by the All-Party Parliamentary Group on British Muslims (APPG). In December 2018 the APPG published Report on the inquiry into a working definition of Islamophobia / anti-Muslim hatred. The report, conflating religion with ethnic origin or nationality, defined “Islamophobia” as a form of racism: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” For a full account of that report, see Gatestone’s previous reporting on the issue here.
The authors of the Policy Exchange Report write:
“Against this backdrop, one might ask whether the IPSO ‘guidance’ process is being used to advance the kind of ‘anti-Islamophobia’ agenda promoted by the APPG on British Muslims… despite the fact that the Government has deemed that definition not fit for purpose… one of the things that makes the APPG’s attempts to institutionalise an illiberal definition of Islamophobia so unpalatable, is the fact that it resembles a form of blasphemy law, protecting Islam specifically, implemented by the back door“.
In conclusion, the Policy Exchange report states:
“Taken as a whole, the IPSO guidance document seems to mark a decisive shift in the purpose of the regulator – which takes it beyond considerations of accuracy or discrimination, as per the Editor’s Code. Instead, it is moving into the realm of ‘insensitivities’ and ‘unbalanced coverage’ – elastic and subjective terms”.
Policy Exchange’s description of the leaked guidance is hardly shocking if one recalls the campaigns and guidelines made by European journalists’ own organizations in recent years. As previously reported by Gatestone, the largest organization of journalists in Europe, the European Federation of Journalists (EJF) — which represents more than 320,000 journalists in 72 journalists’ organizations across 45 countries and claims that it “promotes and defends the rights to freedom of expression and information as guaranteed by Article 10 of the European convention on human rights” — ran a Europe-wide campaign, sponsored by the EU, called “Media against Hate” in 2016-2018. The purpose of it was to, “improve media coverage related to migration, refugees, religion and marginalised groups… counter hate speech, intolerance, racism and discrimination… improve implementation of legal frameworks regulating hate speech and freedom of speech…”
None of the above appears to have had much to do with freedom of expression or journalism. Rather, it was actually a political campaign, spearheaded by one of the largest journalism organizations and supported by the Rights, Equality and Citizenship (REC) Programme of the European Union. The Council of Europe, another international political body constituted by 47 European member states was also listed as a partner. The mix-up of government interests with journalistic principles seemed to bother no one.
Similarly, in September 2017, a project called respectwords.org published guidelines — the publication of which were financially supported by the Rights, Equality and Citizenship (REC) Programme of the European Union — on reporting about migration and minorities. According to those guidelines, “more than 150 European radio outlets and 1300 journalists from the eight RESPECT WORDS countries (Austria, Germany, Greece, Hungary, Ireland, Italy, Slovenia and Spain) have joined together to strengthen media coverage of migrants and minorities, an indispensable tool in the fight against hate speech”.
One of the guidelines in the book, which IPSO’s recommendations seem to echo, was to “Remember that sensitive information (eg race and ethnicity, religious or philosophical beliefs, party affiliation or union affiliation, health and sexual information) should only be mentioned when it is necessary for the public’s understanding of the news”. The key here, again, seems to have been to respect “sensitivities” and avoid causing offense – not the factually correct reporting of newsworthy events. The guidelines also advised:
“Take care not to further stigmatise terms such as ‘Muslim’ or ‘Islam’ by associating them with particular acts… Don’t allow extremists’ claims about acting ‘in the name of Islam’ to stand unchallenged. Highlight… the diversity of Muslim communities…”
The respectwords.org guidelines, two years old, barely seek to hide that they are a political tool.
This, then, is the highly politicized atmosphere that journalists breathe and that their organizations openly promote. It is hardly surprising, then, that even independent regulators, such as IPSO, choose to take what looks like a similar path. As for the eroding of the freedom of the press, the question seems not so much to be “if” as “to what degree”.
The U.S. trade deficit in goods and services increased to $54.9 billion in August, up from $54.0 billion in July. That’s because imports grew more than exports overall. While President Donald Trump will see this higher trade deficit as a bad thing, we should not. It can be a bit confusing, but Trump and pretty much every president before him justified allowing imports as a price we must pay to allow American companies to sell their stuff abroad.
Consider former President Barack Obama. He once said during a State of the Union address, “Ninety-five percent of the world’s customers live outside our borders, and we can’t close ourselves off from those opportunities.” This was meant to explain why it was OK for him to lower tariffs on American goods: It was the key to gaining more access to foreign markets for domestic exporters.
Every multinational or bilateral trade agreement is based on this idea—an idea that reached its zenith in the 17th century. The underlying belief is that the only benefit we receive by agreeing to accept more imports is that other governments will allow their citizens to buy more of our exports. Such thinking has made free trade agreements possible; these, in turn, have made trade significantly freer. But we should nevertheless abandon this backward thinking.
Let’s consider some counterintuitive but true facts about imports:
In the long run, the level of exports is tied to the level of imports. The easiest (although not the only) way to think of this relationship is to recognize that the more a country imports, the more of its money its people spend (and send) abroad. With more of its money abroad, foreigners have more money with which to buy the home country’s exports. This is a simplified rendition of what in economics is known as the Lerner Symmetry theorem. This theorem explains why when our imports grow, so do our exports (though export growth may not be as much as the growth in imports because foreigners can also spend their U.S. dollars by investing in the United States or buying our debt).
The Lerner Symmetry theorem also explains why, when the North American Free Trade Agreement went into effect in 1994, U.S. imports increased significantly afterward, as predicted, but so did U.S. exports. And it explains why most economists consider any attempts to affect the balance of trade through export subsidies to be foolish. Reality doesn’t work this way. A better way to export more is to import more.
This economic understanding also means that the Trump strategy is bound to fail. Sure, with enough tariffs you can reduce imports from, say, China, on a bilateral basis. But you will also be reducing your exports. And in no case will any of these changes affect your global trade balance, but that’s another column for another day.
One more reason why imports are so important is that they are tremendously beneficial to middle- and lower-income consumers. The more imports, the better, as these lead to greater consumer choices and varieties, all at lower prices.
Moreover, final consumers aren’t the only ones to benefit from imports. U.S. manufacturers benefit from lower input prices. At least half of U.S. imports are not final consumer goods; they are, instead, inputs for U.S.-based producers, which help reduce imported-input costs. This reduces businesses’ overall production costs, which promotes employment possibilities and economic growth. We should welcome U.S. business and employment growth.
But what about domestic businesses that have to compete with these imports? Well, what about them? All businesses have to compete for consumers’ dollars. And in a country as large and economically dynamic as the United States, most competition comes not from imports but, instead, from other domestic producers. Just ask Blockbuster how it liked competing with Netflix.
The bottom line is that the U.S. businesses that lose customers because of imports are no more “victimized” or worthy of special consideration than are the far more numerous U.S. businesses who lose customers to other U.S. businesses.
Competition is an indispensable component of a healthy market economy, and we have every reason to welcome competition from abroad with all the sincere applause with which we welcome it from domestic firms and entrepreneurs. In that spirit, I welcome imports, and so should you.
The U.S. trade deficit in goods and services increased to $54.9 billion in August, up from $54.0 billion in July. That’s because imports grew more than exports overall. While President Donald Trump will see this higher trade deficit as a bad thing, we should not. It can be a bit confusing, but Trump and pretty much every president before him justified allowing imports as a price we must pay to allow American companies to sell their stuff abroad.
Consider former President Barack Obama. He once said during a State of the Union address, “Ninety-five percent of the world’s customers live outside our borders, and we can’t close ourselves off from those opportunities.” This was meant to explain why it was OK for him to lower tariffs on American goods: It was the key to gaining more access to foreign markets for domestic exporters.
Every multinational or bilateral trade agreement is based on this idea—an idea that reached its zenith in the 17th century. The underlying belief is that the only benefit we receive by agreeing to accept more imports is that other governments will allow their citizens to buy more of our exports. Such thinking has made free trade agreements possible; these, in turn, have made trade significantly freer. But we should nevertheless abandon this backward thinking.
Let’s consider some counterintuitive but true facts about imports:
In the long run, the level of exports is tied to the level of imports. The easiest (although not the only) way to think of this relationship is to recognize that the more a country imports, the more of its money its people spend (and send) abroad. With more of its money abroad, foreigners have more money with which to buy the home country’s exports. This is a simplified rendition of what in economics is known as the Lerner Symmetry theorem. This theorem explains why when our imports grow, so do our exports (though export growth may not be as much as the growth in imports because foreigners can also spend their U.S. dollars by investing in the United States or buying our debt).
The Lerner Symmetry theorem also explains why, when the North American Free Trade Agreement went into effect in 1994, U.S. imports increased significantly afterward, as predicted, but so did U.S. exports. And it explains why most economists consider any attempts to affect the balance of trade through export subsidies to be foolish. Reality doesn’t work this way. A better way to export more is to import more.
This economic understanding also means that the Trump strategy is bound to fail. Sure, with enough tariffs you can reduce imports from, say, China, on a bilateral basis. But you will also be reducing your exports. And in no case will any of these changes affect your global trade balance, but that’s another column for another day.
One more reason why imports are so important is that they are tremendously beneficial to middle- and lower-income consumers. The more imports, the better, as these lead to greater consumer choices and varieties, all at lower prices.
Moreover, final consumers aren’t the only ones to benefit from imports. U.S. manufacturers benefit from lower input prices. At least half of U.S. imports are not final consumer goods; they are, instead, inputs for U.S.-based producers, which help reduce imported-input costs. This reduces businesses’ overall production costs, which promotes employment possibilities and economic growth. We should welcome U.S. business and employment growth.
But what about domestic businesses that have to compete with these imports? Well, what about them? All businesses have to compete for consumers’ dollars. And in a country as large and economically dynamic as the United States, most competition comes not from imports but, instead, from other domestic producers. Just ask Blockbuster how it liked competing with Netflix.
The bottom line is that the U.S. businesses that lose customers because of imports are no more “victimized” or worthy of special consideration than are the far more numerous U.S. businesses who lose customers to other U.S. businesses.
Competition is an indispensable component of a healthy market economy, and we have every reason to welcome competition from abroad with all the sincere applause with which we welcome it from domestic firms and entrepreneurs. In that spirit, I welcome imports, and so should you.
