About twenty percent of a car is, or should be, high quality specialty steel which is not made in America. Because there are no local sources of such steel, it is organizationally difficult to make such parts in the US, so the parts tend to be made overseas. Or, disturbingly often, made out of crappy steel.

When Jobs was creating the smartphone, he went to Corning to talk to the people who make specialty glass. If we had been importing our specialty glass from China, the way we are importing our specialty steels from India, maybe no smartphones, or smartphones with easily scratched plastic screens.

Let’s say that you’re after armor steel, and you want to buy it direct from the mill. Your options are more or less limited to:

  • Arcelor Mittal’s “Mars” Steel from India.
  • SSAB’s “Armox” or “Ramor” from Sweden.
  • ThyssenKrupp’s “Secure” From Germany.

And if you want it cheap, and you want a supplier who speaks English, probably India.

Assume the God Emperor is not a complete moron. If a tariff on all steels, an intent that locals will start producing specialty high tech steels. Remember all those people declaring that Trump was lying when he promised coal miners coal jobs were coming back? They told us coal jobs were gone, and were not coming back. Specialty steels are coming back.

Tariffs tend to have bad consequences, because they tend to reflect corruption and special favors. What happens is that there is a high tariff on goods imported by regular folks, and someone who is cozy with the government gets a special permit, a recategorization, or some such, and he gets to import stuff without a tariff, and mark it up.

But the biggest indignation against Trump’s tariff is that he is taxing specialty steels, taxing steel that you just cannot buy in America, which tax is not a gift of free money to existing steel producers, but a demand that they get their act together and an opportunity for them to do so.

And, if they do so, they create high skill, high pay jobs for white males in flyover country
High pay high skill male jobs
jobs for Trump voters in electorates where their votes make a difference.

Never forget who whom.  Be mindful of who are your friends, and who are your enemies.  The Democrats do not attempt to follow an economically optimal policy, but a policy that harms their enemies economically, even if it causes some lesser harm to their friends.  They have been aggressively destroying jobs in flyover country to force the great centralization, so as to get the most voter power out of the people they have been importing to live on crime, welfare, and voting Democrat.

It is likely that this policy tariff policy is economically efficient, because of technological externalities, but even it was not, ask whom it harms, and whom it helps.

81 Responses to “Externalities”

  1. […] considering the angles of Trump’s tariff on steel and aluminum. This week Jim considers the externalities. Definitely RTWT on this one, but I will quote Jim at length here because of just how completely […]

  2. lalit says:

    Jim, The CIA is known to be hostile to Trump. You know it, I know it, Trump knows it and the alley cat knows it. Could this be Trump destroying the CIA from within using the Left’s own tactics? The CIA can’t protest at this appointment as she is a “Woman.” Or is this Trump appointing someone loyal to him? She looks like a career bureaucrat as Spandrell puts it. So possibly she may not be loyal to him.


    Sinistram Delenda Est
    Sinsitram Soli
    Illi Soli Sinistris

  3. lalit says:

    Jim and Peppermint, don’t look now, but have you read this piece about His Excellency where he made the exact comment regarding the action you Gentlemen had been hoping for.


    If you can think it, you can say it. If you can say it, you can plan it. If you can plan it, you can do it…….. Could His Majesty be testing the waters with comments such as this? It’s hard not to admire his Highness even if you may not like him. Jim, I’m curious regarding your take on this comment. Testing the waters or just Trump being Trump as in this tweet?

    Do we Indians dare dream that Modi in India is thinking along similar lines? If not Modi, how about the crown prince in waiting, Yogi? Dare we dream of putting it all on the line in one audacious Gamble?

  4. pdimov says:

    “Kobe Steel, which supplies steel parts to manufacturers of cars, planes and trains around the world, admitted last year to supplying products with falsified specifications to about 500 customers, throwing global supply chains into turmoil.”


  5. Alrenous says:

    but a demand that they get their act together and an opportunity for them to do so.

    Their act together? It’s not steel mill’s fault that every American steelworker has to pay for some dindu with 14 kids by 15 fathers, for the medicine of the border-jumper, for the negatively useful HR woman who is about to sue him for harassment, and for the bureaucrat who makes sure none of these poor downtrodden protected classes don’t get their gibs.

    The reason India makes the steel is their workers don’t have to pay that. When you buy Indian steel you buy only steel, not steel+.

    Using tariffs is a way of avoiding having to face this enormous and growing problem.

    If Trump was using tariffs temporarily, to consolidate his power so he can take on the real problem, there might not be an issue. I am instead confident that his economics is in fact mercantilist.

    • Oliver Cromwell says:

      India’s a horribly inefficient AA-riddled overtaxed overregulated mess as well. Probably Mittal just has some personal exemption to it via his influence.

      • Alrenous says:

        Or despite being overtaxed and AA-riddled, it’s still not as bad as America in absolute terms. Never underestimate how bad America’s welfare state really is.

        • Oog en Hand says:

          Compared to America, the Netherlands have de facto GMI. Ironically, this makes Alt-Right activism easier, as you don’t feel the sting of job loss that much.

        • Oliver Cromwell says:

          India is far poorer than America in general, so it seems unlikely to me that it has better institutions than America.

          And indeed, it seems Mars steel is produced by Industeel, a company owned by Mittal but located in France.



          So right at this moment, and although I am open to being proved wrong, I do not believe that India is a major producer of advanced steels.

          • jim says:

            What is likely is that they have some kind of political leverage which protects them from the local corruption – they get to pay off one big corrupt official instead of a thousand lesser ones.

            But Lalit would know better than me.

            • lalit says:

              It is that way in the more relatively prosperous southern States. You pay off one big goon and he blocks all the other goons. In the lawless northern states, there are several uncountable officials and you have no idea how many of them there are. Each has the authority to stop your work, but none has the authority to get your work done.

              As for Mittal, yes, his plants are outside India. India is a horrible place of manufacturing of any kind. The only reason software survives is that they bureaucrats don’t understand it enough to block it with regulations. So they are forced to be content with the tax revenue it generates

          • Alrenous says:

            America’s institutions largely exist to to be corrupt. So yes, India isn’t as good at it. They still do the bribery thing. It annoys people, which is why America stopped; but also it’s far less expensive. Instead of doing a full EPA impact report, you bribe some official to pretend that such a report was made. The actual effect on the ground is the same, but the Indian way of getting there is cheaper.

            • lalit says:

              But as I mentioned in India, you need to bribe several such officials and you will never know who they are beforehand. Several of them will turn up after you actually begin your project. Each has the power to block, none has the power to facilitate. Had you known the number of regulators to bribe upfront, you may not have even started. But you underestimated the number, assumed profitability and sunk some money and now they turn while you are mid way through your project. I think what Modi is trying to do is to cut down the number of big shots needed to bribe down to 1 or 2 or some manageable number. Hard to do in a multi-big-shot country like India. Let’s see what happens

              You are thinking about countries like China/Vietnam/Philippines where you need to bribe one head honcho and he will make sure no other big shot turns up to stymie you. Hence the rapid progress they are making.

    • Carlylean Restorationist says:

      Excellently worded comment. I may quote that to someone, minus the last bit. It’s a very good illustration of the economics of the out-sourcing problem.

      To your last claim, that Trump is probably mercantilist, rather than playing 7D Piri-Q, I expect you’re right. He’s a simple-minded buffoon. I like him, he’s a net positive, and the fact he’s not Hillary Clinton makes him almost a saint, but he’s no Jeff Herbener.

      The thing is though, you, along with all the big Austrian outlets, assume that mercantilism was 100% wrong and laissez-faire was 100% right.

      As Vox Day’s pointed out, persuasively, before, the international division of labour via comparative advantage made perfect sense in the early 20th century.
      Nowadays not so much. Why? Because if the world’s best widget factory wanted to, it could ship not only all the needed materials but all the needed expertise and experience, over to wherever it wanted. Then back again, then somewhere else, then somewhere else.
      The possibility of global ease of movement of knowledge, workforce, genetic stock, capital equipment and so on changes everything.

      Now I’m not straw manning Adam Smith. I know he knew that nobody’s going to dismantle a Spinning Jenny and turn it into a Locomotive. I know that.
      But today it applies a fortiori, because if the Jenny Spinner wanted to move to Nigeria, it could not only take the Jenny but also the Jenny-maker and all the Jenny operators.

      Am I making an argument that global free trade is a ‘race to the bottom’ where workers will end up living at subsistence levels until everyone’s a penniless prole and then the revolution comes? (Laying aside the fact the revolution already came.)
      No. I’m making only the modest claim that for Trump to rig the market to make it possible for the old industries to return, regardless of motivation, regardless of sophistication and regardless of long-term intent, makes perfect sense because in 21st century global laissez-faire (yes I know there’s no such thing – except for foreign labour!!!!!!!!!!!!!!!!!!) Smith’s platitudes no longer hold. There IS NO positive comparative advantage in the current year except for natural resources. There are negative ones: absence of X Y and Z, just like you said. But that’s all.

      The idea of an international order of spontaneous order based on what people’s traditions have shaped them into is dead and gone.

      • Michael Rothblatt says:

        Outsourcing was great for second and third world countries. It would appear that their poverty is their comparative advantage — they work for next to nothing…

        It was, however, bad for the West. But, not in the way that people usually think. Without overseas slave labour West would have had to revise its consumerist ways decades ago.

        • pdimov says:

          “They work for next to nothing” is a myth. There were arbitrages here and there to be found, where workers were more productive relative to their wages, but not that many, and not exactly in the third world. As a general rule, those who work for next to nothing produce next to nothing.

          • Michael Rothblatt says:

            Well, next to nothing relatively speaking. If some work in US costs $10k, and $500 abroad then it’s next to nothing for the company which would otherwise have to pay $10k (or not do the work at all).

            • Carlylean Restorationist says:

              It’s important not to lose sight of the fact that the cost of doing business in the U.S. is primarily the cost of bloated government caused by chronic kinglessness.

              A U.S. worker can’t take less than the minimum wage, but worse than that he also needs enough to pay his Obamacare/MedicareD/etc. expenses and to pay some of the regulatory burden of the crony firms that prosper in the system. He’s paying part of the bill for the debt interest, the wars, the ‘education’ system and so on, as well as endless bureaucratic expense that has no particular purported purpose.

              Insofar as personal laziness and greed is involved, this too is largely down to the government: perverse incentives and moral hazards abound in the form of emergency assistance, state pensions and so on, while the ‘spend now YOLO’ mentality is in part a function of pro-GDP, cheap credit policies.

              Of course there’s more to it than that: the other aspect of the Cathedral drives the culture in the same directions, partly by changing the genepool and partly by poisoning the intellectual well; partly by controlling the mainstream public narrative and partly by using the schools to instil certain ideas that are hostile to productivity, frugality and decency.

              The whole thing is a sick system coming out of the Cathedral’s toxic form of heretical Christianity.

              Is Trump going to cure us? No. Might he slow things down long enough for the Cathedral’s power to become unstable in ways that won’t kill everyone? Fingers crossed.
              Might he make it possible for industries that promote good behaviour to return? He certainly can if he wants, and if he can overcome the regulators.

              We shall see whether he has the heroism to do it or whether he too will succumb to perverse incentives and simply focus on his future trading environment and his bottom line.

              We’re all fallen, even kings, and a king plucked from the rabble by best guess isn’t as good a bet as a king from a proud line of sage leaders.

              We shall see. Every day is judgement day.

              • peppermint says:

                Proud line of sage leaders? The reason the kings failed is they stopped being kings of nations and instead became a proto-EU, aristocrats are probably all kikes by now.

                It’s not just the taxes. SS/Medicare takes its tithe and then normal income taxes on top of that. Obamaphones are paid for by normal people who pay for cell phones. More serious is housing costs are driven up by immigration, both supply and demand and the need to move away from crime.

                If it would cost 5000$ to deport every non-American from the US, there are like 150M by now, well, are there 15M American men who would be able to pay 50,000$ to not have as long a commute?

                We don’t lack the money, we lack the will.

                • Carlylean Restorationist says:

                  Yes you’re entirely right. It’s all too easy for us within the right-wing bubble to assume that others see what we see.
                  For the most part, they really don’t.

                  At best, they see us as racist conspiracy theorists; at worst, terrorists who ought to be jailed at the very least.

              • Michael Rothblatt says:


                The sad truth is that productivity gained from automation and outsourcing only served to further fuel consumption, instead of fuelling investment. It appears that nobody cares about the future any longer.

                • pdimov says:

                  There’s nothing to invest in. China builds entire ghost cities and completely useless roads in Africa, and still can’t spend all its money.

                • jim says:

                  Some of the newly built cities are losing money, but they are not ghost cities. Some of them are making money. Does not seem that China over invested in real estate.

                • Eli says:

                  China still has a lot of rural population (something like half the population). It’s still urbanizing. Real estate is needed.

                  The real question is what they will be doing with their TFR, especially, once they become truly urban.

                • Andrew E. says:

                  There’s nothing to invest in.

                  Under the dollar reserve system savers invest their savings instead of saving it, which crowds out real investment. That’s why bullion is needed desperately by the global economy as a wealth asset, properly priced, to soak up all the excess value that instead is circulated back into wasteful projects.

                • pdimov says:

                  Investment coming from savings is less efficient than the current system, whereby you get a printed money credit, buy the necessary capital goods from South Korea, and off you go.

                  This efficiency exposes the fact that there’s nothing in which to invest.

                  Slower capital formation just masks the underlying problem. Everyone already has everything, so to sell to people, you need to be very creative in coming up with superficial things for them to own.

                  Wars fix this. Arms races. Space races. Space stations. Mars colonies.

                • Carlylean Restorationist says:

                  p’Dimov just look back to fifteen years or so ago: nobody had, or believed they needed, Netflix. They did however need a much larger number of CDs and so on. People’s need for extra collectables hasn’t gone away: they just spend some of that money on Netflix now.
                  If a cheaper, better, less preachy services comes out, they’ll spend the difference on more collectables, or on some other thing out there in the world that they decided they always needed.

                  If you’re only speaking *objectively* then yes, there’s no further need for comfort or plenty in the developed world and it’d be better, arguably, if we began to refocus on more important things than ‘things’. But there’s a world of difference between that sober balanced assessment and a description of real people’s real wants. It’s important not to confuse the two.

                  As the efficiency of non-savings based investment methods, they’re efficient only in the sense of allowing more stuff to get done rapidly. That’s by no means the definition of efficiency. There’s no need, I think, for this audience to be walked around the utility of truthful price signals, especially the price of money: this is not a naive audience. So I’ll limit my comment to this: efficiency depends as much on making appropriate, targeted, accurate investments as on making lots of big investments.

                  Indeed two relate the two themes in your comment that I’m answering here, you’re saying that people need less stuff but efficiency is defined as being able to make more stuff more quickly. That seems contradictory to me. Wouldn’t a more efficient method of capital deployment be accurately alert to the situation with regard to consumers’ needs?

                • pdimov says:


                  All entertainment competes for your free time, which is finite. Once you have enough to fill it ten times over…

                  >they’re efficient only in the sense of allowing more stuff to get done rapidly. That’s by no means the definition of efficiency.

                  But it is. It literally is.

                  >you’re saying that people need less stuff

                  No, not that. I’m saying that at some point, there are diminishing returns in investing into producing stuff/entertainment/infrastructure for people, because they only need so much.

                • Carlylean Restorationist says:

                  Diminishing returns yes.

                  Efficiency=ability to produce, without prejudice to whether or not it’s a good idea: why aren’t you a normie? I’m not being hostile. The International Community is doing a sterling job at bringing production to its practical maximum. You ought to be some sort of climate-sceptic conservative activist who wants to deregulate in order to increase production while keeping the spigots open. A Chicago school / supply-sider maybe…

                  As for a lack of demand due to people being swamped with options, everyone thought that day had already arrived thirty years ago when people had twenty channels of TV to choose from and video games consoles to boot.

                  Don’t ask my *why* people who own an iPhone 5 desire an upgrade, but they certainly seem to.

                  Again I suspect you may be confusing what you know to be righteous and good for people and what their demonstrated preferences actually are in their own realities.

                • pdimov says:

                  >Efficiency=ability to produce, without prejudice to whether or not it’s a good idea

                  >Again I suspect you may be confusing what you know to be righteous and good for people

                  These two things seem contradictory, don’t you think? You’re simultaneously accusing me of not considering whether something is a good idea, and of considering whether something is a good idea, except being mistaken about it.

                  If you produce the same thing in less time, your production is more efficient with respect to time. I really don’t see what’s the problem here. “Is a good idea”, “is righteous and good for people” don’t enter the picture at all.

                • peppermint says:

                  A phone from the last five years with 32GB of internal storage, an sdcard slot, a removable battery, a stylus, a headphone jack, and quickcharge, is essentially finished tech. Today’s phones ditch some of those features, especially the sdcard and battery, in order to sell replacements.

                  So be it.

                  The biggest difference between TV, newspapers, radio, and CDs, and Youtube, blogs, Youtube, and Youtube, is that We The People can get a word in edgewise.

                  Assholes say people have too much. Do people have too much? 35 year old men who have never had anything in life decide to power trip as trannies. 25 year old men in apartments who have had plenty of casual sex and work shit jobs (a shit job is defined as a job that doesn’t pay well enough to support a family) play cards against humanity and vidya all day and eat fast food and hit on 25 year old women, have casual sex, take classes, and go nowhere. 15 year old men are told that they are nothing, will have nothing, and should get used to casual sex and vidya because that’s all they’re ever getting.

                  20 years ago people joked about the difference between a salad fork and a tuning fork. Now everyone shovels mac&cheese out of bowls held up to their faces and you say they have too much because they have a bowl and several boxes of macaroni and a closet full of booze and some cool looking weed pipes and a gaming pc and a netflix subscription and a bed with a sheet and a pillow and access to a washing machine.

                  They’re too comfortable, right? It’s comfy to not have responsibilities like a wife and kids, right? You wish you were one of them?

                • jim says:

                  If you are a Venezuelan farmer, it is comfortable not to have responsibilities like a herd of cattle or a crop.

                  If you emancipated cattle, which is pretty much what the Venezuelan government has done, you will not have any cattle.

                  All women are married to Uncle Sam the big Pimp. All children are fatherless. Hence no wives and no children. If men could own their wives and their children, they would do whatever it takes to have wives and children.

                  When fatherhood is criminalized, only criminals will be fathers.

                • pdimov says:

                  >a wife and kids

                  So you’re saying [cathy_newman.jpg] we should invest into providing people with wives and kids?

                  That’s not how investment works.

                  Look. China is sitting on $1T. Apple has more money than it knows what to do with. Google has more money than it knows what to do with. If they could invest, they would. Wives and kids have nothing to do with it.

                • peppermint says:

                  You say there’s nothing to buy. Elon Musk figured out how to buy a rocket. What’s his face at crApple is too busy getting cornholed to think big, the curry nigger at Microsoft has his hands full figuring out how to force people to use Windows and look at ads, Bill Gates is too busy giving whatever to the dirt niggers of west africa to prove that he cares, and so on.

                  There’s tons of work that needs doing in this country, aging infrastructure as well as building new infrastructure, and we also need a mars colony. Tons of young men who need work and would cheerfully work on building the mars colony for cheap.

                  A trillion dollars could buy a ton of cool stuff that tech companies don’t want. What they do want is a billion worth of GPUs running neural nets to delete anyone who doesn’t love their dominance while they fuck all the 22 year old girls fresh out of college until they’re 28 and then send them to live in their cars and drive uber.

                • peppermint says:

                  Is it an anglo-jew elite? Nancy Pelosi and the only senator with a confirmed kill in the war on women aren’t anglo-jews. Is it a utilitarian elite? Then we’d have infrastructure and a mars colony. Is it jews running the media? Sure, but that can’t be all there is to it. Is it virtue signaling Boomers and nihilistic Xirs and duckspeaking Millennials? That’s certainly a problem but there’s a reason the left can just assert and the right needs to prove.

                  Whatever it is, America has the men and the capital to be great again. We just need the will.

                • Carlylean Restorationist says:

                  Pdimov raises an interesting question.

                  If Say’s Law is correct and all production is good for prosperity because there’ll always be demand for it, why exactly IS ‘stimulus’ a bad thing?

                  None of us are classical liberals of the Enlightenment variety so nobody here is going to say “because it violates the natural rights of the taxpayer, etc.”.

                  If Mises is right about malinvestment than Say is wrong about infinite demand.

                  Or am I missing something?

                  BTW Pdimov, it’s not contradictory: I’m claiming that artificially stimulating production is a bad thing and that consumption in the West right now is too high. Those statements are compatible.
                  Peppermint I do take your point about standard of living, but standard of living (including things like the ability to raise a family) is not defined by high consumption. Indeed it’s absolutely credible that what you say is true: the 25yo lives the high life *because* he can afford that but not a house and family. Absolutely.

                  In a way that’s the great confusion of our age: living standards / GDP appear to be doing well to many observers but it’s precisely *because* millions of people are too broke to have a family.

                  And yes of course the motivation to try harder to do so is nipped in the bud by the deformations of the state in family life: perhaps the single most heinous thing the USG currently does, including war and population replacement.

                • jim says:

                  Mises is right about malinvestment, Say is right about infinite demand.

                  No contradiction. You can invest, you can produce stuff, you can sell what you produce. But you cannot necessarily sell it at a profit.

                • pdimov says:

                  >Elon Musk figured out how to buy a rocket.

                  Elon Musk is the only one who can figure out how to spend $1T on cool stuff. But he doesn’t have the $1T, because to just give him that would be literally natsoc. He’ll probably even grow a fitting mustache.

                • pdimov says:

                  >why exactly IS ‘stimulus’ a bad thing?

                  Because stimulus is democrats giving their voters money for not working, instead of giving Musk $1T to build a Mars colony or a proper rotating space station.

                • pdimov says:

                  >that tech companies don’t want.

                  There’s an interesting Thiel-Schmidt video where Thiel explains why Google can’t spend their money: they are smart-people-bound, and the number of smart people is fixed no matter how much money you offer.

                • jim says:

                  Google have been losing their smartest people at an impressive rate – their best and brightest are resigning or retiring one step ahead of being fired.

                  What is happening is that their female hires feel angry and hostile at their smartest people – because their female hires are just not that smart. They get angry, hostile, and nasty when they are unable to understand Google smart people, and accuse them of thought rape. Google declines to fire people accused of thought rape, but encourages them to move out. And then they move out.

                • pdimov says:

                  I was misremembering; he doesn’t.


                  Schmidt hints at it, doesn’t spell it out though.

                  It’s still fun.

                • Marsh says:

                  Quantity of consumption is high. Quality is low.

                • peppermint says:

                  > they are smart-people-bound, and the number of smart people is fixed no matter how much money you offer
                  Everything Google does has failed and gotten worse since 2011. Google Plus was led by a diversity.

                • Carlylean Restorationist says:

                  Thanks Jim, I see what you mean.

                  Austro-libertarians are framing it in an understandable but misleading way: it’s not that businesses go bust because they shouldn’t have undertaken any production at all but were handheld by the central banks.
                  It’s that businesses are estimating the likely profitability of future production based on an incorrect estimate of how flush people are.

                  The interest rate’s ‘lying’ not so much about the cost of credit (because a sound entrepreneur won’t just rush to the bank when rates are low) but about the savings rate.

                  Makes perfect sense. So the point Pdimov is that infinite production is, as you say, efficient, but when there’s not enough money in people’s bank accounts to allow them to buy the stuff at the proper price, it’s often a mistake to do too much too soon.

                  (Of course even there, it’s easy to see why the central planners’ response is “well let’s just create more money then”.)

                  It’s all very tragic. See the thing is, steering the boat without a rudder and navigating by steam is a mistake too: it’s all very well for the laissez-fairies to say “just step back” but Trump’s tariffs are a clear case of why that’s wrong – yes indeed you will create a healthy capitalist economy where everyone has a lot of consumption. The trouble is, absent proper careers to shape their lives in responsible ways, it ends up being a bunch of twats singing the birthday song into their 60s, playing video games and dying out.

                  As for Google et al, who’d’ve guessed even 20 years ago that the avant-garde of the 21st century social justice movement would be biwwionaire global corporations?

                  It’s a sick joke played on us by GNON.

                • pdimov says:


                  If you’re sitting on $50B, you will inevitably attract green-haired parasites.

                  One could make the argument that Google can’t invest because it’s only allowed to invest in things that help democrat voters. Maybe. But China?


                  As far as I can see, Mises is entirely correct in principle, but the application of the theory is wrong.

                  For example, the correct interest rate is indeed sub-zero, because banks simply don’t need your money. (They are legally required to pretend that they do, but that’s artificial.)

                  And central planners don’t print money, banks do, each time they extend credit. (Bernanke tried to print and nothing happened.)

                • pdimov says:

                  print -> create

                • pdimov says:

                  >the correct interest rate

                  on deposits

                  >is indeed sub-zero, because banks simply don’t need your money.

                  in the form of deposits.

                  They do need your money in the form of interest paid on the credit they extend to you, of course.

                • Carlylean Restorationist says:

                  That’s 100% true, can’t fault your analysis in any way.

                  (Of course Bernanke would probably say paying interest on reserves held at the Fed was intended to prevent the new money leaking out, but yes you’re right: the *actual* units come from fractional reserve, which means in practice we’ve got a levered business cycle – *gulp*, right!)

                  You’re so right that Mises is being misapplied: by libertarians for ideological reasons basically.
                  To hear Tom Woods go on, you’d think Mises was an anarchist.

                  In practical terms, in the modern world we have bigger problems than mere disposable income, though that is a problem for some thanks to the cost of housing and so on.
                  What we really need is to bolster society, and if that means taking the standard of living backwards temporarily in order to re-establish some heavy industry, so be it. Heavy industry, like military service, is character-building, and the verdict’s in: *social* laissez-faire produces very bad results.

                • Michael Rothblatt says:

                  Stimulus is a bad thing because it kick-starts the cycle. More importantly inflationary money as a phenomenon on its own (even without taking into account the robbery of savers and destruction of quality and quantity of goods and increasing prices) is a bad thing because it increases the time preference of all thereby leading to degeneracy and consumerist culture. Gold does not matter. But having deflationary money does. Society needs a future and therefore needs money which grows in value with time.

                • Carlylean Restorationist says:

                  Absolutely right Michael, and that gem of wisdom right there is the ‘pill’ that takes a person from libertarianism to neo-reaction: a Moldbuggian leader could launch a fiat currency that’d be much much harder than gold.
                  It’s the stability and dependability that matters.

                  As for the relationship between appropriate rates of consumption and a healthy society, again it requires a leader, hence ancap is wrong.

      • pdimov says:

        >There IS NO positive comparative advantage in the current year except for natural resources.

        There’s no such thing as “positive comparative advantage” because then it’s just called advantage.

        “Comparative” is when for the other country it’s more efficient to specialize in what you don’t produce even though they could produce everything themselves, at a higher productivity than yours.

        • Carlylean Restorationist says:

          Sorry I don’t mean to coin new terms. I know how annoying that can be.

          What I meant by positive and negative comparative advantage was basically this:

          Positive comparative advantage would be something like “in Japan there’s a long history of expertise at making zippers. They also have the machines already in place and lots of well-defined channels for distribution as well as links to relevant industries”. (I’m saying those kinds of comparative advantage no longer exist thanks to easy movement of labour, capital equipment and ideas.)

          Negative comparative advantage would be something like “there’s no income tax in Puerto Rico.”

      • Oliver Cromwell says:

        There are lot of countries in this world with cheap workers that produce nigh nothing. Look at Africa. There were a few golden years in China because wages don’t catch up with sudden, unexpected, massive productivity increases all at one. But look at the Chinese coastal cities: their standard of living is going to exceed that of the US in our lifetimes unless the Baizou take over there.

        • Q says:

          You might draw a distinction between “inexpensive” and “underpriced”. African labor is inexpensive, not underpriced. Chinese labor was both inexpensive and underpriced; now it’s merely inexpensive, and soon it may not be even that.

  6. Oliver Cromwell says:

    US industries will only respond by producing high quality steel if they can hire high quality steel divisions without any NAMs in them, and do so at a tolerable cost in paying off NAMs by employing them doing makework in other divisions.

    Otherwise, the US will just lose access to high quality steel and not replace it.

    • Oliver Cromwell says:

      The US rust belt is clearly a result of the Great Migration.

      The UK rust belts are clearly a result of “half way to Moscow”.

      Germany and Japan stayed more than “half way from Moscow” and avoided, in Germany at least to some extent, and in Japan thus far, Great Migrations.

  7. Carlylean Restorationist says:

    Jim you’re an essential voice of our times. You never dare re-think the already thunk out.

    You are absolutely correct.

    Free trade advocates will waste no time in telling us that as soon as the oil price hits $70, fresh U.S. production comes online and bashes it back down again……. all you’re doing is applying the same Austro-compatible logic to steel, and you’re clearly correct.

    The only question remaining is will the regulators allow the new plants to start working? Well that’s part of Trump’s job, to stop them from stopping them.

    • Carlylean Restorationist says:

      *never fail to dare

    • jim says:

      > The only question remaining is will the regulators allow the new plants to start working?

      Not if they can help it. But with Trump in charge, maybe they cannot help it. Remember all those expert economists telling us that coal jobs were gone and not coming back – meaning that they had smashed the coal jobs, and were not going to let them come back.

      • Carlylean Restorationist says:

        It’s a big job and the signs so far are mixed. He hasn’t exactly deregulated guns, but some of the talk about letting people try treatments for major illness without permission has been pretty good.

        The modern world’s a minefield. The good work with allowing seriously ill people to try stuff carries the risk they’ll use it as a sneaky way to take recreational drugs; any deregulation of guns means deregulating them for degenerate, volatile idiots. Damned if you do, damned if you don’t.

        We shall see, but if Trump can kill the regulators’ power enough to bring back industries that create responsible men, we’ll be well on the way to a restoration: maybe not to Throne and Altar but at least to pre-1980s relative sanity. Is that enough? Not for us miserable so&so’s, clearly, but it’s certainly a start.

        • peppermint says:

          Recreational drugs wouldn’t be a problem if the culture didn’t tell people to do drugs and loose sex while going to school until they’re 30 and then they’re too old to have kids so keep at it.

          Gas the professors, weltanschauung war now

          • Michael Rothblatt says:

            Libertarians like to point out that ye olde monarchies had legal drugs, and prostitution, and whatnot. That is true, but back then people were aware that it was bad. Today, we don’t have that culture. Today we need draconian drug enforcement — capital punishment for possession. Many propose capital punishment for dealing, but it’s hard to kill the supply when there’s demand. But if you kill demand, supply will die on its own.

            • Oliver Cromwell says:

              Drug laws exist to protect the taxpayer from druggies, not to protect druggies from drugs.

              If druggies are not a threat to the taxpayer, for instance because he is armed and there is no welfare state, absence of drug laws is benign and even eugenic.

            • Oliver Cromwell says:

              To go further: leftists oppose drug laws today because they protect the taxpayer from druggies. Around 1900, leftists were the ones pushing drug laws because they were dysgenic.

        • Oliver Cromwell says:

          “we’ll be well on the way to… pre-1980s relative sanity”

          No, America’s demographics are already trashed compared to then, and Trump has not reversed that trend, just slowed the rate at which thing sare getting worse. So either Trump takes over the state to get real freedom of action for the future, or the far right lost hard.

      • Michael Rothblatt says:

        Trump has, thus far, delivered on the economy, and Syria. He is yet to deliver on the wall, and deportations however.

        • jim says:

          He has yet to deliver on those things that matter most. But he has delivered on the Muslim ban, which makes me optimistic.

          The biggest crime of the left was importing black male military age Muslims screaming for infidel blood and white pussy, and dropping them on marginal electorates in flyover country.

          • Alrenous says:

            They matter most, therefore the Cathedral is fighting them the hardest.

            It’s a single man vs. a globe-spanning prospiracy of conspiracies. Don’t be surprised it takes more than one year.

            But also if he gets his wall then you’ll probably see real Trump derangement syndrome. As in, a real government shutdown, not the symbolic nonsense they usually do.

  8. Glenfilthie says:

    Pbbbfffft. Armour plate? Are you joking?

    American foundries will make anything you want, Jim – from exotic metals right on down to pig iron and armour plate. It is more correct to say the others can mass produce it more cheaply than America can – and even that is doubtful in the case of the Euros. The fact is the best leading edge metals are coming out of America and Japan and no bones about it. The best composites and elastomers are being developed here too.

    It is more correct to say that America can’t mass produce it (yet) at the same price point the packies and chinks do. In India, you can hire high end, cutting edge employees for $400.00 US/month. China uses slave labour. America cannot compete with economic tactics like that. You don’t have to worry about the environment, union slobs, and red tape either. You buy a pakie or a chink – and he STAYS bought, unlike American politicos.

    We stand astride the tides of history. Trump has not only done everything you say – he has fired the first shot directly at the world globalists and hit them directly amidships! They’re screaming about ‘trade wars’. As if!!! Canada’s soy boy-prince, Turdo La Doo is promising an all out trade war over it! Some wags have rudely reminded the pink-socked buffoon that most of Canadian steel is Chinese too! If ever there was a finger puppet for the globalists – that fwench whoreson is it!

    There are those that say the war with Japan in WW2 was a war for markets. Not sure if I agree with that – but if nations do go to war over markets – we could be in for a food fight of epic proportions.

    • Oliver Cromwell says:

      Why would you buy a Pakistani? Well, not all of them are dumb and unmanageable. But most of them are, and the population isn’t all that large.

      The Chinese will, sooner than you think, have wages higher than those of the US, but by that time the US will be Brazil, and so will not justify high wages.

    • lalit says:

      You don’t get cutting edge employees in India for $400/month any more. You are thinking 1992. It is now more like $2000/month for top metallurgists. In India’s ISR, the Engineers earn $1500/month. In some professions such as IC design, the Indian pay is USD 4500/month. This is 66% of Canadian pay and 40% of US pay. It appears that the cost of an Indian Engineer is now close to 2/3 of a US Engineer once the travel costs and productivity loss due to time-zone and location difference is accounted for. In China, the salaries for an IC Designer are on par with those in Canada.

      The big difference between Indian salaries and Canadian salaries is now in Retail, the trades, service industry, cab drivers etc. For example a Canadian working in Tim Horton’s in Toronto (CAD 15/hr minimum wage) makes 10 times what his counterpart in Bangalore makes working in McDonalds (Rs 15000/month)

      • Glenfilthie says:

        Fair enough – but in these days of cut throat competition and ‘aggressive accounting’ – $2000/month for a high end engineer is chump change.

        I’m watching Tim Hortons in Morontario with high expectations – I can’t wait for the pink slips to go out. It’s mostly packies and chinks working there anyways.

        • lalit says:

          Sure, but the $2000 is because India is not a good place for manufacturing with all the regulations and Red tape. You may save $6000 by hiring an Indian Engineer for $2000 which you could hire in the west for $8000. But you end up losing $20000 per Indian Engineer you hire due the delays that the Indian regulatory authority will put you through in going through all their hoops. So a net loss over keeping the Job in the US. This is exactly why Mittal finds it profitable to run his factories outside India even though he has to pay the metallurgists there 3-4 times more than he would need to pay an Indian Engineer. I say with confidence India is a more expensive place to manufacture than the US even though Indian engineers get paid 25% of American Engineers.

          Now I don’t know the pay for Top metallurgists in China. And that is what you may want to look at since that is the number that really matters. I have never been to China nor do I work as a metallurgist. So I would not know. Any Metallurgists who read this blog?

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