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An Uneasy Labor Day

Labor Day is supposed to provide a brief respite from the news, but lately there is no escape.
On Sunday the nutcase dictatorship running North Korea successfully tested a thermonuclear bomb five times more powerful than anything in its previous arsenal, which comes shortly after provocative tests of long-range missiles that could reach as far America’s west coast, and follows decades of verbal provocations that have lately been ramped up to an alarming level. This seems a particularly inopportune time to pick petty fights with our longstanding allies in the very sane democracy running South Korea, but that is exactly what President Donald Trump has chosen to do.
Trump “tweeted” shortly after North Korea’s nuclear test that South Korea’s ongoing efforts to reach a diplomatic solution to the crisis amounted to “appeasement,” adding that the North Koreans “only understand one thing,” with an exclamation mark added for emphasis, and he also reportedly instructed his aides to begin preparations for a unilateral withdrawal from a free trade agreement with South Korea. Neither stand seems to comport with the very complicated facts of the situation, and neither seem likely to do anyone any good.
South Korea’s efforts at diplomacy are easily understandable, given the devastation that the country would suffer even in a brief war involving only conventional weaponry, but Trump should be aware that they’ve also backed up their efforts with a strong military posture. The South Koreans are currently conducting bombing drills, practicing ballistic missile strikes on key North Korean targets, and defiantly continuing other large-scale military exercises with American forces. They’ve also reluctantly agreed to proceed with a American-made missile defense system that President Barack Obama negotiated, all the more reluctantly after Trump tried to make them pay billions of dollars for the equipment that is mostly intended to shoot down any missiles heading toward America’s west coast, and won’t offer any protection from the old-fashioned artillery barrages that could rain down on the more than 10 million people of Seoul who are just 30 miles away from the supposedly demilitarized border.
So far as we can tell South Korea hasn’t offered any concessions of land or other strategic advantages to maintain the tenuous peace, which is the definition of appeasement that has informed the past many centuries of diplomacy, and our guess is that after 54 years of coping more or less peacefully with their nutcase neighbors to the north they know them better than Trump ever could.
There are some strong arguments to be made against that free trade agreement with South Korea, which didn’t increase overall American exports to the country as promised and instead increased the trade deficit, and Americans can rightly complain that our very sane democratic allies have taken full advantage of some badly negotiated loopholes, but of course the facts are more complicated than that. There’s also a strong argument to be made that for all sorts of complicated reasons our exports to South Korea might have fallen even further without the agreement, that America’s trade deficits with other countries are no more troubling than your own swelling trade deficit with your local grocery store, and that in any case South Korea’s doubling of its financial investment in America’s economy since the agreement was made more than makes up for the difference.
All politics is local, too, and here in Kansas and other red states it’s widely noted that beef exports to South Korea have increased by an impressive 150 percent since the agreement. We suppose that the local aircraft plants have also been among the winners, and given how very good the world-class steaks are around here we’re sure that some epicurean South Koreans have also benefited.
Some future economic historian might definitively prove that both sides came out ahead, with South Korea relatively slightly better off from the deal, which is fine by us but is surely anathema to every fibre of Trump’s being. Trump might flip-flop on all sorts of other positions, but he has always maintained with a granite consistency that every negotiation comes down to a matter of winners and losers, and that no matter how far ahead you get if the other guy gets even further ahead you’re the loser. This view has always had a certain appeal to the “America First” types from pre-World War II up until now, and seems work well enough in the New York real estate biz, but it’s never been the way for the country’s preeminent economic, military, and cultural power to conduct business with the rest of the world.
Especially when you’re dealing with a complicated situation between a sane democratic ally and the nutcase dictatorship just to the north of them who might now be able to launch a missile with a thermonuclear bomb atop that could devastate one of the cities on America’s west coast. Trump is safely ensconced on the east coast, where he’s talking tough on both trade and thermonuclear war, and can be sure that no matter how devastating the war at least he and most of America came out the relative winner, but we’d prefer he take a broader view of the situation. That $20 billion or so trade deficit with the South Koreans is a mere rounding error in the context of a multi-trillion dollar economy, and nothing close to the hit that the stock markets the rest of the American economy would take if Seoul or Tokyo were flattened or an international trade war broke out, and there’s also a strong argument to be made for the lives of all those millions of people in Seoul and Tokyo and now America’s west coast, so now hardly seems the time for  petty spats with the South Koreans.
According to press reports all the military generals and Goldman-Sachs veterans that Trump has surrounded himself with have been urging that he speak more softly while still  wielding the big stick he inherited from all those previous hated presidents, as another populist Republican president with more bona fide tough guy credentials once advised, so we’ll hold out some hope they’ll prevail. During the campaign all of Trump’s reluctant supporters assured us that he’d hire such seasoned hands and heed their counsel, but he kept talking about how he knew more than the generals and that he was his own main security advisor and could make decisions without all the information that those squishy establishment types seemed to need, and we guess we’ll have to wait to see how that turns out.
In the meantime we plan to have some charbroiled Kansas beef and a couple of Colorado-brewed beers, watch some baseball, and otherwise celebrate America’s labor and take a day off from the rest of the news. We hope it turns out pleasantly for all you, as well.

— Bud Norman

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The Economy and the Cold

The winter has been so cold around here that we’re running out of snappy “it’s so cold” lines, and have lately been reduced to likening it to certain unmentionable portions of witches’ and well-diggers’ anatomies, but the fine folks at the Bureau of Labor Statistics have helpfully provided us with a brand new cliché. Whenever the arctic breezes push the wind chills down to double-digits below zero we can now say “It’s so cold that the jobs report is lousy.”
In case you couldn’t hear the news over the chattering of your teeth, the past two monthly jobs reports have been unexpectedly lousy. We say “unexpectedly” because all the media stylebooks now require that any bad economic news be described that way, as they apparently expected the economy to be chugging along toward egalitarian utopia with Barack Obama in the White House, but even the most enthusiastic cheerleaders in the press have been forced to admit that the jobs numbers — along with other data ranging from consumer confidence to manufacturing activity to the trade deficit — have indeed been lousy. Reluctant to stop telling their favorite tale of a rebounding economy, the press has endeavored to explain the recent bad news as a mere interruption caused by various factors having nothing to do with administration policies. The devaluation of some third world currencies has been one common explanation, as is whatever mischief those darned Tea Party Republicans have been up to lately, but the most popular excuse has been the cold and snowy weather.
This explanation has the obvious advantage of plausibility. The weather has indeed been miserable the past two months in much of the country, and it’s bound to have had some chilling effect on the economy. Here in Wichita the streets have been covered with enough snow to deter the hardiest car shopper from taking a test drive, workers have stayed home to mind children taking an unscheduled winter break from school, and commerce has been frozen as solid as the Arkansas and Little Arkansas Rivers. We hear it’s been worse elsewhere, and almost as bad in places even more unaccustomed to such icy hassles, and those warm weather regions that have been spared the worst of it are probably used to taking life easy. Such awful weather likely explains some of the recent economic data, but we are not reassured that those long awaited green shoots will soon start to sprout through the melting snow.
Even before winter set in the jobs reports were pretty lousy by historical standards, showing just enough job creation to keep pace with population and not nearly enough to make a dent in the record number of long-term unemployed and labor force drop-outs, and it’s hard to see what might have brought improvement even in a mild winter. The Federal Reserve Board’s quantitative easing of gazillions of newly-printed dollars into the stock market seems to have worked well enough to entice so many discouraged workers out of the labor force to push the official unemployment rate down to 6.6 percent, just a tick ahead of the announcement benchmark for ending the scheme, and the markets have responded with a two-month slide that has abated only on the hope that things are still bad enough to keep the presses running at the mint. There’s also been an energy boom based on fracking and drilling on private lands, but the administration has been working on stopping that and the recent problems with the trade deficit suggest it might be succeeding. The economy is increasingly controlled by people who think it’s a good thing that Obamacare will pay a couple million workers to stop working and live on the dole, and that more job-killing regulation is needed to stop global warming.
An economy that is truly chugging along toward utopia, egalitarian or otherwise, should be able to plow through a few feet of snow. Many of the economic effects of the weather can be blamed on the failure of state and local governments to competently deal with the foreseeable challenges of the weather, and their inability to acquire enough salt for the frozen streets should cause some doubt about their ability to run the entirety of the economy and make it fair and sensitive and hurtful to no one’s feelings. A change in the political climate is required, and that is at least two more winters away.
If the weather is to blame for the past two months of economic data the next jobs report should be another lousy one, as February is proving the worst month yet. At this point we have no optimism regarding March, and we expect the April showers will bring a flowering of new excuses.

— Bud Norman