The time has come," the Walrus said,
"To talk of many things:
Of shoes--and ships--and sealing-wax--
Of cabbages--and kings--
And why the sea is boiling hot--
And whether pigs have wings.
I can't remember when I first discovered the wonderful words of Lewis Carroll. In my mind I can see that book; I can see the illustrations. But how old was I? Who gave me the book and why don't I have it still? I'm pretty sure it was my Nana, my grandmother that gave it to me. Since I couldn't read until I was in the third grade, I must have been 8 or 9 years old when I received the book.
In the last few months of the third grade a switch was turned on in my brain and suddenly I could read. And I read everything! I read our Encyclopedia Britannica from A to Zymurgy. And then read them again. I read the dictionary from front to back. When we went for a drive I would read every sign that I saw; out loud and driving my family crazy. My mother had the collected works of Rudyard Kipling and I read those...I was desperate!
The oddest things come into my mind these days. I could see that third grade classroom as clear as day. And the teacher who had been trying so hard to help me. Enough of that...this morning I was reading an article about the reversal of global trade and what it means. No, it was not caused by the blatherings of Trump. It has been happening over the past four years or more as the need for it has begun to shrink. And profits declined. China was once the source of cheap labor and the giant container ships sailed back and forth between the USA and China. But China has a middle class now and labor costs are rising. These days, China doesn't need all the things we sell and the prices for what we buy from them have risen. It's happening in Vietnam and in India. With trade shrinking, the multinational corporations are looking at coming 'home'.
But, the multinationals have stacks of cash located offshore and don't want to bring that home with them to be taxed at what Trump calls an outrageous amount. I suppose it (35%) might be properly called outrageous if that is what they actually paid. But corporations pay only 15% to 20% because of the loopholes in the tax laws. This is the Effective tax rate. Trump wants to cut the corporate tax to 15% and eliminate the loopholes...so what's the incentive there? It makes for a great speech for the base to hear, but that's all it is; words.
And there's more. Here, from the Economist: ...if American multinationals shifted a quarter of their foreign jobs home, at American wage rates, and paid the same tax rate abroad as they did at home, their profits would fall by another 12%. This excludes the cost of building the new plants in America.
The dynamics of world trade are not as easily managed as selling real estate. I think Trump has some lessons to learn, but when has he ever wanted to learn anything? He's already the world's smartest guy.
After all of these years of cheap goods, I can't see Americans being calm when they see the price for t-shirts going up to $10 when they used to buy a 3-pack for $12. Will American labor remain calm when they are asked to take a cut in pay so that the company can become competitive? When labor balks at the cuts, the company begins investing in robotics. These are definitely interesting times.