California Apart, the US Economy is Pretty Blah

♠ Posted by Emmanuel in , at 10/17/2018 06:10:00 PM
I was watching Bloomberg TV when they brought on one of their journalists to expound on the condition of the American economy. If you were to listen to Trump, the reason why the United States economy is doing better is because of ridding of all sorts of regulations, permitting unlimited pollution, detaching from the rest of the world via trade wars, deporting en masse people willing to work, embracing Stone Age technologies like coal, etc. That is, making America great again is a distinctly backward-looking activity from Trump's point of view.

Actually, the fact of the matter is this: If you separate supremely performing, high-technology, forward-looking California from the rest of the United States, the latter's economic performance is rather mediocre. The Golden State, which Trump hates with a passion (a sentiment California returns back), is buoying the rest of the US:
Trump attributes the prosperity of the U.S. economy during his 17 months as president to his evisceration of environmental regulations and other consumer protections, abandoning the Paris climate accord, aggressively deporting undocumented immigrants, prohibiting people from certain nations (mostly majority Muslim) from emigrating to the U.S., prosecuting sanctuary cities for protecting immigrants, cutting taxes most for corporations and the rich, and appointing a Supreme Court justice who just wrote the 5-4 decision limiting the rights of tens of millions of workers.
Evergreen California Governor Jerry Brown has taken the opposite tack to nearly everything Trump does. So, is California the American laggard? On the contrary, it's doing better than every other state:
Jerry Brown, California's longest-serving governor, takes the opposite approach, and his state thrives. California is the global leader among governments committed to safeguarding the planet from climate change. Corporate California's revenues from clean energy companies dwarf those of the other 49 states or any country. The state's auto emissions law, now contested by the Trump administration, is the nation's most stringent. The legislature voted to become a sanctuary state, preventing police from participating in federal enforcement or asking people about their immigration status. The same assembly also made California the first state to declare a $15-an-hour minimum wage and to require solar panels on new homes. Its citizens approved Proposition 30, temporarily raising personal income and sales taxes to fund education.
The implications are clear. Wouldn't gains be more evenly distributed Stateside if other states acted like California? By not following Trump, maybe everyone else in the US would be doing better too. It's not my place to tell Americans what to do, but weighing the votes of Trump-suopprting primitives instead of those actually driving progress does not seem to be the way forward:
Remove California from the job market and U.S. employment rose only 2.62 percent, a little better than Japan's 2.48 percent and less than Austria's 2.82 percent. The 19 countries that use the euro showed an increase of 2.41 percent. Subtract California's big and small companies from the rest of the nation's and something similar happens. During the same 22-month period, the market capitalization of the companies in the Russell 3000 Index of large, medium and small companies increased at an average rate of 46 percent. California's Russell 3000 companies appreciated 64 percent, according to data compiled by Bloomberg...  
What do California and Illinois have in common aside from voting decisively against Trump? Their companies are committed to global trade. Among companies reporting sales in the Russell 3000, California firms received at least 48 percent and as much as 66 percent of revenues from their exports (accounting for disparities in corporate reporting) while Illinois-based companies got between 44 percent and 53 percent, according to data compiled by Bloomberg.
For reasons inherent in their political (electoral) system, the danger is that the Trump-voting primitives drag down California instead of California being allowed to pull up the rest of the laggards. Here California is showing an example of forward thinking...and the Trumpian cave-dwellers not only ignore it but try to bring it down to their level of barbarism.

10/18 UPDATE: Thinking about it more, on the balance, Trump's policies have likely hurt than help the United States. If the country is doing reasonably well, look at parts of it that are faring the best--like California. It's doing so despite rather than because of what Trump is doing.

World Trade War: Good for the Enviroment?

♠ Posted by Emmanuel in , at 10/08/2018 06:27:00 PM
Is Trump's trade war going to save the Earth? It depends...
It's generally recognized that carbon emissions dropped off during the Global Financial Crisis of 2008-09, making tanking the world economy "good for the environment." With some predicting even direr outcomes than the aftermath of the "beggar-thy-neighbor" 1930s as the United States has commenced slapping tariffs on its trade partners, who are retaliating in return, there is no telling how much worse things can get if this back-and-forth process continues unabated. Who knows? The end result could be a reduction in global economic activity even greater in percentage terms than what transpired during the global financial crisis.

In the meantime, though, the Sierra Club is warning that Trump's actions against the PRC are causing dislocations in environmentally beneficial forms of trade on the negative side of the ledger:

Plastic and cardboard recycling: For some time, China has been tightening up it standards on what raw material it will accept from the United States for recycling. The trade war has exacerbated this situation, with China planning to levy a 25 percent charge on corrugated cardboard, paper, scrap plastic, and other materials...

E-bikes: On August 23, the United States started charging 25 percent tariffs on electric bicycles and cycling computers from China. These include e-models from popular brands like Trek, Giant, and Pedego. The move could significantly slow the otherwise rapidly growing e-bike market that has been growing by double-digit numbers in recent years...

Teslas in China: The only U.S.-made electric vehicle sold in China is the Tesla, and it just got a lot more expensive for consumers there to buy. The price of a Model S in China just went up by 20 percent...

Water pollution: An unexpected environmental effect of a drop in soybean production [because of lost sales to China], according to a study by the Northeast Midwest Institute, could be increased nitrate pollution of drinking water sources. Nitrates enter the soil primarily as a result of fertilizers used on corn, but many farmers cycle it by also planting soybeans, which absorb the nitrates. No soybeans to absorb the nitrates, though, means more nitrate runoff into rivers and streams...

Expensive solar panels: In January, even before the trade war really got going, the Trump administration imposed a 30 percent tariff on Chinese solar panels. That was followed in June by an additional 25 percent levy. The effect has not been enormous, given that many U.S. solar installers saw the writing on the wall and stockpiled cheap units in advance of the trade spat...
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It's not a fun thought, but is a worldwide economic slowdown even worse than the global financial crisis what we should hope in an age of Trump when the United States doesn't even acknowledge the existence of man-made climate change?

Sinopec's Shame is Caving In to Trump on Iran

♠ Posted by Emmanuel in ,, at 10/03/2018 08:36:00 PM
Hey Sinopec, maybe your new slogan should be "Trump Threatens, Cower in Fear."
I almost forgot about this one: Sometime ago, I lauded China for stating that it would not stop buying crude oil from Iran despite the Trump administration's re-imposition of sanctions. These come despite Iran living up to its commitments under the Obama-era agreement JCPOA (which Trump unilaterally pulled the United States out of). Apparently, I had spoken too soon. Fast-forward a couple of months and, lo and behold, China's state-owned energy giant Sinopec has cut back on its Iran purchases by half ahead of a forthcoming tightening of American sanctions:
China’s Sinopec Corp is halving loadings of crude oil from Iran this month, as the state refiner comes under intense pressure from Washington to comply with a U.S. ban on Iranian oil from November, said people with knowledge of the matter.

The sources did not specify volumes, but based on the prevailing supply contract between the top Chinese refiner and the National Iranian Oil Company (NIOC), its loadings would be reduced to about 130,000 barrels per day (bpd).
Where did I go wrong in thinking that Beijing would live up to its word by not constraining its state-owned firm from purchasing from Iran? As it turns out, while Sinopec certainly does not conduct much energy-related trade with the United States, its shares are traded as an American depositary receipt (ADR) Stateside. That is, if it does not want to curtail this US-based capital-raising source, then it has to comply with American laws:
This would be 20 percent of China’s average daily imports from Iran in 2017, dealing a blow to Tehran, which has counted its top oil client to maintain imports while European and other Asian buyers wind down purchases to avoid U.S. sanctions.

 The cut marks Sinopec’s deepest reduction in years as the Hong Kong and New York-listed state oil company faces direct pressure from a U.S administration determined to choke off the flow of petrodollars to the Islamic Republic.sin
It makes me wonder: If China's bluster about standing up to American bullying rings hollows on importing Iranian oil, will it also be the case with Trump imposing tariffs on more and more Chinese exports? Sinopec was rather lame; will Chinese leadership also be chicken out when threatened with ever-growing lists of goods hit with import taxes?