(^34) Best columns: Business
Four of the world’s biggest automakers have dealt
“a significant blow to Washington’s attempt to roll
back” Obama-era fuel-economy rules, said David
Fickling. Last week, Ford, Honda, Volkswagen, and
BMW struck a deal with California that requires
tighter fuel economy standards, closer to Obama
administration rules than the lenient regulations pro-
posed by President Trump. Additional states repre-
senting a third of the U.S. car market tend to follow
California’s standards, so more companies are likely
to join in. Two decades ago, U.S. regulations “could
more or less define the shape of the world’s car mar-
ket.” But that has been changing. Japan, Canada,
Europe, and even China have all been upgrading
their standards “to reduce the toll of vehicle pollu-
tion.” The proposal from Trump’s Environmental
Protection Agency would make the U.S. the odd one
out. Carmakers now depend on “unified platforms
and modular designs” to sell their vehicles world-
wide. They want to minimize the complexity of
their global supply chains and can’t afford to make
“bespoke vehicles for each market.” Maybe 20 years
ago Washington could have successfully managed
to “grab hold of the industry’s steering wheel.”
But these days, the U.S. alone just isn’t significant
enough for the car companies to change course.
Elizabeth Warren has a trade proposal—and it’s
a lot like Trumpism dressed up for the Left, said
Eric Boehm. Her plan, unveiled this week, calls for
“establishing a set of standards countries must meet
as a precondition for any trade agreement with
America.” Those include “enforcement of collec-
tive bargaining, elimination of domestic fossil fuel
subsidies, and a long-term plan to reduce carbon
emissions.” Warren’s standards are so strict that no
developing country would qualify. China wouldn’t,
either, of course. “Warren says her administration
‘will engage in international trade—but on our
terms and only when it benefits American families.’”
This is one of those sentences in which “nothing
that comes before the ‘but’ really matters.” It’s just
protectionism that Warren hopes to execute more
competently than the GOP. Like all protectionism,
the plan relies on “magical thinking,” promising to
raise living standards around the globe while helping
American workers. Actually, it will do neither. “The
evidence that Trump’s trade policies are harming the
economy continues to grow.” Democrats should be
running against Trump’s disastrous trade policies.
Instead, they seem to be hoping that Trump will
tip the country into a recession—so they can argue
they’ll do a better job with the same bad ideas. Newscom
Automakers:
‘No thanks’ to
deregulation
David Fickling
Bloomberg.com
A trade plan
to out-Trump
Trump
Eric Boehm
Reason.com
The Federal Reserve cut its key interest
rate this week to protect the “record-long
economic expansion from slowing global
growth,” said Christopher Condon in
Bloomberg.com. The quarter-point cut is a
signal from the central bank that it hopes
to get ahead of a potential slump. Eco-
nomic growth slowed to 2.1 percent in the
second quarter, falling a full basis point
below the first-quarter number. Though
a rate cut is what President Trump—who
tweeted that the Fed “let us down” by re-
jecting a bigger cut—has called for, it’s ac-
tually a sign that Trump’s “supercharging
of growth hasn’t worked” as advertised, said Matthew Yglesias in
Vox.com. For two years, Trump has promised to achieve a “sus-
tainable 3 percent economic growth rate by slashing government
regulations and business tax rates.” That’s looking like an illu-
sion. Early estimates of 2018 growth seemed to show that Trump
might have met the target in 2018, but the latest data have made
the government revise the numbers downward to 2.5 percent. The
economic expansion under Trump has been merely “fine”—as it
was in the later part of the Obama presidency.
It’s worrisome that the economy really “isn’t behaving as ex-
pected,” said Nick Timiraos in The Wall Street Journal. When
the Fed began raising rates from near-zero after the financial cri-
sis, economists’ “models held that falling unemployment would
eventually fuel rising inflation.” That’s not all bad; inflation can
be “a sign of healthy growth across the economy.” But in fact,
even with interest rates still at historic lows, inflation has been
well below the Fed’s 2 percent target. And while relatively low
unemployment should have pushed
wages higher, wage growth has been
lackluster. That has led Federal Reserve
chairman Jerome Powell to argue the
economy is really barely above luke-
warm. “To call something hot,” said
Powell, “you have to see some heat.” In
fact, whatever heat there was is disap-
pearing, said Karl Smith in Bloomberg
.com. Business investment fell 0.6 per-
cent in the last quarter, compared with
a 4.4 percent increase in the first three
months of 2019. Exports were also
down 5.2 percent, widening a trade defi-
cit burdened by the tariff war with China. “If President Donald
Trump wants to improve conditions—both in the economy and
for his re-election—then he might start by ending his trade war.”
Conservatives and liberals, markets and media—everybody is
applauding the Fed for cutting rates, said Ruchir Sharma in The
New York Times. Bernie Sanders and Alexandria Ocasio-Cortez
want to print money to pay for ambitious social programs. Presi-
dent Trump wants the Fed to cut interest rates to restore growth
to 3 and 4 percent. In the U.S. and elsewhere, central banks are
“making money ever cheaper and more plentiful to try to juice
growth.” Despite this, the U.S. economy “has grown at half
the pace” of other post–World War II recoveries. All that cheap
money has done little for the real economy; it’s just powered a
boom in corporate borrowing and “a record bull run in the fi-
nancial markets.” Now the Fed’s prescription is more rate cuts—
setting the stage for exactly the kind of “debt-fueled market col-
lapse” that tanked the world economy in the first place.
Economy: As growth flags, the Fed moves in
Powell: Trying to keep growth alive
michael s
(Michael S)
#1