Archives

All posts for the month November, 2016

For the audio version of the text below, click the wave file.

Late October 2016, I had a road-trip with a friend and his two dogs—Boogie and Puppy, from San Francisco, CA to Miami, FL. There was an interesting canine phenomenon. When we passed a semi-truck on the road, no matter how long it took to pass Boogie and Puppy did not care. But the same eighteen-wheeler at idle waiting for a red-light to turn green the dogs went crazy; barking nonstop.

My friend and I reasoned that the dogs hate diesel engines at idle. So, now… How dogs barking at trucks are analogous to the 2016 US Presidential elections? Verily; because the politicians, the pundits and the media failed to see a pattern or distinction just like Boogie and Puppy. The semi-truck remains the same truck with the same amount of molecules cruising at 75 miles per hour; conversely, politicians, pundits and even economists fail to see the enduring consequences of laws and social economics in the long run, they only bark at the consequence in the present or recent past. For instance, Paul Krugman accused Jill Stein voters for Hillary’s loss; even when the numbers show a smaller turn out of Democrat voters measured against 2012—roughly 5 million fewer voters, furthermore more Latinos voted for Trump in 2016 than Romney in 2012. Could Jill Stein voters compensate for the difference? No. It would be a long essay to compare today’s pundits and how close they reason like Boogie and Puppy; instead, let us follow the money and how a international trade first conceptualized in 1990 affected the elections of 2016. The three names that we must pay attention since 1990 are: Bush, Clinton, and NAFTA. It took 26 years; thus, a whole generation; for us to measure the consequences of a bad trade law. So, what is NAFTA?

Most countries protect their domestic industry with a serious of tariffs. A tariff is an import tax to bring up the cost of a domestic product. A wonderful book detailing the history of tariffs and its consequences is called “The Travels of a T-Shirt in the Global Economy: An Economist Examines the Markets, Power and Politics of the World Trade,” authored by Pietra Rivoli.

Time Magazine cover of 1992 (Source:Time Magazine archive)

So… History let us know that Bush-41 or Father-Bush (a Centrist-Republican) failed to pass the North Atlantic Free Trade Agreement while in office. It took a Centrist Democrat William Jefferson Clinton to pick up the baton an finish the relay-race for the benefit of major corporations of Mexico, Canada and Wall Street. Nobody is perfect, I must confess that in 1992, I was thrilled that Bush-Gore won the election. I also must confess that I was wrong in thinking that Presidential Candidate Ross Perot had no clue about the economics pertaining NAFTA. It is really easy to find the video of Perot debating Al Gore on “Larry King Live;” on Youtube. Recently I saw the old debate once again, it was amazing to see that Ross Perot had the foresight of an oracle.

NAFTA turned out to be the vacuum cleaner that Ross Perot predicted and with the passing of the law four major side effects took place:

  1. Major manufacturing moved to Mexico destroying the economy of thousand of small towns in the U.S.
  2. Labor Unions lost a lot of their bargaining power since now there is fewer demand for blue color-workers.
  3. American major flooded the Mexican economy with cheap grains destroying the rural economy in Mexico.
  4. Illegal immigration rose because the Mexican local farming could not compete with U.S. subsidized grains. The choice for many farm workers became only to participate in to the growing marijuana or crossing the border for less then minimum wage.

Consequently, not only American citizens workforce was reduced due the fleecing of manufacturing; illegal immigration (increased due to the destruction of rural jobs in Mexico) which took more jobs of the American employment pool. At the same rate that NAFTA was exponentially increasing profits for major corporations, it decreasing the opportunity for American workers. Specifically the voting group referred as “blue-color non-educated Caucasian.” This was the group that overwhelming voted for Donald Trump.

History repeats itself, media was ready for Hillary to be the winner.

History repeats itself, media was ready for Hillary to be the winner. The polls pointed to Hillary in 2016 in the same way it pointed to Dewey in 1948 instead of Truman. Who is Dewey? Exactly!

Beyond Ross Perot, the first to become the herald for the disenfranchised by NAFTA, was Senator Bernie Sanders (campaign began on May 26, 2015). He had an overwhelming number of small donations and attendance to his rallies. Donald Trump became the second voice for the disenfranchised (campaign began on June 16, 2015). Wikileaks finally revealed that the DNC colluded with the media by attacking and blocking major advances from Bernie Sanders. Chairwoman Debbie Wasserman Schultz, chief finance officer Brad Marshall; chief executive Amy Dacey, and communications director Luis Miranda resigned their positions with the DNC. Later, interim chairwoman Donna Brazile was fired from CNN for releasing debate questions to Candidate Clinton in advance. Most were not surprised by the revelations of Wikileaks, so much so, that none of the Wikileaks revelations did not land anyone in jail, only four volunteered resignations and one CNN firing.

Never in American history both candidates had legal lawsuits, criminal investigations and alike. Nevertheless, the Joe Blows from Hattiesburg, Mississippi and Jane Does from Emporia, Kansas are not worried about the DNC’s mischief or Wikileaks revelations; they are only concerned in voting for who is going to bring their jobs back to their small towns. Prior to writing this essay, I explained to a friend that the reason why Donald Trump won, was not because of emails, Wikileaks, Jill Stein, but because of NAFTA. He asked, “Does everyone know what NAFTA is when they went to the voting booth?” My reply was,“Absolutely not! They may not even know what NAFTA is; some may even think NAFTA is a type of mosquito or a rash. The only thing that they know is that the factory that their grandfather and father used to work for, located at the outskirts of town has their gates locked their roofs caved in and their jobs fled somewhere to Mexico.”

Closed factory, anywhere USA.

NAFTA is the semi-truck loaded at 75 miles per hour running over and destroying the lives of every little town that had a factory in the United Sates; however, when it is took close to the election, the truck slows down to idle and the politicians, pundits and media copying the styles of Boogie and Puppy keep barking “he is a racist, he is homophobic, he is a sexist, he is a bully, he is a sexual predator!”

 

There is a much bigger picture than NAFTA, and even bigger than the 2016 Elections, it is a picture that escape most economists. I have mentioned before that I am a fan of the Freakonomics Group; but their most recent book disappointed me. In the book “When to Rob a Bank” the authors by Steven D. Levitt and Stephen J. Dubner unveiled the pros and cons of bank robbery and even pan-handling to name a few. The most ingenious part of the work of economists should not be the understanding the of profit and loss of robbing a bank or the best corner or time for pan-handling; instead, to aim towards a sustainable economy. Looking at the immediate picture of economics will only lead us to the next collapse. Economists like Robert Reich and Paul Krugman claim that Capitalism is the best form of economics; Reich even went a step further naming his book “Saving Capitalism,” such title make as much sense as “Saving Feudalism,” because when a system is working well, it does not require saving; it becomes self sustaining and it would never crash. Unfortunately, politicians are listening to pundits like Reich and Krugman, and much worse than that politicians are begging for money of wealthy donors for their next reelection.

“Divergent Series” based on a trilogy authored by Veronica Roth. Movie copyrights: Lionsgate (Source: Wikipedia)

The historic gains and losses created by NAFTA were born in 1990 under the names Clinton and Bush and destroyed by the American voter when they voted against Clinton and Bush in 2016; they voted for a candidate who promised the end of NAFTA. The creation of NAFTA benefited the elite in Mexico and the United States and pinned the rural worker of Mexico against the factory worker of the United States. In the true fashion and format of “Follow the Money,” mostly using a movie plot showing similarity to real life; the creation of NAFTA and its consequences is is very similar to the “Divergent Series” based on a trilogy authored by Veronica Roth.

Here are the parallels: workers of the United States and Mexico are pinned against each other for the production of the same product which profits will go to an elite out of their reach. Fiction meets reality when the plot of the “Divergent,” are factions of people are pinned against each other and the benefit is an elite out of their reach. Psychologists could claim the book and movie series became bestsellers and blockbusters because subconsciously the reader or the audience is able to relate to the plot because in real life “we” already do.

Adding insult to injury; is the discontentment of the American worker (and voter), who has been the mysteriously secluded from the backdoor deals of the Trans Pacific Partnership that President Obama and Secretary of State Clinton were promoting together. Where NAFTA was the elimination of tariffs and the due process in three countries, the TPP would be the elimination of tariffs between twelve countries. History has already given us two preludes to the TPP, first one was NAFTA and second one has been the European Union, the consortium of 28 countries. Greece tried to get out, and United Kingdom just took the first step in June of 2016.

Publisher: Wiley; 1 edition (December 2006)

The financial mechanics of international trade benefiting a small elite having people around the world fighting for the same jobs, (in essence, very analogous to the “Divergent Series),” was handsomely consolidated in a book called “The Global Class War: How America’s Bipartisan Elite Lost Our Future—and What It Will Take to Win It Back” authored by Jeff Faux, was published in 2006.

Promises made before the election are like love promises during Summer-camp. Not impossible, but almost. Will Trump break the heart of his voters by passing TPP and doing almost nothing about NAFTA? Could Trump echo the words of George Herbert Bush, “Read my lips, no new taxes?” A president-elect with outstanding loans with German banks, an unresolved bankruptcy and a class action lawsuit still pending. That is a lot on anyone’s table before he decides to solve the problems of the nation. (In my previous essay called, “The Corruption of Donald Trump,” I explained that Trump is not the problem; instead, he is the consequence). We have a political system corrupted by the elite, and a major collapse to come inspired by greed. Just like bacteria on a Petri-dish eventually runs out of food and die, the U.S. debt reaching 20 Trillion may inspire the same end. We ran out of suckers to sell more trillions of dollars of loans, we are going to depend on donations to build the Mexican wall.

2016-10-28-me-reststop-florida

Fourth day of the trip, first stop in Florida. One hour prior to hearing FBI reopening Clinton’s email investigations.

In the spirit of full disclosure, by the time we were passing by Pensacola, Florida—the fourth day of our cross country journey. My friend and I heard on the radio that the FBI Director James Brien Comey Jr. was reopening the investigation on Clinton’s emails, that was thanks to Anthony Weiner’s formidable penis being promoted while having access to his wife’s computer which was also used for Clinton’s classified emails (soon to be a HBO mini-part series, just wait!) The shock of this news was so intense that for the next hour my friend and I arguing about the news; we became louder than Boogie and Puppy when threaten by a semi-truck at idle.

jon-boogie-puppy

My friend Jon practicing yoga guarded by Boogie and Puppy.

Fiat Lux! \"Share the light:\"