Tag: #Business

What’s at stake as President Trump sits down with China’s Xi

The U.S. and China together account for one-third of global economic output, so there is a lot at stake as President Donald Trump meets with his Chinese counterpart Xi Jinping, not least the fate of the world economy over the next few years.

And it is precisely the magnitude of the stakes involved that has led some observers to assume that both countries will play it safe and focus on the areas of the relationship that are “win-win” relative to the areas that are more likely to produce conflict.

But there is no guarantee that this will happen. In fact, Trump may have already dealt himself a poor hand thanks to his past rhetoric on trade, which has heightened the political risk that he faces in negotiating with Xi. Perhaps more worryingly, Trump’s focus on achieving short-term victories could also tip the balance against the U.S.

At the end of the day, the two countries not only drive the world economy but also rely critically on one another, a fact that should moderate the decisions of these two strong-willed leaders. In fact, my research (with fellow economists Giovanni Peri and Gianmarco Ottaviano) has highlighted the economic risks of miscalculating on trade deals, particularly those with developing countries.

A tricky trade balance

Trump has a difficult political balancing act to maintain.

On the one hand, 85 percent of Republicans believe that trade has cost more U.S. jobs than it has created. This group will presumably expect results in raising barriers to U.S. imports, particularly those from China. In fact, there is perhaps no other issue more salient to Trump’s base than the perceived harm done to U.S. workers due to international trade, and Trump has been unequivocal in his promises to scale back trade agreements, from NAFTA to the now-rejected Trans-Pacific Partnership.

On the other hand, Trump’s more moderate advisers, such as Gary Cohn, head of the National Economic Council, have likely cautioned him that trade is ultimately good for economic growth. And any disruption would be bad both for the U.S. and for Trump’s political future.

Having repeatedly (and unrealistically) promised at least 4 percent to 5 percent annual economic growth, Trump must be careful not to inadvertently push the economy into a ditch by abandoning the free trade principles that have made the U.S. one of the richest countries in the world.

Who will ‘win’?

Another potential pitfall for Trump is that the search for a perceived “victory” in the negotiations – something the president typically prizes above all else – is actually more likely to favor Xi.

This is because Xi’s grip on power is such that he does not need headline-grabbing wins to the extent that Trump does. Instead, he can try to extract more substantive concessions behind the scenes. This suggests that a possible outcome is that the status quo will be effectively maintained. For instance, Xi may be able to walk away with a win by simply avoiding a trade war while also obtaining an implicit promise that the U.S. will look the other way on human rights issues and Chinese regional expansion.

This isn’t to say that Trump does not have leverage – his campaign promise to raise import tariffs on China to 45 percent would be a serious blow to the Chinese economy. And of course, the U.S. can always flex its political and military strength in opposition to Chinese interests. But perhaps most unnerving for the Chinese is Trump’s unpredictability which, despite its downsides, keeps his counterparts off balance.

The concern is that Trump may use his leverage in order to obtain “tweetable” victories that do not amount to much. For instance, a likely outcome is that Trump obtains promises of future investments in the U.S. of several billions of dollars. In fact, Chinese and U.S. commentators have suggested that these investments may come as part of a larger U.S. infrastructure program. However, as with other investments that Trump has taken credit for, most of these would be made in any case (China invested $45 billion in the U.S. last year) and so come at little cost to the Chinese.

A misguided focus on trade deficits

But as with the imposition of trade barriers, Chinese investments do not come without political risk. In this case, it is the Trump administration’s obsession with the trade deficit in goods as the key metric by which it views success or failure on trade that will make life harder.

The trade deficit with China – US$347 billion in 2016 – is simply the difference between U.S. exports to China and U.S. imports from China, and this value fluctuates for a variety of reasons. When the U.S. runs a trade deficit it means that, on net, the U.S. is sending dollars to China in exchange for Chinese goods. As a simple fact of accounting, those dollars must then end up back in the U.S. as investments in U.S. assets. So investments in U.S. assets are the flip side of a trade deficit.

As a result, inviting greater Chinese investment in U.S. assets will necessarily increase the trade deficit with China. While most economists believe that the trade deficit is a poor measure of the success of a country in the world economy, National Trade Council Director Peter Navarro has repeatedly pressed the case for trade deficits as a proxy for the overall health of the U.S. economy, as has Trump.

And so, however inadvisable it may be to focus on the trade deficit, Trump is sure to pay a political price if it were to grow over the course of his tenure.

Forging a bond before the clashes ahead

In the end, the most consequential outcome of Xi’s visit may be the extent to which a bond is forged between the two leaders.

This is because Trump tends to personalize policy choices, and many of the most important issues on which the U.S. and China will need to find common ground will arise over the next few months.

For instance, although Trump has not yet formally labeled China as a currency manipulator (which he promised to do on “day one”), later in the spring the Treasury Department will publish its analysis of international currencies and may choose to place that label on China. While the Chinese would likely simply ignore such a designation, it would require the U.S. to take some form of punitive action if negotiations with China did not resolve the dispute.

But, of course, this may be small beer compared with the more pressing geopolitical issues that will be in play. These include dealing with North Korea, whether or not to confront internal repression within China and the threat of Chinese regional expansion. It would not be surprising to find that American cooperation on these fronts comes with a price tag denominated in U.S. jobs.

Finally, it is worth noting that reducing the level of trade with China will do little to help U.S. workers. This is something that nearly all economists agree on, but that politicians rarely embrace. This is because while the economy can be easily cured of a proliferation of trade agreements by simply withdrawing from, or rewriting, those accords, there is no easy cure for the proliferation of new technologies, which are the real culprits in the decline of U.S. industrial production.

And so, since trade is a policy lever that can be easily pulled, politicians inevitably rush to do so.

Greg Wright, Assistant Professor of Economics, University of California, Merced

Photo Credit: Digg Ita

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This article was originally published on The Conversation. Read the original article.

School bus routes are expensive and hard to plan. We calculated a better way

Here’s a math problem even the brightest school districts struggle to solve: getting hordes of elementary, middle and high school students onto buses and to school on time every day. The Conversation

Transporting all of these pupils presents a large and complex problem. Some school districts use existing software systems to develop their bus routes. Others still develop these routes manually.

In such problems, improving operational efficiency even a little could result in great advantages. Each school bus costs school districts somewhere between US$60,000 and $100,000. So, scheduling the buses more efficiently will result in significant monetary savings.

Over the past year, we have been working with the Howard County Public School System (HCPSS) in Maryland to analyze its transportation system and recommend ways to improve it. We have developed a way to optimize school bus routes, thanks to new mathematical models.

Finding the optimal solution to this problem is very valuable, even if that optimal solution is only slightly better than the current plan. A solution that is only one percent worse would require a considerable number of additional buses due to the size of the operation.

By optimizing bus routes, schools can cut down on costs, while still serving all of the children in their district. Our analysis shows that HCPSS can save between five and seven percent on the number of buses needed.

Route planning

A bus trip in the afternoon starts from a given school and visits a sequence of stops, dropping off students until the bus is empty. A route is a sequence of trips from different schools that are linked together to be served by one bus.

Our goal was to reduce both the total time buses run without students on board – also known as aggregate deadhead time – as well as the number of routes. Fewer routes require fewer buses since each route is assigned to a single bus. Our approach uses data analysis and mathematical modeling to find the optimal solution in a relatively short time.

To solve this problem, a computer algorithm considers all of the bus trips in the district. Without modifying the trips, the algorithm assigns them to routes such that the aggregate deadhead time and the number of routes are minimized. Individual routes become longer, allowing the bus to serve more trips in a single route.

Since the trips are fixed, in this way we can decrease the total time the buses are en route. Minimizing the deadhead travel results in cost savings and reductions in air pollution.

The routes that we generated can be viewed as a lower bound to the number of buses needed by school districts. We can find the optimal solution for HCPSS in less than a minute.

Serving all students

While we were working on routes, we decided to also tackle the problem of the bus trips themselves. To do this, we needed to determine what trips are required to serve the students for each school in the system, given bus capacities, stop locations and the number of students at each stop. This has a direct impact on how routes are chosen.

Most existing models aim to minimize either the total travel time or the total number of trips. The belief in such cases is that, by minimizing the number of trips, you can minimize the number of buses needed overall.

However, our work shows that this is not always the case. We found a way to cut down on the number of buses needed to satisfy transportation demands, without trying to minimize either of the above two objectives. Our approach considers not only minimizing the number of trips but also how these trips can be linked together.

New start times

Last October, we presented our work at the Maryland Association of Pupil Transportation conference. An audience member at that conference suggested that we analyze school start and dismissal times. By changing the high school, middle school and elementary school start times, bus operations could potentially be even more efficient. Slight changes in school start times can make it possible to link more trips together in a single bus route, hence decreasing the number of buses needed overall.

We developed a model that optimizes the school bell times, given that each of the elementary, middle and high school start times fall within a prespecified time window. For example, the time window for elementary school start times would be from 8:15 to 9:25 a.m.; for middle schools, from 7:40 to 8:30 a.m.; and all high schools would start at 7:25 a.m.

Our model looks at all of the bus trips and searches for the optimal combination of school dismissal time such that the number of school buses, which is the major contributing factor to costs, is minimized. We found that, in most cases, optimizing the bell times results in significant savings regarding the number of buses.

Next steps

Using our model, we ran many different “what if?” scenarios using different school start and dismissal times for the HCPSS. Four of these are currently under consideration by the Howard County School Board for possible implementation.

We are also continuing to enhance our current school bus transportation models, as well developing new ways to further improve efficiency and reduce costs.

For example, we are building models that can help schools select the right vendors for their transportation needs, as well as minimize the number of hours that buses run per day.

In the future, the type of models we are working on could be bundled into a software system that schools can use by themselves. There is really no impediment in using these types of systems as long as the school systems have an electronic database of their stops, trips, and routes.

Such software could potentially be implemented in all school districts in the nation. Many of these districts would benefit from using such models to evaluate their current operations and determine if any savings can be realized. With many municipalities struggling with budgets, this sort of innovation could save money without degrading service.

Ali Haghani, Professor of Civil & Environmental Engineering, University of Maryland and Ali Shafahi, Ph.D. Candidate in Computer Science, University of Maryland

Photo Credit: Dean Hochman

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This article was originally published on The Conversation. Read the original article.

The art of a speech: President Trump’s speech to Congress

By Robert J. Garrison

Last night President Donald Trump delivered his first speech to a joint session of Congress. Here are a few of the observations that I precieved from the speech. 

First, this speech was meant to position President Trump to higher ground. What do I mean by higher ground? I mean, that President Trump gave the Democrats two options.

  • Work with President Trump to rebuild America on the few issues that they themselves agree on such as immigration reform, renegotiating trade deals, and infrastructure spending or
  • Come out and fight with him on everything.

The Democrats being so predictable, chose to come out and instead of saying while we disagree with President Trump on XYZ but we agree with him on ABC, choose to come out and fight with President Trump on everything! 

Last night I heard Sen Minority leader Chuck Schumer and Minority Leader Nancy Pelosi come out and say that President Trump called for gutting education. Where the hell did they get that from? President Trump spent about 5 minutes on education and didn’t mention anything that could be perceived as “gutting education”. In fact, President Trump called education

…the civil rights issue of our time!

He also called for congress to pass an education bill that includes school choice to help disadvantaged children. Seems like more spending than gutting to me. 

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The American people are sick and tired of a do-nothing congress (See Gallup graph below). President Trump extended an olive branch to the Democrats and pleaded with them to work with him to find common ground. However, the Democrats have a big problem – the far left progressives.


The far left progressives are the loudest, most vocal wing of the Democratic party and they have made their intentions clear. They refuse to work with President Trump on anything and will fight him on every front. The Democratic party is being held hostage to a point that if any Democrat even says a compliment about President Trump they are raked over the coals for it. 

To be fair, this is the same climate that the Republicans also had during the Obama administration. However, there is one big difference, President Obama was a liberal ideologue (source?) and refused to work with Republicans on any form of compromise (source). President Trump is far from an ideologue. President Trump is a deal maker willing to give both sides what they want to work out a deal and that’s a huge difference.

Finally, the optics of the speech were excellently produced. You saw President Trump at his best. He came across as Presidential, powerful, and willing to work with both sides of the aisle. Also, the way he worked the guests into his speech was masterfully done. The one thing I noticed during the speech was how President Trump would clap with the rest of the chamber, which is something one rarely sees in a State of the Union.

The highlight of the night was when he spoke about the men and women of the military. When President Trump introduced  Carryn Owens, the widow of a U.S. Navy Special Operator, Senior Chief William “Ryan” Owens, the camera turned to her and showed her with tears in her eyes as she looked up to the heavens.

Then something magical happened. The President of the United States went on to call him a hero and state that his name would be etched into eternity; and with a pause, he looked up to Carryn Owens and said: 

Thank you. Thank you.

The chamber broke into one of the longest standing ovation in the history of the State of the Unions. It was a touching moment.    

Below is the full video of President Trump’s address to congress.

Robert J. Garrison is a political and religious writer for The Systems Scientist. You can connect with him directly in the comments section, follow him on Twitter or on Facebook, or catch up on his articles in the Archives

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America’s always had black inventors – even when the patent system explicitly excluded them

America has long been the land of innovation. More than 13,000 years ago, the Clovis people created what many call the “first American invention” – a stone tool used primarily to hunt large game. This spirit of American creativity has persisted through the millennia, through the first American patent granted in 1641 and on to today.

One group of prolific innovators, however, has been largely ignored by history: black inventors born or forced into American slavery. Though U.S. patent law was created with color-blind language to foster innovation, the patent system consistently excluded these inventors from recognition.

As a law professor and a licensed patent attorney, I understand both the importance of protecting inventions and the negative impact of being unable to use the law to do so. But despite patents being largely out of reach to them throughout early U.S. history, both slaves and free African-Americans did invent and innovate.

Why patents matter

In many countries around the world, innovation is fostered through a patent system. Patents give inventors a monopoly over their invention for a limited time period, allowing them, if they wish, to make money through things like sales and licensing.

Patent Office relief on the Herbert C. Hoover Building.

The patent system has long been the heart of America’s innovation policy. As a way to recoup costs, patents provide strong incentives for inventors, who can spend millions of dollars and a significant amount of time developing a invention.

The history of patents in America is older than the U.S. Constitution, with several colonies granting patents years before the Constitution was created. In 1787, however, members of the Constitutional Convention opened the patent process up to people nationwide by drafting what has come to be known as the Patent and Copyright Clause of the Constitution. It allows Congress:

“To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”

This language gives inventors exclusive rights to their inventions. It forms the foundation for today’s nationwide, federal patent system, which no longer allows states to grant patents.

Though the language itself was race-neutral, like many of the rights set forth in the Constitution, the patent system didn’t apply for black Americans born into slavery. Slaves were not considered American citizens and laws at the time prevented them from applying for or holding property, including patents. In 1857, the U.S. commissioner of patents officially ruled that slave inventions couldn’t be patented.

Slaves’ inventions exploited by owners

During the 17th and 18th centuries, America was experiencing rapid economic growth. Black inventors were major contributors during this era – even though most did not obtain any of the benefits associated with their inventions since they could not receive patent protection.

Slave owners often took credit for their slaves’ inventions. In one well-documented case, a black inventor named Ned invented an effective, innovative cotton scraper. His slave master, Oscar Stewart, attempted to patent the invention. Because Stewart was not the actual inventor, and because the actual inventor was born into slavery, the application was rejected.

Stewart ultimately began selling the cotton scraper without the benefit of patent protection and made a significant amount of money doing so. In his advertisements, he openly touted that the product was “the invention of a Negro slave – thus giving the lie to the abolition cry that slavery dwarfs the mind of the Negro. When did a free Negro ever invent anything?”

Reaping benefits of own inventions

The answer to this question is that black people – both free and enslaved – invented many things during that time period.

One such innovator was Henry Boyd, who was born into slavery in Kentucky in 1802. After purchasing his own freedom in 1826, Boyd invented a corded bed created with wooden rails connected to the headboard and footboard.

The “Boyd Bedstead” was so popular that historian Carter G. Woodson profiled his success in the iconic book “The Mis-education of the Negro,” noting that Boyd’s business ultimately employed 25 white and black employees.

Though Boyd had recently purchased his freedom and should have been allowed a patent for his invention, the racist realities of the time apparently led him to believe that he wouldn’t be able to patent his invention. He ultimately decided to partner with a white craftsman, allowing his partner to apply for and receive a patent for the bed.

Some black inventors achieved financial success but no patent protection, direct or indirect. Benjamin Montgomery, who was born into slavery in 1819, invented a steamboat propeller designed for shallow waters in the 1850s. This invention was of particular value because, during that time, steamboats delivered food and other necessities through often-shallow waterways connecting settlements. If the boats got stuck, life-sustaining supplies would be delayed for days or weeks.

Montgomery tried to apply for a patent. The application was rejected due to his status as a slave. Montgomery’s owners tried to take credit for the propeller invention and patent it themselves, but the patent office also rejected their application because they were not the true inventors.

Benjamin Montgomery succeeded despite being refused a patent.

Even without patent protection, Montgomery amassed significant wealth and become one of the wealthiest planters in Mississippi after the Civil War ended. Eventually his son, Isaiah, was able to purchase more than 800 acres of land and found the town of Mound Bayou, Mississippi after his father’s death.

A legacy of black innovators

The patent system was ostensibly open to free black people. From Thomas Jennings, the first black patent holder, who invented dry cleaning in 1821, to Norbert Rillieux, a free man who invented a revolutionary sugar-refining process in the 1840s, to Elijah McCoy, who obtained 57 patents over his lifetime, those with access to the patent system invented items that still touch the lives of people today.

This legacy extends through the 21st century. Lonnie Johnson generated more than US$1 billion in sales with his Super Soaker water gun invention, which has consistently been among the world’s top 20 best-selling toys each year since 1991. Johnson now owns more than 80 patents and has since developed different green technologies.

Bishop Curry V, a 10-year-old black inventor from Texas, has already applied for a patent for his invention, which he says will stop accidental deaths of children in hot cars.

Black women are also furthering the legacy of black inventors. Lisa Ascolese, known as “The Inventress,” has received multiple patents and founded the Association for Women Inventors and Entrepreneurs. Janet Emerson Bashen became the first black woman to receive a patent for a software invention in 2006. And Dr. Hadiyah Green recently won a $1 million grant related to an invention that may help treat cancer.

True to the legacy of American innovation, today’s black inventors are following in the footsteps of those who came before them. Now patent law doesn’t actively exclude them from protecting their inventions – and fully contributing to American progress.

The Conversation

Shontavia Johnson, Professor of Intellectual Property Law, Drake University

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Will Trump’s ‘color-blind’ pro-business policies help black entrepreneurs too?

A growing body of research has shown the power of entrepreneurship to help solve the economic problems of disadvantaged groups such as women, immigrants and racial and ethnic minorities.

This finding can be traced to a longstanding vision of entrepreneurship established by black Americans as a means of supporting their community and overcoming discrimination. The tradition enjoys enduring popularity as contemporary social surveys commonly report that more African-Americans regard self-employment as a desirable occupation than other racially defined groups.

Yet despite their commitment to entrepreneurship, blacks continue to have lower rates of self-employment than whites and other groups. The self-employment rate for unincorporated white-owned businesses was 6.9 percent in 2015, almost double the 3.6 percent for black-owned ones, according to the Bureau of Labor Statistics. Moreover, black-owned businesses tend to be smaller, have fewer employees, generate less income and are generally less successful than those owned by whites.

Now that Republicans – who have long resisted efforts to pursue race-based policies aimed at supporting historically disadvantaged communities – control Congress and the White House, will those figures become even more lopsided as Donald Trump limits or ends affirmative action style policies that spurred big gains in the past? Or could “color-blind” pro-business policies such as reducing taxes and regulation lift all boats, including those of African-Americans, in equal measure?

To answer these questions, it helps to understand the reason black entrepreneurs are underrepresented in the first place. In a recent paper, one of us (Gold) examined common explanations for why this is the case.

Critical disadvantages

While some researchers and pundits have, controversially, blamed a lack of work ethic or aptitude for the dearth of African-American entrepreneurs, such race or ethnicity-based explanations of human abilities have long been discredited in social science. More commonly, a broad consensus of research shows that a variety of race-based forms of discrimination and disadvantage have played a critical role in limiting blacks’ ability and opportunity to start their own businesses.

Even a century and a half after Abraham Lincoln freed the slaves, blacks continue to suffer a wide range of disadvantages. For example, blacks are commonly assigned lower credit ratings than whites who earn much less. Their neighborhoods are under-served by banks. In addition, black entrepreneurs are often excluded by racial barriers from networks that business owners rely on to get to know each other and exchange referrals, information and investment opportunities.

As of 2009, the average white family’s wealth was US$113,000. In contrast, the average black family’s wealth was about $5,700.

This has meant that blacks generally lack the resources, such as investment capital, education and previous work experience, needed to achieve entrepreneurial success.

Based on these findings, government policies that sought to encourage the growth of black entrepreneurship have commonly done so via affirmative action to compensate for this unique legacy. These included training and loan programs and requirements that government contracts reserve a fraction of work for minority-owned businesses.

Affirmative action backlash

However, affirmative action policies that allocate governmental benefits on the basis of race, ethnicity or gender have been controversial, to say the least. They have been attacked by conservative politicians with legislation, social movements and court decisions.

Since the 1990s, the anti-affirmative action movement used state electoral initiatives to appeal directly to resentful white male voters – a group that became a key Trump constituency. The strategy led to the implementation of anti-affirmative action laws in several of the country’s largest and most diverse states. From 1996 to 2010, California, Washington, Michigan, Nebraska and Arizona all passed such laws.

Among other factors, reductions in government and private sector support for minority entrepreneurship coincided with the decline in the number and profitability of black-owned businesses.

Now that Trump occupies the White House and Republicans enjoy majorities in both the House and Senate, indications are that the new administration will withdraw support from affirmative action and other race-based policies that encourage black entrepreneurship. In 2015, candidate Trump asserted that “I don’t think we need it (affirmative action) so much anymore.”

Trump and black entrepreneurs

So what does this mean for black self-employment?

For a start, it probably means African-Americans will no longer be able to access affirmative action policies to help them overcome their disadvantages in starting or running businesses.

On the other hand, however, black entrepreneurs may benefit from the Trump adminsitration’s promised creation of a social and economic climate conducive to business growth via pro-business policies such as lowering taxes and reducing regulations. In addition, Trump aims to invest extensively in infrastructure spending and revitalize American manufacturing.

At least in theory, these pro-business policies could benefit black entrepreneurs – alongside everyone else. Infrastructure investments and boosting manufacturing may be significantly beneficial to African-American entrepreneurs, especially if such contracts are distributed in a manner that matches these entrepreneurs’ skills and abilities. Historically, African-Americans have been active in manufacturing, albeit as workers rather than business owners. However, given their familiarity with this industry, the growth of manufacturing might yield special benefits.

Of course, the potential benefits received by black entrepreneurs under Trump’s economic policies depend on how these activities are organized and funds allocated. For example, will small businesses get a generous share of the contracts compared with large companies, few of which are owned by African-Americans? (Virtually all black-owned businesses are small in size.)

A test of ‘color-blind’ policies

All in all, this will be a test of whether the benefits of pro-business policies that don’t favor a particular group or race end up boosting black economic activity. Historically, as the data show, this has not been the case thanks to the legacy of discrimination, from slavery to Jim Crow to modern-day prejudices in the financial system.

If the pro-business environment is set up in a way that facilitates the growth of black entrepreneurship, the benefits of these policies should be evident in due time. Results could then support the virtuous circle that leads to increased earnings in black communities, which in turn spurs greater patronage of and investment in other black-owned businesses.

However, if entrepreneurial growth is negligible, then we may conclude that pro-business policies of the sort that were created by the Trump administration are insufficient to allow for the fulfillment of African-Americans’ longstanding desire to create a viable business community.

Steven J. Gold, Professor of Sociology, Michigan State University and Jeffrey R. Oliver, Visiting Assistant Professor, Michigan State University

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TSS News Mag: Article #500

TSS Admin

Greetings readers! This is our 500th article! We can’t think of a better way to celebrate this occasion other than to thank you.

Thank you so much for your readership and following TSS News Mag. It is because of you that January became our best month ever!

When TSS started 2 years ago we had a handful of views and followers and did maybe a couple of articles a month. Well, now we publish at least 4-5 articles a day, and last month we had tens of thousands of views and have added over 6,500 followers with more being added daily.

This kind of growth wouldn’t be possible without readers like you commenting on our articles, liking them, and sharing them on social media.

We also created a way for our readers and followers to support TSS News Mag. We at TSS News Mag write, edit, post, and manage the site in our spare time. We are passionate about providing content that makes our readers think, debate and dialog with others but we are limited in ways we can make this happen. So if you’d like to support us please do so at the link below and thank you.

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Also, TSS would like to hear from you if you are interested in writing for us. We are looking for people who are passionate about what they are writing about. If you would like an opportunity to write for us or if you already have written something and like to contribute, please contact us at the link below:

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Finally, we have some exciting things planned for this year at TSS so stayed tuned! Until then enjoy the ride and continue to read, comment, like, share, donate and write.

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Trump’s trade policy is more predictable and less isolationist than critics think

In his first full week in office, President Donald Trump unleashed a whirlwind of actions that have deep ramifications for U.S. trade. Although critics have labeled the actions “unpredictable,” “isolationist” and “chaotic,” they provide an instructive outline of his new trade policy.

The president began the week by signing a memorandum directing the United States’ withdrawal from the Trans-Pacific Partnership (TPP). Later in the week, he met with British Prime Minister Theresa May to discuss greater bilateral cooperation, including a post-Brexit trade deal.

His new envoy to the United Nations, Nikki Haley, called for reform of that organization. She even issued a blunt warning: “For those who don’t have our backs, we’re taking names.”

As if these developments were not complicated enough, President Trump signed an executive order on Friday requiring the “extreme vetting” of citizens of seven Muslim-majority countries seeking to enter the United States. The related travel ban sparked protests at airports around the country.

While it still remains unclear how President Trump’s trade policy will evolve, his first full week has provided some good indications of what to expect in the next four years. The new policy is also more nuanced and consistent than his critics have given him credit for.

Shift from multilateralism to bilateralism

As shown by his handling of the TPP, the United Nations, and Anglo-American relations, President Trump harbors a strong distrust of the existing multilateral system. This system covers not only the United Nations, the World Trade Organization (WTO) and the World Bank but also regional efforts such as the TPP, the Transatlantic Trade and Investment Partnership (TTIP) and the North American Free Trade Agreement (NAFTA).

This shift away from multilateralism is a major departure from the Obama administration. While President Barack Obama went out of his way to team up with other nations, President Trump wants none of this.

Instead, he prefers bilateral negotiations that will maximize the United States’ bargaining strengths, drawing on the country’s superpower status and 300-million-strong market. Such one-on-one negotiations will also ensure a dedicated focus on those core issues that are important to both sides.

Although some commentators and pundits may characterize this changing approach as isolationist, the presidential memorandum concerning TPP withdrawal made it clear that the administration will continue to negotiate trade deals with other members of the partnership. Those deals will just have to be negotiated through the bilateral route.

Preference for the ‘John Wayne’ approach

Going hand in hand with a renewed emphasis on bilateral negotiations is the administration’s preference for hard bargaining and ultimatums. Stemming from President Trump’s penchant for negotiation from strength, this preference will likely result in a lot of saber-rattling between the United States and its trading partners.

While the embrace of this “John Wayne” approach will undoubtedly make the United States unpopular within the international community, hardball tactics will enable the country to obtain more of its demands while offering fewer concessions. These tactics, in turn, will allow President Trump to keep his campaign promise of putting America first.

At times, the administration will surely make missteps by overplaying its hand. For example, President Trump’s repeated insistence that Mexico will pay for his proposed border wall appears to have backfired after Mexican President Enrique Peña Nieto canceled a previously scheduled face-to-face meeting. The two eventually settled for a phone conversation.

For countries with complicated politics such as China and India, strong-arm tactics and hard bargaining could also complicate the negotiations. In these countries, things could easily get out of control with the increasingly nationalistic populace.

If the Chinese and Indian populace fails to get the correct signals and overreacts, their leaders may find their hands are tied, even if President Trump offers to provide follow-up private clarifications.

For China especially, such complications could arise if the administration insists on naming the country a currency manipulator and slapping its imports with a 45 percent tariff. Such drastic measures could not only lead to a mutually destructive trade war but also undesirable WTO complaints or even penalties against the United States.

Reduced regional emphasis

Under the Trump administration, trade deals are unlikely to be developed through a region-based approach, whether through the bilateral or multilateral route. Within Asia, for example, Cambodia and Laos are just not as important as Japan and South Korea.

Instead, the deals the administration negotiates are likely to be more opportunistic. They could emerge in Asia, Europe, and the Middle East at the same time without the constraints imposed by a region-based trade policy.

This nongeographical yet ironically global approach stands in sharp contrast to the Obama administration’s “pivot to Asia.” President Obama was not only eager to rewrite the trade rules for the Asia Pacific region, but he emphasized the region’s importance by sending his first secretary of state, Hillary Clinton, to Asia on her first state visit.

For the Trump administration, it will still be interesting to see where newly confirmed Secretary of State Rex Tillerson will visit first. That trip, however, may not be as indicative of the administration’s policy focus as Secretary Clinton’s was.

Trump’s trade policy takes shape

The Trump administration’s new trade policy is still in its infancy. So it will continue to evolve. A raging debate concerning its expediency and sustainability will also continue, especially in this highly polarized post-election environment.

Nevertheless, this policy is not as “unpredictable” and “chaotic” as many critics have claimed. Instead, the policy is more nuanced and consistent. It can be traced back to not only the president’s campaign promises but also his early open letters in the mass media.

For those who strongly believe in the multilateral trading system, which dates back to the end of the Second World War, his policy will undoubtedly undermine the stability of this system. This policy could also lead to new tensions and confrontations in the international trade arena.

We will just have to wait and see as President Trump’s new trade policy slowly takes shape.

The Conversation

Peter K. Yu-Professor of Law and Co-Director of the Center for Law and Intellectual Property, Texas A&M University

Photo Credit: Wikipedia

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This article was originally published on The Conversation. Read the original article.