Trump Wins Trade War As Global Markets Plummet

It is early July, well before this article goes online, yet the landscape is pretty clear from where I stand. The U.S. and China both raised tariffs on $34 billion worth of goods Friday, July 6. This did not deter the S&P 500 from continuing its charge up to the January 26 all-time high. To boot, unemployment is historically low and the Fed is set to raise rates twice before the year ends – all this amidst a stealth discretionary spending recession.

So, how about that trade war? Let’s recap. Most folks would agree that the free trade of goods would be best for all concerned. Goods would be less expensive and those that could not compete on price would do so on quality, leading to a beneficial improvement of goods. All is well and good until protectionism and nationalism rear their ugly heads. Some nations have goods that find it difficult to compete on the basis of price and/or quality. Globally, world leaders of such nations are unapologetic in pursuing their nation’s interests at the expense of others. In trying to avoid the image of the ugly American, we have often placed ourselves at a disadvantage. Nowhere is this more evident than in trade were our trading partners often have a clear advantage.

U.S. Census Data shows that we have a trade deficit with every trading region except for South and Central America and Australia/Oceania. At only $33.14 and $14.38 billion, respectively, the last four years and a combined trade of $310.44 billion this pales in comparison with the deficit for the rest of the world, -$844.66 billion, whose combined trade is $3.578 trillion. Below are 2014-2017 averages for most of the world in billions:
Canada: -$20.01
European Union: -$149.61
Asia: -$547.49
Africa: -$2.60

China is a case in point. Aware of the huge financial benefit that comes with their 1.38 billion consumers, they extract huge concessions from their trading partners, including the U.S. When they have not barred certain U.S. business sectors, they restrict or regulate business, place tariffs on goods, or coerce intellectual property release. Note this goes one way; there is no intellectual property sharing.

These noncompetitive business practices are not fair, but until now, U.S. companies have accepted them without much push back as the cost of doing business there. That is until Trump. What Chinese leaders need to realize is that they are not in a good bargaining position and the longer they hold out the more harm will come to their economy.

Here is why. Leaders of the government-run economy are well aware of their history and realize the huge Chinese population is not going to put up with poor conditions forever. To keep discontent at bay, they have a policy of inflated economic growth. According to Trading Economics, they have averaged 11.7% GDP growth for the past 10 years but chinks in their armor are showing. From the 2010-2011 heyday, where GDP grew 19% and 24%, growth has dropped steadily and sometimes precipitously. It was 5.56% and 1.14% in 2015 and 2016, respectively. Little wonder that worried central government figures have made a big push since then for increasing their global exports, including those to the U.S., resulting in a resumption of GDP growth to 9.35% in 2017. The prospect of increased tariffs, which would make their goods less competitive, runs afoul of those plans. China’s economy is struggling and their stock market is testament to that. The smaller Shenzhen composite moved into bear market territory in February and the Shanghai composite closed in bear territory on Tuesday, June 27. The indexes went as low as -26.5% and -25.0 on July 5 but have recently recovered to -22.5 and -21.2%, respectively, as global markets have climbed in tandem with U.S. markets. That is still in bear market territory, which will curtail much need foreign investment. Meanwhile, U.S. GDP is growing steadily, the economy seems to be healthy, and the stock market is nearing new heights. Trump can ratchet up the tariff game longer knowing he has more economic wiggle room. Moreover, he can inflict more pain to the Chinese economy than they can to ours.

To see why, let’s look at the trade numbers. The trade deficit with China has averaged -$358.68 billion the last four years in a rising trend. While U.S. exports have vacillated between $110-129 billion since 2012, Chinese imports have steadily increased from $315 to 375 billion. Last year the deficit was -$375.58 billion, of which $129.89 billion were U.S. exports to China and $505.47 billion were U.S. Chinese imports. Not only is trade unbalanced, so are tariffs. Prior to this year, U.S. tariffs on Chinese agricultural and non-agricultural goods were 2.5% and 2.9%, respectively, while Chinese tariffs on U.S. goods were 9.7% and 5% for the same. True, these had been going down from a 14.1% average prior to 2001 when China joined the World Trade Organization but that was part of the price and tariffs are much higher for some industries.

In Today’s Commercialized World, Money Is Everything – The Rich Can Even Afford To Buy Better Genes

One afternoon, after a grueling math exam, Ayomah’s math teacher, the old and lean Mr. Jacksotto Tobacco, smoking a thin hand-rolled cigarette, sat them together to recount a news story he’d read from a newspaper. It was a heart-warming piece of news. Between puffs on his cigarette, he narrated to the class how, a thirty year-old woman gave birth to a baby free of her family’s curse of Alzheimer’s disease – thanks to the wonders of medical science. To his young mind, it was hard not to feel the joy of the baby’s family, or the hope of the many others who feel helpless by their genetic inheritance.

The breakthrough, according to Mr. Tobacco, occurred when doctors in Chicago, in the US, applied genetic tests to batches of human eggs, helping the woman to have a baby free of her family’s early Alzheimer’s disease. According to him, without such intervention, the baby would have had a 50-50 odds of becoming senile by the time she was 40. But he had a terrible feeling as he thought about the implication of this seemingly wonderful evolution of medical engineering. Before long, the rich will be able to buy not only better education for their kids but also better genes! This thought was especially troubling for someone who didn’t know his father’s whereabouts, and who was being raised by a struggling single parent.

As a child, Ayomah was taught this in school: given a chance between being rich and being smart one should always choose the latter, for smart people will always be able to find a way to get rich and foolish people could easily lose the wealth someone else had worked so hard to accumulate on their behalf. This simple proposition was powerful for those of us growing up with less and whose hopes were derived from the knowledge that if even poor, talented individuals will have a shot in an otherwise unequal world. But after listening to Mr. Tobacco’s story, it turned out that money will buy smarts, too! After the class was over, Ayomah left home thinking that, the prospects for his family, which was already daunting, will, in the future, become almost hopeless. He couldn’t have narrated what he heard from Mr. Tobacco to his Mama. She would be crestfallen.

Ayomah had a great story to tell, he decided to put it in the form of a book. He failed to publish it because he was restricted by money. Later on, he managed to get some money, published the book but yet another challenge – he is unable to advertise it. He is again restricted by money. He thinks of abandoning the whole idea of writing altogether and start a business. Here too, he was restricted by money. He finally decided to go back to school to acquire marketable skills. Hoping that after his graduation he will be able to find a good job. Here too, he was required to first pay some tuition in order to be accepted into that institution. He got restricted again by money.

Artificial Intelligence and the Economy in the 21st Century

Artificial intelligence is a driving business force in this fast changing 21st century. AI is no longer an implausible futuristic vision, but a stark reality that is disrupting businesses worldwide. In the 21st century, companies are forced to rethink traditional market approaches and become more service – centric in order to remain relevant. Organizations such as Uber and air are perfect examples of 21st century enterprises. The application on the demand, always on technology that propel agility, simplicity, flexibility, and lean operators with customer experience at the core of their actions enabled new dawn of large or small organizations to leverage on the benefits of Artificial intelligence (A1) to succeed in the 21st century. Companies are gradually embracing A1 and its increasingly influence every aspect of business, especially consumer technology.

According to IDC, the worldwide market for cognitive systems, content analytics, and discovery software is expected to accelerate through 2020. As a result, there are speculations regarding AI growing role and whether that might adversely affect the job market.However, the purpose of automation is not to replace humans or dehumanization, but to enhance and augment human functions for improved productivity and efficiency.

The main key benefits of artificial intelligence are stated as follows:

1.Agility from orchestration: by harnessing the power of service integration and Develops, an agile and experience-oriented business, with programmable infrastructure, application releases, and catalog-based services, can be created.

2. Simplicity from autonomics: artificial and predictive analytics will self-healing, self-service, and proactive support, while minimizing waste and establishing elasticity. This will simplify enterprise system workings and enable up-place workforce to handle higher level tasks.

3. Being lean through automation: Automating repetitive tasks will result in waste reduction, workforce optimization, and efficiency point and improvements.

Despite the above disadvantages of AI, it will take several decades before AI will actually be replacing human intelligence. The horror scenarios of AI entities taking over the planet and killing off the human race is still part of science fiction. Although several futurologists predict the possibility of transferring the human mind into a body of a robot to seek immortality in 2050.

The combination of AI and nanotechnology will also make technological breakthroughs in the fields of medicine, energy, and production systems. The combination of AI and nanotechnology applied in solar panels will cause the price of renewable sources of energy to drop dramatically starting in 2025.

The question haunting many is related to the horror scenarios in which killer AI robots start hunting down humans to be killed. These scenarios have been made popular by Hollywood blockbuster movies like the Terminator. Although AI will be beneficial for the human race, it needs to be controlled. Without proper control mechanisms and protocols, AI robots might become hostile although it a highly unlikely scenario. According to Michio Kaku, AI robots will be truly beneficial for the human race. However, in the long term, AI robots must be controlled with various inbuilt mechanisms to prevent them from becoming too independent and autonomous with becoming hostile towards humans as a real possible future scenario.