Looking out from Hell Town tonight...
Sun going down into Escambia Bay, which separates Milton from Pensacola, FL, 20 miles to the west.
websitesammy.com (estab. 1999)
4th Qtr GDP, at 2.1%, less than "greatest." Click here for
Tax Reform Scorecard.
Job losses total 701,000 in March; unemployment rises to 4.4%. Click here for
Vital Signs charts

2/29/20 -- 1,000 Words:

International stock indices performance
(close of Friday, Feb. 21 to close of Friday, Feb. 28)
NYSE
DOW
London Stock Exchange
FTSE 100
Tokyo Stock Exchange
Nikkei 225
Börse Frankfurt
DAX
Euronext Paris
CAC
Borsa Italiana
FTSI MIB
Hong Kong Stock Exchange
HANG SENG
-14.10%
-12.51
-11.4%
-16.02%
-13.56%
-11.68%
-4.51%
Lke what, you're so special? The Washington Post reports President Trump is furious stocks are plunging.

What do you think is responsible? Is it another hoax? Have irresponsible health officials’ warnings spooked investors? Is it because of the media overreporting a pandemic in a dastardly conspiracy to hurt the president's reelection chances?

Is it because Democrats are making fools on themselves on the debate stage? (And by the way, they are.)

Ah, we Americans … so provincial.

What goes around comes around, eh? Just like a virus. Where's FDR when you need him?



2/25/20 -- Laissez Les Bons Temps Roulez, Y'all

Mardi Gras makes ordinary people do strange things and act in strange ways. It's a festival that goes way back, tracing its roots to medieval Europe and the Bourbon kings of France. Technically those roots may even stretch back to Ancient Rome and the celebration of Saturnalia. In America Mardi Gras celebrations are older than America itself.

A little history. It didn't get its start in America in New Orleans as you might think, but rather in Mobile, Alabama. On March 2, 1699, which happened to be the day before Ash Wednesday, French-Canadian explorer Jean Baptiste Le Moyne Sieur de Bienville arrived at a spot 60 miles due south of New Orleans, and named it "Pointe du Mardi Gras. Bienville also established "Fort Louis de la Louisiane" (which became Mobile) in 1702. In 1703, the tiny settlement of Fort Louis de la Mobile celebrated America's very first Mardi Gras.

Party people, attired for the occasion. Lots of cutaway tux jackets, medieval dress, pirate costumes, low-cut scoop-neck, off-the-shoulder smocked tops. Lots of cleavage. And, strangely, Vikings.

Bienville established New Orleans in 1718 . By the 1730s, Mardi Gras was celebrated openly in New Orleans, not with the parades we know today but with elegant society balls. The earliest reference to Mardi Gras "Carnival" appears in a 1781 report to the Spanish colonial governing body. (The French colony was ceded to the Spanish Empire in the Treaty of Paris (1763), following France's defeat by Great Britain in the Seven Years' War.)

By the late 1830s, New Orleans held street processions of maskers with carriages and horseback riders to celebrate Mardi Gras. It remains ground zero for Mardi Gras celebrations, signaling the beginning of Lent and a more abstemious lifestyle for the next six weeks. Clean living, lean eating. Mardi Gras means Fat Tuesday, last chance to stock up on rich, over-caloric cuisine and for excessive drinking and frolicking. Remember man that thou are dust and until dust thou shalt return. Right after you shut this party down.

Taking pains to make sure the octopus doesn't fly away.
In 1872 a group of businessmen invented a King of Carnival, Rex, to preside over the first daytime parade. To honor the visiting Russian Grand Duke Alexis Romanoff, the businessmen introduced Romanoff's family colors of purple, green and gold as Carnival's official colors. Purple for justice, gold for power, and green for faith.

King Cakes, popular fare widely available in supermarkets even in the North around the Mardi Gras season, often decorated in the traditional Mardi Gras color palette. The King Cake takes its name from the biblical kings who visited the Christ child on the day now observed as the Epiphany in Western Christian liturgical tradition. Get it? Kings, Epiphany, Mardi Gras colors?

Oh, and Epiphany, revelation, Twelfth Night? In case you ever wondered where Skakespere got his titile from. But nothing to do with Mardi Gras, strickly speaking. If you didn't know, now you know.

The crowd. Hungry for "throws" (strings of beads, teddy bears, can cooler sleeves, doubloons, cups, other trinkets). Anything you can toss into a crowd without inflicting bodily damage on the unsuspecting.

What many a Yankee may not know is that while the festivities reach their crescendo in New Orleans on Shrove Tuesday, the gaiety starts much earlier and in just about every decent-size town along the Gulf Coast from Galveston, TX through southern Mississippi and Alabama and across the Florida panhandle all the way to the Atlantic Ocean.

And as far North as St. Louis, Missouri, which claims to host the second largest Mardi Gras celebration in the United States. (St. Louis was founded by French fur traders.) It's not just those Cajuns who know how to party it down. The whole south coast of the country is fairly rockin' from Epiphany until the first day of Lent.

Mardi Gras parades are traditionally put on by private social organizations called "krewes (and pronounced "crews"). A krewe's members are assessed fees in order to pay for the parades. They also sponsor balls, which remain a big part of the Mardi Gras tradition, some of them quite fancy. Annual membership fees can range from thousands of dollars per person for krewes involved in the biggest and grandest parades to as little as $20 a year for smaller clubs.

Beats walking.
In New Orleans and other large venues, the exclusivity of krewe membership ranges from closed organizations largely limited to relatives of previous members to small groups open to anyone able to pay a membership fee.

In smaller cities with smaller budgets or aspirations, the krewe members are actually the workers who build and decorate their floats. They even make their own costumes. For the largest parades and the largest floats, krewes hire professionals to do the work.

Parading krewe members are usually responsible for buying their own "throws," beads and coins and such, to throw to parade spectators. If you want to skip all the work and just ride along, you can actually arrange to pay to be on a float. Depending on the krewe you select and the parade day, it will set you back: $2,400 to $3,700.

The Navarre krewe at work.
Some krewes also organize other events throughout the year, like private dances and parties, for their members . It's also common for krewes active all year to be engaged in supporting charities and other public causes.

Ever since krewes began parading through New Orleans over 100 years ago, parade floats have played a major role in Mardi Gras history. These floats can be quite elaborate and artful. Many parades are themed each year, so floats have to be created or modified to reflect those themes. The most ambitious floats can easily cost $15,000 or more to construct, and they're not made overnight. Krewes often work on their creations year-round. Like anything else in life, when you get to the big time, you'll find it a serious business.

King Trident passing by, bearing gifts.
Photos are from the Navarre Beach Mardi Gras parade, Feb. 15. Navarre Beach is a barrier island beach community across from the town of Navarre.

The town's population is about 42,000, which is approximately the same as the number of people who come to watch.

The parade steps off at 1 pm, features about 50 floats, runs for about two miles and lasts about two hours. The Sherriff's Dept. closes off the causeway bridge sometime before noon. No more room.

The Bill of Fare at Chez Skelly Tonight: Shrimp and Chicken Etouffee
  • 2 tablespoons vegetable oil
  • 1 pound andouille sausage, diced
  • 3 pounds skin-on, bone-in chicken thighs
  • Kosher salt
  • 1/2 cup plus 2 tablespoons all-purpose flour
  • 4 stalks celery, diced
  • 1 large onion, diced
  • 1 green bell pepper, chopped
  • 4 cloves garlic, minced
  • 1/4 teaspoon cayenne pepper
  • 4 cups low-sodium chicken broth
  • 1 pound medium shrimp, peeled and deveined
  • 2 tablespoons dry sherry
  • Freshly ground black pepper
Heat a large pot over medium-high heat. Add the vegetable oil and andouille and cook, stirring, until crisp, 4 to 5 minutes. Transfer to a plate. Season the chicken with salt, then add to the pot in batches to brown, 5 minutes per side. Transfer to the plate with the andouille.

Make the roux: Remove the pot from the heat and cool slightly (there should be about 1/4 cup drippings; drain or add oil as needed). Return the pot to medium heat. Sprinkle in the flour and stir, scraping up the browned bits from the pan with a wooden spoon. Continue to cook, stirring, until the mixture smells nutty and turns a deep brown, 10 to 12 minutes. Add the celery, onion, bell pepper, garlic, cayenne, and salt to taste. Cook, stirring, until the vegetables are tender, 6 to 8 minutes.

Whisk in the broth. Return the chicken and andouille to the pot and simmer until the chicken is cooked through, about 25 minutes. Transfer the chicken to a plate and let cool slightly while the stew simmers; remove the skin and shred the meat. Return the meat to the pot. Stir in the shrimp and sherry and cook until the shrimp turn pink, 2 to 3 more minutes. Season with salt and black pepper.

Lee Benoit Cajun Band on "Louisiana Jukebox" television program in New Orleans, 1995.
Post parade bar scene. Never did get a drink.
Lady Look Like a Dude. That's a girl in the middle!
Dinner with the winners. Best in Category, Best Overall. Congrats, Sarah and D.!

2/18/20 -- Super Tuesday

Herewith the ABCs of counting delegates in this election year. On March 3rd, 1,357 of the 3,979 pledged delegates to be awarded to the candidates in all the Democratic primaries for the 2020 Presidential Election will be decided.

That's about one-third of what's needed to seal the nomination on the first ballot, and it all goes down in one day. That's why they call it "Super Tuesday."

The Iowa Caucuses awarded 20 pledged delegates. New Hampshire awarded 24. Why do they bother? Maybe Bloomberg knew what he was doing. (Even more so now that we've seen him debate.)

Fourteen states will hold their primaries this Super Tuesday. No one can get ahead of Iowa's and New Hampshire's preferential treatment. Two other states have primacy as well. Nevada holds its caucuses on Saturday, Feb. 22. It has 36 pledged delegates. It also has 12 superdelegates. South Carolina’s Democratic primary will take place on February 29, with 63 delegates at stake, 54 of them pledged.

So then March 3rd is as early as other states can get. This year California, which used to go later in the year, moved its primary up to Super Tuesday, so as to be more relevant.

Nothing worse than holding your vote after the race is already decided. Your vote may still be determinative but it's the early primaries that shape the race and solidify the leads of the frontrunner(s). Most people think the race is pretty much decided after that, although this is possibly the year they're wrong.

It is a lot of votes. California (415 delegates) and Texas (228 delegates), the two most populous states in the country, account for 643 of the day's delegates all by themselves.
Super Tuesday at a Glance
Primary Dem Del. GOP Del. Type
Alabama primary 52 50 Open
Alaska Republican convention 0 28 Closed
American Samoa Democratic caucus 6 0 Closed
Arkansas primary 31 40 Open
California primary 416 172 Mixed
Colorado primary 67 37 Open
Maine primary 24 22 Closed
Massachusetts primary 91 41 Mixed
Minnesota primary 75 39 Open
North Carolina primary 110 71 Mixed
Tennessee primary 64 58 Open
Texas primary 228 155 Open
Utah primary 29 40 Closed
Vermont primary 16 17 Open
Virginia primary 99 49 Open
Democrats Abroad (to 3/10) 13 0 Closed

If no candidate should get a majority of delegates on the first ballot in Milwaukee, a second ballot will be held. This is when the superdelegates get to vote (an estimated 771 elected officials like members of Congress, Governors and leading party officials). Also, pledged delegates are released to vote as they choose after the first ballot according to DNC rules. Again, a majority wins.

Not counting the superdelegates until the second round is a refinement the Democratic National Committee (DNC) put in following the fallout from the 2016 race, when supporters of Sen. Bernie Sanders (I-VT accused the national party of tipping the scales in favor of former Secretary of State Hillary Clinton. Clinton had early on secured considerable verbal commitments among superdelegates (who are technically uncommitted). After the New Hampshire Primary one DNC member quipped that Sanders had gone to bed ahead, and woke up effectively tied in the delegate count once those commitments were added in.

Fun Facts: Nominating thru the Years
  • In 1831 the Anti-Masonic Party convened in Baltimore, MD to select a single presidential candidate agreeable to the whole party leadership in the 1832 presidential election.
  • The term "dark horse candidate" was coined at the 1844 Democratic National Convention, when a little-known Tennessee politician, James K. Polk, emerged as the choice after the failure of the leading candidates—former President Martin Van Buren and Michigan Senator Lewis Cass—to secure the then-necessary two-thirds majority.
  • Florida enacted the first presidential primary in 1901.
  • In 1910, Oregon became the first state to establish a presidential preference primary, which requires delegated to the National Convention to support the winner of the primary at the convention.
  • By 1912, twelve states either selected delegates in primaries, used a preferential primary, or both. By 1920 there were 20 states with primaries, but some later reversed course.
  • The primary got its first major test in the 1912 Republican Convention with President William Howard Taft up against Theodore Roosevelt and Robert La Follette. Roosevelt proved most popular in primary voting, but those were non-binding and held in only fourteen states. At the convention, the nomination went to Taft.
  • The 1924 Democratic National Convention required a record 103 ballots to nominate John W. Davis.
  • In 1952, Senator Estes Kefauver of Tennessee beat sitting President Harry S. Truman in the New Hampshire primary, leading the latter to drop out of the race. Kefauver went on to win 12 of 15 primaries but in the end lost out to Adlai Stevenson, governor of Illinois. Stevenson was first choice of the Democratic Party political bosses. He had resisted calls to enter the race but was nominated anyway by a "Draft Stevenson" movement following his eloquent keynote speech on the opening night of the convention.
  • In 1968, Vice President Hubert Humphrey got the Democratic nomination despite not winning a single primary. After that the National Democratic Party adopted rules that called for more delegates to be selected by primaries.
  • Primaries were adopted as the principal nominating tool by the Democratic National Committee in 1968. Republicans adopted the primary as their preferred method in 1972. By 1992 Democrats had primaries in 40 states, Republicans in 39.

Yes, yes, time marches on. But new and improved doesn't always mean better. When conventions played the vital role in deciding a party's nominee, they could be heated affairs, far from democratic or transparent. Political bosses controlled nearly all of the delegates and decision-making was often shrouded in secrecy and intrigue. But who says that was totally a bad thing?

A good argument can be made that nominees chosen by party elites are more likely to produce presidents who will more closely represent the preferences of the average voter. Primary voters tend to be more ideologically aroused than the average Joe or Jane. And they get behind candidates who often aren't even representative of the core of their own party much less of the general voting populace. Candidates closer to the middle still have to prove how fiercely partisan they are to appeal to the ideologues most likely to vote in primaries.

Party leaders, on the other hand, are likely to seek out a legislator or executive with the experience and temperament that more closely fits within the general public’s perceived preferences. They have an incentive to find a candidate who appeals to the median voter because they want to be in power when the dust settles, and that means capturing the broadest range of the general electorate. Richard Nixon used to say you have to run hard right in the primaries and then turn into a centrist in the general election.

What's more, a closed-door selection process allows for a level of discussion, frankness and horse-trading that disappears when the process is conducted in public.
George Grantham Bain Collection / Public domain
1912 Republican National Convention, Chicago Coliseum. Roosevelt won the primaries. Taft won the nomination.
Out of sight, party elites can hash out contentious issues, account for vulnerabilities and make the necessary compromises with opposite forces without having to worry about staying on message.

Consider this. Sanders may have complained that superdelegates were putting the fix in for Hillary Clinton in 2016. But the truth is, both parties invented superdelegates for the express purpose of reversing potentially bad decisions by their rank and file.

The voting process needs to be democratic and in the open, but that doesn't mean every aspect of the nominating process has to be rooted in the democratic process. There could be a role for professional judgment and experience to play. (For some quick insight into our Framers' democratic state of mind, click here.)

Unquestionably, there were some structural flaws in the "smoke-filled rooms" of yesteryear, but that routine evolved with a purpose. America may never come up with a political process that some politicians won't try to game. But the first goal of reform should be, like the doctors say: "First, do no harm." Separate baby and bathwater.

Just for the sake of argument, what if Bernie Sanders winds up with the Democratic nomination because the more moderately inclined candidates, and there are more of them, cancel each other out? So he beats all of them not collectively but head to head, getting a 40% plurality. And then goes on to lose to Trump, marginally unpopular himself, 48% to 46%.

In 2016 the primary system gave American voters arguably two of the least popular presidential candidates in American political history.


2/9/20 -- Same as It Ever Was

The Tax Reform Scorecard (top link on right) was launched in 2017 to gauge whether the Trump administration's Tax Reform package of that year would live up to the hype.

The betting among those who derided it as a needless give-away to large corporations and wealthy taxpayers was, naturally, that it could not. But they may not have just been cranky curmudgeons.

Now, two years out, it is instructive to note that Administration spokespeople, while continuing to hail the 2017 GOP tax plan as a signal accomplishment, tend to speak only in benign and vaguely generalized terms. Nobody tries to bring up any numbers anymore to support their case.

It probably never really had a chance to be the muscular game-changer Treasury Secretary Steven Mnuchin envisioned. In September 2017, he boldly predicted that not only would the plan “pay for itself, but it will pay for the debt” and “cut down the deficits by a trillion dollars."

Mnuchen and friends in 2017 when the world was new

A bridge too far, a height too lofty. Nobody outside a small circle of fanatical supply-side economists believes that tax cuts even pay for themselves. Where Mnuchen was headed was way past the second star to the right and straight on til morning.

The stated ambitions behind that legislation as enumerated by Secretary Mnuchen and other supporters were these:

  • Improved GDP growth (Gross Domestic Product, basically economic output)
  • Growth in jobs, earnings and corporate investment
  • Revenue growth sufficient to control and even reduce the federal deficit.

In 2018, besotted by an upward lurch in GDP the President was moved to proclaim, "So we're at 3.3 percent GDP. I see no reason why we don't go to 4 percent, 5 percent, and even 6 percent.”

For the record, 4th quarter GDP is 2019 was 2.1%. Second quarter in a row. "A long time forgotten, the dreams that just fell by the way .... "

("Good-Hearted Woman," by Waylon Jennings. The lyrics to which are worth cogitating over in these frenetic days:
A long time forgotten, the dreams that just fell by the way
The good life he promised, ain't what she's living today
But she never complains of the bad times
And the bad things he's done
She just talks about the good times they've had
And all the good times to come
She's a good hearted woman in love with a good timin' man
She loves him in spite of his ways she don't understand
Through teardrops and laughter, they'll pass through this world hand in hand
A good hearted woman lovin' a good timin' man
Did you know that Waylon Jennings once upon a time looked like this?
Waylon Jennings Promotional picture for RCA Records)

Tax revenues never got near anything like the infusion Treasury Secretary Steven Mnuchen was looking for. The boost in personal income? Not bigly either except for top-end earners, but for them income indeed grew. And why would it not? The government handed them a lot of money. The bottom 70% of wage earners didn't see much of that action though, and what they did see was in many cases cancelled out by the new cap on state and local income, sales, and property tax deductions.

Employment growth is still strong, but that seems more like the continuation of a longer-term pattern. The job market was already doing quite well. Job growth is actually showing some signs of slowing recently, as might be expected this late in such a long period of expansion. But jobs and consumer spending remain the two bright lights shimmering through the midst of this economy.

In any event, those heady original projections could very likely have been little more than a convenient cover story masking the real motivation pushing the Tax Reform Act forward. Republican leaders may have just been making good on a campaign promise rich supporters had extorted from them during the 2016 election cycle. Well-quoted sources on both sides of the Congressional aisle have suggested as much.

The Congressional Leadership Fund, a Republican super PAC blatantly warned lawmakers who might stand in the way of the tax cuts in the House not to expect any share of the $100 million it expected to spend on the upcoming midterm elections.

Current presidential candidate Bernie Sanders fervently believes this narrative. He called the 2017 tax cuts at the time "a thinly disguised reward to billionaire extreme right-wing donors."

Chris Collins, a Republican Congressman from New York echoed that view, albeit more softly but admitting to reporters that pressure from donors made the reform essential. "My donors are basically saying, ‘Get it done or don’t ever call me again,’” he said.

President Trump boasted the bill would be like rocket fuel for the economy. But all that really took off was the federal deficit, the one thing that wasn't supposed to happen. It's now on track to pass a trillion dollars, a figure broached only in the dark days of the Great Recession. Not what one would expect in a healthy, growing economy.

The original intent with the Scorecard was to track six salient metrics for three years to see how close the White House's flights of fancy might come to realization. But there's no need to go further. The Trump tax reform hasn't done much to move any of those metrics, certainly not to an extent that matches expectations. And now, presumably, the time has pretty much passed.

But all that said, the Scorecard charts turned out to be a useful graphical way of tracking economic progress over time. Unfortunately, casual feedback from readers makes clear many could not make heads or tails out of all those numbers.

Part of this was self-inflicted, the result of trying to report a range of numbers that resist apples-to-apples quarterly comparisons.

For instance, GDP quarterly displays are in line with how that benchmark is tracked. But the revenue and deficit presentations are not so informative. First, the disparity from quarter to quarter is both too arbitrary and too large—due to uneven revenue inflows (e.g., the April 15th revenue bulge). Second, those numbers get published not quarterly but monthly and not on a calendar- but a fiscal-year basis. (The federal government keeps its books from October to the following September 30.)

So here's a slightly revised design, much much better than new, separating revenue and deficit numbers annually and on a fiscal-year basis. GDP and related investment growth figures as well as employment and earnings figures are still displayed quarterly on a calendar-year basis.

Confusing? Not really. Just look at the tables. Look often enough and you won't even have to check out how the stock market is doing. You'll already know where it's going.

Of course, the guys who do this for a living well know too. And will probably still find out sooner than you will. That's why they do this for a living. But really, it's no harder than Fantasy Football.

Or don't you do that either?



1/20/20 -- Ah the Siren Song of Protectionism: an Old Fashioned Love Song or Just a Catchy Tune?

Give us a protective tariff and we will have the greatest nation on earth.
Abraham Lincoln, 1847

America has been a staunchly protectionist country for most of its history. Not just Lincoln, but before him Hamilton, Jefferson, the Adamses, both father and son: all championed protective tariffs.

Not to mention the Father of our Country. One of the very first bills Washington signed as President was a tariff: the Tariff Act of 1789.

Predictably, its stated purpose was to raise money for the new federal government, reduce Revolutionary War debt and protect the fledging country's fledgling industries from from foreign imports. And tea.

Most goods entering the U.S. were subjected to a 5% tariff (although there were cases where the rate would go as high as 50%). But on the whole, pretty modest stuff actually.

Still, tariffs generated the bulk of federal receipts up until 1913 when Congress passed its first federal income tax. In some years tariffs funded as much as 95% of the federal budget.

Tariff sentiments were not exactly homogeneous across the land. The (relatively) industrialized Northeast favored protective tariffs to bolster its competitive position versus Old World industrial importers. Southerners generally opposed tariffs because they were primarily consumers of European goods for their homes, farms and business.

Plus, the South, with an economy predominately agriculture-focused, didn't want anything to complicate its access to Europe's markets, which protectionism would surely do. Boiled down to its essence, Southerners were often inclined to see a tariff as a transfer mechanism that moved wealth geographically from south to north. And it rankled them. Can you sense where this is going?

In 1832 the so-called Tariff of Abominations created a constitutional crisis starring Andrew Jackson and South Carolina . Jackson's Vice President John C. Calhoun (S.C., Dem. - but Calhoun often served as a virtual party-independent who variously aligned as needed with Democrats and Whigs.) resigned his office and ran successfully for the Senate where he became a champion of Nullification, the contention that a state has the right to declare any federal law it considers unconstitutional to be null and void within its boundaries.

It became a crisis in that it gave rise to a powerful movement towards secession in the South—very nearly a civil war before the Civil War. Jackson dispatched federal troops to Charleston, and South Carolina in turn prepared to muster troops of its own.

Tensions were reduced at length through a Congressional compromise (Remember Henry Clay?), but residual hard feelings from this long-simmering dispute are generally considered to have contributed to the start of the real Civil War thirty years later. "Forget, Hell!"

Tariffs began to decline in importance after 1914 and the income tax, but ideological positions didn't change much until the Great Depression.

The Smoot-Hawley tariff of 1930 gave rise to tit-for-tat global trade barriers that deepened the depression, and by the middle of the decade the Roosevelt White House was working to undo the damage.

By the end of World War II, tariffs had lost favor in Washington. Republicans morphed into free marketers and joined Democrats in a commitment to low tariffs. Why? American companies had come to dominate the global economy. Ronald Reagan particularly reviled them

Protectionism lost favor as a valid tool for boosting growth, and things stayed that way until when foreign competition once again started to creep once again into U.S. markets in the mid '70s. Remember the foreign car invasion? Remember when "made in Japan" evolved from a slur into a stamp of quality?

But tariffs have returned to Washington in fine style and high fashion under the Trump administration. Only this time to protect against fledgling industries (China's) and in response to that country's perceived abusive and predatory trade practices, many of which fall outside of international trade rules and contribute to America's trade deficit. These include stealing intellectual property, publicly subsidizing private enterprises and forcing trading partners to transfer proprietary technology to China as a price of doing business.

President Trump is fond of claiming that punitive tariffs have generated billions of dollars in new revenues for the U.S. Treasury, paid by China, but tariffs don't exactly work that way. Tariffs are taxes paid by U.S.-registered firms to U.S. customs when goods they order from outside the United States enter the country.

Customs duties have indeed been a windfall for Washington. According to the Congressional Budget Office, they grew by $29 billion (or 71%) in the last fiscal year primarily because of the new tariffs imposed on China. That income has helped counter revenue losses resulting from the 2017 tax cut (which triggered a $92 billion drop in corporate tax receipts in FY 2018).

U.S. Importers employ a mix of ways to spread tariff costs among suppliers and buyers, including accepting lower profit margins for themselves, cutting costs, wages and jobs, and, of course, raising prices to end-consumers.

Chinese suppliers may also choose to absorb some of the cost increase, for instance by giving discounts to U.S. importers in order to maintain contracts and market share. U.S. importers can also look for suppliers in other countries with more favorable US tariff rates, and growing numbers of companies are doing so. But in the end guess who pays the lion's share?

The scarier headlines project future costs to the consumer based on both actual and proposed tariff increases, and most of the latter will never actually be imposed. However, according to a report by JPMorgan Chase last August, Tariffs already imposed on China are estimated to be costing the average American household $600 per year. Other estimates broadly match up with this.

Still other estimates calculate the trade wars are trimming U.S. GDP growth by about quarter of a point. (E.g., The Tax Foundation estimates they reduce long-run GDP by 0.26%, wages by 0.16%, and employment by 198,700 full-time equivalent jobs.)

Is it all worth it? Time will tell. But The Washington Post point out that compared to every other advanced economy, the United States is actually fairly well insulated from trade. We import 15% of our GDP and export 12%. Good numbers for a rich country.

The final story will be told more likely by historians than economists. Certainly not by politicians. You could start here with a column penned a little while back by James Stewart on the mother of all trade wars. "What History Has to Say About the 'Winners' in Trade Wars" appeared in Stewart's "Common Sense" column in The New York Times in March 2018.

Stewart is a highly seasoned journalist and author of a barrel of acclaimed books on the American business and political scene including "Den of Thieves," on the 1987 stock market crash and "Blood Sport: The President and His Adversaries," on the Clintons and Whitewater.

It's a column you should read. It's not too long, it's a very thorough survey, and it could make you a better person. One better prepared for the times that may be coming. Click here.

Fortune magazine in its January issue points out that U.S. tariff rates, for all the headlines they're generating these days, are actually near all-time lows (as they calculate: weighted mean for all products). Even China comes in at 3.8%, notably lower than South Korea. Evidently we're not too interested in sub-Sahara Africa. Fortune estimates that with Canada and Mexico running a close second and third to China as trade partners aggregate tariffs are likely to remain near historic lows. So what's all the fuss about?

Junedeck from John Skelly
June Memorial Deck
June Memorial Deck