It wouldn't be here without digression.

Digressions are good, especially when they're interesting like that one.

On my original topic all that's been going on has been another round of tariff threats and stock market dips from the boss man. He really has no discernable plan. It's more of the same.

So here's another digression while we're looking at how different models look in different nations. China is bizarro USA. They're like us backwards, for better and worse.

Typical middle class Chinese own multiple apartments because they're cheap, plentiful and a popular investment strategy. Unsurprisingly, their value is diving. It's a rough plan for retirement in a place with a very high tax burden and shockingly minimal social security. Where does the money go? The government invested over a trillion to extend their reach as a manufacturing behemoth. They're turning out goods that the Chinese citizens can't afford/don't want to buy.

On the one hand, until they can push that kind of volume into S America and Europe, a practical embargo on them from the US is a serious dilemma. On the other hand there is no reality where our domestic manufacturing can ever compare. This entire conflict has gone without attention to the fact that China has a deficit with the US in services.

I find China pretty worrying looking into the future. As you mention the social safety net in China is incredibly thin compared to other Communist states like Cuba for instance, which has world class eduction and healthcare. Everything else might be shit but when you're poor and education, health and housing is good then other stuff tends to hold the social fabric together. My fear with China is that the CCP is a paper tiger. But some context here, China has lifted more people out of poverty in the past 50 years than any other society in history by a massive margin. The next time some shill for capitalism bangs on about capitalism being the best system for reducing poverty tell them them to go and look at China, it's not even close.

There is a reason Western Communist states transitioned into capitalist states so quickly. They had very highly educated populations that had "social democratic" expectations of their societies post Communism.

But.

China has not created the kind of welfare and self management system within its economy that is should have. Civil society is incredibly weak. They imported western capitalist structures into their ownership and production. This was not necessary to produce the social goals they had. Fun fact, "Chinese Medicine" in its modern form was pretty much invented by Mao as a way of elevating the fact China was facing a medical crisis after the revolution and simply couldn't provide enough actual doctors so the CCP promoted traditional Chinese medicine as if it was actually medicine. It's no better than witchcraft.

^ I heard a story that when uppity youth movements manage to think around very tight censorship to suggest legitimate social security for the aging Chinese their media labels it "wacko American socialism" to put it to rest.

Well, Trump got to the end of his punt on trade deals and tariffs and really wanted to flaunt his quasi deals (with tariffs still often around 15%) when suddenly employment statistics come in bad. Add to this the ticking up of inflation and Powell's worst fear feels a little more likely: stagflation.

Trump could repair all of these self-inflicted wounds, but as the gradual downturn has shown, the economy isn't a sports car that you can whip around a corner in. It's a giant, slow, barge that changes trajectory over weeks and miles even after you jack the wheel as hard as you can. Inflation from tariffs has been gradual because of the steps along the supply chain, mega-corps' large inventories buying them time to see if the TACO trend will bail them out before they jack up prices.

You can hand Trump one thing, he knows that the US is the major global economy along with a couple other large siblings, and that other countries will show up to compromise and make deals. Unfortunately for him while he's been able to wirld this power like no one in recent American history, he's absolutely clueless. He's not doing anything productive with all of his willingness to break things. He suffers from an acute lack of curiosity.

Tariffs are a tax on US consumers.

That’s it. No amount of magical thinking can change that. Trump might be good at certain BS, but this nonsense is hitting reality and nothing he can say is going to change that.

There are very real criticisms of past trade practices to be had. You can have lower friction trade that benefits many people or you can have western companies pack up and move to cheaper markets to produce. Capital can move under recent trade practices but people can’t. Other than internally or in the EU single market.

Trump is now trying to defy markets. This isn’t possible. Markets transcend capitalism. They existed before capitalism and will exist after it. He’s high on his own supply and the nodding dogs he surrounds himself with are just fuelling the fire.