Farmers Are Trump's Biggest Supporters - And Biggest Victims

(Cartoon image is by Dave Granlund at davegranlund.com.)

One of the craziest things about Donald Trump's trade war with China is that it has hurt his best supporters the most (farmers). Here's how Nobel Prize-winning economist Paul Krugman explains it in his New York Times column:

Donald Trump is unpopular, but he retains the loyalty of some important groups. Among the most loyal are America’s farmers, who are a tiny minority of the population but exert disproportionate political influence because of our electoral system, which gives 3.2 million Iowans as many senators as almost 40 million Californians. According to one recent poll, 71 percent of farmers approve of Trump’s performance — which is down somewhat from previous polling, but remains far above the national average.

Yet farmers are hurting financially. Investors are worried about a possible recession for the economy as a whole, but the farm recession is already here, with falling incomes, rising delinquency rates and surging bankruptcies. And the farm economy’s troubles stem directly from Trump’s policies.

This apparent contradiction — Trump is inflicting the greatest harm on the people who supported him most — isn’t an accident. Farmers’ past support for Trump was predictable: The demography and culture of (white) rural America make it fertile ground for politicians promising to restore traditional society, and especially traditional racial hierarchy. But farmers’ financial distress should also have been predictable: While rural America may dislike and distrust cosmopolitan elites, the U.S. farm economy is hugely dependent on global markets, and it has inevitably been a major victim of the Trumpian trade war.

The questions, looking forward, are whether farmers understood what they were getting themselves into, whether they understand even now that their distress isn’t likely to end anytime soon, and whether economic pain will shake their support for the man who’s causing it.

At one level, it’s not hard to see why farmers supported Trump. Hostility to nonwhite immigrants was central to his campaign, and such hostility tends to be highest in places where there aren’t actually many immigrants. So rural America, with its still tiny immigrant population, was a receptive audience for his fear-mongering. More generally, Making America Great Again — which was basically about setting back the clock racially and culturally — was a message that played well in places that still tend to think of themselves (and are told by politicians to think of themselves) as the Real America, as opposed to the big metropolitan areas where most Americans actually live.

On the other hand, while farm country may be notably lacking in ethnic diversity and feels generally distrustful of globalists, the farm economy is in fact deeply integrated with and dependent on world markets. On the eve of Trump’s trade war, America exported76 percent of its cotton production, 55 percent of its sorghum, half its soybeans, and 46 percent of its wheat.

Overall, U.S. agricultural exports are almost 40 percent of the value of farm production, up from just 15 percent circa 1970. Globalization hurt some parts of U.S. manufacturing, with particularly harsh effects on some small industrial cities. But the rise of China and the growth of world trade have been nothing but good news for farmers.

And here’s the thing: It shouldn’t have been hard to predict that Trumponomics would be bad for farmers. Trump’s desire for a trade war was out in the open from the beginning; protectionism is right up there with racism and anti-environmentalism as one of his core values. And a trade war was bound to hurt farm exports. Did anyone really imagine that China, an economic superpower with its own fierce nationalism, wouldn’t retaliate against U.S. tariffs?

So what were farmers thinking? My guess is that they let the will to believe override their judgment. Trump seemed like their kind of guy. He certainly seemed to share their dislike for urban elites who, they imagined, looked down on people like them. So they convinced themselves that he knew what he was doing, that he would win his trade war and that they would be among the victors sharing the spoils.

Even now many farmers seem to believe that the pain will end any day now, that Trump will soon announce a deal that restores all the old markets and more.

In short, farmers’ support for Trump should be seen as a form of affinity fraud, in which people fall for a con man whom they imagine to be someone like them.

And as is often the case in such frauds, the con man and his associates actually have contempt for their marks. . . .

So what will happen as the trade war drags on? Don’t expect farmers to suddenly exclaim en masse, “Hey, we’ve been had!” Real life doesn’t work that way. But they have, in fact, been had, and they may finally be starting to realize it.

Donald Trump Foolishly Decides To Start A Trade War

The tweet above by Donald Trump is in response to the backlash on his decision to kick off a trade war. On Thursday, he announced that he would be imposing a 25% tariff on foreign steel entering the United States and a 10% tariff on foreign aluminum.

The tweet shows just how ignorant Trump is to think that it's easy to win a trade war. It may seem easy to a hotel/real estate magnate, because he doesn't depend on exports to make a living -- but the same is not true of many others in our economy. There are many farmers, ranchers, and manufacturers in the United States that depend on exporting their goods to other countries -- and if another country puts a stiff tariff on those goods (in retaliation for the Trump tariffs), they could be devastated.

The higher cost of their goods could send consumers in those other countries to buy goods from a country other than the U.S., and that would cost both profits and jobs here in this country.

And the idea that we could win a trade war by just stopping all trade with those countries is simply ludicrous. For example, most foreign steel comes into the U.S. from Canada, Brazil, China, and Mexico. Is the U.S. going to cease trading with those countries? Of course not! Such a thing would be disastrous for business, jobs, and the economy in general.

Here is what the traditionally conservative Wall Street Journal had to say about Trump's tariffs:

Donald Trump made the biggest policy blunder of his Presidency Thursday by announcing that next week he’ll impose tariffs of 25% on imported steel and 10% on aluminum. This tax increase will punish American workers, invite retaliation that will harm U.S. exports, divide his political coalition at home, anger allies abroad, and undermine his tax and regulatory reforms.

I don't often agree with the Wall Street Journal on economic policy, but this time they are right. Our economy is still fragile and many are still recovering from the Bush recession. Trump's tax plan is bad enough (further widening the gap between the rich and the rest of the country), but the addition of a trade war could seriously damage the economy. It could even trigger a new recession.

If We Have A Critical Need To Drill For More Oil, Why Are We Exporting So Much Of It ?

For years now, we have been hearing from right-wing Republicans that we have a critical shortage of oil -- forcing us to depend on foreign countries for our oil supply. They say we must drill for more oil in this country, even if it means destroying national lands and beaches ("drill, baby, drill"). For them, allowing the oil companies to drill where ever they want is the only answer, and they are quick to denigrate putting federal money into renewable energy sources (and the GOP has actually proposed cutting funds for this).

Is that true? Do we really need to drill so much, even if it hurts the environment? If so, then the following list makes no sense at all. It is a list of our top ten exports to foreign countries:

1. Machines, engines.....$205.2 billion (13.9% of exports)
2. Electronic equipment.....$158.9 billion (10.7% of exports)
3. Oil.....$129.5 billion (8.8% of exports)
4. Vehicles.....$119.7 billion (8.1% of exports)
5. Aircraft, spacecraft.....$87.5 billion (5.9% of exports)
6. Medical, technical equipment.....$79.1 billion (5.3% of exports)
7. Fems, precious metals, coins.....$71.8 billion (4.9% of exports)
8. Plastics.....$58.6 billion (4.0% of exports)
9. Organic chemicals.....$45.6 billion (3.1% of exports)
10. Pharmaceuticals.....$38.8 billion (2.6% of exports)

That's right. We are exporting about $129.5 billion worth of oil to other countries each year -- nearly 9% of all of this nation's exports, making it the third largest category of exports from the United States. And it gets even worse. Those exports of oil are increasing (up over 200% in 2011), and are the second fastest growing export from this country (behind only vegetable products, which was up over 360% in that year).

If we have such a critical shortage of oil in this country, then why are we exporting so much of it to other countries? The truth is that those right-wing Republicans aren't really worried about our oil supply, or the fact that we import so much. If they were, they would be trying to stop those exports. No, they are just shilling for the giant oil companies. They care more about the oil company profits than they do about our environment or the price of gas for consumers (which all that exporting has to affect).

And the same is true of the proposed XL pipeline. They tell us that it will help to stop our dependence on foreign oil (in spite of the fact that pipeline oil will come from another country). The fact is that most of that oil will be exported after refined, and will do nothing to solve our energy dependence problem (if indeed, it is a problem at all).

North Korea Makes Jeans ?

This is a surprise to me. I had no idea that North Korea makes a brand of jeans. It's called Noko, and the jeans were scheduled to be introduced in the West in a Swedish department store. But that Swedish store, PUB, has decided not to go through with selling the Korean jeans.

PUB has pulled all the jeans off their shelves. They said they just didn't want to involve themselves in politics. Rene Stephansen, PUB's director, said, "For us this is not a question of Noko jeans - this is a question about a political issue that PUB doesn't want to be associated with."

The three Swedes who imported the jeans were disappointed, saying they had hoped selling the jeans would help to influence North Korea to open its society. The jeans will now be sold on the internet.

I can't believe the store wanted to sell the jeans in the first place -- for two reasons. First, the jeans only come in black. The North Koreans think the color blue for jeans is associated too much with America. But is it even really a jean if it doesn't come in blue?

The second reason not to sell them is their price. They were priced at $220 a pair ( 1,500 kroner). You'd have to be an idiot to pay that much for a pair of jeans (or have so much money you don't know what to do with it). For that kind of money, you could get several pairs of Levis, Wranglers or Lees, and wind up with better jeans to boot.

I'm a person who loves jeans, but I won't have any trouble passing up these overpriced rip-offs.

(The above picture shows the Swedish importers with the jean.)

Bush Playing Politics With Oil

Bush continues to play politics with the high price of gasoline. He has now lifted presidential restrictions on off-shore drilling for new oil. In that way, he's trying to get the American public to believe that high gas prices are the fault of Democrats because they won't allow new off-shore drilling.

Bush says the new drilling he is proposing would cure a "shortage" of oil in the long-term, and the psychology of the new drilling would result in a short-term drop in prices. Of course, this is pure horse-hockey. The big oil companies are not about to give up their record profits because of the "psychology" of some new oil leases, especially since they already have 68 million acres of leases they have not drilled in yet.

Democrats have asked the president to release some of America's strategic oil reserves to correct the perceived shortage. Bush has refused to dip into the oil reserves. Why? Because he knows there are no real shortages. It's just a game being played by his oilmen buddies to keep making their record-breaking profits.

Even those who admit there is currently plenty of oil want to play the "shortage" game. They claim the shortage is in gasoline because the U.S. doesn't have enough refining capacity to meet the demand in this country. This is also a lie.

The truth is that plenty of gasoline is being produced, but record amounts of diesel and gasoline are being EXPORTED from the United States to other countries at record levels. Gasoline exports to just one country (Canada) has jumped from 9,000 barrels in 2007 to 41,000 barrels in the first four months of this year.

Just look at gasoline exports for one month this year. During April, big oil exported an average of 202,000 barrels of gasoline each day from the United States to other countries. In April of 2007, 116,000 barrels a day were exported. If there is a shortage of gasoline (or oil), then why are we exporting so much to other countries?

For the first four months of this year, exports of American refined petroluem products (diesel, gasoline, etc.) were up 33% to about 1.6 million barrels each day. At the same time oil companies are complaining about a shortage of refining capacity, they are shipping huge quantities out of the country.

The truth is that if these exports were outlawed, there would be plenty of gas here and the price would fall so they could sell it all. But Bush is not about to do that. That would lower the oil company profits from obscene to merely outrageous. He wouldn't do that to his oil buddies.

So don't let the Republicans tell you the gas prices are high because Democrats won't allow off-shore drilling. The prices are high because the oil companies have created a false shortage by shipping our gas to the highest bidders in other countries. That's why they're getting record windfall profits even though the price of oil has risen.

These are multi-mational companies who care nothing about the American consumer. Bush and Cheney (and McCain) don't care either.

(Hat tip to M YU of Social Seppuku for the article on petroleum exports).