Friday, May 10, 2019

China US Trade War Escalation



How Goes the Trade War? by Paul Krugman Donald Trump ... provided us with many iconic quotations .... extremely clear examples of bad ideas........ foreigners paid none of the bill, U.S. companies and consumers paid all of it. And the losses to U.S. consumers exceeded the revenue from the new tariffs, so the tariffs made America poorer overall...... These price hikes led to substantial changes in behavior. Imports of the tariffed items fell sharply, partly because consumers turned to domestic products, but also in large part because importers shifted their sourcing to countries that aren’t currently facing Trump tariffs. For example, a number of companies already seem to have begun buying goods they previously bought from China from Vietnam or Mexico instead........... Consider the following example: pre-tariff, the U.S. imports some good from China that costs $100. Then the Trump administration imposes a 25% tariff, raising the price to consumers to $125. If we just keep importing that good from China, consumers lose $25 per unit purchased – but the government raises an extra $25 in taxes, leaving overall national income unchanged.......... Suppose, however, that importers shift to a more expensive source that isn’t subject to the tariff; suppose, for example, that they can buy the good from Vietnam for $115. Then consumers only lose $15 – but there is no tariff revenue, so that $15 is a loss for the nation as a whole........... But what if they turn to a domestic supplier – say, a U.S. company that will sell the product for $120. How does this change the story? ......... Here the crucial thing is that producing a good domestically has an opportunity cost. The U.S. is near full employment, so the $120 in resources used to produce that good could and would have been employed producing something else in the absence of the tariff. Diverting them into producing what we used to import means a net loss of $20, with no revenue offset. ....... in practice any manufacturing jobs added by the Trump tariffs are probably offset by losses of other manufacturing jobs. ........ most of the tariffs are on intermediate goods – inputs into production, so that job gains in, say, steel are offset by losses in autos and other downstream sectors. Beyond that, the tariffs have probably contributed to a rising dollar, which makes U.S. exports less competitive.
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Thursday, May 09, 2019

Modi Expecting A Larger Victory Than 2014



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Wednesday, May 08, 2019

India 2019: The Suspense

If the BJP-led alliance is at 250 or above, it might be able to still cobble together a majority by pulling in a few parties. But if the tally is closer to 200, that opens up the distinct possibility of the emergence of a new Prime Minister. As to who that new face will be is not at all clear.

The total number of seats is 545. That puts the halfway mark at 273. There are three camps: the BJP-led alliance, the Congress-led alliance, and the unaffiliated, sometimes known as the Federal Front. It is possible the unaffiliated could emerge as the second largest block after the Congress-led alliance and seek the outside support of the Congress-led alliance. As in, the BJP-led alliance could emerge the largest but not the majority block and still have to sit out.

Or Modi could easily hit 300. It is hard to tell.

NDA: 250-300, UPA: 80-120, FF: 160-200. If the Federal Front crosses 200, it might as well claim the top job.

On election results, it is best to keep an open mind One of the great charms of Indian democracy is the power of the silent voters ....... When the counting began for the 2014 election, there was very little expectation that some four hours later India would be witnessing a clear Narendra Modi victory, an event that was subsequently to be described as a ‘wave’. As Prannoy Roy has written in a recent book, even the outcome of the tsunami election of 1984 was largely unanticipated by the pundits........ the larger suspense will persist till the morning of May 23. ....... particularly true of rural women whose voting preferences are often not robustly factored in....... In the Delhi assembly election of 2013, the Aam Aadmi Party made its electoral debut. Its campaign was enthusiastic but not very organized. That was evident on polling day when the AAP’s patchy presence contrasted with the organized approach of both the Congress and the BJP. Yet, AAP performed spectacularly and came within a whisker of upstaging the BJP as the single largest party.......... Modi’s meetings in West Bengal for example have been hugely attended. The numbers attending are also far in excess of what the BJP’s weak organizational apparatus in the state can mobilize. Indeed, the success of these meetings has forced the West Bengal chief minister to organize many more public meetings than she originally planned. In places where the crowds have not matched her expectations, she has followed the meetings with a padayatra....... the raw human emotion of an election is never captured by surveys and exit polls. This is why it is best to approach the morning of May 23 with an open mind.

BJP banks on Bengal Ground reports from three rounds of polling indicate that the party could lose a chunk of the seats it had won in 2014 ...... “We could lose around 50 seats we had won in 2014 in states like Uttar Pradesh, Rajasthan, Madhya Pradesh, Chhattisgarh, Maharashtra, Bihar and Jharkhand. However, we are confident of springing a surprise in Bengal, Odisha and also in the Northeast to an extent to offset the losses,” one of the BJP leaders monitoring the party’s election war room in Delhi said...... “We are banking heavily on Bengal and Odisha. If we falter in these states, our tally will come down substantially,” another BJP leader said. “It would be very difficult for us to come close to the majority mark if the showing is not good in Bengal and Odisha,” the leader added....... “Our feedback shows there is a high chance of us winning between 10-15 seats in Bengal and anything between 5-10 seats in Odisha,” a BJP leader said....... The most serious losses are being feared in Uttar Pradesh, owing to the formidable BSP-SP-RLD alliance. ....The BJP has received reports of losses in Maharashtra owing to acute agrarian distress and the Congress-NCP alliance.

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