In the April 14, 2024 WSJ Andy Kessler writes one of the best columns I’ve seen on why what’s coming out of D.C. is dangerous to everybody. One of his best lines is, “The U.S. prospers atop a horizonal empire, not as a vertical island.” Some takeaways:
- Trade deficits don’t matter. If they did, why did U.S. household net worth go from $41 trillion in 1999 to $160 trillion in 2024 when trade deficits were $15.4 trillion?
- We outsource low margin things. He points out Apple designs products in the U.S. and has them made overseas. Apple has a 34% operating margin and their main assembler, Foxconn, has a 3% operating margin.
- Low-wage jobs aren’t what’s needed or wanted by workers. Modern manufacturing requires people to be proficient in operating robots and programming machine tools so “fixing education is critical.”
One thing Kessler doesn’t touch on is how services are calculated in trade. I’ve seen a lot of articles saying they’re ignored, for the most part. If we had a client in Canada, they pay us in U.S. dollars, there’s no way it gets noticed in any calculation. Now multiply that by a million times, or more.
The bottom line is, with the almost daily changes in policy no wonder the markets are on a rollercoaster ride, business owners are being cautious, and I’m guessing consumers are also, or so will be (cautious).
We just published an article about how all this affects business owners wanting to sell, business buyers, and owners not wanting to sell. To read it click here.
“Not knowing the scope of your own ignorance is part of the human condition.” (Psychologist) David Dunning