Blog

The Trade Wars Begin!

Donald Trump has “Cried Havoc! and let slip the dogs of war” – trade war, that is – to bay at and harass the good people of Canada and Mexico, America’s largest trading partners.  He imposed a tax of 25% on imports to the United States from each country.

He said he did this to pressure Canada and Mexico to do more to protect America’s borders from illegal immigration and to stop the importation by Americans of the drug, fentanyl.

This is Godfather stuff: “Give them a deal they can’t refuse!”

An apt comment is: “Those whom the Gods would destroy, they first make mad.”

(In verses 620–623 of his play Antigone, Sophocles wrote: “Evil appears as good in the minds of those whom god leads to destruction.”)

Mexico and Canada immediately reciprocated, taxing imports from the U.S. to their countries.

Now, if we ask the old question “Qui bono?” – to whose benefit? – asked by the ancient Roman judge, Lucius Cassius, and passed on to us by Cicero in one of his orations against dictatorial Mark Antony, the most likely answer is: “No one.”

The immediate effect will be fewer goods showing up in American markets and higher prices for whatever is imported, both eventualities lowering the real American standard of living.

Canadian and Mexican manufactures will not likely lower their net profit margins by whatever it takes to match the 25% increase in gross sales prices to be paid by American consumers so that Trump’s taxes will have no effect on American consumers.  As the prices on Canadian and Mexican goods go up, the quantity sold to Americans will go down.  That is the law of human nature – marginal utility curves.

In the 1930s, the American Smoot Hawley tariffs contributed to worsening the worldwide great depression, adding momentum to the rise of Hitler and Mussolini and so contributing to World War II, which killed a lot of people.

Trump’s taxes on imports will also lower economic output in Canada and Mexico.

It’s a win/lose game of chicken.  Who will blink first?

On January 31, Trump also mentioned imposing taxes on goods imported from the European Union and, in general, on computer chips, steel, oil, gas, copper and pharmaceuticals.

With his tariffs, Trump has violated the Caux Round Table Principles for Business:

Principle 5: Support Responsible Globalization

A responsible business, as a participant in the global marketplace, supports open and fair multilateral trade.  A responsible business supports reform of domestic rules and regulations where they unreasonably hinder global commerce.

His tariffs are a form of “brute” not moral capitalism, consistent with the thinking of Herbert Spencer, who argued that humans, like all other members of the animal kingdom, do not have a moral sense, only a predatory instinct to kill or be killed, eat or be eaten, whereby only the fittest survive, while the rest find themselves dishonorable graves (see Chapter 3 in my book. Moral Capitalism).

The first meeting of the Caux Round Table was convened at Mountain House in Caux, Switzerland, to discuss ending the trade war between Japan and the U.S./E.U., triggered by Japanese capitalistic prowess in making consumer electronics and automobiles of better quality and at lower cost than the Americans and Europeans were able to do.

By raising their cost, the American and European governments prevented their citizens from personally benefiting from Japanese innovations and quality improvements.

On their side, however, the Japanese restricted the import of American agricultural products to protect Japanese farmers and their small rural communities, which were no longer price competitive.

The business leaders gathered at that first meeting of the Caux Round Table came to an agreement on ethical grounds that all deserve access to the fruits of Adam Smith’s “invisible hand” that, through ethical, reciprocally balanced relationships and cooperation, improves quality, increases quantity and lowers prices through innovation.

In this regard, consider what DeepSeek just did to the demand curve for AI.

Is Our Politics at Odds with Our Civics? Please Help Us Draft a Statement

Looking at the United States at the present time and considering trends and decisions over the past four years, our times “seem out of joint”.

Executive orders in Washington, a Minnesota House of Representatives that cannot convene.

What was once in place for good civics to happen out of their own sense of right and fair seems to have gone missing.

It has been said these past few years, though more on the right than on the left, that politics is downstream of culture.  So, if politics is of concern, we should look first to culture.  Civics is shaped by culture, so maybe the pundits have it backwards – culture is downstream from politics.  Bad politics can make for bad civics.

Where then is the fulcrum on which the lever of good civics can rest to balance our needs and wants, our agreements and our disagreements, our gender agendas and our racial discontents, our communication of our truths and our use of law to overcome our insecurities?

Or rather, is it a fulcrum of civics – no longer taught much at all – that we need on which to rest the lever of politics, as it seeks to check extremes and balance passions with interests, ideologies with compromises?

A public statement of wise advice is needed to share with our politicians and educators.  Will you help us draft one?

Please join us for an in-person round table over lunch at noon on Tuesday, February 25, at Landmark Center, room 430, in St. Paul.  The topic on the table will be “is our politics at odds with our civics?”

Registration will begin at 11:30 am.

Cost to attend is $20, which you can pay at the door.

To register, please email jed@cauxroundtable.net.

The event will last between an hour and hour and a half.

More Short Videos on Relevant and Timely Topics

We recently posted a couple more short videos on relevant and timely topics.  They include:

The Way of the Viking

The Comfort of Complexity

Some Thoughts on Healthcare

All our videos can be found on our YouTube page here.  We recently put them into 9 playlists, which you can find here.

If you aren’t following us on Twitter or haven’t liked us on Facebook, please do so.  We update both platforms frequently.

Update on 2025 Global Dialogue and Request for Feedback

Recently, I sent you a save-the-date notice for our 2025 Global Dialogue to be held at Marymount University in Washington, D.C.

This is a short additional notice with more information and a request for your suggestions.

Our current estimate of a registration fee to cover room arrangements, food, support for speakers and overhead is in the range of $900.

There are the Hilton, Westin, Holiday Inn, Comfort Inn and Residence Inn locations within walking distance of Marymount’s Ballston Center campus.  However, the Placemakr is nice, only 50 feet away and less expensive.

I am hopeful of securing a venue in the Capitol for our sessions on Sunday, April 13.

Please let me know your suggestions for round tables and possible speakers and participants. Again, the overall theme of the dialogue will be a new global ethic.  You can simply respond to this email.

I am intending to ask a former director of U.S. national intelligence, a foreign policy expert in Moscow associated with the Valdai Discussion Club, which advises President Putin (by Zoom), the presidents of several think tanks, a leading journalist involved daily with analysis of American politics and experts on Ukraine, Israel and China, to join us as speakers or participants.  Our colleagues at Marymount are thinking of asking a member of the U.S. Senate to share thoughts on the new Trump Administration.

I look forward to hearing from you.

Can Donald Trump Deliver Moral Government? Please Join Us on Zoom January 30

This coming Monday, January 20, at noon, Donald J. Trump will take an oath for a second time to “faithfully execute the office of President” of the United States.

Trump has caused no little controversy in recent years.  That phenomenon is not likely to stop once he becomes president again.

As you reflect on the current condition of the U.S., the changes in the flow of power among nations and international organizations, the track record of Donald Trump, where would you put priority in seeking to promote high standards of trusteeship of the public good?

Please join us at 9:00 am (CST) on Thursday, January 30, for a Zoom round table discussion on Donald Trump and moral government.

To register, please email jed@cauxroundtable.net.

The event will last about an hour.

You may read a copy of our ethical principles (second set on page) for moral government here.

Who Is in Charge in Los Angeles and Did They Do Their Duty?

That so many structures of a modern civilization have been destroyed by wildfires propelled and sustained by nature – and by human shortcomings – is a shameful embarrassment for the United States.

But the lesson to be learned from the human failures – failures of character and good judgment – are universal.  They can be applied in every country because they lie at the heart of bad governance.

In 2012, Daron Acemoglu and James A. Robinson wrote an impressive and well-received book, Why Nations Fail, on the origins of power, prosperity and poverty.  In many ways, their theory of failure followed the recommendations of John Locke and Adam Smith to build institutions that embraces the ambitions, aspirations and well-being of individuals – politically and economically.

They credit good institutions with prosperity and bad institutions with poverty.  Good institutions bring about virtuous circles of growth and individual agency from individual to individual.  Bad institutions are elitist and extract rents from the economy and suppress growth and well-being.  They concluded that “Rich nations are rich largely because they managed to develop inclusive institutions …[under which] wealth is not concentrated in the hands of a small group that could then use its economic might to increase its political power disproportionately.”

In California, wealth and political power are concentrated in an elite – Hollywood and high-tech, for short – that failed at the state, county and local levels to provide for water reservoirs, to have fire hydrants that worked and which ignored warnings from the National Weather Service of the risk of wildfires flourishing with an assist from strong winds.  The budget for the fire department of Los Angeles was cut.  There was no professional management of chaparral and other undergrowth in the hills to the north and east of downtown Los Angeles.

It has been widely commented in the American media that this California elite had “its own priorities,” elevating the importance of an idealistic environmentalism, higher salaries for those who work for government (rent extraction from the public at large) and enabling dependency among the homeless and those ill-prepared to take care of themselves.

To the contrary, the Caux Round Table Principles for Government advocate:

1. The civic order shall serve all those who accept the responsibilities of citizenship.

Public power constitutes a civic order for the safety and common good of its members.  The civic order, as a moral order, protects and promotes the integrity, dignity and self-respect of its members in their capacity as citizens and therefore, avoid all measures, oppressive and other, whose tendency is to transform the citizen into a subject.  The state shall protect, give legitimacy to or restore all those principles and institutions which sustain the moral integrity, self-respect and civic identity of the individual citizen and which also serve to inhibit processes of civic estrangement, dissolution of the civic bond and civic disaggregation.  This effort by the civic order itself protects the citizen’s capacity to contribute to the well-being of the civic order.

4. Security of persons, individual liberty and ownership of property are the foundation for individual justice.

The civic order, through its instrumentalities, shall provide for the security of life, liberty and property for its citizens in order to insure domestic tranquility.

5. General welfare contemplates improving the well-being of individual citizens.

The state shall nurture and support all those social institutions most conducive to the free self-development and self-regard of the individual citizen.  Public authority shall seek to avoid or to ameliorate conditions of life and work which deprive the individual citizen of dignity and self-regard or which permit powerful citizens to exploit the weak.

The state has a custodial responsibility to manage and conserve the material and other resources that sustain the present and future well-being of the community.

All our principles, including the full list of our Principles for Government, can be found here.

Save the Date! Caux Round Table 2025 Global Dialogue

I’m pleased to announce that the Caux Round Table 2025 Global Dialogue will be taking place Friday, April 11 through Sunday, April 13, in Washington, D.C., in collaboration with the Convention of Independent Financial Advisors and the Center for Professional Ethics at Marymount University in Arlington, Virginia and you are invited to join us.

Please save the date.

Our ambition is to provide round table discussions on the elements of a global ethic relevant to our age and new dynamics of our global community.

In some ways, our times are reenactments of ages past.  There is trench warfare in Europe, conflict within the Abrahamic family of religions in the Middle East.  In Africa, the American Secretary of State has just made public his conclusion about genocide in South Sudan and since 1996, war in the eastern Democratic Republic of the Congo has claimed an estimated 6 million lives.  The BRICS alliance recently proposed its own terms for world order, independent of the Pact for the Future proposed by the United Nations.  Russia and China have proposed a world order centered on the prerogatives of “civilization states.”  China, in a move without precedent in human history, seeks to impose its sovereignty over the South China Sea, or what the Vietnamese call the “Eastern See.”  The challenge of clashing civilizational communities – religious and ethnic, the West and the Rest, North and South – is with us still

In Europe, effective and respected governance at the national and E.U. level is hard to find.  In Canada, a political transition is underway.  In the U.S., divisive factionalism – just as feared by its Founders in 1787 – has taken sway over public affairs.  Re-elected President Donald Trump has proposed tariffs as barriers to trade and market rationality and new arrangements for Greenland and the Panama Canal.

What should be done?  What can be done?

The tentative agenda, as of now, with speakers to be added shortly, is as follows:

Friday, April 11:

Location: Marymount University

-Opening Dinner

Saturday, April 12:

Location: Marymount University

-Welcome and Introductions

-Session 1: The New Global Order of Civilization States: BRICS et al; the E.U. in Decomposition; MAGA Isolationism in America

-Coffee Break

-Session 2: The Decline of the West, Just as Ibn Khaldun Predicted

-Lunch: Speaker

-Session 3: Fragmentation of the Global Economy

-Coffee Break

-Session 4: Money, Debt and Storing Value

-Session 5: Summary of Day’s Discussions

-Dinner: Speaker – Prospects for the New American Administration

Sunday, April 13:

Location: Think Tank in Washington, D.C. (TBD)

-Session 1: A View from Asia

-Coffee Break

-Session 2: A View from the Middle East; the Covenants of the Prophet Muhammad; is Islam a Civilization State?

-Lunch: Speaker – What Value is Virtue?

-Session 3: Stakeholders in the Global Economy: Qui Bono?  Qui Dicit?

-Coffee Break

-Session 4: AI and Moral Capitalism

-Session 5: Conclusions

-Closing Dinner: General Discussion

I do hope you can join us.

Additional information, including registration information, will be sent out shortly.

“Once More into the Breach, Dear Friends, Once More!”

Thus, in Shakespeare’s words, did English King Henry V challenge his soldiers to carry on against rival French defenders of Harfleur.

As many in business and finance know, success is not for all.  Failure and bankruptcy also mark the road forward for capitalism.  Creative destruction paves the way of progress and higher standards of living, said Joseph Schumpeter.  Clayton Christensen and the Harvard Business School wrote of the “innovators dilemma.”

Today, the once mighty company, creator of so much wealth and progress with its CPU chips to run computers, Intel is no longer just steaming along astride the waves of time and fortune.

The Wall Street Journal’s Christopher Mims reported on January 4-5, 2025:

“You may think you know how much Intel is struggling, but the reality is worse.

The once-mighty American innovation powerhouse is losing market share in multiple areas that are critical to its profitability …

One flashing warning sign: In the latest quarter reported by both companies, Intel’s perennial also-ran, AMD, actually eclipsed Intel’s revenue for chips that go into data centers.  This is a stunning reversal: In 2022, Intel’s data-center revenue was three times that of AMD.

… more and more of the chips that go into data centers are GPUs, short for graphics processing units and Intel has minuscule market share of these high-end chips.  GPUs are used for training and delivering AI.

By focusing on the all-important metric of performance per unit of energy pumped into their chips, AMD went from almost no market share in servers to its current ascendant position, says AMD Chief Technology Officer Mark Papermaster.  As data centers become ever more rapacious for energy, this emphasis on efficiency has become a key advantage for AMD. …

This situation looks likely to get worse and quickly.  Many of the companies spending the most on building out new data centers are switching to chips that have nothing to do with Intel’s proprietary architecture, known as x86 and are instead using a combination of a competing architecture from ARM and their own custom chip designs.”

Under the natural law of markets, what has no customers cannot be sold, no matter how nice, well-meaning and deserving the producer or the seller may be.  Markets are not charities.  As Adam Smith noticed, they match self-interest with self-interest.

But not every judgment about one’s self-interest is optimal.  People can be and often are short-sighted about what is best for them.  Some people can even be self-destructive or have no confidence in their agency to do good and right.

Thus, for me, finding the balance that makes a market transaction or capitalism, in general, moral, is a constant challenge for us all.

Negative Externalities from Political Advertising Anyone? An American Case Study with Global Implications

Will internet technology – produced and maintained by capitalist companies – be good for political discourse in America?

The Caux Round Table’s ethical principles for moral government rely on discourse for offsetting the worst in human self-promotion and denigration of others and empowering good reasoning and formation of balanced aggregation of opinion and getting us closer to a sustainable “truth.”

But a recent comment in the Wall Street Journal by Ms. Jamie Manning, CEO of Swann Street Media, a digital agency specializing in advocacy and political campaigns, points to very negative externalities associated with the most recent communicative campaigning techniques.

She enlightens us:

“The Trump campaign’s key strategists attribute their victory … to a finely tuned advertising strategy that used new techniques to target undecided voters with messages that the campaign knew would move the needle.  Specifically, the campaign found that “a disproportionate share of those undecided or swayable voters could be found on streaming services,” as a recent New York Times article noted.  Approximately half of up-for-grabs voters didn’t have cable and subscribed only to streaming platforms like Hulu, ESPN+, YouTube TV and Pluto.

That presented the Trump campaign with an unprecedented opportunity.  Most streaming platforms allow advertisers to choose exactly who sees their ads.  The campaign and allied super PACs chose wisely.  Operatives worked to “pair their polling data with consumer information and match it to the voter rolls in the seven swing states.  The end result was an actual list of 6.3 million individual voters.”

Modern analytics tools enable the Trump campaign and any other advertiser, whether a trade association looking to sway public opinion on a niche issue or a company hoping to boost sales, to assemble such lists with staggering precision.  By combining publicly available voter files with purchasable information from credit card companies, internet service providers and other data brokers, it’s possible to match voters with the unique “device IDs” of their laptops, desktops, smartphones and tablets.  From there, it’s possible to build accurate profiles based on purchasing, browsing and location histories.

The Trump campaign could push ads about its Make America Healthy Again agenda to a newly registered 20-year-old Hispanic male who frequents the gym, regularly listens to Mr. Rogan, streams UFC fights and buys vitamins at GNC.  Or the campaign could push ads featuring Mr. Trump’s and JD Vance’s pledges not to ban abortion – perhaps even featuring footage from their podcast appearances, where both men built trust with audiences by offering longer-form, nuanced takes – to reassure voters who were pro-choice, but favored Mr. Trump’s immigration or economic policies. …

Political campaigns at every level will increasingly pay for micro-targeted digital ads to reach the voters they need with the exact messages those voters find most compelling. …

A new day is dawning for political campaigns, issue-advocacy groups and Fortune 1000 companies looking to reach the audiences that matter most.  Precision targeting is the future.  The Trump campaign just got there first.”

With such targeted one-way communications, is there any discourse taking place?