daily musings

Category: Uncategorized

  • Rationale for US Tariffs

    I was curious about why Trump talks about the year 1913 when he refers to tariffs.

    Apparently before 1913, the US relied entirely on tariffs and excise duties to fund the federal government. There was no income tax. Even then, the government recognised that tariffs impacted the population unequally. Tariffs and excise duties made the price of goods more expensive locally and this was a greater burden on the less well off. The well off would feel the impact of the higher prices but it had less of an economic impact on them.

    A prime concern of the drafters of the US Constitution had been to prevent federal government overreach. And therefore the federal government was prohibited from collecting taxes directly from citizens. It could only collect revenue from states proportionately. Although it was recognised that tariffs and excise duties were unfair on the less well off and the wealthier people were not contributing their fair share, nothing could be done as the courts kept on striking down laws that attempted to collect individual taxes.

    Until 1913. By the 26th Amendment passed in 1913, the US Constitution was amended to allow for the collection of taxes directly from citizens. Since then individual taxes and corporate taxes have been the main sources of revenue for the federal government. The level of tariffs came down after income tax introduced.

    So when Trump refers to 1913, he is hoping to revert back to a period when tariffs would bring in sufficient revenue to the federal government and then taxes on individuals can come down. The idea is that since tariffs are paid by foreigners and foreign companies, there would be little resistance domestically to this.

    To some extent this is true. But then the original problem of tariffs increasing the prices of goods within the US remains. This will push up inflation. Again the less well off will bear the brunt of the price increases. The wealthier will do better in this scenario because they will pay lower taxes.

    When tariffs started coming down after 1913, it made sense to make goods in the cheapest possible place and then import it to the US. China became the beneficiary of this after it opened up and was, for a long time, the factory of the world. China prospered and its economic strength grew on the export dollars it was earning. By being the factory of the world, employment prospects for the Chinese population increased and its people and companies prospered. Correspondingly whilst consumers in the US and Europe benefited from the lower prices of goods, their manufacturing base was decimated. Making goods in the US and in many parts of Europe was no longer competitive. Factories shut down and manufacturing jobs, which had been the mainstay of US employment, were lost.

    Trump hopes that if the tariffs are high enough, companies outside the US would invest in manufacturing facilities within the US to avoid paying the tariffs. This would then bring back manufacturing jobs to the US.

    And of course tariffs would reduce the trade deficit the US has with many countries because either they would have less things to sell to the US or would have to pay taxes to the US to import them.

    Another side benefit Trump might be focused on is the economic impact especially on China. Tariffs on Chinese goods will hurt its manufacturing base, create unemployment and reduce its economic strength.

    The theory makes sense but will it work? The price of goods in the US and in the rest of the world would differ significantly. If the goods were manufactured in the US, the goods will be more expensive because the cost of manufacturing in the US is going to be higher not just because of labour costs but also because of the investment cost. With this price difference can the US be competitive? Also the less well off in the US are going to have to bear this higher burden of the increased price of goods. How will this pan out? The US no longer produces all the raw materials it needs to make goods. These will have to be imported. Wouldn’t the tariff on these raw materials also drive up the price of goods?

    I wonder how long will it take to see if reverting to the pre 1913 position brings jobs and prosperity equally to all in the US?

  • Election Season

    So it’s election season again and the main stream media and social media are filled with election related news. Everyday new candidates are introduced.

    I wonder if now is the best time to call the elections for the ruling party.

    In 2015, elections was held in the immediate aftermath of LKY’s death. The outpouring of “grief” and gratitude to the founders generation ensured that the ruling party scored almost 70% then.

    In 2020, election was held just after Covid broke out. The ruling party must have thought they would do well as the people were afraid then of the future and at that time, political and economic stability was important. Social distancing rules and mask wearing made campaigning difficult for the opposition. Surprisingly the ruling party only managed 61.24%.

    Issues such as cost of living, property prices, car prices, employment related issues, immigration related issues, general economic conditions, the conflict in Gaza and some own goals are going to make this even tougher than 2020 for the ruling party.

    People I speak to are generally negative about the current state of affairs in Singapore although I confess I have no idea where the sentiments of the heartlanders are.

    Can the current tariff war be used to warn people that they are going to be in for a rough ride and they therefore need to vote carefully? Not sure the common man would understand the implications of tariffs.

    The Worker’s Party has been quietly working the ground and they have picked up some good new candidates. I think they will do well.

    The new PM will want very much to make his mark and bring in his new younger team. Pity it is not the best of times although the current state of affairs is not of his doing. Just hope he doesn’t get the blame if they do not do well.

  • Indian Start Ups

    Just read that a Indian Cabinet Minister created an uproar over his remarks at a tech event to Indian start ups to create AI and tech like the Chinese instead of ice cream and more food delivery apps.

    In his scathing remarks he said Indian start ups were pandering to the wealthier people who didn’t want to leave their homes by having young people do back breaking work to deliver goods and food to them. No economic benefit to the country whatsoever.

    This is exactly what I told my Indian friend after my China visit. I said that China is so far ahead in tech such as EVs, telecom devices, wireless technology, battery technology and AI. I had visited India and then China in the same month and the contrast was telling. India is so far behind in technology and AI and that is quite shocking. No Indian companies involved in high speed train, no manufacturing of high end phones, no EV car companies and Indian AI to date. I do wonder what is their current state of weaponry.

    They are not lacking in smart people who are technologically savvy. Some of the top US technology companies are run by Indians. They have money that can invest in these companies. They have a decently well educated population and English conversant. Yet why are they reticent to do it? Are they not worried that they are falling far behind?

    What would it take India to start moving up the innovation and AI ladder?

  • Liberation Day

    Trump announced his so called Liberation Day today. He said that the US has been looted, pillaged, raped and plundered by the other countries for a long time and that it is now time to correct the imbalance. He also said that it is now time to make the US wealthy again.

    So what he has done is to announce tariffs on all countries that import goods into the US. Any country importing goods into the US will be hit with a minimum 10% tariff. That number increases if the other country, for a variety of reasons, has a “tariff” that it charges to the US either as a result of direct tariffs it charges , currency manipulation or trade barriers. In addition, all foreign made automobiles will be hit with a 25% tariff. Canada and Mexico have been hit with a 25% “fentanyl” tariff.

    He says that he intends to make US an industrial powerhouse. And he anticipates a total of $6 trillion of investments by companies into the US. He hopes to cut government spending significantly and with tariffs and investments by countries into the US, there will be tax cuts soon in the US.

    Asia Pacific countries have been hit hard. China has been hit with another 34% and with the existing 20% that were already in place, the total tariff is now 54%. India 26%, Japan 24%, Indonesia 32%, Cambodia 49%, Thailand 36%, South Korea 25%, Vietnam 46%, Malaysia 24%, Taiwan 32% and Singapore 10%. Most of these countries are US allies and I wonder if they would feel a sense of betrayal.

    But do tariffs actually work and will they achieve the results that he wants? Would an importer into the US actually pay these tariffs or would they charge it back to the consumer in the US? Or share the cost? Would countries sell their goods elsewhere instead of the US? Would other countries likewise impose a tariff on US goods or boycott buying any US products? In light of these tariffs, would companies now make a fresh investment into the US?

    So many assumptions made by Trump as to what will be the result of his tariffs. Only time can provide the answers to these questions.

  • Manus AI

    Today I received an invite code for Manus AI.

    This is another AI product launched by a Chinese start up and this time it is an AI agent. An AI agent is one which carries out a range of tasks given to it, independent of human intervention.

    Manus tells me that it can do research and compile research reports, do data processing and data analysis, write in depth articles, reports and research papers with citations, create websites and web applications, help automate workflows and navigate websites and fill out forms.

    It’s in beta mode now but they have already launched a commercial product at US $39 a month which can perform 2 tasks simultaneously.

    So I downloaded it just now and to test it, I asked it to tell me about the usefulness of elections nowadays (this being the election season). In 8 minutes it did a 26.63 KB detailed paper on this.

    Wow. With products like this very soon why would one need to spend time researching and writing articles anymore? You can just work on the draft provided by an AI agent and ask it to beef up areas that you think you want brushed up. Scary.

    I do have to say that at his point in time, the Chinese are probably ahead in terms of trying to incorporate AI into their products for everyday use. All their big companies are vying to get AI into everything they do and sell. In the Western world you see AI products launched but no mass scale adoption yet. People hear all the hype about AI but so far it  has had no impact on ordinary people. Let’s see whether and when it happens.

    Task list it worked out for itself
    election_usefulness_analysis(1)Download

  • Anti Ageing Treatments

    I have started to hear and read more about this in recent times.

    Some time back, a friend of mine gave me a whole list of supplements that he was taking and recommended that I try them. All of them were for anti ageing. It was a long list and these supplements were not cheap when I checked the price. I spent time reading about each one of them and on paper they sound good. But does the theory translate into them working properly in the human body? Or are they snake oil treatments?

    Another friend did a stem cell treatment. Again it is apparently to keep the body young and functioning well. It’s $35k a pop and you do it every 9 months. He has been doing it for 3 years now.

    Another doctor friend was talking about gene therapy and how it can be used to get the body to produce more of the right things needed in the body.

    How much of this is true and works I wonder? Also I read about these things either in the foreign newspapers and magazines but nothing in the local news media. Should there be a discussion on this so that one can hear from the experts, regulatory authorities and people who have tried these treatments with either positive results or no benefit whatsoever. If some basic supplements are beneficial, should they be provided to the masses because its obviously better for society if they remain healthy and don’t burden the health care system?

    I have been told people have been doing stem cell therapy for a while. While it is recommended treatment for some limited types of cancer, does it work for anti ageing purposes? Shouldn’t there be some evidence of this by now?

    Again people have been taking supplements such as NAD and metformin for some time. Aren’t there any studies reporting on the effects?

    Is it because the treatments are expensive that it is best kept quiet so that only the ones who can afford it get these quietly and benefit? Better not to stir the masses with something they cannot afford?

    If these treatments work, is there a benefit overall to society to subside this for the masses?f people live longer is it actually better for society?Would it be better because in an ageing society having healthier people work longer is better? Perhaps it is because if they were healthier there would be less reliance on caregivers? Or as Sir Humphrey Appleby put it in Yes Prime Minister, is it better to let the people die at the current rate because they would then be less of a burden on the health care system?

    If people live longer is it better for society? Would it be better because in an ageing society having healthier people work longer is better? Perhaps it is because if they were healthier there would be less reliance on caregivers? Or as Sir Humphrey Appleby put it in Yes Prime Minister, is it better to let the people die at the current rate because they would then be less of a burden on the health care system?

    These are the ones I read about in the Western media about western medical treatments and supplements. Surely the Chinese and Indians have their range of herbal products and treatments that might have a similar purpose?

    Can we not talk about all this? I want to know.

  • Motorcyclists

    I was driving to an event just now and I noticed this again. I was on the expressway and motorcyclists were zooming past me on the fastest lane. I was already traveling at the speed limit of 90 km/h but these people must be at least doing at least 110 km/h. And they are passing me on my right and the left!

    I have been driving since 1984. I never used to see motorcycles on the fastest lane when I first started. Also they never used to zoom past cars at these speeds.

    Is it any surprise that there are so many accidents nowadays involving motorcycles?

    Surely there has to be more enforcement on the roads. There was a time when there were highway patrols and TP on bikes. All gone now. Perhaps budget cuts?  I think its time to bring them back.

  • Eurokars Electrified

    I attended this session at Eurokars showroom this morning. They had a lovely breakfast spread and the event started at 10.

    I wanted to know more about the current state of technology of electric vehicles and how I could optimise my driving.

    I like electric cars. I’ve had one for 18 months now. They are very quiet, easy  to maintain and cheaper than ICE cars because the charging cost is so low. Also I don’t care for the sound of noisy engines.

    I learnt today that I need to start charging from slightly below 20%. Currently I start charging when the battery is at about 35%. And also that there isn’t much drain on the battery when one is stuck in a traffic jam. That’s good news for those stuck on the causeway traffic jams! And there is such a thing as one foot driving. Apparently it’s more efficient. I must try that.

    I can understand why some people are hesitant about electric cars at the present time if they can’t have their own charging station at home. I guess I am lucky to be able to have my own station at home.

    Anyway I wanted to drive to KL and I was afraid of not finding charging stations along the way but at the panel session, there was an owner who with a car with a range of 460 km has been to KL without charging along the way. That’s good news. I have a slightly longer range and he says if I don’t speed I should be good!

    The breakfast spread

    So something to look forward to.

  • Executive Order by Trump against Law Firms

    Just read that Trump had issued another executive order against a large law firm in Washington DC restricting their security clearance and access to federal buildings and directing federal agencies to terminate existing work with them and not take on any new work.

    This is to punish them for having been involved in lawsuits and  investigations against him during the period of the last administration. And also for the political views of their partners and for taking on legal cases challenging his current actions.

    This is the 5th law firm targeted.

    It is shocking that this can happen in the US. Things are now happening there on the whims and fancies of one man. Totally discriminatory actions and no one to speak up against this or stop it? How can you take this kind of action against someone simply because they were involved in a lawsuit or investigatation against you or because they do not agree with your views. Where do you derive your power for this?  This is a personal vendetta and a witch hunt. The US used to pride itself on being a bastion of law and order and justice. I actually feel sorry for the people there. The rest of the world, including China and its people, are now laughing at this country.

    Shame

  • Worklessness

    A very interesting word that I came across today. This designates a state where a person is of employment age, ie between the ages of 18 and 65, but is unemployed because of a disability. The disability could be as a result of physical illness, physical disability or mental illness or disability.

    It seems the UK now has the highest number of people in this category in the world. In the UK, generous disability benefits are provided to people in this category and the number of people in this category has increased after Covid.

    Could it be that people are more unwell after Covid because of the long term effects of catching Covid, or mental health issues as a result of either catching Covid or the effects of a lockdown. Was it because it is simpler to be diagnosed as being under a disability because the rules were relaxed after Covid or because testing was no longer by way of a physical examination but done over a zoom call? I was surprised that in there were YouTube videos instructing viewers on how to answer questions in the UK during the examination so as to be able to qualify for disability benefits. Has something gone wrong with the system?

    I remember in 2019 when I visited Brighton, I was at a cafe in a shopping center and a middle aged couple sat across me sipping their coffee. They were friendly and we chatted. They told me that they were both unemployed and collecting disability payments and living in a council flat. They seemed perfectly fine to me, spoke well and walked off without any difficulties after finishing their coffee.

    At what stage does a well intentioned disability benefit turn into a disincentive to work?

    If someone stops working and starts to collect disability benefits, it will be difficult for that person to go back to work and forego the benefit. Inertia sets in. What incentive do they have to start working again to earn a livelihood? Should there be incentives provided to get someone back to work or disincentives if they remain out of employment too long? Should testing criteria be tightened?

    I can imagine the drain on a country if people who can work and contribute to the economy stop working and instead take benefits from the system. Of course there will always be genuine cases that must be looked after. But at some point in time the economic impact will take its toll. Apart from the economic strain, what is the psychological impact on the country when working adults, who are contributing to the economy and paying taxes, see their tax payments used in this manner? Will it discourage hard work and encourage more to take an easier option?