Stumped By Stumpage

In seeking to justify his imbecilic trade war against Canada, Donald Trump complained on March 7 that “Canada has been ripping us off for years on tariffs for lumber.” You will not be surprised to learn that this claim is, like most of what comes out of the presidential mouth, untrue, and that, until very recently, there were no Canadian tariffs on U.S. lumber at all. The Canadian tariffs on U.S. lumber that have been imposed since they were first considered in 2017 are retaliation for increases in U.S. tariffs on Canadian lumber. As usual, Trump either doesn’t know what he is talking about or doesn’t care. A bit of both, I suspect. 

The U.S.-Canada dispute over trade in softwood lumber is roughly the same age I am, old enough to have been “solved” at least two times in the past, producing the inevitable crop of initialisms: the SLA (Softwood Lumber Agreement), which is to be administered by the LCIA (London Court of International Arbitration), and CUSFTA (Canada-U.S. Free Trade Agreement) which begat NAFTA (North American Free Trade Agreement) which begat USMCA (United States-Mexico-Canada Agreement). The first substantial bilateral work on the issue began in the early 1980s. 

Trump has had plenty of time to do his homework on the issue. Of course, he hasn’t. He is lazy and ignorant, he always has been lazy and ignorant, and he prefers to remain lazy and ignorant. 

When I was a newspaper editor, I habitually began job interviews for would-be reporters with the same question: “What is millage?” (Youngsters with Ivy League educations almost never knew; but their parents, and older applicants with mortgages, almost always did: Millage is the amount of tax per $1,000 in valuation imposed on homeowners.) If you want to know if somebody knows what they are talking about vis-à-vis U.S.-Canada trade, ask them about stumpage. Most of them—including our Canuckophobic president—will be stumped.

Stumpage is the fee charged to harvest trees for wood on public lands. U.S. timber producers insist that Canada does not charge a high enough fee for trees cut on public land, which is the source of most Canadian timber. Stumpage is not much of an issue in the United States, where most of the timber is harvested on privately owned land, which enables the existence of a competitive marketplace and real market prices. In Canada, most of the wood is on Crown lands, meaning public lands, mostly under the control of the various provinces (though some is under the direct control of the federal government).

Because these lands are government-owned, the process for determining stumpage fees is political rather than market-driven. If that sounds like wicked evil socialism to you, keep in mind that this is pretty much how we do things in the United States when it comes to oil, gas, and coal extracted from public lands. Environmentalists have long complained that federal royalty rates charged to petroleum and coal producers were too low, and they cited discrepancies between relatively low federal rates and the rates charged by western states on state-owned land, which tended to be a few points higher. (The conversation has shifted a bit in recent years, from price to prohibition.) And while the critics might have had a point about the federal royalties (or not; I’m agnostic), the argument was always obviously pretextual: Environmentalists want to reduce oil and gas consumption (or stop it outright), and they will do anything they can do to make it more difficult and expensive to produce petroleum fuels. U.S. timber producers are not bothering about stumpage on Crown lands in Canada because they all read Milton Friedman and care passionately about free markets—they want to raise their prices, and the presence of relatively inexpensive Canadian wood in the market prevents their doing so. 

Almost all attempts at what is known as “industrial policy”—which is what you call corporate welfare when it is implemented by people who went to Harvard—rely on the same strategy: Artificially reducing standards of living for the general public in order to fortify the economic position of politically favored firms or industries. The U.S. government has long maintained “price support” programs for farmers, which is a nice way of saying that the vast majority of Americans who are not farmers pay taxes to support programs that are designed to make their grocery bills higher. In Beijing, one strategy (among many) has been to artificially weaken the currency, at least at times, reducing the real incomes of workers in order to make Chinese exports cheaper on world markets. (It’s “currency manipulation” when the other guys do it; when your guys do it, it is “monetary policy.”)

Assuming, arguendo, that the critics of Canadian policy are right, what Canada is doing is artificially lowering the standard of living of Canadians who are not in the lumber-exporting business in order to increase the profitability and competitiveness of lumber exporters, in effect transferring part of a tax liability (the uncollected portion of the higher “correct” stumpage fee) from politically connected business owners to the general taxpaying public. That is something to complain about—for Canadian taxpayers.

Should Americans be complaining about it? Well … it depends on whom you’re asking. The ratio of Americans who consume wood-based products to the number of Americans who work in timber-producing jobs is something like 6,800 to 1. The Canadians stand accused of subsidizing the 6,800 to the disadvantage of that one other guy. If there is government-subsidized unfair competition, then that’s not great for the firms that have to compete with subsidized rivals, but it’s still, overall, a tax on Canadians taxpayers that ultimately benefits American consumers. 

That said, I’m not convinced by the U.S. timber lobby’s complaints here: If you’ve ever traveled through Canada, then you’ll appreciate that competing with Canada in wood is like competing with the Sahara in sand—the place is just full of the stuff. And U.S. businesses enjoy all sorts of advantages—some of them matters of government policy—that overseas competitors do not. Canadian timber-cutters may have it easy relative to the guys in Oregon, but U.S. automakers are able to pay their workers a lot less than their German counterparts do; U.S. businesses typically pay higher taxes than their Swiss counterparts but lower taxes than their Mexican competitors. And some of this stuff is pretty hard to sort out: German industrial unions are, as a rule, a lot more powerful than their U.S. counterparts, but they also are better, more responsible partners for firms and industries. There are lots of countries with no statutory minimum wage, but you wouldn’t relocate to many of them—Sweden, Denmark, Iceland, Norway, Switzerland—in search of cheap labor. Different countries are … different!

And that’s a good thing. Comparative advantage means specialization and a more productive division of labor which—if there is reasonably free trade—makes everybody richer.

But, I know: You’ve heard me give that sermon before.

There are some real live trade issues with Canada, including its 19^th-century-style protectionist policies touching the dairy industry. But here’s the thing I keep thinking about: Canada’s stumpage and dairy and much else are roughly the same today as they were when Washington insisted on renegotiating NAFTA, which, with a few revisions and updates, became USMCA. Donald Trump was president when those negotiations happened. Trump insisted that USMCA was—of course—the greatest, biggest, most significant, superlative this, super-superlative that, “most balanced trade agreement in history.” It left Canadian timber and dairy practices largely (though not entirely) untouched. We’ve already torn up one North American trade pact and replaced it with another negotiated by Trump and his team, and now Trump and his team think our North American trade pact is no good. If this half-organized bouquet of numbskulls couldn’t get it right last time around, why should we think they’re going to get it right this time around?

To ask the question gives up too much. The fact is, Trump et al. don’t really care about U.S.-Canada trade very much. Some of them are stupid enough to believe that U.S. economic problems are the result of (snigger, snigger) ruthless Canadian predation, but even the workaday goons in this Rotten Apple Dumpling Gang aren’t, for the most part, quite that dumb. So why does Trump suck up to Russia and China and North Korea while pissing on Canada and the European Union? Because he knows Canada and … Belgium or whoever … won’t fight back because they can’t fight back.

Just apply the same principles to trade that any intelligent person would use to understand Trump’s foreign policy, which is explained only to a minor degree by idiocy and incompetence but to a major degree by the fact that Trump is on the Russians’ side. Putin and Xi exemplify the kind of leader he would like to be, and their autocratic regimes exemplify the sort of power he thinks he should have. Trump doesn’t appear to be doing Moscow’s work because his administration is feeble and incompetent—it is feeble and incompetent, but if it were more robust and more competent it would simply be advancing Moscow’s interests more effectively. 

If there is a less outrageous reading of that, it is that Trump believes that the Kremlin’s interests and Washington’s interests are aligned—though it probably would be more accurate to say that he believes that Putin’s interests and his own are aligned. Trump is trying to wreck Canada because he thinks Canada ought to be wrecked, and that if Putin is going to have his Ukraine then Trump must have his Canada, or his Greenland, or his Panama. Trump is trying to reduce Canada to the status of a colony for the same reason Putin is trying to make a serf state of Ukraine: because he thinks that is what it should be. 

Trump thinks he should hand out rewards to powerful business interests because they are powerful business interests, and, if these rewards to the powerful come at the expense of the less powerful—the unorganized general American taxpaying and mortgage-paying public—then, in his mind, that is exactly how things should go. This much should be plain: Trump applies the same might-makes-right ethos to Americans as he applies to Canadians and Belgians.

In the narrowest sense, sure, this is about stumpage. But in the broader and more significant sense, it is about anything but that—it is about creeds and codes and what sort of nation it is that we are to be. 

(And a Little More) Economics for English Majors

Oh, Wall Street Journal:

Nasdaq Falls 4% After Trump Doesn’t Rule Out Recession

I cannot tell you how much I hate to read the Wall Street Journal writing as though a recession were something the president had the power to simply “rule out.” But one encounters that kind of presidential idolatry everywhere now. It’s repugnant. 

Words About Words

Writing in the Australian (quoted at length by David Ignatius in the Washington Post, which is where I saw it), defense expert David Kilcullen observes:

We partner with Washington not for sentimental reasons but because we need an ally powerful enough to stabilize the global system. But what if Washington were simultaneously declining in relative military strength, lacking in national will to secure the global system, moving out of alignment with our values, damaging our trade, bullying its partners and becoming unreliable as an ally? 

…

In such a hypothetical scenario, where our traditional nuclear-armed ally was no longer reliable, Australia might need its own sovereign nuclear deterrent, or at least an extremely capable array of long-range, nonnuclear strike assets.

Kilcullen, a noted thinker about security issues, is being cute with that hypothetical, there, intending to communicate that the situation is anything but hypothetical. In classical rhetoric, this is called antiphrasis: “Brutus is an honourable man; so are they all, all honourable men,” Mark Antony says when heaping shame upon the Romans who assassinated Julius Caesar. (Brutus was an honorable man; Caesar was a tyrant; Mark Antony was a dissipated sycophant, the Rudy Giuliani of his time.) Ain’t nuthin’ hypothetical afoot at this particular Circle-K. 

Hypothetical there feels a little like a distancing technique to me, too—like the guy doesn’t want to have the argument. Which is fair enough. But it reminds me of a particular bit of journalese that I find endlessly annoying: allegedly. Our world is full of reporters and columnists and editors, all of whom should know better, who believe that the word allegedly somehow saves your bacon if there should be a libel complaint or another legal dispute arising from your copy. I have some bad news for you, Sunshine: Allegedly don’t do nothing of the kind. 

The catch is in who is doing the alleging. If I hear from some random guy who thinks he’s Cleopatra and lives under a bridge that Politician X is an embezzler, and then I write that Politician X is an alleged embezzler, I’m still on the hook for the accusation. If, on the other hand, Politician X has been indicted for embezzling, then I’m pretty safe calling him an alleged embezzler—an allegation in an indictment is a pretty serious thing and carries with it a certain degree of credibility, even if it turns out to be untrue or unproveable. If I’m just doing the alleging myself, then alleged doesn’t help. 

If I just went out and found the first person I could to make some outrageous claim—and a reasonably good reporter can find somebody to say almost anything—that doesn’t really help, either: That’s one way to run up against that “reckless disregard for the truth” business. We have rules that privilege things said in Congress or government meetings or in court, so that if Sen. Snout calls Sen. Spleen a thief or a pervert or something, or if a witness in court claims Sen. Snout is evil, in league with Satan, etc., then reporters can report the fact, and commentators can comment on it, without fear of legal exposure.

A particularly weaselly variation on this is credibly accused, a formulation favored by knee-walking moral and intellectual cowards everywhere. If you hear or read the words credibly accused, you can normally dismiss what comes after. People who hate Brett Kavanaugh will say he was “credibly accused” of some kind of weird sexual misconduct, when that is, from any reasonable point of view, not true: Kavanaugh was non-credibly accused, including by people who later admitted that they were making things up. But the smear lives on. That’s one reason why we should work out accusations of criminal wrongdoing in court—where there are rules and standards of evidence and penalties for perjury—rather than decades after the supposed episode in confirmation hearings or on social media or whatever.

Allegedly doesn’t do much. But some bits of funny-seeming journalese serve a real function: If you’ve ever read a police report identifying a criminal suspect as “108-year-old Johann McFarland Singh Jr. of the 2400 block of Smith Street in Shelbyville,” or something like that, you might wonder why infamous criminals always have three names and why newspapers give their approximate addresses, exact ages, etc. The problem is that there are lots of names that belong to more than one person. (Those poor other Kevin Williamsons! Well, not poor, but, you know what I mean.) So you use Kevin Daniel Williamson so you know you aren’t talking about Kevin Meade Williamson; but there is more than one Kevin Daniel Williamson in the world, too, so you might identify a malefactor as “Kevin Daniel Williamson of Avenue Claude Nobs 2” or “Kevin Daniel Williamson of 15 Pl. Vendôme” or “Kevin Daniel Williamson of Brook Street, Mayfair,” or whatever it is. 

Hypothetically.

I know of at least two cases in which college newspapers got into big trouble after wrongly assuming that an unusual name encountered in a police report indicated one person when it actually indicated another. One of those cases was that of a man who worked in a university dormitory who woke up one morning to read in the paper that he had been charged with a sexual crime, when no such thing had happened—he had a name that was unusual in the United States but not that unusual in his home country. Another guy in the same city with the same name had indeed been charged with the crime, and someone had tipped off the school paper that this alleged miscreant worked in a women’s dormitory, and the newspaper ran with the story: right name, wrong guy. I am told the lawyer’s advice was, “If he asks for anything less than a million dollars, write him a check.” But think about what that poor guy’s day was like! 

That story was related to me by the late Mike Quinn, a University of Texas professor and Dallas Morning News veteran who advised the school paper about law and ethics. Quinn was a character, one of those guys who had been to a lot of places and seen a lot of things. When he was a young reporter at the Morning News, there was a visit by the president, and Quinn had hoped to be assigned to the press conference, where he’d get to ask the president a question. But, being relatively junior, he was given the less glamorous assignment of covering the motorcade. And nothing ever happens there. 

In Other Wordiness

I enjoyed (and recommend) David Von Drehle’s Washington Post column about the renovation of LaGuardia Airport in New York. But I did take issue with one bit:

[BLOCK]To have aging infrastructure, a nation must have infrastructure to begin with. China looks shiny new because it is: from Third World to first in a scant two generations.

I think it is time to retire phrases such as “from Third World to first.” As I’m sure most of you know, “Third World” does not denote a ranking behind a notional First and Second World but speaks to a Cold War distinction between the liberal democracies (the “free world”), the Communist bloc, and the “Third World” of unaligned developing countries. (It’s a translation of a French term, tier monde.) In any case, I’m also not convinced that China, with a GDP per capita still behind Mexico’s and Kazakhstan’s as the World Bank figures it, is in the same “first” category as the United States or Switzerland or Norway, though it is a very important country for all kinds of obvious reasons. 

It sounds impolite to write about first-rate countries, second-rate countries, third-rate countries, etc. (The original usage of “first-rate,” “second-rate,” etc.,  referred to the classification of ships by the British navy.) I’m sure there is a nicer way to write it: first-tier, second-tier, third-tier, or something along those lines. Share your suggestions or preferred usages in the comments, if you like. 

Elsewhere

You can buy my most recent book, Big White Ghetto, here. 

You can buy my other books here. 

Please subscribe to The Dispatch if you haven’t. 

You can check out “How the World Works,” a series of interviews on work I’m doing for the Competitive Enterprise Institute, here. 

In Closing

People sometimes wonder why I care so much about free trade, regulation, investment, and all that economic stuff. It is because I care about human flourishing and because I want to live in a peaceful, contented republic where people can go about their business and live their lives in the way that seems best to them. Everything gets easier the richer we are, and everything gets harder the poorer we are. Making Americans artificially poor for no good reason is one of the most unpatriotic, immoral, and—maybe worst of all—stupid things an administration can do. We should not sit by and accept it or keep mum because we’re worried about being criticized as “out of touch” with blue-collar workers or farmers or struggling communities.

I’m not out of touch with any of those. I know the world of struggling, low-income America a lot better than most people in Washington do. And what I know about Americans is that we are not weaklings, that we do not require protection by Big Daddy Government, that we can compete with even the most vicious … Canadians … and come out of it just fine. Anybody who tells you differently either doesn’t know this country or is trying to sell you a wagonload of horsepucky for his own benefit.

Americans can’t handle the modern global economy? We built it. We dreamt it up and invented it. Americans will do just fine, and maybe those hardworking blue-collar Americans the politicians are always going on about don’t need a lot of oversight and input from people who’ve never lifted anything heavier than money.

A note from Kevin: I’m going to be taking a little bit of vacation next week, so there will not be a Wanderland next Monday. Back to the usual schedule thereafter.