Distinction Matter - Subscribed Feeds

Authored by Spencer Morrison via American Greatness,

India is taking President Trump up on his offer for reciprocal free trade, proposing zero-for-zero tariffs on specific goods like pharmaceuticals, steel, and automobile components.

This has electrified President Trump’s base—the reciprocal tariffs are working! India’s coming to the table!

Sorry to burst your bubble: America will not benefit from free trade with India—or any other Third World country. 

Why? 

One word:

Externalities.

President Trump would be wise to remember that tariffs are not about moving factories from China to India—they’re about moving factories back to America.

Hunting Unicorns

Real international free trade—much like real communism—has never been tried. Why? It’s impossible.

The reality that economists & libertarians refuse to recognize is that different countries are different. And not just different in a nominal sense—different in real and practical ways that prevent economic integration.

First, America and India have different levels of economic development that cannot be reconciled without seriously rebalancing the factors of production.

The average annual wage in America is $63,000, while the average annual wage in India is just $2,500—the average American earns 25x more than the average Indian. Labor is often the largest input cost for making products, accounting for approximately 30–35% of the cost of American manufacturing—and it’s an even higher proportion in many service industries.

If America and India traded freely, India’s low wages would undercut America’s labor market—either Americans will need to accept lower wages domestically, or the factories will relocate to India to take advantage of dirt-cheap labor.

How do we know this will happen? The exact same thing happened after China joined the World Trade Organization (WTO) in 2001.

In 2001, the average annual wage in America was $30,846, while the average annual wage in China was just $1,127—the average American earned 27x more than the average Chinese. What happened when American workers competed with Chinese workers? American factories moved to China, and wages stagnated.

The pace of offshoring was harrowing. Since 2001, more than 60,000 factories have moved abroad, killing over 5 million manufacturing jobs. This has decimated America’s industrial capacity and hollowed out local communities. And no, robots and automation had nothing to do with this process, in case you were curious.

In fact, the process has been going on even earlier than 2001. America has run global trade deficits every year since 1974. The cumulative value of these deficits is $25 trillion, after adjusting for inflation. This has decoupled wages for American workers from their productivity—even though workers produce more value, they aren’t paid for it. Why? Because the wages are suppressed by competition with cheap foreign labor.

Notice how the price differentials respecting America and China in 2001 and America and India today are almost identical. Why do we think the result will be different this time around?

From India With Love

In addition to obvious market asymmetries like the price of labor, the cost of doing business in India is lower because of externalities. Essentially, there are many costs of doing business in America that are baked into the final price of a product, such as the costs of environmental remediation, labor standards, and upholding higher quality control standards.

These costs are not baked into the price of Indian products. Instead, the costs of pollution or abusive labor standards are externalized to the environment or society at large.

But of course, we always pay the piper. Rather than pay 10 cents more per spatula, we live with plastic trash from India floating up on American beaches or mercury poisoning the fish we eat—we may not pay the price at the store, but we certainly pay it with our health and with our soul—all for the sake of “cheap” goods.

Often, foreign goods are not actually cheaper than American goods: they simply do not reflect the full cost of production. For this reason, America cannot produce goods as cheaply as China or India—not unless we are willing to destroy our standard of living—not unless we are willing to sacrifice our environment—not unless we are willing to outlaw morality in the name of business and sell our very soul for profit.

No. Reducing the cost of business to compete with India on price is simply not desirable. Nor is it possible.

Remember, even if America allowed manufacturers to externalize all costs, our economy is structurally distinct from India’s. In America, private corporations dominate the market. Although these corporations are large, and many are owned by the same few investment firms—like BlackRock—they remain private entities.

This is not the case in India, where the state is crafting a cohesive industrial policy designed to industrialize the country. Part of this policy appears to be to piggyback on America’s consumer market when it comes to strategic industries, like steel or pharmaceuticals—just like China.

Ultimately, the only way to protect America’s market from asymmetrical competition from countries like China or India is to price in these externalities by imposing protective tariffs. This is discussed in detail in my book Reshore: How Tariffs Will Bring Our Jobs Home & Revive the American Dream.

The Shock and Awe of Reality

Different countries have different levels of economic development, legal systems, tax structures, histories, geographies, languages, cultural and business norms, and demographics. All of these differences can create market asymmetries that are simply not relevant domestically.

At best, free traders can reduce tariffs and other visible trade barriers, like taxes, transportation costs, and legal disharmonies. However, they cannot uproot the sort of cultural norms and political corruption that make doing business in India—or China, or Mexico, or Italy—different than doing business in America.

Ultimately, America’s interests are not served by moving industry from China to India. The industry needs to come home. Let’s not make the same mistake with India that we did with China—say no to free trade and raise the tariff walls.

Authored by Kyle Anzalone via The Libertarian Institute

Hamas is using some of the thousands of unexploded bombs that now litter Gaza as weapons against the invading Israeli forces. Most Hamas munitions are created from cannibalizing dud bombs dropped by Israel.

According to Israeli media, the country’s military estimated early this year that there were at least 3,000 unexploded bombs in Gaza. An Israeli officer explained that the munitions will be used by Hamas. “The situation we’ve reached is not normal. Tens of tons of explosives are lying in Gaza, waiting for Hamas,” they said.

The true number of unexploded bombs could be higher. The IDF has dropped about 40,000 bombs on Gaza since October 7, 2023. A typical dud rate is 10%; however, the Israeli military still uses some Vietnam-era missiles that could push the rate of bombs that fail to explode to 20%.

Haaretz estimates that the value of unexploded bombs is in the tens of millions of dollars.

A former Israeli official explained to The New York Times in January 2024 that Hamas makes most of their munitions from bombs dropped on Gaza that do not detonate.

“Unexploded ordnance is a main source of explosives for Hamas,” said Michael Cardash, the former deputy head of the Israeli National Police Bomb Disposal Division and an Israeli police consultant. “They are cutting open bombs from Israel, artillery bombs from Israel, and a lot of them are being used, of course, and repurposed for their explosives and rockets.”

The armed wing of Hamas, the al-Qassam Brigades, has teams trained to recover the unexploded bombs, including 2,000-pound weapons. It also has the ability to break down the Israeli munitions and repurpose them as rockets, RPGs, and IEDs.

Salvaged Israeli bombs have been turned into lethal munitions by Hamas since October 7. In December 2023, remnants of an unexploded Israeli bomb were used to kill 10 soldiers, while Haaretz reports that in January, an IDF tank was destroyed by a Hamas IED created from an undetonated bomb.

While Israel has laid waste to the Strip over the past 19 months, US and Israeli intelligence have acknowledged that Hamas has retained most of its tunnel network and has recruited at least as many fighters as it has lost.

Tel Aviv recently announced a mass call-up of its reserve forces and expanded military operations in Gaza to the full occupation of the territory.

Another $60 million US Navy fighter jet has been 'lost at sea' - this time during a crash landing as the aircraft was trying to land on the USS Harry S. Truman aircraft carrier.

This marks the second F/A-18 Super Hornet fighter jet which has been destroyed aboard the Truman in just over a week.

US Navy image

The first Super Hornet reportedly fell overboard late last month while the Truma took a hard turn amid inbound Houthi fire, in a strange incident which could just be a Pentagon cover story.

But as for the second incident, first reported Tuesday night (local US time), CNN writes that "It is not entirely clear what happened yet, as the investigation is ongoing, but two of the people said there was some kind of arrestment failure as the jet was trying to land on the carrier and the pilot and weapons systems officer had to eject."

"They were recovered by a rescue helicopter and are both alive, but they suffered minor injuries, one of the people said," the report continues.

Amid the apparent systems failure the aircraft went overboard. "The arrestment failed, causing the aircraft to go overboard. Both aviators safely ejected and were rescued by a helicopter assigned to Helicopter Sea Combat Squadron 11," a defense official described. "The aviators were evaluated by medical personnel and assessed to have minor injuries. No flight deck personnel were injured."

US Naval Institute News further details:

It’s unclear if the arresting wire that stops the aircraft during the carrier landing failed or if the hook on the fighter didn’t catch the wire. It’s also unclear whether the incident fouled the flight deck, interrupting flight operations. As of Tuesday evening, Truman was fully operational, the defense official said.

In total three jets have been recently lost in the Red Sea:

And in December, the missile cruiser USS Gettysburg, part of the Truman's strike group, shot down a Super Hornet in what the US military described as "an apparent case of friendly fire." Both aviators ejected safely.

The Houthis had since Red Sea hostilities were renewed in mid-March (in the wake of the Gaza ceasefire collapsing), sent drones and missiles against US warships off Yemen's coast, particularly the Truman carrier.

This week Israel has joined the US-led coalition's bombing campaign against the Houthis in Yemen. Israeli jets obliterated Sanaa International Airport, in an operation described as retaliation for the Sunday ballistic missile attack on Ben Gurion International Airport in Tel Aviv.

The timing of this second jet loss incident is interesting, given it was revealed the same day that President Donald Trump announced the US would stop strikes against the Houthis.

1/2
The USS Harry S. Truman appears to have performed an emergency turn on April 27th to evade a large-scale Yemeni missile and drone attack. The maneuver was so severe it could have caused the loss of the Super Hornet.

If true, this indicates that: pic.twitter.com/MMIDOpcZdw

The Houthis have confirmed there will be a ceasefire in the Red Sea with the United States. The deal was mediated by Oman, and this looks like a 'mission accomplished' moment for Trump where he's ready to grasp onto a way out of the quagmire the US found itself in. Wisely, he is getting the US out, and Israel appears to be stepping up in terms of its own defense.

Mideast war correspondent Elijah Magnier has concluded, "The US intelligently stopped the bombing on Yemen due to the lack of objectives, the empty outcome and the high cost versus no gain." 

Submitted by Thomas Kolbe,

The European Central Bank (ECB) is pushing ahead with the “Digital Euro” project. On a new interaction platform, it is seeking dialogue with banks, startups, fintechs, and retailers. What is being sold as an open discourse is, in truth, calculated camouflage.

While the economic policy debate has shifted to the trade conflict with the US, things have gone quiet around the digital euro (CBDC). Yet, the ECB recently launched an online interaction platform where merchants and payment service providers can express their opinions about the new payment system. About 70 pre-selected market participants are to test the “ecosystem” of the digital euro in real-world applications and identify problems. The platform enables the testing of new payment services, such as conditional payments or the integration of digital wallets in post offices. Proponents of the project aim to modernize the payment system, granting access to the financial system even to those currently excluded due to their economic situation.

However, this mainly applies to people in poorer regions of the world-here, the benefit of a digital payment infrastructure, as offered by stablecoins (usually denominated in US dollars), is obvious. The question is whether we should consider something like this for the eurozone. Does the Chinese model of the digital yuan really align with our values, which should balance utility, efficiency, security, and individual sovereignty?

What is the Digital Euro?

The digital euro would be a small revolution, leading to a fully centralized form of central bank money. In tokenized form, it could be technically programmed and controlled-each monetary unit could be assigned conditions, each transaction centrally managed. The ECB would then be the sole issuer and operator of central wallets and the entire account infrastructure.

This raises questions about the future of commercial banks. At best, they could only function as distribution channels-their traditional role as intermediaries in payment transactions would effectively disappear. Lending would then fall into the hands of a largely autonomous central entity, which, needless to say, would be synchronized with the European Union’s objectives. According to its own statements, the ECB aims to develop the digital euro as a “secure, free-of-charge, and privacy-friendly means of payment” that, as is claimed in Frankfurt, is only intended to supplement the use of cash.

Such assurances from the ECB are nothing new, and so the launch of the interaction platform should be interpreted as a media charm offensive-or better: as a kind of transparency simulation that distracts from the real problems of this technology. Participants are pre-selected service providers whose expertise is indispensable for system design and procedural processes. Direct attacks on the monetary sovereignty of individuals or the separation of state and monetary system are not addressed on the platform. A public vote on the future of cash in the eurozone seems more unlikely than ever.

The Current State

Since November 2023, the European Central Bank has been in a two-year preparatory phase. By October or November of this year, technical foundations, data protection requirements, and initial tests are to be completed. The recently launched interaction platform, where citizens, merchants, and payment service providers can participate, is part of this process. Technically, the ECB is clearly oriented towards existing stablecoin models, where transactions are fast, secure, and free of charge. ECB President Christine Lagarde had already suggested in March that the digital euro could be introduced as early as October 2025.

But as so often with large-scale EU projects, this timeline seems overambitious and born out of haste. The challenge lies not only in technical complexity-billions of transactions are processed daily via existing systems-but also in the sensitive interplay between the central bank, commercial banks, retailers, and consumers. The overhaul is like trying to move a monolith by hand: massive, sluggish, risky.

Furthermore, the security architecture of the digital euro remains largely in the dark. Given the real threat of targeted attacks from the international hacker scene, this reticence is remarkable-real dangers, as well as fundamental systemic criticism, are ignored.

The Leviathan-Thoughts on the Background of CBDC

The digital euro is not a neutral means of payment. It is a tool of power. The ECB is no longer positioning itself merely as a central bank but as the central technological infrastructure operator for payments in Europe. For the first time, it would have direct access to the entire monetary infrastructure of the eurozone-from payment flows to account management and even to the potential control of individual monetary units. The digital euro would give the ECB not only more insight into financial activity but also far-reaching intervention and control possibilities over the financial system-with significant political and social implications.

As a largely autonomous entity, the European Central Bank has evaded democratic control since its inception. Even during the last sovereign debt crisis 15 years ago, it managed to massively expand its real-world powers by buying up government bonds on a large scale and thus effectively beginning to monetize government debt. The planned introduction of a digital euro would further cement this immediate power-with potentially profound consequences for the balance between monetary sovereignty, fiscal responsibility, and democratic legitimacy.

Why the Rush?

Against this backdrop, a central question arises: Why is the ECB pushing for the introduction of a digital euro right now? The eurozone has been stuck in a structural economic and debt crisis for some time. Germany’s economy, traditionally the EU’s anchor of stability, is in its third year of a persistent recession. At the same time, many southern European countries have long since lost control over their national debt.

Amid this fragile situation, the ECB is increasing the pressure to implement digital central bank money-a step that is not only technocratically motivated but also aims to deeply reshape the architecture of the European financial system. France, with a national debt of 120%, and Italy, with 140%, will not be able to escape the debt spiral without massive monetary interventions-the ECB is firmly planned as the “lender of last resort” in the capitals of the eurozone. Massive credit injections and yield curve control seem to be the only way out of this dilemma. A sovereign default is not an option, as it would mean the end of the entire eurozone.

The Greek crisis is a reminder. However, the mountain of debt in the eurozone has continued to rise to 95%. Bringing it under control in the event of a debt crisis would be much more complicated. The necessary expansion of the credit base to rescue over-indebted states would be so massive that investors would question the stability of the currency. In such a scenario, the digital euro would not be a neutral means of payment but a tool for market closure-with programmable transactions that could nip any capital flight in the bud.

The digital euro thus mutates into an electronic bolt: the ECB raises the drawbridges of the EU fortress to prevent a flight from the system and thus the collapse of the euro.

Consequences and Outlook

What is obviously underestimated in the Frankfurt ECB Tower is the speed at which mobile capital moves today. It is to be expected that the already beginning capital flight from the eurozone will accelerate dramatically-precisely at the moment when rumors spread in European financial centers that the ECB wants to close the gates with the help of a digital euro.

Given the political movement in the United States against CBDCs and the clear rejection of this technology by the Federal Reserve, there is a danger that Europe, especially the eurozone, will isolate itself through the ECB’s initiative. Unlike the United States, which is currently pursuing deregulation and free-market policies, the euro CBDC appears as a digital panopticon: a central authority that monitors everything, controls everything, and reserves the right to intervene at its discretion. An opaque monster that directly threatens the sovereignty of the citizen.

With the digital euro, the ECB is not only planning the creation of a new means of payment. We are witnessing an attempt to radically change the way we handle money. 

What is being touted as a convenient, cashless payment option could turn out to be a Trojan horse for deep control of the financial system and the individual citizen. Unfortunately, the new interaction platform does not offer the opportunity to discuss these thoughts in detail.

European Commission President Ursula von der Leyen is calling for the fast-tracking of EU accession talks for Ukraine, though we can imagine quietly behind the scenes other European officials aren't looking forward to the day that one of the world's most corrupt countries joins the bloc.

Speaking at a Europe Day event on Wednesday, von der Leyen urged for the process to start this year, in 2025, in order to "help Ukraine stand strong" and "defy Putin’s intimidations" - according to a readout.

"Today, I would like to focus on how we can do so, and on three priorities for our action," she said. "First, support Ukraine’s defense. Second, complete the phase-out of Russian fossil fuels. And third, accelerate Ukraine’s accession path to our Union."

She then emphasized that Brussels is "working hard with Ukraine to open the first cluster of accession talks, and to open all clusters in 2025."

The Kremlin last year said that it is open to Ukraine joining the EU, but stressed that the question of joining NATO remains an impossibility, and that Moscow will never allow it.

Still, at around same time the EU question was raised, Foreign Minister Sergey Lavrov had asserted that the EU itself, which is supposed to be a purely economic and politically-linked bloc, is "becoming militarized at a record pace."

Meanwhile, the European Union has of late seemed much more open about its willingness to sabotage Trump efforts toward achieving peace in Ukraine. 

The EU's top diplomat Kaja Kallas last week told the Financial Times in an interview that the bloc will not recognize Russia's annexation of Crimea under any circumstances. Really, this should be the most obvious and 'easiest' concession to make, but alas Brussels is saying no!

The White House is seeking to pressure the Zelensky government to get to the negotiating table fast, and the quickest and easiest concession would be expected to center on letting go of Crimea, which Moscow declared part of the Russian Federation after a 2014 popular referendum.

"I can’t see that we are accepting these kind of things. But we can’t speak for America, of course, and what they will do," Kallas had said. "On the European side, we have said this over and over again... Crimea is Ukraine."

"There are tools in the Americans’ hands that they can use to put the pressure on Russia to really stop this war," Kallas continued. "President Trump has said that he wants the killing to stop. He should put the pressure on the one who is doing the killing."

This has basically been the Ukrainian government's position all along as well. For this reason, she said Brussels and other European capitals are still focused on "working with the Americans and trying to convince them why the outcome of this war is also in their interest, that Russia doesn’t really get everything that it wants." But again, Crimea should be the easiest issue.

Via Remix News,

After the Trump administration condemned Germany’s slide into tyranny and anti-democratic actions against the Alternative for Germany (AfD), the new German government under Friedrich Merz is now openly criticizing the U.S. for pointing out these tyrannical methods. 

Realizing that there is serious potential for conflict between Washington and Berlin, Merz says he will speak to the U.S. government.

Merz criticized the voices from parts of the U.S. government that supported the AfD during the federal election campaign and recently criticized the party’s classification as right-wing extremist by the Federal Office for the Protection of the Constitution.

The current main point of contention is the powerful domestic spy agency, the Federal Office for the Protection of the Constitution (BfV) and its decision to classify the Alternative for Germany (AfD) as a “confirmed right-wing extremist” party. Merz said the U.S.’s comments were “absurd observations of the Federal Republic of Germany,” and that “I’ve actually always had the feeling that America is able to distinguish very clearly between extremist parties and parties of the political center.”

The BfV operates with modern Stasi-like powers but wields a far greater technological arsenal. Under the new designation, the BfV can now legally surveil all AfD members without a warrant, including reading their emails and chats. It can also flood the AfD party with informants and take action against civil servants who are members of the party.

The fact that the AfD is the largest opposition party in the country and that there are now efforts underway to ban the party is causing serious alarm in the United States, which is calling the German government’s path forward authoritarian and undemocratic. Most notably, Secretary of State Marco Rubio called it “tyranny in disguise.”

Germany just gave its spy agency new powers to surveil the opposition. That’s not democracy—it’s tyranny in disguise.

What is truly extremist is not the popular AfD—which took second in the recent election—but rather the establishment’s deadly open border immigration policies…

Perhaps the best analogy would be if the U.S. government suddenly declared the Democratic Party a “confirmed extremist” party because it promotes open borders, and under Biden, effectively brought millions of more illegal migrants into the country. Then, a Republican-appointed spy chief surveilled all members of the Democratic Party without a warrant, was able to send informants into the party, and could fire teachers, judges, and police officers who were members of the party.

If such a scenario occurred, the liberal EU and mainstream press would be the first ones to scream about “tyranny” and a new “authoritarian” reality in the United States, with Germany at the top of the list.

Merz, on the other hand, seems dismissive of the U.S. critiques. He said he will speak with Donald Trump and establish contacts with the White House, but Merz may be in store for a chilly reception.

In regard to Trump, Merz said: “We don’t know each other personally yet.”

However, he said at the end of June, he will meet with Trump at the NATO summit in The Hague and “perhaps even sooner.” He said they “talk openly with each other.”

“As Europeans, we have something to offer; together we are even bigger than the United States of America,” said Merz.

“We can do something, we are united, largely anyway. That will be my message to the American government.”

“I did not interfere in the American election campaign and did not take sides unilaterally for one party or the other,” said Merz.

However, democratic backsliding in Germany is a grave concern for the entire world, and there are fears that a ban of the AfD could come sooner than later. In such a scenario, millions of voters would be denied their democratic rights.

Not everyone in the CDU, or its sister party, the Christian Socialist (CSU), is on the same page though.

CSU leader Markus Söder is warning against an AfD ban, saying it should only serve as a “wake-up call” to change government policies. He said he is not sure the BfV report is sufficient for a ban.

Read more here...