Friday Night Links

• My biggest uncertainty is whether I’m right about the necessity of manufacturing as the foundation of an economy. A lot of conservatives were similarly dead wrong in the 1800s about agriculture, with a lot of political capital invested in hare-brained schemes like silver-based inflation. Recall William Jennings Bryan’s “Cross of Gold” speech in which he compared the plight of farmers paying back mortgages in gold-backed dollars to the sufferings of Christ. Bryan and his farmer supporters wanted to devalue the currency to relieve the debt load of a sector destined to fail as science increased crop yields and sank crop prices. Many a prominent American family were impoverished by trying to hold onto the family farm for too long, romanticizing the Jeffersonian ideal of the politically independent gentleman farmer as the foundation of the republic. The crushing economics of cheaper food and consolidation meant that there was no possible political intervention to save the family farm, as now fewer than 1% of Americans grow all our food. [The Tom File]
  
• The Republican majorities in both houses of Congress have been irresponsible in relinquishing their authority on tariffs to the executive branch. It amounts to an insult to history, and even to themselves. They are a coequal branch of government, and it is their job to protect their own standing. Instead, as Jonathan Martin notes in Politico, they have reduced themselves to “doing color commentary up in the booth.” Gosh, I hope the president is right. They spoke gently of their reservations, acting like “a parent praising a toddler about what a big boy he is in hopes he won’t melt down and ruin dinner.” They should stop this. It’s embarrassing to witness. [Peggy Noonan]
• USMCA is now a privileged tax status for corps. Everyone else paying a 10% tribute to the US helps Mexico labor cost advantage vs competitors. This situation has shown that even with someone willing to be as extreme as Trump clearly is, USMCA, as an agreement and an economic bloc, held together. At least for now. It seems clear that the path of least resistance forward for companies with overseas operations is to go to Mexico. It’s the one country with cheap labor, generally tariff free, where you can have relative certainty over the next four years and is a clear advantage over holding off all plans/growth until Donnie leaves the stage. Why is the Mexico bull story not stronger now than a month ago? [@invertedfragility]
• When not plotting with Q, Trump mostly dedicated himself to golf trips and petty feuds and vendettas waged against thousands of random media, business and political figures he believed had crossed him at some point or another during the latter half of the twentieth century. It was honestly an okay arrangement. He left the actual task of governance to a kind of Kushner-Mnuchin duumvirate caretaker regime which kept the economy and stock market humming along by simply leaving things be. This is probably what allowed a number of tech and Wall Street titans to convince themselves that a second Trump term would be fine because 'nothing ever happens,' etc. [Drew Pavlou]
• Remarkably, quality control is so variable that generic manufacturers, as a matter of course, grade their finished products and decide post-hoc upon the market into which they will be sold. Literally, the same drug from the same plant will be destined to an end-market differently from one day to the next based on final manufacturing test results. The product a market receives is directly proportional to the strength of that market's regulators. Africa, India, and developing world nations are at the bottom. China, Latin America, and Eastern Europe are next up in quality. Western Europe is third. United States and Canada (owing to US proximity more than actual Canadian regulatory muscle) at the top. But, make no mistake, like the best house in a bad neighborhood, the FDA is failing miserably. US consumers are merely getting the best of the worst when it comes to Indian and Chinese produced generics. [@pdxsag]
• Look at Kentucky’s economy: Our biggest foreign direct investor is Japan, and the president has launched a very aggressive tariff on Japan. I mean, the biggest Toyota plant in the world anywhere is in Georgetown, Kentucky, and so to act like our economy isn’t global and there aren’t repercussions on the ground, that there aren’t manufacturing jobs that are already supported by foreign direct investors, that’s just not reality. [Andy Beshear]