What if I Told You the Tariffs Aren’t a Big Deal (Yet)?

What if I Told You the Tariffs Aren’t a Big Deal (Yet)?

If you hadn’t heard, President Donald Trump recently established tariffs (taxes) on imports of steel and aluminum. 25% and 10% respectively. Media outlets are proclaiming economic peril. I’ve even heard it referred to as “evil” on social media.

Is it weird if I think we’re going to be OK?

I’ve said it before and I’ll say it again: I’m a free trade shill. I think we take our low prices for granted and then gripe about jobs leaving, not realizing the two go hand in hand. It’s easy to point to thousands of jobs lost, it’s hard to point to millions of avocados that are cheaper because Mexico produces them cheaper, or gas that’s cheaper because we can import Canadian oil freely. I think NAFTA is underrated for thousands of little reasons like that. I even suspect the deceased Trans-Pacific Partnership was underrated too. I think protectionism tells consumers they’re too stupid to make their own choices, and the government needs to help them, and then fails to address the actual underlying issues. I’ve outlined my vision of the least-bad approach to protectionism, and I think I stand by what I said on that matter.

I’ve been critical of Donald Trump on several issues. I disagree with his zero-sum view of the US trade situation. But I don’t think I have Trump Derangement Syndrome. I keep things in perspective.

And I wish to offer my perspective about why markets will survive the new “trade war.”

1. It’s Not a Trade War til They Shoot Back

China, in particular, will probably respond with their own trade barriers. We’d see a bit more inflation from it, depending on the magnitude of what they choose to do.

But, I daresay, there is a grain of truth in this tweet:

Not a ton, but a grain or two. Having the import market gives us negotiating leverage. China’s response will be measured, because they have more to lose than we do, especially given that Trump doesn’t seem to care about losing the benefits of trade I mentioned above. We both would lose, but they would lose more from escalating, so we can expect them to be careful.

But none of this has even happened yet, and it could remain restricted to the steel and aluminum sectors.

2. The Immediate Impact is a Tiny Portion of the Economy

I looked up the annual value of US steel and aluminum imports last year, and I was shocked at how low they were. $29 billion for steel, $1.26 billion for aluminum. Yes, billion with a b is small here. Because the US economy is measured in trillions. In the $18 trillion range (GDP). Let’s just take that fairly round number. I did the math for you: steel imports are .0016% of the economy, aluminum imports are .00007% of the economy.

It is true that higher prices for steel and aluminum will translate into higher costs for industries that use those materials (automotive, aerospace, construction, etc.). There could be layoffs, or just slowed hiring. It is also true that these industries account for much more employment than steel or aluminum processing. But when forming a picture in your mind of what percent of workers are going to be affected by this, keep the above percentages in mind.

We’re talking about a fraction increase of the price of a fraction of steel and aluminum which is a direct input for a fraction of the economy.

Don’t sell your investments over this.


We’re Not in 1939 Anymore (or 1994)

We’re Not in 1939 Anymore (or 1994)

by Jonathan McGeachen

In my last post, I made some off-the-cuff statements about the North Korea situation without providing a framework. I was surprised that multiple responses suggested I wanted “appeasement,” and I feel a need to rebut this in detail.

I’m not talking about appeasement. Appeasement is satisfying demands in the vain hope that the opposing party will stop making demands. Of course this doesn’t work, because they just keep making more demands.

But let me ask a question: what demands is North Korea even making? They just keep improving their missile technology.

For this reason, this situation is not like Chamberlain and Hitler. That comparison also ignores the huge difference of WMDs.

Also brought up was Bill Clinton’s effort to give oil to NK in exchange for them dismantling their nuclear program. I agree that this was naive, but I file that blame away under “fun facts,” because it doesn’t help us now.

This is uncharted territory, because we’re trying to disarm a nation that has already acquired the ability to strike us and has every incentive to keep that ability, even if we give them nothing.

Are You Ready For Some Football Analogies?

Almost no one is professionally involved in football, yet everyone feels entitled to comment on a poorly chosen play. This is because they have some idea in their own mind of what good football strategy looks like. There’s nothing wrong with this, they just call it the way they see it.

This is roughly the feeling I have watching the North Korea drama unfold.

Let me defend my last post using my limited knowledge of football:

It’s as though the coach insists that the offensive line (missile interceptors) is airtight and will protect the quarterback (the homeland). Even though spring training and pre-season (system testing) have shown, repeatedly, that it’s not airtight. To be polite, they have a lot of work to do, but they’re the best they were able to draft. But the coach insists that the QB cannot be sacked, and wants to build strategy around this “fact.” We can reasonably expect, in that situation, that the QB would be sacked repeatedly. There’s just no avoiding it. Any viewer would say this coach is, to be polite, “mistaken.”

Are You Ready For Some Bank Robbery Analogies?

Let’s use another analogy to describe the broader situation. Suppose there is a bank robbery in progress, and the police have surrounded the building. The robbers (Kim regime) have taken hostages (potential nuclear targets) in an effort to gain leverage.

The police (USA) don’t currently have a clear shot to take them out: if they take a shot and fail to take them out, the robbers may execute hostages. But the police could try, and the robbers know it.

The robbers probably won’t execute the hostages for no reason, because then there’s no reason for the police to hold back. The hostages are the only thing saving the robbers. But the robbers could execute hostages, and the police know it.

And so there is a standoff. Enter the police negotiator. Except all he says through his megaphone, over and over, is: “DROP YOUR WEAPONS OR WE WILL COME IN AND KILL YOU.” This is certainly a tough thing to say. He’s really going to stick it to them, and the pride of our great city will be restored. The robbers reply, over and over, “if we even think you’re about to come in, we will execute all the hostages!”

Can we expect this negotiator’s strategy, at this moment, to result in all the hostages (and officers) coming out OK? Because that is really the goal, not to pat ourselves on the back for how tough we were.

Using a more nuanced approach doesn’t mean telling the SWAT team to take the day off. The police snipers can keep setting up positions on adjacent buildings. Maybe they’ll get their clear shot. But they don’t currently have it, and to bluff about it risks lives needlessly.

Back To The Real World

My point is that tactical restraint is not appeasement. Sometimes we need to not scare the bad guy into doing something stupid. This doesn’t mean making him safe. It means making him feel safe, while actually making him unsafe. There’s a huge disconnect in this area between Trump’s real NK policies (flawed but defensible) and his Twitter game (counterproductive).

Trump is employing the Art of the Deal, but he should consider the Art of War:

“Let your plans be dark and impenetrable as night, and when you move, fall like a thunderbolt.” and

“Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.” -Sun Tzu

I’m just glad Mattis has surely read that.

Never Tell Me the Odds, Kid

Never Tell Me the Odds, Kid

This post was originally going to be a comment on this article in Foreign Policy, but I figured content is content!

Do read the article, though, or you won’t understand what I’m talking about.

I figured the President’s 97% figure came from [(chance of one interceptor failing)^4= chance of any 4 interceptors failing], which contains plenty of optimistic assumptions.

I’d heard the 25% success rate before too. But: 100% minus 25% success rate= 75% failure rate per interceptor. 75%^4= 31.6% chance that any 4 interceptors will fail, or conversely, 68.4% chance that at least one per four will succeed. That’s assuming that a complex system that has never been tested without notice under real-world conditions will function as expected on the first try.

*Those are really bad odds considering what’s at stake. Do not rely upon it.*

Edit: actually, that’s just the odds for a 1-missile scenario. For an 11-missile scenario, it would be 68.4%^11= a 1.5% chance of intercepting every single one, firing 4 interceptors at each missile!

But I do also disagree with the article’s final implication that the only way to avoid war is through implicitly unconditional diplomacy, because there is still such a thing as old-fashioned *deterrence.* That’s the whole reason Pyongyang, Seoul, Tokyo, Guam, Pearl Harbor, San Francisco, Los Angeles and Seattle are still on the map through all this mad posturing.

I just wish the guy with the bigger button had a bit more chill.

One Weird Trick to Identify a Bubble

One Weird Trick to Identify a Bubble

I thought about making a triumphant return to blogging with a post about the hot topic of Cryptocurrency, and how it is or is not a bubble. I know I have some Crypto fans in my audience; I’m not here to bash it. Frankly, I need to research Crypto some more so I can know what I’m talking about. I might get to that some other day.

But what I can tell you today is what a bubble is.

A Definition of a Bubble

When I talk about a “bubble,” I’m talking about an asset’s value spiking up to an unsustainable level before dropping rapidly.

The One Weird Trick (Speculators HATE Him)

Ask this question:

“Are people buying this thing to use it, or are they buying it to re-sell it at a higher price?”

In my humble view, that’s all you need to know to tell how sustainable an asset’s value is. The more the former is true, the more safety. The more the latter is true, the more danger.

I’ll explain why this question is so important.

What Causes a Bubble?

I’d describe the cycle like this:

    1. Asset is cheap, so rather than use the asset for some real purpose, people buy it and hold it so they can sell it later for a profit (this is known as “speculating”). Resulting demand drives the price up.
    2. More people see the price going up and want to hop on the train. They buy and hold so they can sell later for a profit. Resulting demand drives price up to even higher levels.
    3. As the price climbs, people begin to question how long this can go on. Also, fewer and fewer people can afford to purchase the asset to actually use it. Less is demanded, price drops.
    4. As the price drops, those who were holding panic and sell, driving price down in a rapid death spiral.
    5. Repeat, but not necessarily from the beginning value.

Of course, it can get way more complicated than that, and I’m no economist. I’m just a down-home netizen like yourself. But I think that’s a fair outline.

Here are some graphs to visualize it.

I’ll give a few examples from my lifetime:

Attorney Frank Totti  looks over papers while his client Frances Mountain sorts out Beanie Babies wi..
A divorcing couple divides up their Beanie Babies in court (image courtesy of Huffington Post).
These bad boys (Ebay).

And this madness.

This sort of thing doesn’t happen with every asset or commodity. Plenty of things are unsuitable for speculation: perishables, technology that will become obsolete, anything that’s hard to move around. It’s very hard to predict what will be a classic collectible someday, and if you’re sane, you don’t want to be buried in a hoard of useless junk “just in case.”

So I’m just saying: diversify your investments and don’t count on any one thing to increase in value over the long run.

So What About Crypto?

I’d just say, if you’re thinking about Crypto, look at each currency individually. Try to understand how it is generated and whether people will begin using it for real goods and services before you decide whether and how much to invest in it.

The Privilege of Being Ashamed of Charlottesville

I encountered a “racism scale” on social media:

Plenty of people on the far left and right would have plenty to say about what they think is wrong with it, but it made me examine myself for a moment. I understood everything up to “My experience as a white person is drastically different than that of a POC.”

Drastically? That’s a strong word. I could accept “noticeably.”

I chewed on it for a day. How drastic could it be?

Privilege as a Sum of Privileges

Some people talk about privilege as though it were a miasma in the air, creating problems. Sometimes these are people who want to argue it doesn’t even exist. But this is a strawman, because I don’t think people who claim privilege really mean it as a diffuse, vague force.

Consider a prison inmate who gets on the guards’ good side and receives privileges. We wouldn’t say that he has privileges because he’s “privileged.” Instead, we’d say that he’s privileged because he has a set of specific, identifiable privileges (maybe he gets cigarettes at a discount, maybe he gets extra yard time). It is merely a summary to say that he generally has “privilege.”

Consider the present-day race and gender relations the same way. When we identify a situation where being white/male/heterosexual/cisgendered (conservative readers: yes I use that word, because it’s useful) is more advantageous than the alternative, we have identified a specific, discrete privilege. Gather a small pile of these, and we begin to understand what the general “privilege” that people talk about. Gather a larger pile, and we begin to understand why they talk about it like a miasma.

Situations where specific privileges do not hold (“but what about affirmative action?” “A black man was president!”) do not invalidate the fact that at least sometimes it’s still materially and psychologically easier to be white. I’ve never noticed someone cross the street to avoid me. I’ve never had a problem with a police officer overstepping their authority (media sensationalism notwithstanding). I’ve never been chopped from an application process because my name was too “weird.” And if you recognize that at least sometimes it’s easier to be white, you recognize some aspect of white privilege.

Charlottesville and the Drastic Safety Gap

Bringing this back around: when I saw the pictures of the alt-right rally in Charlottesville, with the torches and the Confederate flags and the Nazi flags, my primary reaction was embarrassment. Embarrassed by them, because they would claim to represent me, and sort of embarrassed for them, too. It’s pathetic, among its many other aspects.

(Pictures not included, because that would run counter to what I say next).

But these guys aren’t lionizing a legacy of hatred towards me (sure, I have Jewish heritage, but they probably wouldn’t know just looking at me). My reaction was a privileged one, because I don’t have much to be afraid of. But people of color, viewing those same images, may feel genuine terror at these symbols of the not-so-distant past, and they are not wrong to feel that way. Their country has just become that much less welcoming.

And need I go on about the car attack? Their country has just become that much less safe, and not in a safe-space “snowflake” way, but in a you-could-get-rammed-by-a-car way.

So now I understand a bit more about the word “drastically.”

But seriously, go read something by a person of color about these recent events.

Arms Race: A Game Where Everyone’s Bluffing


But some are bluffing more than others.

-By Jonathan McGeachen

This article has been edited from its original version.


This is a card game that models realist international relations theory in simple, easy-to-understand ways, teaching strategy involving:

-International Anarchy

-The Security Dilemma

-Balance of Power

-Escalation Dominance

-Zero-sum Conflict

-Non-zero-sum Conflict

-Mutual Assured Destruction

-Perverse Incentives from New Technology

The Goal

Win by being the last player with cards in your hand, or by having the most valuable cards in your hand when you’re all sick of playing.


Shuffle together as many ordinary decks of 52 playing cards as you want. Jokers are accommodated (see below). Ideally, you don’t want to run out of cards to draw. This will depend how cautiously a given group plays.

Each player draws a card and places it face up in front of them. They then draw a number of cards for their starting hand equal to the value of the card they placed. Face cards through Jokers are worth 10. They may add their face-up card to their hand.

A Round

There are no turns; everyone acts when they wish. Priority, when it matters, is up for negotiation within the context of game mechanics. Dealer rotates each round, unless you want to assign someone trustworthy to it. This can also be negotiated.

At the start of a round, each player is dealt one card from the deck, face-down, to add to their hand. If there are no more cards to draw, shuffle the discard pile. If there are still no cards, you just have to wait, or you can add another deck mid-game for all I care.

Then deal a number of cards one less than the current number of players face up in the center of the table. There are no rules whatsoever governing their allocation. Players must negotiate, cajole and bluff over who should get which of them. Players may simply take them without asking if they wish, although the other players would be wise to employ attack mechanics (below) against such bad faith.

It may occur, due to a stalemate, that no one dares take the cards remaining in the center. In such a case, they will be placed in the discard pile at the end of the round.

A round ends when no players have any more actions they wish to take, and then a new round begins.

There are no limits to the number of times any actions may be taken each round, except for drawing.

Gains From Trade

Players may give or trade cards at will. A pair of players who are trading may choose one and only one of them to draw a bonus card from the deck, beyond their normal draw limit. If they cannot agree who, neither of them gets the bonus. A given player may only gain this bonus once per round, and may not gain this bonus from someone they helped get this bonus in the same round.


Use attacks to diminish one other player’s hand. A player may initiate an attack at any time.

Say whom you’re attacking, and choose as many cards from your hand as you wish to place face down in front of you. These are attack cards.

The defending player then may do the same with as many cards from their hand as they wish, or none if they choose. These are counter-attack cards.

Once placed down, cards cannot be taken back.

After both players are satisfied with the cards they’ve placed, the cards are revealed.

Both players must then discard from their hand cards equal to twice or more the total value of the cards used against them. This is their “damage” received. Face cards and Jokers are worth 10. The cards used for attacking and counter-attacking are then discarded.

If a player cannot meet their damage requirements with the cards in their hand, they lose and are out of the game. NOTE: It is entirely permissible to go out with a bang by using all your cards to counter-attack.

Other players may take a side in a fight in progress as long as the attack and counter-attack cards have not been revealed, after any first strikes (below) are resolved. Attacker and defender may assign additional attack and counter-attack cards as appropriate at this point, and the attack resolves normally from there.

You do not need to wait for someone else’s attack to resolve before initiating another, or even your own, if you’re crazy enough.

Attacking is not recommended without the aid of face card abilities (below).

Face Card Abilities

Face cards may be used in the following ways. If a player chooses to use one this way, it cannot be used as an attack or counter-attack card.

Jacks, Queens, and Kings: First Strike

These are placed on the table in front of you when not attacking or being attacked. You may place them face-up or -down. You may only use their abilities if they are face-up. You may flip them up or down at any time as long as you are not currently attacking or defending. They remain out until something requires them to be discarded.

Each allows for 1/3 of a first strike: 1/3 of your attack cards of your choice (not counter-attack), rounded up, must deal their damage before your opponent gets to select counter-attack cards.

This effect can stack up to 100%, but stacking must be from different types. For example, having a Jack and a King grants 2/3 first strike, but having two Jacks has the same effect as one Jack. Multiples may be placed on the table, though, as backups.

Jacks, Queens and Kings that have already been played on the table can be discarded in order to discard a like kind that an opponent has played. Two in any combination may be discarded to discard an opponent’s Ace.

Aces: Interception

Aces are placed out in the same way, can be flipped in the same way, and remain in play until something requires them to be discarded. Each Ace you have face-up allows you to discard 1/4, rounded up, of an opponent’s first strike attack cards before they are revealed, and 1/2, rounded up, of an opponent’s attack or counter-attack cards after all first-strike cards have been resolved. Aces that would stack beyond 100% may be placed on the table as backups.

Joker: Spy

Can be played at any time, and is discarded after use.


Another player of your choice must show you their hand, but they don’t need to be happy about it. You may steal one card from them.


Negates the effects of any single card of an opponent until the end of this round.


Negates an opponent’s Joker.

Threats and Bad Behavior

Threats are an important part of the game. Players may threaten to attack each other for any reason at all. There is no penalty for bluffing except for your credibility. Be creative!


“Don’t draw a card this turn… or else.”

“Don’t play that Ace you drew last turn… or else.”

“Give me that Ace you drew last turn… or else.”

“Show me your hand… or else.”

“Don’t attack him… or else.”

There are very few rules governing player behavior outside of the combat mechanics. Behavior that would be disallowed in many games is encouraged as a means to generate conflict.

Examples include but are not limited to:

-Players may try to peek at each others’ hands or face-down cards. Victims are encouraged to employ attack mechanics against this.

-Players may show their hands, or only part, if they wish, to deter others from messing with them.

Basically, if there’s no rule explicitly against it, you can do it as far as the game is concerned. The only limit is what the victims and witnesses will tolerate.

Some things that are actually rules:

-Limits on drawing (above).

-You can’t just ignore cards that have been played.

-You can’t steal cards, aside from using a Joker.

-You can’t trade cards that have been played on the table.

-Dealer mustn’t abuse their position.

-Common-sense stuff about severely disrupting the game or damaging cards. If you need to ragequit, don’t flip the table.

[Update: Patch 1.01 Notes]

After initial playtesting, the following changes are being introduced:

-Introduced a “negotiation” period after dealing cards to the center pot. Players may not take cards from the center until all players have declared which card(s), if any, they want from the center. (Untested: if someone wants to obstruct this phase from progressing, a majority vote can suffice).

-First strike and interception bonuses/penalties may be applied on the basis of the value of cards being used in an attack/counterattack, rather than the number of cards, but it makes for much messier math.

-Clarification: if you run out of cards, you’re out of the game.

All rights reserved by Jonathan McGeachen.

The Interactive Syria Choose-Your-Own Intervention

The Interactive Syria Choose-Your-Own Intervention

Found Here

I’ve long thought that we’ve been too hard on our leaders over the Syrian crisis. Yes, even Obama! He made some missteps, but it’s a uniquely difficult situation with too many moving parts, too many shifting alliances. And I think Trump will deserve a bit of latitude for his choices here as well. I decided to create this in order to point out the huge number of branching possibilities, the large number of dangers and the small number of relatively good outcomes.

(Edit: I also wanted to say that the first version of this was from Bashar al-Assad’s perspective, to give better insight into how his choices have shaped the conflict for the worst, and history should place responsibility upon him. I decided to ditch it because it was both uninteresting and in even worse taste than the final version.)

Unlike most choose-your-own-adventure type stories, this one includes a sort randomizing element here and there. This is because I am representing possibilities, not certainties. I cannot claim to know what “would” have happened if the US had taken down Assad’s government in 2011, or if ground operations had commenced against ISIS as early as 2014, or if Obama had decided to declare a no-fly zone against the Syrian and Russian aircraft in 2016. But I can give a pretty good guess at some potential outcomes, and I did, decided by such tools as coin flips, rock-paper-scissors, and dice rolls.

For now, it only extends from the Arab Spring up through the present. I may expand it to include the future, especially Kurdistan.

Does it cover every possibility up to the present? Of course not. I’d go insane trying; I nearly did. I had to scrap a great deal of ideas for the sake of parsimony. But I think it covers the most important decision nexus-points of the conflict so far.