The Wall Street Journal Reviews

Intermediate Goods

Katz, R. (2016). If Trump launched a trade war on Asia. The Wall Street Journal Online. Retrieved from!?&_suid=146367637954705626449237349456

In his article dedicated to provisions of American economy changes, the author Katz is quite critical and skeptical about the proposals and solutions that Trump announced during his election campaign. Such a critical approach to Trump’s economy policy is the central topic that the article addresses. Before the presidential elections that will take place in November 2016, the author is inspired by the stream of promises for the mass auditory. Katz’s aim is to provide economical and particularly legal arguments against inadequate presidential promises, and explain the selfish reasons why his party colleagues support him.

Katz applies to some legal expert opinions, documents, and organizations (Section 301 of the US Trade Act of 1974, World Trade Organization, Congressional Research Center etc.). In the context of economy theory, the article content reminds critical evaluation of Keynesianism, when a state regulates macroeconomic rates in accordance with its own interests, which is the threat to discretization and prioritization of separate groups. The author operates with relevant facts and forecasts, analytical conclusions that neglect Trump’s program, and shows its extremely negative consequences. As evidence, Katz gives the example of possible recession after decrease of Chinese and Mexican import. According to Katz (2016), “More than one-half of U.S. imports from China and three-quarters of U.S. imports from Mexico are capital goods and intermediate goods that American firms need for their own production” (n. p.). The point is that many American corporations have affiliations and partnership corporations that secure American own producing only in complex. Any sanctions, trade, tax or other complications will affect American own producing. Especially it is dangerous for auto plants, because without cheap Chinese steal the prices of American cars will grow and they will not be able to compete with Japanese, Korean or German products in the world market anymore.

In the context of employment rate (which Katz also criticizes in Trump’s program), the author believes that refuse from partnership with Chine will not bring work places back to the U.S., which is definitely supported by proper statistical evidence. Besides, internal economy will face the consequences in the sphere of producing, consuming and employment, as it is shown in Katz’s article, which analyzes the global consequences. There is the point in opinion that economy of the USA is bound with Taiwan, Korea, Vietnam and Singapore in export costs, so in global terms, the currency and stock markets may suffer from ripple damages. Again, it is because of the intermediate goods that are produced and shared as a mutual trade relations necessity.

Thus, the anti-Trump policy article by Katz is the symbiosis of economic, statistical and particularly legal research of the reasons why rejection of the Chinese and other Asian markets is unacceptable for the American economy. The article depicts rather pre-elections demagogy than expertized program with proper evaluation and analysis of all consequences. Obviously, along with economy analytics, Katz shows political and social hostility towards daring populist expressions.

Private Property Rights and Economic Growth

Crowe, D. (2014). Devaluation hurts Argentina's regional standing; Colombia has likely overtaken Argentina as Latin America's third-largest economy. The Wall Street Journal Online. Retrieved from:!?&_suid=146369178092707403841516550138

The headline of Darcy Crowe’s article is the central theme of his research: it develops the issue of Argentina’s economy fall on the background of Colombia’s growth. The author uses arguments proved by researches to support his critical opinion that aims to show that abolished old model of management and improper government policy will increase Argentinian economy rate among Latin America countries. In contrast, the author describes Columbia, which has been transformed from the criminal business center into the state that is attractive for investors. In economy theory aspect, the proper model here is the Austrian School that protects strict adherence to voluntary agreements between economic agents with minimum intervention of government and maximum openness of the personal choice.

Possibly, the author is inspired by rapid contrast that is rising between Argentina and Columbia, despite the fact that previously the situation was opposite. One of the first arguments is dedicated to economy output that is higher in Colombia since 2013 due to the lower position of Argentinian peso to dollar. The author uses expert resources that similarly show improperness of Argentinian economy system in comparison to Columbian model. Crowe emphasizes Columbian third position of economy growth in Latin America, which is a good incentive that can encourage large investments. The way Colombia has passed from reputation of cocaine cartel, human trafficking, kidnapping and civil war country to the state with economically prosperous model has two directions. Firstly, taking into account the effectiveness of private property theory, which means relaxation and flexibility of economy, Crowe mentions it as Columbian lottery win. Regulated private property policy and rights have made the market more predictable and economy has become more stable. Secondly, Argentinian black market has reduced the cost of peso, which has also made currency rates fluctuate and caused panic in the market. Thirdly, Argentinian economy ministry has adopted mistaken policy subsidizing expensive energy and transport costs that has led to growing inflation and controlling currency.

According to Crowe, Argentina may face a recession this year. Vice versa, Columbia expects another growth due to privatization and development of small and medium business. The article objectively claims that Argentinian government has purportedly overestimated and publically reported on wrong size of GDP for at least “12%” considering globally recognized standards that Argentina “stopped applying to its indicators” (Crowe, 2014, n. p.). As a result, even Uruguay has better export rates, especially of beef, and it is valuable indicator considering the resources and size of the country. According to the economist, tightened economies of the Latin America countries has particularly transferred Argentinian economy pattern.

Thus, Argentinian economy growth will not be possible until the government stop currency regulation, provide vast privatization, based on clear private property policy. Also, it should develop business and artificially regulate GDP that will give clear strategy on how to define property taxes and reduce devaluation. According to the author, Columbian investment attractiveness can be a good opportunity for Argentina to renovate proper economy policy and establish trustful reputation among foreign partners.

Mandatory Government Spending

Ramsey, M., & Bennett, J. (2013). Corporate news: Car sales rise but at a slower pace. The Wall Street Journal Online. Retrieved from:!?&_suid=1463692149687006683778058324985

The article by Ramcey and Bennett has the aim to analyze the 2013 auto trade market and the impact of mandatory government spending on sells. The comparison with 2009, when the rate of car cells decreased rapidly and raised again before 2012, shows that the customers are willing to buy older vehicle (of eleven years for example). The authors use statistical analysis of the two largest automobile companies of the U.S.: Ford and Volkswagen Group of America, which predict that low interest rates will secure increase of auto industry capacity.

The imposed mandatory government spending cuts, which lead to sequestration, can decrease the rate of the American GDP. Particularly, it has relevance to Monetarism, which frequently supports anti-inflation programs. This program requires providing high bank interest and decline of wage growth, hence, keeping higher rate of unemployment. Those threats affect car selling, which bothers the companies. According to Ramsey and Bennett (2013), the low interest rates should overcome “any potential drag from mandatory government spending cuts” (n. p.). Along with that, the experts predict possible decrease of jobs and tax elevation, which in turn will lead to fall of financial capacity of clients, and consequently will cause the reduction of auto sales.

The authors’ analysis is represented not only in the context of economy theory as the fluctuation between supply and demand, but it also includes additional affects that define auto market success. It is about unexpected natural phenomenon (weather, vacation season etc.) and international competitive alternatives like Japan, whose auto producing capacity is one of the highest in the world. Despite this fact, the text provides rather positive than skeptical forecast with smooth season transitions between vehicle requests.

Thus, general argument, provided by Ramsey and Bennet,t is about increasing auto trade capacity in the United States. It relates the issue of proper domestic conditions for vehicle production and financial well-being of citizens, who buy those cars. According to the threat of sells’ fall, the companies should pay attention to market analysis and forecasts, when they want to avoid confusion regarding the debt ceiling.

Expansionary Monetary Policy

Fairless, T., & Harriet, T. (2016). Germany can’t fix world’s economy with social spending, Sch?uble says; German finance minister also warns that ECB’s easy-money policies could affect country’s elections. The Wall Street Journal Online. Retrieved from:!?&_suid=1463739889085040609994860825993

The article is a summarizing report that criticizes political position of Germany and analyzes world economies in the context of German role in stabilization of European economy, and effect of expansionary monetary policy. Logically, the article is related to Monetarism theory, when the amount of money in circulation is a determining factor that shapes economic conditions, and there is a direct link between changes of currency mass and GDP. In theoretical aspect, monetary policy is the tool of global central banks of the countries with developed market economies that is used to regulate national economies through influencing monetary system in the form of changes in the scope and structure of the money supply. Thus, the expansionary monetary policy, which is the part of German one, is a complex of measures (like emission and increased mass of benefits’) for acceleration of monetary. In this case, the necessary monetary acceleration leads to stimulus to economy, which automatically means acceleration of global growth.

The German minister of economy believes that Germany is not able to spend large percentage of budget on social programs supporting citizens of republics with lower financial capacity. He explains it by the fact that Germany needs new economy stimulus and control over easy-money policy, which is possible only if German economy will be more isolated from the outside requests. However, Fairless and Torry provide not only economical, but also internal political consequences, based on the results of elections. Particularly, the authors see its reason in noise resistance of Bundesbank and some senior German economists, who suppose that expansionary monetary policy and vision of ECB will bring positive inner tendencies in German and global economy.

Indeed, the collisions of government with the vision of ECB, the World Bank and the International Monetary Fund provoke pressure on countries, relying on German reinvigoration of global economy growth. The tone was dictated by lowered global growth in IMF marked; hence, the dependence of global growth on German monetary policy is too high. However, Fairless and Torry (2016) harshly criticize Sch?uble’s comments about “no substantial worsening" of global growth” (n. p.). Possibly, their purpose is to show the absurd conservative approach of the Alternative for Germany party which they call “populist” (Fairless & Torry, 2016, n. p.).

Thus, the tension between German ministry and global banks was high during the meeting in the USA, where the representatives from Berlin did not show constructive alternatives after critical remarks about artificial panic of IMF. However, the German point about multibillion financing of social programs has sense, since tax payers are willing to receive more from government instead of giving money to other countries. However, German upcoming higher independence and isolation will not find positive respond on the next elections.

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