Category: China

Farmers and the Trade War

8/17/2019

I have read quotes from and run into farmers who supported Trump (no surprise there) and still do even with the tariffs. Despite the pain that the tariffs are causing, the reality is almost all farmers want to be patient. They apparently feel the President’s overall plan, when fully implemented, will more than offset the so-called temporary financial pain.

This flies in the face of traditional trading norms. When countries stop buying US farm products like soybeans and milk, assuming these buyers will be back as soon as the tariffs are lifted is not realistic. This is particularly true if the buyers are pleased with their new source and it appears to be more reliable. As evidence to the market uncertainty created by these tariffs, the President announced this week that he will not put in place the new tariffs he had promised because they would raise prices on shoppers during the holiday season. I thought the President told us that China would be paying for these tariffs?

Why would these countries come back to the United States when the current administration could very likely without notice put the tariffs back on?

Although I have a B.S. degree in Dairy Husbandry, I know this did not totally provide me a solid understanding of all aspects of Ag Economics, including tariffs and trade, so I decided to get an expert opinion. I asked my friend and fellow teacher Dr. Barry Flinchbaugh, national expert in all issues impacting agriculture, to comment. He said, “No country ever wins a trade war, going back to biblical times, because export sales are like sleep—once you lose the sales they are gone and you cannot get them back.''

What farmers need to understand is that they and their farm organizations are now in a position of strength to put political pressure on the Trump Administration. They should make it clear they are not patiently waiting for the markets to come back. Now they have political leverage. They are part of his base. Speaking up now, they can communicate economically they have no choice but to support former Republican Governor Weld of Massachusetts, currently the only Republican challenger to Trump’s 2020 campaign. He understands these economic realities and pledges to lift unwise tariffs and focus on trade deals that are mutually beneficial.

The same is true for our Congressional delegation. Farmers should expect stronger protests from their representatives to this Administration regarding the negative impact on agriculture, and especially when the President's own Secretary of Agriculture calls farmers whiners. President Trump knows Republican members of Congress want it both ways. Telling their farming constituents that they are concerned is not real pressure that will make this Administration change course. Our entire Agriculture sector needs to be communicating to the Administration that if there is not an immediate reversal and new commitment to positive trade policy, they will have a hard time defending this President in Ag country.

Let me make this clear. If farmers don’t cause this administration any political pain, their silence on the tariffs will most likely assure that tariffs stay in effect longer and become more frequent. If that happens, the result will be serious long-term damage to the Agricultural economy. In states like Kansas, that pain extends farther given the significance of our Ag sector to the overall statewide economy. Adding further to this misery is that much of our manufacturing sector is facing similar results from these tariffs. And more damage can come down the road. Remember, once you lose a buyer, it's almost impossible to get them back.

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June is National Dairy Month

6/9/2019

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For as long as I can remember, June has been Dairy Month all across the country. Growing up we were not just milking cows, but my Dad was for several years President of the Kansas Dairy Association. He took his role very seriously, best exemplified by his almost religious belief that one did not have to use the butter paddy on the dinner table, but you had to, "at least mess it up." Later, as Governor for eight years, I had the enjoyable experience of signing the Proclamation declaring June as Dairy Month in Kansas. I then got to enjoy the ice cream brought to my office by the dairy leaders of the state.

A lot has changed in the dairy industry in Kansas since those early days. When I still had the cows, our herd was one of over 30 herds in Saline County alone participating in official testing for milk production of each individual cow. Today, in most counties, I don’t believe any milking herds remain. Yet somehow Kansas is the 5th largest dairy state in the country. Obviously, the huge dairies in western Kansas make that possible. Which is why Trump’s tariff policies have been so damaging to not just those dairies but to the overall economy of Kansas. Mexico and China have been major purchasers of milk products from us, and their shift to other dairy sources may not just be temporary.

For this June to be really special, we need two things to change. First, our country’s trade policies need to more positively represent the interests of all who market internationally, and not just in the dairy industry. Second, development of a sensible immigration policy would really help. Why do I say that? Very simple: If you were milking 10,000 to 25,000 cows probably three times a day and depended on immigrants to do that work, you would see immigration policy in a totally different light. The tariffs and the need for immigrant workers make milking cows in Kansas a real challenge. And the Trump Administration is making it even harder on both fronts.

Obviously, I haven't milked a cow for a very long time. But I still have fond respect for those who do and wish them the very best for not only June but for the future. Just to stay in touch, I do still take the Hoard’s Dairyman- a magazine out of Wisconsin where one of my 4-H kids from the Smolan community, Steve Larson, served as chief executive for many years. I will toast the dairy industry this year by stopping at the nearest Dairy Queen on my way home for a Chocolate Cookie Dough Blizzard.

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China: Yesterday and Tomorrow

3/12/2019

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January 1979 and my first day on the job as Governor of Kansas, I found on my desk an invitation for my predecessor Governor Bennett to go to China. He chose to wait to respond until he thought he would be re-elected in November 1978. That didn’t work out for him but it gave me a huge opening, and I quickly saw it as an excellent opportunity for Kansas and our future. The decision was made possible because Presidents Nixon and Carter made decisions to take advantage of China’s interest in opening up to the outside world. Kansas was the third state to take advantage.

So, in August 1979, I led a Kansas Trade Delegation to China to take the first step in promoting business opportunities. Some of the time was spent enjoying the things they wanted us to see, like the Great Wall. It too was built to keep invaders out, the difference being Chinese built it, paid for it, and from their perspective had a real purpose in keeping a real enemy out. Because of its massive depth, it not only served as a path to move troops and supplies but is one of the very few world objects that can be seen from the moon.

To describe where China was in 1979, a comparison on infrastructure and technology might best make the point. Here in the United States, we were finishing the Interstate Highway System proposed by President Eisenhower. In China, I was riding on dirt roads from one major city to another. Our space program was well underway while they were still recovering from years of backward Communist Leadership where much of the talent was put into restrictive camps to limit their possibility of leading change.

But there were many positives to see as well. Their wheat varieties were pretty amazing, as timing allowed us to see the crops shortly before harvest. The Chinese were creative to say the least. Gas from human waste was piped back into the living area for cooking purposes. I saw chickens fed and grown out on concrete covered with sawdust, which was along with the chicken feces collected, put in what looked like glass milk bottles, and used to produce a very special mushroom. The spirit of cultural exchange and discovery during those trips fueled an unforgettable engagement that I hope came to benefit all parties involved.

The video above features media coverage from the trip. Special thanks to Larry Hatteberg, the reporter covering the delegation, for providing archived footage from 1979 and the follow-up visit in 1984.

Forty years have passed since my first trip to China, and the view of China on later visits (I went back in 1984, '86, and '88 as a private citizen) to now, as well as their projected path forward, are difficult to believe but certainly true and should be alarming for our elected leaders. David Brooks in a recent article in the New York Times wrote, “China aims to dominate high-tech by 2025,” and from my experience, that seems realistic. Brooks’ article points out their aggressive plans that, yes, include stealing some of our technology but outlines the overall reality we must address. As an example, we struggle to have any mass transit in the United States, while they have a 200 mile-an-hour Bullet Train from Beijing to Shanghai. China has also taken significant action on climate change, an area where U.S. vision and leadership is sorely lacking. If only we spent less time stoking the flames of a harmful and ongoing “trade war” and more time on level-headed engagement, we may find better relations and improved outcomes for both countries.

Meanwhile, if we don’t—as a country—learn soon that we cannot borrow our way to prosperity and that we must wisely invest in the research, technology, and infrastructure we need to compete, it will be China who is in the position for the 21st century that the United States held throughout the 20th century. Smart conservatives invest wisely. That is true in Kansas as well, as education and taking care of our infrastructure will dictate our future.

This is a photo of myself and Governor He on our follow-up visit to China in 1984, where we visited Henan Provence. Kansas and Henan Province established a sister state relationship in 1981.

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Why Don’t We Hear About the National Debt?

2/7/2019

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I remember when I was in leadership with the National Governors Association and taking our concerns about key issues to Washington, to the Congress and President. The focus was on problems that significantly impacted the states but could not be resolved state-by-state. Acid Rain, for example, where the states producing it were not impacted, made action at the national level a must. Another example, funding for emergency weather response, especially in states where their constitutions require the budget to be balanced. But the key message we always delivered was our concern about the national debt, the impact it could have if neglected, and the fact that all key parties had to be at the table to have any hope of making progress.

Why do we hear so little from our politicians on this issue of national debt? It is really quite simple. For one, very seldom does the press talk about debt. Both parties run away from the issue making it the so-called third rail in politics: the one that could kill you, or as in politics, throw you out of office. When Republicans are in power, they like to feed the very rich what they want. Recently, it was the major tax cut that was primarily focused on the ultra rich. They couldn’t pay for it through higher taxes from the rest of us, so they treated it like it was “off-budget” and didn’t really count. For the Democrats, protecting Social Security and Medicare is a must. They want to avoid opening a debate about debt reduction because, if done responsibly, proposed changes may not be liked by their loyal supporters. In both cases, doing nothing will be far worse than making responsible changes.

To underline the fact that neither party wants to deal with the national debt, and will not unless voters wake up and make it an issue, I share a couple experiences I had campaigning for responsible action. When I tried to meet with then Speaker Jim Wright from Texas, he met me at the entrance door and verbally threw me out. He did not want to hear our message and wished me to go away. The powerful minority leader in the Senate, Robert Byrd from West Virginia, called me at my hotel on one of my visits and basically read me the riot act. They had plans to attack the then President Reagan on some funding issue they wanted and our raising the issue of debt in a bipartisan way was counter to their interests.

Exploding national debt should be something that we as citizens understand. For most of us balancing our personal or business budgets, we know that debt can work for us but always with the understanding that it can go too far. If we go too deep into the red, creditors could start raising interest rates or we run the risk of simply borrowing more than we can afford to pay back. Remember the housing crisis a few years ago when suddenly far too many housing loans were under water? In agriculture, managing debt is always a huge challenge. And the basics of debt can be applied to government. When the financial crisis hit in 2008 and recession came, deficit spending was needed in order to account for declining government revenues and encourage economic investment. This was an example of a time the federal government utilized debt to help get through difficult times, and it worked. However—and most importantly—as the economy improved and revenues began to stabilize, that deficit spending began to decrease during the later years of the Obama administration. This is precisely the response you’d expect to see from a responsible household or business planning for the future. Because, as a country, one of our major bankers is China and at some point—just like with any creditor—if we borrow too much, the interest rates could go up. And we also risk saddling future generations with a national debt so huge they may never be able to pay it back.

Unfortunately, concerns over the national debt were totally overlooked by the Republican-controlled Congress and White House when they pushed through a huge tax cut for the rich, without any plan—outside of trickle-down fantasy—for how to pay for it. As a result, in just the last two years, our national debt has grown two trillion dollars. There are economists who believe we are close to the tipping point and, without responsible actions, that point could be as soon as three or four years.

Now, the good news. Responsible action can happen. In the late 90’s Democratic President Clinton and Republican Speaker Gingrich successfully worked together to not just balance the budget but start to pay down on the national debt. What stands out in this example? Bipartisanship, something we struggle to have in today’s politics.

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Farmers and the Trade War

June is National Dairy Month

China: Yesterday and Tomorrow

Why Don’t We Hear About the National Debt?

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