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The Anti-Business Businessman
We’ve been instructed not to take our new president literally, but instead seriously (in the felicitous phrasing of Salena Zito). As I write, there are hints that the inaugural address will focus on the theme of “America First.” President-elect Trump may or may not be familiar with the historical taint of that phrase, but in any case the meaning he attaches to it has been clear enough.
Throughout his career, Mr. Trump has been consistent on two issues: trade and admiration for strong men. He departs from the consensus about American leadership in the post-World War II era. Rather than seeing US security guarantees and promotion of trade as providing the means through which the world (and the US) has seen unprecedented growth, peace, and prosperity, he thinks we’ve been chumps.
“America First” is a declaration of No More Mr. Nice Guy. This is the link between his views on NATO and trade. In the former case, he appears to think that the NATO alliance is a favor we do for an ungrateful Europe. While it would be a very positive development if every NATO member were to spend the agreed-upon two percent of GDP on defense, there is reason to doubt that Trump’s comments are simply veiled threats to achieve that. Is it pure coincidence that while denigrating NATO, Trump has shown excessive friendliness to Putin, whose chief goal (just ask Gen. Mattis) is undermining the alliance?
Trump has offered differing explanations for his tweets about NATO being “obsolete.” He has mentioned defense spending. He has also cited failure to cooperate on terror. But Article V has only ever been invoked for Europe to help America. Many NATO countries contributed troops and other support to the war in Afghanistan, including the UK, Germany, Italy, Turkey, Norway, and The Netherlands, among others.
Unlike his views on immigration, abortion, single-payer, ISIS, and countless other topics, Trump has been consistent on trade since the 1980s. In 1987, he bought a full-page ad in the New York Times denouncing trade with Japan. He seems genuinely to believe that trade impoverishes us, which is odd for a businessman, because trade is really just another word for business.
It is true that our economy has seen very limited growth over the course of the past decade or so, but to finger NAFTA and other trade deals as the culprit, instead of, say, overregulation or high taxes, is perverse. Trump cites the trade deficit figures with China and others to prove that we are “losing” in a zero-sum competition and that jobs are being “outsourced” due to stupid leadership by politicians. These are Democratic talking points. Or were.
Manufacturing jobs are being lost to automation above all. Also, commerce (another word for trade), unlike war, has winners on both sides of the transaction, not winners and losers. The US economy boomed during the 1980s and 1990s despite large trade deficits. Those who claim that the US is running a trade deficit in goods due to unfair trade practices of trading partners never seem to make the case that our trade surplus in services (large and growing) is due to our own unfair practices.
Trump has made a number of fine cabinet appointments, but the “trade triumvirate” of Commerce Secretary Wilbur Ross, US Trade Representative Robert Lighthizer, and the head of a new entity called the National Trade Council, Peter Navarro, are quite worrying advocates of so-called “nationalist” economics. Like Mr. Trump, they see trade as a form of warfare. It isn’t. But trade wars can lead to real wars, thus the saying “If goods don’t cross borders, armies do.”
The possible ironies here are voluminous. 1) The people who will suffer from trade protectionism are the poor and working classes who will pay higher prices for goods, and see their jobs lost due to higher prices of imports (half of imports are used in American manufacturing, some of which go to exports). 2) China is benefitting even now from other nations’ fear of US retrenchment on trade. Instead of American-led free trade agreements, China is lining up Pacific nations for a Regional Comprehensive Economic Partnership, in which Beijing calls the tune. 3) The US is the world’s largest trading nation. Protectionism is a punch in our own eye. To “punish” China or anyone else for selling us too many products, Mr. Trump can impose higher prices only on Americans.
The president has a great deal of independent power on trade matters. Here is something for Republicans in Congress to mull: If President Trump, the great businessman, ignites a trade war and tanks the economy, voters will draw the lesson “Those free-market Republicans have done it again. Capitalism equals depression.”
Published in Politics
Exactly how does negotiating fair trade deals that facilitate our balance of trade while ensuring robust trade in general constitute “trade war”? Trump’s stated trade goals don’t.
Simply lowering our confiscatory taxes on business will repair a lot of the damage done by Congress. Not having an administration that demonizes profit will create a more positive environment. Not ignoring the rampant intellectual property theft by China will restore profits to their lawful owners. Not ignoring currency manipulation will also restore profits to their legitimate owners. Manufacturing creates most actual wealth.
Labeling Trump as an imminent trade warrior has no value whatsoever, except the non-economic benefit of making sensation-inducing Trump critics feel better. Trade war will lead to a shooting war! The world economy will collapse! Robots caused real jobs to move overseas!
Please. Take a breath and let him get sworn in before the sharp knives are unsheathed.
This thought process seems backwards – do you shop? We are paying more for everything. I’ve seen people put stuff back on the grocery shelves, saying do I really need this – I’ve done it. Obama doubled the national debt – we are in the negative. If there are unfair trade deals that need to be reworked, is that a problem or a solution? It must be nice to be China – you can manipulate currency, not abide by the climate change agreements, sell your cheap crap all over the world, hack into other governments to steal trade secrets. The rest of the world is squirming with economies on edge and their citizens don’t want to change anything. Something has to give – we’re broke. How are we even paying for the interest on the debt? Any suggestions on how he should improve our economy and bring back jobs that have dried up across the country? The poor are still poor after Obama.
What’s wrong with strong men? I’m always hearing how great “strong women ” are. Merkle, Thatcher, HRC…
Are we to admire weak men?
And yes, we’ve been chumps.
The “chump” factor! Maybe that’s why Trump is about to be sworn in and not Mona.
Franco, didn’t you get the memo? Strong men are dictators and brutal fascists. Vlad the Impaler is a strong man. Maduro the Idiot is a strong man. Trump is a strong man, therefore he is in the same class as the other two. Our language and our understanding of human dynamics has been ruined by the “educated” leftists, apparently including Mona.
“Those who claim that the US is running a trade deficit in goods due to unfair trade practices of trading partners never seem to make the case that our trade surplus in services (large and growing) is due to our own unfair practices.”
2016 Jan thru November, trade balance in Goods = negative $680 billion. trade balance in Services = positive $226 billion.
https://www.census.gov/foreign-trade/Press-Release/current_press_release/ft900.pdf
That is, the deficit in Goods exceeds the surplus in Services by about 3:1
Wouldn’t it be nice. But first, Mona had to squeeze in the allusion to a taint on the term ‘America First’. I didn’t know my credit union was tainted. Then she goes on to say ‘but in any case the meaning he attaches to it has been clear enough’. Then why did she bring it up? See, this is the Fred Cole thing all over. They just can’t restrain themselves.
It seems that by now everyone would know there are no words, phrases, or terms that are removed from the lexicon of President-Elect Donald Trump. And we are certainly not going to remove a great expression like ‘America First’.
Let’s hope he’s anti business but pro market. All special interests are pro some businesses. There are ways to deal with our deficits that aren’t protectionist. Although counter intuitive, an across the board uniform tariff is one such approach, as is a uniform VAT (sort of), elimination of taxes on corporate profits and savings is another. I’d love to hear President elect Trump or some of his people address the issue though any approach that strengthens markets, savings and entrepreneurial activity. Still, going after over regulation and taxes is the right place to begin and that seems to be what they’re talking about. The wrong place is currencies and specific tariffs and subsidies. We have a serious current account problem and we must address it.
Agreed. And I think Mona would agree with that.
We’re far from pure on this. When our government does it, we don’t call it currency manipulation though, we call it quantitative easing. Our government prints money out of thin air expressly so that the dollars are worth less, making it easier to repay debt. It’s a nasty thing to do to those who have saved up money, whether that money is Chinese or American.
And fortunately, we manufacture more product then ever before. We have fewer people in those jobs because of automation. Same goes for China. While their production output is increasing, the number of their manufacturing jobs is decreasing. This is not to say we couldn’t manufacture more, if we stop treating industry as an enemy as the Obama administration has done.
This has been my biggest reason for not wanting Donald Trump to be the Republican nominee. For generations the Democrats have been successfully selling the false notion that there is a fixed amount of wealth in the world, and of someone gets richer that means someone else gets poorer. Republicans have been striving to sell the message that wealth can be created, not just transferred. A business transaction doesn’t mean that someone won and someone lost, although leftists often portray it that way. Both parties made the deal because they believed they would be better off than not making it. But Donald Trump is selling the proposition that if Mexicans or Chinese people become more prosperous, then it must mean that we are becoming less prosperous. That’s just BS.
I wonder what Republicans would think about a President that set quotas on the importing of sugar, clothes pins and machine tools. Increased tariffs on Canadian Lumber and Japanese Motorcycles. Restricted the import of textiles and removed several 3rd world countries from the “duty free” program. Place price controls and tariffs on memory chips and electronics. Reduced steel imports and Japanese auto imports. Re-defined “dumping” to make it easier to bring charges against other countries.
Oh wait, most Republicans think Reagan was a great President. The world did not end, trade did not end when he used Protectionist measures to help American businesses.
Since he got nominated and elected it makes little sense to argue this point until his administration actually takes or proposes some actions that meet this reason.
This phrase, regardless of context, is misleading. All agreements labeled as free-trade are, in fact, full of restrictions and other provisions. For example, NAFTA is a twenty-two-chapter, seven-annex document with specific provisions and exceptions concerning a wide variety of goods and services from autos to textiles. A genuine free-trade agreement would consist of one sentence: All goods and services may flow freely across the borders of the signatories of this treaty. [N.B.: Not that I’m advocating such an agreement.]
The notion that NAFTA, or any similar document, is some sort of holy text that is not to be modified or tampered with is preposterous. Treaties, like any other contract, should accommodate the needs and desires of the parties. As these needs change, so must the terms of the agreement, consistent with honoring those provisions that have force in the future. This would seem to be common sense, yet remarkably uncommon in these discussions. Even lawyers recognize the Rule Against Perpetuities.
You don’t think his recent Tweets threatening German auto manufacturers with a 35% tariff indicate he still maintains his position on foreign trade?
You maintain the Trump believes the zero-sum wealth model? Really? Why? I’ve listened to and read a lot about his trade ideas and never took away that conclusion.
Now if you’re referring to the index of fairness, which of course exists, then it is a teeter-totter. If one trading partner has an unfair advantage, then profits and the balance of trade can be skewed. The volume of transactions is not at issue when discussing fairness.
So if I as a businessman demand that my Procurement manager negotiate better deals with suppliers, and that my Sales manager stop giving so many questionable discounts to customers, does that mean that I am advocating for a zero-sum view of the economy?
This creature is who you voted for and wanted. Nothing you say regarding prognostication has any validity to me. I actually used this TP a few nights ago since the ‘he’s not Hillary’ routine expires tomorrow.
I’ll see how you do analyzing what actually happens after it happens. Somehow I just don’t see the sky falling. Yep, just checked, it’s not falling.
Tweets have economic impacts just like signed and sealed trade agreements?
Great post Mona. Thank you.
Not at all. Maybe you’ve heard different Trump speeches than I have. Some of the ones I’ve heard have been full of resentment that China is doing well.
First, my biases: I was firmly #NeverTrump until I saw his candidacy as a cultural, not a policy, phenomenon. I like the Cabinet picks, and if the judicial picks are good, it will matter far more than whatever vulgarity he tweets at 2 am in terms of getting government out of the way enough so that we can fix the country. (I put a tremendous amount of weight on judicial picks for the simple reason that it doesn’t matter how much amazing lawmaking we do at the state or federal level if everything just gets overturned in the courts.)
That said, I wish the #NeverTrump crowd had a coherent vision for going forward. It simply cannot be to throw stones at the man for everything and nothing; it, like the Tea Party, has to be a concerted effort to discuss specific problems with actual policies that might become law. Otherwise, there’s simply no credibility: it’s just background noise.
I also think that anyone who complains in politics needs to have a coherent explanation of what would make them happy enough to shut up and go home (to be overly blunt). To the Tea Party, it was things like, “Don’t pass this monstrosity of a ‘health care’ bill.” I have no idea what Trump could do that would cause the #NeverTrump crowd to, if not be happy, at least stop complaining.
NATO is a collective security treaty that deterred the Soviet Union from invading Western Europe during the Cold War. But the Soviet Union is gone, and so, if NATO is to serve any purpose we ought to identify what threat against Western Europe it is meant to deter. NATO was distrusted by many Europeans during the Cold War, and it was criticized at the time by commentators for making Western Europe dependent on the United States, and in need of reform.
Since the fall of Communism, NATO has been expanded to include some of the former Warsaw Pact countries, most notably Poland. In other words, NATO now commits the United States to come to the defense of Eastern Europe.
If Russia is a threat to Eastern and Western Europe, what is the nature of that threat?
Like 10 times….
Invasion?
On BBC News tonight, interestingly they highlighted just south of the border in Mexico, citizens of Mexico who are now unhappy and disappointed that the auto plant that was coming to their town has now been cancelled and is going to Michigan. The person they interviewed is shown picking cactus, his new job, with a desolate, dusty, treeless, dirt background. The outrage! The BBC commentator made a point to say “the world will be watching carefully”. How many things can you find wrong in this picture?
With all due respect to Mona, I heard her on the radio the other day and I find it hard to believe she’s a conservative.
I think that is the correct answer if all of Europe is doing as now which is lax. The answer if all of Europe is doing what is called for in the collective security agreement is the threat of invasion is deterred. When this status is reached the U.S. should only be a reserve against ground invasion but also provide a nuclear deterrent.
That’s a fair point, Bob. And I’m sure that if Hillary Clinton had won the election but not yet been sworn in and was talking about how she’s going to raise taxes and restrict the sale of guns, you would rightfully calm me down by reminding me that it’s just talk, she hasn’t done it yet and might not even be able to enact such legislation if she does try.
I used to love this podcast, I really did, but try as I might I cannot get through more than half of it before I just throw my hands up and hit the delete button. No new arguments, just the same old #NeverTrump shtick, really it gets boring. The guy could walk on water and you two would bitch about it somehow, LOL, really there are so many other better thought invoking podcasts on Ricochet, and I have only so many hours in a day, this one is now consistently on the “Why Bother” list, sadly.
podcast?
The way people lie nowadays is by using the wrong verb. It’s cute and snarky. You haven’t been “instructed” to do anything. “Advised” might be a more accurate word. Advised for your sake to perhaps better understand the phenomenon that you are visibly struggling with, and have been proven wrong about in serial iterations. Obviously you aren’t taking the advice, or rather ironically, you choose to take the advice itself ‘literally’ and not seriously.
You are on the verge of failing the class, Ms. Charen.