[CTC] Trump’s Trade Rhetoric Is Unhinged. His Tariffs Aren’t.

Thu Apr 5 04:59:29 PDT 2018

A couple perspectives on tariff alarmism...

https://www.huffingtonpost.com/entry/trump-trade-tariffs-twitter_us_5ac51b86e4b09ef3b2430789 <https://www.huffingtonpost.com/entry/trump-trade-tariffs-twitter_us_5ac51b86e4b09ef3b2430789>
POLITICS  <https://www.huffingtonpost.com/section/politics>
04/04/2018 06:46 pm ET Updated 2 hours ago
Trump’s Trade Rhetoric Is Unhinged. His Tariffs Aren’t.
Trump is a bad messenger for a reasonable idea.

Before Donald Trump <https://www.huffingtonpost.com/topic/donald-trump> was elected president, the large and expanding American trade deficit with China was widely recognized as a problem. China’s entry into the World Trade Organization in 2001 had destroyed millions of good jobs in the United States, eroded the earning power of American workers, and left many towns and communities economically gutted.

U.S. manufacturing jobs began disappearing almost immediately, and growing evidence suggests the “China shock” never really ended <https://twitter.com/Brad_Setser/status/979412355992797184>. Sustained U.S. trade deficits made the Great Recession worse <http://www.slate.com/blogs/moneybox/2016/07/05/why_trade_deficits_are_worse_for_the_economy_than_they_used_to_be.html> and put a drag on economic recovery. Even today, with the unemployment rate down to 4.1 percent, the trade deficit with China continues to put downward pressure on U.S. wages, and many who lost their jobs never re-entered the labor force. 

Tougher enforcement against unfair trade practices has long enjoyed bipartisan support in Congress, and when U.S. Trade Representative Robert Lighthizer announced a review of Chinese policies in August 2017, even top Democrats applauded <https://www.reuters.com/article/us-usa-trump-trade-china/in-rare-bipartisan-display-democrats-back-trump-on-china-trade-probe-idUSKBN1AI2JI> the decision as long overdue.

Yet suddenly, Republicans and Democrats alike seem to be hailing the WTO and two decades of obvious failure as a smashing success. When Lighthizer announced a very modest slate of tariffs targeting Chinese-made goods last month, liberals <https://www.washingtonpost.com/blogs/plum-line/wp/2018/04/03/how-trumps-latest-reckless-gamble-could-hurt-trump-country/?utm_term=.e1c89000ef98> and right-wing libertarians <https://www.cato.org/publications/commentary/threat-trade-war-opposite-drain-swamp> alike began tearing their hair out, while apocalyptic <https://www.washingtonpost.com/news/worldviews/wp/2018/04/04/how-trade-wars-end-and-why-trumps-will-be-different/?utm_term=.8141cb2eb517> warnings <https://www.bloomberg.com/view/articles/2018-04-04/a-trade-war-will-leave-markets-with-few-winners> about the supposedly devastating consequences of an imminent trade war began getting headlines. “China Just Gut-Punched Trump On Trade. Is It Time To Get Worried?” asked The Washington Post <https://www.washingtonpost.com/news/wonk/wp/2018/04/04/china-just-gut-punched-trump-on-trade-is-it-time-to-get-worried/?utm_term=.090dfffcdc48>. “US-China trade war fears: How bad could this get?” mused CNN <http://money.cnn.com/2018/04/04/news/economy/trade-war-escalation/index.html>.

It would be nice to believe the intensity of the freakout is a result of the bizarre, needlessly inflammatory rhetoric Trump has invoked on trade. Last month he declared on Twitter that ”trade wars are good, and easy to win <https://twitter.com/realDonaldTrump/status/969525362580484098?ref_src=twsrc%5Etfw&ref_url=https%3A%2F%2Fwww.cnbc.com%2F2018%2F03%2F02%2Ftrump-trade-wars-are-good-and-easy-to-win.html>,” a statement which doesn’t seem to gel with today’s entry <https://twitter.com/realDonaldTrump/status/981492087328792577>, “We are not in a trade war with China, that war was lost many years ago by the foolish, or incompetent, people who represented the U.S.,” to which Trump added the head-scratcher <https://twitter.com/realDonaldTrump/status/981521901079146499>, “When you’re already $500 Billion DOWN, you can’t lose!” These are not the words of a stable and competent negotiator. The self-dealing and corruption that permeate his administration do not inspire confidence that trade talks with China, or anyone else, will generate results in the national interest.

But the truth is that Trump’s idiocy is being used to rehabilitate a lot of failed doctrines from the past few decades, and Democrats, eager to score partisan points against a racist and cruel opponent, are gleefully embracing discredited ideas and individuals.

Architects of the Iraq War and apologists for the CIA’s torture program have been transformed <https://twitter.com/amjoyshow/status/868851156734193666?lang=en> into sage foreign policy experts on liberal television programs. The WTO is receiving a similar makeover from the libertarian Cato Institute, The New York Times <https://www.nytimes.com/2018/03/26/business/nato-european-union.html> and The Washington Post <https://www.washingtonpost.com/news/worldviews/wp/2018/04/04/how-trade-wars-end-and-why-trumps-will-be-different/?utm_term=.8141cb2eb517> ― all of which have recently offered paeans <https://www.cato.org/blog/chinese-intellectual-property-policies-demand-smart-us-trade-policy-response-one-president> to globalization’s most powerful engine as the ideal venue for settling legitimate trade disputes. Instead of threatening tariffs, they argue, Trump should complain to the WTO.

But the WTO doesn’t work. If it did, we wouldn’t be where we are.

Trade policy is a diplomatic tool. The setbacks globalization has created for many American communities ― tragic as they have been ― could well have been justified if they secured other strategic goals. In the late 1990s, the Clinton administration pitched <http://www.slate.com/articles/business/the_next_20/2016/09/when_china_joined_the_wto_it_kick_started_the_chinese_economy_and_roused.html>China’s entry into the WTO as a way to advance <https://www.hrw.org/news/1999/11/24/use-wto-process-push-china-rights> human rights causes. More trade with the United States, it was hoped, would encourage China to become more democratic. After more than 16 years, a verdict is long overdue. The WTO failed because it is structured to prioritize corporate profit and investment over human rights, the environment and worker wages. It isn’t equipped to alleviate tensions between an authoritarian government and a democracy.

These inadequacies were well understood before Trump took office. In September 2016, the New America Foundation held a majorconference <https://www.newamerica.org/open-markets/events/trade-war-and-china-21st-century/> on American foreign policy and China, effectively acknowledging that the past 20 years had been a mistake. “The bottom line is that Chinese mercantilism is a growing problem, and the victims of that mercantilism have little to lose from a trade confrontation,” Paul Krugman wrote <https://www.nytimes.com/2010/01/01/opinion/01krugman.html> on New Year’s Eve 2009. Even the free-trading Obama administration believed the WTO was largely obsolete and ineffective, which was why it spent eight years negotiating the Trans-Pacific Partnership (which the U.S. ultimately failed to approve) with 11 other nations.

However outrageous Trump’s Twitter comments may be, the scope of what both his administration and the Chinese government are proposing just isn’t very big. Last year, U.S. imports from China increased by over $43 billion, to $505 billion. In that context, slapping tariffs on $50 billion worth of imports shouldn’t be terrifying, and neither should the prospect of a $50 billion retaliation from China. Our $130 billion in exports to China amounts to less than seven-tenths of one percent of the U.S. economy.

Trump has taken a few other, smaller trade enforcement actions that affect China, and it’s hard to predict where the back-and-forth will end. Trump, of all people, is perfectly capable of screwing the whole thing up. Effectively negotiating with China is a long game that will require reorganizing some supply chains, a process that will create its own winners and losers. Human rights, national security and political stability must be vital considerations ―  not just consumer prices and gross domestic product. Trump doesn’t seem to be very good at managing any of that.

But he isn’t starting a trade war ― he’s grappling with a failed foreign policy. And on trade, at least, his critics are defending the indefensible.

http://www.populist.com/24.07.bybee.html <http://www.populist.com/24.07.bybee.html>
The Unhinged and Ignorant vs. Clueless and Complacent on Tariffs

No room to debate bigger questions of globalization

By ROGER BYBEE

A mindless debate between two discredited sets of opponents obscures the real meaning of Trump’s call for imposing a 25% tariff on imported steel and 10% on aluminum.

It pits the ignorant and impetuous Trump and allies against the complacent and clueless clique of unbridled “free trade” among America’s elite corporate and government officials, and the donor class for both major parties.

As a result of this spurious interchange, it becomes almost impossible for Americans to make any sense of the tariff issue or much more importantly, understand how corporate globalization has greatly intensified US inequality, severely hollowed out the American middle class, and devastated industrial communities in both the North and South. Tariffs are a blunt, primitive weapon that offer no long-term solution for US industries and workers.

Instead, America desperately needs a thorough discussion of a set of the central issues kept off the radar screen by corporate and political elites. We need to contemplate why the torrential offshoring of US jobs by Corporate America continues, while just 11% of Americans defend this practice. We must confront the continuing downward spiral of discarded American workers, their families, and their communities if present trends are not reversed and a new American industrial base is not created.

The public must fully repudiate the counsel of the elites and their technocrats who blithely ignore the human costs of de-industrialization. “Don’t trust your own experience of shuttered factories and broken unions, let the experts who got us this far lead us deeper into the abyss,” as Robert McChesney and John Nichols have insightfully summarized this pitch from free traders in People Get Ready.

Yet none of the fundamental issues at stake—the offshoring of jobs, the shrinking middle class, and sharply rising inequality — are part of the current debate.

In one corner of this unproductive battle, we have Trump, who suddenly unleashed his tariff plan while in a fit of pique that left the erratic always-impulsive president particularly “unhinged” by unrelated issues. But even if the self-described “very stable genius” was capable of rational consideration, he would have been blinded by his 19th century view of tariffs and his obliviousness to how the corporate-dominated world economy actually works. In an interview, international economist William K. Tabb, professor emeritus of economics at Queens College, says the Trump’s plan would likely raise prices on a variety of goods while failing to render any serious help to steelworkers and others whom Trump claims to care about.

More broadly, Trump, lacks any awareness that nations as unified entities are not “winners” or “losers” in global trade. Transnational corporations have almost exclusively been the big winners. But Trump instead places the Fortune 500 — who have richly profited from their globalization — in the same boat as the Unfortunate Five Million — those who have lost jobs since the acceleration of offshoring over the past two decades. In the same fashion, he shows no awareness that his massive new tax bill contains massive incentives for US corporations to export more jobs.

However, in his crude way, Trump at least connects government and corporate policy with the suffering felt across numerous traditional industries and in fading factory towns and rural areas.

In the other corner, we have most US CEOs, leading Republicans like House Speaker Paul Ryan, the Koch brothers, and most economists decrying the violation of sacred “free trade” doctrine by tariffs. But the current tariff debate is largely a mere distraction in steering the public discussion away from the real fundamentals of corporate globalization.

For example, free traders are loathe to admit that fully 80% of global trade occurs within transnational corporations and their global supply chains. In other words, four-fifths of “trade” involves transactions like GE shipping parts and machinery back and forth with Mexico, or Apple obtaining iPhones from the notorious factories of their supplier Foxconn.

Nor are “free traders” eager to acknowledge that the offshoring of US jobs have been key in driving down US incomes for the vast majority and been a central factor in the closing of 56,190 factories — 15 a day — between 2001 and 2012. During the 2000-2010 period, Commerce Dept. data show that major US firms created 2.4 million jobs overseas while vaporizing 2.9 million in America.

These job losses have taken an enormous toll on workers and families. Collectively, the free-trade advocates have shown a cruel indifference to how the large-scale offshoring of US jobs has hollowed out America’s middle class and devastated industrial communities wracked by low wages, poverty, falling property values, high rates of domestic and street violence, and afflictions like opioid and alcohol abuse. When the free trade establishment reluctantly admits that a huge problem exists, leaders of both parties airily prescribe “re-training” as a cure-all despite the almost-universal failure of these programs in the US to restore decent living standards and healthy communities.

Moving toward meaningful solutions for America’s disposable workers and communities will require rejecting both Trump’s reckless and unfocused tariffs and the conventional wisdom of the “free trade” chorus of elites and most pundits. Restoring our manufacturing base will demand moving toward democratizing the economy and establishing a broad “industrial policy” coordinating economic, trade, environmental, enforcement of widely-trampled labor rights, and manpower strategies.

We will also need to challenge the very purpose of the US economy and the global economy it dominates. The late British billionaire Sir James Goldsmith sharply outlined the current phase of turbo-capitalism which intensifies the subjugation of the vast majority to maximize profits for the top 1%. As Goldsmith observed, “Today we are proud of the fact that we pay low wages.

This reflects a shift from the paternalistic capitalism exemplified by Henry Ford to an ever-more ruthless neo-liberal capitalism where society increasingly geared solely toward ever-larger profits. “We have forgotten that the economy is a tool to serve the needs of society,” said Goldsmith. “The ultimate purpose of the economy is to create prosperity … and not the reverse. The ultimate purpose of the economy is to create prosperity with stability.”

Progressives need urgently to offer an alternative replacing the current system— where people are simply servants of the economic machinery— with a new vision where a democratic, decentralized economic system is instead dedicated to serving human needs.

Roger Bybee is a Milwaukee-based labor studies instructor and longtime progressive activist and writer who edited the Racine Labor weekly for 14 years. Email winterbybee at gmail.com <mailto:winterbybee at gmail.com>. A version of this appeared at Progressive.org <http://progressive.org/>.

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