Im-Politic: A Billionaire Candidate’s Massive Climate Change Blind Spot

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It’s now been five days since I first heard it, but I still can hardly believe my ears because this utterance might have been the single dumbest and/or most ignorant combination of positions I’ve ever heard a leading political figure make. It came from Tom Steyer during the Democratic presidential debate last Tuesday night, and even though the California billionaire’s campaign seems to be going nowhere fast as the 2020 campaign nears its primary phase, it deserves to be spotlighted.

The first of the two statements in question? Steyer’s declaration that “On the first day [of his presidency], I would undo Mr. Trump’s [China] tariffs.” The second? “…I would declare a state of emergency on day one on climate.”

Why is this so mind-boggingly idiotic? Because as should be known by anyone who thinks he or she is qualified to be President, not only has China become by far the world’s largest emitter of the greenhouse gases held to be responsible for climate change, but as shown in the left-hand chart below, it started becoming an emitter in a class by itself at the turn of the century – i.e., right about the time when it was admitted into the World Trade Organization (WTO). And the most important effect of WTO admission was greatly complicating the challenge faced by all the world’s economies – including America’s – in using tariffs to curb the growth of China’s subsidy-fueled carbon-belching export-heavy industries. 

We don’t yet have data for 2019, but the chart also shows that the growth of China’s emissions began to slow (though they’re still growing faster than anyone else’s except India’s) as China’s economic growth (which has always been export-heavy) began slowing. Moreover, over the last year, as literally hundreds of billions of dollars worth of Chinese goods intended for U.S. markets have been hit by President Trump with stiff tariffs, China’s growth hit a 29-year low. Think that’s a coincidence? Think again, as between 2018 and 2019, China’s annual export growth crash dove from 9.9 percent to 0.5 percent in U.S. dollar terms. (The right-hand chart, which measures emissions on a per capital basis, displays similar trends.) 

There’s nothing of course intrinsically wrong with Steyer’s passionate belief in the need to combat climate change. But his utter failure to recognize China’s immense contribution to the danger he sees makes embarrassingly clear – to put the kindest interpretation on the matter – that his knowledge base lags far behind his emotions. To the extent that other high profile climate activists repeatedly let China off the hook as well, they deserve the same criticism. And if this massive blind spot (or delusion) casts big-time doubt on Steyer’s qualifications to be President (which it should), it should have the same effect on all the other climate change resisters who display this shortcoming, too.

Making News: A Washington Post Cite on Manufacturing, China Trade Deal Interviews…& More!

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I’m pleased to report that I got quoted in this morning’s Washington Post on the new Federal Reserve industrial production figures (released yesterday).  Reporter Heather Long mentioned my observation that U.S. domestic manufacturing’s recent recession seems to be over.  She could have also noted the evidence I’d presented indicating that this slump never even happened, but what the heck.

Also yesterday, I was interviewed on “Market Wrap with Moe Ansari” on the new trade deal President Trump has signed with China.  You can listen to the podcast at this link;  my segment begins just after the 27-minute mark.

That same day, Breitbart.com‘s John Carney gave me a very nice shout-out in his very important piece noting new research showing that he (and I) have been right all along about the Trump trade wars having minimal-at-best effects on prices for consumer goods.  Incidentally, Post reporter Heather Long also deserves much credit for first reporting these academic findings.  Read the piece here.

On Thursday night, the U.S.-Israeli TV network i24News also interviewed me on that “Phase One” China trade deal.  To watch the interview, click here and download the file.  As usual with i24News, be sure to download the link within a week, because after that, your freebie access will be gond.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

 

(What’s Left of) Our Economy: Manufacturing’s (Latest) Recession Looks Like It’s Over

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Let’s do something a little different this time in RealityChek‘s monthly examination of the Federal Reserve’s latest domestic U.S. manufacturing output figures – which came out this morning and bring the story through December and therefore through full-year 2019 (at least preliminarily).

Instead of focusing on the industries most seriously affected by President Trump’s tariff-heavy trade policies (mainly the metals tariffs, given big measurement problems with the China duties), let’s look at the question of whether manufacturing remains in recession – which has big, trade war-related implications because this Trump campaign is widely blamed for many of manufacturing’s recent weakness.

There’s considerable evidence that the answer is “Yes” – that industry’s inflation-adjusted production (the measure used by the Fed) is back in growth mode, though just barely.

But the question remains an open one. That’s partly because the answer depends on which baseline date you use for the start of the manufacturing recession, which unit of time you use (along with which particular manufacturing output gauge you favor).

Among that evidence tilting toward “Yes” – today’s Fed data.  Specifically, December’s 0.16 percent monthly increase in constant dollar manufacturing output means that, since June, such production is up. Now it’s only up by 0.04 percent. But since that’s a cumulative increase over the last six months (i.e., two consecutive quarters), the technical definition of recession no longer applies.

Or does it? The same Fed figures show that, between December, 2018 and December, 2019, after-inflation manufacturing output was down – by 1.26 percent. So the recession is still on, right?

Maybe. But use another baseline – April, 2018. As RealityChek regulars know, that’s the first full month in which significant Trump tariffs went into effect (on imports of aluminum and steel). Since then, though, price-adjusted manufacturing production has grown by 0.38 percent. This result, therefore, indicates that, although the President’s trade policies seem to have delivered a hit to domestic manufacturing, it was pretty negligible, and it’s already over (at least for now).

To complicate matters still further, as RealityChek reported last July, according to the Fed’s figures, manufacturing has suffered several recessions since the current economic recovery began (in the middle of 2009).  Indeed, as of this morning, it  still hasn’t recovered from the Great Recession that began at the end of 2007!

At the same time, another set of U.S. government data support the conclusion that there has been no trade war-related manufacturing recession during the Trump years – or manufacturing recession of any kind.

These statistics come from the Commerce Department’s “GDP [Gross Domestic Output] by Industry” reports. They use the same measure used by the Fed for tracking manufacturing growth (or contraction), but they’re kept on a quarterly, not monthly, basis. As a result, these numbers aren’t issued as frequently.

Yet the latest results came out January 9, and although they stop at the third quarter of last year, they show that in real terms, domestic manufacturing under Mr. Trump never shrank on net for two straight quarters, much less over any longer time frame. Here are the quarterly change figures:

2Q 16-1Q 17 :+0.32%

1Q 17-2Q 17: -0.7%

2Q 17-3Q 17: +0.35%

3Q 17-4Q 17: +1.22%

4Q 17-1Q 18: +0.38%

1Q 18-2Q 18: +0.09%

2Q 18-3Q 18: +1.38%*

3Q 18-4Q 18: +0.38%

4Q 18-1Q 19: +0.43%

1Q 19-2Q 19: -0.38%

2Q 19-3Q 19: +0.67%

*those Trump metals tariffs began in this quarter

Indeed, what comes through loud and clear from them is that not only has there been no manufacturing recession on President Trump’s watch, but there hasn’t even been an output slowdown.

It’s always possible to point to the counter-factual – that is, in this instance, to try to figure out how matters would look without any Trump tariffs, or similar Trump efforts to transform U.S. trade policy. And it’s certainly conceivable that domestic industry would have fared even better had Trump abjured all tariffs.

But that’s not the only counter-factual. For example, what if the rest of the world had been able to deal with the pressure created by China’s steel dumping by dumping its own steel into the United States (which hasn’t happened because the Trump metal tariffs were global)? What if China itself had remained completely free to send artificially low-priced (because heavily subsidized) product into the US market? What if President Trump had kept the United States in the Trans-Pacific Partnership trade agreement (TPP), with its wide open back door for imports with lots of Chinese content, while China remained under no obligation whatever to open its market to U.S. products? It’s easy to see that U.S.-based manufacturing could have gone on the critical list.

What’s certain, however, is that according to the most authoritative data available, claims of tariffs-led disaster for U.S. manufacturing have been either much ado about nothing, or much ado about very little. Could the coming months finally bear out the worst fears of cheerleaders for pre-Trump trade policies and other globalists? Of course. But that’s simply speculation, which counts much less than facts.

Making News: Talking China Trade Deal with Jersey Joe, John Batchelor…& More!

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I’m pleased to announce that I was interviewed this morning on the new U.S.-China trade deal on “The Joe Piscopo Show” on New York City’s AM 970 The Answer radio station.  Sorry that I could only give limited advance notice, but the podcast is on-line already!  Special bonus:  Jersey Joe and I also dealt with the Major League Baseball cheating scandal, too!

In addition last night, I was back on John Batchelor’s nationally syndicated radio program to discuss the so-called Phase One agreement with John and co-host Gordon G. Chang.  You can listen to the podcast here.

Tuesday night, I was interviewed on a wide range of foreign and domestic issues on “Breitbart News Tonight.”  Click on this link and scroll down till you see my January 14 segment.

The Breitbart.com folks were also kind enough to write up some portions of this segment in website items here and here.

On Tuesday, meanwhile, Breitbart‘s excellent economics and finance editor John Carney quoted me in his detailed analysis of the latest U.S. government report on consumer prices – which reveals whether the Trump trade wars have sparked any meaningful inflation.  You can read it at this link.  (Spoiler alert for everyone who hasn’t been paying attention to RealityChek‘s own coverage of this issue:  They haven’t.)

Meanwhile, The Epoch Times has quoted my views recently on energy security and what it means for America’s policy in the hopelessly dysfunctional Middle East, and on the progress made in reducing the U.S. the trade deficit.

On January 6, IndustryToday.com re-published – at this link – my recent blog post on the latest data undermining the claim that President Trump has betrayed his working class and middle class voters.  (Another spoiler alert:  These data indicate that he hasn’t.)

Finally, on January 2, the popular finance website AlphaWeek.com posted the video of my December RealVision.com interview on the virtues of an America First approach to U.S. foreign and trade policy – and whether Mr. Trump’s measures fit the bill.  Catch it here.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

 

 

 

(What’s Left of) Our Economy: The Case that Phase One Passes the Enforceability Test

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Not only has the “Phase One” trade deal now been signed by the United States and China, but official texts have now been released. And my initial read indicates that the Trump administration just might have come up with an effective enforcement regime – though success here will depend on U.S. governments (including this one) displaying nerves of steel.

At the same time, the enforcement terms raise the question of why the President felt the need to reach this point via a treaty, rather than simply punish China unilaterally for economic transgressions – as his tariffs on hundreds of billions of dollars worth of imports from the People’s Republic (most of which remain firmly in place) already accomplish.

By way of background, from the beginning, I’ve doubted that any such agreement could be adequately verified from the U.S. standpoint. The main reasons: The bureaucracies China uses to implement the various features of its trade and broader commercial predation are too big and secretive for any outsider to monitor in any meaningful sense. (Further complicating matters – many of the worst culprits are provincial and city governments.) Therefore, documenting abuses in any kind of detail – or verifying any Chinese promises of structural change – has looked like an insurmountable obstacle to standard, legalistic dispute-resolution systems that could actually work satisfactorily for American plaintiffs.

As a result, I’ve argued that the best way to handle these transgressions is for the U.S. government to impose sweeping tariffs on China (because its predation is a systemic plan, not the product of individual entities’ decisions), and to deal with additional, individual complaints by acting as judge, jury, and court of appeals. And because of my conviction that the United States holds the clear upper hand in its relations with China, I saw no need to permit any Chinese involvement in these processes.

The Phase One deal certainly can’t be relied on to eliminate or even reduce Chinese opacity. But the way the treaty reads, it doesn’t need to. The key appear to be these passages (on page 7-3), which set out the procedures to be followed if the United States and China can’t, after a series of meetings and “consultations” agree on resolving a complaint. Here’s the first:

…the Complaining Party may resort to taking action based on facts provided during the consultations, including by suspending an obligation under this Agreement or by adopting a remedial measure in a proportionate way that it considers appropriate with the purpose of preventing the escalation of the situation and maintaining the normal bilateral trade relationship.”

Remedial measures” clearly means punitive tariffs, and just as clearly, they can unilaterally applied.

It’s true, as some trade policy critics have fretted, that the agreement gives the Chinese the same rights – as well as the option of retaliating if Beijing believes the United States has been acting in “bad faith.”

But here’s where the nerves of steel come in. The retaliation that’s permitted isn’t tit-for-tat – as in the case of World Trade Organization (WTO) rules. Indeed, even challenging such retaliation isn’t allowed – a right that can always frustrate justice by delaying it. Instead, the retaliation required is no less than exiting from the entire deal. The system can work in America’s favor if U.S. leaders either display confidence that China won’t take such a dramatic step (because the export-heavy Chinese economy still needs the American market much more than vice versa), or if they resolve to tariff China heavily if this U.S. bluff is called.

Incidentally, the language also makes clear that, in order to go ahead with tariffs, Washington won’t need much evidence any kind of Chinese failure to respond adequately to complaints. In fact, no meaningful evidentiary standards are specified at all. In other words, it’s entirely up to the United States to decide on the threshold for action.

Can China take advantage of the same provisions? In theory, yes. But nothing in the deal would prevent the United States from treating as treaty violations any Chinese complaints it regards as unmerited – and credibly threatening to retaliate by withdrawing unless Beijing backs down.

The deal also could well prevent a big potential problem from emerging – fear of Chinese retaliation (which itself might be tough even to identify because of Chinese bureaucratic secrecy) by U.S. victims of Chinese predation (and especially by victims that are operating in China). Such fears have prevented many of these victims from complaining publicly about Chinese abuses in the first place.

But the text on pages 7-2 and 7-3 appear to permit Washington to keep the name of the plaintiff’s business confidential. So, at least in theory, problem preempted.

As suggested above, however, the deal looks so promising, and permits so much implicit U.S. unilateralism, that it’s difficult to understand why President Trump decided to proceed bilaterally t begin with. Was he worried about being criticized for being reckless and not going the extra mile to deal with the Chinese respectfully and accommodate their legitimate concerns? Perhaps. But I strongly suspect that, at least if the agreement works out as I expect, he’ll face such accusations anyway. And by negotiating, he’s lost precious time to provide tariff relief for U.S.-based producers who need it, and to permit other companies to adjust their supply chains to a new tariff-heavier era sooner rather than later (and to make adequate progress well before November, 2020).

Clearly, however, the negotiating train has left the station. And between this effective enforcement system, Chinese promises of big import increases from the United States, and steep tariffs remaining on most imports from China (which cope with the systemic issue), it looks like a major and important economic and political win for a self-proclaimed master negotiator, and the entire domestic economy – if he makes full use of it.

(What’s Left of) Our Economy: U.S. After-Inflation Wages Could Still Use More Inflation

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This morning’s real wages figures from the Labor Department (for December) contained an unusually diverse grab bag of results, and with a presidential election year now officially underway, perhaps the most newsworthy are those that could well affect the race for the White House – and which on balance seem unfavorable to President Trump.

In addition, though, some other results undermine a major belief about how after-inflation paychecks have fared during the current (record length) economic recovery versus its two immediate predecessors.

Not that the news was all bad for the President and his supporters (and anyone else rooting for a stronger American economy). Yes, overall, inflation-adjusted wages in the private sector dipped sequentially for the second time in three months – by 0.09 percent. (The Labor Department doesn’t track real public sector wages because their trends say more about politicians’ decisions than about economic fundamentals).

But if these preliminary figures hold tightly enough, the 2019 year-on-year improvement of 0.64 percent will be higher than 2018’s 0.56 percent increase.

At the same time, wage growth decelerated throughout 2019 – from 0.37 percent between January and June to 0.27 percent between June and December.

Real manufacturing wages fared better, continuing a year-long trend. Month-to-month in December they climbed by 0.18 percent, and their year-on-year increase and improvement were stronger than that of the private sector, too. The latest annual rise was 0.74 percent – up from the previous year’s flatline. And throughout 2019, they increased at the same 0.37 percent rates during both halves of the year.

But the results were less encouraging for non-supervisory workers in both the private sector overall and in manufacturing. By certain measures, paychecks for the lowest paid U.S. workers have been improving faster than those for the workforce overall. And using the Labor Department’s methodology of distinguishing supervisory from non-supervisory workers provides some support for that finding.

For example, on an annual basis, in 2019 and 2018, inflation-adjusted wages increased faster for both non-supervisory manufacturing and blue-collar workers than those wages for all workers, as shown here:

                                     Total private     N/S private     Total mfg      N/S mfg

Year-on-year, 2019:         +0.64%           +0.75%          +0.74%        +0.45%

Year-on-year, 2018:        +0.56%           +1.63%                0%          +1.14%

Yet the table also shows 2018-19 deceleration for both groups.

Moreover, on month in December, real wages for these blue-collar workers performed worse in absolute terms than for all private sector and manufacturing workers – actually falling by 0.21 percent for the former (the biggest decline since October, 2018’s 0.22 percent drop) and increasing by just 0.11 percent for the latter.

And deceleration continued through the year. Between the first and second halves of 2019, constant dollar wages increases for the private sector fell from 0.53 percent to 0.21 percent, and from 0.23 percent to 0.22 percent for manufacturing.

The impact of Boeing’s safety-related woes on aircraft manufacturing per se and on the company’s huge domestic supply chain could explain some of these disappointing figures for industry. But so could the uncertainties created either by Mr. Trump’s tariff-centric trade policies, or by their ragged implementation, or both. Further, as the numbers indicate, real wage weakness isn’t simply a manufacturing problem.

Perhaps most important for Mr. Trump, real wages’ performance during the first 34 months of his term in office (starting with February, 2017, his first full month), have lagged their increases during the most comparable period in Barack Obama’s presidency – his last 34 months in office (ending in January, 2017). Here are the results:

                                       Total private      N/S private      Total mfg        N/S mfg

1st 34 Trump months:         +2.53%           +2.72%           +0.65%          +2.77%

last 34 Obama months:      +3.50%           +3.97%          +3.05%           +2.97%

Finally, the new real wages data show that when it comes to this gauge, the current economic recovery stacks up unexpectedly well with the two previous expansions where a reasonable amount of statistics exist – for non-supervisory workers. The comparison is especially striking between the current expansion and the 1990s expansion – which is widely viewed as an excellent one for both the economy and America’s employees.

                                                               Private    N/S private    mfg     N/S mfg

1990s expansion (2Q 91-1Q 01):             n/a           +6.37%       n/a      +2.18%

bubble expansion (4Q 01-4Q 07):           n/a            +0.35%       n/a      -2.77%

current expansion (2Q 09 – present):  +6.30%        +6.79%   +1.59%   +3.01%

Unfortunately for President Trump and Trump-ers, though, this longer-term picture isn’t likely to impress voters as much as more recent developments. And when it comes to workers’ after-inflation wages, he clearly has more work to do.

Our So-Called Foreign Policy: The Ultimate Iraq Policy Absurdity

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If you still have any doubts that American policy in the Middle East has become completely bonkers, just think about recent threats made by the United States to punish Iraq economically if it kicks U.S. troops out of the country – a decision its parliament has approved in a nonbinding resolution.

Iraq, you might recall, is a country that the United States has invaded no less than twice in the last three decades, and where it’s lost the lives of thousands of servicemen (let’s not forget the maimed, either) and spent more than a trillion dollars – first reversing the late Iraq dictator Saddam Hussein’s invasion of neighboring Kuwait, then overthrowing Saddam himself, then occupying the country and trying to stamp out various insurgencies, then fighting the jihadist group ISIS.

America still keeps thousands of troops in Iraq and keeps spending hundreds of billions of dollars annually trying to secure the country militarily and rebuild it economically. And these policies have continued under President Trump, even though he has stated repeatedly that he’d like nothing better than to end such “forever wars” – at some point.

So it’s fair to say that Mr. Trump considers Iraq’s security and prosperity to be awfully important American interests.

And if so, why has the President warned Iraq that it would face “very big sanctions” and “sanctions like they’ve never seen before” if the Americans are forced to leave? And how on earth could reports be true that his administration has told Iraq that it would lose access to billions of dollars of vitally important oil earnings it has no choice but to keep in an account at the Federal Reserve system’s New York branch?

Sure, making good on these threats would produce disaster for Iraq. And Mr. Trump has backed his words with deeds several times during his presidency – on tariffs on metals and on China, on tariffs on Mexico to achieve more immigration enforcement cooperation, and of course on Iran’s attacks on American assets.

But these Trump actions weren’t taken against countries the President wants to help, including for self-interest-based reasons. By contrast, his Iraq policies demonstrate that self-interest is exactly why he wants to stay in that country militarily – despite continued cost and risk. Why, therefore, would any Iraqi with a working brain believe the President? Unless Mr. Trump has been converted that perverse Vietnam-era logic that he has to “destroy the town to save it”? Or unless (at least many) Iraqis and their politicians really doubt Trump-ian suggestions that he would indeed be comfortable withdrawing soon, or fervently hope they’re not true, and are simply playing to their more skeptical countrymen?

Yet even the possibility (and indeed the likelihood) that Iraqis are playing political games with their – again, nonbinding – resolutions presents a problem for the United States. For how smart is it to stay dangerously and expensively mired in a country whose leaders believe such shams are needed simply to stay in power?

Finally, if Mr. Trump really could take Iraq or leave it, then why not leave now? If it’s ultimately so expendable, then why expose a single further American soldier to danger, or spend a single additional taxpayer dollar, there?

If the United States was at the beginning of a deep involvement in Iraq, a respectable argument could be made for these latest Trump-ian threats and other statements. Sometimes such good cop/bad cop tactics can help governments walk tricky tightropes that are worth walking. But even those who tend to see value in such acrobatics have to concede that, after nearly two decades, precious little progress has been made toward creating an Iraq that can handlie its major challenges (which clearly are internal) by itself, and therefore supporters of the status quo need at least to consider the possibility that the policy’s a fool’s quest.

As for those of us who have long argued that current Iraq policies have been doomed and that the United States should wash its hands of the country, and indeed the entire hopelessly dysfunctional Middle East – the latest jumble of Trump words and deeds can only leave us more convinced than ever.

Our So-Called Foreign Policy: How Post-Soleimani, Trump Schooled the Globalists Again

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I’d hardly call President Trump a foreign policy mastermind. But since his 2016 presidential campaign started gaining strength, it’s been clear to me that his instincts in the field are exactly what a country like the United States needs, and this conviction has been strengthened considerably by a little remarked-on point he made in his announcement last week of the killing of Iranian military and terrorist commander Qassem Soleimani.

Here’s the remark:

The fact that we have this great military and equipment…does not mean we have to use it.  We do not want to use it.  American strength, both military and economic, is the best deterrent.”

Sounds pretty obvious, right? But it’s been anything but obvious to America’s globalist foreign policy establishment, and especially to many in its liberal wing – which could very well regain the White House if a Democratic candidate like former Vice President Joe Biden or Indianapolis Mayor Pete Buttigieg wins November’s election. And that would be terrible news, as these establishment globalist liberals’ failure to agree indicates that they might return the nation to the days when it plunged into all sorts of foreign crises that had no potential to bolster American security, and much potential to become costly, bloody quagmires.

My evidence? An absolutely seminal exchange from the early 1990s between then U.S. Ambassador to the United Nations Madeleine Albright (who went on to become Secretary of State) and Colin L. Powell – then Chairman of the Joint Chiefs of Staff who would also go on to run Foggy Bottom.

During former President Bill Clinton’s first terms, Albright and Powell disagreed sharply on the merits of the United States intervening militarily in the Bosnia war – one of many civil conflicts in the Balkans triggered by the post-Cold War breakup of Yugoslavia. Albright was a leader of the hawks and Powell had long championed a view that the United States should use its armed forces only when genuinely vital national interests were at stake.

During one of their debates, Albright asked Powell a question that was shockingly moronic even by the dismal standards of globalists generally: “What’s the point of having this superb military you’re always talking about if we can’t use it?”

In his memoirs, Powell wrote that Albright’s question almost gave him “an aneurysm.” And it should be screamingly obvious why. Albright, who has studied international affairs her entire adult life, had apparently never heard of, or forgot, the concept of “deterrence.”

Thank goodness she wasn’t in power during one of the Cold War nuclear crises, like that over Cuba in 1962. Can you imagine any of former President John F. Kennedy’s advisers asking “What’s the point of having these superb nuclear weapons if we can’t use them?” And most worrisomely Albright – who remains influential in top Democratic political circles – has been proudly unrepentant.

Even more important, Albright’s position shows that she’s clueless about a fundamental intellectual key to U.S. foreign policy success – understanding that a superpower is defined first and foremost by what it is (i.e, by the assets it can bring to bear regarding overseas challenges and opportunities) not by what it does (how and how energetically it uses those assets). 

That is, for a country as geopolitically secure and economically self-sufficient as the United States, what matters most is focusing on building the strength (in all dimensions, including the power to deter any aggressors) needed to enable it to survive and prosper in a world certain to remain dangerous, rather than working overtime figuring out ways to keep using that strength – especially when there’s no obvious need.   

Now Powell’s a globalist, too – but he clearly comes from the wing that’s at least recognized that national interests (though he and his ilk invariably define them way too broadly) should be driving the use of foreign policy tools, not the availability of those tools (let alone list of uses of American arms and resources that may be desirable to some extent, to some Americans, but are hardly essential – like the Bosnia mess and other humanitarian tragedies in which the Clinton-ites initially engaged the nation).

Trump’s Iran remarks unmistakably associate him with that far wiser Powell approach – including in situations unlikely to go nuclear. They also signal that he gets it on the real nature of a superpower.

So don’t doubt for a minute that the President’s quasi-America First-type foreign policies will continue to be much less coherent and efficiently implemented than is desirable. But don’t doubt for a minute that his (sort of) Powell-like instincts boost the odds that the United States won’t get bogged down in debilitating and unnecessary quagmires.

In other words, everyone hoping for an American foreign policy displaying some kind of post-Iraq War learning curve should remember that, for all Mr. Trump’s faults, the United States can always do much worse in its presidential choices, in fact has done much worse – and could well again.

(What’s Left of) Our Economy: Is Manufacturing Employment Being Undercut by Boeing Along with Trade Wars?

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One of the biggest questions raised by the new (lousy) manufacturing results of this morning’s monthly U.S. jobs report concerns whether industry’s dismal recent performance is being impacted more by President Trump’s tariff-heavy trade policies or by Boeing’s aircraft safety woes. The bulk of the evidence released this morning seems to point to the trade wars as the continuing main culprit, but also to some Boeing-related puzzles. 

Overall, the sector lost 12,000 jobs on month in December – its worst such result (excluding October, whose figures were distorted by the General Motors strike) since August, 2016’s 23,000 decrease).  Moreover, the year-end annual manufacturing jobs gain of 46,000 was the lowest such figure since 2016’s 7,000 loss.  (For comparison’s sake, 2018’s annual manufacturing employment increase of 264,000 was the best such result since 1997’s 304,000.  

The trade wars evidence for the recent deterioration comes in the form of comparisons between the major metals-using industries during the early months following the imposition of tariffs on steel and aluminum, and afterwards (when many Trump critics argue that the trade curbs’ impact began sinking in). As always, the impact of Mr. Trump’s levies on imports from China remain too diffused throughout the manufacturing sector – and too unevenly so – to be gauged reliably. For good measure, they’ve also been threatened and applied in a confusing, on-and-off manner, and the recent Phase One trade deal and announcement of follow-on negotiations looks unlikely to end much of the measurement uncertainty.

First, here are the data on employment changes in those metals-using sectors from April, 2018 (the first full month during which the tariffs were in effect) through last month. Figures for the U.S. private sector overall, manufacturing overall, and manufacturing’s durable goods super-sector (in which most of the main metals users are classified) are included for comparison’s sake. Keep in mind that the results for household appliances also reflect a separate set of tariffs for large household laundry machines that have been in place since February, 2018.

                                                  Old thru Nov      New thru Nov       Thru Dec

entire private sector:                +2.82 percent      +2.81 percent    +2.92 percent

overall manufacturing:            +1.83 percent      +1.84 percent    +1.75 percent

durable goods:                         +1.99 percent      +2.02 percent    +1.94 percent

fabricated metals products:     +1.51 percent       +1.45 percent   +0.96 percent

non-electrical machinery:       +1.26 percent       +1.56 percent   +1.37 percent

automotive vehicles & parts:   -0.45 percent        -0.73 percent    -0.81 percent

household appliances*:            not available        -5.84 percent     not available

aerospace products & parts*:  not available        +9.02 percent     not available

*data are one month behind

There’s no mistaking that net new hiring in the metals-using sectors has been slower than in the rest of manufacturing and the private sector. As is clear from the table below, that’s a substantial change from the early post-metals tariffs period (presented here as April, 2018 through December, 2018 and January, 2019), when most metals-users were leaders in boosting payrolls:

                                                                Thru December           Thru January

entire private sector:                                +1.36 percent            +1.60 percent

overall manufacturing:                            +1.39 percent            +1.49 percent

durable goods:                                         +1.72 percent            +1.97 percent

fabricated metals products:                     +1.57 percent            +1.78 percent

non-electrical machinery:                        +2.33 percent           +2.57 percent

automotive vehicles & parts:                   +1.07 percent           +1.15 percent

household appliances:                              -2.05 percent –           2.52 percent

aerospace products & parts:                    +5.47 percent           +5.87 percent

But what about the Boeing effect – which figures to be considerable given the major role played by the aircraft and aerospace giant not only in American industry but the entire economy? As the data below show, the impact of the company’s production slowdown and more recent suspension of the previously best-selling but flawed 737 Max model (not to mention worldwide groundings) is anything but clear-cut. Presented here are the job change figures for aircraft and related parts industries, along with the numbers for other major supplier industries and the usual comparison sectors for the eight months preceding and following the announcement of global 737 Max groundings last March. The latest available data for the aerospace-specific industries only go through November, so that’s the final month used for the entire table.

                                                 July, 2018 thru March           March thru Nov

entire private sector:                     +1.38 percent                    +1.03 percent

overall manufacturing:                 +0.98 percent                    +0.28 percent

durable goods:                              +1.17 percent                    +0.11 percent

fabricated metals products:          +0.89 percent                     -0.31 percent

non-electrical machinery:            +1.38 percent                     -1.16 percent

aerospace products & parts:        +4.34 percent                    +2.27 percent

aircraft:                                        +6.59 percent                    +2.09 percent

aircraft engines & engine parts:  +1.04 percent                    +3.67 percent

non-engine aircraft parts/equip: +3.06 percent                     +1.22 percent

The pattern seems to show employment slowdowns nearly across the board. But the two non-aerospace-specific supplier industries – fabricated metals and non-electrical machinery – saw net hiring increases turn into net hiring decreases. Moreover, in aircraft engines and engine parts, payroll improvements actually accelerated.

At least some of this apparent paradox might result from the November end date used here. Boeing didn’t decide to suspend outright production of the troubled model until December 16, and the decision won’t even go into effect until sometime this month. Indeed, the company initially announced that no layoffs were accompanying the halt, although significant workforce reduction plans were finally made public yesterday. In this vein, reports of actual supply chain employment effects didn’t begin appearing until mid-December. Moreover, it’s possible that employment pain has been felt by the non-aerospace-specific companies in Boeing’s vast domestic supply chain before it spread to the aerospace-related firms.

So the safest bottom line so far seems to be this: Contributors to manufacturing’s recent jobs slump might now include both trade war- and non trade war-related developments. And anyone singling out one or the other deserves considerable skepticism.

Our So-Called Foreign Policy: (Unintentional) Gifts from the Globalists

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One of life’s great pleasures is seeing views you’ve held for decades validated by your intellectual or ideological or political opponents. And there’s a special gratification in seeing them validated unwittingly (though nothing beats outright admissions of error).

So imagine how I’m feeling today having just learned that two of America’s leading globalists have just made clear (except to themselves) that the foreign policy approaches they’ve championed for decades are, in one case, only loosely at best related to the nation’s security and prosperity and, in the other, almost suicidally moronic.

The globalist who now apparently believes that globalism is unnecessary – along with, by implication, all the costs and risks it imposes on the United States – is Harvard University political scientist and former top U.S. national security official (under Democratic presidents) Joseph S. Nye, Jr.

In an essay published yesterday on the Project Syndicate website, Nye focused on explaining why American foreign policy can never escape and should never seek to avoid efforts to advance moral objectives. I disagree – but that’s another debate. What was most intriguing to me was a central argument used to advance his case: “Some foreign policy issues relate to a nation-state’s survival, but most do not. Since World War II, the United States, for example, has been involved in several wars, but none were necessary for its survival.”

This claim may seem to be nothing more than the essence of common sense (it is). But it also happens to clash violently with the core assumption of globalism (which in the pre-Trump years was called “internationalism”). As I originally wrote here, this assumption holds that America’s security, independence, and prosperity are so completely inseparable from the security, independence, and prosperity of literally every corner of the globe that the country literally has no choice but to anchor its foreign policy to the goal of creating a world so free of security, economic, and social challenges that threats to the United States will never arise in the first place.

Subsequently, I’ve contended that, however true this argument may or may not be for other countries, it is uniquely inapplicable to the United States, due to its towering degree of geopolitical security and its equally formidable potential for economic self-sufficiency.

Leave aside for the moment the issue of whether I’m right or wrong. Nye’s acknowledgment that none – i.e., not a single one – of the (often frightfully costly) wars fought by the United States in the last seven decades was a war of necessity signals loudly and clearly that Nye (at least now) agrees with me. And if these conflicts were in fact wars of choice, then logically the various globalist policies they were intended to advance or reinforce in the name of creating that threat-free world need to be seen as optional as well – ranging from prioritizing the maintenance of international alliances and institutions to the extension of foreign aid and involvement in nation-building.

Not that their optionality means that they should always or even often be opposed. But it does mean that Americans – and especially the globalist elites that have controlled and dominated the way Americans discuss foreign policy (at least in systematic ways) – need to pay more attention to alternative approaches for achieving and maintaining adequate levels of security, independence, and prosperity. As a result, the types of America First impulses displayed by President Trump and articulated more completely by some of his like-minded compatriots (including yours truly) need to be examined carefully, not ruled out of hand with pejoratives like “isolationism” or “bullying.”

The second globalist to have made my day today is former U.S. Senator John Kerry, who of course also won the Democratic nomination for President in 2004 and then went on to serve as Secretary of State in Barack Obama’s administration.

Kerry has been campaigning for his Obama era colleague Joe Biden’s bid to win the White House this year, and this morning was shown on CNBC making the following statement while touting the former Vice President’s qualifications for the Oval Office: “He [Biden] is completely committed to the notion that before you send American troops into harm’s way, before you ask families to risk the lives of their loved ones, you owe it to everybody in the world to exhaust the capacity for diplomacy. This President has not done that.”

It’s one thing of course to support caution in using America’s military overseas. No sensible person of good will could object. But such decisions should be made with “everybody in the world” in mind? Seriously? Even national populations with absolutely no stake in the outcome? Even the population of the country being targeted? Even its leaders? Even the allies of those leaders, like Vladimir Putin? Come to think of it, what did Franklin Roosevelt owe Adolf Hitler before he declared war on Germany in 1941, beating the Nazis to that punch. Talk about a formula for endless inaction and outright paralysis – however urgent the circumstances or imminent the threat. I really try avoiding use of the word “stupid,” but if the shoe fits….

Moreover, Kerry wasn’t simply having a bad day here. He expressed almost identical views during his 2004 presidential run when he insisted that American decisions to go to war must be submitted to a “global test” of legitimacy. It’s like he either doesn’t know that the United States is a fully sovereign country, which means that according to any framework you care to use (utilitarian, legal, ethical) it is completely and unreservedly entitled to decide for itself whether its own actual or even perceived interests justify this step – or he doesn’t believe it.

I’m going with the latter answer, especially given globalism’s bottom line about the supremacy of multilateralism, – i.e., about creating, reserving, and continually strengthening international institutions as the only conceivable way to achieve that benign global environment they seek.

But my swelling head aside, let’s not forget the most important silver lining to this post. For decades, Nye and Kerry have done more than their share to push the United States into endless globalist wars, to assume needless nuclear attack risk (through the tripwire forces deployed to defend wealthy, free-riding U.S. allies), to waste massive resources on nation-building fool’s quests, and to undercut its precious sovereignty for the sake of utopian global governance dreams.

In the last 24 hours, though, they’ve strengthened the case – however unintentionally – for avoiding these blunders going forward. And I’m certainly more than happy to say “Thanks!” instead of “I told you so.”