Im-Politic: The Politics and Nature of Confederate Monuments May Not be What You Think

Tags

, , , , , , , , , , ,

The politics of dealing with the nation’s Confederate monuments has just taken a major and, to me, dismaying and surprising turn with the release of a new poll gauging national attitudes on the issue. At the same time, although I remain convinced that the Confederacy and its ideals should be condemned, and certainly never memorialized in public spaces, the more I learn about these statues and plaques and grave sites, the clearer it becomes that a cookie-cutter approach mustn’t be taken to the issue.

First, the poll. Keeping in mind that surveying public opinion is still much more an art than science, the results of yesterday’s NPR-Marist sounding on the monuments are nothing less than stunning. According to the poll, fully 62 percent of all Americans believe that “statues honoring leaders of the Confederacy should remain as a historical symbol.” Especially discouraging for me, the question’s wording makes clear that the subject isn’t some broad category that could include simple burial sites for ordinary Confederate soldiers, and/or even statues or other monuments to these regulars, many of whom were motivated by a wide variety of considerations on top of racism. Instead, respondents were asked their views of monuments honoring the Confederacy’s leaders – who spearheaded the South’s betrayal of the United States and whose declarations of secession leave no doubt that preserving the racist institution of slavery was their top priority.

Even more bizarre – at least for me: Such sentiments were expressed by 44 percent of Democrats, 31 percent of Americans who described themselves as “Very liberal-Liberal,” and 61 percent of self-styled political independents.

Nor were the regional breakdowns what you’d (I assume) expect: Honoring Confederate leaders in this way was endorsed by majorities throughout the country, including 53 percent in the Northeast, 61 percent in the Midwest, 66 percent in the South, and 61 percent in the West.

But the real shock comes from the racial and ethnic results: Honoring Confederate leaders with memorials was backed by 44 percent of African Americans and 65 percent of Latinos (along with 67 percent of whites). Moreover, African Americans registered the largest percentage of those “unsure” (16 percent).

It’s possible that these results were skewed by the phrasing of the “anti” position: The stated reason for removing the statues was that “they are offensive to some people.” That’s an awfully bland formulation, and I wonder if the numbers would have changed much if the wording was changed to something on the order of “because they staged an armed revolt against the United States” or “because slavery would have remained in place had they prevailed.” But over the last week or so, how many African Americans in particular could remain unaware of these facts? And how many liberal Democrats?

So the poll’s findings seem pretty accurate to me. And the big takeaways from them look like the following: There’s a big divide over these matters between the national (bipartisan) political class and especially the national media on the one hand, and the general public on the other; and much of the (current) elite position on these racial issues contains a huge element of anti-Trump posturing. (And don’t forget – I believe that the president is in the wrong on Confederate memorials, too.)

Second, Confederate monuments can’t all be lumped into the same category, don’t all raise the same questions, and shouldn’t arouse the same emotions. Here’s just one example. I’m sure I haven’t been the only American who’s been amazed to learn that these sites can be found in many locations outside the old Confederacy. They’re even located in my home state, New York. But the story of one of these markers shows how varied they can be.

I’m talking about not only a cemetery with the remains of Confederate veterans that’s located in Hastings-on-Hudson in Westchester County, an affluent suburb of New York City. I’m also talking about an obelisk that stands over the graves.

The bodies interred at the Mount Hope Cemetery, beneath the obelisk are those of former Confederate soldiers who moved to the area after the conflict in search of economic opportunity. The inscription on the 60-foot monolith refers to them as “heroic dead” and the complex was dedicated in 1897. And according to one source, these veterans “remained proud of their Southern Confederate heritage.”

So for an opponent of honoring these figures, like me, that set off alarm bells. But as I read further, my first inclination to call for the removal of the obelisk changed. To start with, even though the site is owned and the obelisk funded by the United Confederate Veterans, this means that it’s a private piece of land. So since it’s not a publicly owned space, the owners should have the right to maintain it however they wish. Moreover, the site was sold to the Confederate veterans group by the Sons of Union Veterans of the Civil War. And this Union group cares for the complex today.

Perhaps most important, a contemporary newspaper account leaves no doubt that the purpose of this particular monument was national reconciliation – a goal no one of good will should oppose provided it’s being sought on the proper basis.

So there are Confederate monuments and there are Confederate monuments. How best to decide their fate? Many voices, including President Trump, believe that the states and/or localities should have the last word – unless the monuments et al are on federal ground. I’m not so sure, partly because it’s a national issue, and partly because policy would likelier become hostage to short-term, and frequently shifting, considerations. Of course, an optimal solution may not be possible, so this outcome might be an acceptable compromise.

One other conceivable option: a presidential commission. Often, these organizations are simply exercises in can-kicking, but some deliberation seems to be exactly what’s needed on the monuments issue now. And its conclusions certainly wouldn’t be ignored – as with the reports of so many other presidential commissions. Best of all, this type of body seems best suited to recognize the variety of Confederate monuments, and propose measures that recognize them adequately – even to the point of case-by-case recommendations.

The big objection to a presidential commission is that it’s not an especially democratic mechanism – although its members would be chosen by a democratically elected leader. Congress could be given a role, too. Especially if its members were well chosen, the result could well be a series of appropriately nuanced decisions that finally, and truly, bring the Civil War to an end.

Making News: John Batchelor China Trade Podcast On-Line – & More!

Tags

, , , , , , ,

I’m pleased to announce that the podcast of my interview last night on John Batchelor’s nationally syndicated radio show is on-line. Click here for a great discussion with John and co-host Gordon G. Chang about the chances of a U.S.-China trade war.

And I’m again grateful for Gordon for soliciting my comments on the subject for his August 14 Daily Beast post.

Also, that same day, my views on China trade issues were featured in a report on Lifezette.com.

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

(What’s Left of) Our Economy: Worsening Automotive Recession Drives Down Manufacturing Output

Tags

, , , , , , , , , , , , ,

According to the Federal Reserve’s new industrial production figures, a sharp automotive drop-off in July helped pull real U.S. domestic manufacturing output down on month (by 0.06 percent) for the third time this year. Since May, 2015, sector’s inflation-adjusted production is down 2.33 percent – a period much longer than the two-consecutive-quarter definition of recession. July’s annual automotive real output decrease (4.98 percent) was the biggest since September, 2009’s 7.21 percent. And the sector’s 3.64 percent sequential output fall was its biggest since August, 2015’s 3.82 percent.

The vehicle sector performed even worse. Its year-on-year July constant dollar production plunge (9.20 percent) was its greatest since August, 2009 (12.54 percent). And vehicles’ July monthly after-inflation production slide (5.92 percent) was the steepest since August, 2015’s 6.31 percent. Largely as a result, July’s real vehicles production was the lowest monthly total since October, 2014.

With President Trump postponing his decision on tariffs for the import-battered steel and aluminum sectors, their price-adjusted production remained weak in July. The former’s sequential real production slumped by 1.50 percent, and although the annual figure rose by a strong 5.50 percent, the sector is still nearly 20 percent smaller in real terms than at the last recession’s onset. The latter’s July monthly real output inched down while growing slightly on a year-on-year basis, but this industry remains less than half its size when the recession struck. Indeed, for the entire manufacturing sector, after-inflation production in July was down four percent from the level hit as the recession broke out – back at the end of 2007.

Here are the manufacturing highlights of the Federal Reserve’s new release on July industrial production:

>The worst U.S. real automotive production performance in many years – especially in vehicles – helped pull the nation’s after-inflation manufacturing output down 0.06 percent on month in July. Although small, the sequential decline was the third so far this year.

>Leading the way was an automotive sector that had led manufacturing’s strong rebound from a deep recessionary dive.

>Combined vehicles and parts output sank by 3.64 percent on month in July, its biggest such downturn since August, 2015’s 3.82 percent.

>Year-on-year, constant dollar total automotive output was down in July by 4.98 percent – the worst such deterioration since September, 2009’s 7.21 percent.

>Largely as a result, real automotive production in July hit its lowest level since June, 2015.

>The automotive output drop in turn was led by vehicles. Final price-adjusted production in this sector plunged by 5.92 percent sequentially in July – its worst output month since August, 2015 (6.31 percent).

>The year-on-year figures for vehicles were much worse. Compared with the previous July, they plummeted by 9.20 percent – the biggest such decline since August, 2009 (12.54 percent).

>Largely as a result, as of July, real vehicle output stood at its lowest level since October, 2014.

>The new Fed figures also show that the American steel and aluminum industries continue to pay a price for floods of imports widely thought to benefit from government subsidies – and from the Trump administration’s hesitation to impose tariffs.

>July iron and steel production decreased on month by 1.50 percent in real terms. The 5.50 percent year-on-year result was much better, but was helped by favorable comps.

>Moreover, the steel sector’s real output is still 19.70 percent smaller than at the last recession’s onset – more than eight years ago.

>July primary aluminum production declined on month by 1.02 percent, but advanced by 2.90 percent on year.

>Yet primary aluminum production is down 53.49 percent since the last recession began.

>In fact, since that December, 2007 watershed, U.S. manufacturing’s output is down by four percent – meaning that it still hasn’t recovered from the recession.

Im-Politic: Charlottesville & Trump: A Never-Ending Story?

Tags

, , , , , , , , , ,

And so President Trump has stepped in it once again, and guaranteed that, unless something major changes, self-inflicted wounds will become the hallmarks of his presidency.

Of course, I’m talking about his impromptu remarks at yesterday’s press appearance, in which new, explicit denunciations of racist and anti-semitic hate groups were accompanied by descriptions of some of their individual members present in Charlottesville, Virginia as “very fine people” – along with comments that at least could reasonably be read as establishing a moral equivalence between the marchers and those who came to the region to protest their planned rally.

Among the least defensible:

>The contention that the torchlight marchers last Friday night included “people protesting very quietly the taking down the statue of Robert E. Lee”;

>The charge that supporters of removing Confederate memorials are “changing culture” – which closely resembles the specious claim that the memorials were erected to honor the American South’s distinctive “heritage.”

As per the views I expressed on Saturday, I still don’t believe that Mr. Trump is a racist or an anti-semite. I still believe that his behavior mainly reflects a “pathetically mistaken” belief that a big chunk of his largely white, working class base will take offense at overly harsh attacks on bigoted, fringe figures like David Duke and Richard Spencer.

But upon reflection, I’d add that he’s stunningly inarticulate, and terminally – and in many ways childishly – argumentative. And although I’m not concerned that his verbal indiscipline will needlessly spark a war or some other kind of domestic or global crisis, those are worrisome traits in a figure whose every syllable is (understandably) put under a microscope. Nor is much simple common sense visible on the President’s part, or at least not often enough.

After all, how difficult would it have been to draw up sometime over the weekend and deliver on TV a statement along the lines of:

My fellow Americans [or whatever standard presidential speech introductory wording you like]. I loathe the Charlottesville protesters and everything they represent. The neo-Nazis, the white supremacists and their ilk have deliberately associated themselves with historical atrocities and injustices that are not only appalling. They are uniquely evil in nature. It is indeed infuriating to see them openly displaying their perverse and destructive views in our streets and parks and squares. In fact, I am personally infuriated that they keep invoking my name, and portraying my efforts to reinvigorate the ideal of a practical, healthy nationalism as an endorsement of racism and anti-semitism and xenophobia.

But we also must remember something crucial about our democratic values – which of course are values that the hate groups’ evil historical idols have tried to destroy. They demand that even loathsome figures and voices enjoy the freedom to exercise their Constitutional speech rights. So in that respect, attempts to disrupt their activities, or the First Amendment freedoms of other unpopular speakers, must be condemned, too.

Therefore, law-breakers will be prosecuted – whatever their political views and associations.

But much more important, I hope that the vast majority of Americans angered by the disgraceful Charlottesville marchers and their supporters understand, and take to heart, that the best way to counter, and defeat, the hatred they spew is not by joining them in the gutter and resorting to violence – unless it’s a matter of self-defense. The best way is to expose their sick lies with the power of reason. The best way is to remember our love, compassion, and respect for each other, and take every opportunity to show it. The best way is to strengthen our nation’s unity of spirit. And the best way is to fulfill our sacred duty each and every day to keep our great national experiment in self-government a beacon for all of humanity.”

Now the President is reaping the whirlwind. I have no idea whether this latest uproar will simply blow over (as with the Access Hollywood video episode), or become superseded by another headline news development, or will doom Mr. Trump to a single term, or will erode his political support so drastically that his presidency becomes impossible to continue. What does seem certain is that the prospects of a successful Trump presidency, and especially of promises kept to economically struggling middle class and working class Americans, have taken a body blow, and that something on the order of a dramatic display of executive competence, an equally dramatic display of contrition and/or explanatory eloquence – plus a tidal wave of dumb luck – will be needed for even a partial recovery.

Making News: Talking NAFTA on CNBC This Afternoon – & More!

Tags

, , , , , , , , , , , ,

I’m pleased to announce a bevy of upcoming scheduled media appearances today.

First, negotiations to revamp the North American Free Trade Agreement (NAFTA) begin today, and at 2 PM EST, I’ll be appearing on CNBC’s “Power Lunch” program to discuss President Trump plans to modify the deal. If you lack access to the network on your TV, you can watch live at CNBC.com.

Second, I’ll be interviewed on the same subject at 7 PM EST on “The Big Picture with Thom Hartmann,” on RT America. Here’s the live on-line viewing option.

And finally (so far!), the topic will turn to China trade tonight when I talk about the president’s new moves to counter Beijing’s predatory practices on the nationally syndicated “John Batchelor Show.”  The segment is slated to begin at 10:15 PM EST, and you can listen live on line here.

As always, for those who can’t tune in to these programs in real time, I’ll be posting links to the videos and the podcast as soon as they’re available. And keep checking in with RealityChek for news of upcoming media appearances and other developments.

(What’s Left of) Our Economy: Which Sectors are America’s Biggest Trade Winners and Losers?

Tags

, , , , , , , ,

Welcome to installment two of RealityChek‘s deep dive into new U.S. data that enable us to compare the economy’s merchandise trade performance during the first half of this year with that of the first half of last year. Yesterday, we reviewed America’s biggest goods exporters and importers, and trade deficit and trade surplus sectors – all on a stand-still basis. Today, we’ll look at the fastest and slowest merchandise export and import growers over the last year, and the sectors whose trade balances have improved or worsened to the greatest extents.

Because the subject today is rates of change, and in order to avoid results distorted by unusually small numbers (e.g., the ease with which big percentage changes in a given indicator are resulting from the use of unusually modest base figures), the following lists are drawn from larger lists of the top 50 goods industries in these performance categories. And fortunately, because U.S. imports and exports are relatively highly concentrated, drawing the line at the top 50 costs almost nothing in terms of creating a very representative sample.

Also, as was the case yesterday, these industry categories examined here are those drawn from the six-digit level of the North American Industry Classification System (NAICS), the federal government’s main system for slicing and dicing the economy. The one exception: aerospace. Because of data limitations in that sector, the five-digit data, which combine final products and their parts and components, are presented.

Let’s start with the ten goods industries whose exports, measured in value terms, grew fastest between the first half of last year and the first half of this year, along with the growth rates:

1. Non-anthracite coal & petroleum gases: +180.9 percent

2. Crude oil & natural gas: +109.0 percent

3. Cotton: +89.9 percent

4. LNG: +62.4 percent

5. Semiconductor manufacturing equipment: +58.2 percent

6. Primary smelted non-ferrous metals: +54.0 percent

7. Soybeans: +27.6 percent

8. Petroleum refinery products: +26.1 percent

9. Motor vehicle engines & engine parts: +19.2 percent

10. Corn: +18.7 percent

As is clear, five of these ten sectors are commodity sectors, which add relatively little value to the economy. Two more are industries where relatively little processing, and thus value-adding, takes place (liquid natural gas and the smelted metals). Only three could be considered high value manufactures – the types of industries that historically have made outsized contributions in terms of productivity growth and innovation, and that tend to pay high wages.

Here are the ten industries with the worst export performances on a year-to-date basis:

1. Medicinal & botanical drugs & vitamins: -25.4 percent

2. Turbines & turbine generator sets: -15.1 percent

3. Computer parts: -9.4 percent

4. Autos and light trucks: -8.3 percent

5. Telecomms equipment: -6.6 percent

6. Electricity measuring & test instruments: -5.9 percent

7. Aerospace: -4.0 percent (5-digit, due to reporting limits)

7. Surgical and medical instruments: -1.1 percent

8. Electro-medical apparatus: -0.9 percent

9. Industrial valves: -0.1 percent

9. Computers: -0.1 percent

10. Surgical appliances & supplies: +0.2 percent

10. Analytical laboratory instruments: +0.2 percent

As should be obvious, every single sector here belongs in the high-value manufactures category.

Now for the industries that saw the fastest import growth between the first six months of 2016 and the first six months of this year:

1. Switchgear and switchboard apparatus: +174.3 percent

2. Crude oil and natural gas: +53.7 percent

3. Printed circuit assemblies: +44.2 percent

4. Iron and steel: +41.3 percent

5. Primary aluminum: +38.6 percent

6. Non-diagnostic biological products: +29.4 percent

7. Petroleum refinery products: +22.2 percent

8. Miscellaneous non-citrus fruits: +20.8 percent

9. Motors and generators: +13.7 percent

10. Lighting equipment: +12.7 percent

10. Surgical appliances and supplies: +12.7 percent

This group, too is dominated by high-value industries. And look at those numbers for steel and aluminum, two sectors where the Trump administration has been talking about imposing national security related tariffs

The list of sectors with the worst import growth – indeed, where imports have declined the most – is much more of a mixed bag:

1. Medicinal and botanical drugs and vitamins: -39.4 percent

2. Computer parts: -12.3 percent

3. Women’s and girl’s blouses/shirts: -12.1 percent

4. Primary smelted non-ferrous metals: -8.8 percent

5. Men’s and boys non-work shirt shirts: -8.3 percent

6. Non-costume jewelry: -6.7 percent

7. Semiconductors and related devices: -6.4 percent

8. Audio and video equipment: -5.3 percent

9. Jewelers materials/lapidary work: -4.1 percent

10. Aerospace products: -3.4 percent

Now for the trade balance figures. Remember, they’re especially important because economic theory tells us they’re strong indicators of which industries the United States trades most successfully – and therefore which industries have the brightest futures.

Here are the ten sectors where the trade balance has shown the greatest improvement from the first half of 2016 to the first half of 2017. They’re presented in percentage terms except where deficits have turned into surpluses :

1. Primary smelted non-ferrous metals: $5.00 billion deficit to $0.76 billion surplus

2. Relays and industrial controls: $1.27 billion deficit to $2.26 billion surplus

3. Semiconductors: $1.48 billion deficit to $1.01 billion surplus

4. Non-costume jewelry: +574.44 percent

5. Drawn/rolled/extruded miscellaneous non-ferrous metals: +305.69 percent

6. Miscellaneous basic inorganic chemicals: +300.00 percent

7. Non-anthracite coal and petroleum gases: +224.29 percent

8. Medicinal and botanical drugs and vitamins: +104.35 percent

9. Cotton: +91.09 percent

10. Semiconductor manufacturing equipment: +64.82 percent

Encouragingly, high value manufacturing is pretty well represented here.

And now for those sectors that experienced the worst deterioration in their trade balances.

1. Non-diagnostic biological products: +856.00 percent.

2. Switchboard and switchgear apparatus: +437.35 percent

3. Oil and gas field machinery and equipment: +130.00 percent

4. Iron and steel: +76.25 percent

5. Surgical appliances and supplies: +71.55 percent

6. Printed circuit assemblies: +47.08 percent

7. Crude oil and natural gas: +45.30 percent

8. Primary aluminum: +42.73 percent

9. Turbines and turbine generator sets: +39.46 percent

10. Copper and nickel ores: +35.96 percent

High-value manufactures are well represented here, too – and this list, too, includes steel and aluminum. At the same time, these rates of deterioration are generally smaller than the rates of improvement in the sectors where trade balances changed for the better. So that’s an encouraging development as well.

Of course, whenever “trade” comes up, the word “China” usually isn’t far behind, especially since the Trump administration just announced it was beginning a process that could lead to tariffs on Chinese goods in response to Beijing’s practice of forcing companies to hand over at least some of their best technology in exchange for the privilege of doing business in the vast Chinese market, and to the more conventional intellectual property theft that’s still SOP in the PRC. So tomorrow, RealityChek takes a deep dive into U.S.-China goods trade.

Our So-Called Foreign Policy: Why Kissinger Comes Up Short on North Korea

Tags

, , , , , , , , , , , , ,

Henry Kissinger’s plan – or at least outline of a plan – to resolve the North Korea crisis is out. And even though the 94 (94!)-year old former Secretary of State and presidential national security adviser has not held public office in decades, you should pay attention because you can bet American leaders in the Executive Branch and Congress are. So are foreign governments (many of which, including China, Kissinger has made millions – at least – “consulting”for).

Kissinger’s approach, laid out in a Wall Street Journal op-ed last Friday, is definitely a cut above the usual (often dangerously misleading) drivel that most commentators have been issuing since North Korea recently demonstrated dramatic and unexpected progress toward being able to hit the U.S. homeland with a nuclear-armed missile. But since Kissinger is a creature of the foreign policy establishment that keeps clinging to an obsolete Korea strategy that is now needlessly exposing the United States to nuclear attack, his proposals ultimately fail to promote and defend America’s interests first, or even to acknowledge the deep splits that must no longer be papered over between U.S. needs and South Korean needs.

The strongest argument Kissinger makes, as I see it, is the suggestion that there’s only one way of persuading China to exert enough pressure on North Korea to achieve Pyongyang’s de-nuclearization, or to start its regime down that road. It’s emphasizing to Beijing that an increasingly powerful nuclear North Korea will inevitably lead other countries to follow suit, and place China in the middle of a ring of nuclear-armed neighbors – many of which are hardly friendly. In other words, Kissinger is identifying an especially compelling reason for China to conclude (finally) that its Korea bottom line must include defanging the North – and quickly, not one of these days.

A public statement of this reasoning also matters because it signals Kissinger’s agreement that preventing nuclear proliferation in Asia may need to take a back seat in U.S. Korea policy to the status quo/establishment position that the United States must bear the main costs and risks (including nuclear risks) of handling North Korea. Not that I doubt the dangers of a regional nuclear arms race. But if that’s the price to be paid for minimizing and possibly eliminating a nuclear to the United States itself, it’s a price that’s a clear bargain. So it’s gratifying to read that Kissinger looks to be in agreement. 

But Kissinger never explains why North Korea would relent absent the kinds of truly comprehensive and strictly enforced economic sanctions whose importance he appears to belittle or dismiss altogether. Instead, he appears to believe that a joint Sino-American statement conveying strong bilateral agreement on the peninsula’s future “would bring home to Pyongyang its isolation and provide a basis for the international guarantee essential to safeguard its outcome.” Unfortunately, nothing publicly known about the North Korean regime indicates that it’s prepared to substitute paper guarantees of its survival for the protection provided by a nuclear arsenal.

Similarly, Kissinger signals support for a solution that would leave Korea divided as at present, but that would trade off de-nuclearization in the North for a permanent ban on reintroducing American nuclear weapons to South Korea (which were removed by former President George H.W. Bush in 1991) and an international agreement prohibiting Seoul from developing its own nuclear arms. But in addition to the “paper promises” problem, Kissinger’s proposal appears to forget that nuclear weapons from anywhere have been included in strategies to defend South Korea in the first place stem from the need to offset the belligerent North’s conventional superiority – which it presumably would still enjoy. So a dangerous military imbalance would be left on the peninsula.

But my biggest complaint about Kissinger’s ideas is the apparent refusal to consider my own favored option – a U.S. military pullout from South Korea (and possibly Japan) that would deny the North any plausible reason to attack the American homeland, and that would force the powerful and wealthy countries of Northeast Asia, which have the greatest stakes by far in a viable North Korea strategy, to take on this responsibility themselves.

The risk? An entire East Asia-Pacific region that’s profoundly destabilized, and even plunged into conflict. The benefit? A dramatic reduction in the odds that a North Korean nuclear weapon would decimate an American city. Or two. Or three. This is even a close call?

Moreover, a U.S. pullout seems to be taboo to Kissinger because he, along with most of the rest of the foreign policy establishment, perversely appears to view protecting allies as being just as important as protecting the United States. What else could be mean when he warns that certain American policies “may be perceived as concentrating on protecting its own territory, while leaving the rest of Asia exposed to nuclear blackmail….”?

Not to put to fine a point on it, but when the stakes involve preventing nuclear warheads from killing possibly tens of millions of Americans, why on earth shouldn’t the United States be “perceived as concentrating on protecting its own territory”? In fact, any American leader with different priorities should be immediately removed from office and banned for life.

So I continue to admire the force of Henry Kissinger’s intellect, his mastery of a wide range of international issues (except economics), and his command of history. Yet I also continue to view him as a paragon of a peculiarly American species: a so-called diplomatic realist who is anything but.

(What’s Left of) Our Economy: Into the (Crucial!) Weeds on America’s Trade Performance

Tags

, , , , , , , ,

The U.S. International Trade Commission has finally added the June American trade statistics to its wonderful Trade Dataweb, an invaluable database and search engine. So now it’s possible to view in needed detail the nation’s trade performance for the first half of 2017, and the first groups of these figures is presented below.

Just so you’ll know exactly what you’re seeing, these are results according to the most granular level of the North American Industry Classification System (NAICS), the federal government’s main system for slicing and dicing industry-specific economic data. I like this six-digit level because it draws the greatest number of distinctions between final manufactured products and the parts and components of these products. This distinction is critical because the rapid growth in recent decades of global supply chains (i.e., the rapid growth of American production offshoring) means that a large percentage of U.S. and global trade consists of trade in these manufacturing inputs.

Another technical note: Because trade data for major aerospace products aren’t made public in order to protect corporate information considered proprietary, the six-digit NAICS results in this sector are unreliable, and the five-digit level data are being used.

So here are the nation’s top ten goods exports for the first half of this year, and how their performance has changed in dollar terms since the first half of 2016:

1. Aerospace: -4.0 percent

2. Petroleum refinery products: +26.1 percent

3. Autos & light trucks: -8.5 percent

4. Special classification provisions: +9.7 percent

5. Semiconductors & related devices: +4.7 percent

6. Miscellaneous auto parts: +1.4 percent

7. Miscellaneous basic organic chemicals: +3.7 percent

8. Pharmaceuticals: +3.9 percent

9. Plastics materials & resins: +6.3 percent

10. Primary smelted non-ferrous metals: +54.0 percent

It’s an encouraging list because most of these products are high-value manufactures, which historically have been very productive, still create lots of high-wage jobs, and incorporate lots of innovation. At the same time, these export growth rates seem pretty meh.

Here is a similar list of the top ten goods import categories and how their levels have changed on a year-to-date basis:

1. Autos & light trucks: +4.5 percent

2. Crude oil & natural gas: +53.7 percent

3. Pharmaceuticals: +2.3 percent

4. Goods returned from Canada: +4.3 percent

5. Broadcast & wireless communications equipment: +10.3 percent

6. Computers: +6.2 percent

7. Telecomms equip: +8.2 percent

8. Aerospace products: -3.4 percent

9. Petroleum refinery products: +22.2 percent

10. Semiconductors & related devices: -6.4 percent

This looks like a higher value list, and the growth rates seem somewhat higher. So that appears less bullish.

The real test of trade performance, though, has to do with trade balances. For the theory of comparative advantage that’s at the heart of modern thinking and policy in the trade field tells us that economies that trade goods and services most successfully (as indicated by surpluses) will wind up as the most successful producers of those goods. Conversely, economies that trade goods and services least successfully will wind up as the least successful producers of those goods. How else could unfettered trade flows create an optimal global division of labor – which is supposed to be their prime economic virtue according to mainstream economics?

So here are the ten goods sectors that wracked up the biggest trade surpluses in the first half of this year, and how those balances compare with the first-half 2016 figures:

1. Aerospace products: -2.03 percent

2. Petroleum refinery products: +33.11 percent

3. Plastics materials & resins: +4.73 percent

4. Soybeans: +28.21 percent

5. Other special classification provns: +7.13 percent

6. Corn: +20.26 percent

7. Waste & scrap: -7.82 percent

8. LNG: +56.54 percent

9. Semiconductor machinery: +64.73 percent

10. Non-anthracite coal & natural gases: +223.22 percent

If you recognize the outsize economic value of manufacturing, this is a less encouraging list, since fully half the products are commodities. Nor is the growth rate of the surpluses in these manufacturing sectors impressive except for semiconductor production equipment and petroleum refinery products.

And here’s the trade balance flip side: the sectors with the top ten U.S. goods trade deficits and their rates of change:

1. Autos & light trucks: +10.64 percent

2. Crude oil & nat gas: +45.31 percent

3. Goods returned from Canada: +4.25 percent

4. Computers: +1.16 percent

5. Broadcast & wireless communications equip.: +11.06 percent

6. Telecomms equipment: +19.10 percent

7. Printed circuit assemblies: +47.12 percent

8. Audio & video equipment: -11.50 percent

9. Institutional furniture: +8.56 percent

10. Iron & steel: +76.28 percent

This list is full of high-value manufactures – so that should be a concern. Ditto for the growth rates, which are mainly well into the double-digits. And check out the number for steel — a sector that’s been making headlines because of the Trump administration’s consideration of national security-related tariffs.  

Coming up tomorrow: the best and worst export and import growers, and the sectors with the most rapidly improving and the most rapidly worsening trade balances.

Im-Politic: First Thoughts on Charlottesville

Tags

, , , , , , , , , , , , , , , , , , ,

It’s as tempting to offer timely thoughts about today’s Charlottesville, Virginia violence and the reactions it’s generated as it is difficult – for new developments keep taking place, and incontrovertible facts are hard to come by. That said, here are what strike me as as points worth making at present.

First, as I’ve previously written, the triggering complaint of the white nationalist/neo-Nazi/confederate revivalist/call-them-what-you-wish protest and the narrowest-gauge cause it represents should be unacceptable to all Americans who truly love their country. Confederate statues and other monuments to the rebellion (e.g., street and high school names) have no place in our national life. And removing them has nothing to do with erasing history. The history of the Civil War must of course be taught in the most intellectually honest way possible. But statues and street names etc are unmistakable efforts to honor and memorialize.

And whether you view the secession as motivated by intertwined racism and slavery issues (where in my view the bulk of the evidence points) or more legitimate federalist and states rights claims, the decision to revolt violently against the federal government was a simple act of treason, which should always be condemned in the harshest possible terms.

Moreover, please don’t respond with observations that the Founding Fathers’ ranks included slave-owners (like Washington and Jefferson) or that many subsequent American leaders were racists (like Woodrow Wilson). For slavery was, tragically, legal under the Constitution until emancipation. And as I’ve written (in the post linked above), most of the historical national figures with inadequate records on race were, first, to great extents products of their time and, second, known for playing many other roles and making many other contributions to the nation and its success.

As for the protesters’ broader supposed grievances about repressed and endangered white rights and even safety, I have no doubt that economic stresses and anxieties are at work in many cases. But feeling the need, or advisability, to fly the Confederate flag or wear the swastika simply signals a form of derangement that our society has rightly decided is beyond the pale politically and morally speaking. So public figures should decry this message and reject any association with those sending them.

Which brings us to the question of the Trump response. It was, as critics have charged, far too weak. What I can’t figure out is the “why”. Is the president a racist? He’s had too many African-American friends and supporters for that charge to stick. He and his advisers and aides also have too often argued for restricting immigration by pointing to the benefits U.S. blacks would reap.

Related anti-semitism make even less sense, given that Mr. Trump’s daughter married an orthodox Jew (who he has anointed as a top White House aide) and then converted herself to Judaism. I know that the “some of my best friends are….” argument can be and has been abused by anti-semites (as well as racists). But insisting that “some of my children and grandkids….” is much harder to dismiss.

The only explanation that makes even some sense to me (meaning of course that I’m not totally convinced) is that the president worries that a substantial part of his (largely white) base either covertly or (much likelier) subconsciously sees itself as racially repressed or marginalized, too, and would suddenly desert him if he went after the David Dukes and Richard Spencers of this country. In other words, Mr. Trump’s troubling words reflect a political calculation, not a shared bigotry.

If so, his position is not only timorous, but pathetically mistaken. Because for every hater he retains by his silence or anodyne words at times like this weekend, he risks losing many more moderates and independents who have no use for the identity-politics obsessed, and therefore intrinsically divisive, Democrats but who are disgusted by overt racists – much less neo-Nazis. In fact, Duke’s tweets today show that this arch-racist and anti-semite is infuriated by the president’s Charlottesville remarks.

More important, the president will earn much more durable support from independents and moderates – especially those who have actually lost economic ground or fear such losses – by keeping the campaign promises he made to restore living wage jobs than by even minimal pandering to prejudice.

Finally, the role of the Charlottesville police and any other law enforcement authorities tasked with handling the protests needs to be scrutinized thoroughly – along with our notions of protesters’ rights. I’m pretty certain that most Americans would agree with the right of Nazis and the like to stage a protest over the treatment of Confederate memorials (or any other reprehensible) cause, and to display symbols that should disgust all people of good will. And of course, these are Constitutionally protected rights.

But I’ve long thought that the right to protest also entails the right of protesters to be protected from those seeking to disrupt their events. In other words, once counter-protesters started physically interfering with the Nazis, the police force present should have stepped in and started making arrests. Even better, they should have taken much more effective measures to keep the counter-protesters physically apart from the protesters, to reduce the odds of violence breaking out to begin with. To my knowledge, law enforcement authorities have never been sued for such failures (not even by the American Civil Liberties Union, which admirably supported the Nazis’ etc right to demonstrate in Charlottesville). I hope the organization will consider bringing such a case in the wake of Charlottesville, if the circumstances merit this action.

For failing to establish protesters’ right to security could easily turn into an open invitation for harassment that could crimp free speech rights yet further. And what would induce the Nazis – and violence-prone lefties – to start licking their chops more eagerly?

(What’s Left of) Our Economy: Smile When You Say “Wage Inflation”

Tags

, , , ,

If you’re really determined to make the case that wage inflation is (finally) taking hold in the U.S. economy, you can find some supporting evidence in the government’s new report on the subject. But you need to look awfully hard, and you also have to ignore other data suggesting that this proposition is still pretty far-fetched.

First the new (July) numbers. (They’re still preliminary, like the June results, which are unchanged.)

For the private sector overall, real wages rose by 0.19 percent month-to-month – lower than June’s 0.28 percent increase. Year-on-year, real wage improvements decelerated, too – from 0.94 percent in June to 0.75 percent in July.

Manufacturing’s results were more robust, with inflation-adjusted wages advancing faster on month in July (0.46 percent) than in June (0.18 percent). Acceleration was evidence on an annual basis, too, with the July year-on-year growth of 0.83 percent besting June’s 0.55 percent. In fact, the July annual increase was the greatest since December (1.03 percent).

The annual constant-dollar statistics contain the strongest signs of vibrant life on the wages front. In particular, year-on-year increases this year have strengthened from 0.09 percent in January to 0.75 percent in July, and in manufacturing from 0.28 percent to 0.83 percent during this period. And that manufacturing figure was the year’s best. As reported above, however, the best annual private sector real wage growth of this year came in June.

In addition, if you more than a year back, you can see that annual real wage growth has slowed considerably after a notable speed-up earlier in the current economic recovery.

For example, for the private sector, after improving by 0.59 percent total between July, 2011 and July, 2014, real wages jumped 2.04 percent between 2014 and 2015, and by 1.90 percent between 2015 and 2016, before the latest, much slower, 0.75 percent rise.

In manufacturing, between July, 2011 and July, 2014, real wages actually dropped by 0.66 percent. The following Julys saw a 1.34 percent increase that nearly doubled to 2.26 percent over the next year before settling back to 0.83 percent during the latest July-July period.

But for me, the most revealing real wage numbers are those measuring its change throughout the current economic recovery. Since it began, in mid-2009, after-inflation private sector wages have risen only by 4.75 percent, and real manufacturing wages are up a mere 2.05 percent. Until those increases get much bigger, warnings of wage inflation understandably will be seen as sick jokes by most American workers.