(What’s Left of) Our Economy: A Big Productivity Data Surprise

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In a world that keeps reminding us it’s full of surprises both good and bad, why should official U.S. economic data – even data that rarely make headlines – be any different? So I suppose that I should have expected that the big news in a recent release on the broadest measure of productivity (which I was planning to write on basically in order to start closing the books on the Trump administration’s pre-CCP Virus economic record), turns out to be completely different than I could have foreseen. It has to do with the significantly revised – and worse – picture it draws of the U.S. economy’s performance in the 1990s, and specifically in manufacturing.

The new statistics from the Labor Department cover multi-factor productivity – which as the name implies, tries to measure efficiency according to how much in the way of all different kinds of inputs (like labor, capital, materials, and energy) are needed to generate a unit of output.

These figures attract less attention that the statistics that track the role of labor alone, because they come out much less often than the quarterly labor productivity numbers. But even given how much uncertainty surrounds the entire idea of gauging productivity, their breadth arguably makes them more important. And of course both measures of efficiency matter greatly because it’s been tough for anyone to figure out how a country achieves and maintains true economic health and sustainably rising living standards without strong productivity growth.

As known by RealityChek regulars, the best way to measure any economic trend or development entails comparing performance during similar phases of the economic or business cycle – that is, expansions or contractions. And before the latest manufacturing multi-factor productivity data came out (last Thursday), bringing the story through year-end 2019, here’s how the numbers for the last three expansions stacked up through 2018:

1990s expansion (1991-2000): +23.40%

bubble decade expansion (02-07): +11.74%

last expansion (10-18): -4.84%

So clearly, there’s not only been a big slowdown over time in manufacturing’s multi-factor productivity growth. During the expansion that was still underway through 2018, Americans had actually experienced multi-factor productivity decline.

Last Thursday’s report contained revisions, and although the slowdown story remained intact, look at the results for that 1990s expansion:

1990s expansion (1991-2000): +15.77 percent

bubble decade expansion (02-07): +11.72 percent

last expansion (10-18): -2.55 percent

Manufacturing’s multi-factor productivity growth turns out to have been about a third lower than previously thought. That’s huge! And the better figure for the latest expansion through 2018 doesn’t come close to compensating – especially since last year’s 1.6 percent annual drop dragged the expansion total decrease down to 4.14 percent.

But the revisions also shed new light on the Trump record per se, and in particular on its performance in multi-factor productivity terms versus that of the final three years of the Obama administration. And the Trump record comes out ahead.

Here’s what we knew along these lines before last Thursday’s report came out: The last two Obama years saw a total 3.18 percent drop in manufacturing multi-factor productivity, compared with a fractional 0.07 dip during the first two Trump years.

The new Labor Department revisions improve the Obama performance to a 3.03 percent decrease, but upgraded the Trump performance to a 1.56 percent increase.

And since these numbers now go through the end of 2019, they show that manufacturing multi-factor productivity over the last three Obama years sank by 1.95 percent, and over the first three Trump years declined by 0.11 percent (due to that lousy 2019).

Because as indicated above, measuring productivity growth is such an inexact science, and because the federal government’s career economists generally are so diligent, next year’s multi-factor productivity report could well contain still more surprising revisions. But as for that new dimmer view of the 1990s expansion, so often lauded as an economic near-Golden Age – I suspect it’s here for the duration.

Our So-Called Foreign Policy: Globalism on Steroids on the Way for America?

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I’ve written at length on how President Trump has conducted a foreign policy that follows America First principles unevenly at best. Now the evidence is growing that if Joe Biden becomes President, he’ll pursue a strategy that will look like globalism on steroids – in other words, an approach certain to return the nation to a diplomacy that minimizes or ignores completely America’s unique advantages on the world stage, maximizes its vulnerabilities, and needlessly increases its exposure to danger.

Aside from Biden’s own strongly globalist impulses, the main evidence so far is the news that he’s decided to appoint longtime aide Antony Blinken as his Secretary of State. Practically all you need to know about this Washington foreign policy veteran, his priorities, and the almost congenitally globalist worldview from which they spring was summed up in this New York Times headline: “Biden Chooses Antony Blinken, Defender of Global Alliances, as Secretary of State.”

For those still doubting his hallmark, The Times stressed in its homepage subhead that, “Mr. Blinken is expected to try to re-establish the U.S. as a trusted ally ready to rejoin international agreements” – which had the added virtue of making clear that Blinken (along with Biden) is thinking not only about America’s security arrangements with Europe and East Asian countries, but about the entire raft of international institutions ranging from the United Nations to the World Trade Organization.

As I’ve explained, this globalist obsession with multilateralism overlooks (1) the potential of the security alliances in particular to plunge the United States into nuclear war for stakes far less than vital; and (2) America’s matchless overall capabilities and potential to achieve security and prosperity in an inevitably unstable, dangerous world through its own power, favored geographic position, and wealth, rather than by making quixotic attempts to pacify the international environment.

At least as worrisome, Blinken seems utterly oblivious to the importance of cultivating and wielding national power when international arrangements of various kinds do offer advantages to the United States. No one could reasonably disagree with his recent observation that

Simply put, the big problems that we face as a country and as a planet, whether it’s climate change, whether it’s a pandemic, whether it’s the spread of bad weapons — to state the obvious, none of these have unilateral solutions. Even a country as powerful as the United States can’t handle them alone.”

You’ll search in vain, however, for any awareness that the multilateral solutions in which he places so much stock will have content. As a result, countries with different strengths and weaknesses, with differing histories and social and economic priorities will be pushing for outcomes likely to differ significantly from those optimal for America. So achieving those optimal outcomes is fanciful without the leverage to compel or to bribe, or some combination of the two.

But there’s another maxim of globalism possibly exemplified by Blinken (and other likely Biden appointees) that’s potentially even more dangerous for the United States. It’s the notion that striving for and achieving triumphs in the international arena are much nobler as well as much more important endeavors than seeking success in domestic affairs. Indeed, globalists have become so convinced of the paramount stakes of foreign policy not only out of sheer necessity but for moral reasons as well that they have crowned foreign policy ambition as nothing less than the ultimate test of the nation’s character and worth.

In this vein, back in 1993, as Americans and especially their leaders were still struggling to grasp the implications of the Cold War’s end, I wrote that that epic contest

generated some troubling theories about America’s national identity and purpose which have become all too uncontroversial. Specifically, many of us have come to believe that America will never be true to its best traditions unless it is engaged in some kind of world mission, that creating a more perfect United States is not a noble or an ambitious enough goal for a truly great people, that we will be morally and spiritually deficient unless we continue to be the kind of globe-girdling power we have been for the past half century.”

In fact, I was always struck by the fact that even a major foreign policy decision-maker and thinker such as George F. Kennan – who for most of his career was not much of a globalist at all – fell under this idea’s sway (or did during his most globalist period). Why else would he have ended his famous 1947 Foreign Affairs article outlining the anti-Soviet containment strategy with this description of the upcoming challenge:

The issue of Soviet-American relations is in essence a test of the over-all worth of the United States as a nation among nations. To avoid destruction the United States need only measure up to its own best traditions and prove itself worthy of preservation as a great nation.

Surely, there was never a fairer test of national quality than this. In the light of these circumstances, the thoughtful observer of Russian-American relations will find no cause for complaint in the Kremlin’s challenge to American society. He will rather experience a certain gratitude to a Providence which, by providing the American people with this implacable challenge, has made their entire security as a nation dependent on their pulling themselves together and accepting the responsibilities of moral and political leadership that history plainly intended them to bear.”

In the Blinken context, I was reminded of these claims by this sentence from someone as embedded in the think tank-centered globalist foreign policy Blob as the likely Secretary-to-be has been. Biden, writes this author, “will be flanked and assisted by a group of ambitious, sophisticated, and energetic aides eager to leave their mark on American foreign policy—and the world.”

This observation isn’t exactly the same as identifying Blinken as a foreign policy-uber-alles type. But it’s close enough to unnerve me, and raises the question of what makes these Biden staffers believe that the vast majority of Americans want them to “leave their mark on…foreign policy – and the world,” as opposed to expecting them to reserve blood and treasure for genuinely, and nationally, vital purposes, and hoping that they’ll avoid major blunders?

The answer, of course, is “nothing,” and makes clear that if Biden foreign policy team members are is thinking of shining in the history books, they’ll lower their sights, keep their collective noses to the grindstone, and view America’s international business as a sacred trust rather than a vehicle for their personal — or even the nation’s — reputation.

(What’s Left of) Our Economy: Are Businesses Closet Techno-Nationalists?

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Even if these poll findings are as off as many of the surveys of the 2020 election vote were, they’d still be pretty astounding. After years of multinational companies all over the world (including and perhaps especially in the United States), proclaiming that promoting innovation requires ever greater cooperation with partners across borders, General Electric’s (GE) latest annual survey of business views on the subject turned up strong support for what it calls a protectionist perspective.

It’s definitely something to keep in mind the next time you hear the China-coddling corporate Offshoring Lobby insist that a major U.S. economic decoupling from the People’s Republic would cut America off from an increasingly important source of technological progress, or the Open Borders-friendly Cheap Labor Lobby claim that restricting the inflow of foreign technology workers would deny them and the national economy as a whole access to many of the world’s best talent.

GE has been conducting these studies since 2011, and this year has looked at the subject twice – in January and September. In toto, the views of corporate innovation executives from 22 countries ranging from Kenya to the United States were sampled. (The January poll reported results from 22 countries and the September follow up from ten.)

Among the most startling results:

>This past January, fully 66 percent of the U.S. executives who responded considered that the country is “self-sufficient, and does not need to rely on other countries to innovate.” By September, this figure had climbed to 78 percent.

>In China, the comparable figures were 56 percent and 52 percent, respectively – meaning that, at least according to this GE study, China’s confidence in its technological autonomy has declined.

>Going global, in September, 69 percent of respondents reporting that their national governments had become more techno-protectionist in the last six months said that these policies had “a positive impact on innovation.” Viewed from the opposite end of the policy spectrum, only 41 percent of respondents reporting that their national governments had become less protectionist during this period considered this shift to have benefited innovation.

>In September, nearly all (94 percent) of the respondents from that month’s smaller sample agreed that “a protectionist stance is important to help address the major economic problems in this country created by the pandemic” and an equal percentage believed that such policies are “important to help the domestic economy recover.”

One reason for this support of techno-protectionism might be the widespread belief that it’s increasingly become the way of the world. Fully half of the September respondents told GE that “their government has taken a more protectionist stance during the COVID-19 pandemic” with only 13 percent reporting movement in the opposite direction and 34 percent perceiving no change.

At the same time, the GE poll revealed a deep ambivalence in business ranks about the virtues of tech self-sufficiency. Notably, 86 percent of the September respondents agreed that “More partnerships across countries will help drive progress on innovation.” And half worried that “Restrictions on movement of people/goods/services” were “a major cause for concern regarding innovation progress.”

One possible reason for the continued belief in the value of international collaboration: seemingly strong confidence that techno-nationalism (at least in their home market) will be a flash in the pan. Only 22 percent believed that such protectionism would last more than three years.

These results hardly exhaust the list of unexpected findings from the GE report. In fact, you’ll be seeing some more of them on RealityChek this week. But the discrepancy between them and the almost unamimous endorsement for the free movement of technological knowledge across borders from the corporate community deserves much more attention, and represents evidence that many of the globalist public positions taken by these executives’ companies and businesses stem from concern not for for the national interest, but for their own already healthy bottom lines.

Making News: (Re)Unveiling a Revolutionary U.S. Tax Policy Proposal

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And now for something completely different. (Apologies to the Monty Python crew.)

As some of you may know, when I’m not blogging here at RealityChek or Tweeting like a house on fire, I’m serving as a Trustee of the Henry George School of Social Science. This economic education institution seeks to apply some of the truly revolutionary insights reached by George, a Gilded Age/Progressive Era American economist about issues of his day, that strongly resemble some of the biggest challenges of our own times – for example, the rise of economic inequality amid extraordinary wealth creation and technological progress, the replacement of so much productive activity with financial speculation, and the weakening of competition throughout American business as enormous industries grow more monopolistic.

George’s signature proposal was a “land-value tax” (LVT), which he wrote boasted great potential to penalize casino-type finance; reward productive investment and thereby foster production-based, broadly shared prosperity; and break up economically and politically dangerous concentrations of wealth.

Folks associated with the School and with “Georgism” have advocated for this proposal ever since, but we believe that the LVT creates yet another advantage that’s especially important today: Its adoption could place the finances of state and cities devastated by the CCP Virus-induced recession and collapse of tax revenues on a healthy, sustainable footing.

As a result, we’ve launched an effort to show exactly how the LVT could eliminate budget gaps in states and localities across the country, and I’m pleased to announce that the first of these offerings has just been published (as an op-ed I’ve co-authored) by the news syndicate InsideSources.com). Here’s the link.

Moreover, we’ve recently issued a policy brief containing much more data relating to New York City and New York State that you can read here. And in the coming weeks and months, we’ll be sending off locally customized versions of this piece to news organizations in dozens of financially squeezed regions, including detailed projections of exactly how much revenue entirely affordable LVTs could raise.

So keep checking in with RealityChek for info on these articles, and news of other upcoming media appearances and developments.

Im-Politic: The Governance Gap Still Undercutting Populism

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Barely time for a quickie today, but it’s important to note that the political writer Christopher Caldwell has just thrown down to TrumpWorld and conservative populist nationalists (call us what you will) in general a challenge that still urgently needs to be met:  nurturing a class of skilled, knowledgeable policy professionals large enough to staff a conservative populist nationalist president adequately. 

Caldwell recognizes that success won’t come easily.  As he explains cogently in a new Financial Times piece

“For a populist, it’s hard to find good help these days. But it remains vital. The problem is not just institutional, it is temperamental. An effective populist adviser turns out to be a rare personality type: someone who loves bureaucracy enough to master its details, but hates it enough to join in pulling it apart.”

Indeed, this observation echoes one I made in 2018, when I wrote that the disruptive outsider Mr. Trump won the presidency, but continually lacked the benefit of “an advisory corps large and savvy enough to at least partly tame the federal bureaucracy.” 

But however difficult, Caldwell is clearly correct that the shortage of competent policy help led to a series of “terrible” Trump hires who either couldn’t perform their jobs satisfactorily, or turned out to be establishment Republicans and conservatives who decided to undermine his agenda from the beginning. (See, e.g., here), with often crippling consequences for his presidency, and the nationalist populist cause more broadly.

In defense of the President, and to a lesser extent of the populists who have long possessed the resources to create this kind of shadow government, Mr. Trump’s staffing woes stemmed in an immediate sense from the surprise nature of his 2016 victory.  He and his followers had been wandering in the political wilderness for so long that the prospect of actually running the country understandably seemed remote.  And having never planned in detail for a governance opportunity, all were caught off-balance.

Going forward, this excuse won’t cut it.  As Caldwell argues, a prime lesson of the aparent verdict of 2020 is that a populist President without large numbers of qualified hired hands will be a fatally underperforming President.  So starting immediately to fill the gap, as opposed to squandering “four more years,” is imperative

Our So-Called Foreign Policy: China Advice that Biden (Unfortunately) Could Take

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Since due to Election 2020’s results, the United States may be at a turning point in China policy, a new report from a bunch of supposed experts assembled by the University of California at San Diego that would ordinarily deserve obscurity merits some coverage. Not that any of the analyses or policy recommendations in this blueprint for a post-Trump approach make much sense, or even hang together coherently.

Instead, Meeting the China Challenge is most noteworthy for unwittingly showcasing key reasons why America’s strategy for the People’s Republic failed so dangerously for so many decades until an America First-y President won the White House – and why its recipe for renewed blundering previews much of a likely Biden administration approach.

Right off the bat it needs mentioning that Meeting flunks the important test of accountability. The “Working Group on Science and Technology in U.S.-China Relations” that wrote it is filled with Obama administration veterans and other backers of the pre-Trump strategy. Further, the University’s 21st Century China Center that’s one of two co-sponsors (along with the corporate funded Asia Society) declares that its mission is “enhancing U.S.-China relations.” That’s an appealing goal in the abstract, of course. But in practice, even in the best of circumstances, it’s represented the kind of gauzy globalist hopium that tends to give short shrift to specific, concrete uniquely American interests.

And since this strategy’s long-time pursuit created circumstances not remotely qualifying as “best,” an intellectually honest team of authors would have asked itself why its previous recommendations turned out so badly, what lessons it’s learned, and how they can be applied to the U.S.-China policy landscape today. Since the report addresses none of these questions, readers are fully entitled to ask why this group’s advice should be taken seriously now.

Substance-wise, Meeting the China Challenge sets the stage for permitting it actually to worsen by foundering on one of the biggest policy rocks that have undercut other leading criticisms of the Trump approach.

Specifically, although the report does a surprisingly good job of portraying the China challenge as systemic and genuinely menacing, it generally calls for responses that are piecemeal and subordinate to that overarching objective of “enhancing the relationship” – including preserving opportunities to cooperate on “shared interests in such global issues as economic growth and stability, climate change, and public health.” In fact, the Working Group is convinced that “Permeating every facet of the U.S.-China relationship will be crucial capabilities in science and technology that will feature both intense rivalry and necessary cooperation.”

I’d be the last one to rule out categorically any overlap between U.S. and Chinese interests, or the possibility of threading the above policy needles. But as yesterday’s post explained, international cooperation has content, and if Washington wants to make sure that it unfolds on terms acceptable to Americans, it will need the relative power to wield the needed leverage and drive the necessary bargains.

More fundamentally, though, Meeting the China Challenge‘s optimism on cooperation assumes maintaining a degree of policy compartmentalization that even the authors seem to doubt ultimately can be maintained – as indicated by the following passage:

We recognize that the United States faces real and growing security threats from China. While we hope that radical decoupling will never be necessary, and understand that such a step would have dire consequences for the global and American innovation systems, we would be foolish to ignore the possibility that it may become unavoidable. Unless and until such a decision is made, the role of the scientific and tech community [and presumably the U.S. government] should be to pursue worldwide collaboration in accordance with practices that mitigate the risks from openness.”

The big and obvious problems are that (1) maintaining a (pre-Trump) business-as-usual posture on “worldwide collaboration” risks permitting further Chinese catch up with the United States and (2) even if Washington wakes up to the need for decoupling before it’s too late, does anyone truly believe that American strategy can shift quickly enough to preserve an adequate edge?

The weaknesses of Meeting the China Challenge hardly stop here. The authors, for example – just like ostensible President-elect Biden – also put way too much stock in mobilizing allied support and working through international institutions like the World Trade Organization (WTO) to manage the China risks it perceived – even though the lucrative economic ties many of these allies have created with Beijing (often at the United States’ expense) will surely keep them firmly on the fence for the foreseeable future. And precisely because they’re so compromised, the international institutions these countries numerically dominate will keep resisting in effect outlawing Chinese transgressions.

Other recommendations are much better – e.g., bolstering “U.S. innovation capabilities through meaures ranging from increased funding for fundamental research to selective upgrading of our production system.” But these are anything but distinctive nowadays.  (See, e.g., the bipartisan support described here for reviving domestic semiconductor manufacturing prowess.)  

But the most insightful observation made by Meeting the China Challenge underscores a challenge that continues to defy the authors themselves and other globalists: the “expert community has serious homework to do if it is to get right…foundational issues for the bilateral relationship….”

Our So-Called Foreign Policy: The Globalists Still Don’t Get It

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It was tempting for me to react to Gideon Rachman’s column in yesterday’s Financial Times by noting, “At least he got it half right.” But this essay on Joe Biden’s determination to put U.S. foreign policy back on a globalist course isn’t even noteworthy by that modest standard.

For Rachman’s observation that a Biden administration is likely to find its goal of American global leadership much more difficult than expected to restore, and his conclusion that therefore the United States will have no choice to advance and protect its interests but to work via international institutions it can’t dominate and hope for the best, has been standard globalist fare for decades – as I’ve explained most recently and comprehensively here.

The crucial globalist mistake Rachman repeats entails what President Trump and his too-ragged pursuit of an America First strategy grasped in its essentials – that although the United States is far from strong (or wealthy, or wise) enough to achieve the central globalist goal of ensuring American security and prosperity by creating a fundamentally benign international environment, it is plenty strong and wealthy enough to achieve its essential interests through its own devices. The key is preserving and enhancing enough of that strength and wealth to maximize the odds of surviving and prospering in a world certain to remain dangerous or at least unstable.

To phrase this conclusion in globalist terms: The United States doesn’t need “global leadership” in the first place. It simply needs the capacity to take care of however it defines its own business.

An added virtue of this America First-y approach – success requires a lot less wisdom than globalism. That’s because (a) this strategy seeks to control what the nation can plausibly hope to control (its own affairs) instead of what it can’t plausibly hope to control (the affairs of everyone else); and (b) the United States’ favored (largely isolated) geographic position, its natural wealth, and its still formidable industrial and technoogical prowess endow it with a strong basis for withstanding and even thriving amid global turmoil that most other countries can only envy.

As I’ve also noted (in that National Interest article linked above) and elsewhere, the America First approach is needed even when working through those international institutions seems to be the nation’s best bet for coping with problems or maximizing opportunities. For as globalists (including Rachman in part) invariably miss is that the decision to foster “international cooperation” could even hope to be an automatic guarantee of favorable or even acceptable outcomes only if an objectively optimal solution for all concerned is already available and identifiable either by one or a group of the national governments involved, or by commonly accepted experts. Write me if you see any of these developments coming any time soon – even on a (rhetorically) widely agreed on worldwide “existential threat” like global warming.

In other words, for the foreseeable future, international institutions will be arenas of politics, not festivals of one-worldism, and international cooperation will have content. And if American leaders’ persuasive skills don’t suffice, for the best possible odds of mastering these politics and securing outcomes reflecting their country’s own distinctive interests and priorities, they’ll need to recognize that the former exist to begin with, and bring to bear the power (in all of its dimensions) needed to prevail satisfactorily. To cite a concept even globalists sometimes use, Washington will need to build and maintain and negotiate from “situations of strength.” But they’ll need to realize that these advantages are just as important in dealing with long-time allies and relatively benign neutrals as with adversaries like China and Russia.

The half of this cluster of issues Rachman gets right also includes his understanding that the American people will probably like the return to globalist-style multilateralism and cooperation even less than a Biden administration. But this insight isn’t exceptional, either, as his ultimate explanation for this resentment seems to be a neanderthal attachment to sovereignty by an electorate long viewed by globalists as too ignorant and unrealistic to acknowledge their superior wisdom.

And since, as Rachman correctly points out, Biden’s globalism is not only staunch, but pretty clueless itself, the nation will need considerable luck if his term in office avoids the debacles that so many of his pre-Trump predecessors created.

(What’s Left of) Our Economy: U.S. Manufacturing Output Held its Own in October

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This morning’s monthly Federal Reserve industrial production report is an object lesson in not counting your real manufacturing output chickens too soon – that is, before the revisions hatch.

So keeping in mind that today’s data will be revised further several times as well, it looks like my concerns last month about manufacturing turning from a CCP Virus-era economic leader into a laggard might have been premature.

Not that today’s release, which brings the story through October, showed gangbuster results. Inflation-adjusted manufacturing output increased by 1.04 percent over September’s levels. Much more encouraging, though, were the continually positive overall revisions and especially those for September. Its initially reported 0.29 percent constant dollar monthly output decline is now reported as a fractional (0.01 percent) increase.

As a result, after having sunk by just over twenty percent from February (the last month before the virus began seriously weakening the economy’s performance) through its April bottom, after-inflation manufacturing production is up by 19.35 percent. Alternatively put, it’s 4.56 percent below the February level, and 3,61 percent lower than last October’s.

Today’s October release also provided more evidence that the automotive sector’s dominant role role in determining overall manufacturing growth has just about faded away. Combined vehicles and parts production remained virtually flat in October, after falling an upwardly revised 3.02 percent sequentially in September.

In addition, October’s figures confirmed that, within manufacturing, the non-durable goods supersector has outperformed its durable goods counterpart – mainly because its first-wave pandemic dropoff was so much less dramatic.

Between February and April, price-adjusted durable goods output (including automotive and the troubled aerospace sector – due to Boeing’s woes and the virus-related travel shutdown) plunged by 27.99 percent, versus a 11.53 percent decline in non-durables (which contains industries like food, healthcare goods, and paper products manufacturing).

Since April real durables output has rebounded by 31.22 percent. But it’s still 5.51 percent lower than in February, and 4.19 percent lower than last October.

Since April, non-durables’ real output is up by 9.06 percent. But since its decline was so much less severe than durables’, in after-inflation terms its production is just 3.51 percent off the February level, and 2.97 percent below last October’s figure.

And what of some of the obvious drivers – for good or ill – of manufacturing output during this CCP Virus era?

Between February and April, aircraft and parts production plunged by 32.85 percent. An astonishing 43.31 percent recovery since has left the sector only 3.77 percent production-wise than in February. But because Boeing’s woes predated the pandemic, this output remains down 17.79 percent year-on-year.

Oddly, constant dollar production of medical equipment and supplies (a category including face masks, protective gowns, and ventilators) dropped by 19.75 percent as the CCP Virus was surging between February and April. And since then, it’s risen only 23.20 percent – including an encouraging 3.54 percent monthly improvement in October. Year-on-year, moreover, these sectors have seen 2.73 percent real output growth, but that improvement suggests how modest – and in retrospect, how inadequate – production was before the pandemic.

Finally, pharmaceutical and medicines production has been steady all year long in inflation-adjusted terms, and advanced by a modest 0.12 percent sequentially in October. Year-on-year, moreover, output has grown by just 0.39 percent – which makes these industries of special interest in the months ahead as mass production of recent promising vaccines ramps up.

For now, though, overall, domestic manufacturing production more than held its own in October. But except for that vaccine production, as the virus second wave strengthens, its near-term future could be just as challenging as that of the rest of the economy and nation

Following Up: Podcasts On-Line of Yesterday’s National Radio Appearances on Biden and China/Asia Trade

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I’m pleased to announce that the podcasts are now on-line of my two national radio interviews yesterday on U.S. trade policy under a Biden administration.  The special focus:  whether the United States should be worried that 14 Asia-Pacific countries – including all of America’s main regional allies – have just signed a Chinese-organized agreement to set up a free trade zone called the Regional Comprehensive Economic Partnership (RCEP).

My appearance on Moe Ansari’s “Market Wrap with Moe” can be found at this site, and clicking on the play button of the “Current Market Wrap” (“Cold War with China”) episode.  The interview begins just before the 23-minute mark.

Meanwhile, the “John Batchelor Show” segment episode covering these subjects is located here.

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

Im-Politic: Trump-ism Without Trump for America as a Whole?

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Since election day, I’ve spent some time and space here and on the air speculating about the future of what I called Trump-ism without Donald Trump in conservative and Republican Party political ranks. Just this weekend, my attention turned to another subject and possibility: Trump-ism without Mr. Trump more broadly speaking, as a shaper – and indeed a decisive shaper – of national public policy during a Joe Biden presidency. Maybe surprisingly, the chances look pretty good.

That is, it’s entirely possible that a Biden administration won’t be able to undo many of President Trump’s signature domestic and foreign policies, at least for years, and it even looks likely if the Senate remains Republican. Think about it issue-by-issue.

With the Senate in Republican hands, there’s simply no prospect at least during the first two Biden years for Democratic progressives’ proposals to pack the Supreme Court, to eliminate the Senate filibuster, or to recast the economy along the lines of the Green New Deal, or grant statehood Democratic strongholds Puerto Rico and the District of Columbia. A big tax increase on corporations and on the Biden definition of the super-rich looks off the table as well.

If the Senate does flip, the filibuster might be history. But big Democratic losses in the House, and the claims by many veterans of and newcomers to their caucus that those other progressive ambitions, along with Defunding the Police, were to blame, could also gut or greatly water down much of the rest of the far Left’s agenda, too.

CCP Virus policy could be substantially unchanged, too. For all the Biden talk of a national mask mandate, ordering one is almost surely beyond a President’s constitutional powers. Moreover, his pandemic advisors are making clear that, at least for the time being, a sweeping national economic lockdown isn’t what they have in mind. I suspect that some virus economic relief measures willl be signed into law sometime this spring or even earlier, but they won’t carry the total $2 trillion price tag on which Democratic House Speaker Nancy Pelosi seems to have insisted for months. In fact, I wouldn’t rule out the possibility of relief being provided a la carte, as Congressional Republicans have suggested – e.g., including popular provisions like some form of unemployment payment bonus extension and stimulus checks, and excluding less popular measures like stimulus aid for illegal aliens.

My strong sense is that Biden is itching to declare an end to President Trump’s trade wars, and as noted previously, here he could well find common cause with the many Senate Republicans from the party’s establishment wing who have never been comfortable bucking the wishes of an Offshoring Lobby whose campaign contributions it’s long raked in.

Yet the former Vice President has promised his labor union supporters that until the trade problems caused by China’s massive steel overproduction were (somehow) solved, he wouldn’t lift the Trump metals tariffs on allies (which help prevent transshipment and block these third countries from exporting their own China steel trade problems to the United States) – even though they’re the levies that have drawn the most fire from foreign policy globalists and other trade and globalization zealots.

As for the China tariffs themselves, the latest from the Biden team is that they’ll be reviewed. So even though he’s slammed them as wildly counterproductive, they’re obviously not going anywhere soon. (See here for the specifics.) 

Later? Biden’s going to be hard-pressed to lift the levies unless one or both of the following developments take place: first, the allied support he’s touted as the key to combating Beijing’s trade and other economic abuses actually materializes in very convincing ways; second, the Biden administration receives major Chinese concessions in return. Since even if such concessions (e.g., China’s agreement to eliminate or scale back various mercantile practices) were enforceable (they won’t be unless Biden follows the Trump Phase One deal’s approach), they’ll surely require lengthy negotiations. Ditto for Trump administration sanctions on China tech entities like the telecommunications giant Huawei. So expect the Trump-ian China status quo to long outlast Mr. Trump.

Two scenarios that could see at least some of the tariffs or tech sanctions lifted? First, the Chinese make some promises to improve their climate change policies that will be completely phony, but will appeal greatly to the Green New Deal-pushing progressives who will wield much more power if the Senate changes hands, and who have demonstrated virtually no interest in China economic issues. Second, Beijing pledges to ease up on its human rights crackdowns on Hong Kong and the Muslims of Xinjiang province. These promises would be easier to monitor and enforce, but the Chinese regime views such issues as utterly non-negotiable because they’re matters of sovereignty. So China’s repressive practices won’t even be on the official agenda of any talks. Unofficial understandings might be reached under which Beijing would take modest positive steps or suspend further contemplated repression. But I wouldn’t count on such an outcome.

Two areas where Biden supposedly could make big decisions unilaterally whatever happens in the Senate, are immigration and climate change. Executive orders would be the tools, and apparently that’s indeed the game plan. But as Mr. Trump discovered, what Executive Orders and even more routine adminstrative actions can do, a single federal judge responding to a special interest group’s request can delay for months. And these judicial decisions can interfere with presidential authority even on subjects that for decades has been recognized as wide-ranging – notably making immigration enforcement decisions when border crossings impact national security, as with the so-called Trump “Muslim ban.”

I know much less about climate change, but a recently retired attorney friend with long experience litigating on these issues told me that even before Trump appointee Amy Coney Barrett joined the Supreme Court, the Justices collectively looked askance on efforts to create new policy initiatives without legislating. Another “originalist” on the Court should leave even less scope for ignoring Congress.

The bottom line is especially curious given the almost universal expectations that this presidential election would be the most important in recent U.S. history: A deeply divided electorate could well have produced a mandate for more of the same – at least until the 2022 midterms.