(What’s Left of) Our Economy: Why China Really is Like Nazi Germany

Tags

Albert O. Hirschman, allies, Biden, China, dumping, Information Technology and Innovation Foundation, intellectual property theft, Japan, multilateralism, NATO, Nazi Germany, nuclear umbrella, Robert D. Atkinson, sanctions, South Korea, tariffs, tech industry, technology extortion, Trade, tripwire, Trump, {What's Left of) Our Economy

Because Nazi references can be so irresponsibly inflammatory, and therefore have been so often abused, I haven’t yet compared the threat posed by China to the rest of the world to that posed by Nazi Germany. (In my view, these comparisons have been used even more recklessly lately in U.S. domestic politics, chiefly to describe former President Trump and his views and policies.) So even though the People’s Republic, its ambitions, and its burgeoning capabilities do scare the living daylights out of me (and should scare you), I was nonetheless pretty surprised to see precisely this comparison just made by Robert D. Atkinson.

Atkinson is the head of a technology-focused Washington, D.C. think tank who I’ve known since the early 1990s. I’ve admired some of its work and haven’t been so crazy about other examples of its output, but I’ve never, ever considered him a boat-rocker, much less a rhetorical bomb thrower. In fact, my criticisms of the numerous studies and articles issued by his Information Technology and Innovation Foundation stem from my view that they’re way too cautious when it comes to countering China’s wide range of predatory economic practices (which include predatory technology policy practices like the theft and extortion of intellectual property).

And I’ve attributed much of this caution to the Foundation’s donor base – which is dominated by the U.S. and in some cases foreign tech and manufacturing companies that have worked so hard to send so much production and employment, and (voluntarily) so much technology to China for decades. It’s true that many of these firms are now crying foul as Beijing in recent years has aimed to strengthen its own entities’ positions at the foreigners’ expense. Yet their stubborn opposition to the unilateral Trump tariffs and some key sanctions on the Chinese tech outfits that have been major customers made clear their vain hope that they could somehow have their China cake and eat it, too.

Yet here comes Atkinson in the Fall issue of The International Economy (a publication that’s as – proudly – establishment oriented as they come) with a piece titled “A Remarkable Resemblance” likening China’s international economic policies to those of “Germany for the first forty-five years of the twentieth century” – which of course include the twelve Nazi years (1933-1945).

As the author argues, Germany during these decades was:

“a ‘power trader’ that used trade as a key tool to gain commercial and military advantage over its adversaries. Likewise, China’s trade policy is guided neither by free trade nor protectionism, but by power trade, with remarkably similar strategy and tactics to those of 1940s Germany. Understanding how Germany manipulated the global trading system to degrade its adversaries’ capabilities, entrap nations as reluctant allies, and build up its own industries for commercial and military advantage, just as China is doing, can shed light and point the way for solutions to the China challenge.”

Atkinson reports that this description of German policies came from a 1945 book by the important economist Albert O. Hirschman, which concluded that “[I]t’s is possible to turn foreign trade into an instrument of power, of pressure, and even of conquest. The Nazis have done nothing but exploit the fullest possibilities inherent in foreign trade within the traditional framework of international economic relations.”

The author rightly observes that

“Hirschman’s key insight was that some countries— in this case Germany under three very different government regimes from 1900 to 1945—focus not on maximizing free trade or even on protecting their industries, but on changing the relative power of nations through trade to achieve global power. Germany’s policies and programs were designed not only to advance its own economic and military power, but to also degrade its adversaries’ economies, even if that imposed costs on their own economy relative to a free trade regime.”

Germany also consistently sought, as the author points out “to make it more difficult for its trading partners to dispense entirely with trade with Germany, thus creating dependency.” And if that’s not enough to convince you about the comparison with China today, Atkinson himself notes that the German policy recipe also included massive industrial espionage, and Hirschman identified a major element as the equally massive dumping (selling at prices way below production costs) of goods into foreign markets to destroy overseas competition.

Atkinson’s diagnosis of the problem is so spot-on that it makes his recommended solution especially disappointing. Kind of like President Biden, he believes that the best internationally oriented option by far (on top of more effective support for U.S. industry, which I strongly support) is forming a “NATO for trade” that would be

“governed by a council of participating [free trading] countries…if any member is threatened or attacked unjustly with trade measures that inflict economic harm, DATO [the “Democratically Allied Trade Organization] would quickly convene and consider whether to take joint action to defend the member nation.”

I’ve already pointed out that the consensus on standing against China economically among America’s allies is way too weak to enable such multilateral approaches to succeed. But as long as we’re talking in terms of NATO – the military alliance between the United States and much of first Western and now Eastern Europe – and the Cold War, let’s not forget two other big problems. First, NATO (and this also goes for America’s security ties with South Korea and Japan) was never so much an alliance as a protector-protectorate relationship. The vast bulk of the heavy lifting was always done by the United States.

This allied security dependence in turn has produced the second major obstacle to a DATO’s effectiveness. Because the United States coddled allied defense free-ridingcand opened its markets one-sidedly for so long, the allies’ protectorate status was substantially cost-free economically, and even came with trade rewards no other country could remotely offer. (In addition, as I’ve also written, the creation of an American nuclear umbrella combined with the stationining of U.S. “tripwire” forces on the NATO frontlines in Germany also greatly minimized the military risks of siding with Washington.)

Today, however, economic power between the United States and the allies is more evenly distributed, and the allies’ profitable trade with and investment in China has, as noted in my aforementioned writings, greatly increased the economic price they would pay for lining up against China.

Still, by comparing the China threat to the Nazi threat, Atkinson’s article significantly bolsters the case for the United States escalating its response to the “all of society” level – or at least intensifying it qualitatively. Let’s just hope, as the author writes, that this time around the United States fully awakens a lot faster.

Those Stubborn Facts: Biden’s Hollow Travel Mask Mandate

Tags

Biden, CCP Virus, coronavirus, COVID 19, masks, Those Stubborn Facts, transportation, travel, Wuhan virus

“Biden to sign virus measures, requires mask use to travel”

– Associated Press, January 21, 2021

U.S. “airlines, Amtrak and other transport providers now require masks….”

– Associated Press, January 21, 2021

 

(Source: “Biden to sign virus measures, requires mask use to travel,” by Ricardo Alonso-Zaldivar, Associated Press, January 21, 2021, Biden to sign virus measures, requires mask use to travel (apnews.com))

 

Im-Politic: Advice Biden Should Reject, but Probably Won’t

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Alibaba, Andrew Ross Sorking, Biden, Biden administration, China, foreign policy, globalism, globalists, health security, Henry Kissinger, Im-Politic, Jamie Dimon, Joseph C. Tsai, JPMorgan Chase, multilateralism, nationalism, The New York Times, Tony Blair

All Americans of good will should hope for the Biden administration’s success. In fact, on a trouble-shadowed Inauguration Day, it seems especially appropriate to create and nurture the brightest feel-good glow possible.

Nonetheless, it’s also vital to keep something else in mind: Powerful forces are acting more determined than ever to convince the public that the new President should double down on the same major policy blunders that ensured the elites’ own power and wealth, but that dangerously weakened U.S. security and prosperity. For good measure, of course, these decisions brought hardship, despair, and (as demonstrated by the country’s deep polarization), bitterness to tens of millions of Americans. And there’s every reason to believe they have a willing audience.

And before you dismiss those thoughts as the sour grapes of a Trump policy supporter, I hope you’ll read this column from Monday by The New York Times‘ Andrew Ross Sorkin, who the paper seems to be enabling to settle into a role of out-and-out establishment mouthpiece.

According to Sorkin, “a provocative memo [is] being circulated among policymakers on both sides of the aisle and the Biden transition team ahead of his inauguration.”

Continues Sorkin, “It is even more notable for who wrote it….an under-the-radar group of global boldfaced names that act as a private advisory committee to JPMorgan Chase. Among others, they include Tony Blair, the former British prime minister; Condoleezza Rice and Henry Kissinger, two former secretaries of state; Robert Gates, the former secretary of defense; Alex Gorsky, chief executive of Johnson & Johnson; Bernard Arnault, chairman of LVMH; and Joseph C. Tsai, executive vice chairman of Alibaba.”

These globalist A-listers “typically [meet] once a year in a far-flung location with JPMorgan’s chief, Jamie Dimon.” Their discussions “are usually kept private. But given the precarious state of the world during a pandemic and change in leadership in Washington, the group put its views on paper in hopes of persuading policymakers to address what it sees as the most pressing priorities.”

Sorkin at least has the…honesty?…to describe their musings as “ a manifesto of sorts calling for a reset, a return to the pre-Trump days. It seeks to turn back the clock to a time when being called a globalist wasn’t an epithet….”

And although he adds that it “acknowledges the failures of globalism and seeks to correct them,” the group’s intentions (which readers need to take on face value, since the full document itself isn’t reproduced), justify deep skepticism for several reasons, starting with its make-up.

After all, it’s one thing to include a former foreign leader (the United Kingdom’s Tony Blair) and the head of a foreign multinational company (French-owned luxury goods maker LVMH). There’s no reason to believe that they have any special concern for America’s security and well-being, but at least they come from allied democracies.

But Joseph C. Tsai, a bigwig at Alibaba? JP Morgan’s Dimon is of course free to seek his advice on various matters, too, but maybe a senior executive from a Chinese entity that by definition is ultimately controlled by China’s hostile thug dictatorship could have been included out of the group’s effort to provide advice to an American President?

So not that other members of the group (like Kissinger for much of his post-government career) don’t have long records as China apologists and lobbyists for companies hungry to do business with and therefore curry favor with Beijing.

But Tsai’s involvement casts in an especially suspicious – and suspiciously defeatist – light the recommendation that “The best outcome for U.S.-China relations is likely managed competition — an accommodation that avoids military conflict while allowing for limited cooperation. It is impractical to think that supply chains and manufacturing can be moved simply, affordably or comprehensively out of China.”

If anything’s impractical, and indeed a spectacularly proven failure, it’s their stated belief that (in Sorkin’s words), U.S. interests can adequately be served by “a return to engaging with China, especially on climate issues and global health, while acknowledging the ‘significant challenge’ the country poses.” This soothing formula is exactly what’s led to the U.S. economic and technology policies that led directly to the rise of the Chinese threat.

The group’s perspectives on the CCP Virus and what it’s taught us about global supply chains and public health security and the like is no more impressive: “The near-total absence of American leadership, coupled with the nationalist approach of too many countries, have come at the expense of a strategically coherent, international response to the pandemic.”

Of course, it’s precisely because so many countries responded nationalistically to the virus – ostensibly when a globalist perspective was needed most – in particular blocking the export of crucial healthcare goods to ensure that their own supplies would be sufficient, that the United States can’t afford to be an exception, and needs to achieve self-sufficiency.

As for the group’s notion (as explained in the words of member Robert Gates, a former U.S. defense secretary) that “international cooperation and engagement on the international front and the relationships with our allies, …serves America’s self-interest,” it simply doesn’t suffice in bromide form any more. Now’s the time to explain exactly why this stance amounts to something more than what it turned into under the last few pre-Trump Presidents – a formula for needlessly risking nuclear war by coddling wealthy but militarily free-riding allies, and winning international friends and influencing people by giving away huge chunks of the U.S. economy’s productive heart.

Perhaps most revealing of all – both of the group’s cynicism and possibly Sorkin’s – was Dimon’s statement to the latter that “The first thing businesses should do is separate their company’s interests from what’s in the interest of the country.” This from a finance sector that has worked tirelessly for decades to push the offshoring of American manufacturing, with all the national security dangers and economic ruin it’s produced – as Sorkin conspicuously failed to point out.

Sorkin’s contention that “the message the group is advancing is common sense” makes clear that he’ll be an eager collaborator. And that probably goes for much of the rest of the establishment-idolizing and Never Trumper Mainstream Media. Fortunately for these elites, but worrisomely for the American people, everything known about Mr. Biden’s career is telling us that he will be, too.

Note: Eagle-eye readers may notice that I just called the new President “Mr. Biden” rather than “Biden.” That’s because he’s the new President, and therefore, at least in my view, deserves to be identified in a manner as distinctive as the authority of his office when the name is being used as a noun. By the same token, Donald Trump will be called “Trump” – a designation I’ve used for all other individuals I’ve written about in RealityChek, except when referring to them for the first time in a particular article.

But I’ll still restrict myself to using the family name when it functions as an adjective (e.g., “Biden administration,” “Biden policy”).

Truth to tell, I’ve had some ongoing trouble figuring out how to treat former Presidents. The tentative solution I’ve come up with is using that last-name-only form when they’re recent (e.g., “Obama”) and tending (not entirely consistently, I’m sure) to use their full names more frequently the further back in time we travel. (E.g., “former President Richard Nixon” or “former President Ulysses S Grant.”)

Even in such instances, though, I’ve struggled to be consistent without being overly pedantic with the exceptionally well known Presidents (like Washington and Lincoln). And when it comes to “Bush” and “Johnson” and “Roosevelt” and “Adams” I’ve needed to make clear whether I’m talking about George H.W. or George W.; Lyndon Baines or Andrew; Franklin D. or Theodore; and John or John Quincy, respectively.

And another complication: Sometimes, the temptations of stylistic diversity have led me to refer to former Presidents by their first and last names (e.g., “Barack Obama,” “Bill Clinton”). I’m sure these temptations will continue, but I just wanted to let you know that I’m trying to be as consistent as possible. Kapische?

Im-Politic: Did “The Science” Give Us the Virus?

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Anthony S. Fauci, bio-weapons, CCP Virus, China, coronavirus, COVID 19, Im-Politics, Joe Biden, lockdowns, National Institutes of Health, New York, Nicholson Baker, pandemics, public health, SARS, stay-at-home, terrorism, Trump, virology, Wuhan virus

That’s a pretty stunning header, I know. But it’s anything but crazy, or even click-baity – at least if you take seriously a long, very serious, and very carefully reported article published January 4 about the CCP Virus’ origins in New York magazine, which hasn’t exactly been an enthusiast for President Trump or science- or China-bashing.

For author Nicholson Baker makes clear not only that for years before the Trump era, America’s top public health officials (who epitomize “The Science” that all the adults in the nation’s room from President-elect Joe Biden on down have anointed as the only valid sources of U.S. and global virus policy advice) pushed measures certain to boost the odds that something like Covid 19 would be created, and somehow escape from, a laboratory someplace in the world – including China.

And notably, one of the main pushers was one Dr. Anthony S. Fauci, Director of the National Institutes of Health’s (NIH) National Institute of Allergy and Infectious Diseases.

It’s important to make clear here what Baker isn’t saying. He isn’t saying that the Chinese manufactured the virus as a bio-weapon. He isn’t saying that Beijing loosed this pandemic on the world on purpose. And he certainly isn’t accusing Fauci and the rest of the public health establishment of acting maliciously.

But what he is saying is awfully damning, and urgently needs to be examined by the incoming Biden administration, the entire U.S. political and policy communities, and of course the public.  For Baker marshalls and summarizes voluminous evidence for the proposition that the most reasonable theory of the virus’ origin is not that in its highly infectious form it developed naturally in some mammal species (like a bat) and then jumped to humans (e.g., at a wet market) – the explanation offered at various times by the Chinese government and by many infectious disease specialists. Instead, the author supports the idea that it was produced by scientists from a naturally occuring mammalian virus, specifically by scientists at one of the three advanced virology facilities in and around the city of Wuhan.

And then, Baker – who is extremely careful to distinguish between facts and suppositions – speculates that “it eventually got out” by hazard. Release via “a lab accident — a dropped flask, a needle prick, a mouse bite, an illegibly labeled bottle,” he emphasizes, “isn’t a conspiracy theory. It’s just a theory.” But he rightly argues that “It merits attention…alongside other reasoned attempts to explain the source of our current catastrophe.”

But where do the roles of the U.S. and global public health establishments come in? During recent decades, as Baker reports, scientists have been conducting “’gain of function’ experiments — aimed to create new, more virulent, or more infectious strains of diseases in an effort to predict and therefore defend against threats that might conceivably arise in nature.” And many of these experiments were funded by the Fauci’s Institute at the NIH. (Similar work was being funded by the Defense Department, whose interest in bio-weapons and fighting them was reawakened by the increase in global terrorism in the 1990s and the prospect that germs like anthrax would be used to advance extremist goals. This threat, of course, materialized right after September 11 with letters containing the germs sent through the mail – in an immense irony – by a U.S. government bio-weapons researcher.)

As implied immediately above, Fauci and his colleagues had the best of intentions. But as Baker documents exhaustively, they ignored numerous warnings from fellow professionals that, in no less than two related ways, they might be creating a problem far worse than that they were trying to solve. First,in their determination to design in the lab super-dangerous bio threats that terrorists hypothetically might some day create and use, they lost sight of how their own experiments could unleash such actual threats in the here-and-now due to the real possibility of leaks (hardly unknown in the world of biological research).

In Baker’s words, “Why, out of a desire to prove that something extremely infectious could happen, would you make it happen? And why would the U.S. government feel compelled to pay for it to happen?” Echoing these worries were numerous scientists, such as Johns Hopkins biomedical engineer Steven Salzberg, who noted several years ago, “We have enough problems simply keeping up with the current flu outbreaks — and now with Ebola — without scientists creating incredibly deadly new viruses that might accidentally escape their labs.”

Second, no evidence has been found yet that any of the coronaviruses that are naturally occuring and that have infected humans (like the SARS “bird flu” – which actually came from mammals – of 2002-03) are remotely as contagious as their lab versions, or are found in animals that often come into contact with humans outside China and its wet markets. In fact, Baker quotes Rutgers University microbiologist Richard Ebright has describing Chinese virologists’ efforts to scour remote locations for animal sources of natural coronaviruses that can be supercharged in a lab as “looking for a gas leak with a lighted match.”

In addition, Fauci arguably magnified these dangers by channeling some of the U.S. government funding for “gain of function” research to the Wuhan virology labs. On the one hand, this decision made sense (as long as gain-of-function was being sought in the first place) because China has been the origin point of so many mammalian coronaviruses, and therefore the home of so many leading virus specialists. On the other hand, safety first hasn’t exactly been a national Chinese watchword.

So the implications for simply “following The Science” seem clear. And they go beyond what should be (but isn’t) the screamingly obvious point that, especially in a field as new and rapidly changing as this branch of virology, there is no “The Science.” Expert opinion almost inevitably will be mixed, and politicians and their journalist mouthpieces flocking to one side while completely ignoring the other is bound to end badly. Matters are bound to end even worse, of course, when the favored faction aggressively tries to stamp out and discredit as “conspiracy thinking” the other’s theories – as Baker shows indisputably was the case with public health authorities and experts (including Fauci) who continue to try absolving the Wuhan labs from any responsibility.

More important, this tale bears out what I and many others have written for months (e.g., here): The pandemic is a crisis with many dimensions – economic and social as well as medical. The public health establishment’s contributions are indispensible. But not only is its expertise limited. Like any other human grouping defined by common characteristics and experiences like fundamental interests and educational backgrounds and occupational environments, this establishment is influenced by its own distinctive unconscious biases and predispositions.

In this case, in Baker’s words, some of the most important are “scientific ambition, and the urge to take exciting risks and make new things.” All of which are perfectly fine and even praiseworthy – in their place.

Further, the medical dimension of the crisis is complex, too, as shown both by all the evidence of major public health costs generated by the lockdown and stay-at-home orders championed so singlemindedly by Fauci and his acolytes, and by the strong disagreements among the virologists and similar researchers laid out in such detail by Baker. So it’s the job of political leaders to take all these considerations into account, not to act as if only one cohort of advisers has a monopoly on wisdom in all relevant areas.

And let’s end on an O’Henry type note. I can’t resist pointing out that President Trump, too, has been one of those U.S. leaders whose administration has robustly funded this gain-of-function research – one of the few instances in which he’s, apparently with no objections, followed The Science.

(What’s Left of) Our Economy: U.S. Manufacturing’s Biggest 2020 Winners & Losers

Tags

aerospace, automotive, Boeing, CCP Virus, computer and electronics products, consumer goods, coronavirus, COVID 19, energy, Federal Reserve, food products, fossil fuels, furniture, housing, industrial production, inflation-adjusted output, lockdowns, machinery, manufacturing, on-line shopping, stay-at-home, travel, wood products, Wuhan virus, {What's Left of) Our Economy

Thanks to last Friday’s release of the Federal Reserve’s report on December U.S. manufacturing production, it’s possible to identify the sector’s biggest winners and losers for inflation-adjusted growth. And their ranks include some notable surprises. (As with all U.S. government economic data, though, there’ll be plenty of revisions over the next few years.)

First, let’s keep in mind that the following categories are pretty broad, including a wide range of products whose performances have varied just as widely. For example, as noted previously (e.g., here), “machinery” contains everything from machine tools to heating and cooling equipment to semiconductor production gear to turbines to construction equipment to farm machinery.

Still, these groupings are specific enough to show how much care is needed when generalizing about the performance of a piece of the economy as big as manufacturing. Moreover, they’re the categories that come early on in the incredibly detailed presentation each month of manufacturing output results deep in the weeds of the Fed’s own website.

With these observations in mind, the five strongest growers (or most modest shrinkers) in manufacturing during 2020 were automotive (vehicles and parts combined) at plus-3.64 percent; food, beverage, and tobacco products (up 0.40 percent), wood products (0.38 percent), computer and electronics products (up 0.14 percent), and non-metallic mineral products (down just 0.52 percent).

The biggest losers? Petroleum and coal products (down 13.34 percent); printing and related activities (off by 10.41 percent); furniture and related products (down 9.86 percent); non-durable miscellaneous manufactures (down 8.57 percent); and aerospace and other non-automotive transportation equipment (an 8.27 percent contraction).

Some of these results were entirely predictable. For example, petroleum and coal products essentially entails the fossil fuels industries, which have been decimated by the overall U.S. and global economic slumps triggered by the CCP Virus, and by the particular hit taken by business and leisure travel. And don’t forget the lingering effects of Boeing’s safety troubles. Moreover, of course those Boeing woes in turn have taken their toll on the aerospace sector.

On the flip side, despite major concern about the strength of America’s food supply chain, it proved impressively resilient. And since Americans didn’t stop eating, real food production expanded – although as the table below shows, its this expansion was much slower than in 2019.

I’m not sure what’s been up with furniture, though, especially considering that the good performance of wood products surely reflects the strength of a domestic housing industry that should have spurred production of furniture. Moreover, so far, the 2020 trade statistics reveal no significant increase in imports.

Non-durable miscellaneous manufactures are something of a puzzle, too. This category includes items like jewelry, silverware, sporting goods, toys, and musical instruments. Since on-line shopping has propped up consumption during the pandemic period, purchases and domestic production of these goods should have remained strong, too – even though many of these sub-sectors have long dominated by imports.

And speaking of imports, a clear sign of their importance is the negligible growth of the domestic computer and electronics industries. It’s clear that the virus and related lockdowns and stay-at-home orders has greatly increased demand for information technology products. But it’s evident that the biggest winners weren’t U.S.-based suppliers. In fact, 2020 growth was way below 2019’s, as the table below shows.

Meanwhile, the solid growth of the automotive sector is pretty remarkable, since the sector literally shut down almost completely in March and April. That looks like awfully strong evidence that much of the economic damage of the pandemic period has stemmed from government restrictions, and not from any inherent weakness in the economy.

In any event, below are the results for all of manufacturing’s main big industry groups, along with the data for the durable goods and non-durable goods super-sectors, and industry overall. For comparison’s sake with the pre-CCP Virus period, I’ve also presented their after-inflation growth for 2019. And a year from now, the final Fed 2021 statistics will permit judging just how complete a retun to normalcy has been achieved.

                                                                              2018-19              2019-20

manufacturing                                                        -1.06                   -2.63

durable goods                                                         -1.70                   -2.97

wood products                                                       +3.58                  +0.38

non-metallic mineral products                               -1.17                   -0.52

primary metals                                                       -2.69                   -7.66

fabricated metals products                                     -1.72                   -5.38

machinery                                                              -2.39                   -3.80

computer & electronics products                          +6.19                  +0.14

electrical equipmt, appliances & components       -1.71                   -1.68

motor vehicles and parts                                        -9.05                  +3.64

aerospace and misc transporation equipment       +0.29                   -8.27

furniture and related product                                +0.34                   -9.86

miscellaneous manufactures                                +0.30                    -3.67

non-durable goods                                                -0.72                    -2.24

food, beverage and tobacco products                  +2.67                   +0.40

textiles and products                                            -2.24                    -5.04

apparel and leather goods                                    -7.50                    -3.64

paper                                                                    -2.37                    -1.91

printing and related activities                              -3.20                  -10.41

petroleum and coal products                               -1.32                  -13.34

chemicals                                                            -2.07                     -1.31

plastics and rubber products                               -3.24                     -0.78

other manufacturing                                           -8.59                      -8.51

Making News: Trump “Requiem” Post Re-Published in The National Interest…& More!

Tags

allies, Capitol riots, Cato Institute, China, Ciaran McGrath, conservatism, Croatia, Daily Express, Dnevno, economic nationalism, EU, European Union, Geopolitika, globalism, GOP, impeachment, Joe Biden, Making News, Populism, Republicans, Ted Galen Carpenter, The National Interest, Trump

I’m pleased to announce that The National Interest has re-posted (with permission!) my offering from last Wednesday that could be my last comprehensive look-back at President Trump and his impact on politics and policy (at least until the next utterly crazy development along these lines). Click here if you’d like to read in case you missed it, or if you’d like to see it in a more aesthetically pleasing form than provided here on RealityChek.

One small correction still needs to be made: The last sentence of the paragraph beginning with “Wouldn’t impeachment still achieve….” should end with the phrase “both laughable and dangerously anti-democratic.” I take the blame here, because my failure to keep track of the several versions that went back and forth.

In addition, it’s been great to see my post on the first sign of failure for President-Elect Joe Biden’s quintessentially globalist allies’-centric China strategy (also re-published by The National Interest) has been cited in new and commentary on both sides of the Atlantic.

Two of the latest came from Zagreb, Croatia. (And yes, I needed to look up which former region of the former Yugoslavia contained Zagreb – though I did know it was some place in the former Yugoslavia!) They’re found on the news sites Geopolitika and Dnevno.  (These sites must be related somehow because since it’s the same author, it must be the same article.)

On January 14, Ciaran McGrath of the London newpaper Daily Express used my analysis to sum up a column analyzing the Europe-China investment agreement that prompted my post in the first place.

And on January 5, the Cato Institute’s Ted Galen Carpenter (full disclosure: a close personal friend) cited my piece in a post of his expressing general agreement.

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

(What’s Left of) Our Economy: Mainstream Media Article Debunks its Own Trump-Caused Shortage Claim

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automotive, China, fake news, Mainstream Media, Reuters, sanctions, semiconductors, tech, Trump, {What's Left of) Our Economy

For all the dreadful journalism I’ve read in recent years (and it’s a lot), I never considered the possibility that a Mainstream Media article could come out in which the thrust of the story changed, and changed substantially, no less than three times between the headline and the story’s 15^th paragraph (two-thirds in). In fact, the thrust changed so substantially that it finally became clear to a reader diligent enough to stick with the article that long that the headline was genuine Fake News.

Here’s the header for the Reuters report in question: “Trump’s China tech war backfires on automakers as chips run short.” The clear implication: “That moronic President! He and his stupid China policies are ruining a major U.S. and global industry!”

Which makes the first change of thrust awfully strange – especially since it came in the very first paragraph. “Automakers around the world are shutting assembly lines because of a global shortage of semiconductors that in some cases has been exacerbated by the Trump administration’s actions against key Chinese chip factories, industry officials said.”

That is, it hasn’t been just the Trump policies. They’ve been a problem in only “some cases.”

Even that development would be newsworthy – although not terribly so. Except just five paragraphs later, readers learn that “In at least one case, the shortage ties back to President Donald Trump’s policies aimed at curtailing technology transfers to China.”

One case! And the company concerned isn’t even named, which is fishier still. In addition, keep in mind that when reporters or anyone else use phrases like “in at least one case,” that means they looked for other cases and couldn’t find any. According to this reputable source, the number of vehicle (including heavy duty truck) manufacturers in the world as of 2018 was 56 – making me wonder how with how many such companies the two reporters who wrote the story checked – before arbitrarily giving up and concluding that what they found couldn’t possibly the only such instance of this Trump policy effect.

And finally, nine paragraphs later, comes the third change – a context-setting observation that further demolishes the storyline: “The chipmaking industry has always strained to keep up with sudden demand spikes. The factories that produce wafers cost tens of billions of dollars to build, and expanding their capacity can take up to a year for testing and qualifying complex tools.”

In other words, buyers of semiconductors have been dealing with sudden shortages literally since chips first starting being used in significant volumes in other goods and services industries.

So the only reasonable conclusion that can be drawn from this article is that, although there’s no meaningful shortage of automotive semiconductors that can be attributed to President Trump’s policies, there’s a major shortage of either journalistic integrity or maybe plain old competence at Reuters.

(What’s Left of) Our Economy: Why Today’s Fed U.S. Manufacturing Report is So Bullish

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737 Max, aircraft, aluminum, automotive, Boeing, China, Federal Reserve, inflation-adjusted growth, Joe Biden, machinery, manufacturing, medical supplies, metals, pharmaceuticals, PPE, real output, steel, tariffs, Trade, vaccines, {What's Left of) Our Economy

Think for a moment about this morning’s very good manufacturing production figures from the Federal Reserve (for December) and a case for major optimism about U.S. industry’s foreseeable future is easy to make. Not only has the advent of highly effective vaccines greatly boosted hopes for a return to normality sooner rather than later. But much of the underlying data was collected before the vaccine production surge began.

Moreover, although Boeing aircraft is still dealing with manufacturing problems, its popular 737 Max model is being recertified or nearly recertified for flight by numerous countries (including the United States) and any continued significant rebound in air travel levels is sure to help the company’s order book for all of its jets.

And again, the data themselves were strong. According to this first Fed read for the month, American inflation-adjusted manufacturing output rose by 0.95 percent sequentially. Moreover, November’s initially reported 0.79 percent improvement was upgraded to 0.83 percent, and October’s results were revised upward for a second time – to 1.34 percent.

These noteworthy advances – which add up to eight straight months of increases – brought price-adjusted U.S. manufacturing production to 22.05 percent above the levels it hit during its CCP Virus-induced nadir in April, and to within 2.40 percent of its last monthly pre-pandemic numbers (for February).

Especially interesting, and another cause for optimism: The December manufacturing growth was so broad-based that it was achieved despite a 1.60 percent monthly drop in constant dollar automotive production. Combined vehicle and parts output has rebounded so vigorously since its near-evaporation last spring (by just under six-fold) that on a year-on-year basis, it’s actually grown by 3.64 percent. But today’s Fed report represents evidence that many other sectors are now catching up.

The crucial (because its products are used so widely throughout the entire economy) machinery sector enjoyed a good December, too, with after-inflation production increasing by 2.07 percent sequentially. That welcome news more than offset a downward revision in the November results, from a 0.51 percent to 0.99 percent shrinkage. Due to this growth, this real domestic machinery output is now just 1.53 percent off its pre-pandemic level.

As for the pharmaceutical industry, its price-adjusted output expanded by a solid 2.12 percent sequentially in December, but November’s disappointing initially reported 0.76 percent fall-off was downgraded to a 0.84 percent decrease, and October’s results stayed at minus 1.01 percent.

Moreover, year-on-year constant dollar pharmaceutical production is up only 0.18 percent – anything but what you’d expect for a country suffering through an historic pandemic.

But the first batch of Pfizer anti-CCP Virus vaccines didn’t leave the factory until December 13, and key data behind this first read on the month’s performance were gathered beforehand. So it’s likely that the huge ramp in vaccine out could start showing up in the revised December results in next month’s Fed manufacturing report (for January), which will reflect more relevant statistics.

Similar optimism seems warranted for the U.S. civilian aerospace industry and especially its beleaguered collosus, Boeing. Despite the safety woes of the popular 737 Max model and its consequent production suspension, the domestic aircraft and parts sectors have actually staged a powerful real output recovery since a 32.85 percent nosedive in February and March. Since then, inflation-adjusted production has boomed by 52.30 percent, fueled in part by December’s 2.78 percent sequential jump and November’s upwardly revised 2.39 percent growth.

In fact, constant dollar output in civilian aerospace is now actually 2.27 percent higher than its last pre-CCP Virus level. The 737 effect isn’t over yet, as made clear by the 11.49 percent real production decline since last December. But it seems evident that the industry is and will remain on the upswing barring any new seriously bad news.

Unfortunately, little such optimism appears justified in the case of medical equipment and supplies – including face masks, protective gowns, ventilators, and the like. Inflation-adjusted production in their larger subsector sank in December by 0.36 percent on month, and although the November increase has been revised up from 1.56 percent to 1.60 percent, October’s growth has been downgraded again – from an initially judged 3.54 percent all the way down to a decidedly non-pandemic-y 1.75 percent.

And since April, the after-inflation production recovery has been only 21.02 percent – still less than that for all of manufacturing. The year-on-year December result is no better, as it’s down 5.44 percent. And of course, those 2019 levels were revealed by the pandemic to have been dangerously inadequate.

But before ending, I couldn’t forgive myself if I didn’t say something about tariffs, and as with last month’s Fed manufacturing figures, the performance of the primary metals sectors for December is sending this loud and clear message to President-Elect Joe Biden: Keep them on.

For in constant dollar terms, these protected industries have recorded strong monthly growth since June, and November’s upwardly revised sequential 3.98 percent pop has now been followed by a 2.51 percent increase in December.

All told, since the April bottom, price-adjusted production has risen by 29.01 percent – expansion that looks inconceivable without the trade curbs preventing the U.S. market from being flooded with Chinese steel and aluminum along with product transshipped through the ports of those U.S. allies with whom Biden is so keen on repairing tattered Trump era ties, and greater metals shipments they often send America’s way to offset their own China-related losses.

(What’s Left of) Our Economy: Biden Trade Policy’s Off to a Flying Stop

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China, inflation, Joe Biden, Katherine Tai, National Foreign Trade Council, offshoring lobby, tariffs, Trade, trade policy, trade war, Trump, U.S. Trade Representative, USTR, {What's Left of) Our Economy

Any minimally intelligent discussion of the incoming Biden administration’s trade policy and the role of his pick for U.S. Trade Representative (USTR) needs to recognize at the start that Katherine Tai will make exactly none of the big calls on trade.

That’s not a knock on her specifically. But as nearly always the case (and the Trump administration was a major exception, as its trade envoy, Robert Lighthizer, was a prime author of specific, central initiatives), these decisions will be made way above her pay grade – almost certainly by the President himself or Treasury Secretary-designate Janet Yellen, or a combination of those two, along with the various special interests they need to please.

Even so, Tai will play an important message-bearing and policy defense role, especially in testimony before Congress, and in this vein, her first effort following her brief remarks following her nomination announcement got the Biden team’s record off to a start just ever so slightly above “same-old-stuff” level.

Most noteworthy, puzzling, and perhaps revealing was the choice of audience: the National Foreign Trade Council. For with its membership consisting of U.S. multinationals and big firms from highly protectionist economies like Germany and Japan, it’s long been a pillar of the corporate Offshoring Lobby.

Sure, many of these members have started to voice complaints about their China-related troubles in particular. But they’ve made equally clear that they have no clue as to realistic ways of solving them. In fact, their dogged opposition to unilateral, Trump-like U.S. tariffs as remedies (which have sharply curbed the access to the American market of their overseas production, and the availability of massively subsidized Chinese inputs for their domestic operations) has rendered them big obstacles to the remaining overhaul national trade policy needs.

It’s also true that everything known about Biden’s own long record on the matter, and his own statements during the campaign, makes clear the incoherence – and just as likely cynicism – of his own current stated approach (notably, stressing the imperative of working with – deeply conflicted and chronically fence-sitting — American allies to counter China’s trade and broader economic abuses).

Even so, given the pains Biden took to portray himself as “Middle Class Joe” whose trade initiatives and related decisions would prioritize American worker interests above all else, it needs to be asked why, from a purely political standpoint, his choice for trade negotiator chose an audience whose members have long pushed for exactly the opposite. Why not appear before a union audience?

Just as bizarre, Tai emphasized to these died-in-the-wool offshorers that “The President-Elect’s vision is to implement a worker-centered trade policy. What this means in practice is that U.S. trade policy must benefit regular Americans, communities, and workers.”

What did she and her superiors (who of course cleared her remarks) hope to accomplish with this declaration? Agreement? Or even the beginnings of theological conversion?

Weirder still: Her observation that “people are not just consumers — they are also workers, and wage earners” and, more pointedly, that when thinking about trade, it’s crucial to emphasize that “Americans don’t just benefit from lower prices and greater selection in shops and markets.” After all, her boss emphasized throughout the campaign that “President Trump may think he’s being tough on China. All that he’s delivered as a consequence of that is American farmers, manufacturers and consumers losing and paying more.”

It’s of course possible that Biden and his team could figure out a way to shield the entire U.S. domestic economy, from Chinese – and other countries’ – predatory practices without reducing the price competitiveness of these imports in the U.S. market. But it’s suggestive at the very least that after months on the campaign trail – and many decades in public life – the President-Elect has offered no specifics. And Tai’s speech did nothing to clear up this mystery.

(Not that there’s been any sign of noteworthy trade-related inflation during the “trade war” period – as shown, e.g., here – but one way greatly to boost the odds that tariffs don’t send prices upward would be to accompany trade restrictions with greater anti-trust enforcement that increases domestic competition, as I’ve argued here.)      

Tai advertised her and the broader Biden trade policy points as part of the former Vice President’s promise to “Build Back Better.” So far, though, the most charitable description of these is actually more like “Pretend More Assertively.”

Im-Politic: Looking Backward and Forward on Trump and Trumpism

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cancel culture, Capitol Hill, Capitol riots, China, climate change, Congress, Conservative Populism, Constitution, Democrats, election 2016, election 2020, election challenge, Electoral College, establishment Republicans, Hillary Clinton, identity politics, Im-Politic, Immigration, impeachment, incitement, insurrection, Joe Biden, Josh Hawley, left-wing authoritarianism, mail-in ballots, nationalism, Populism, Republicans, sedition, separation of powers, tariffs, Ted Cruz, Trade, trade war, Trump, violence

(Please note: This is the linked and lightly edited version of the post put up this morning.)

The fallout from the Capitol Riot will no doubt continue for the foreseeble future – and probably longer – so no one who’s not clairvoyant should be overly confident in assessing the consequences. Even the Trump role in the turbulent transition to a Biden administration may wind up looking considerably different to future generations than at present. Still, some major questions raised by these events are already apparent, and some can even be answered emphatically, starting off with the related topic of how I’m viewing my support for many, and even most, of President Trump’s policies and my vote for him in both of his White House runs.

Specifically, I have no regrets on either ground. As I’ll make clear, I consider Mr. Trump’s words and deeds of the last few weeks to represent major, and completely unnecessary, failures that will rightly at least tarnish his place in history.

All the same, legitimate analyses of many developments and resulting situations need to think about the counterfactual. Here, the counterfactual is a Trump loss to Democratic presidential nominee Hillary Clinton in 2016. And I’m confident that her presidency would have been both disastrous in policy terms (ranging from coddling China to moving steadily toward Open Borders immigration policies to intervening militarily more often and more deeply in numerous foreign conflicts of no importance to the United States) and heatedly divisive in political terms (because of her grifting behavior in fundraising for the various supposedly philanthropic initiatives she started along with her husband, former President Bill Clinton; because of her campaign’s payment for the phony Steele dossier that helped spur the unwarranted and possibly criminal Obama administration investigation of the Trump campaign; and because of intolerant and extremist instincts that would have brought Identity Politics and Cancel Culture to critical mass years earlier than their actual arrivals).

As for the worrisome events of the last several weeks:

>As I’ve written, I don’t regard Mr. Trump’s rhetoric at his rally, or at any point during his election challenges, as incitement to violence in a legal sense. But is it impeachable? That’s a separate question, because Constitutionally speaking, there’s a pretty strong consensus that impeachment doesn’t require a statutory offense. And since, consequently, it’s also a political issue, there’s no objective or definitive answer. It’s literally up to a majority of the House of Representatives. But as I also wrote, I oppose this measure.

>So do I agree that the President should get off scot free? Nope. As I wrote in the aforementioned post, I do regard the Trump record since the election as reckless. I was especially angered by the President’s delay even in calling on the breachers to leave the Capitol Hill building, and indeed the entire Capitol Hill crowd, to “go home.” In fact, until that prompting – which was entirely too feeble for my tastes – came, I was getting ready to call for his resignation.

>Wouldn’t impeachment still achieve the important objective of preventing a dangerously unstable figure from seeking public office again? Leaving aside the “dangerously unstable” allegation, unless the President is guilty (as made clear in an impeachment proceding) of a major statutory crime (including obstruction of justice, or incitement to violence or insurrection), I’d insist on leaving that decision up to the American people. As New York City talk radio host Frank Morano argued earlier this week, the idea that the Congress should have the power to save the nation from itself is as dangerously anti-democratic as it is laughable.

>Of course, this conclusion still leaves the sedition and insurrection charges on the table – mainly because, it’s contended, the President and many of his political supporters (like all the Republican Senators and House members who supported challenging Electoral College votes during the January 6 certification procedure) urged Congress to make an un-Constitutional, illegal decision: overturning an election. Others add that the aforementioned and separate charge not includes endorsing violence but urging the January 6 crowd to disrupt the certification session.

>First, there’s even less evidence that the lawmakers who challenged the Electoral College vote were urging or suggesting the Trump supporters in the streets and on the lawn to break in to the Capitol Building and forcibly end the certification session than there’s evidence that Mr. Trump himself gave or suggested this directive.

>Second, I agree with the argument – made by conservatives such as Kentucky Republican Senator Rand Paul (often a Trump supporter) – that authorizing a branch of the federal government unilaterally to nullify the results of elections that the Constitution stipulates should be run by the states is a troubling threat to the Constitutional principle of separation of powers. I’m also impressed with a related argument: that sauce for the goose could wind up as sauce for the gander.

In other words, do Trump supporters want to set a precedent that could enable Congress unilaterally to overturn the election of another conservative populist with something like a second wave of Russia collusion charges? Include me out.

>Further, if the Trump supporters who favored the Electoral College challenge are guilty of insurrection or fomenting it, and should be prosecuted or censured or punished in some way, shouldn’t the same go for the Democrats who acted in the exact same ways in other recent elections? (See here and here.) P.S. Some are still Members of Congress.

>Rather than engage in this kind of What About-ism, and help push the country further down the perilous road of criminalizing political behavior and political differences, I’d much rather consider these challenges as (peaceful) efforts – and in some cases sincere efforts – to insert into the public record the case that these elections were marred by serious irregularities.

>How serious were these irregularities? Really serious – and all but inevitable given the decisions (many pre-pandemic) to permit mass mail-in voting. Talk about a system veritably begging to be abused. But serious enough to change the outcome? I don’t know, and possibly we’ll never know. Two things I do know, however:

First, given the thin Election 2020 margins in many states, it’s clear that practices like fraudulent vote-counting, ballot-harvesting, and illegal election law changes by state governments and courts (e.g., Pennsylvania) don’t have to be widespread. Limiting them to a handful of states easily identified as battlegrounds, and a handful of swing or other key districts within those states, would do the job nicely.

Second, even though I believe that at least some judges should have let some of the Trump challenges proceed (if only because the bar for conviction in such civil cases is much lower than for criminal cases), I can understand their hesitancy because despite this low-ish bar, overturning the election results for an entire state, possibly leading to national consequences, is a bridge awfully far. Yes, we’re a nation of laws, and ideally such political considerations should be completely ignored. But when we’re talking about a process so central to the health of American democracy, politics can never be completely ignored, and arguably shouldn’t.

So clearly, I’m pretty conflicted. What I’m most certain about, however, is that mass mail-in ballots should never, ever be permitted again unless the states come up with ways to prevent noteworthy abuse. Florida, scene of an epic election procedures failure in 2000 (and other screwups), seems to have come up with the fixes needed. It’s high time for other states to follow suit.

As for the politics and policy going forward:

>President Trump will remain influential nationally, and especially in conservative ranks – partly because no potentially competitive rivals are in sight yet, and possibly because Americans have such short memories. But how influential? Clearly much of his base remains loyal – and given his riot-related role, disturbingly so. How influential? Tough to tell. Surely the base has shrunk some. And surely many Independents have split off for good, too. (See, e.g., this poll.) Perhaps most important, barring some unexpected major developments (which obviously no one can rule out), this withering of Trump support will probably continue – though the pace is tough to foresee also.

>The Republican Party has taken a major hit, too, and the damage could be lasting. In this vein, it’s important to remember that the GOP was relegated to minority status literally for decades by President Herbert Hoover’s failure to prevent and then contain the Great Depression. Those aforementioned short American memories could limit the damage. But for many years, it’s clear that Democratic political, campaigns, and conservative Never Trumper groups like the Lincoln Project, will fill print, broadcast, and social media outlets with political ads with video of the riot and Mr. Trump’s rally and similar statements, and the effects won’t be trivial.

>What worries me most, though, is that many of the urgently needed policies supported and implemented by the Trump administration will be discredited. Immigration realism could be the first casualty, especially since so many of the establishment Republicans in Congress were such willing flunkies of the corporate Cheap Labor Lobby for so much of the pre-Trump period, and Open Borders- and amnesty-friendly stances are now defining characteristics of the entire Democratic Party.

The Trump China policies may survive longer, because the bipartisan consensus recognizing – at least rhetorically – the futility and dangers of their predecessors seems much stronger. But given Biden’s long record as a China coddler and enabler, the similar pre-Trump views of those establishment Republicans, and their dependence on campaign contributions from Wall Street and offshoring-happy multinational companies, important though quiet backtracking, particularly on trade, could begin much sooner than commonly assumed. One distinct possibility that wouldn’t attract excessive attention: meaningfully increasing the number of exemptions to the Trump China and remaining metals tariffs to companies saying they can’t find affordable, or any, alternatives.

>Much of the political future, however, will depend on the record compiled by the Biden administration. Not only could the new President fail on the economic and virus-fighting fronts, but on the national unity front. Here, despite his reputation as a moderate and a healer, Biden’s charge that Republican Senators Ted Cruz and Josh Hawley have used Nazi-like tactics, and race-mongering comments accusing law enforcement of handling the overwhelmingly white Capitol Rioters more gingerly than the racial justice protesters earlier this year represent a lousy start. And as his harsh recent rhetoric suggests, Biden could also overreach greatly on issues like climate change, immigration, and Cancel Culture and Identity Politics. Such Biden failures could even shore up some support for Mr. Trump himself.

>How big is the violence-prone fringe on the American Right? We’ll know much more on Inauguration Day, when law enforcement says it fears “armed protests” both in Washington, D.C. and many state capitals. What does seem alarmingly clear, though – including from this PBS/Marist College poll – is that this faction is much bigger than the relatively small number of Capitol breachers.

>Speaking of the breachers, the nature of the crimes they committed obviously varied among individuals. But even those just milling about were guilty of serious offenses and should be prosecuted harshly. The circumstances surrounding those who crossed barriers on the Capitol grounds is somewhat murkier. Those who knocked down this (flimsy) fencing were just as guilty as the building breachers. But lesser charges – and possibly no charges – might be justifiable for those who simply walked past those barriers because they were no longer visible, especially if they didn’t enter the Capitol itself.

>I’m not security expert, but one question I hope will be asked (among so many that need asking) in the forthcoming investigations of the Capitol Police in particular – why weren’t the Capitol Building doors locked as soon as the approach of the crowd became visible? The number of doors is limited, and they’re anything but flimsy. The likely effectiveness of this move can be seen from an incident in October, 2018 – when barred Supreme Court doors left anti-Brett Kavanaugh protesters futilely pounding from the outside when they attempted to disrupt the new Supreme Court Justice’s swearing in ceremony. Window entry into the Capitol would have remained an option, but the number of breachers who used this tactic seems to have been negligible.

What an extraordinary irony if one of the worst days in American history mightn’t have even happened had one of the simplest and most commonsensical type of precaution not been taken.