Following Up: Woodward’s Globalist Bias

Tags

Alan Greenspan, Bob Woodward, economists, establishment, Fear, Financial Crisis, Following Up, globalism, Mainstream Media, manufacturing, North Korea, nuclear weapons, Robert Costa, South Korea, steel tariffs, Trade, Trump, Washington Week

I’m a long-time admirer of Bob Woodward, and so it’s disappointing to say the least that he’s just provided more evidence that his sensational (literally) new book Fear is as much of a Hail Mary to restore the (deservedly) shredded reputation of the nation’s bipartisan globalist policy establishment as an effort to portray “the real inside” story of the President Trump’s White House.

At this point, I should confess that I still haven’t read the book. But enough of it had come out through about a week ago that I felt justified in analyzing Woodward’s treatment of Korea-related trade and security issues and arriving at the above conclusion. The new evidence comes from the long-time Washington Post reporter’s interview this past Friday night on PBS’ Washington Week talk show, so it seems as an equally sound basis for judging Woodward’s thinking.

Korea issues again come into play, but so does the President’s recent decision to impose tariffs on most of the foreign steel attempting to enter the U.S. Market. Let’s look at Woodward’s assessment of the steel situation first.

The author’s first problem with the levies is his belief that they represent an instance of Mr. Trump’s alleged habit of “just [doing] what he wants; and he’ll listen up to a point, then he will dismiss….” This disquiet is easily dismissed itself, as it sounds like the President seeks advice from his advisers and then, after a finite period of time, decides what course he’ll take. What does Woodward think Mr. Trump is supposed to do? Listen indefinitely? Or until he’s convinced he’s wrong?

But the Woodward’s second problem with the steel tariffs is much more revealing of his own blinders – and therefore much more disturbing. Here it is:

“Now, if you took a thousand economists and say do steel tariffs make sense – and I quote a document in the book where experts on the left, the right, the economists, Nobel Prize winners, Alan Greenspan, Ben Bernanke, leading Democratic and Republican economists, send him a letter saying don’t do this; this will not work.  And, of course, he does it….

“But now we are in the world of these trade wars, which he says he thinks he can win.  Wow.  Danger, danger.”

In other words, Mr. Trump’s great crime is failing to listen to the supposed experts. I say “supposed” because the two he mentioned specifically – former Federal Reserve Chairs Alan Greenspan and Ben Bernanke – have little enough claim to minimal competence in their own economic specialty, monetary affairs. The former spearheaded the disastrous monetary and regulatory policies that helped trigger the world’s worst financial crisis and depression in decades. The latter was caught with his pants below his ankles when the crisis struck, and “solved” it by flooding the economy with so much new credit that it was bound to stay afloat. You needed a Ph.D. to pretend that money “does grow on trees”?

But according to Woodward, the President should have followed their recommendations on trade policy, about which they have no special credentials? For good measure, Greenspan knows about as much about manufacturing industries like steel as Hillary Clinton knows about winning presidential elections. After all, he’s the genius who once referred to manufacturing as “something we were terrific at fifty years ago,” and “essentially a nineteenth- and twentieth-century technology.” So please, Mr. Woodward, spare us the experts worship.

By contrast, Woodward’s latest Korea example warrants more concern about the President’s competence on the job and knowledge of the issues – but unwittingly exposes the status quo as just as worrisome. Woodward had reported that last December, Mr. Trump wanted to tweet that the dependents of the 28,000 U.S. troops stationed in South Korea would be evacuated. The problem with this tweet? In th author’s words:

“[J]ust at the time, the top North Korean leader had sent a message through intermediaries to H.R. McMaster, the national security adviser, on December 4th of last year saying if you start withdrawing dependents, we will take that as a signal that war is imminent.  Now, you have a volatile leader, Kim Jong-un.  He’s got these nuclear weapons and there’s no predictable path for understanding how he might respond.  And the Pentagon leadership went nuts about this and just said, you – and the tweet never went out, but had it, you know, God knows.”

If you actually start thinking about the Korea crisis, however, you recognize that the current situation is even more dangerous. For as I’ve repeatedly written, these U.S. forces are deployed to South Korea not to help South Korean forces repel a North Korean attack. They’re deployed to South Korea to serve as a tripwire whose impending defeat will create overwhelming political pressure on an American president to save the day by using nuclear weapons. And the presence of these soldiers spouses and children is being counted on to make this pressure completely irresistible.

As I’ve also written, when North Korea was unable to strike American territory with nuclear weapons of its own, this strategy arguably made sense. For the nuclear threat was likely to succeed in preventing that North Korean attack in the first place because carrying it out pose no risk to America’s core security.

Now, with the rapid recent (and apparently continuing) development of North Korean nuclear forces capable of reaching North America, those days of U.S. invulnerability are unmistakably nearly over, and the American troops’ presence in South Korea are putting U.S. cities in the line of nuclear fire. Worse, they are the only recognizable source of this danger – unless you believe that North Korea has a reason to launch an unprovoked nuclear attack on the United States, and sign its literal nuclear death warrant.

In other words, because the Korean peninsula remains such a powderkeg, and because the North’s leaders are so little known and unpredictable, the danger that Woodward’s Pentagon sources allegedly are so terrified President Trump might have created exist right now, have existed ever since North Korea’s progress toward producing nuclear weapons platforms with intercontinental capabilities became known, and will continue to exist as long as Mr. Trump keeps following the Pentagon’s advice and keeps any American military presence on the peninsula.

Ironically, moreover, the best guarantee of preventing a North Korean nuclear warhead from landing on American city or two is for the President to follow his instincts, pull the troops and their dependents out, and let the local countries take the lead in dealing with North Korea’s nuclear ambitions.

Something else disturbing about the Woodward Washington Week interview: Anchor the clear reverence for the globalist Washington establishment demonstrated also by the show’s moderator, Robert Costa, who, like Woodward, works for the Washington Post. It came through when Costa told Woodward that what most surprised him about the book was “the effort that’s being made by so many people around him to bring him back into the mainstream, back towards certain norms.” It came through in his reference to “keeping President Trump in line” and “keep Trump moving toward the center.” And it came through in his question to Woodward,

“Do the people around [Trump] who are taking documents off of his desk, different trade agreements the president’s trying to rip up, do they see themselves, when you talk to them, as heroes?  Or do they know they are, in a sense, mounting, as you call it, an administrative coup d’etat?”

What Costa, Woodward – and so many other Mainstream Media journalists – need to understand is that the “norms” reportedly being protected in Woodward’s book aren’t the Ten Commandments or any other code of decency, justice, or democracy. The administration officials reportedly defying the President’s wishes aren’t some modern collective embodiment of Moses. And the center isn’t ipso facto the location of policy wisdom, or even sanity.

Instead, the norms are positions developed by flawed and often self-interested human beings. More specifically, the administration’s Never Trump-ers could also be motivated by simple desires to protect and restore the positions of power, privilege, and wealth their kind enjoyed almost unchallenged until the Trump Revolution. And fetishizing the center amounts to judging these positions only by their relationship to other alternatives that may be widely voiced but also equally off-base, not by their relationship to realities on the ground.

That is, Woodward’s globalist sources for Fear need to be scrutinized just as thoroughly as the President they oppose – especially since their often catastrophic failures did much to put Mr. Trump in power. You could even write a book.

Advertisements

Following Up: Still Lots of Unanswered Questions About that Trump NAFTA Revamp

Tags

auto parts, autos, Canada, domestic content, Following Up, Mexico, NAFTA, national security, North American Free Trade Agreement, rules of origin, Trade, Trump, World Trade Organization, WTO

In recent days, the Trump administration has reached a trade deal with Mexico that either may or may not fundamentally rework the North American Free Trade Agreement (NAFTA). I say “may or may not” because above and beyond the question of whether the third NAFTA signatory, Canada, will actually go along, and whether Congress will agree to consider a bilateral as opposed to a trilateral deal, some of the most important provisions of the bilateral U.S.-Mexico pact remain unknown to the public.

In particular, it’s completely unclear what the United States and Mexico have agreed to regarding the rules of origin for automotive products traded within the NAFTA zone. In fact, it’s completely unclear whether what they reportedly have agreed to is an agreement at all.

To remind: The rules of origin specify how much of a product (in this case, most motor vehicles as well as all automotive parts) needs to be made inside North America in order to qualify for tariff-free treatment when its sold in any of the signatory countries. The idea – totally reasonable, in my opinion – is to make sure that as many of the benefits of a trade deal as possible flow to the signatories (which of course, legally need to incur all of the obligations) and don’t leak out to non-signatories (which of course legally need to incur none of the obligations).

Automotive trade is crucial in this respect because vehicles and parts combined last year made up nearly a third of all U.S. merchandise imports from Mexico, and (revealingly) 9.65 percent of the considerably smaller amount of U.S. goods exports to Mexico.

As I’ve repeatedly observed, the original NAFTA failed to achieve this objective. And the main problem was not the level of North American content required for duty-free treatment (62.5 percent). The main problem was that the penalty for ignoring the rules was so negligible (a 2.5 percent tariff). And it appears that even though the content requirement has been increased (to 75 percent), the meager penalty remains. Reportedly, it’s also the only obstacle to automakers ignoring the new requirement that 40 to 45 percent of a vehicle be made by workers earning at least $16 per hour.

So it’s entirely reasonable to finish most news accounts and conclude that the new U.S.-Mexico treaty will do little to achieve its stated goal of inducing automakers based outside North America to move production and jobs inside North America.

Complicating matters, though, are some wrinkles in the U.S.-Mexico deal that have been reported in the days since the agreement was first announced. Principally, according to some news accounts, much higher 25 percent tariffs will be imposed on vehicles assembled in Mexico and sent to the U.S. market once the number of those vehicles exceeds 2.4 million. Therefore, the actual automotive rules of origin may well have been genuinely toughened.

Nevertheless, for several reasons, this conclusion, too, needs to be qualified. For Mexico exported only 1.8 million passenger cars and sport-utility vehicles to the United States last year. So its sales would need to rise considerably before that genuine toughening kicks in. Second – and again, reportedly – this provision of the agreement is contained in a side letter. The apparent failure to include it in the core text of the agreement raises questions about its enforceability – especially since the same reports indicate that under it, Mexico retains the right to challenge those higher tariffs at the World Trade Organization (WTO). Moreover, I’ve seen absolutely nothing about any quotas for imports of auto parts as such from Mexico – which are currently running at an annual rate topping $16 billion.

That could actually be good news for the United States – because the auto tariffs (again, reportedly) would be based on the U.S. trade law that authorizes Washington to impose levies based on national security considerations. Such trade curbs are legal under WTO rules because the creators of even this sovereignty-impinging arrangement recognized that no major powers would ever surrender their right to assess and act on their national security interests. It’s plausible, therefore, to believe that today’s WTO majority would shy away from challenging this kind of decision by Washington, however damaging it might be to their exports, for fear of provoking a U.S. walkout and thus the organization’s demise.

But there’s no guarantee of this outcome – especially if or when a more WTO-friendly administration replaces Mr. Trump’s in Washington.

It’s true that an eventual Trump decision to impose lofty national security-justified auto tariffs on non-North American auto-makers would render many of these questions moot – because even if Mexico was exempted, and those companies therefore could keep supplying the American market through that channel, they’d quickly run up against the quota (assuming of course that one exists).

Yet this auto tariff decision seems to lie pretty far down the road. In the meantime, the NAFTA decision continues to look pretty confusing. I’m just hoping that this post will make your confusion a little more informed.

Following Up: Why Auto Tariff Alarmism Just Got (Even) Sillier

Tags

automotive, autos, CNBC, consumers, Following Up, prices, Rick Santelli, tariffs, Trade, Trump

The claims just keep coming that President Trump’s threatened auto tariffs will cause vehicle makers to boost the prices paid by American consumers per vehicle by thousands of dollars. So does the evidence that such claims are “horse hockey” – to quote a memorable euphemism for “baloney” recently used by CNBC’s Rick Santelli (in a similar context).

As I noted in a post last Wednesday, this alarmism flies in the face of recent U.S. auto sales trends – which recently have been weak enough to force the companies to offer deep discounts to prop up their numbers and try to keep market share. As I’ve also noted, those trafficking in price hike fears either know nothing about business, or are trying to fool their audiences. For although producers’ costs of course influence consumer prices, the latter’s main determinant is what the former believe the market will bear. To believe otherwise is to believe that companies aren’t striving to maximize revenues and profits wherever and whenever possible. And by extension, it’s logically to believe that, although auto makers don’t believe their customers will pay those higher prices today, they’ll change their tunes as soon as vehicles become much more expensive.

Which brings us to the newest evidence – yesterday’s data on U.S. auto sales for June and for the first half of the year. Overall, they were up, and up nicely (especially for last month, when they rose year-on-year). But as always, you need to look under the hood. (Couldn’t resist!) And that’s when you encounter vital contrarian details provided by analysts at Cox Automotive.

According to the Associated Press’ coverage of their conclusions, the increases were driven by “low-profit sales to fleet buyers such as rental car companies, and retail sales to individual buyers were propped up by rising incentives such as rebates and subsidized leases.”

Indeed, said observed one Cox consultant, “Retail sales have been flat, and even those sales have been supported by incentives being up 6 percent.”

Does this sound like a market where big, sudden price increases have much chance of sticking? If you agree, I’d be happy to show you a bridge in Brooklyn that’s available for a song. And if you’re parroting this line, chances are you’d be a great used car salesman.

Following Up: My Maryland Hometown Approves Non-Citizen (Including Illegal Immigrant) Local Voting

Tags

Aaron Faulx, citizenship, democracy, diversity, Following Up, illegal immigrants, illegal immigration, immigrants, Immigration, Maryland, Pledge of Allegiance, Riverdale Park, voting

Monday night, the monthly legislative meeting of my hometown Riverdale Park, Maryland’s Town Council started off, as usual, with the pledge to the flag. A little less than two hours later, the Council voted 4-2 (with one abstention) to extend local voting rights to two categories of non-citizen residents (illegal and legal immigrants), and to 16-year olds to boot.

As RealityChek readers know, I wasn’t surprised by the final result – although the margin of defeat was narrower than I expected. Still, especially in light of the Pledge of Allegiance recited solemnly by Council members supporting this amendment to the Town Charter, and their backers in the audience, the voting decision was a (vigorous) head-scratcher. For it raises the most profound questions about to what exactly those in favor of non-citizen voting are vowing their loyalty.

As I wrote in that previous post, this form of voter expansion is completely inconsistent with arguments made – and with good reason – throughout American history since the era of the Founding. These arguments have held that a successful democracy cannot be created or maintained unless it’s based on a community of deeply shared ideas about democratic governance. In turn, it’s impossible to preserve this community and allow significant immigration flows unless newcomers receive extensive exposure to these values. Hence longstanding requirements that voting on the federal level be restricted to citizens, and that the naturalization process take several years. (As explained also in the post, the Constitution empowers the states to set election rules within their borders, and both historically and currently, some have decided ignore these claims and to permit non-citizen voting.)

Instead, the new Riverdale Park voting eligibility criteria specify that an applicant be a resident for a mere 45 days. Of course, even this threadbare requirement will be difficult at best to verify for illegal immigrants (along with their very identities). And it is utterly far-fetched to suppose that these verification goals can be achieved adequately with same-day registration of these voters.

But just as important, a 45-day local resident who could well have crossed the U.S. border not long beforehand cannot possibly be well-versed enough in the nation’s democratic values to qualify for the franchise – which is after all a right to make decisions with long-term implications for the community’s well-being. As for non-citizen legal U.S. residents, they either have not been present in the United States long enough to pass the national tests for citizenship (which include a five-year residency requirement), or they have chosen not to become citizens – and therefore join the national democratic community.

Is there any reason, however, to believe that the national residency requirement is inappropriate to apply on the municipal level? If so, none of the supporters of Riverdale Park voter expansion has mentioned it, and there’s no evidence that the subject even came up in discussion of the proposal among Council Members.

I sent my RealityChek post on the subject to all the Town Council members before the vote. Only two replied, and neither of them supported the amendment. In fact, I’ve only seen a single reference to the subject of a community of beliefs – in a lengthy and largely emotive ramble on non-citizen voting published by my Council Member, Aaron Faulx, in the April issue of the Riverdale Park government’s official bulletin. According to Faulx, “Our shared beliefs need to evolve toward inclusivity and engagement.”

He didn’t explain what he believes comprises these shared beliefs currently, much less why they’re flawed. But the shared beliefs he prizes are hollow at best and dangerously inadequate at worst. “Inclusivity” per se, after all, says nothing about substance. As a result, it seems to assume that even individuals who actively oppose each others’ most fundamental political and even philosophical principles can for any significant period of time work together to promote any version of common well-being – much less one bearing any resemblance to that which has served the nation so well for so long, though of course not perfectly. How on earth can that work? The only reasonable answer is, “It can’t.”

And if inclusivity per se (and its logical follow-on, “engagement”) cannot be treated as absolutes, then they inescapably need to be supplemented with some form of content. And just as logically, it can’t reasonably be assumed that those  unfamiliar with this content (through usually through no fault of their own to be sure) can instantly or quickly become familiar once they enter any political community – national, state, or local – from the outside. Some period of orientation – i.e., assimilation – is essential. And on a more practical level, some effective way of determining that the assimilation process has been completed is essential.

Reasonable people can disagree on the specifics of all of these procedural standards. But what is thoroughly unreasonable is insisting that they, and the institution of citizenship that necessarily incorporates considered procedural and substantive considerations alike, be dispensed with in the name of a mere shibboleth – whether “inclusivity” or its cousin, “diversity” – that has in and of itself has no organizational capabilities whatever. Even sadder is the seeming refusal of the “inclusivists” to recognize or admit that these related concepts of citizenship and voting rights have for decades (not long enough, to be sure!) been available totally irrespective of race, gender, or ethnicity.

So no wonder I found these “inclusivists’” recitation of the pledge to the flag Monday night so utterly ironic, and indeed bizarre – and why you should, too. For their stated views can only logically mean that they’re pledging allegiance not to a national political community worthy of the name, but to a certain tract of land and whatever agglomeration of individuals happens to be occupying it at any given moment. Why even continue to bother?

Following Up: More on the Trump Tariffs

Tags

aluminum, Australia, Canada, David J. Lynch, Defense Department, defense manufacturing base, downstream industries, European Union, Following Up, George W. Bush, Gordon Hanson, James Mattis, Kentucky, manufacturing, Mitch McConnell, multiplier, Paul Krugman, Paul Ryan, steel, steel-consuming industries, tariffs, terrorism, The New York Times, Trade, Trump, U.S. Business and Industry Council, United Kingdom, Washington Post, Wisconsin

I could spend all day today rebutting ignorant, biased, and simply inane commentary on President Trump’s Thursday announcement that stiff tariffs will be imposed on U.S. imports of steel and aluminum (along with watching the plethora of college hoops on TV today!). Instead, I’ll offer some follow-on thoughts to the tariff talking points I posted yesterday.

>The European Union in particular seems outraged by the Trump decision, and has threatened to retaliate with tariffs on its own on a wide range of products, including some from Wisconsin and Kentucky. These of course happen to be the home states of House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell. It’s an understandable, and certainly clever, impulse, and in 2003, something like it succeeded in convincing former President George W. Bush to lift steel tariffs he had imposed 18 months earlier.

Of course, Bush 43 was no Trump. He was a committed free trader and globalist, and/or agent of of America’s powerful corporate offshoring lobby. But here’s something that needs to be considered by Messrs Ryan, McConnell, and other lawmakers at whom the Europeans or other powers may take aim: What if, shortly after September 11, Osama Bin Laden had threatened to destroy major targets in their home states or districts unless the United States withdrew militarily from Afghanistan and left him alone. Would the affected legislators have run to the White House to plead for an abandonment in the war on terror? Not likely.

I know that war and economics are different (although given the importance of economic strength as a source of military strength and overall national success, the similarities and overlap are widely overlooked). But don’t doubt for a minute that American politicians’ reactions to these European threats will be watched closely in all the world’s capitals, and that signs of weakness will be factored into foreign decisions to abide by or violate current trade agreements at the U.S.’ expense, or take other measures to gain advantage in their own, American, or third-country markets that clash with free market and free trade norms.

So here’s hoping that American Members of Congress and Senators will show some backbone, and make clear to the nation’s trade partners that they won’t permit themselves and the country at large to be hanged separately.

>Speaking of hanging separately, quite naturally, U.S. steel- and aluminum-consuming industries are concerned that their global competitiveness will be harmed if they’re forced to use more domestic metal in their products. They need to keep two considerations in mind. First, if foreign governments are permitted by Washington’s inaction to dump major American industries like aluminum and steel out of existence, consuming sectors would be next in line. 

Second, there is indeed no inherent reason to make the consuming industries pay any penalty at all. When I was at the U.S. Business and Industry Council, which represented many steel-consuming companies and industry groups, we persuaded them that the best solution would be tariff protection for them as well. The tariff complaints coming from such sectors today reveals that the Trump administration hasn’t put this possibility on the table. That’s a major missed opportunity, and the President should realize that such offers not only can build support for the steel and aluminum tariffs. They can also expand the constituency for broader America First trade policies. (New Trump statements on possible auto tariffs make clear exactly the types of steps needed, although as is usually the case, they work best when applied across-the-board.)   

>Speaking of missed opportunities, here’s another (big) one – the handling of some allied countries’ indignation about being treated as threats to America’s national security because of their steel and/or aluminum shipments. In several major cases, these complaints could have been prevented had the administration recognized that Australia, Canada, and the United Kingdom are defined by American law as part of the nation’s defense “technology and industrial base.”

I’m not necessarily a supporter of this policy, but since it exists, these countries have an entirely legitimate point regarding their possible inclusion in the metals’ tariff regime. And the Trump administration should have explained to them that they were of course being exempted. Moreover, the Defense Department should have told the rest of the administration about the legal and legislative situation. Yet Pentagon chief James Mattis’ memo to his administration colleagues outlining his department’s position on the tariffs never mentioned it.

Not that these allied countries are entirely blameless for the row. They could have raised the issue when the prospect of sweeping U.S. tariffs was first raised. But all indications are that they preferred to grandstand.

>As should now be expected, the media coverage of the tariff controversy has often veered off into economics and policy La-La Land. Two of the funniest examples I’ve seen so far (and they’re nearly identical): criticizing the announced tariffs because they only boast the potential of bringing back high-value manufacturing to the United States instead of lots of industrial jobs.

Think I’m kidding? Here’s Washington Post correspondent David J. Lynch: “If tariffs prompt companies to move production back to the United States, they would likely opt for highly automated plants that require fewer workers. Trump’s tariffs ‘would bring back 21st-century factories where we lost 20th-century factories,” [economist Gordon] Hanson said this week at the National Association for Business Economics conference in Washington.”

Here’s no less than Nobel Prize-winning economist and New York Times columnist Paul M. Krugman: “[T]he tariffs now being proposed would boost capital-intensive industries that employ relatively few workers per dollar of sales; these tariffs would, if anything, further tilt the distribution of income against labor.”

What both authors are somehow missing is how manufacturing is valuable for much more than high wage employment. It’s long been the nation’s leader in productivity growth. It generates nearly 69 percent of private sector American spending on research and development. And don’t forget its high employment and output multipliers – which mean that each dollar of manufacturing output punches far above its weight in generation production and jobs elsewhere in the economy.

That last point is particularly relevant to Krugman’s claim about labor’s low share of national incomes. The manufacturing employment multiplier tells us that adding to industry in America – including capital-intensive industry – will promote employment in related sectors like logistics, plus revitalize the retail and other service sectors of the towns and cities and counties where the new factories are built. Those jobs may not pay as well as the manufacturing jobs lost. But they’re sure better than the economic death that often results when communities lose their factories.

Following Up: A Big China-Related National Security Hole May Get Plugged, and Trade Derangement Syndrome Keeps Spreading

Tags

CFIUS, China, Committee on Foreign Investment in the United States, consumers, East Asia-Pacific, Following Up, foreign direct investment, LG Electronics, manufacturing, Samsung, South Carolina, tariffs, technology, Tennessee, Trade, washing machines

Yesterday alone produced a news item that provides important grounds for hope that America’s policy toward China might finally be getting coherent, and one that shows that Mainstream Media coverage of international trade issues remains almost determinedly brain-dead. And conveniently, both items concern developments recently reported on by RealityChek.

The first came in The Wall Street Journal, and describes some important new provisions in legislation proceeding through Congress that would update the federal government’s standards for approving or blocking prospective foreign proposals to take over U.S. businesses with defense-related implications. The current process for screening such investment enables Washington to nix (and this is just an obvious hypothetical example) a Russian or Chinese proposal to buy a company that makes jet fighter craft.

Most cases examined by the inter-agency group that makes recommendations to the President for final action (the Committee on Foreign Investment in the United States, or CFIUS) aren’t such easy calls, which is precisely why lawmakers seem determined to expand the grounds for blocking potentially dangerous takeovers. That’s an idea I’ve long favored.

But at least as important is a provision in the bill that addresses a problem I’ve written on, but that Washington has been slow to recognize – even under the Trump administration. That’s the growing tendency of American technology companies to share their best knowhow with partners in places like China. In some cases, the U.S. firms voluntarily hand over the keys to these kingdoms. In others, they invest capital in Chinese start-ups and other ventures.

It’s true that the United States maintains a system for controlling exports of national security-related technology to problematic countries like China. But the proliferation of these corporate transfers and investments makes clear it’s too sieve-like. And plugging holes is particularly important now because China has so aggressively challenged America’s position as the lead power in the economically vibrant East Asia-Pacific region.

I’ve long opposed the U.S. strategy of maintaining major military forces in this far-off area decades after the Cold War’s end in order to fend off the Chinese and North Koreans. But if American leaders stay determined to ignore my advice (!), it’s nonsensical to keep pushing for bigger and bigger military budgets and stronger forces (in part to buttress its East Asia strategy) while allowing American companies in effect to help China strengthen the military against which Americans may fight. So let’s hope Congress sends a CFIUS reform bill to President Trump’s desk tout de suite.

The second, more dispiriting news item came from Reuters, and dealt with those tariffs Mr. Trump last week imposed on certain imported washing machines from South Korea. As I wrote on January 24, these actions seemed to infect officials in South Carolina with a case of Trade Derangement Syndrome – the utter mindlessness produced by announcements or fears of even small-scale restrictions on trade flows. In this case, South Carolina officials were criticizing the tariff decision even though it undoubtedly led one South Korean manufacturer – Samsung – to announce that it would begin producing washing machines in the Palmetto State, thereby avoiding the tariffs and creating hundreds of jobs for South Carolinians.

Yesterday, Reuters reported similarly looney reactions on the part of the other South Korean company fingered – LG Electronics. LG, too, clearly has been convinced by the prospect of tariffs to manufacture some of its products in the United States – in this case, in Tennessee. But the company clearly is not thrilled with the prospect. It’s grousing that, because of the tariffs, it will need to raise the prices it charges American consumers.

That’s pretty par for the course – though has anyone who’s bought a major appliance lately seen many producers or retailers that are full of confidence that they can charge more? But what was completely doofy was what the company spokesperson quoted by Reuters reporter David Lawder (with a figurative straight face) said next. He fretted that the price increase could cost the company market share, therefore reducing the demand for the new Tennessee factory’s products and for local workers. And then he noted that the costs could be long-lasting: “If you lose floor space at retail, it can take years to get it back.”

I don’t blame the LG spokesperson for trying to drum up American opposition to the tariffs any way possible. But maybe Lawder could have asked him why on earth the company would take actions that it’s admitting would lose it money – for “years”? Or pointed out that these adverse consequences do a great job of explaining why LG is not remotely likely to raise prices? Instead, Lawder simply permitted the LG flack to get away with arrant nonsense – and reinforced my claim that nothing, but nothing, is as badly, and as tendentiously covered by the media as anything having to do with international trade.

Following Up: Time for a “Truth in Testimony Act” for Think Tanks

Tags

business, civil society groups, Congress, corporations, data, exports, Following Up, globalization, idea laundering, imports, Jobs, labor unions, offshoring, statistics, think tanks, Trade, trade balances, transparency

So far, my work on the problems for our democracy caused by corporate- or other special interest-funded think tanks has emphasized that the media has a special responsibility – and ability — to help solve them. How? By making sure that whenever they quote staffers from these organizations as experts on this or that issue, they reveal who’s signing the tankers’ paychecks.

But another major segment of society also needs to play a role in preventing what I call think tank idea-laundering – posing as objective, academicky-type organizations in order to portray their staffs’ findings as the products of disinterested scholarly research rather than exercises in agenda-pushing. That segment is government.

Legislatures at the local, state, and federal levels should pass what might be called “Truth in Testifying Acts.” That is, whenever they invite input from think tanks in hearings they hold, or in public comment exercises they conduct, the law-making bodies should require these organizations to disclose all their funders with a financial stake in the subject being examined, or the decision that’s pending. As a result, the public or any other consumers of these analyses would have the information they need to judge how much credibility they feel the information deserves, and what kind of material has been deliberately exaggerated or spotlighted or downplayed or ignored altogether.

In fact, these requirements should be imposed on so-called civil society groups, foundations, labor unions, academic institutions, and business organizations, too. Sometimes their biases are obvious from their names, but only sometimes. Best to err therefore on the side of caution – and more disclosure.

Further, while we’re on the subject, I’d like to see something else added to these Truth in Testimony Acts, or follow-on legislation, which is especially relevant to the trade issues I follow so closely: requirements that business groups and their think tank fronts lay out comprehensively their own domestic and international operations and structures, and those of their major funders. They’re needed because representatives of these organizations have long gotten away with literal intellectual murder by presenting legislators with shamelessly cherry-picked data.

For example, when trade agreements and other trade policy decisions are being examined, it’s become standard operating procedure for witnesses in favor of greater liberalization to present figures on exports from the country as a whole, from individual states or Congressional districts (always of major concern to Senators and House members), or from whatever company or industry they represent. And typically, they’re allowed to ignore the import and trade balance sides of the equation. Talk about a total crock.

Similarly, these individuals and organizations are happy to report on how many workers they employ nationally, and in various states and localities, and how many of these jobs depend on exports at a given moment. But they have no interest in discussing how these trends have changed over time, or how many jobs and how much production they’ve sent overseas or have lost to imports, or how these situations have evolved, say, over the life of a certain trade deal.

The companies and industries justify this selectivity by contending that information on imports and offshoring is proprietary, and that keeping it confidential is crucial to their commercial success. That’s often true. But the Truth in Testimony Act should specify that if witnesses wish to keep close to their vest information on one side of the trade ledger (e.g., their firm’s imports), then they can’t brag about their performance on the other side (e.g., their firm’s exports). There’s simply no reason to allow these businesses to play, “Heads, We Win; Tails, You Lose.”

Nor need there be anything the slightest bit coercive about such requirements. If businesses and industries and their various representatives feel so strongly about the secrets to their success, they should be free to decline invites to appear before lawmakers.

Actually, I’d like to extend these requirements to the financial statements public companies need to file with the feds. As with their testimony, such businesses often include flattering trade-related information in quarterly and annual financial statements. If they’re not willing to give investors the full picture, they should need to drop the whole subject.

And why restrict such disclosures to public businesses? Companies of all kinds are required to report all sorts of information to Washington. Their submissions form the basis of much of the economic data that is made publicly available by the federal government. The shield of anonymity provided by the Census Bureau and other statistical agencies to prevent rivals from using the data to gain advantage is entirely reasonable from the standpoint of these businesses. But from a national standpoint, it makes no sense at all. Indeed, it puts policymakers and the public in the position of flying largely blind when it comes to evaluating the impact of trade policy decisions.

The same kind of problem is created by the narrow range of trade-related info that businesses are legally obligated to share. Why not force them to specify their job and production offshoring, the wages of their U.S. and overseas workers, their foreign and domestic procurement, the foreign and domestic content of their products, and similar statistics? And why not demand time series, so that long-term patterns can be identified?  BTW — content information has been required of auto-makers selling in the United States since the 1990s, so major precedent exists. 

The business secrets problem is easily solved: If all firms wishing the privilege of operating in the United States need to share the same information, no one company is put behind the eight-ball. And again, no coercion is involved. Companies would be perfectly free not to comply – and exit the world’s most lucrative market by far in the process. And what about the regulatory burden that would be placed on smaller firms? There’s a strong argument for exempting them, as larger firms dominate U.S. trade flows anyway.

Such a sweeping “Truth in Globalization Act” would probably be a heavier legislative lift than the “Truth in Testimony Act,” so I’d focus first on the former. But both are urgently needed to ensure the soundest possible U.S. policymaking process.  And how could anyone genuinely devoted to the national interest object?  

Following Up: Mercury News Treats H1B Debate as Non-News

Tags

Following Up, H1B, immigrants, Immigration, journalism, Mercury News, Neil Chase, Norman Matloff, Ro Khanna, Silicon Valley, tech, tech workers, workers

The story of the video of a major debate on U.S. immigrant tech worker policies that earlier this week looked like it was being kept under wraps now looks like the story of a video that never was – due to some astonishingly unenterprising journalism from the Mercury News, Silicon Valley’s main newspaper and therefore a leading source of information on the technology industry.

As RealityChek regulars know, the story began with a June 1 debate in Silicon Valley centering on the controversial H1B immigrant visas. Squaring off were the Valley’s new Democratic Member of Congress, Ro Khanna and Norman Matloff, a professor of computer science at the University of California, Davis. (A tech entrepreneur took part in the event, too, but in a minor way.)

Technology companies claim that the H1B and similar programs are crucial to accessing the world’s best talent. Critics charge that they’ve overwhelmingly been used to cut their costs by replacing native-born U.S. workers with much cheaper foreign counterparts. Khanna favors relatively modest changes to H1B policies; Matloff believes major surgery is needed.

Matloff, who’s become a valued friend of mine, has written that the event marked  the first time a debate has been held between an elected official and a researcher on the topic, a major event in that sense. (Khanna has not disagreed.) Matloff also noted that a videographer from the Mercury News was present and apparently recording the proceedings.

Yet the Mercury News failed to cover the debate and never posted a recording on its website. Matloff asked a reporter on the paper to find out why, and was told that a recording existed, but that “it was essentially scrapped as a standalone report, but there’s apparently a possibility that parts of it will be used in coverage of Rep. Khanna. Not sure the reason(s) for this…” Matloff then speculated that the paper failed to make the video public because Khanna performed poorly – leading the Mercury News, which editorially has sided with the tech industry on H1B and related issues, to consign it to non-event status.

I emphatically agreed that the video’s import deserved to see the light of day, and last Sunday urged the Mercury News to post it both to perform a public service on a major technology policy area and to affirm its journalistic chops. Gratifyingly, the post and follow-up tweets prompted Khanna readily to agree, and to call openly for the video’s posting. (For the record, he contends that it was Matloff who was highly ineffective.)

Two days later, Matloff and I got answers from Mercury News editor Neil Chase. In the version he sent Matloff, he wrote, “We had a photographer there who captured some still photos and some video for use with a future story, but we didn’t attend with the intention of taping the full debate and did not.”

Based on information Matloff had shared with me and my own journalistic experience, yesterday, I sent Chase the following email. I had hoped to get a response from him in time to prepare this post, but no such luck yet:

Dear Neil,

Many thanks for your comment to my blog and my apologies for the short delay in responding.  

I must confess, though, that the response leaves me somewhat mystified on two counts.

First, the statement that the Mercury News videographer did not “record the whole event” doesn’t track with an email from one of your reporters, Ethan Baron, to Matloff.  Baron said, in response to the latter’s query re the video’s availability, “it looks like the video was essentially scrapped as a standalone report, but there’s apparently a possibility that parts of it will be used in coverage of Rep. Khanna.”  Granted he’s conveying some uncertainty here. But Matloff also has written in his blog that “the videographer seemed to be taping continuously.”  In addition, Matloff noted that “the video cam [was] on a high tripod, seemingly much for an occasional clip.”

Similarly, it sounds odd, as your email indicates, to give the videographer the responsibility for choosing the portions of the debate to be shot.  Was this the case?  If so, what were the criteria used to determine what was captured?  Or were they simply taken to get a bit of file footage of each participant, irrespective of what they were saying at the time?  

Second, I certainly don’t mean to tell you how to do your job.  But as someone with a journalistic background, I’m hard pressed to understand the paper’s seemingly offhand attitude toward this event.  After all, the H1B issue has been described as crucial by the dominant industry in the region served by the Mercury News, and it’s surely of comparable importance to all your tech worker subscribers.  The new Congressman from your area, Rep. Khanna, has been touted by several national publications as a rising star in the Democratic party, and possibly all of national politics.  To his credit, he was willing to appear in public with an outspoken, prominent critic of the H1B and related programs – a rare event at the very least, according to Matloff.  And of course, H1B and other immigration issues have become even greater controversies nationwide since the last presidential campaign heated up.  So from all appearances, the leading paper of Silicon Valley would be expected to view the debate was highly newsworthy from the get-go.  And yet it seems from your email that no coverage was ever planned.  

Now it’s clear that some fur was flying at the event, and that Rep. Khanna and Matloff are begun feuding in public over what was said and over their qualifications to claim expert status on the issue.  I.e., because of this aftermath, their debate has become by any reasonable definition even more newsworthy.     

So I respectfully make the two following requests:

1. Would you check whatever video archive you have – including whatever the videographer might possess – to determine conclusively whether a full recording of the debate is indeed available?  (If not, I would hope to find out how it was disposed of, and why.)

2. Would you assign a reporter to cover this emerging Khanna-Matloff dispute — in which a local Congressman who’s increasingly prominent nationally has publicly gone after a critic on an issue that’s one of his top legislative priorities, and a major national concern?  The Mercury News would get an excellent scoop, and perform a valuable public service at the same time.  

Thanks for your consideration, and I look forward to your reply.

Sincerely,

Alan

As per the email, I’m still hoping that the Mercury News finds a recording and shares it, and that it reports on the differences between Khanna and Matloff, which cut to the heart of the debate on H1B and broader questions and arguments concerning the future of the domestic workforce in an age of rapid innovation. At a time when Fake News abounds, it would amount for welcome coverage of some real news.

Following Up: Progress in Freeing the Mercury News H1B Debate Video

Tags

Following Up, H1B, Immigration, Mercury News, Norman Matloff, Ro Khanna, Silicon Valley, social media, tech workers, Twitter

What a day it’s been for RealityChek on Twitter today! Yesterday, I posted on the peculiar failure of the Mercury News, the top newspaper in technology industry center Silicon Valley, to post a video it made of a landmark and apparently heated recent debate on the H1B visa program. Under this controversial feature of U.S. immigration policy, American employers can secure foreign workers they can demonstrate are needed because they boast special talents that generally can’t be found in the U.S. workforce.  

Thanks to this item, and to some tweets today, I seem to have persuaded the most prominent participant, Rep. Ro Khanna (D.-Cal.) to ask the paper to release the full version.

Another participant in the event, University of California, Davis computer science professor Norman Matloff, had already made such a request, but got a “Thanks, but no thanks”-type answer.

So this morning, I decided, via Twitter, to ask Khanna to join the campaign. It was great to see him respond, and after a few tweets back and forth, at about 1:45 PM EST, he declared, “I have told them [the Mercury News] I would welcome the release of the tape if they have one. I would love for this to be public. I’m all for transparency.” So let’s hope that a request from a Member of Congress will do the trick. And let’s also hope that the paper still has the video!

I’ve asked Khanna to let me know the Mercury News‘ answer as soon as he can, and of course, I’ll pass the word on to you – ideally with a link – right away. And FYI, you can get in on this kind of action first-hand yourself by following me at @AlanTonelson. As with RealityChek, feedback is always welcome, and that includes heavy doses of snark!

P.S. Just for a bit of context, a major point of contention between Khanna and Matloff is a bill sponsored by Democratic Senator Dick Durbin of Illinois and Republican Senator Chuck Grassley of Iowa that attempts to address H1B-related problems.  Khanna is another sponsor of the legislation; Matloff considers its remedies inadequate.

Following Up: Britain’s May is Moving – Though Too Slowly – to Define the Real Terrorism Problem

Tags

Barack Obama, Following Up, Islam, Islamism, London Bridge attacks, Manchester bombing, multiculturalism, Muslims, Susan Rice, terrorism, terrorists, Theresa May, This Week with George Stephanopoulos, travel ban, Trump, United Kingdom

British Prime Minister Theresa May’s remarks following Saturday night’s London Bridge attacks include one of the most forthright, perceptive, and necessary statements from an international leader (excepting President Trump) about the difficulties free societies face in combating terrorist acts committed by Muslims.

Specifically, these comments appear to recognize that these abominations are not simply the product of individuals having nothing whatever to do with their co-religionists, or with the supposedly peaceful, law-abiding, thoroughly assimilated – in other words, utterly unexceptional – communities they comprise. That is, May has closely approached stating that something is decidedly, and often dangerously, abnormal in too many of the Islamic neighborhoods and congregations found in the non-Islamic world, and particularly in the United Kingdom and in the rest of Europe.

As the Prime Minister declared, “While we have made significant progress in recent years, there is – to be frank – far too much tolerance of [Islamist extremism] in our country. So we need to become far more robust in identifying it and stamping it out – across the public sector and across society. That will require some difficult and often embarrassing conversations, but the whole of our country needs to come together to take on this extremism – and we need to live our lives not in a series of separated, segregated communities but as one truly United Kingdom.”

That last clause is extraordinarily important. As I wrote in the wake of last month’s suicide bombing in Manchester, the United Kingdom has officially glorified multiculturalism to such a degree that it has encouraged in many ways the emergence of Muslim population clusters with considerable degrees of autonomy from even the legal system – let alone the values – that holds in the rest of the country.  

May unmistakably has now attacked those policies, and by extension the assumption behind them:  that many of the core teachings of Islam are no better and no worse than those developed in the British Isles throughout their long history. They are simply different. As a result, if certain Muslims living in Britain wish, say, to govern family life with the precepts of their faith rather than British law, they should enjoy ample freedom to do so. Indeed, denying them these rights in the absence of clear and present dangers to – to what, it’s not entirely clear; certainly not the freedoms enjoyed in Britain by other individuals, like women – would be the antithesis of liberty and tolerance.

Yesterday, May strongly suggested that in practice, this segregation has created major dangers at least to national security and public order. And she deserves immense credit for recognizing that, however “difficult and embarrassing” pluralistic democracies like her country may find creating a more united United Kingdom, a concerted effort must not only be made – it must succeed.

Nevertheless, I worry that May herself is still a bit too embarrassed to identify the main problem. For along with describing the enemy belief system as “Islamist,” she also insisted that “It is an ideology that is a perversion of Islam.” Which, if you view as legitimate her alarm at segregated Muslim communities, is a little too neat.

After all, if extremist Islamism indeed “perverts” Islam, presumably this offense would be readily apparent to the vast majority of Muslims themselves. And not only would these segregated communities refuse to tolerate it, and be joining with the national authorities in “identifying it and stamping it out” (May’s own words, as per above). An outraged Muslim majority would be taking the lead in these matters.

But nothing could be more obvious than the general failure of Muslims anywhere to fit this description. Instead, as the Prime Minister herself complains, there has been “too much tolerance,” and the most dangerous manifestations are in those communities whose segregated nature produces Islam in a form relatively un-polluted by British and other non-Islamic values (whatever you suppose them to be).

So May has a ways to go before the clarification of thought that necessarily precedes any course of action with a reasonable hope for success. But she’s clearly much further along than much of the American leadership class. Take Susan E. Rice, national security adviser to former President Obama. On ABC’s This Week with George Stephanopoulos, she was asked about President Trump’s proposal to suspend travel to the United States from a handful of majority Muslim countries that the Obama administration itself viewed as either overrun with terrorists or ruled by terrorist-sponsoring regimes. She explained her continued opposition (which is also shared by her former boss) in part this way:

“[I] think there’s a very real risk that by stigmatizing and isolating Muslims from particular countries and Muslims in general that we alienate the very communities here in the United States whose cooperation we most need to detect and prevent these homegrown extremists from being able to carry out the attacks.”

Leave aside your views on the travel ban proposal for or against. First of all, I’ve never been comfortable with the suggestion just made above (and by so many others) that there’s something fundamentally acceptable about residents of the United States (and especially citizens) conditioning their cooperation with law enforcement authorities that are combating violence on whether or not they feel stigmatized in some way by Washington, or any level of government. Are you? And remember – nearly all Muslims resident in the United States live here legally, so it’s not as if they need fear deportation like so many illegal Hispanic residents, or Hispanics here legally here with illegal friends or relatives.

But more important is Rice’s obliviousness to a glaringly obvious implication of her statement: Why, in the first place, are Muslim communities “the very communities here in the United States whose cooperation we most need to detect and prevent…homegrown extremists from being able to carry out the attacks”? It’s because so many of the actual attackers and attacker wanna-bes are coming from those communities. Obviously something about them has gone seriously wrong.

I’m not saying I know exactly what needs to be done domestically on top of existing efforts, and how new programs can be squared with essential Constitutional protections. It’s also clear that the United States doesn’t have the kind of related assimilation-segregated communities problems plaguing the United Kingdom and so much of Europe. But I do know that the more solidly the more extreme versions of multiculturalism take root in America, the larger these problems will grow. And the sooner the British more explicitly acknowledge major problems among their compatriots who practice mainstream Islam, the faster they’ll restore acceptable levels of safety to their concert halls, historic bridges, and the rest of their country.