Our So-Called Foreign Policy: At the WTO, Europe Claims a Right to Free Ride

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Charles Dickens famously observed that the law can be an idiot. Last week’s World Trade Organization (WTO) ruling on U.S. and European Union (EU) aerospace subsidies reminds that American alliance policy can be idiotic – and in a key respect has been for decades. The fault here lies not with the WTO – which is hardly beyond criticism. Instead, the problem entails an American approach to international security relationships that continues a decades-long record of enabling brazen free-riding even under the current U.S. administration – which so far has decried this practice only rhetorically.

Interestingly, the WTO decision last Friday looks like a big win for American aerospace giant Boeing and a big loss for its EU rival Airbus. The trade body ruled as still illegal only one of the original 28 subsidies provided Boeing by Washington state and the federal government that were challenged by Airbus. According to Airbus, the WTO agreed with its allegation that some of the other 27 means of Boeing support were subsidies, but Boeing says that since the ruling determined that these payments had not harmed Airbus, they can remain in place. Airbus disagrees, so expect more litigation.

But here’s what’s completely outrageous. Some of the subsidies Airbus successfully challenged – at least on paper so far – were U.S. Defense Department subsidies. It’s jaw-dropping enough to recognize that Airbus gets military support, too. What’s worse is that so much of the Pentagon money handed over to Boeing (and other defense contractors) has been spent on weapons and other military systems that the United States would not need at all or in such quantity either if Washington hadn’t taken on any role in protecting Europe for decades, or if the Europeans bore anything like an appropriate burden for the own defense.

And don’t forget: For decades, even most U.S. Presidents and other foreign policy establishmentarians who have assign supreme value to continuing current transatlantic security arrangements agree that too many European members of the North Atlantic Treaty Organization (NATO) have been shirking. Talk about biting the hand that shields you.

It’s important, however, to keep in mind who’s mainly to blame. It’s clear that the Europeans deserve no high marks for either gratitude or loyalty. But it’s also clear that their actions can be reasonably portrayed as legitimate efforts to maximize their own self interests – reflecting the equally reasonable judgment that these gambits long have been good bets to succeed.

What the American public needs to ask is (a) why their leaders have handled alliance relationships so ineptly as to have created expectations of free-riding that the WTO case shows are now seen as nothing less than a right to free-ride; and (b) whether the avowedly transactional Trump administration will view the EU defense subsidy charges as a long overdue opportunity to say enough’s enough.

Im-Politic: Russiagate Aside, the Economy Keeps Failing Too Many Americans

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On the off chance that the American political and chattering classes ever conclude that they might have responsibilities other than waging the Russiagate wars, some new Labor Department data might usefully remind them of the economic pressures faced by so many of their compatriots that resulted in the 2016 presidential vote producing such a stunning – and anti-establishment – upset. Because there are no signs that the situation has improved meaningfully since election day.

The figures describe trends in weekly wages in the United States county-by-county for the 344 largest American counties and how they changed between 2015 and 2016. They’re awfully revealing when viewed collectively, but they become especially illuminating when overlaid on the election results, and add to the case the fragile and/or falling living standards were major contributors to Donald Trump’s victory.

The headline wage development was that average weekly pay in the United States overall fell 1.5 percent between the fourth quarter of 2015 and the fourth quarter of 2016. As the Department put it:

This is one of only eight declines in the history of the series, which dates back to 1978. The 1.5 percent decline in average weekly wages was the largest decline since fourth quarter, 2011, when average weekly wages decreased by 1.7 percent. The most recent decline occurred in 2016, when the U.S. average weekly wage decreased 0.6 percent over the year.”

Even worse, this drop-off isn’t adjusted for inflation. Although by conventional measures, the cost of living hasn’t been rising much lately, it’s still been rising. So in real terms, weekly wages decreased still more. And it’s hardly a stretch to suppose that this development had more than a little something to do with so many voters’ willingness to roll the dice and put a political outsider and novice in the world’s most powerful position.

The correlation between economic distress and pro-Trump votes comes through much more clearly when broken down by county. But before examining these statistics, two big context-setting points need to be made.

First, according to the Associated Press, Mr. Trump won an astonishing 2,626 out of 3,113 total U.S. counties. His Democratic Party opponent, Hillary Clinton, won only 487. So candidate Trump triumphed in more than 84 percent of counties.

Second, however, as is not the case with, say, House of Representatives districts, the size of counties varies enormously. Just one example: As of 2006, the population of Los Angeles County (won by Clinton) was larger (10.29 million) than that of 42 states. And indeed, Clinton won the popular vote precisely because she won so many of those gigantic urban counties.

Still, looking at the 20 large counties where weekly wages fell and rose by the greatest percentages from late 2015 to late 2016 shows that the former heavily went for Mr. Trump and the latter for Clinton – a pattern similar to that demonstrated by state-level growth numbers I looked at recently. (The county-by-county vote total can be found on this New York Times interactive graphic.)

The specific numbers? Seven of the ten counties where weekly wages worsened the most went for the president in 2016; only three voted for Clinton. Of the ten second worst wage performers, six were won by Mr. Trump, three opted for Clinton, and election data was unavailable for one county (Anchorage, Alaska).

But in my view, the correlation between economic performance and Trump and Clinton voting shows up most strikingly when examining the winning counties. After all, Clinton won very few counties to begin with. In fact, on a percentage basis, her results in the worst performing large counties were better than her county-by-county results overall.

This was also the case with the large counties where wages rose the fastest on a percentage basis. But what stands out to me is the difference between the share of these counties the Democratic candidate won, and the share of total counties she won.

The Democratic candidate won six of the ten large counties where wages performed best, and eleven of the 17 “next ten” performers (there were several ties). In other words, Clinton captured nearly 63 percent of these winners, versus fewer than 16 percent of total counties large and small.

These data don’t conclusively resolve the debate over whether Mr. Trump’s appeal (and Clinton’s failure) was rooted in economic distress or other issues (racism, sexism, server-gate).  We’d need data going back farther than that. But they do underscore the continuing gap between the apparent priorities of official Washington and its various satellites on the one hand, and much of the public on the other. And they raise the question of whether, in 2018 and 2020, the voters will respond by throwing the rascals in both major parties out once again.

(What’s Left of) Our Economy: U.S. Productivity Remains in the Doldrums

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The Labor Department reported earlier this week that America’s labor productivity flat-lined at an annual rate between the last quarter of last year and the first quarter of this year. And relatively speaking, that was good news. The initial study of this measure of economic efficiency – and key determinant of the nation’s living standards – estimated that business labor productivity in the non-farm business sector (the government’s main proxy for the entire economy) fell at an annualized 0.6 percent.

Labor productivity, you may recall, is the narrowest of two measures of productivity. It gauges how much in the way of stuff or services Americans produce per hour of work from each worker. So the resulting picture isn’t as complete as that provided by multi-factor productivity – which as the name suggests looks at production per man or woman hour generated by many different inputs. But the labor numbers come out on a much timelier basis (each quarter), and for all the unusual amount of uncertainty that economists admit when they analyze productivity, they’re viewed as being reasonably reliable.

One small consolation, especially if you value manufacturing highly (as you should): Industry’s labor productivity not only grew quarter-to-quarter during the first three months of 2017 (by 0.50 percent annualized). It grew faster than the original estimate of 0.40 percent.

Manufacturing’s role as the economy’s productivity leader is also crystal clear upon reviewing the longer-term trends. During the 1990s expansion (as known by RealityChek regulars, comparing similar phases of the business cycle produces the most informative data), non-farm business labor productivity increased by 23.25 percent, while manufacturing labor productivity improved by 46.18 percent.

That recovery was America’s longest on record – just under ten years. The next expansion, during the bubble decade that preceded the financial crisis, lasted only six years. Non-farm business labor productivity rose by about the same annual pace as during the 1990s – 16.03 percent. But manufacturing labor productivity grew even faster year-by-year, advancing by 41.22 percent during the entire period.

The story is as different during this recovery as it is depressing. Although it’s so far been nearly as long as the 1990s recovery (having started nine years ago), the improvement in non-farm business labor productivity has been just 8.05 percent overall. For manufacturing, it’s been much higher – 21.55 percent – but relatively speaking, it’s a big fall-off.

Incidentally, undoubtedly one big reason for manufacturing’s excellent productivity performance during that bubble decade has to do with production offshoring. As I’ve written repeatedly, the way labor productivity is calculated results in productivity gains being recorded when businesses send jobs overseas, as well as when they use other techniques for saving labor or using their employees more effectively. And because the United States helped China enter the World Trade Organization at the start of that decade, and thus assured multinational companies that they’d remain overwhelmingly free to supply the American market from Chinese factories, that bubble decade was a major manufacturing offshoring decade.

The fall in productivity growth could indicate that, as widely claimed, manufacturing offshoring has dropped off significantly. But the evidence is mixed at best. What’s much more apparent is that, if Americans want their country’s productivity performance to rebound, they’ll press their leaders to make robust growth in domestic manufacturing a much higher priority.

(What’s Left of) Our Economy: Being Tom Friedman Means Never Having to Say You’re Sorry About China Trade

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Uber-pundit Thomas Friedman’s New York Times column this week about China demonstrated both that “better late than never” may not always be true, and that there’s precious little accountability in the Mainstream Media. Too bad he performed both vital tasks completely unwittingly?

As he traveled through China recently, Friedman told us, his conviction grew that, as President Trump has been charging, “China is not playing fair on trade and has grown in some areas at the expense of U.S. and European workers….” Moreover, he adds, this China challenge “needs to be addressed — now.”

Continued Friedman: “The core problem, U.S. and European business leaders based in China explained, is that when the U.S. allowed China to join the World Trade Organization in 2001 and gain much less restricted access to our markets, we gave China the right to keep protecting parts of its market — because it was a ‘developing economy.’ The assumption was that as China reformed and become more of our equal, its trade barriers and government aid to Chinese companies would melt away.

“They did not.”

And Friedman did a pretty good job of summarizing what RealityChek regulars and so many others have known for years – that China’s mercantilism became considerably worse.

The author ended his piece with a (sort of) ringing call for action: “China needs to know that some people who disagree with everything else Trump stands for — and who value a strong U.S.-China relationship — might just support Trump’s idea for a border-adjustment tax on imports to level the playing field.”

But Friedman also included this kicker: According to someone he called “the smartest person I know inside China on trade (who will have to go nameless),” such actions “if anything… may be too late.”

As the author’s reaction – “Ouch!” – suggests, there’s a distinct possibility that his source is right about the consequences of waiting sixteen years to grapple seriously with China’s predatory practices.

But here’s what Friedman didn’t tell you: One of the folks who pushed vigorously for the boneheaded American WTO decision was none other than Thomas Friedman! As he wrote in 2000, opponents of China’s admission, like U.S. labor unions, were “head-in-the-sand” protectionists. Nor did Friedman seem to think much of fears that “China’s entry into the WTO will make it a more formidable geopolitical rival to the United States.”

Instead, he confidently wrote that “to say that [admission] will hurt the cause of democratization in China or that it won’t help create more islands from which Chinese democrats can operate and more tools by which they can communicate, is to speak utter nonsense.”

Interestingly, by 2011, Friedman seemed to be having important second thoughts about China’s reformist intentions. But he still doggedly opposed meaningful actions to neutralize Beijing’s currency manipulation, for example, with tariffs.

Since no one likes to admit mistakes – especially whoppers – I can certainly understand Friedman’s failure to report his enthusiasm for a China trade strategy he now recognizes as a titanic failure. Much less clear is why so much of the rest of the Mainstream Media – and especially news talk shows who view him as a globalization oracle – keep giving him a pass.

Im-Politic: Deconstructing Obstruction of Justice

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There have been so many important economic and foreign policy stories to write about these days, and certainly RealityChek will be covering lots of them. But this of course is #ComeyDay, as they’ve said on Twitter, and I thought the most useful item I could post today would focus on one of the central questions raised by the Russiagate controversy: Has President Trump committed an impeachable offense?

Before beginning, though, it’s vital to recognize that although the Constitution provides for impeachment (and removal – they’re two separate matters) of government officials, including the president, on the grounds of “high crimes and misdemeanors,” the Framers never defined this term. Not surprisingly, legal specialists have made any number of convincing arguments for infusing these words with some specific content. But at least based on this Congressional Research Service survey, the consensus seems to be that “high crimes etc” mean anything that a majority of the House of Representatives (which impeaches) and two-thirds of the Senate (which conducts the trial, and whose guilty verdict on any specific charges, or “articles” results in removal from office) believe it means.

So legally and Constitutionally speaking, the debate on whether the president is guilty of the specific crime of obstruction of justice is beside the point. Politically speaking, though, finding this kind of actual violation of criminal law would make impeachment and removal votes much easier to justify for lawmakers when they face the electorate.

The main evidence so far in favor of an obstruction charge consists of two claims made by Comey under oath in his opening statement today to the Senate Select Committee on Intelligence. First, according to the former FBI Director, in a one-on-one February 14 Oval Office meeting, Mr. Trump made the following comments about the bureau’s probe of former White House national security adviser Michael J. Flynn:

‘He is a good guy and has been through a lot.’” He repeated that Flynn hadn’t done anything wrong on his calls with the Russians, but had misled the Vice President. He then said, ‘I hope you can see your way clear to letting this go, to letting Flynn go. He is a good guy. I hope you can let this go.’”

Second, in phone calls with the president on March 30 and April 11, Comey said Mr. Trump referred to a “cloud” that was undermining presidency’s agenda that he wanted Comey’s help in lifting. In the first phone call, according to Comey,

the President called me at the FBI. He described the Russia investigation as ‘a cloud’ that was impairing his ability to act on behalf of the country. He said he had nothing to do with Russia, had not been involved with hookers in Russia, and had always assumed he was being recorded when in Russia. He asked what we could do to ‘lift the cloud.’ I responded that we were investigating the matter as quickly as we could, and that there would be great benefit, if we didn’t find anything, to our having done the work well. He agreed, but then re-emphasized the problems this was causing him.”

Comey added that President Trump “finished by stressing “the cloud” that was interfering with his ability to make deals for the country and said he hoped I could find a way to get out that he wasn’t being investigated.”

In the April 11 call, Comey stated that Mr. Trump

asked what I had done about his request that I ‘get out’ that he is not personally under investigation. I replied that I had passed his request to the Acting Deputy Attorney General, but I had not heard back. He replied that ‘the cloud’ was getting in the way of his ability to do his job. He said that perhaps he would have his people reach out to the Acting Deputy Attorney General. I said that was the way his request should be handled. I said the White House Counsel should contact the leadership of DOJ to make the request, which was the traditional channel.”

It seems clear, therefore, that the “cloud” references concerned the president’s belief that Comey should have informed the public that he personally was not being investigated by the FBI for anything. That is, it had nothing to do with the Russiagate investigation or the separate Flynn investigation. And responding to separate questions from California Democrat Dianne Feinstein and Florida Republican Marco Rubio, Comey explicitly agreed.

The question still remains, however, of whether Mr. Trump’s Flynn comments constitute obstruction. At this point, definitive answers aren’t possible. For one, the president’s personal attorney has denied Comey’s claim that any such Flynn-related statements were made at all. For another, as all the legal community seems to agree, obstruction of justice is a complicated act consisting of numerous criteria that need to be met. But what’s certainly noteworthy for the time being is what Comey himself has said about the matter – and what he hasn’t said.

It’s important to observe that Comey at one point did indeed tell the Senate panel, that although he found the Flynn remarks “very disturbing, very concerning,” he also said

I don’t think it’s for me to say whether the conversation I had with the president was an effort to obstruct….that’s a conclusion I’m sure the special counsel will work towards to try and understand what the intention was there, and whether that’s an offense.

Considering Comey’s willingness to expound at great length last July on Democratic presidential candidate Hillary Clinton’s innocence of the charge of criminally mishandling classified information on her personal server, that sounds coy at very best.

In addition, Comey was given repeated chances to characterize the Flynn statements as obstruction. For instance, Idaho Republican James Risch asked him whether the president “directed” or “ordered” him to “let it go.” Comey responded, respectively, “Not in his words, no” and “those words were not an order.”

Comey then added that “I took it as a direction” because “this is a president of the United States with me alone saying I hope this. I took it as, this is what he wants me to do. I didn’t obey that, but that’s the way I took it.”

Also pertinent: In response to a question from Rubio, Comey said that President Trump never asked him to “let go” the Flynn investigation after the February 14 meeting. Moreover, Comey told Republican James Lankford of Oklahoma that neither any White House nor Justice Department staffers, nor the heads of any of the intelligence agencies ever mentioned to him dropping the Flynn probe.

As Lankford concluded: “The key aspect here is if this seems to be something the president is trying to get you to drop it, it seems like a light touch to drop it, to bring it up at that point, the day after he had just fired Flynn, to come back here and say, I hope we can let this go, then it never reappears again.”

Keeping in mind that other shoes could always drop, that’s an observation I hope will remain front and center as the Russiagate probes – and press coverage – drag on.

(What’s Left of) Our Economy: April’s U.S. Trade Figures Sure Weren’t Winners

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Since last Friday was one of those days when both the U.S. jobs figures and trade figures were released the same morning, and since I was traveling that day, I didn’t get a chance to report on the latter as promptly as usual. But that doesn’t mean the trade figures should be overlooked! Here’s a quick rundown of the high- (or low-) lights, which cover the month of April:

>The combined goods and services U.S. trade deficit rose by 5.15 percent on month, from $45.28 billion to $47.62 billion. But for a change, the big news in this total trade shortfall category was in the revision for the March gap – it was upgraded from an initially reported $43.71 billion. That’s a ginormous 3.61 percent.

>Total exports fell sequentially in April by 0.25 percent, from $191.46 billion to $190.98 billion, and total imports increased from $236.74 billion to $238.59 billion, or 0.78 percent.

>And quite naturally, the March revisions were substantial, too. That month’s combined export total was upgraded by 0.25 percent, and the much larger combined import total revised up by 0.87 percent.

>Also disturbing about the new trade figures: They show that for the first four months of this year, the total trade deficit is up by 13.43 percent on a year-to-date basis. That’s more than four times as fast as the total economy grew between the first quarter of last year and the first quarter of this year (4.08 percent – both these figures are in pre-inflation dollars).

>With Germany’s trade policies in the Trump administration’s cross-hairs and therefore in the news, it’s noteworthy that the U.S. merchandise shortfall with Germany grew sequentially by 5.43 percent, to $5.48 billion in April. That’s the highest monthly total since last August’s $6.05 billion.

>U.S. goods imports from Germany fell by 4.11 percent sequentially, but America’s goods exports sank on month by 15.34 percent.

> At the same time, the Germany goods deficit is down by 5.24 percent year-to-date.

>Of America’s other major trade partners, only the merchandise deficit with China increased significantly on month – from $24.58 billion to $27.63 billion, or 12.42 percent.

>U.S. goods exports to China advanced by 2.22 percent, but imports rose by 9.55 percent.

>The U.S. merchandise trade deficit with China is 4.21 percent larger in the first four months of this year than it was the first four months of last year.

>The April manufacturing trade deficit of $70.31 billion was just 0.79 percent higher than March’s $69.76 billion. Manufactures exports were off by 7.91 percent sequentially, while the much greater amount of imports fell by just 4.27 percent.

>Year to date, the manufacturing trade deficit looks set to establish yet another annual record. At $276.12 billion, it’s already running 6.20 percent ahead of last year’s pace.

>For the first four months of this year, manufacturing exports are up by 3.44 percent, but imports are 4.64 percent higher.

>The story is even worse in high tech goods. The trade shortfall actual dipped by 0.49 percent on month in April – from $6.07 to $6.04 billion. Exports were 8.28 percent lower than in March, and imports were off by 7.01 percent.

>Year-to-date, however, the high tech trade gap is up by 36.69 percent – from $18.37 billion to $25.11 billion. Exports have inched up by 0.25 percent, but imports are 5.42 percent higher.

>The U.S. trade deficit in oil fell by a sharp 35.56 percent sequentially in April, from $8.43 billion to $5.43 billion – the lowest monthly total since last September ($5.13 billion).

>But the April non-oil goods deficit of $61.71 billion was 9.22 percent higher than March’s $56.50 billion. It was also the highest monthly total for this shortfall – which is heavily influenced by U.S. trade agreements and other trade policy decisions – since March, 2015’s $61.74 billion (the highest monthly figure in a data series that goes back to 1992).

>Moreover, in real terms, the April non-oil goods deficit climbed 7.62 percent on month, to $62.04 billion. That’s also the highest total since March, 2015’s $62.80 billion (which was another all-time high).

>Since the headline U.S. government data on changes in the gross domestic product (GDP) are adjusted for inflation, this lofty figure for the real non-oil goods deficit indicates that this Made in Washington shortfall’s growth will drag on economic growth in the second quarter of this year.

Im-Politic: Why Russiagate Could be a Never-Ending Story

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This morning’s Senate Select Committee on Intelligence hearings on some of the Russiagate scandal charges preoccupying Washington remind Americans once again how determined most Democrats are to continue what looks like a politically inspired, open-ended fishing expedition.

Don’t get me wrong: Russia’s interference with the 2016 presidential election (and apparently others before it) is a national security threat of the first order. Stronger official U.S. responses than we’ve gotten so far are essential. Moreover, since any Russian cooperation offered on common problems such as fighting terrorism isn’t an act of charity, and serves Russian interests, such sanctions need not upend such joint efforts.

At the same time, the intelligence community issued the public version of what it’s discovered months ago. It’s fine for Congress to conduct its own probes, but it’s unclear what Capitol Hill will find out about Moscow’s meddling that the CIA etc don’t already know.

In addition, of course it’s essential to know if President Trump or anyone connected with him or his campaign “colluded” with the Russians in this election interference, or if the chief executive and/or associates has tried to impede the executive branch probe of this subject that are underway. It’s also clear that not all the facts are in – or at least publicly divulged.

But I’m more convinced than ever that Democrats generally, for the foreseeable future, aren’t likely to take any official “No’s” for answers having just seen Virginia Senator Mark Warner query National Security Agency chief Admiral Michael S. Rogers and Director of National Intelligence Daniel Coats on reports that Mr. Trump tried to persuade them, respectively, to deny the existence of any collusion, and to intervene with Trump-fired FBI chief James Comey to “back off” an aspect of the agency’s Russiagate work.

After all, as I’ve written, though the Russiagate uproar has now lasted for months. But although President Trump’s opponents in the intelligence community clearly have absolutely no compunction about leaking the most sensitive national security material to cripple his administration, they’ve produced absolutely nothing in the way of a collusion smoking gun.

Today, Warner directly asked Rogers and Coats to confirm or deny those Trump interference charges – which of course raises the question of whether from now on, taxpayer funds are going to be spent running down every anonymously sourced allegation produced by every organ of the Mainstream Media. But whether you think this is a good use of lawmakers’ time or not, bear in mind how Rogers and Coats answered: Although both refused to disclose the details of any specific conversations they’ve had with the president, both also denied ever in their careers (including this year) having been asked or pressured to do anything improper regarding an investigation in progress.

Warner’s response? (And he’s far from one of the Democratic Party’s Maxine Waters-like yahoos.) “[H]e was ‘disappointed’ with the officials’ answers. He told Rogers the committee had ‘facts’ that other individuals were aware of his conversation with Trump and that a memo had been written about it.” But did Warner then go on to reveal those “facts”? No.

On Thursday of course Comey himself will appear before the Senate Intelligence Committee. In fact, the panel has just released his opening statement. My first read – and the reaction of the Twitterverse, for what it’s worth? No smoking gun confirming obstruction of justice charges – though Comey did describe his view of a key conversation with the president as “very concerning.” No matter. Based on his performance today, I expect Mark Warner and most of the rest of his party to make sure that Russiagate remains the (manufactured) political gift that keeps on giving.

(What’s Left of) Our Economy: JOLTS of Confusing News About the U.S. Jobs Market

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Since the U.S. economy has settled at its current level of near-full employment (at least by the official figures), the monthly JOLTS reports issued by the Labor Department have been attracting much less attention – including from me! After all, with so many Americans working, it’s been less important (though not totally unimportant) to learn about one of the key findings in each such survey of labor market turnover – how many new job opportunities business and government say they’ve been creating. 

So it’s not surprising that today’s JOLTS report (for April) hasn’t had much impact on the financial markets this morning. But it still contained more than its share of noteworthy results that reinforce what we think we already know about the economy’s current biggest problems, and that raise major questions about other portions of the conventional wisdom.

The overall job openings number, for example, was quite the stunner: At 6.044 million, it was an all-time high in absolute terms. (The JOLTS series dates from December, 2000.) And the 4.48 percent increase over May’s 5.785 million level represented the biggest monthly jump since last July’s 7.91 percent.

Openings in the private sector hit a new record in April, too (5.464 million). And that 4.20 percent monthly rise was the great sequential increase since last July (8.46 percent).

But as RealityChek regulars know, the economy’s growth has been sluggish even by the meager standards of the current economic recovery. In the first quarter of this year, real growth came in at a paltry 1.15 percent annual rate. So the JOLTS figures indicate that employers feel they need record numbers of new employees even though as a group their output is historically lousy.

That adds up to more evidence that American business boosting its productivity only sluggishly at best – which is awful news given that productivity growth is the nation’s best hope for improving living standards in a sustainable, not bubble-ized, way. And as I’ll be reporting on shortly, the latest government labor productivity numbers once more confirm that the economy is stuck in a productivity crisis.

Yet these JOLTS results carry more complicated implications for another broadly accepted feature of the American economy. They support the idea that U.S. businesses are struggling to overcome almost unprecedented labor shortages. How else to explain the enormous number of reported job openings? But companies that desperate to find workers should be raising wages at rapid and indeed accelerating rates. Everything that we know about hourly pay, though, tells us that nothing of the kind is happening. If anything, wage growth, which has underwhelmed throughout the current recovery, is showing signs of slowing.

One other new record revealed by today’s JOLTS report – total government job openings (540,000) have never been higher except in April, 2010, when the call went out for temporary Census workers. Even more interesting, most of the openings were in state and local governments outside the schools.

Also somewhat surprising: The “retail-pocalypse” so commonly bemoaned or hailed (depending on your viewpoint) is nowhere to be seen in this JOLTS report. Sure, retail job openings fell between March and April from 593,000 to 577,000. Moreover, that’s the lowest level since December, 2015, and the numbers now are generally, though unevenly, trending down. But for the first more than seven years of this nearly eight-year old recovery, they were trending solidly up. With overall economic growth down and consumers still cautious, the reported retail openings numbers are far from screaming “disaster!” – or even “serious trouble!”

Finally, although manufacturing output has been modestly recovering lately from its most recent recession, its job openings fell from 404,000 in March (the second highest record and best since January, 2001’a 496,000) to 359,000 in April. Still, the decline followed a major increase in March (from 364,000), and the manufacturing numbers have been pretty volatile for more than two years.

Maybe the safest conclusion to draw from the JOLTS numbers is that, for now, the economy is heading for more of the same. Whether that’s the safest result for incumbent American politicians is another matter entirely.

Making News: A New USAToday Op-Ed – & More!

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I’m pleased to announce the publication of my latest op-ed article – a piece that appears in USAToday this morning on President Trump’s criticisms of Germany’s trade policies. Here’s the link.

Incidentally, the article ran as a rejoinder to an unsigned USAToday editorial on the subject that also was published today.  The paper’s editors have been using this “pro-con” format for many years, and I think they deserve great credit for seeking out viewspoints with which they disagree.

In addition, a June 1 post on Lifezette.com included my (skeptical) opinions about claims that Mr. Trump’s withdrawal from the Paris climate change accord will cede global leadership on the issue to China.

Moreover, a May 25 Lifezette article quoted me on a new study finding that trade and offshoring have been responsible for much more manufacturing job loss lately than automation.

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

 

 

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

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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.