Following Up: Podcast Now On-Line of My Latest National Radio Appearance Warning of a Ukraine-Induced “Lehman Moment,” & the Video of My Talk on the Economic Competition America Really Needs

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America First, antitrust, competition, Following Up, Lehman moment, Market Wrap with Moe Ansari, monopoly, National Conservatism Conference, oligopoly, tariffs, Trade, Ukraine

Sorry for the loooong headline here, but it’s a daily double today.

First, I’m pleased to announce that the podcast is now on-line of my interview Wednesday night on the nationally syndicated “Market Wrap with Moe Ansari.” Click here, scroll down a bit to the link featuring my name, and then click on the little “POD” symbol. My segment starts at about the 22-minute mark, and what you’ll get is an unusually spirited debate on why the U.S.’ strong support of Ukraine might trigger exactly the kinds of calamities it seeks to prevent (see here for background), and why America’s torrid inflation isn’t likely to peak anytime soon.

Second, a video is now available of my presentation to last month’s important conference on the future of conservatism. Here’s the link to the talk. It made the case for U.S. national economic strategy emphasizes promoting more competition among America-based companies over the current approach – which bizarrely appears to value competition from abroad much more highly. (This recent post contains a lightly edited text of these remarks.)

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

Im-Politic: A New, Promising but Still Flawed Form of Conservatism

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abortion, America First, China, Christianity, conservatism, crime, culture wars, Dobbs v. Jackson Women's Health Organization, education, family policy, foreign policy, identity politics, Im-Politic, Immigration, industrial policy, inflation, national conservatism, politics, religion, Roe vs. Wade, sovereignty, Supreme Court, Trade, wokeness

Don’t get me wrong. It’s not like I’m not grateful to have been invited to last week’s third National Conservatism Conference. The interest displayed by this crowd in economic policy ideas that depart dramatically from the right-of-center’s longstanding free market dogmatism was especially gratifying, and there was no shortage of thought-provoking and compelling speakers.

It’s just that my four days at the session left me unconvinced that National Conservatism as it presently seems to be constituted can create or contribute to a winning American political coalition. The main problem: Most of those spearheading the drive to establish National Conservatism as a major national force haven’t recognized which culture wars they should be fighting, and which they shouldn’t — and how this failure to discriminate is endangering other objectives that the movement (and others) rightly deem crucial.  In fact, unhappiness expressed to me by more than a few conference attendees with the stances on social and cultural issues taken by those putative leaders make me skeptical that it’s a movement yet to begin with – or can be if their vision prevails.

The economic dimension of national conservatism, at least judging by the presentations and hallway conversations, is not only politically astute; it’s substantively sound. All the speakers who addressed these issues – including such nationally prominent figures like Florida Governor Ron DeSantis, and the state’s Republican Senators Marco Rubio and Rick Scott (the event was held in Miami) supported smarter, more restrictive trade and other economic policies (especially toward China), reduced immigration inflows and genuine border security, and federal policies to promote strategically important industries and to ease economic pressures on the middle and working classes.

The same goes for National Conservatism’s critique of the overly, and often recklessly, adventurist foreign policies pursued by the mainstreams of both major political parties for decades.

But the conference organizers and another set of speakers seem wed to other goals and measures that are already backfiring among the American electorate and that, intriguingly, clash with other elements of their agenda. The most important by far were near-total opposition to abortion and a determination to tout the United States as a “Christian nation.”

The political folly of these priorities couldn’t be more obvious. As I’ve written, there’s long been a strong national consensus favoring the right to an abortion early-ish during a pregnancy and then favoring broad restrictions later on with significant exceptions (rape, incest, life of the mother, health of the mother). Indeed, that’s why comparable majorities have supported maintaining the abortion policy framework established by the Supreme Court’s 1973 Roe vs. Wade ruling – which was entirely consistent with that common sensical compromise. P.S. Contrary to the claims of the extreme pro-lifers on an off the Court, Roe gave states plenty of latitude to enact all manner of abortion curbs. (The other major misconception or falsehood surrounding Roe comes from the pro-choice movement: It never established an unfettered right to an abortion.)

If you’re skeptical, consider that the day that a draft of the Supreme Court’s eventual decision striking down Roe was leaked to the press (May 3), Republicans held a 4.1 percentage point lead in the RealClearPolitics.com average of polls gauging the public’s preference for control of Congress in November’s midterm elections. The latest figures show Democrats with a 1.1 percentage point lead in the so-called Generic Ballot.

It’s true that abortion isn’t the only reason, that the actual votes determining control of Congress aren’t cast nationally but state-by-state, and that Republicans hold enough built-in advantages in the Congressional map to keep their hopes of prevailing very much alive. But the polls also show that the Court’s Dobbs decision, the enactment of and efforts to enact near-abortion bans in Republican-run states that the ruling has permitted, and GOP talk of more such moves (including on the national level) is increasing Democrats’ interest in voting and boosting the party’s prospects. (See, e.g., here.) And not so coincidentally, Republican candidates and leaders all over the country are backing away from hard-line anti-abortion positions.

Adamant opposition to abortion in practically all circumstances also seems to clash violently with other stated National Conservative positions. For example, many speakers at the conference emphasized their support for individual liberty. But what about the right of women uninterested in becoming mothers to lead the lives they wish? Even if the unborn must indeed be deemed human life very early in pregnancies, should the wishes of those women count for absolutely nothing the minute they conceive – and simply because they failed to take adequate precautions, or because precautions taken failed? According to many, and possibly most, at the conference, the answer is “Yes.”

The repeated references to America as a Christian nation are just as problematic. For reasons like those suggested above, if that’s a rationale for insisting that U.S. policies conform with scriptural teachings (and Section 4 of this “Statement of Principles” by the movement’s leading lights certainly suggests this “Where a Christian majority exists” – i.e. in most of the country), that simply won’t wash with big majorities of voters. But the historical arguments advanced for this view don’t impress, either.

Sure, the Founding Fathers were Christians, and for the most part, observant Christians at that. But so what? The England they came from was overwhelmingly Christian. What else realistically could they be? For similar reasons, the Founders were ovewhelmingly white, too. Does that mean that America should be seen as a Caucasian nation?

And does Christian dogma really deserve much credit for the ideals that make up the American creed of freedom of expression and conscience and other major liberties for the individual; representative, accountable government; equal justice under the law; and the like? Clearly, in most of Christendom at the time (e.g., Russia, Spain, Germany) these notions were unknown or actively rejected. Instead, the great American experiment in self-government is rooted in specifically English thought and practice. And ironically, the major contribution made by Christianity that hasn’t been present outside Europe has been the faith’s willingness to leave big swathes of human life to secular institutions and authorities (as in Jesus’ admonition to “Render to Caesar the things that are Caesar’s, and to God the things that are God’s.”)

Even worse, precisely because they’re so unpopular as well as intellectually feeble, National Conservatism’s focus on these particular culture wars is weakening the ability of the entire conservative movement (except the libertarians) to fight effectively the culture wars that must be fought – specifically, over woke school public curricula; the metastasis of left-wing authoritarianism in so many major, powerful American institutions; and the related spread of divisive identity politics.

I have nothing but respect for those National Conservatives I met – and other Americans – to declare that they’re less concerned with winning politically than with remaining true to their consciences. But their version of the perfect is shaping up as a powerful enemy of the good and formula for defeat – especially if they wish to contend, as they clearly do, in an arena that rightly values the art of the possible.

That’s why I was so encouraged to find out that many of those I met at the National Conservatism Conference agreed that hard-line anti-abortion stances and pro-Christian nation preaching need to be dropped if any of National Conservatism’s other worthy causes are to be advanced.

For me, nothing could be clearer than the following as a recipe for political victory and national well-being: focusing tightly in an America First-type way on  confining U.S. foreign policy to advancing and protecting U.S. sovereignty and core security (especially against foes like China), on taming inflation and building sustainable prosperity; on securing the border; on fighting crime; on removing propaganda from public schools; on preserving a strong voice for parents in their children’s education; and on resisting the intolerant woke and rigid identity politics ideologies being pushed by our most powerful institutions.

National Conservatism as it exists now is close to being on board. If it can go the extra mile, show better judgment politically, and accept a more inclusive, more historically accurate view of “Americanism,” I’ll be happy to join its ranks.

Our So-Called Foreign Policy: Toward Avoiding New Afghanistans

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Afghanistan, Al Qaeda, America First, Antony J. Blinken, Barack Obama, Biden, China, credibility, globalism, Jack Keane, jihadism, Our So-Called Foreign Policy, Taliban, terrorism, Washington Post

The humanitarian calamity seemingly sure to erupt in Afghanistan now that the Taliban have taken over means that this is no time for I-told-you-so-type gloating – even by long-time critics of U.S. military involvement and nation-building since these jihadist extremists were driven from power in late 2001.

So as one of those long-time critics, I offer the following two observations simply as an attempt to help avoid repeats of this disaster going forward. And interestingly, they’re both inspired by a single Washington Post article.

The first concerns a statement from early this month by a spokesman for the Chinese defense ministry. According to one Colonel Wu Qian, Washington “bears an unavoidable responsibility for the current situation in Afghanistan. It cannot leave and shed the burden on regional countries.”

There’s no doubt that the U.S. military withdrawal could have been handled much better – especially for the local U.S. allies who will be left to the mercy of violent, reactionary, misogynistic Islamists. In particular, as retired U.S. Army General Jack Keane asked on Friday, why did President Biden decide to complete the pullout in the middle of Afghanistan’s fighting season – when the weather is warm enough to permit aggressive, large-scale Taliban military campaigns? Why didn’t he wait till the winter – when, as has consistently been the case, the cold has prevented such operations?

But this notion that America “cannot leave and shed the burden on regional countries”? What on earth is Colonel Wu talking about? Not only can the United States do exactly that. It should have done exactly that long years ago, once the main mission was accomplished of ousting the Taliban regime that permitted Al Qaeda to turn the country into a base for launching terrorist strikes like the September 11 attacks.

And the reason is pretty simple: As I recently posted, Afghanistan is in China’s neighborhood. Not to mention Russia’s and Iran’s. And it’s as far away as it can be from America’s neighborhood. As a result, it’s always been the case that once the United States left, it would have been the regional countries’ burden, and therefore, these countries (which aren’t exactly weak mini-states) would have had no choice but to figure out how to deal with a Sunni Muslim jihadist-led country capable of causing big problems for all of them.

How could this be done? Frankly, that’s not America’s problem. Because the only valid reason Americans ever had to have any significant self interest in who runs Afghanistan had to do with its terrorist base potential. And once the Taliban was gone, along with the unique threat it posed of giving sovereign-state shelter to a terrorist organization, that challenge has always best been handled with a genuine America First strategy: genuinely securing the U.S. border (something Washington can reasonably hope to control) rather than (1) chasing jihadists around a Middle East so dysfunctional that it’s bound to keep breeding new extremist groups faster than existing groups can be neutralized by the American military; much less (2) trying to build nations where none have existed before.

At the same time, more than cynicism and opportunism may be responsible for that Chinese statement. For it comes against the backdrop of decades of Washington acting like Afghanistan’s political makeup and regional behavior indeed mattered more to the United States than it mattered to Afghanistan’s neighbors.

Just as important, the statement also comes against the backdrop of decades of pre-Trump, globalist U.S. politicians, like Mr. Biden, prattling on about how America is and must be the world’s leader and “indispensable nation.” It seems perfectly reasonable, therefore, to suppose that even countries like China, which clearly has some global leadership ambitions of its own, have taken the idea seriously, at least on some subliminal level. That is, the indispensable stuff looks like it’s backfired big-time in the case of Afghanistan. So maybe Washington, and especially the globalists, could bring such bloviation, and the cluelessness and hubris behind it, to an end?  

The second statement that I hope can guide wiser post-Afghanistan U.S. foreign policy decisions (sort of) came today none other than Secretary of State Antony J. Blinken. According to the Washington Post‘s account:

“…Blinken rejected criticisms that the withdrawal damages U.S. credibility. He said staying mired in a conflict that is not in the ‘national interest’ would do far more damage.

“‘Most of our strategic competitors around the world would like nothing better than for us to remain in Afghanistan for another year, five years, 10 years, and have those resources dedicated to being in the midst of a civil war,’ Blinken told CNN. ‘It’s simply not in our interest.'”

I said “sort of” because if you look at the transcript of the interview from which this statement came, Blinken didn’t make the global credibility connection explicit. But since Mainstream Media news organizations like the Washington Post play such a big role in creating dominant narratives on issues like this, he might as well have.

And this connection matters, because it essentially echoes my main point from yesterday’s post: America’s global credibility depends most not on trying to stamp out every foreign challenge that arises, and even less on sticking with obviously lost causes. In fact, pretensions of omnipotence that are just as obviously groundless, and an unwillingness to cut losses, are likeliest to be seen, and have been seen, as signs of lousy judgment.

The real source of U.S. global credibility is demonstrating the wisdom to avoid plunging into conflicts or problems in low priority areas in the first place, and correcting such mistaken moves ASAP.

Former President Barack Obama put it cogently: “Don’t do stupid sh– (stuff).” It seems like a low bar for American foreign policy to meet. But especially as long as the country is led by globalists – like Mr. Biden – who for decades characteristically have viewed security and prosperity as internationally seamless wholes that will unravel disastrously if a single thread becomes loose, any sign that his administration may be learning the Obama lesson is unmistakably encouraging.

Im-Politic: Biden’s Latest Americans Last Immigration Policy

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America First, Biden, Border Crisis, border security, Central America, Chobani, cities, corruption, crime, El Salvador, foreign aid, gang violence, governance, Guatemala, Honduras, Im-Politic, immigrants, Immigration, inequality, Kamala Harris, Mastercard, Microsoft, migrants, Northern Triangle, racial economic justice, urban poverty

As known by RealityChek regulars, I’m deeply skeptical that the Biden administration can bring migrant flows from Central America (or similar regions) under control by adequately improving the miserable local conditions that (understandably) drive so much flight northward to begin with. But the first detailed description of this policy that I’ve seen not only ignores all of the intertwined institutional, governance, and cultural obstacles to turning regions like Central America’s Northern Triangle (El Salvador, Guatemala, and Honduras) into even approximations of success stories. It also casts real doubt on the seriousness of the vaunted domestic social justice and inequality commitments made both by President Biden and by at least some of the U.S. corporate sector.

As argued by a White House Fact Sheet released yesterday, support for economic development in these long-impoverished, abusively ruled countries will “require more than just the resources of the U.S. government.” Also essential “to support inclusive economic growth in the Northern Triangle” will be the “unique resources and expertise” of the private sector.”

It’s true that only three completely private, profit-seeking American companies have responded so far to the “Call to Action” for business involvement issued by Vice President Kamala Harris, who’s the administration’s designated czarina for dealing immigration-wise with the Northern Triangle. But let’s say lots more get involved.

Why would anyone capable of adult thinking believe that their efforts will succeed? After all, the administration acknowledges that economic success in the region depends on overcoming its “long-standing impediments to investment-led growth.” And it specifies that these obstacles include governments that simultaneously either can’t or won’t carry out their duties in corruption-free ways, and are unable to provide minimal levels of security for their populations against criminal gangs.

Meaning that private businesses will be keen even on setting up the kinds of training and business incubator and internet connectivity programs that predominate in their Northern Triangle plans while threats of violence and extortion remain omnipresent? Maybe they’re planning to cope by hiring massive  private security forces – but such precautions were never mentioned in the Call to Action announcement.

Just as important, here’s another major head-scratcher, especially given the flood of promises over the last year or so from U.S. business circles about promoting racial economic and financial equality. If companies are willing to wade into dangerous environments to educate populations, build or strengthen the infrastructure needed for significant economic progress, and foster new businesses in Central America, why aren’t they focusing their efforts on America’s own inner cities, or at least focusing more tightly on these efforts first? It’s not like their needs aren’t pressing. And although the Northern Triangle countries have actually made some noteworthy progress in fighting violent crime lately, they’re still much more dangerous places than even most of America’s homicide capitals.

Consequently, for companies concerned overall with actual results, it would make far more sense to take an America First approach. Not that Microsoft, Chobani, and Mastercard have ignored their disadvantaged compatriots in practice. But even as their U.S. efforts remain pretty modest (Microsoft, e.g., to date has only launched its digital skills and access improvement program in Atlanta and Texas, and Chobani’s incubator program still seems pretty small scale), they’ve decided to head south of the border(s).

Incidentally, the entire Biden Central America and overall immigration policies are vulnerable to a similar criticism. Since however difficult it’s going to be to spur racial and other economic and social progress at home, the challenge will be far more difficult in foreign countries, a President truly committed both to these vital domestic goals and to staunching migrant flows would focus focus his economic development programs on his own country, and deal with the migrants as an immigration issue – by securing the border. Unfortunately for Americans, Joe Biden has been anything but that President.

(What’s Left of) Our Economy: Whose Trade Representative?

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America First, Biden, Donald Trump, Katherine Tai, middle class, positive sumn, supply chainsi, tariffs, Trade, trade talks, U.S. Trade rep, USTR, zero sum, {What's Left of) Our Economy

Since her appointment as President Biden’s U.S. Trade Representative (USTR), Katherine Tai has become known as a master of the “noncommittal interview style,” steadfastly remaining in the realm of lofty generalities “but never getting pinned down on specifics.” I’d add that this description has characterized her other public statements, too.

Last week, though, appearing on Marketplace radio, Tai appeared to let her guard slip – and in ways indicated that even moderate American liberals like her have turned as thoroughly, and in my view, worrisomely, ambivalent about the main purposes of U.S. trade policy as their more progressive counterparts.

As I’ve written, by the late-1990s, this ambivalence has long been a major obstacle to turning U.S. trade policy from an exercise in offshoring that had been devastating the productive heart of the American economy and its workforce into a drive to boost domestic employment and production. For although progressives agreed that trade policies were harming American workers, they also tended to claim that it had been harming their third world counterparts, too – which was critically important given the tight focus of pre-Trump U.S. Presidents and their allies in Congress on expanding trade with very low income countries.

As a result, their critiques of trade policy were continually debunked by convincing evidence that the era of rapid globalization had actually been a major boon to much of the “global south.” (See, e.g., here.) And they continually refused to acknowledge that, at least for some undefinable period of time, changing trade flows to channel more of the benefits to Americans would entail hard choices that came at the expense of developing countries. Not surprisingly, it wasn’t until a full-throated champion of America First-oriented trade policies emerged as a major force in American politics that public pressure finally brought the offshoring-focus of trade diplomacy to a resounding halt.

To their credit, early on in the last presidential campaign, candidate Joe Biden and his key aides recognized the importance of prioritizing of domestic interests – including worker interests – and their endorsement of Trump-ian economic nationalism has been most recently expressed in the President’s promise that “In everything we do, we will aim to make life better, safer, and easier for working families in America.”

The Biden administration’s record to date has been more mixed than its words – e.g., retaining every single dollar of Donald Trump’s China tariffs so far, but defining secure supply chains as including production nodes that are not only overseas, but locaed in many countries that haven’t remotely earned the designation of “trusted suppliers.” But it’s nonetheless revealing that even this position has some prominent globalization cheerleaders accusing the new President of neanderthal protectionism.

That’s why it was so surprising to see this exchange in Tai’s Marketplace interview:

[INTERVIEWER] “…l want to go back to that speech from a week or so ago that you gave about trade policy and environmental policy. And one of the things you aid was: ‘My job is to push for trade reforms that translate into meaningful change in the lives of farmers, ranchers, factory workers, parents and children, not just in the United States, but around the world.’ And I wonder whether you thought twice before you wrote that and you said that because to some in this country, that’s going to clang a little bit.

“Tai: Really, why is that?

[INTERVIEWER]: “Well, I think at this moment where we are a deeply polarized society, the idea that the United States trade representative would be worrying about workers, farmers, children and students in countries other than the United States might be problematic for some.

“Tai:  We don’t exist in a vacuum. And, you know, all you need to do is take a look at a map. We are all inextricably linked to each other and we are sharing this planet as a home in terms of climate and COVID-19. These are collective challenges, and we only get through them if we can get through it collectively.”

As I wrote previously, the point to keep in mind is not that global win-win solutions to trade problems are impossible to conceive, or should be ruled out of hand. The point to keep in mind is that someone who starts out in a negotiation over trade (which will be a big part of Tai’s job) or anything else assuming the best of all possible worlds doesn’t seem likely to recognize when the inevitable real world complications start intruding.

This kumbaya attitude shapes up as a tactical disaster for another reason, too: Tai can be sure that any international interlocutors will be focused like the proverbial laser beam on maximizing their own countries, not on achieving some hypothetical positive sum result. If that’s her starting point, it’s all too easy to imagine that she’d accept a final outcome much closer to other countries’ preferences than to America’s.

To be clear, I’m not troubled by Tai’s remark because I think she’ll be making any of the big calls on U.S. trade policy.  USTRs rarely do, and she simply doesn’t have the stature or the personal connection with the President.  I’m troubled by her remark because Tai’s many years as a Congressional staffer have surely taught her never to say anything that clashes with her boss’s official line. If as careful a bureaucratic operator as the new USTR doesn’t seem to understand that she’s the Trade Representative of the United States, not the world at large, maybe Mr. Biden needs to be reminded of his real job definition, too?

Following Up: A Lippmann Gap Still Could be a Big Threat to Biden’s Foreign Policy

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allies, America First, Biden, China, defense budget, Donald Trump, Following Up, Lippmann Gap, Russia, Theodore Roosevelt

Late last month, I worried here that President Biden could open up a dangerous “Lippmann Gap” in U.S. foreign and national security policy by proposing a defense budget incapable of supporting his expansive ambitions. Yesterday, the administration came out with its first official budget request, and although it lacks the detail to justify firm conclusions, I’m still worried.

The nub of the problem is this: The President has repeatedly announced his intention to reverse course from his predecessor’s America First strategy and return U.S. foreign policy to its decades-long pre-Trump sweeping global activism and engagement. And since Mr. Biden’s “America is back” declarations clearly entail at the least a determination to fill an allegedly vital gap left by Donald Trump, and probably to pursue an even more expansive agenda, logic and common sense alone dictate that he request much more defense spending than at present.

It’s true that Pentagon budget and the military forces it supports are by no means the only tools available to the nation to carry out its international aims. It’s also true that defense spending can be made more effective without boosting overall spending levels by spending existing funds more efficiently and wisely. The latter’s potential won’t start to be revealed until the more detailed budget request is made later this year.

But for now, what is known is that Mr. Biden will ask for some 1.6 percent more for the Defense Department proper for the coming budget year (fiscal 2022) than the resources allotted to the Pentagon during the Trump administration’s final year (fiscal 2021). When adding in national security funds not provided to the Department itself (mainly for maintaining the nation’s nuclear weapons stockpile – which is handled by the Energy Department), the Biden increase is also about two percent over the funding appropriated during the final Trump year.  (This figure is calculated from here and here.)

Knowledgeable observers of defense spending may note that these Biden fiscal 2022 requests are considerably bigger than the Trump fiscal 2021 requests. These sought just 0.1 percent more for the Pentagon itself than was spent in 2020, and 0.34 percent more for that larger national security budget including the non-Pentagon money. (These figures are found here and calculated from here and here.) 

But Mr. Biden charged that the Trump national security agenda was sorely inadequate. So it’s natural that he’d want more military spending than his predecessor. What’s noteworthy, however, is that the Biden request isn’t that much more. In fact, if inflation takes its expected course this year, this latest military spending proposal will leave the Defense Department and the other agencies responsible for national security with less money when adjusting for rising prices than they spent last year.

Moreover, even in terms of “top-line” spending figures, this Biden request is hardly the last word. The Democratic Congress is practically certain to make further cuts.

Again, wiser spending could fill some of this gap. But what the Biden administration has said about its priorities isn’t all that encouraging, either. Just one example (but a big one): The administration stated yesterday that its military spending request “prioritizes the need to counter the threat from China as the [Defense] Department’s top challenge. The Department would also seek to deter destabilizing behavior by Russia.”

It’s still possible, as suggested above, that moving funds into U.S. China- and Russia-related accounts from lower priority accounts could accomplish these aims even though overall outlays decline in real terms. But in the very next sentence, we learn that the administration isn’t confident that these moves would be the answer (assuming they’re even being contemplated). For it claims that

“Leveraging the Pacific Deterrence Initiative and working together with allies and partners in the Indo-Pacific region and the North Atlantic Treaty Organization, DOD [the Defense Department] would ensure that the United States builds the concepts, capabilities, and posture necessary to meet these challenges.”

That is, help from allied countries supposedly will be crucial to countering the Chinese and Russian threats. But not only have these countries skimped on their own defense for decades. For the time being, the President has decided not to press them overly hard to share more of the defense burden (as documented in my original “Lippmann Gap” post).

To repeat: I’m not calling for more U.S. military spending. In fact, I’d like to see Pentagon budgets shrink. But this position reflects my judgment that the nation can be adequately safe and sound by doing less in the international sphere. As long as President Biden wants to do more – not only than me, but also than Donald Trump – the only responsible policy would be to boost military spending. Anything else amounts to inverting former President Theodore Roosevelt’s approach of speaking softly and carrying a big stick – which history teaches never, ever ends well.

(What’s Left of) Our Economy: Why Biden’s Trade Policies are Looking Trump-ier Than Ever

Tags

America First, arbitrage, Biden, China, economic nationalism, environmental standards, global minimum tax, globalism, globalization, infrastructure, Jake Sullivan, Janet Yellen, labor rights, race to the bottom, subsidies, tariffs, tax policy, taxes, Trade, trade Deals, trade wars, {What's Left of) Our Economy

As the author of a book titled The Race to the Bottom, you can imagine how excited I was to learn that the main rationale of Treasury Secretary Janet Yellen’s new proposal for a global minimum tax on corporations is to prevent, or bring to an end, a…race to the bottom.

But this idea also raises a question with profound implications for U.S. trade and broader globalization policies: Why stop at tax policy? And it’s made all the more intriguing because (a) the Biden administration for which Yellen surprisingly seems aware that there’s no good reason to do so even though (b) the trade policy approach that could consequently emerge looks awfully Trump-y.

After all, the minimum tax idea reflects a determination to prevent companies from engaging in what’s known as arbitrage in this area. It’s like arbitrage in any situation – pitting providers and producers that boast little leverage into competition with one another to sell their goods and services at the lowest possible price, and usually triggering a series of ever more cut-rate offers.

These kinds of interactions differ from ordinary price competition because, as mentioned above, the buyer usually holds much more power than the seller. So the results are too often determined by considerations of raw power, not the kinds of overall value considerations that explain why market forces have been so successful throughout history.

When the arbitrage concerns policy, the results can be much more disturbing. It’s true that the ability of large corporations to seek the most favorable operating environments available can incentivize countries to substitute smart policies for dumb in fields such as regulation and of course taxation. But it’s also true, as my book and so many other studies have documented, that policy arbitrage can force countries to seek business with promises and proposals that can turn out to be harmful by any reasonable definition.

Some of the most obvious examples are regulations so meaningless that they permit inhumane working conditions to flourish and pollution to mount, and encourage tax rates to fall below levels needed to pay for public services responsibly. Not coincidentally, Yellen made clear that the latter is a major concern of hers. And the Biden administration says it will intensify enforcement of provisions in recent U.S. trade deals aimed at protecting workers and the environment – and make sure that any new agreements contain the same. I’ve been skeptical that many of these provisions can be enforced adequately (see, e.g., here), but that’s a separate issue. For now, the important point is that such arbitrage, and the lopsided trade flows and huge deficits they’ve generated, harm U.S.-based producers and their employees, too.

But as my book and many other studies have also documented, safety and environmental arbitrage aren’t the only instances of such corporate practices by a long shot. Businesses also hop around the world seeking currency arbitrage (in order to move jobs and production to countries that keep the value of their currencies artificially low, thereby giving goods and services turned out in these countries equally artificial, non-market-related advantages over the competition). Ditto for government subsidies – which also influence location decisions for reasons having nothing to do with free markets, let alone free trade. The victims of these versions of policy arbitrage, moreover, have been overwhelmingly American.

The Biden administration is unmistakably alert to currency and subsidy arbitrage. Indeed a major element of its infrastructure plan is providing massive support for the U.S. industry in general, and to specific sectors like semiconductors to lure jobs and production back home and keep it there. Revealingly, though, it’s decided for the time being to keep in place former President Trump’s steep, sweeping tariffs on China, and on steel and aluminum.

So it looks like the President has resolved to level these playing fields by cutting off corporate policy arbitrage opportunities of all types with a wide range of tools. And here’s where the outcome could start looking quintessentially Trump-y and America First-y. For it logically implies that the United States shouldn’t trade much – and even at all – with countries whose systems and policy priorities can’t promote results favorable to Americans.

Still skeptical? Mr. Biden and his leading advisers have also taken to talking about making sure that “Every action we take in our conduct abroad, we must take with American working families in mind.” More specifically, the President’s White House national security adviser, Jake Sullivan, wrote pointedly during the campaign that U.S. leaders

“must move beyond the received wisdom that every trade deal is a good trade deal and that more trade is always the answer. The details matter. Whatever one thinks of the TPP [the proposed Trans-Pacific Partnership trade deal], the national security community backed it unquestioningly without probing its actual contents. U.S. trade policy has suffered too many mistakes over the years to accept pro-deal arguments at face value.”

He even went so far as to note that “the idea that trade will necessarily make both parties better off so long as any losers could in principle be compensated is coming under well-deserved pressure within the field of economics.”

But no one should be confident that economic nationalism will ultimately triumph in Biden administration counsels. There’s no doubt that the U.S. allies that the President constantly touts as the keys to American foreign policy success find these views to be complete anathema. And since Yellen will surely turn out to be Mr. Biden’s most influential economic adviser, it’s crucial to mention that her recent speech several times repeated all the standard tropes mouthed for decades by globalization cheerleaders about U.S. prosperity depending totally on prosperity everywhere else in the world.

Whether she’s right or wrong (here I presented many reasons for concluding the latter), that’s clearly a recipe for returning trade policy back to its pre-Trump days – including the long-time willingness of Washington to accept what it described as short-term sacrifices (which of course fell most heavily on the nation’s working class) in order to build and maintain prosperity abroad that would benefit Americans eventually, but never seemed to pan out domestically.

Nor is Yellen the only potential powerful opponent of less doctrinaire, more populist Biden trade policies. Never, ever forget that Wall Street and Silicon Valley were major contributors to the President’s campaign coffers. Two greater American enthusiasts for pre-Trump trade policies you couldn’t possibly find.

And yet, here we are, more than two months into the Biden presidency, and key pieces of a Trump-y trade policy both in word and deed keep appearing.  No one’s more surprised than I am (see, e.g., here).  But as so often observed, it took a lifelong anti-communist hardliner like former President Richard M. Nixon to engineer America’s diplomatic opening to Mao-ist China. And it took super hard-line Zionist Menachem Begin, Israel’s former Prime Minister, to sign a piece treaty with long-time enemy Egypt. So maybe it’s not so outlandish to suppose that a died-in-the-wool globalist like Joe Biden will be the President establishing America First and economic nationalism as the nation’s new normals in trade and globalization policy.  

Following Up: Biden’s Cave-In on Ukraine, Russia, and Germany and Why It Matters

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Adam Schiff, alliances, allies, America First, Angela Merkel, Democrats, Donald Trump, energy, Eric Swalwell, Following Up, Germany, impeachment, NATO, natural gas, Nord Stream 2, North Atlantic treaty Organization, Russia, Ukraine, Vladimir Putin

Earlier this month, I wrote about the weirdness of the Biden administration’s seemingly blasé attitude toward Ukraine’s security, given the President’s long record of support (including military aid) for its independence from an expansionist Russia, and especially given the determination of the entire Democratic party to impeach Donald Trump largely because his allegedly blasé attitude toward Ukraine security treasonously endangered America’s own security.

Today I can report that the situation has grown even weirder – and in the process, raised major questions about the administration’s view of smooth alliance relations as a top foreign policy priority, and about its adults-in-the-room reputation itself for foreign policy competence itself.

As explained in my March 17 post, the issue at hand is the Nord Stream 2 pipeline, That’s a natural gas transport project that the Trump administration opposed because it threatened to, among other problems, increase Europe’s energy dependence on Vladimir Putin’s Russia, provide this aggressive autocrat with a big new source of revenue and therefore of funds for his military, and ace Ukraine itself out of natural gas earnings, thereby weakening its economy and ultimately its ability to defend itself.

So why is Nord Stream 2 being built? Two main reasons. First, lots of big German (and other European) companies have been involved in its financing and nearly finished construction, and will profit from its operation. (See here and here for good summaries.) Further, the German government is obliged to cover the multi-billion dollar losses that would result from cancellation. Second, Chancellor Angela Merkel;s government views the project as a means of keeping Germany, and Europe in general, economically engaged, influential, and therefore at peace with Russia.

The Germans also say they need the new gas because of its plans to de-nuclearize and de-carbonize its economy. Berlin also has the option of filling the looming energy supply gap by purchasing more gas from the United States than at present.  But Germany seems more impressed by the fact that higher transport costs make the U.S. product more expensive than Moscow’s.

You’d think, therefore, that Germany would be facing heavy pressure to cancel the pipeline from the Biden administration and especially from the impeachment enthusiasts in the Democrats’ Congressional ranks – like California’s Adam Schiff, the lead House manager for the first Trump impeachment trial, who described Ukraine’s sovereignty and safety as nothing less than a vital interest of the United States.

Not a peep about Nord Stream has been heard from Schiff or from other Trump impeachment hard-liners, like California Democratic Congress Member Eric Swalwell – confirming suspicions that their main concerns all along during both the Trump-Russia collusion and impeachment dramas were somehow ousting Trump for purely partisan or possibly simply deranged reasons, not safeguarding America’s security or democracy.

But Mr. Biden’s stance is more puzzling and disturbing – the latter since Presidents matter so much more than individual legislators. As my earlier post noted, his administration has seemed more relaxed about Nord Stream even though it, too, has claimed to harbor major concerns about Ukraine’s fate.

In fact, as recently as a few days ago, Secretary of State Antony J. Blinken declared that “President (Joe) Biden has been very clear, he believes the pipeline is a bad idea, bad for Europe, bad for the United States, ultimately it is in contradiction to the EU’s own security goals, It has the potential to undermine the interests of Ukraine, Poland and a number of close partners and allies.”

Yet just this morning, when asked whether Washington could (and by extension, actually would) do anything to stop Nord Stream 2, Blinken “Well, ultimately that is up to those who are trying to build the pipeline and complete it. We just wanted to make sure that our … opposition to the pipeline was well understood.”

In other words, “La de dah.”

Such quick and complete turnabouts by America’s top diplomat are disturbing in and of themselves, but the real problems with the Biden Nord Stream stance go far beyond the impotence claimed (and therefore advertised) by Blinken.

After all, avoiding a showdown with Germany on the pipeline would be understandable and even smart if Mr. Biden really didn’t view Ukraine’s security, and/or Russia’s aims and power, as terribly important in the first place, or if (as I offered as a possibility in my previous post), this decision reflected some broader administration conclusion that relations with Russia should be improved in order to outflank the stronger and more dangerous Chinese.

But not only is the President a strong believer in deterring Russian designs on Europe. He recently seemed to go out of his way to antagonize Putin by calling him a “killer.”

So the most reasonable conclusion to draw is that, at least for now, Mr. Biden is so determined to keep America’s wealthiest European ally happy that he’s given it a veto on a matter he himself has deemed a major U.S. interest. Worse, he seems indifferent to Trump’s (correct) complaint that Germany evidently has no problem with enriching Moscow while continuing to rely on the U.S. military to defend it from Russia. This doesn’t necessarily leave the President guilty of carrying out an “America Last” foreign policy. But it makes you wonder how far he’ll drift from from putting America First.

Our So-Called Foreign Policy: It’s Official. Uncle Sucker is Back

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alliances, allies NATO, America First, Biden, deterrence, Donald Trump, Japan, North Atlantic treaty Organization, Our So-Called Foreign Policy, South Korea

If you think this title is too harsh, and especially if you agree with his view that maintaining U.S. alliances must be central to American foreign policy-making, you need to ask yourself this: How can some of the major points President Biden made in his speech Friday to an audience containing heads of major allied governments accomplish anything but keep the United States needlessly paying outsized costs for these arrangements and even worse, running major risks that include nuclear attack, for no good reason whatever?

As known by RealityChek regulars, downsides of American security alliances both in Europe and Asia that arguably were acceptable during much of the Cold War period have become terrifying and – because stemming from stubbornly hidebound thinking and consequent policy inertia – downright inexcusable more recently. That’s because physically devastated allies literally helpless against aggression in the earliest post-World War II decades, but nonetheless retaining vital economic and therefore military potential, had fully recovered by the mid-1970s, and because their continued defense free-riding led Washington to station sizable military units (and their dependents) directly in harm’s way.

The idea was that this U.S. presence’s very vulnerability to superior conventional forces from the Soviet Union and North Korea would deter aggression to begin with. Forit would all but force a U.S. President to approve saving these American lives with nuclear weapons – whose use could trigger an all-out mutually devastating conflict.

This gamble could be defended when the United States enjoyed clearcut nuclear superiority over the Soviets, a nuclear monopoly and near-monopoly over the North Koreans and Chinese, respectively – and when allies and their potentially crucial assets were still down and out. But for many years, the nuclear gap has  closed in Europe and the the monopoly and near-monopoly in Asia vanished, and all allies in question have been amply wealthy enough to defend themselves. So Washington’s refusal to adjust means that the nation could well see nuclear warheads land on its soil because the Europeans, Japanese, and South Koreans have been permitted to be military deadbeats. Could any policy be more recklessly perverse, or determined to reward irresponsibility and cynicism?

Despite loudly griping about allied defense free-riding, raising the temperature in periodic defense burden-sharing negotiations, and rearranging some troop deployments in Europe, Donald Trump never frontally and comprehensively challenged the status quo, at least while President. Would a second term have been different? Who knows?

What is clear, especially from this latest speech by Mr. Biden, is that the United States will now be doubling down on this entire literal Americans Last strategy.

For not only did the President repeated the pre-Trump standard Washington endorsement of the core principle of the North Atlantic Treaty Organization (NATO) that “An attack on one is an attack on all. That is our unshakable vow” – which inevitably tells the allies that they can continue free-riding militarily to their heart’s content and count on American protection no matter how potentially disastrous the consequences for the American people.

He actually praised “Europe’s growing investment in the military capabilities that enable our shared defense” even though these expenditure will be definition be utterly inadequate as long as their level leaves a military gap that American conventional and nuclear forces still need to fill.

Further, in declaring that he would not view U.S. alliances as “transactional” he assured America’s so-called partners that their relationships with Washington need involve no give and take whatever, thereby guaranteeing that these opportunistic governments would raise their chronic free-riding to much loftier levels, and that Americans would bear more of the costs and risks of these arrangements than ever.

And most foolishly of all, Mr. Biden explicitly told the Europeans (and consequently the Asians) that, after the stormy Trump years, it was up to the United States “to earn back our position of trusted leadership.” That is, the kinds (long overdue) burden- and therefore risk-sharing criticisms made by the former President were completely illegitimate, and that whatever ailed the alliances resulted from Trump’s America First words and (much more modest) deeds, not from decades of allied risk- and burden-shirking.

Of course, Mr. Biden’s words were actual U.S. policy for decades before the Trump years. That’s why these arrangements became so dysfunctional from any sensible American standpoint in the first place. But by making this approach explicit, and giving the Europeans and Asians official license for their longstanding “heads we win, tails America loses” priorities, the President has not only gravely weakened his own country’s safety and prosperity. He’s destroyed whatever legitimate hopes ever existed that multilateralism and collective security could ever adequately serve any reasonable definition of American interests.

Our So-Called Foreign Policy: Globalists Keep Rejecting Key Tenets of Globalism

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America First, Biden, Council on Foreign Relations, Donald Trump, foreign policy establishment, globalism, international institutions, Our So-Called Foreign Policy, Richard N. Haass

As well known by RealityChek regulars, there’s not much I enjoy more professionally speaking than finding figures with whom I normally strongly disagree on key economic and foreign policy issues unwittingly agreeing with me on the concepts at the heart of these disagreements. (See, e.g., here and here.)

So imagine how pleased I was to see this paragraph in a recent opinion column by Richard N. Haass – a foreign policy establishmentarian if ever there was one, and therefore a leading advocate of the globalist approach to world affairs that I and Donald Trump (in his typically ragged way) believe has been needlessly and indeed recklessly risky and costly for Americans:

“The US will…encounter difficulty in realizing its goal of organizing the world to meet global challenges, from infectious disease and climate change to nuclear proliferation and conduct in cyberspace. There is no consensus and no international community, and the US can neither compel others to act as it wants nor succeed on its own.”

It’s a statement that’s noteworthy not only because it recognizes the fatal flaw of one of globalism’s central pillars – fetishizing international cooperation and therefore striving to systematize and formalize such multilateralism by building strong global institutions. For the point being made by Haass – a former official in the pre-Trump Republican presidencies and now President of the Council on Foreign Relations, often described as the foreign policy establishment’s epicenter – is that creating organizations can’t be equated with solving even problems shared by the entire world because – across the board – so many different countries disagree on the best solutions.

It’s also statement that’s noteworthy because Haass had previously called the rejection of multilateralism and its constituent institutions a defining and especially wrongheaded feature of Trump’s America First-ism. Withdrawal from such arrangements, Haass wrote just last May, has been

“central to the Trump presidency. He has pulled the country out of every manner of multilateral agreement and institution overseas in the name of going it alone. Going it alone, though, makes little sense in a world increasingly defined by global challenges that can best be met through collective, not individual, action.”

But Haass’ new about-face is consequential as welI because it’s essence’ is identical with my own previously stated (anti-globalist) view that

“Precisely because…domestic [political] systems are characterized by a common acceptance of legitimate authority, and by a broader sense of mutual obligation, a true [foreign policy] realist would never disagree that their possibilities for ‘trust, cooperation and growth’ are often encouraging. It is precisely because the international system possesses none of these features that realists’ expectations of achieving such advances abroad are so low.”

P.S. I wrote the above in 2002.

Unfortunately, Haass’ latest makes painfully clear that he has no useful policy advice for President Biden – another multilateralism and international institution fan boy – in a world in which their foreign policy lodestars have become so useless (and in my view have never been essential). I’ve written that recognizing the shortcomings and limitations of international institutions doesn’t require simply abandoning them.

Instead, because cooperation inevitably sometimes be worth seeking, it means recognizing the hard-ball politicking typically needed to prevail; and amassing the power (in all dimensions) needed both to succeed, and to survive and prosper through America’s own devices if others prove recalcitrant. 

In fact, the virtues of this foreign policy strategy seem so obvious that I’ve got the sneaking suspicion that a big reason they became controversial was because they were championed by Trump.  Which raises the intriguing possibility that the Biden administration could wind up adopting an America First-type foreign policy, but in the worst conceivable manner – unwittingly, and even kicking and screaming all the way.