Our So-Called Foreign Policy: Why the Public Knows Best

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Alexis de Tocqueville, Barack Obama, Democracy in America, Financial Times, globalism, Joe Biden, Our So-Called Foreign Policy, public opinion, Trump

Since the French aristocrat Alexis de Tocqueville came out in 1835 with his classic Democracy in America, insightful foreign analysts have used their outsiders’ perspective to help Americans themselves learn much about their own country.

The Financial Times‘ new editorial about the Never Trump-y globalist approach to foreign policy sure to be taken by a Biden administration continues this tradition – however unwittingly. In the British newspaper’s enthusiasm for a return to a pre-Trump U.S. international strategy, it valuably reminds Americans of how far that globalism has taken these American foreign policy traditionalists from the objectives that should always make up the nation’s overriding priority in world affairs.

The editorial contains the usual mindless paeans to content-free “multilateralism, free trade and an active American role around the world. That is, it regurgitates the idea that America’s best bet for maximal security and prosperity lies in pushing practices and positions that in the end are nothing more than means (in other words, tools, or tactics) that may or may not be useful in the kinds of circumstances that ultimately require countries to conduct foreign policies in the first place – those where a valued objective needs to be achieved.

But what really stands out about the article is its inadvertant acknowledgement that the agenda of the globalist President-elect and his establishmentarian team is not only highly unpopular with the public, but rightly so.

It’s become standard operating procedure for foreign policy professionals and self-appointed thought leaders to bemoan Everyday Americans’ reluctance to recognize the importance of globalism’s devotion to (quoting from the editorial) “restoring US leadership,” playing “global policeman,” and the like, and here the Financial Times writers don’t disappoint.

Much more unusual is their acknowledgement that there exists a “perceived disconnect between the Washington view of US interests and middle America’s more immediate concerns for its physical and economic security.”

A longtime hallmark of globalism has been to equate the two – and insist, in fact, that preserving that physical and economic security simply isn’t possible without globalism’s characteristic energetic international engagement in every dimension imaginable.

To be sure, the editorial’s use of the word “perceived” signals its belief that any such disconnect exists only in the minds of the uninformed or the shortsighted. But its use of the phrase “more immediate” inadvertantly indicates that the disconnect has a basis in reality. For although this wording doesn’t flatly deny the linkage, it carries the suggestion that the nation’s physical and economic security can be achieved to a significant, and even for the time being, an adequate extent without assuming all of globalism’s labors.

Globalists can still (and no doubt will) maintain that, even if true, this minimalist version of success can’t last indefinitely without completing more ambitious tasks – specifically, eliminating the very sources of threats to that American physical and economic security. To which critics of globalism can and should reply that this challenge is so formidable, and therefore costly and risky, that its pursuit risks turning the utopian into an enemy of the good.

Further, given how cloudy the personal crystal balls of even the most brilliant globalists undoubtedly are, and therefore how unpredictable many future challenges and opportunities will inevitably be, a more modest strategy of coping, reacting, muddling through, and avoiding “stupid stuff” (an unusually sound bit of non-globalist advice from globalist former President Barack Obama) logically makes the most sense – and doubly so for a country like the United States that’s already blessed with the kinds of strengths and advantages that can enable a low-risk, low-reward foreign policy to deliver results that are eminently acceptable, especially compared with many of the alternatives.

A final theoretical reason to pursue globalist foreign policies might be called the spiritual case – condemning the low-risk, low-reward alternative as utterly uninspiring. This supposedly lackluster nature matters crucially because, as explained in last Monday’s post, so many globalists seek foreign policy careers and push for their characteristic proposals not to help achieve ostensibly mundane aims like ensuring narrow-bore security and prosperity for their country, but out of loftier hopes to prove America’s historical worth by curing various global ills and slaying various global dragons. As a sympathetic author I quoted wrote of the globalist Biden team, they’re “eager to leave their mark on American foreign policy—and the world.”

But as even the Financial Times editorial writers point out, seeking global goals for there is absolutely no domestic political mandate could be a formula for “sparking a counter-reaction” strong enough to return “Trumpism to the White House in four years time.” All Americans have major stakes in hoping that a new administration learns this lesson sooner rather than later.

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

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1990s expansion, Barack Obama, Labor Department, labor productivity, manufacturing, multi-factor productivity, Trump, {What's Left of) Our Economy

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

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

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

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

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

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

last expansion (10-18): -4.84%

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

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

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

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

last expansion (10-18): -2.55 percent

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

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

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

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

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

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

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

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America First, Barack Obama, Biden administration, China, decoupling, globalism, Joe Biden, Our So-Called Foreign Policy, technology, Trump, University of California at San Diego

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

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

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

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

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

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

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

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

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

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

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

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

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

Im-Politic: Most of the Flip Vote Stayed with Trump

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Barack Obama, battleground states, election 2016, election 2020, forgotten Americans, Im-Politic, Joe Biden, Populism, racism, Trump, Trump flip voters, xenophobia

Since I haven’t yet come across any reason to suppose that the Election 2020 exit polls are any more accurate than most of the surveys throughout the campaign, and especially during the general election, worthwhile post-mortems are going to be really difficult to produce.

One exception: It’s clear what happened with the hundreds of counties across the country that voted twice for Barack Obama for President, and then flipped for Donald Trump in 2016. I’ve written repeatedly (most recently here) that these mainly lower-income counties are especially important because they clearly contain lots of Trump voters who couldn’t possibly be the racists who are so often viewed as the majority of the President’s base.

Moreover, they not only look like a representative sample of voters who bought Mr. Trump’s promise that he would champion their economic interests. They also look like voters who made a smart bet in this regard, as the majority of these counties saw their annual pay grow faster under Trump pre-CCP Virus than during the most comparable Obama administration time frame.

And how did they vote earlier this month? Recounts and challenges could change some of the numbers we have already, but as of this writing, an overwhelming majority of these so-called “forgotten Americans” stuck with the President a second time around. So did nearly all of those whose economic fortunes – at least by that wage measure – improved faster under Mr. Trump than under his predecessor.

First the overall numbers. In 2016, 194 counties for which the aforementioned wage data are available from the Labor Department supported the Trump candidacy after voting Obama in 2008 and 2012. Three other counties for which no such data have been kept followed this pattern.

Of the 194, 173 (89.17 percent) stuck with the President this time around, along with two of the data-less counties. Just as important, of the 194, 116 (59.79 percent) saw faster pay growth under Mr. Trump than under Obama, and 102 of them (87.93 percent) pulled the lever for the President in 2020. To me, that adds up to a pretty powerful case that a great deal of the President’s appeal stemmed from his economic populist pitch.

These outcomes can’t possibly be either-or. That is, just because a flip county prospered more under Mr. Trump than under Obama doesn’t necessarily mean that this performance was foremost in every voter’s mind. And it can’t be assumed that counties that have supported the President despite worse relative economic performance were filled with racists and xenophobes and other deplorables.

Nonetheless, a strong relationship between greater prosperity for these flip counties and their support for the President held up well through Election 2020.

Of course, the presidential vote this time around was awfully close, especially in the six key battleground states where the talleys seem certain to decide the final outcome: Arizona, Georgia, Michigan, North Carolina, Pennsylvania, and Wisconsin. Yet it doesn’t seem that the Trump flippers relatively few flops back to his Democratic opponent made much of a difference in any of these states.

Of the total 49 Trump flip counties in these states, only five flopped back last week. Moreover, the 49 were highly concentrated – 23 in Wisconsin alone, and 12 in Michigan. Arizona had none and Pennsylvania only three. Interestingly, two of the Wisconsin flippers supported Biden in 2020, as did two of their Pennsylvania counterparts. But even given the closeness of the statewide totals, their populations appear too small to have made a difference.

A stronger argument can be made for the floppers’ importance in three states that were not as close as expected. Iowa, for example, was long thought to be up for grabs despite the handy margin it gave candidate Trump four years ago. It’s arguable that his repeat performance in 2020 stemmed in part from the decision of all 27 Trump flip counties to remain in the Republican column.

Minnesota was considered a Trump possibility this year, since Mr. Trump came within five percentage points of victory in this traditional Democratic stronghold. But President Trump actually lost some ground this month, and the decision of four of the state’s 19 Trump flippers to support Joe Biden clearly didn’t help.

Finally, New Hampshire looked like another possible Trump pickup. But two of its three flip counties (including Coos, for which there’s no economic data), opted for Biden.

All told, the numbers represented by these shifts were pretty small, too. But they could have reflected changes in sentiment elsewhere in these states that accounted for the somewhat surprising outcomes. A similar argument can be made for the six high-profile battlegrounds, but in my view the number of floppers returning to the Democratic camp was so small that it’s much weaker.

Again, some or even many of these results could change in the near future. But if they don’t, then no doubt many of the Americans who agree with President Trump that they’d been forgotten before are hoping that they’re remembered better over the next four years.

Im-Politic: VP Debate Questions That Should be Asked

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1619 Project, African Americans, Barack Obama, Biden, budget deficits, CCP Virus, censorship, China, Confederate monuments, Constitution, coronavirus, COVID 19, education, election 2020, Electoral College, filibuster, Founding Fathers, free speech, healthcare, history, history wars, Im-Politic, inequality, investment, Kamala Harris, Mike Pence, national security, Obamacare, police killings, propaganda, protests, racism, riots, semiconductors, slavery, spending, Supreme Court, systemic racism, Taiwan, tariffs, tax cuts, taxes, Trade, trade war, Trump, Vice Presidential debate, Wuhan virus

Since I don’t want to set a record for longest RealityChek post ever, I’ll do my best to limit this list of questions I’d like to see asked at tonight’s Vice Presidential debate to some subjects that I believe deserve the very highest priority, and/or that have been thoroughly neglected so far during this campaign.

>For Vice President Mike Pence: If for whatever reason, President Trump couldn’t keep the CCP Virus under control within his own White House, why should Americans have any faith that any of his policies will bring it under control in the nation as a whole?

>For Democratic candidate Senator Kamala Harris: What exactly should be the near-term goal of U.S. virus policy? Eliminate it almost completely (as was done with polio)? Stop its spread? Slow its spread? Reduce deaths? Reduce hospitalizations? And for goals short of complete elimination, define “slow” and “reduce” in terms of numerical targets.

>For Pence: Given that the administration’s tax cuts and spending levels were greatly ballooning the federal budget deficit even before the virus struck, isn’t it ridiculous for Congressional Republicans to insist that total spending in the stimulus package remain below certain levels?

For Harris: Last month, the bipartisan Congressional Problem Solvers Caucus unveiled a compromise stimulus framework. President Trump has spoken favorably about it, while stopping short of a full endorsement. Does Vice President Biden endorse it? If so, has he asked House Speaker Nancy Pelosi to sign on? If he doesn’t endorse it, why not?

For Pence: The nation is in the middle of a major pandemic. Whatever faults the administration sees in Obamacare, is this really the time to be asking the Supreme Court to rule it un-Constitutional, and throw the entire national health care system into mass confusion?

For Harris: Would a Biden administration offer free taxpayer-financed healthcare to illegal aliens? Wouldn’t this move strongly encourage unmanageable numbers of migrants to swamp U.S. borders?

For Pence: President Trump has imposed tariffs on hundreds of billions of dollars’ worth of Chinese exports headed to U.S. markets. But U.S. investors – including government workers’ pension funds – still keep sending equally large sums into Chinese government coffers. When is the Trump administration finally going to plug this enormous hole?

For Harris: Will a Biden administration lift or reduce any of the Trump China or metals tariffs. Will it do so unconditionally? If not, what will it be seeking in return?

For both: Taiwan now manufactures the world’s most advanced semiconductors, and seems sure to maintain the lead for the foreseeable future. Does the United States now need to promise to protect Taiwan militarily in order to keep this vital defense and economic knowhow out of China’s hands?

For Pence: Since the administration has complained so loudly about activist judges over-ruling elected legislators and making laws themselves, will Mr. Trump support checking this power by proposing term limits or mandatory retirement ages for Supreme Court Justices? If not, why not?

For Harris: Don’t voters deserve to know the Biden Supreme Court-packing position before Election Day? Ditto for his position on abolishing the filibuster in the Senate.

>For Pence: The Electoral College seems to violate the maxim that each votes should count equally. Does the Trump administration favor reform? If not, why not?

>For Harris: Many Democrats argue that the Electoral College gives lightly populated, conservative and Republican-leaning states outsized political power. But why, then, was Barack Obama able to win the White House not once but twice?

>For Pence: Charges that America’s police are killing unarmed African Americans at the drop of a hat are clearly wild exaggerations. But don’t you agree that police stop African-American pedestrians and drivers much more often than whites without probable cause – a problem that has victimized even South Carolina Republican Senator Tim Scott?

For Harris: Will Biden insist that mayors and governors in cities and states like Oregon and Washington, which have been victimized by chronic antifa violence, investigate, arrest and prosecute its members and leaders immediately? And if they don’t, will he either withhold federal law enforcement aid, or launch such investigations at the federal level?

For Pence: Why should any public places in America honor Confederate figures – who were traitors to the United States? Can’t we easily avoid the “erasing history” danger by putting these monuments in museums with appropriate background material?

For Harris: Would a Biden administration support even peacefully removing from public places statues and monuments to historic figures like George Washington and Thomas Jefferson because their backgrounds included slave-holding?

For both: Shouldn’t voters know much more about the Durham Justice Department investigation of official surveillance of the Trump campaign in 2015 and 2016 before Election Day?

For both: Should the Big Tech companies be broken up on antitrust grounds?

For both: Should internet and social media platforms be permitted to censor any form of Constitutionally permitted speech?

For Pence: Doesn’t the current system of using property taxes to fund most primary and secondary public education guarantee that low-income school children will lack adequate resources?

For Harris: Aren’t such low-income students often held back educationally by non-economic factors like generations of broken families and counter-productive student behavior, as well as by inadequate school funding – as leading figures like Jesse Jackson (at least for one period) and former President Obama have claimed?

For Pence: What’s the difference between the kind of “patriotic education” the President says he supports and official propaganda?

For Harris: Would a Biden administration oppose local school districts using propagandistic material like The New York Times‘ U.S. history-focused 1619 Project for their curricula? Should federal aid to districts that keep using such materials be cut off or reduced?

Now it’s your turn, RealityChek readers! What questions would you add? And which of mine would you deep six?

(What’s Left of) Our Economy: So Much for That Pre-Virus Trump Manufacturing Recession?

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(What's Left of) Our Economy, Barack Obama, election 2020, Federal Reserve, GDP, gross domestic product, gross output, industrial production, Joe Biden, manufacturing, manufacturing recession, real GDP, real value added, tariffs, Trade, Trump, value added

A funny thing happened when the U.S. Commerce Department released its latest report on gross domestic product (GDP) by industry last Wednesday: Most of the evidence that American domestic manufacturing suffered a recession – even a mild one, as widely reported – before the CCP Virus struck disappeared.

The new figures also reveal that President Trump’s manufacturing record before most of the U.S. economy was literally ordered closed due to virus-related fears looks even better than previously thought in comparison with that of the Obama administration – in which the President’s Democratic rival for the White House, Joe Biden, served as vice president.

Focusing on this pre-virus data is anything but grasping at straws – unless you think the CCP Virus and its impact will last forever. For manufacturing’s fortunes have been closely connected to President Trump’s tariff-centric trade policies throughout his time in office because manufacturing is so thoroughly exposed to foreign competition both at home and abroad. And as this article (which featured unusual balance) made clear, recent evidence that industry had slumped last year – even before the virus’ arrival and the deep downturn it caused – was widely viewed as a major sign not only that the “trade war” was failing, and undermining Mr. Trump’s .broader determination to revive the sector.

Yet the new GDP by Industry numbers (which take the story through the second quarter of this year, and incorporate revisions going back to the first quarter of 2015 and which were part of a broader release of four different measures of manufacturing production) generally revised that recession away. So presumably, judgments about the effectiveness and impact of the Trump tariffs and similar trade decisions during normal economic times should turn much more positive.

Understanding that the federal government uses four different measures of manufacturing production is the key to understanding why those manufacturing recession claims now look largely mistaken, and why some uncertainty remains. The four measures are: gross output and inflation-adjusted (real) gross output, and value added and real value added. The latter two measures try to eliminate the double-counting in the gross output numbers that economists generally agree results from including in its results both the parts and components and other manufactured inputs of final products, along with the final products themselves.

As of now, the only one of these gauges that still shows a pre-virus Trump-era manufacturing recession (defined as two straight quarters of declining output) is current dollar (pre-inflation) gross output. According to these data, this downturn began in the second quarter of 2019 and continued through the end of the year – and of course into this year. But a recession doesn’t show up in any of the other measures, and its absence in the new real gross output figures is especially important, since that’s the measure that the Federal Reserve uses to measure manufacturing production in its closely followed monthly industrial production reports.

At the same time, those real gross output figures still leave one manufacturing production uncertainty remaining. For even though the Commerce Department’s tables, and their quarterly numbers, show no pre-virus Trump era recession by this measure, the Fed’s monthly numbers do. Specifically, they report three consecutive quarters of manufacturing production decrease last year – from the first through the third.

Yet the quarterly figures reported by the Commerce Department show that real gross output in manufacturing fell between the first and second quarters of 2019, but rose between the second and third before dropping again between the third and fourth. Even odder: Although these Commerce numbers show a weakening manufacturing output picture for the fourth quarter of last year, the Fed figures show a brighter one.

As for the comparison between administrations, here’s what the new numbers show for the two most comparable pre-virus periods (because they’re closest together in the same business cycle) – the last three years of the Obama administration and the first three years of the Trump administration. And they demonstrate that, whether due to Mr. Trump’s policies or not, industry performed considerably better during his watch. The Trump numbers are all the more impressive since 2019 was marked in part by major production woes at Boeing that greatly undercut the output numbers for the huge U.S. aerospace industry and its vast domestic supply chain.

last 3 Obama years first 3 Trump years

Gross output: -6.50 percent +12.71 percent

Real gross output: +1.40 percent +4.63 percent

Value added: +5.41 percent +11.72 percent

Real value-added: +2.33 percent +9.00 percent

This year, of course, has been terrible for domestic U.S. manufacturing. Between the first and second quarters, in real gross output terms it decreased by 1.03 percent at an annual rate between the fourth quarter of 2019 and the first quarter of 2020, and by 9.47 percent between the first and second quarters.

Interestingly, put together, those are about the same as the declines suffered by the entire U.S. private sector (1.11 percent and 9.14 percent, respectively), even though manufacturing employment during this that period held up notably better than its overall private sector counterpart. During the first and second quarters of this year, the private sector lost 9.92 percent of its jobs, compared with 6.25 percent for manufacturing.

The GDP by Industry figures for the third quarter won’t be out until well after the election (December 22), so voters won’t be able to judge the full Trump manufacturing output record during the CCP Virus period. But from what’s known so far, it looks like something the President can point to during the rest of the campaign as a promise kept.

Im-Politic: Trump’s Decidedly Non-Racist Economic Record

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African Americans, Barack Obama, CCP Virus, coronavirus, COVID 19, election 2020, families, family income, Federal Reserve, Hispanics, Im-Politic, inquality, Joe Biden, median income, racism, Survey of Consumer Finances, Trump, wealth gap, whites, Wuhan virus, xenophobia

Some pre-debate advice for Democratic presidential nominee Joe Biden: Don’t rush to trot out your charge that Donald Trump is the first racist President in American history. Because if Mr. Trump has been briefed with any competence, two recent official economic reports have just come out making clear that when it comes to African Americans and Hispanic Americans, – at least before the outbreak of the CCP Virus that has hit minorities especially hard for longstanding structural reasons – the incumbent’s economic record compares quite favorably to that of the Obama administration for which Biden rode shotgun.

The evidence we’ll look at today drawn from the latest edition of the Federal Reserve’s Survey of Consumer Finances, contains arguably the most important finding of all: The wealth gap separating African Americans and Hispanic Americans on the one hand from white Americans on the other narrowed more during Mr. Trump’s first three years in office than during the final three years of the Obama administration. (RealityChek regulars know that such time frames provide the best apples-to-apples data needed for comparisons, since they came right next to each other in the same economic cycle – in this case, the post-2009 expansion.)

This racial wealth gap is often described as the most damning indictment of the nation’s longstanding failure to generate equal economic opportunity, since the wealth created by one generation can be passed down to future generations, and thereby boost the odds that beneficiaries are cushioned against major economic and financial stress, and foster all the self-reinforcing social as well as economic advantages flowing from such achievement of the American Dream.

The numbers come both from the Fed’s new survey, which covers the 2016-2019 period, and its previous survey, which covered the 2013-2016 period, and here they are, starting with the growth in median family net worth (the Fed’s preferred measure of wealth) for all American families, for non-Hispanic white families, for non-Hispanic black families, and for Hispanic families.

During the final three Obama years, in pre-inflation dollars, this net worth increased as follows for the aforementioned three groups pre-tax

for all U.S. families: +16.25 percent

for white non-Hispanics: +16.80 percent

for black non-Hispanics: +29.41 percent

for Hispanics: +45.77 percent

As a result, median wealth for black non-Hispanic and Hispanic families as a share of median family wealth for their white counterparts rose as follows:

                                                                   2013                    2016

black non-Hispanic families:              9.29 percent        10.29 percent

Hispanic families:                               9.70 percent        12.11 percent

Alternatively put, black non-Hispanic families closed the wealth gap with white non-Hispanic families by 10.76 percent, and Hispanic families by 24.85 percent. No denying that’s progress.

And the Trump record through 2019 in comparison? We’ll start again with the increases in pre-tax median family net worth from 2016 until then:

for all U.S. families: +17.58 percent

for white non-Hispanics: +3.46 percent

for black non-Hispanics : +32.42 percent

for Hispanics: +65.30 percent

So during the first three Trump years, median family wealth overall grew faster than during the final three Obama years, and minority families far outgained white families in this regard. Moreover, this was especially true for Hispanic families, who belong to an ethnic group Mr. Trump is often accused of despising.

That this minority family outperformance bettered that achieved during the most analogous Obama period comes through even more clearly from the following table, which shows how minority families’ net worth grew as a share of white family net worth between 2016 and 2019:

                                                                    2016                    2019

black non-Hispanic families:              10.01 percent       12.81 percent

Hispanic families:                               12.04 percent       19.23 percent

Again, alternatively put, during the Trump years, these results mean that black non-Hispanic families closed the wealth gap with white families by 27.97 percent, and Hispanic families by 59.72 percent. So both groups made much more relative progress during the Trump supposedly racist and xenophobic Trump administration (pre-CCP Virus) than during the supposedly racially enlightened Obama administration.

The Trump record isn’t as good when it comes to another measure of economic peformance – pre-tax family incomes and their growth. But any fair-minded observer would have to agree that it’s more than respectable, especially considering the President’s reputation among so many of his opponents.

Once more, let’s start with the Obama record on this score between 2013 and 2016. (These results aren’t adjusted for inflation, either. During these years, median family income grew as follows for the groups in question:

for all U.S. families: +9.56 percent

for white non-Hispanics: +6.44 percent

for black non-Hispanics: +9.94 percent

for Hispanics: +14.93 percent

As a result, median incomes for black non-Hispanic and Hispanic families as a share of median income for their white counterparts rose as follows:

                                                                    2013                    2016

black non-Hispanic families:               56.00 percent       57.84 percent

Hispanic families:                                58.26 percent       62.91 percent

So the income gap with white non-Hispanic families shrank by 1.13 percent for black families and by 7.98 percent for Hispanic families. These relative gains generally were far smaller than those registered for wealth, but they were gains all the same

At first glance, it’s clear that the Trump record between 2016 and 2019 lagged the Obama era progress. Here’s how family incomes rose then for the groups concerned:

for all U.S. families: +4.64 percent

for white non-Hispanics: +6.00 percent

for black non-Hispanics: +7.00 percent

for Hispanics: -0.49 percent

The same conclusion flows from examining the changes in minority groups’ family income as a share of non-white Hispanic families’ income:

                                                                    2016                    2019

black non-Hispanic families:               57.76 percent      58.41 percent

Hispanic families:                                62.83 percent      58.99 percent

In fact, Hispanic families actually lost ground on this front.

And not surprisingly, the income gap between Hispanic families and white non-Hispanic families widened by 6.11 percent during these Trump years, while that between black and white non-Hispanic families narrowed by much less than during the final three Obama years (1.13 percent versus 3.29 percent).

These Fed figures hardly show that President Trump, as he likes to claim, has done more for African Americans than any President in history Lincoln aside, or that Hispanic Americans have been special beneficiaries of his policies. But they do show impressive progress for minority groups and, perhaps more important, progress that compares well with such achievements under the nation’s first African American President.

Therefore, Biden (and other Trump opponents) could well be right about the President’s racism and xenophobia when all considerations are taken into account. But if so, he’s clearly the strangest racist and xenophobe in U.S. history – a conclusion that will be supported when RealityChek turns next to the new poverty statistics and another set of income figures just issued by the Census Bureau. .

Im-Politic: The Supreme Court Mess I

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Antonin Scalia, Barack Obama, Biden Rule, conservatives, Constitution, Democrats, election 2020, elections, Ginsburg, Im-Politic, Joe Biden, lame duck Congress, liberals, Merrick Garland, Mitch McConnell, Republicans, rule of law, Ruth Bader Ginsburg, Senate, Supreme Court, Trump

I call this piece “The Supreme Court Mess I” rather than “The Ginsburg Mess I” because the fix in which the nation finds itself regarding the replacement of the late Supreme Court Justice Ruth Bader Ginsburg reflects a number of much deeper problems America is suffering. These stem from the firestorm-like nature of some recent battles over the roster of this nearly (but not quite paramount) arbiter of the Constitution, which makes it a the nearly last word regarding the entire U.S. legal system and its often decisive, lasting effects on every dimension of American life. (The Roman numeral tells you that there will be another post on this subject coming real soon, probably tomorrow.)

Today we’ll focus on the immediate question at hand: whether the Senate should vote on President Trump’s nominee for a new Justice. To me, the only answer with any merit: Absolutely. Indeed, nothing could be stronger, and more important to affirm, than the conclusion that any President has every right to nominate a new Justice at any time during any of his or her terms in office (i.e, through Inauguration Day, January 20), and that the Senate has every right to vote on his choice during this time. Why? Because it’s what the Constitution says, and neither the Framers nor any American leaders have ever formally tried to change the system since 1789. That is, there are no exceptions made – including for presidential election years, as many Democrats are calling for now.

If you think about it non-hysterically, you can see why. Abandoning this standard opens the door to the kind of bizarrely and indeed laughably convoluted and self-serving case being made now by Republican Senate Majority Leader Mitch McConnell of Kentucky to explain why (a) he’s decided to allow a vote on a Supreme Court nominee this presidential election year, but (b) refused to allow former former President Obama’s appointment of Supreme Court nominee Merrick Garland be considered during the previous presidential election year.

According to McConnell, the governing principle for Court nominations is the result of the latest Senate election. As he wrote right after Ginsburg’s passing:

“In the last midterm election before Justice [Antonin] Scalia’s death in 2016, Americans elected a Republican Senate majority because we pledged to check and balance the last days of a lame-duck president’s second term. We kept our promise. Since the 1880s, no Senate has confirmed an opposite-party president’s Supreme Court nominee in a presidential election year.

“By contrast, Americans reelected our majority in 2016 and expanded it in 2018 because we pledged to work with President Trump and support his agenda, To

To which the only serious reaction has to be “Seriously”? Not only is this position even further from the Constitutional standard than the presidential carve-out position. If it’s followed, it’s easy to see how other unscrupulous politicians could use even more arbitrary maxims like this to completely paralyze the Supreme Court nomination process.

After all, if it’s the Senate’s makeup that counts most of all, then why not bar nominations during the run-up to such elections – which of course take place every two years (when a third of the Senate faces reelection). For by McConnell’s logic, it wouldn’t be possible to know the people’s will on such matters for certain until those Senate results are in. And how would anyone define “run-up”? A month? Two? Six? A full year? On what objective basis could anyone distinguish among these possibilities? The only reasonable answer? None.

Lest you want to blame Republicans alone for this kind of sophistry, keep in mind that its origins lie in the so-called “Biden Rule” – when in 1992, the former Vice President and current Democratic presidential nominee argued that “once the political season is under way, and it is, action on a Supreme Court nomination must be put off until after the election campaign is over.” And in an example of poetic justice, McConnell and many other Republicans and conservatives cited this reasoning to justify their own Supreme Court positions when former President Barack Obama in March, 2016 nominated senior federal judge Merrick Garland to fill the seat left by Scalia’s death in February.

Three final observations: First, any number of politicians and pundits are citing various supposed historical traditions for justifying their stances on election year Supreme Court votes. (See here for Republicans and conservatives, and here for Democrats and liberals.) To which I can only say, “Tradition, shmadition.” As indicated above, although interpretation is possible and often needed for all laws and many Constitutional provisions, when the latter set out clearcut procedures – as for the nomination and approval of Supreme Court Justices (but not so much for impeachment) – Americans drift away from them at their peril. If you don’t like these procedures, then use the amendment process of the Constitution to change them, rather than pretending that traditions and non-legal precedents and other practices are adequate substitutes.

Second, equally ludicrous and even more dangerous is the claim that the nation’s current divided circumstances justify waiting until after the presidential election to fill the Ginsburg seat. That’s essentially warning that violence may erupt if the President and Senate exercise their Constitutional prerogatives, and in effect supporting a surrender to the threat of mob rule.

It’s absolutely true that practically all decisions made by political leaders – elected and unelected alike – are at least partly political in nature, and can profoundly affect the national interest short term and long term. It’s entirely legitimate, therefore, and even important for President Trump to take into account in his Ginsburg approach non-Constitutional considerations.

But it’s something else entirely, and far more dangerous, to contend that such judgment calls are or should in any way be legally binding. As with federal government personnel choices, Constitutional procedures can be used to protest and overturn presidential or other decisions that are entirely legal but unpopular for whatever reason. They’re called elections, and Americans would do far better to focus on taking all (legal) steps to ensure that their candidates and viewpoints prevail, rather than dreaming up spur-of-the-moment rationalizations for ignoring settled law that may create momentary advantages, but that contain equal backfire potential, and that can only erode the rule of the law to everyone’s ultimate detriment.

Third, my only strong preference in this matter is that a Senate Supreme Court vote not take place during a lame duck session – which would be convened after the presidential election. That’s because a possibly decisive number of Senators who would be considering the nomination would be Senators who have been voted out of office. What an offense to the idea of representative government that would be! At the same time, it’s only my preference. These sessions themselves are entirely legal, and I’m not about to claim that my views should substitute for Constitutional procedures.

Making News: National Interest Post Examines Biden’s Often Head-Scratching Manufacturing Plans

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2020 election, allies, Barack Obama, China, Joe Biden, Making News, manufacturing, offshoring, reshoring, tariffs, taxes, Trade

I’m pleased to announce that my latest article for an outside publication is now on-line.  It’s an analysis of Democratic presidential nominee Joe Biden’s proposals to revive American domestic manufacturing, and it leads off this morning’s edition of The National Interest.  Here’s the link.

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

(What’s Left of) Our Economy: A Backfiring Attack on Trump’s Trade & Manufacturing Policies

Tags

Barack Obama, CCP Virus, coronavirus, COVID 19, Economic Policy Institute, election 2020, EPI, Great Recession, Joe Biden, manufacturing, offshoring, Trade, Trump, Wuhan virus, {What's Left of) Our Economy

For the record, the Economic Policy Institute (EPI) has done terrific work over decades on the domestic economic impact of U.S. trade policy decision and trade flow, and it’s been great to stand shoulder-to-shoulder with its economists and ther staff during many major trade policy battles starting with the North American Free Trade Agreement (NAFTA).

Which is why I have been absolutely baffled by a recent EPI report that shows signs of furnishing some major trade policy talking points for Democratic nominee Joe Biden’s presidential campaign.

Most puzzling of all: a table in the August 10 study purporting to show that (a) “President Trump’s erratic, ego-driven, and inconsistent trade policies have not achieved any measurable progress” in reversing the offshoring of U.S. manufacturing jobs and the related ,”decline of American manufacturing”; and in fact (b) that “Offshoring and the loss of manufacturing plants have continued under Trump, notwithstanding U.S. Trade Representative Robert Lighthizer’s claim that the administration’s trade policy is helping U.S. workers.”

Here are the main table figures that cover the first two Trump years and the record of its predecessor, the Obama administration (whose Vice President of course was Biden). I started with 2010 because during 2009, the first year of the Obama presidency, the nation was mired in a Great Recession for which he deserves absolutely no blame. In addition, EPI stops the table at 2018 because factory numbers afterwards aren’t yet available. (The gross output figures have been added by me to make further comparisons possible.)

             Change in factory #s            Change in mfg jobs        mfg real gross output

2010:            -11,283                               -755,000                        +5.37 percent

2011:              -5,155                              +222,000                        +2.89 percent

2012:             -2,938                               +223,000                        +1.93 percent

2013:             -4,220                               +101,000                        +2.86 percent

2014:             -4,056                               +121,000                        +0.79 percent

2015:             -2,129                               +192,000                        +0.54 percent

2016:                -999                                 +33,000                        +0.04 percent

2017:                -782                                 +50.000                        +0.99 percent

2018:             -1,005                               +216,000                        +2.31 percent

The first point that needs to be made is that, as must be obvious, these numbers show absolutely no consistent relationship between the annual change (and in this case, decline) in the number of the nation’s “manufacturing establishments” (what these official figures call factories) and the annual change in manufacturing payrolls.  

For example, in each of these years, lots of factories kept closing, yet manufacturing employment kept rising. It’s true that rates of annual change have varied for both categories during this period. But these variations don’t seem to hold any significance, either. If they did, why would the number of closures fall notably between 2011 and 2012, while those years’ manufacturing workers’ numbers rise by almost exactly the same amount? And why the big difference between the number of closures in 2011 and 2012 on the one hand, and in 2018, on the other, and the close resemblance of the employment gains for each of those years?

Further, although it’s true that factory closures continued during the first two Trump years, the annual rate of closures slowed dramatically. Indeed, from 2010 through 2016, the average annual closure rate was 4,397. For 2017-18, this rate was 893.5. That’s not progress? And let’s be fair and not count 2010, because the manufacturing job losses of the Great Recession continued through its early months. The 2011-16 annual average factory closure number was still much higher (3,249.5) than during the Trump years.

Not weird enough for you? According to these EPI figures, despite factories closing at a much faster rate during the Obama years than during the Trump years, manufacturing employment grew faster. From 2011 through 2016, manufactring jobs grew by an annual average of 148,670. The comparable number for the first two Trump years was only 133,000.

At the same, time, this seemingly paradoxical relationship between numbers of factories and numbes of workers isn’t so completely paradoxical after all.  For example, new kinds of machinery and other efficiencies have surely enabled many domestic manufacturers to consolidate their physical footprint, and actually boost production and hiring. Alternatively, manufacturing companies can increase their capacity by expanding existing plants rather than build new facilities.        

Speaking of production, if we’re going to talk about the decline of American manufacturing, we need to talk about output levels and their changes, too. After all, it’s tough to boost or even maintain manufacturing workers’ numbers if production isn’t rising. Yet the annual growth numbers I’ve added to the table (which represent inflation-adjusted gross output), don’t show much of a relationship with closure numbers or employment numbers, either – and that’s the case even leaving out the quasi-manufacturing recession year 2010.

Still, don’t the EPI figures make clear that manufacturing hiring during the first two Trump years was weaker than during the Obama years? They sure do. As mentioned above, from 2011 through 2016, manufacturing payrolls grew by an average of 148,670 each year versus the Trump annual average in 2017 and 2018 of 133,000.

But are the EPI numbers the right numbers? I decided to check since the 50,000 manufacturing jobs increase presented for 2017 seemed way off to me. And there’s strong evidence that my suspicions were justified. Here’s what I found on the Bureau of Labor Statistics website. They represent December-to-December changes, and they’re seasonally adjusted. But the unadjusted numbers aren’t terribly different:

2011:    +207K

2012:    +158K

2013:    +123K

2014:    +209K

2015:     +70K

2016:        -6K

2017:   +185K

2018:   +264K

According to these data, the average annual manufacturing employment increase during the Obama years was 126,830 (again, recession-y 2010 is left out) and the annual average for the first two Trump years was 224,500. So advantage Trump here. The current administration enjoys a big edge even adding in 2019, when industry’s payrolls rose by only 59,000. That performance brings the Trump annual average down to 169,330 – still considerably higher better than the Obama years’ performance.

The EPI report correctly notes that 2020 has been much worse so far for manufacturing employment, and reasonably argues that even though the CCP Virus pandemic has been mainly responsible, “If President Trump wants to take credit for the job growth at the tail end of a decade of recovery from the Great Recession, then he must also own this collapse, thanks to his administration’s mismanagement of the pandemic.”

But if we’re going to start blaming non-trade policy-related factors for changes in manufacturing performance measures, let’s at least be consistent. For manufacturing hiring and growth (1.30 percent) undoubtedly were held down in 2019 by the safety woes experienced by aerospace giant Boeing – and therefore by its vast domestic supply chain – and by the six-week strike at General Motors.

Combine those developments with the inevitability of manufacturing inefficiencies as companies and entire industries adjust to a dramatically different trade policy environment, and the Trump record looks remarkably good. Unless EPI (and other Trump critics) believe that a painless way to transform U.S trade and manufacturing policies (which the institute strongly supports) has ever been possible?

President Trump was clearly (though anything but disastrously) mistaken when he claimed in early 2018 that trade wars are “easy to win.” Let’s hope that the EPI report isn’t a sign that a Biden administration and other critics would peddle the same pipe dreams.