Our So-Called Foreign Policy: A Call to Return to Failed U.S. China Strategies

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alliances, allies, Barack Obama, Biden, China, Donald Trump, engagement, FOREIGNPOLICY.com, George W. Bush, Indo-Pacific, intellectual property theft, Michael J. Green, national security, Our So-Called Foreign Policy, Paul Haenle, tech transfer, TPP, Trans-Pacific Partnership, World Trade Organization, WTO

When it comes to China-related issues in particular, supposed American experts who have long completely missed the mark have developed a head-exploding habit of assuming that they have anything useful to say on the matter going forward. Here’s a recent example.

Now these failed economic and foreign policy establishmentarians have hit new heights (or is is “depths”?) of chutzpah. As laid out in this article last week on FOREIGN POLICY magazine’s website, two typical figures are now attacking President Biden’s approach to the People’s Republic for taking too Trump-ian a turn, and blaming his alleged mistakes on learning the wrong lessons from the records of pre-Trump Presidents.

Whereas both the Biden and Trump teams, they write, have accused their predecessors of naively assuming that “engagement would lead to a democratic and cooperative China,” in fact, since the initial Nixon Era opening to Beijing, American leaders have fully understood that China’s democratization could never be a foregone conclusion, and have always “combined engagement with strategies to counterbalance China through alliances, trade agreements, and military power.” In other words, far from being disastrously pathetic failures, America’s pre-Trump China policies were actually as successful as was humanly possible,  And current leaders should emulate some of their principal choices. 

Even the administrations of George W. Bush and Barack Obama, they continue, which faced a China whose wealth and power had begun growing stunningly, had foreseen the possibility of Beijing turning more aggressive, and responded to warning signs exactly as events prescribed. Further, their decisions to stay on an engagement track as well were entirely shrewd and responsible. After all, major potential benefits could still plausibly be expected – because during those years, “the question of how China would use its growing power was open to shaping.”

Indeed, say authors Michael Green (a former Bush-ie) and Paul Haenle (previously both a Bush-ie and Obama-naut), a harder line at that time would have amounted to a policy of “strangling China” that also would have been opposed by major allies and the American people, “both of whom mainly saw China as a partner [and] would not have supported containment and decoupling.“

All that went wrong was that that darned current Chinese dictator Xi Jinping assumed power and, well, just ruined everything with his belligerently expansionist aims and actions, and his reversal of much Chinese economic liberalization. The 2008-09 financial crisis didn’t help, either, according to Geen and Haenle, because it convinced Beijing that “the West was declining and the East is rising.”

All the same, say Green and Haenle, the Biden administration should

>recognize that the two immediate pre-Trump presidents had the security side of China policy fundamentally right with their strategy of maintaining and strengthening U.S. alliances with major Asian countries (an odd recommendation since that’s what Mr. Biden is already trying to do); and

>on the economic side, “reconstruct some of the economic statecraft that underpinned U.S. strategies toward China in the past” – principally reviving the World Trade Organization (WTO) as “an important tool to hold China to account” for its predatory practices and joining the current version of the Trans-Pacific Partnership (TPP), which can “bring the weight of almost two-thirds of the world economy to the table in demanding reciprocal agreements from China” and “force Beijing to play by the rules or lose hundreds of billions of dollars in trade as tariffs and market barriers among the rule-abiding economies went down.”

But these arguments only strengthen the case that Green, Haenle and their ilk should be kept as far away as possible from U.S. policymaking toward China.

Regarding security issues, their contention that Bush-Obama hedging was responsible and understandable ignores all the ways in which China had been undercutting U.S. national security interests long before the Age of Xi began in 2012. For example, it played a key role in creating Iran’s nuclear weapons program starting in the mid-1980s. It’s been a major supporter of North Korea’s economy – and therefore an enabler of Pyongyang’s nuclear weapons development for decades. And it’s beefed up its military presence in the South China Sea – including island grabs that violate international law – for nearly as long.

And Green and Haenle seem to need some improved calendar-reading skills, as financial crisis-borne hubris to which they attribute much of Beijing’s recent bellicosity dates from 2008-09 – three to four years before Xi became China’s top leader. Against this backdrop, it’s glaringly obvious that, judged by actual results, the various hedging statements and even counter-measures mentioned by Green and Haenle counted for exactly squadoosh.

In addition, there’s compelling evidence that the Chinese thought so, too. As I reported in 2018, a former U.S. Chief of Naval Operations (the Navy’s senior-most officer) has stated that his Chinese counterpart told him that “he thought the United States would have a more forceful reaction when China began” one of its key island-building phases during the former’s tenure – during the Obama years.

P.S. – this behavior doesn’t exactly jibe with the notion that Beijing was blown away by Bush-Obama alliance-rallying, either.    

If anything, the Bush and Obama China economic policies were worse, at least in terms of long-run security impact. Both presided virtually passively as

>China’s economic predation helped produce trade surpluses that put literally trillions of dollars at Beijing’s disposal to devote to its military buildup and prevent any guns versus butter tensions from emerging;

>China stole intellectual property seemingly at will, which supercharged weapons development, too; and

>U.S. multinational companies felt perfectly free to transfer cutting-edge defense-relevant technology to Chinese partners that were first and foremost agents of the Chinese state, and to teach perhaps hundreds of thousands of Chinese employees and students how to use this knowhow – and ultimately how to develop more on their own.

As for the authors’ economic recommendations, they’re simply laughable. The TPP, after all, contained a wide-open back door through which goods with lots of Chinese content could enter the proposed free trade – largely because none of the other TPP signatories wanted to disrupt production chains in which China plays a key role.

Meanwhile, that robust China-Asia/Pacific trade and investment, plus the difficulty that Mr. Biden has run into in mobilizing support outside Europe against Russia’s invasion of Ukraine is telling all but the willfully deaf that the United States will suddenly become able to increase the WTO’s effectiveness against China’s mercantilism. 

As Green and Haenle suggest, being able to learn from both mistakes and successes is one of life’s most valuable skills.  Sadly, all that their article demontrates is either that they can’t tell the difference, or that they stubbornly refuse to.

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Our So-Called Foreign Policy: The Deaf Leading the Blind on U.S. China Policy

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Barack Obama, Biden, Blob, China, Donald Trump, Fareed Zakaria, George W. Bush, globalism, Mainstream Media, national security, Our So-Called Foreign Policy, privacy, South China Sea, Taiwan, technology, Washington Post

Is “beyond clueless” or “beyond intellectually dishonest” the best way to describe Fareed Zakaria’s latest column for the Washington Post? It’s tough to tell. And you could ask the same of the editors at the Post‘s opinion pages, who clearly saw nothing wrong with letting this apologia for the United States’ thoroughly discredited (at least for those blessed with working and/or uncorrupted brains) pre-Trump China policies see the light of day.

Zakaria’s missive, from this past Thursday, suffers two glaringly obvious flaws. First, like America’s most influential leaders from both parties for decades before 2017 the author insists on the importance of Washington building and maintaining “a serious working relationship” with a regime that has developed (with oceans of reckless American assistance) into one of the world’s “two most powerful actors.”

And former President Donald Trump’s greatest sin (which Zakaria accuses President Biden of following)? Adopting a policy toward Beijing of “open hostility and criticism” that has caused the “collapse” of “communications channels for managing tensions,” and especially during crises or near crises such as that which appears to be developing over Taiwan.

But nothing could be clearer by now than the delusional nature of these procedure-obsessed and substance-free views (which of course despite Zakaria’s claim have continually been parroted by the Biden administration.) For by now it should go without saying that China’s top priority isn’t avoiding conflict with the United States. In particular, it lacks any interest in the President’s oft-stated  objective of creating clear “guard rails” and other rules of the road that result in a safe and orderly “competition” for goals like “winning the twenty-first century” whose definition seems just as vapid, utopian – and distracting – as his administration’s “liberal global order” references.

Instead, China’s top priority is specific and concrete: increasing its power (in all dimensions) and reducing America’s in every way possible. The reason? Eliminate the greatest obstacle to its plans to ensure its decisive control over every major trend shaping the globe’s future – whether the field is military prowess or technological advance or wealth creation or the evolution of society and culture (especially through privacy-threatening progress in cyber-hacking and facial recognition technology).

Not that the Chinese are eager for conflict or even any kind of frontal challenge or showdown – especially when prevailing is still anything but guaranteed. But the ultimate objective is prevailing, and the means entail building the domestic, regional, and global conditions needed to prevail, either without firing a shot or when clashes do break out.

And not that American leaders shouldn’t make sure to maintain those communication lines with Beijing. With both countries possessing vast nuclear arsenals, lowering the odds of accidental conflict is clearly imperative.

But communication, much less broader engagement, mustn’t become an end in and of itself. History too often has shown that they encourage the (1) U.S. acceptance of empty promises; (2) rationalization of failure to achieve or preserve particular valued objectives in the here and now for the sake of payoffs stemming from a sense of mutual obligation that could be entirely unilateral and imaginary, over a time frame that tends to keep lengthening; and (3) the substitution of wishful thinking about attainable goals for gaining and maintaining the ability to deter or successfully counter specific, dangerous Chinese initiatives.

The second glaringly obvious flaw in Zakaria’s column is its exclusive reliance on former Obama administration officials to support his analysis – which makes as much as sense as citing former Carter administration officials as inflation-fighting experts.

After all, it was under Trump’s immediate predecessor that the Chinese began running wild throughout the South China Sea, pushing aggressive territorial claims and literally building islands with military facilities capable of controlling those commercially vital waters – and according to one senior U.S. admiral at the time, precisely because Beijing concluded that Obama would keep sitting on his hands.

It was also Obama who continued enabling China to pursue the predatory economic policies that badly damaged numerous manufacturing industries vital to American national security, and who turned a blind eye to the massive transfer by U.S. and foreign companies of advanced, defense-related techology to the People’s Republic.

But at least Obama “upgraded” the George W. Bush-era “Senior Dialogue” and “Strategic Economic Dialogue” in order to merge “the economic and security tracks” to “break down the barriers inside both the U.S. and Chinese governments to more effectively tackle cross-cutting issues such as climate change, development, and energy security.” Which accomplished exactly what to advance and defend American interests?

And this is where Zakaria’s editors at the Post come in. Evidently none of them thought to say something like, “Hey, Fareed. Maybe quote someone on China policy whose advice isn’t widely seen as a proven failure?”

Maybe they’re just supposed to look for stray commas and dangling participles?  I suspect that the real reason is that they’re part of the same group-thinking, self-perpetuating globalist Blob that keeps working overtime to ensure that the American public is never exposed to any genuinely fresh ideas about promoting the United States’ security, prosperity, and optimal place in the world – and whose  decades-long record of squandering the nation’s blood and treasure on behalf of one grandiose goal after another is its only claim to success.

Our So-Called Foreign Policy: Who Really Lost Ukraine

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Austria, Baltic states, Barack Obama, Biden, Bill Clinton, Donald Trump, Eastern Europe, Finland, Finlandization, foreign policy establishment, geography, George Kennan, George W. Bush, NATO, neutralization, North Atlantic treaty Organization, Our So-Called Foreign Policy, Russia, Thomas Friedman, Ukraine

When it comes to explaining a big and possibly the biggest reason that Ukraine is under apparently full-scale attack by Russia, why it faces a foreseeable future of major casualties and widespread destruction (especially if it mounts a full-scale resistance), and why a longer-term future of heavy-handed dominance by Russia is surely in store, the late George Kennan put it best.

That’s no surprise, since Kennan was one of the most learned, most rigorous, and most practical minds ever to analyze the foreign policies not only of the United States but of Russia and the old Soviet Union. And as New York Times columnist Thomas Friedman reminded his readers Monday, Kennan was one of the few voices warning why the 1990s U.S. decisions to push the bounds of the North Atlantic Treaty Organization (NATO) right up to the Russian border were practically bound to bring tragic consequences. The full Kennan remarks (given in a telephone interview) are well worth reading, but to me, by far the most crucial point was this:

“We have signed up to protect a whole series of countries, even though we have neither the resources nor the intention to do so in any serious way. [NATO expansion] was simply a lighthearted action by a Senate that has no real interest in foreign affairs. What bothers me is how superficial and ill informed the whole Senate debate was.”

He’s entirely correct about the cavalier nature of the Capitol Hill decision-making needed to formalize this treaty modification – the bloviating and posturing and sloganeering about defending freedom and deterring aggression and new world orders that were completely disconnected from the iron realities of brute power and immutable geography.

But this particular list of culprits was far too short, because it should have included the entirely of the Clinton administration (and the George W. Bush and Obama administrations, which successfully pushed for new rounds of NATO expansion), along with virtually all of the academics, think tankers, pundit, and mainstream media foreign policy and national security reporters making up the U.S. foreign policy establishment.

Moreover, at least as important today, the quality of decision-making and analysis inside or outside the federal government remains just as unhinged from both the facts on the ground in Europe – not to mention the skepticism about the establishment’s judgement and competence that’s clearly shaping public opinion at home. 

As a result, Ukraine is now paying the price of their pig-headed refusal (which President Biden has so far continued) to help devise security arrangements in Eastern Europe that actually reflected the national interests (or lack thereof) of the major parties, and the real current and likely future power balances in the region.

It’s entirely possible that neutralizing or Finlandizing the former Soviet bloc countries and regions that used to be part of the Soviet Union itself (in particular Ukraine and the Baltic states) would have only fed Moscow’s appetite for further gains, and/or returned those lands to their former state of dictatorial rule and economic stagnation.

But it’s also entirely possible that their experiences could have mirrored those of Austria (neutralized in 1955, during the height of the Cold War) and, yes, famously Finlandized Finland. Both are prosperous democracies whose well-being seems not to have been affected in the slightest by their lack of total freedom of manuever in foreign policy.

What’s most important to recall is that this option was never even seriously entertained by American leaders or their official and unofficial advisers. For they’ve been living in a fantasy world dominated by international law, unfettered national self-determination, global public opinion, “soft power,” and the like. These myths conveniently relieved them of the need to set priorities, call for spending anything close to the major costs required of their ambitions, or preparing for of the sobering risks.

Meanwhile, America’s high degree of intrinsic security (thanks to geography) and prosperity (thanks to a combination of abundant resources and a dynamic economic system) just as conveniently goes far toward relieving both the establishment and country at large of experiencing the full consequences of commitments glibly and (using Kennan’s language) lightheartedly made. 

Except that American leaders haven’t left the nation entirely off the hook. That’s because although the Biden administration in recent weeks hasn’t deployed remotely the kinds of forces able to defend possible future Russian targets like the Baltics etc. from Russian attack, it has deployed more than enough to boost the risk of direct encounters with Russian forces by accident. (The Trump administation took some similar steps, too.) Given the size of both countries’ nuclear arsenals, and the clearcut treaty commitments Washington has made to new NATO members like the Baltics, the results could be nothing less than the stuff of armageddon novels – or a backdown for the West that could truly reverberate globally and kneecap its credibility.

Although Ukraine seems destined to become a Russian satellite, saving the Baltics and other now independent former Soviet republics from such a fate may still be possible. Before this Russian invasion, because many are now NATO members, it seemed like a bridge too far for American politics for Washington to offer to neutralize or Finlandize them.

In the wake of a completed Russian victory in Ukraine (and yes, the occupation may prove Afghanistan-like for Moscow, but that’s far from a certainty), this idea may move up to the status of the best of several lousy options. Certainly it’s the one that better aligns American goals with American capabilities than what Kennan aptly described as Washington’s now increasingly hollow-looking support for their full sovereignty – not to mention an approach less likely to trigger an even wider, far more dangerous war, either by design or accident.

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.

(What’s Left of) Our Economy: Progress!

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American Affairs, antitrust, Barack Obama, competition, Financial Times, free trade, Jobs, John Maynard Keynes, Martin Wolf, production, Project Syndicate, Robert Skidelsky, stimulus, stimulus package, tariffs, The New York Times, Trade, trade deficit, {What's Left of) Our Economy

I hope you’ll all forgive me for an exercise in self back-patting that (I hope) you’ll read through the end. But the two instances described here of leading economics commentators expressing support for highly unconventional trade policy positions I’ve taken for years are simply too striking to pass up. Even more eye-opening: They appeared within a week of each other!

In chronological order, the first came courtesy of Martin Wolf, the Financial Times columnist who’s more-than-the-average pundit because he boasts both considerable policymaking experience and serious academic chops. As those two bios make clear, he’s also been a strong (though not completely uncritical) supporter of the standard free trade and globalization policies that decisively shaped the entire world economy, including America’s positions, for decades until the CCP Virus’ breakout. (Or did the turning point come with the financial crisis of 2007-08? Oh, well – no need to settle that question right now.)

That’s why I was so amazed to see in his column this past Tuesday the observation that the United States “gains many of the benefits of trade through internal specialisation” essentially because it’s “a large country with a sophisticated economy and diverse resources….”

Wolf’s point may not sound like much. But it not only contradicts the long-standing conventional wisdom – and rationale for supporting the freest possible global trade flows – that emphasizes (1) the centrality of international specialization for maximizing the prosperity of all individual countries and indeed the entire world, and (2) the imperative of exposing national economic activity to global competition in order to force domestic industries continually to improve quality and lower costs.

Wolf has also echoed (unwittingly, no doubt) my own argument that, whatever the validity of these ideas for most countries, there’s no reason for Americans to place any special value on them.

The reason? As I explained in an article in the Summer, 2019 issue of the journal American Affairs, the greatest possible degree of international specialization is advantageous and even crucial for the prosperity of most individual countries because they lack the ability to provide for a critical mass of their essential needs at affordable cost, let alone generate progress.

Any number of reasons or combination of reasons could be responsible. They might lack vital raw materials. Even if they’re wealthy and/or technologically advanced, their domestic market alone might be too small for most forms of economic activity aside from subsistence farming to achieve the scale needed for efficient and therefore relatively low-cost production. Alternatively, this domestic market could be inadequate because most of their people are too poor to be satisfactory customers.

In addition, because they’re so small, inadequate domestic markets have been considered incapable of generating enough competitive pressure needed to force their own producers to keep improving quality, innovating, and to maintain reasonable prices.

Conventional trade thinking has held that these problems could be overcome by individual countries (1) focusing on turning out the goods and services they could provide most efficiently (interestingly, whether in world-leading fashion or not), and (2) selling them where they were in greatest demand (because of other countries’ shortcomings) in exchange for what they themselves required.

Even better, such free trade would continually maximize the efficiency, and therefore the wealth, of all countries, as well as create the conditions for sustainable progress by requiring efforts to enter new, more promising industries to meet global competitive standards.

My own article, however, emphasized that the United States isn’t like most other countries. In fact, it’s uniquely blessed with both the size, the variety of resources, and the economic and social dynamism to supply nearly all its needs and wants from within. In the words of that 1980s inspirational song, in economic term, the United States “is the world.’

As a result, Americans have no inherent need to keep their home markets open, or open them wider, in order to secure adequate supplies of goods and services. And if they’re unhappy with the levels of competition their companies face, because of the country’s gargantuan scale, their best bet for maximizing such competition is resuming the vigorous enforcement of antitrust laws – which, as I documented, had long been largely neglected.

Wolf didn’t accept the policy implications I drew concerning these insights about America’s economic distinctiveness. But since he evidently accepts the basic proposition, it’s legitimate to ask why not.

The second example of a leading economic authority making one of my central points came yesterday on the Project Syndicate website. That in itself is pretty remarkable because, as I’ve previously suggested, Project Syndicate is best described as a digital op-ed page for globalist elites. Just as remarkable, and gratifying, the author of the post in question is Robert Skidelsky, a veteran British politician and venerable academic who’s best known for a highly acclaimed three-volume biography of John Maynard Keynes, the most influential economist of the 20^th century and a scholar whose work still shapes much global economic thought and policy.

According to Skidelsky, one of two major gaps in President Biden’s economic proposals – and especially his stated desire to rebuild manufacturing in America – is its failure to impose tight curbs on imports. Without a plan that Skidelsky (and its originator) calls “compensated free trade,” the author writes that domestic industry won’t be “built back better.”

That’s already nearly identical to arguments I make all the time. But what I found most intriguing was Skidelsky’s principal rationale: America’s still towering trade deficits are bound to permit too many of the job- and production-creating benefits of Mr. Biden’s stimulus spending to drain overseas.

That’s virtually identical to the case that I and a colleague made early during the recovery from the previous U.S. recession. Unfortunately, then President Barack Obama apparently didn’t see our New York Times article, because he ignored the continuing growth of the deficit, and partly as a result, the rebound he presided over was the weakest in American history.

I’m hardly above wishing to have gotten some credit for these ideas.  But progress on the economics of trade (as opposed to the ongoing U.S. policy departures from free trade absolutism bemoaned by Wolf) has been so slow to develop that I’ll take it in whatever form it comes – and of course be keeping an eye out for more.           

(What’s Left of) Our Economy: Recent Revisions Muddy the U.S. Manufacturing Picture Still Further

Tags

Barack Obama, CCP Virus, China, Commerce Department, coronavirus, COVID 19, Donald Trump, Federal Reserve, inflation-adjusted output, manufacturing, manufacturing output, metals, real value-added, tariffs, Trade, trade policy, trade war, value added, Wuhan virus, {What's Left of) Our Economy

As if the CCP Virus pandemic and its aftermath haven’t made gauging the real health of the U.S. economy difficult enough, the Federal Reserve late last month came out with its latest long-term (“benchmark”) revision of its domestic manufacturing production data that confuse the picture of industry’s recent status still further.

These revisions cover the 2017-2019 period, and as such, they’re especially important in gauging how U.S.-based industry fared under President Trump and the trade policy revolution he launched versus their performance during the second term of Barack Obama’s presidency and his standard trade policies. (As known by RealityChek regulars, these two time periods provide the best basis for comparison, since they came closest together during the same – expansionary – business cycle.) Moreover, because the revisions create a different baselines, they also affect the post-2019 period’s growth results for manufacturing, which include the pandemic period.

The Fed’s summary makes clear that the revisions show the inflation-adjusted expansion of manufacturing output during that Trump period to have been significantly slower than previously reported. That finding indicates that far from boosting manufacturing production, and particularly compared with the Obama years, the Trump tariffs (on steel and sluminum, and on hundreds of billions of dollars worth of goods from China) actually held it back.

Indeed, the revisions are so substantial that the picture they draw is a mirror image of the predecessor data – which showed that, at least before the virus struck, Trump-era manufacturing growth in real terms considerably bested the Obama-era performance. For that matter, the previous Fed numbers showed that domestic industry fared relatively well under Trump even counting the pandemic-induced recession year 2020.

Here are the results side-by-side for after-inflation manufacturing production growth in percentage terms:

                                                                   pre-revision               with revision

last four Obama years:                                   +2.45                          +1.30

Trump years pre-pandemic:                           +3.60                           -0.41

all four Trump years:                                     +2.13                           +0.82

So when it comes to growth – an especially important metric, since it’s tough to imagine creating many jobs without it – the new Fed revisions show that the second Obama term was better for U.S. manufacturers than Trump’s single term, CCP Virus or no.

Or were they? As also known by RealityChek regulars, the constant dollar output figures used by the Fed aren’t the only way to measure growth in manufacturing (or any other sector of the economy). Another is value-added, which attempts to avoid the double counting built into the standard output numbers created by their failure to distinguish between the value of the parts and components of a final product, and that of the final product itself. That’s why economists generally view them as the more revealing statistics. And in the above-linked announcement describing the revision and its methodology, the Fed says that the new numbers incorporate insights gleaned from the latest value-added figures (which are reported by the Commerce Department).

But when the latest version of these statistics are examined, they still show that domestic manufacturing grew much faster during the Trump years than during the final four Obama years. Here are the results in percentage terms when value-added is adjusted for inflation:

last four Obama years:                                    +3.88

Trump years pre-pandemic:                            +7.56

all four Trump years:                                       +9.22

One especially interesting feature of the above – the real value-added numbers show that U.S. manufacturing output actually grew further during the pandemic. In fact, even the revised Fed growth numbers show that industry has fared a good deal better so far during the pandemic than previously reported – with after-inflation production shrinking by just 0.92 percent between February, 2020 and this past April, not 1.42 percent.

Tomorrow the Fed will publish its first read on real manufacturing output for May. It will of course shed some more light on the status of domestic industry. But never forget that, given how the results will be revised not only several times during the next several months, but also about two years from now, the degree of illumination may be relatively modest.

Following Up: Gun Sense Still Lacking in the Crime/Violence/African Americans Debate

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African Americans, Arionne Nettles, Barack Obama, Chicago, crime, Following Up, gun violence, guns, homicides, law enforcement, police reform, policing, poverty, racism, The New York Times

Everyone (like me) worried about the metastasizing influence of race-panderers can give thanks that so many are so completely, and indeed stupefyingly, incompetent. Otherwise, merchants of division like Northwestern University journalism faculty member Arionne Nettles and her enablers at The New York Times might be overwhelming favorites to tear the country apart for good. All the same, the more they push claims (I’m getting fed up with the pseudo-sophisticated term “narrative”) that are not only flagrantly phony but transparently contradictory, the more they obscure genuine and important failures and inequities that need fixing.

Nettles and The Times editors who considered her piece on African American victims of “gun violence” worthy of publication in this form took only a paragraph and a half to blow up their own case that big cities across the United States have seen a recent “rise in gun violence – perpetrated both by civilians and police officers” that’s taken an especially heavy toll on black children and teenagers.

They’re of course right about these tragedies and their scale. But the obvious insinuation that “civilians and police officers” share even remotely comparable blame is demolished by the observation that

“In one especially alarming spree last summer, Chicago police officers shot five people in just two months. And shootings and murders in the city were up more than 50 percent overall in 2020 compared with 2019; 875 people died from gun violence – a record high. A majority of the city’s victims (78 percent) were Black.”

Let’s assume that every one of the five Chicago police shootings mentioned here was totally unjustified. Let’s also state categorically that unjustified shootings by police are way more disturbing than other types of shootings because law enforcement must be held to a much higher standard. Are Nettles and The Times still seriously contending that the two categories of violence are on anything like a par, even as threats to African American lives?

More important, these and similar passages – along with Nettles’ interviews with African American mothers who have lost children to such violence – add powerfully to the evidence that, as I’ve argued before, the overwhelming problem here isn’t “gun violence” at all. Instead, it’s a culture of violence and broader irresponsibility that’s gained a strong foothold in too many Black neighborhoods, and whose importance keeps being ignored by supposed champions of American minorities.

A handful of data points from recent (2018) national (FBI) law enforcement statistics clinch this case. First, of the 328.24 million total U.S. population estimated by the Census Bureau that year, 76.3 percent were white and 13.4 percent African American. That’s a ratio of nearly six-to-one. Yet that year, reported Black homicide offenders in one-on-one incidents actually slightly outnumbered their white counterparts in absolute terms (3,177 to 3,011).

Almost as stunning: Of the 2,925 Black homicide victims that year, nearly 89 percent were killed by other Blacks. Nearly 81 percent of the 3,315 white homicide victims in 2018 were killed by whites, so it’s clear that American killers principally go after members of their own race. But relatively speaking these figures – combined with Nettles’ accurate observation that Blacks are much likelier to die in firearms incidents than Whites – reveal not a gun violence crisis afflicting so many African American communities. They reveal an African American violence problem.

No one can reasonably doubt that racism’s legacy and the resulting lack of economic opportunity and poverty play a big underlying role. As I (and many others) have written, the racial wealth gap alone is yawning, owes much to discrimination, and generates affects that have lasted generations. It should be just as hard reasonably to doubt, however, that something other than poverty is responsible.

Look at Chicago. In 2019, according to the U.S. Census Bureau, its Black poverty rate was 26.3 percent – that’s much higher than the overall poverty rate for the city (16.4 percent), or the national African American poverty rate (18.8 percent). So even though there seems to be a Chicago-specific problem on top of a poverty problem, even in Chicago nearly three fourths of the Black population lives above the poverty line. That hardly means affluence, but it’s hardly destitution, either.

Moreover, the Chicago Black poverty rate is down considerably from 2010’s 33.6 percent (although the city’s overall poverty rate fell faster during this period). Yet the city’s numbers of homicides and its homicide rate have roughly doubled during the subsequent nine data years, and in Chicago, the vast majority of the killers (as with the victims) are African American.

As suggested above, moreover, Nettles’ ham-handed treatment of the “gun violence” and homicide issue is all the more inexcusable because the author’s interview subjects do a decent job of reinforcing the case that there does exist a serious race-based policing problem in this country. Not that the African American women with which the author spoke are entirely free of denialism about what’s plaguing their neighborhoods. There’s Shanice Steenholdt, who seems to believe that Australia-like gun control laws would turn her city of Houston into a replica of the small Australian town in which she lived for a time where she “didn’t feel like [she] had to worry about gun violence.” There’s Chicago’s Diane Lasiker, w appears to think that the big problem in her city is that it seems “to want to keep the Police Department separate from the community.” Her fellow Chicagoan Chez Smith and Flint, Michigan’s Marcia McQueen put much stock in “offering conflict resolution techniques” to their communities’ youth.

But the story told by Atlanta’s Cora Miller of her husband’s arrest (in Minnesota) reinforces the case that it’s much too common for completely innocent African Americans to be mistreated by police. As I’d written last August, I’ve heard first-hand accounts of such episodes from Black friends who have experienced it first hand – on top of South Carolina Republican U.S. Senator Tim Scott’s experiences with Capitol police. If these individuals – who are all highly successful by any reasonable definition – can be harassed for no good reason, imagine how often everyday folks just trying to get by face these indignities and indeed dangers.

So let’s by all means get policing up to snuff. Let’s by all means identify the most effective ways in which government and business can help foster opportunity in needy Black (and other) communities. But let’s also never forget a voice who has passionately argued that

“no matter how much money we invest in our communities, or how many 10-point plans we propose or how many government programs we launch — none of it will make a difference, at least not enough of a difference, if we don’t seize more responsibility in our own lives.”

In case you’re wondering, his name is Barack Obama.

Those Stubborn Facts: Immigration Excuse-Making for California

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Associated Press, Barack Obama, California, Donald Trump, green card holders, green cards, immigrants, Immigration, legal immigration, Mainstream Media, MSM, Those Stubborn Facts

California’s “immigration decline has been particularly fast in the past half decade as President Donald Trump’s administration sharply reduced the number of people legally entering the United States.”

– Associated Press, April 24, 2021

 

Average annual grants of legal permanent U.S. resident status to

immigrants, Trump years: 1,085,181

 

Average annual grants of legal permanent U.S. resident status to

immigrants, second Obama term: 1,060,402

 

(Sources: “Awaiting census count, California ponders slow growth future,” by Kathleen Ronayne, Associated Press, April 24, 2021, Awaiting census count, California ponders slow growth future (apnews.com) & “Table 1. Persons Obtaining Lawful Permanent Resident Status: Fiscal Years 1820 to 2019,” Yearbook 2019, Yearbook of Immigration Statistics, Immigration Data and Statistics, Department of Homeland Security, Table 1. Persons Obtaining Lawful Permanent Resident Status: Fiscal Years 1820 to 2019 | Homeland Security (dhs.gov))

(What’s Left of) Our Economy: “Joe Science” – Finally?

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Barack Obama, Biden, Bill Clinton, Congressional Research Service, defense, dual-use technologies, George W. Bush, infrastructure, National Science Foundation, research and development, science, scientists, technology, {What's Left of) Our Economy

President Biden is a champion of science – everyone knows this, right? He promises to follow it on major issues like the CCP Virus. He’s pledged to boost Washington’s funding of research and development. He’s blasted his predecessor for neglecting this responsibility. (See here for examples of the last two statements.)  And the scientific community the world over is brimming with confidence that greater respect from the White Houe and more resources are on the way.  (See, e.g., here and here.)

Judging from his remarks unveiling his big new infrastructure plans, it looks like Mr. Biden will indeed bolster the federal government’s support for science and technology. And that’s great news, because such efforts will be crucial to meeting any number of big public policy challenges and seizing equally important opportunities. Dealing with enviromental threats, beating back the China challenge, and boosting the nation’s productivity – its best hope for raising living standards on a sustainable basis – are just a few that come to mind.

And if you’re one of those who believe the Feds can’t do anything right, you need to learn some history. Washington has a formidable record both on the basic research and applied research sides. (Here’s an impressive list from America’s National Laboratories system, and it doesn’t even include major advances fostered by other agencies in medicine, agriculture, aerospace, and information technology – some of which are summarized here.)

Mr. Biden also is unmistakably right about America having fallen behind on these fronts. But what he hasn’t told you, and what his scientific backers seem to have forgotten, is that in the last roughly quarter century, federal science and technology spending in toto never stagnated as much as during the administration he served as Vice President.

The data below are calculated from the annual research and development budget requests made by U.S. Presidents going back to the Clinton years. (For the data from 1998 through 2015, see the National Science Foundation reports archived here.  For the later data years, see the annual Congressional Research Service reports here, here, here, here, here, and here.)

Since Congress has the authority to raise or lower these requests, these figures don’t measure actual federal research and development spending by year. But they do shed light on how much various Presidents sought to spend, and by extension how greatly they valued nurturing such activity, how much they believed they could convince Congress actually to appropriate – and, by implication, how hard they were willing to push to achieve these goals.

In this vein, during his second term, Bill Clinton’s overall annual federal research and development budget requests rose by a total of 15.54 percent.

During the eight years of George W. Bush’s presidency, such Executive Branch requests increased by 43.91 percent.

For the eight years of Barack Obama’s administration? These requests climbed by 6.56 percent.

And under supposed science denier Donald Trump? They were up 20.82 percent.

Some important qualifications need to be made here. The big Bush increases were driven by major new asks for defense-related R&D (think “September 11,” “Global War on Terror,” and “Iraq”). Indeed, during his administration, such spending grew from 52.47 percent of total federal research and development spending to 58.97 percent. And when you draw this distinction, the Obama (-Biden) record looks better if you value civilian research over military. Here’s how recent Presidential requests compare on that score.

Clinton civilian requests: +25.67 percent

Bush civilian requests: +24.24 percent

Obama civilian requests: +34.26 percent

Trump civilian requests: +19.07 percent

But the Obama-(Biden) record doesn’t look that much better, especially than the Trump record. After all, that 34.26 percent increase took place over eight years, not four. And the Obama-Bush comparison, and other Obama comparisons, need to take into account the ever-blurring line between defense and non-defense-related research and development, because so many new technologies can be used in both fields and spur progress in both. That is, advances in defense knowhow can and do produce spin-off effects in the civilian world, and vice versa.

It still remains to be seen how the Biden infrastructure plan translates into specific research and development budget requests. But for now at least, Americans can be grateful that the Joe Biden of 2021 seems to be much more of a science and tech enthusiast than the administration he worked for a decade ago. 

By the way, special thanks to Rafal Konapka, who first brought the recent federal research and development trends to my attention.

 

Our So-Called Foreign Policy: Biden’s Aides Show How Not to Deal with China

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Alaska, Antony J. Blinken, Asia-Pacific, Barack Obama, Biden, China, Donald Trump, global norms, globalism, Hong Kong, human rights, Indo-Pacific, international law, Jake Sullivan, liberal global order, Our So-Called Foreign Policy, Reinhold Niebuhr, sanctions, Serenity Prayer, South China Sea, Taiwan, tariffs, tech, Trade, Uighurs, United Nations, Yang Jiechi

You knew (at least I did) that America’s top foreign policy officials were going to step in it when they led off their Alaska meeting yesterday with Chinese counterparts by describing U.S. policy toward the People’s Republic as first and foremost a globalist exercise in strengthening “the rules-based international order” rather than protecting and advancing Americas’ own specific national interests.

This emphasis on the part of Secretary of State Antony J. Blinken and White House national security adviser Jake Sullivan simultaneously made clear that they had no clue on how to communicate effectively to the Chinese or about China’s own aims, and – as was worrisomely true for the Obama administration in which both served – unwittingly conveyed to Beijing that they were more concerned about dreaming up utopian global arrangements than about dealing with the United States’ own most pressing concerns in the here and now.

It’s true that, in his opening remarks at the public portion of yesterday’s event that Blinken initially refered to advancing “the interests of the United States.” But his focus didn’t stay there for long. He immediately pivoted to contending:

“That system is not an abstraction. It helps countries resolve differences peacefully, coordinate multilateral efforts effectively and participate in global commerce with the assurance that everyone is following the same rules. The alternative to a rules-based order is a world in which might makes right and winners take all, and that would be a far more violent and unstable world for all of us. Today, we’ll have an opportunity to discuss key priorities, both domestic and global, so that China can better understand our administration’s intentions and approach.”

Where, however, has been the evidence over…decades that China views the contemporary world as one in which peaceful resolution of differences is standard operating procedure, much less desirable? That multilateral efforts are worth coordinating effectively? That might shouldn’t make right and that China shouldn’t “take all” whenever it can?

Even more important, where is the evidence that China views what globalists like Blinken view as a system to be legitimate in the first place? Indeed, Yang Jiechi, who in real terms outranks China’s foreign minister as the country’s real foreign affairs czar, countered just a few minutes later by dismissing Blinken’s “so-called rules-based international order” as a selfish concoction of “a small number of countries.” He specifically attacked it for enabling the United States in particular to “excercise long-arm jurisdiction and suppression” and “overstretch the national security through the use of force or financial hegemony….”

Shortly afterwards, he added, “I don’t think the overwhelming majority of countries in the world would recognize…that the rules made by a small number of people would serve as the basis for the international order.”

Yang touted as a superior alternative “the United Nations-centered international system and the international order underpinned by international law.” But of course, even if you swallow this Chinese line (and you shouldn’t), it’s been precisely that system’s universality, and resulting need to pretend the existence of an equally universal consensus on acceptable behavior and good faith on the part of all members, that’s resulted in its general uselessness.

Meanwhile, surely striking Beijing as both cynical and utterly hollow were Blinken’s efforts to justify U.S. criticisms of China’s human rights abuses as threats to “the rules-based order that maintains global stability. That’s why they’re not merely internal matters and why we feel an obligation to raise these issues here today.”

After all, whatever any decent person thinks of Beijing’s contemptible crackdown in Hong Kong, arguably genocidal campaigns against the Uighur minority, and brutally totalitarian system generally, what genuinely serious person could believe that the United States, or other democracies, had any intention or capability of halting these practices?

What might have made an actually useful, and credible, impression on the Chinese from a U.S. standpoint would have been blunt declarations that (a) Beijing’s saber-rattling toward (global semiconductor manufacturing leader) Taiwan and sealanes-jeopardizing expansionism in the South China Sea, and cyber-attacks were major threats to American security and prosperity that the United States would keep responding to with all means necessary; and (b) that Washington would continue using a full-range of tariffs and sanctions against predatory Chinese economic practices as long as they continued harming U.S. businesses and their employees. That is, Blinken and Sullivan should have emphasized Chinese actions that hurt and endanger Americans – and against which in the economic sphere, Donald Trump’s policies showed Washington could make a significant difference.

It’s possible that in the private sessions, President Biden’s emissaries will dispense with the grandstanding and zero in on the basics. (Although that shift would raise the question of why this approach was deemed unsuitable for the public.) But the Biden-ites weirdly advertised in advance that China’s economic abuses and the technology development threat it poses wouldn’t be U.S. priorities at any stage of the Alaska meetings.

In the mid-20^th century, American theologian Reinhold Niebuhr popularized (although probably didn’t write) a devotion called the “Serenity Prayer” whose famous first lines read “God grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference.” I’m hoping someone puts copies into Blinken’s and Sullivan’s briefcases for their flight back from Alaska.