(What’s Left of) Our Economy: The Case for Trump’s Carrier Jobs Policy

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2016 election, Carrier, Donald Trump, Jobs, manufacturing, offshoring, subsidies, tariffs, Trade, United Technologies, {What's Left of) Our Economy

Donald Trump’s initiative to prevent manufacturing jobs from being offshored from Indianapolis to Mexico (at least what we know of it so far) makes me feel like one of those “two-handed” economists that so frustrated former President Harry Truman. You know – the ones he complained would always give him an “On the one hand…on the other hand” answer when he was seeking clear advice. Here’s what I mean. (Spoiler alert: As you’ll see, however, on balance, the Carrier news is encouraging.)

On the one hand, I wish the President-elect had never vowed during the campaign to prevent the Carrier company from closing that factory and sending the production and employment south of the border in order to save on labor costs – or at least to punish it with tariffs if it proceeded. After all, individual offshoring decisions can be heavily dependent on the special characteristics of the products and/or markets in question. Therefore, it seemed the height of hubris and even folly to risk personal political credibility, or the credibility of an entire policy agenda (in this case, on trade) on stopping a single instance of such job flight.

Moreover, Carrier’s intent to carry out the operation by the middle of next year ensured that the new president had created an effective deadline that would likely force him to try to act before his new administration was fully in place. Addressing the problem before he even took the oath of office seemed even more ill-advised.

In addition, the kind of deal being reported, hinging largely on tax incentives for Carrier to stay stateside, wasn’t the kind I would have struck. As I’ve explained repeatedly, even with America’s remaining and often considerable productivity edge in most sectors of advanced manufacturing, tax-focused policies suffered too many shortcomings to prove an effective tool for reshoring, or persuading businesses not to leave in the first place.

For example, many multinational manufacturers in particular pay little or no actual taxes, whatever their nominal liabilities might be. Further, it’s difficult to see how a first world country like the United States – whose citizens rightly insist on first world levels of public services – could win or even be competitive in a tax-cutting competition with third world countries, where expectations of government are so much lower. (Unless Americans want to see their country’s budget deficits shoot even higher?) And when it comes to the flip side of tax breaks – subsidies – nothing that American leaders have ever proposed, or are likely to propose, is remotely in the league of the subsidy programs of countries like China.

Indeed, Carrier itself has a long history of offshoring even when offered or given tax incentives. As widely noted, the company had received breaks from Indiana shortly before it decided to export the Indianapolis facilities. And in 2004, the company actually turned down similar offers from New York State after announcing its intent to move production to the American South and to Asia. The numbers were simply too paltry.  (See the first link in the preceding paragraph.)

As a result, I’ve always favored what Mr. Trump emphasized during the campaign – imposing a stiff tariff on products that offshoring companies sought to sell back to the United States. As he rightly noted, access to the U.S. market remains paramount in the business models of nearly every business on earth that seeks world-class status. Consequently, conditioning that access on producing and employing domestically – no matter what the job and production flight destination – was the best bet to keep factories at home, to bring many back or induce new U.S. facilities, and to lure more foreign-owned capabilities.

And yet there’s that proverbial other hand – which strikes me as dominant at least in terms of Carrier’s Indiana facilities in particular. First, in conjunction with his repeated promise to kill the Trans-Pacific Partnership (TPP) agreement, it looks like Mr. Trump is determined to keep at least many of his trade and manufacturing-related campaign promises. This should be applauded both by trade policy critics and by anyone who believes that the yawning, chronic gap between politicians’ rhetoric and their actions has dangerously corroded American democracy.

Second, the President-elect’s initiative again signals his awareness that international trade and investment flows have been profoundly shaped by government – and therefore human – decisions; that these decisions at least as often reflect special interest priorities or simply mistaken perspectives as they do expert calculations of national interest; and that when evidence abounds that they’re doing more harm than good, they can and should be changed.

So at least for the next four years, Americans, and especially American workers, won’t have to be settle for leaders content to cry a few crocodile tears over trade-related job and production loss even while insisting that they’re the inevitable casualties of an impersonal, uncontrollable, and of course ultimately beneficial force called “globalization.”

Moreover, although the Carrier plan by no means rules out a more comprehensive, trade-centered response to offshoring over the next four years, Mr. Trump’s actions so far have also already usefully shed light on executive actions that can potentially make a difference before one is put into place, and that in certain cases might be superior alternatives to tariffs.

For example, it’s been speculated that the President-elect could use the reliance of Carrier’s parent company, United Technologies (UT), on government military contracts to keep the Carrier factories state-side. Ideas along these lines have also been proposed in Congress.

UT apparently isn’t devoid of leverage, either – e.g., it’s the sole supplier of engines for the new F-35 jet fighter. But does an American company really want to threaten an incoming president – and the country as a whole – with withholding a product crucial for national security? Be very, very skeptical.

In this vein, Mr. Trump also seems to be in the process of showing that the bully pulpit powers of the presidency still matter. Carrier’s Indiana offshoring decision attracted national attention because of some special factors. It both took place during a presidential campaign, and generated a video that went viral and dramatically illustrated the outrage and anguish felt by the workers seemingly fated to lose their livelihoods.

But most other such corporate moves fly under the radar, especially the national media’s. The president-elect seems determined to make sure that offshoring decisions become headline news and therefore that heat will be felt by politicians in both major parties who have grown accustomed to blithely rationalizing them with the “impersonal forces” argument – unless they’re ignoring them altogether.

Appreciating the bully pulpit effect also rebuts a criticism already widely being made of the Carrier deal – that it will simply persuade other companies to threaten to move factories overseas in order to get juicy tax breaks. As the Carrier-United Technologies latest reaction to this controversy has made indisputably clear, most businesses hate the kind of bad publicity that Mr. Trump’s spotlight has generated. They’ll like it even less if a President of the United States publicly accuses them of extortion – especially a chief executive who’s proved he can connect with large percentages of the electorate, and as a result who’s demonstrated over and over again that he can break the major rules of American politics and come out a winner.

Im-Politic: The Day After, Part I

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2016 election, Bernie Sanders, Cheap Labor Lobby, conservatism, Democrats, Donald Trump, Hillary Clinton, Im-Politic, Immigration, Jeb Bush, Mainstream Media, Marco Rubio, Obama, offshoring lobby, Open Borders, Paul Ryan, Populism, Republicans, Ross Perot, Ted Cruz, Trade

How did I go wrong on analyzing President-elect Donald Trump’s rise during this epochal presidential campaign? Let me count the ways.

My first post on this populist phenom expressed full confidence that he would never win the Republican presidential nomination – or even “come close.” Although I didn’t explicitly say it, I viewed the idea that he could win the White House as positively ludicrous.

After several of his insult barrages and other verbal bombshells, I was all but certain that his campaign was finished.

I had no doubt that, as with third party presidential candidate and fellow tycoon Ross Perot in 1992, his unwillingness to take advice – especially of the critical kind – would cripple his candidacy. Similarly, I believed that he would run his presidential operation the same way that many successful business leaders engage in politics – incompetently.

So I guess I’m qualified to be a Mainstream Media pundit! But seriously, since I got at least some things right – like translating Trump-ish into language that the chattering class should have been able to grasp – I’m not totally sheepish about serving up a first batch of thoughts about what all Americans either are chewing over or should be in the weeks ahead.

>For all the teeth-gnashing about the ugliness of the presidential campaign, and for all the responsibility for it that Trump deserves, imagine what the race for the White House would have been like without him. The Republicans would have nominated either a tool of the Cheap Labor and Offshoring Lobbies like former Florida Governor Jeb Bush or Florida Senator Marco Rubio, or a social conservative extremist like Texas Senator Ted Cruz. And none of them would have felt major pressure to pay attention to the Republican base’s anger about mass immigration, job- and growth-killing trade deals, or the income stagnation they fostered.

On the Democratic side, this kind of conventional Republican nominee may well have enabled Hillary Clinton to win that party’s crown without many nods to the populist positions taken by her chief rival, Vermont Senator Bernie Sanders – including on trade policy, along with Wall Street reform.

What a clueless – and maybe dangerously clueless – campaign that would have been! In particular, with no political safety valve, the continuing buildup of working- and middle-class rage that both major-party standard-bearers would have kept blithely ignoring could have exploded much more powerfully.

>The Trump victory could be a milestone in not only American politics, but policy. Yet the potential may never become performance unless this most successful outsider in U.S. history meets a staffing challenge that has hung over his campaign since his strength starting being apparent. Specifically, where is he going to find the populist policy specialists and academics and business types and politicians to fill the hundreds of key cabinet and sub-cabinet posts where presidential ambitions can just as easily die a lingering death as produce real, on-the-ground change?

The institutions needed to nurture and train such cadres simply haven’t existed. Or they’ve been way too small (i.e., modestly funded) to produce the needed numbers and possibly the needed quality. After his first White House victory, President Obama dismayed many of his followers by appointing to key economic positions in particular the kinds of Wall Street-friendly Clintonians that he had raked over the coals during that campaign (including Hillary Clinton, his rival for the Democratic nomination that year). His response? As I recall at the time (and I’m still looking for a link), something to the effect “What choice do I have?”

Although Mr. Obama never intended to bring the substantive break with the past that his successor has vowed, Mr. Trump could find himself in the same position, and his administration could drift steadily, and even imperceptibly towards a more conventional, and indeed donor-class-friendly, form of conservatism.

>Finally, for today, the Trump triumph places the Republican party in its current form in just as much jeopardy as a narrow Trump loss.

Had Trump lost in a landslide, the GOP’s future would have been easy to predict: The Never-Trumpian Washington establishment would have loudly crowed, “I told you so,” and advanced an overpowering rationale for returning to its low-tax, small-government, free-trading, open-borders, global interventionist orthodoxy of recent decades.

But last night’s results could be the death knell of establishment Republicanism – at least as a viable political force. It’s entirely possible that this establishment’s corporate and similar funders could decide for the time being to keep afloat the think tanks, media outlets, lobbying shops, and political consultancies comprising the GOP/conservative establishment. Indeed, since Trump could flop disastrously, preserving this infrastructure in preparation for 2020 makes perfect sense.

But for the foreseeable future, this is Donald Trump’s Republican party (whether he has to staff his administration with lots of standard-issue Republicans or not). House Speaker Paul Ryan, who strongly opposes his own party’s president-elect on issues ranging from trade and immigration to entitlement reform to foreign policy, can talk all he wants about reestablishing party unity. But the key question surrounding such calls is always “Unity on whose terms?” Until Mr. Trump fails a major test of leadership (or even two or three), or until events beyond his control render him ineffective (like a weakening economy) he’ll be calling the shots.  

And however lavishly financed the party’s establishment may remain, this election has made painfully obvious that its grassroots are shrunken and browned out. Since one of the prime takeaways of this election cycle is that voters ultimately count even more than money, it will become increasingly difficult even for the donors to treat the Washington Republicans as a true national political movement, as opposed to a self-appointed clique of supposed leaders with embarrassingly few followers.

So there’s of course a chance that the Ryan wing (emboldened by some truly desperate plutocrats) might at some point bolt and try to reclaim the Republican brand as its own or launch a third party. But these well-heeled dissidents will face the strongest of tides with the weakest of paddles – the more so given Ryan’s acknowledgment that Trump’s unexpectedly strong showing helped the GOP retain both houses of Congress. 

Tomorrow I’ll be offering some further initial thoughts. Until then, like so many others, I’ll go back to catching my breath!

Im-Politic: A Preview of Trump-ism without Trump?

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2016 election, amnesty, attrition, Contract for the American Voter, Democrats, deportation, Donald Trump, entitlements, establishment, healthcare, Im-Politic, Immigration, immigration magnet, independents, Jobs, NAFTA, Obamacare, Peggy Noonan, politics, Populism, Republicans, TPP, Trade, Trans-Pacific Partnership, Wall Street Journal

Throughout this circus of a presidential campaign, I’ve emphasized the importance of distinguishing between Donald Trump’s myriad personal failings and the Republican presidential nominee’s campaign positions – which I remain convinced can form the basis of an urgently needed, sensible, and therefore, enduring new American populism. This week, substantial support for this proposition has come from Wall Street Journal columnist Peggy Noonan and, more surprisingly, from Trump himself.

In an October 20 essay, Noonan – long one of the most effective critics of the corporate-funded Republican establishment that Trump thoroughly trounced during the primaries – described the pillars of “Trump-ism without Trump” with her usual wit and grace. Among the highlights:

>He “would have spoken at great and compelling length of how the huge, complicated trade agreements created the past quarter-century can be improved upon with an eye to helping the American worker”:

>He “would have argued that controlling entitlement spending is a necessary thing but not, in fact, this moment’s priority. People have been battered since the crash, in many ways, and nothing feels stable now”:

>And he “would have known of America’s hidden fractures, and would have insisted that a healthy moderate-populist movement cannot begin as or devolve into a nationalist, identity-politics movement.”

The only matter on which I believe Noonan is seriously off-base is immigration. I certainly agree with her that Trump should have “explained his immigration proposals with a kind of loving logic—we must secure our borders for a host of serious reasons, and here they are. But we are grateful for our legal immigrants….” The problem is with her apparent belief that “In time, after we’ve fully secured our borders and the air of emergency is gone, we will turn to regularizing the situation of everyone here….”

As I’ve written, this popular (with both wings of the establishment) version of amnesty inevitably will supercharge America’s “immigration magnet.” The perceived likelihood of eventual legalization can only bring millions more impoverished third world-ers to the nation’s various doorsteps. It’s inconceivable that even a President Trump would take the measures needed – which would surely involve some use of force – to keep these masses, and especially the women and children, at bay.

The far better, indeed only realistic, approach is one that Trump himself has unfortunately barely mentioned: a stout refusal to legalize in any form accompanied by a strategy of attrition – i.e., encouraging illegals to leave both by boosting efforts to keep them out of the workplace, and by denying them (and their anchor children) public benefits.

But it’s almost like Trump was listening. Two days later, he came out with a “Contract for the American Voter” that echoed much of Noonan’s column. He promised that in his first hundred days in office, he would announce his “intention to renegotiate NAFTA or withdraw from the deal,” along with withdrawal from the Trans-Pacific Partnership (TPP) trade deal. Both measures should draw strong support from Democrats and independents. In addition, Trump would designate China a currency manipulator, and order an inventory of predatory foreign trade practices.

On immigration, he omitted any reference to blanket deportation of all illegals and instead focused on starting to remove “the more than 2 million criminal illegal immigrants from the country and cancel visas to foreign countries that won’t take them back”; to de-fund Sanctuary Cities; and to “suspend immigration from terror-prone regions where vetting cannot safely occur. All vetting of people coming into our country will be considered extreme vetting.” Especially in the political climate that would result from a Trump victory, would most Democrats on Capitol Hill fall on their swords to prevent any of this?

And what did Trump vow re entitlement reforms? The phrase doesn’t appear at all in the Contract, although the list of legislative proposals does include the repeal of Obamacare and replacement with a system (described only generally, to be sure) that could well appeal to most Republicans and many independents, and that in combination with other measures mentioned could bend the national healthcare cost curve down further.

Couple these ideas with Trump’s support for a big infrastructure build-out and repair program; his broadly non-interventionist foreign policy stance combined with a big (job-creating) defense buildup; new government ethics reforms that seek to halt the corrupting revolving door between government and private sector; and any kind of serious middle class tax relief, and it looks to me like a (mandate-sized) winning formula – for a politician who can pass the interlocking personality, character, and temperament tests.

Can such leaders emerge from the current political system, as I recently asked? Are American politicians who rise up through this system simply too beholden to special interests, or too thoroughly imbued with the “If you want to get along go along” ethos to favor rocking any big boats? I still can’t say I know the answer. But I’m as confident as ever that unless and until this kind of candidate emerges, American politics is going to remain one very angry space.

Following Up: Why Economists & Establishment Media Should be a Little More Humble on Trade

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Adam Davidson, Donald Trump, economics, economists, Federal Reserve, Financial Crisis, Following Up, Global Imbalances, Great Recession, Janet Yellen, Korea, Peter Navarro, The New Yorker, TPP, Trade, Trans-Pacific Partnership

A fascinating and revealing coda has just been provided to my brief brush with fame last week, when The New Yorker deemed my views on trade issues not worthy of consideration.  And the source was, of all people, Fed Chair Janet Yellen.

As I wrote on October 13, in a profile of Donald Trump economic adviser Peter Navarro, New Yorker writer Adam Davidson made clear that he considered one glaring weakness of the Republican candidate’s views on trade and other economic policies to be their lack of support among professional economists. As a result, Davidson was completely unimpressed when Navarro noted that I have endorsed them in general – since I lack an economics degree. Nor was his interest piqued when I reminded him by email that my predictions about the outcomes of major trade policy initiatives, like admitting China into the World Trade Organization, were much more accurate than those of most Ph.Ds .

Enter Chair Yellen. In a speech in Boston the very next day, she focused on “some ways in which the events of the past few years [since the outbreak of the financial crisis and Great Recession] have revealed limits in economists’ understanding of the economy….” And despite her understatement, these limits look awfully important. The subjects to which they apply include how demand influences supply, the makeup of the groups of actors economists study (which these scholars’ models assume are completely homogeneous), how finance affects the real economy, and “what determines inflation.”

Indeed, Yellen’s list raises the question of where economists’ knowledge really is solid – at least in terms of ideas that affect economies’ performance in the real world. And so does the economy’s abysmal performance on net since the outbreak of a near-financial cataclysm that virtually none of its members foresaw.

Yellen did add an international question that she believes deserves much more research: how changes in American monetary policy affect the rest of the world and then feed back to the United States. But even though other aspects of the nation’s relationship with the global economy strictly speaking don’t fall under the Fed’s purview, she still might have noted that major gaps still exist in her profession’s understanding of international trade.

Even more disturbing: Although the trade-fueled global imbalances that built up during the bubble decade have been identified as bearing great responsibility for the crisis’ outbreak, as Davidson’s attitude suggests, international commerce is the one area of economics where no significant thinking has been called for at all since the disaster. Indeed, judging from the reactions to Trump’s trade proposals, the conventional wisdom is more entrenched than ever.

Of course, none of this is to say that economists know nothing useful, whether on trade or elsewhere. But with evidence that those global imbalances are once again nearing pre-crisis peaks (albeit with a somewhat different composition), and with President Obama seemingly more determined than ever to win passage of a trade agreement (the Trans-Pacific Partnership) modeled on a Korea deal that has supercharged the U.S. merchandise deficit, you’d think that both economists and journalists would react to proposals for fundamentally new approaches with at least minimal humility.

Im-Politic: Race, Conspiracies, and Double Standards

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2016 election, Courtland Milloy, David J. Rothkopf, Donald Trump, establishment, Im-Politic, Mainstream Media, middle class, Obama, Occupy Wall Street, One Percent, racism, The Washington Post, working class

It’s more than a little strange to praise an establishment newspaper column that all but calls Donald Trump a racist. And yet the bar for simple sanity has sunk abysmally low for opinion journalists (who aren’t supposed to be objective – like their increasingly unprofessional counterparts in hard news). So it’s more than appropriate to tout the virtues of Washington Post pundit Courtland Milloy’s October 11 piece on charges that if the Republican presidential nominee loses the presidency, African-Americans and other minorities could face an “apocalypse.”

Milloy’s article contains the by-now standard accusation that Trump’s rhetoric has been “racist” (as well as “misogynist”). But he departs insightfully from the emerging conventional wisdom that many of Trump’s backers are such vicious bigots that they will respond to defeat at the polls by going on a violent rampage that targets non-whites of all kinds. In addition to disputing the claims that all or most or lots or too many of Trump’s supporters are racists, Milloy points to a lesson he argues African-Americans have learned about even seemingly hostile whites over the…centuries:

“[F]or those who are racists, their views may not lead to threatening actions. When blacks and whites work on jobs where cooperation is a matter of life and death — such as in the military or on a construction site — people, no matter their beliefs, tend to find a way to get along.”

Along the way, he lampoons contentions that Trump’s campaign is responsible for a significant rise in racism throughout American society.

Even more important, Milloy writes that even many Trump critics are missing “the villain that lurks in the shadows” for both minorities and whites in the middle and working classes, and in the ranks of the poor: “the extremely rich who own the politicians, manipulate Wall Street and exploit cheap labor worldwide at the expense of America’s working class.”

If that last phrase sounds familiar, it should. It revealingly mirrors Trump’s own latest line:

“For those who control the levers of power in Washington, and for the global special interests, they partner with these people that don’t have your good in mind. Our campaign represents a true existential threat like they haven’t seen before,” Trump said.

“It’s a global power structure that is responsible for the economic decisions that have robbed our working class, stripped our country of its wealth and put that money into the pockets of a handful of large corporations and political entities.”

As Milloy observes (approvingly), it also sounds a lot like what we’ve heard from the left wing of American liberalism since the “Occupy Wall Street” movement began (and of course before). In addition, this phenomenon has been the subject of extensive recent study – e.g., in a 2009 book titled Superclass: The Global Power Elite and the World They are Making. And the author in this case is David J. Rothkopf, a quintessential establishmentarian who currently edits FOREIGN POLICY magazine.

Curiously, though, when these words come from Trump’s mouth, they’re simply ridiculed (as in this speech from President Obama last week), or they’re ascribed to historic anti-Semitism (as in this October 13 post).

Milloy offers vastly superior advice: urging black and white working-class people [to] come together and stop falling for these political con games….” Clearly, such cooperation is impossible to envision in the near-term future. Is it too much to hope that, by the 2020 campaign cycle, someone who deserves the adjective “presidential” might take on the challenge?

(What’s Left of) Our Economy: New Yorker Coverage that Follows the Crowd

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Adam Davidson, China, Donald Trump, economists, Financial Crisis, Mainstream Media, media, Peter Navarro, The New Yorker, Trade, {What's Left of) Our Economy

Since yesterday brought my first appearance in that supposed paragon of journalistic excellence, The New Yorker, it’s important to present all the context that staff writer Adam Davidson left out, and that was somehow ignored by the magazine’s legendary but evidently slipping fact-checking staff.

The occasion was a Davidson article on Peter Navarro, the University of California, Irvine economist who has been a leading adviser to Republican presidential candidate Donald Trump. Davidson’s main theme was that the input on China-related trade issues being provided to Trump by Navarro (a professional and personal friend of mine for several years) is “wrong and dangerous.” Major evidence for this proposition, according to the author, was his failure to find more than one other professional economist who shares these positions.

While researching the piece, Davidson asked Navarro for some examples to the contrary, and in an email response, Navarro suggested that the author “Start at least with Peter Morici and Alan Tonelson, two leading authorities.” Davidson pointed out (correctly), “I know Alan and he is not an academic economist. I will reach out to Peter Morici. Please do let me know of other academic economists, by which I mean PhD economists who have published peer-reviewed journal articles.”

Navarro contended in a rejoinder on which I was copied, “Tonelson is a fine economist.” I certainly appreciated the vote of confidence, but felt obligated to confirm to Davidson that “It’s true that I do not hold an economics degree. Nor do I write for peer-reviewed scholarly journals.” But I also added three points that I thought created at least some credibility, noting “At the same time, I wasn’t completely blindsided by the financial crisis” – unlike virtually all of the PhDs in whom Davidson places such stock. To document the claim, I provided a link to this article I wrote in early 2006.

In addition, I observed “Nor did I predict that liberalizing trade with China would prove an unalloyed success for the American economy” – unlike virtually all of the PhDs in which Davidson places such stock even though they proved sadly mistaken on this point as well.

Finally, I told Davidson, “Although I don’t know the full scope of your planned article, I do hope if appropriate it makes note of the many Ph.D. economists down the — literally centuries — who have dissented from Smithian-Ricardian trade theory in whole or in part, from Mill to Keynes to Samuelson.” (Abundant material along these lines can be found in a book review I wrote for The New York Times in 1996 of a history of the idea of free trade which unfortunately is not on-line, but which a friend did find in the Times‘ own archives. I would be happy to furnish a copy to anyone interested.)

I never heard back from Davidson on any of this, and learned yesterday when his article came out that his only apparent interest was my acknowledgment that I lack an academic degree in economics. In particular, he judged my track record in predicting damaging consequences from China-related and similar recent trade policy decisions as far less important than my lack of a Good Housekeeping Seal of Approval from a profession that as a whole has been whoppingly and even disastrously wrong on the most important issues it claims to analyze effectively.

Davidson is hardly alone in this media practice of worshiping the authority of a discipline that has been seriously discredited recently by the real-world standard of results. But it was more than a little dispiriting to see that this version of the herd instinct has even spread to The New Yorker – yes, The New Yorker.

Finally, for truth-in-advertising purposes, I have been asked to do research on trade policy by both the Trump and the Bernie Sanders presidential campaigns.  I have not endorsed either candidate for president, though I do support many of Trump’s proposals and have criticized others as being overly timid.  

 

Im-Politic: Clinton’s Campaign Sure Thinks the Mainstream Media is “With Her”

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2016 election, ABC News, Bernie Sanders, CBS News, CNN, Donald Trump, Establishment Media, Hillary Clinton, Im-Politic, Mainstream Media, media, MSNBC, NBC News, NPR, PBS, The Intercept, The New York Times, Washington Post, Wikileaks

The word “surrogate” is defined in dictionaries as “a substitute, especially a person deputizing for another in a specific role or office.” Now thanks to the Wikileaks disclosures of internal emails and other strategy documents from Hillary Clinton’s presidential campaign, we know that the Democratic candidate and her operatives believed that many members of the Mainstream Media fit that description for her upcoming White House race as well.

According to a memo released by Wikileaks on Friday, and first reported (to my knowledge) on The Intercept website, the list of journalists viewed by the Clinton-ites as reliable conveyors of her message included numerous opinion journalists whose liberal leanings are no secret. Examples include E.J. Dionne, Ruth Marcus, Dana Milbank, and Eugene Robinson of the Washington Post; and David Brooks, Maureen Dowd, and Gail Collins of The New York Times.

There’s nothing wrong in principle with their presence. There’s no evidence so far that any of them offered their services to the campaign either voluntarily or in response to a request. And unless material comes out indicating active collusion, although surely most are bristling at the suggestion that they’ve been in the tank for anyone in politics, none of these pundits has any control over how they’re viewed by politicians.

But the Clinton characterization of other list members is much more troubling. Dan Balz of the Post isn’t exactly a pure-play columnist – presumably that’s why his employer doesn’t place his pieces on the op-ed page. But his “news analyses” are supposed to occupy some middle ground between opinion and hard news. That concept isn’t necessarily illegitimate. But maybe the Post could clue its readers in on how it views the relevant distinctions, so they could make up their own minds as to how to view these articles?

Another category of listees is problematic, too, but maybe a little less so, since Chris Hayes, Rachel Maddow, and Chris Mathews host talk shows on a cable network (MSNBC) that doesn’t try very hard to hide its partisanship. (Similar criticisms of course can be leveled at many of their counterparts on Fox News.)  

Major problems, however, surround the inclusion of news show hosts and anchors who do style themselves as objective journalists. For reasons, I described yesterday, no one should be surprised that ABC News Sunday talk show host George Stephanopoulos is viewed as a Clinton surrogate. But his CBS counterpart John Dickerson? Wolf Blitzer of CNN? Charlie Rose, who does double duty at CBS and PBS?

And scariest of all is the number of listed journalists who present themselves as completely objective beat reporters, like Jonathan Karl of ABC News, Jon King and Jeff Zeleny of CNN, Mara Liasson of NPR, Andrea Mitchell of NBC News, and Karen Tumulty of the Washington Post. Moreover, in another memo, the New York Times‘ Maggie Haberman was described as an especially “friendly journalist” who has “never disappointed” the Clinton team with her performance after their promptings.

Since this material dates from spring, 2015, it’s of course nothing more than speculation (however plausible) to venture that Clinton’s operatives have viewed these same journalists as trusted allies in the campaign against her Republican opponent, Donald Trump. (He didn’t declare his candidacy until June.) But the timing is revealing nonetheless because by April, Clinton’s main rival for the Democratic nomination, Bernie Sanders, had thrown his hat into the ring, and it was clear by then that many voters in the party’s left wing were recoiling at the prospect of Clinton as liberalism’s standard-bearer.

As a result, these memos add to the case that much of the national press corps has seen its real mission not as reporting events as objectively as possible, or even as fronting for Democrats, but as defending a center-left status quo against populist challengers of all stripes. Certainly Sanders and many of his backers count themselves as victims.

Fortunately, the only silver lining in this picture is a bright one: Americans’ trust in the mass media to give them the straight news dope is at an all-time low, at least according to Gallup. Undoubtedly that’s a big reason why the establishment media’s finances show signs of weakening across the board. If money really does talk in the ranks of these profit-seeking enterprises, mounting business pressures could push them back to their more responsible roots. Or the Mainstream Media’s owners could arrogantly decide to go down with their ships – in which case the big question will be whether investors more devoted to quality journalism will recognize the vacuum they’ve left.

Im-Politic: The Biggest Media Clinton Cover-Up?

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2016 election, Bill Clinton, chattering class, democracy, Donald Trump, Establishment Media, Gennifer Flowers, George Stephanopoulos, Hillary Clinton, Im-Politic, journalism, Juanita Broaddrick, Kathleen Willey, Mainstream Media, Monica Lewinsky, Paula Jones, sexual assault, videotape, women

What does George Stephanopoulos know and why isn’t he talking? Those to me are two of the most important and clearly the most inexcusably neglected, questions that have been raised in the last 36 hours of the Donald Trump video firestorm. I say inexcusable because the answers could produce major evidence that the establishment media are becoming ever less capable of playing their historic and indispensable role of American democracy’s watchdog.

As must be obvious to anyone following this latest twist of the 2016 American election cycle, one of the leading issues being raised is whether the Republican presidential nominee is being held to a standard fundamentally different from that applied to his Democratic rival’s husband, Bill Clinton, both throughout his presidential years and, reportedly, for decades before.

“Reportedly” is of course the key here. The most disturbing parts of the Trump video clearly are those passages in which he suggests he committed sexual assault. If true, that would of course eliminate the “locker room banter” defense put up by his surrogates and other backers. Indeed, it’s entirely conceivable and understandable that a critical mass of American voters will view even that possibility as a disqualification for any public office. 

I wrote yesterday, there’s no shortage of hypocrisy over the Trump-Clinton comparison on either side. But so far, the Clinton supporters would seem to have the advantage because, as I understand their position, the only Bill Clinton offense that’s been proven has been the former president’s affair during his administration with then White House intern Monica Lewinsky – and that this affair was consensual.

That’s true enough. But for many years, serious charges of far worse behavior by Bill Clinton have been circulating. In connection with one of those instances, a sexual harassment lawsuit filed by former Arkansas state employee Paula Jones was settled, with Clinton paying her $850,000. (He admitted no wrongdoing.) At least one other woman, Juanita Broaddrick, has accused the former president of raping her. At least one other woman, Kathleen Willey, has charged him with sexual assault. Neither woman took her claims to legal authorities at the time – which is a common feature of such episodes.

My purpose here isn’t to litigate or even debate the merits of these real and alleged scandals. Instead, it’s to point out that one of America’s most prominent journalists is and has been throughout the campaign in a position to shed considerable light both on Bill Clinton’s behavior and on Hillary Clinton’s treatment of the women claiming to be his victims. That’s George Stephanopoulos. He was a top adviser to the former president’s first election campaign, and then served as his White House press secretary for Clinton’s entire first term.

As a result, it’s inconceivable that Stephanopoulos didn’t participate in high-level meetings with both Bill and Hillary Clinton on handling these controversies both during the campaign and during the first term. (Jones filed her complaint in 1994, and an imbroglio involving an alleged Clinton affair with Gennifer Flowers roiled the 1992 White House race.) That is, he surely has first-hand knowledge that bears directly on the most sensational issue before the nation today – about the veracity of the various sexual misconduct-related charges against both Clintons.

But on Stephanopoulos’ own Sunday morning talk show, on the very day of a potentially monumental presidential debate in which these questions are sure to come up, the host said nothing even hinting at his former employment by the Clintons. None of the other journalists or political figures on the show’s panel of commentators did either. Nor can I find any instance of an establishment journalist asking Stephanopoulos about his nearly unmatched access to the Clintons in those years.

Could the reason be that Stephanopoulos is thinking about passing through an increasingly busy revolving door yet again and returning to government from his media perch? Or is he still simply a Clinton partisan? And what of the rest of the Mainstream Media and political chattering class members that owe so much of their public profile, and therefore incomes, to shows like Stephanopoulos’? Are some of them having the same thoughts, or holding the same views? Are they worried about getting blackballed from “This Week” – and possibly from the rest of the broadcast and cable networks if they put one the industry’s leading lights on the hot seat? Or are they above all concerned that they’ll be informally ostracized from one of America’s most glamorous social sets for displaying bad form?

Until these questions start getting asked, Americans will have more and more reason to suspect that their country’s news industry can’t be trusted to hold their public figures accountable not simply because of political bias, but because the industry keeps steadily merging with those it’s supposed to be covering. How a democracy can retain its fundamental health under those circumstances isn’t easy to see at all.

Im-Politic: The Near and Longer-Term Outlook for Trump-ism

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2016 election, Bill Clinton, campaign finance, Cold War, Donald Trump, establishment, Hillary Clinton, Im-Politic, Mikhail Gorbachev, Populism, Republicans, Ross Perot, Soviet Union

As of this afternoon, it’s hard to tell which current storm has been bigger – Hurricane Matthew, or the tempest whipped up by the release of a video showing Donald Trump making genuinely disgusting comments about women, and specifically about hitting on them as a big shot.

It’s possible that this disclosure will finally doom the Republican presidential nominee’s already dimming chance of victory in November. But it’s not inevitable, Trump, after all, has been written off before, including following similar revelations, and as of yesterday’s pre-video tape polls, remained highly competitive (though behind) both nationally and in swing states. And even this late in the fall campaign, any number of outside shocks could tip the balance in his favor – including a foreign setback for the United States, a major act of terrorism abroad or even at home, and new information about Hillary Clinton’s own heavy personal and policy baggage.

At the same time, each new Trump outrage makes his chances of defeating his Democratic rival more and more reliant on events he can’t control. That’s a position no one, office-seeker or not, should ever want to be in.

It’s impossible to imagine influencing the main substantive debate that’s broken out over the Trump video – whether what has been learned (anew?) about him is worse morally than what is known about womanizing by former President Bill Clinton and some of his predecessors, along with Hillary Clinton’s own treatment of her husband’s victims. But I can’t resist one relevant observation: Nothing could be more revealing about the deeply divided state of American politics than noting how many Clinton backers who are up in arms about the Trump news dismissed Bill Clinton’s late-1990s critics as (among other descriptions) hopelessly backward prudes, and how many Trump backers were then all over the former president as a reprehensible pervert unfit to hold office.

Largely because they’re still so uncertain, to me the purely political ramifications and questions – especially longer term – are much more interesting and important.

First of course comes tomorrow night’s presidential debate, and how both candidates will handle the Trump revelations. Even before the new video was made public, the first such contest and the vice presidential debate made clear that the Democrats were still counting heavily on spotlighting Trump’s closely related character and qualifications issues. The newest Trump outrages would seem to make this strategy more appealing than ever.

But after a while (which could range from 15 minutes into the debate to the entire period preceding election day) will this look like piling on to significant numbers of voters? Or will repetition make many eyes simply glaze over?

And crucially, how will Trump respond? The smart approach would be to apologize again, at somewhat greater length, and then call for focusing the rest of the evening – and the campaign – on issues. If Clinton persisted, Trump could sadly accuse her of wallowing and resume discussing jobs and the economy, national security, or immigration etc. Trump might also consider shifting the discussion to the potentially damaging release of transcripts of Clinton’s Wall Street speeches and what they signal about her views of America’s top financiers, the desirability of open borders, and the like. Yet too quick a pivot could too easily be read as simple tactical desperation on his part, not as a valid effort to introduce a genuinely worthy subject.

The next time Trump displays such political intelligence, however, will be the first. Indeed, he had exactly this opportunity at the end of the first debate, and hit back with a reference to Bill Clinton’s misbehavior and then a sustained attack on a former Miss Universe.

Second, it looks to me like the mainstream, establishment Republicans who Trump routed in the primaries are looking at his latest crisis as gift from the gods that will boost their chances of recapturing the party in time to prepare for the 2020 elections. Their thinking could not be more obvious. A Trump presidency could consign the establishment to irrelevance for several electoral cycles – which would hurt not only politically, but financially, since as a class their incomes depend on their ability to peddle influence. And this observation applies both to establishmentarians who currently make a living lobbying or consulting for political candidates or media outlets, and to office-holders eagerly eyeing such jobs at some point.

Even a narrow Trump loss could threaten their positions and livelihoods. But a landslide defeat for Trump would enable them convincingly to tell a critical mass of conservatives and Republican-leaning independents, “I told you so,” and push populist impulses and figures to the political margins – at least until the next economic downturn or national security-related disaster.

So every time you read a report about such an establishment Republican denouncing Trump’s transgressions, or calling for his withdrawal from the ticket, keep thinking about all the reasons why their denunciations aren’t necessarily high minded.

The final (for now) political question also concerns the future. And one way to think about it in this respect to remember Mikhail Gorbachev. No need to Google him (right now, anyway). He was the 1980s era Soviet leader whose efforts at domestic and foreign policy reforms were followed by the USSR’s collapse and the end of the Cold War.

It’s still an open question as to whether Gorbachev had a theoretically viable plan but simply ran out of time because the Soviet Union was so brittle economically and socially as well as politically that any serious talk of change at the top was bound to shake its foundations. There’s a powerful argument that Gorbachev actually was not nearly bold enough domestically, and foolishly tried to graft some free market practices onto an economy that he intended to remain fundamentally state-directed. Still others insist that the moment Gorbachev decided to allow Soviet bloc members to open their borders to the West, communism’s dominion over Russia and the rest of the USSR proper was finished. (Here’s a handy summary of many of the major pro and con arguments.)  

But what’s important here for the future of American politics was the question that dominated American foreign policy circles from the moment Gorbachev’s apparent ambitions became…apparent: Was Gorbachev “sincere”? Or more accurately, it was a question that flowed from this query: Could someone like Gorbachev, who rose up through the Soviet system, truly stand for ideas that could in theory of transform that system?

Trump’s obvious personal shortcomings raise the same kind of questions for me. Principally, is it reasonable to hope for politicians to come up through the current political system, and therefore learn how to avoid needlessly alienating or scaring much of the electorate, but who will champion thoroughgoing populist-type reforms a la Trump? Or does succeeding within the system require such heavy reliance on establishment funding (on both sides of the aisle) as to frustrate any truly populist inclinations – and leave that space open to outsider alpha types who have learned to place supreme, overweening trust in their own judgment and capabilities, with all the resulting eccentricities, or worse?

That is to say, can Trump-ism without Trump become a viable movement? Can it attract the necessary resources and talent from outside the establishment? Evidence for a “No” answer is the fact that neither Trump nor his immediate ideological forebear, Ross Perot, have so far been able to pass crucial confidence and reassurance tests with the U.S. electorate. It’s of course rarely a good idea to say “Never.” But this admittedly small historical sample suggests that for a new, improved version of populism to emerge, the aftermath of these 2016 elections will need to be as rule-breaking as the campaign itself.

(What’s Left of) Our Economy: Manufacturing Should Indeed be a US “Obsession”

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Binyamin Appelbaum, Donald Trump, Federal Reserve, innovation, manufacturing, manufacturing production, manufacturing wages, multi-factor productivity, multiplier, productivity, research and development, STEM workers, The New York Times, Trade, Trade Deficits, {What's Left of) Our Economy

You have to give New York Times economic correspondent Binyamin Appelbaum credit. He decided to go the flood of recent media attacks on trade policy critics one better by not only charging that Republican presidential candidate Donald Trump and others are economic know-nothings, but belittling them for an ignorantly nostalgic focus on American manufacturing. Less admirable – Appelbaum’s decision to broach the subject before learning anything important about it, or much of the broader economy.

In an October 4 Times Magazine article, Appelbaum repeated standard claims that American politicians’ “obsession” with manufacturing misses the mark because the sector is doing better than ever, and because its only major problem is actually a sign of progress – its falling payrolls reflect higher productivity, and thus outstanding technological progress. His new wrinkle: a contention that U.S. leaders should spend less time trying to revive manufacturing employment (and wages, which have lagged badly, too?), and more on turning the low-wage service sector jobs into family wage jobs.

But Appelbaum’s own assessment of manufacturing badly misses the mark. His claim of record output, for example, is belied by Federal Reserve data clearly showing that industry’s output is down 4.45 percent in real terms since the Great Recession started – more than eight years ago. Nor does Appelbaum seem familiar with the productivity figures. They show manufacturing’s performance stagnating recently by the broadest measure (multi-factor productivity).

Industry’s record in international trade is another flag that’s at least deep orange. Manufacturing keeps racking up record annual trade deficits, and yesterday’s U.S. government figures revealed that August saw the latest in a string of monthly record shortfalls. These trade balances matter because standard trade theory teaches that one of international commerce’s main virtues is fostering the best possible international division of labor. By its logic, America’s failure to produce anywhere near as many manufactures as it consumes – including in numerous high-value industries like semiconductors, advanced telecommunications gear, pharmaceuticals, construction equipment, machine tools, and ball bearings – unmistakably signals that such activity has a grim future in the United States.

And if such pessimism is warranted, the entire American economic picture will look grim as well. For no other sector appears poised to replace manufacturing as the nation’s productivity growth champ. And it’s hard to identify major new employment prospects for science and technology workers if manufacturing continues stagnating (at best). After all, the sector conducts 70 percent of the private sector’s research and development, and its STEM workers comprise 60 percent of the national total.

Moreover, this funding and these workers seem to be doing an awfully good job on the innovation front, as they generate nine out of every ten U.S. patents.

But perhaps strangest of all is Appelbaum’s call for downplaying efforts to foster manufacturing employment and dramatically raising the wages and improving the living standards of America’s fast-food workers, home healthcare aides and the like via government fiat. At least he recognizes that such steps will have nothing to do with the free market principles so widely used to justify laissez-faire approaches to manufacturing’s woes. But why does he evidently suppose that productivity improvements and especially technological innovation won’t displace many of these jobs, too, especially if employment costs get high enough? And what kind of formula for boosting national competitiveness – and therefore hopes for longer term, sustainable prosperity – would this be?

Ironically, promoting domestic manufacturing looks like the best, most market-friendly way to help these low-wage workers, too. For the sector boasts the economy’s greatest multiplier effect for overall economic activity (which by definition creates new jobs) and one of the largest for employment itself. In other words, manufacturing punches far above its weight in generating new jobs throughout the rest of the economy (e.g., in transportation, construction, retail, and wholesale). Even better, most of these sectors already pay considerably more than those singled out by Appelbaum – and without new government props.