Our So-Called Foreign Policy: Will the Foreign Policy Experts – Finally – Start Learning Some Geography?

Tags

Afghanistan, Biden, Blob, Bloomberg.com, CNN.com, Europe, geography, globalism, Jeremy Shapiro, Luke McGee, Mainstream Media, Marc Champion, Our So-Called Foreign Policy, Robert D. Kaplan, The Economist

I’m thrilled to report that I may have jumped the gun in my post last Wednesday in scoffing at the possibility of President Biden’s botched Afghanistan withdrawal – and the broader U.S. failure in that Forever War – would resulting in any major changes in America’s needlessly risky and costly globalist approach to foreign policy.

I’m not saying that the two-decade Afghanistan fiasco and its humiliating final chapter will spur a search for real alternatives in the foreseeable future, or even that significant new strategies will ever be put into effect – at least not without a much bigger disaster reflecting the same kinds of mistakes. But it’s nonetheless remarkable not only that any unconventional idea has appeared – especially given the determination of the strongly globalist Mainstream Media to suppress them – but that the one that has surfaced challenges the root assumption of globalism.

Specifically, some establishment voices are, inchoately to be sure, pointing out that for all the worries understandably expressed by Americans about new threats to their security appearing in Taliban-controlled Afghanistan, Europe faces much greater threats. The reason, moreover, is that it’s located much closer to Afghanistan than the United States.

In other words, geography counts, and America’s position halfway around the world from this troubled region and its utterly dysfunctional Middle East neighborhood, and separated from them and from its leading adversaries by wide oceans, is a leading contributor to its security that creates options enjoyed by no other major power.

Further, by implication – given that these points are being made in the context of the United States concluding that a Taliban victory in Afghanistan is acceptable after all – one of the most important of these options when many forms of trouble arise in any number of locales abroad is simple non-involvement.

The importance of America’s unique geography and its advantages may seem screamingly obvious. But as I’ve explained in detail (see, e.g., here and here), it has not only been ignored by generations of globalist American leaders and thinkers literally since Pearl Harbor. It’s been actively rejected.

Instead, the prevailing foreign policy conventional wisdom has consistently held that peace and security around the world make up a seamless whole, and that war and aggression and even instability anywhere across the globe are matters of urgent concern to the United States and must be squelched or resisted ASAP lest they mestastasize and directly endanger the American homeland.

Some of these “Geography matters”-type statements have been made by members of America’s most prominent and influential proponents of universal and open-ended foreign policy activism – the so-called Blob. This Washington, D.C.-centered bipartisan agglomeration of globalist former diplomats and Congressional aides, retired military officers, genuine academics, and think tank hacks shapes American diplomacy in two critical ways.

First, it represents the main personnel pool drawn on to staff presidential administrations and House and Senate offices on rotating bases, and also serves as key informal sources of advice for these politicians. In other words, it’s a central portion of what’s often called the “permanent bureaucracy” (and by some, the “Deep State”), whose combination of experience (which of course has unmistakable value), sheer staying power, and skill at projecting an air of authority (which clearly have much less intrinsic value) enables it often to steer policy independent of what elected officials favor – and especially to keep the status quo alive through inertia-reenforcing foot-dragging and even sabotage.

Second, the Blob powerfully influences what so many Americans read, hear, and see about foreign policy by dominating the list of sources used by Mainstream Media journalists (who are predominantly sympatico by virtue of shared elite educations and clubby intertwined social networks) to report and interpret the news. The resulting permeation of reporting and analysis with Blob-y globalist perspectives goes far toward defining for the public which foreign policy ideas are and aren’t legitimate to discuss.

That’s why I was so gobsmacked when Blob mainstay Robert D. Kaplan wrote in the (ardently globalist British magazine) The Economist that

“America is a vast and wealthy continent densely connected by navigable rivers and with an economy of scale, accessible to the main sea lines of communication, yet protected by oceans from the turmoil of the Old World.

“And that geography still matters, despite technology having shrunk the globe….”

As a result, Kaplan added that “geography helps explain why America can miscalculate and fail in successive wars, yet completely recover, unlike smaller and less well-situated countries which have little margin for error.” Moreover, logically speaking (and these are my views, not Kaplan’s), the very geography-grounded security that enables the United States to recover quickly from (at least most) foreign involvements that produce disastrous consequences means that it was never significantly vulnerable to the perceived threats that led to that involvement to begin with.

Similar opinions have been offered by former senior U.S. official Jeremy Shapiro, who argues that post-Afghanistan, the United States “can and will work effectively with allies, but only when its vital interests are at stake. It sees those interests in the competition with China. Increasingly, however, in places such as central Asia, the Sahel, and perhaps even Europe’s eastern neighbourhood, it does not.”

By contrast, he observed, “Europeans have more direct interests at stake in those places.”

Further, some Mainstream Media journalists have followed suit – providing further evidence that such once utterly heretical notions are now being bandied about in some Blob-y circles.

For example, Bloomberg.com‘s Marc Champion has contended that

“The U.S. left Afghanistan on Tuesday humbled and with few of its goals achieved after 20 years of war. For America’s European allies, the humiliation may just be starting.

“Connected to Afghanistan by land, unlike the U.S., for Europe the return of the Taliban presents more concrete threats. Those include not just terrorism but also mass migration and the heroin trade.”

More vividly, a recent CNN.com post was headlined, “Europe left exposed as Biden walks America away from the world stage.” It seems reasonable to infer that if the headline writer – and his editors – regarded America as exposed, too, they’d have mentioned that danger explicitly. Indeed, correspondent Luke McGee went on to report that “Multiple European officials and diplomats told CNN of their shock at Biden’s assertion that the only US interest in Afghanistan was to neutralize the terrorists who attacked the US in 2001 and prevent further attacks on American soil.

“They now fear the humanitarian and political consequences of mass migration from a country run by militants who’ve historically harbored terrorists and that is connected to mainland Europe by land” – unlike, I’d remind again, the United States.

Again, I’m not saying that an intellectual revolution in U.S. foreign policy is on the horizon. But as suggested above, only a few weeks ago, I couldn’t have imagined seeing so many examples of any of the above in so short a timespan.

On balance, I’m still convinced that the Blob will wind up stamping out such dissent, at least within its own ranks – if only because at the end of the day, so few would be employable in a truly post-globalist America. But many Blob-ers are also savvy enough to recognize a potentially sinking ship. So I feel pretty confident in predicting that the longer lousy headlines and optics keep emanating from Afghanistan, the more of these globalists will start appreciating the virtues of America’s geography.

Im-Politic: Has Biden Bet Right Politically on Afghanistan?

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Afghanistan, Biden, border security, Charles Lane, crime, Donald Trump, election 2022, election 2024, Europe, hostages, Im-Politic, Immigration, Jimmy Carter, Lloyd J. Austin III, Open Borders, politics, refugees, Taliban, terrorism, Washington Post

Even if he didn’t peevishly block me on Twitter, I’d consider Washington Post columnist Charles Lane’s Tuesday piece on – how President Biden can “contain” Afghanistan-related damage to his presidency and historical legacy – pretty silly. For it completely ignores some screamingly obvious ways that this debacle can greatly worsen and keep degrading his image far into the future – and of course through the midterm 2022 elections and the 2024 presidential campaign.

Not that it’s out of the question that the domestic political calculation on which Mr. Biden is widely reported to have based his Afghan withdrawal will prove correct. The American public’s attention span can be pretty short and, as the President has rightly noted, who controls that remote “country” has no bearing on U.S. national security. (I use quotes because American policy has been led astray largely because there’s so little evidence that Afghanistan is a country in any meaningful sense of the word.)

Moreover, in case you haven’t noticed, the national news cycle has sped up considerably in recent years. Therefore, any public anger over the withdrawal botch could quickly evaporate once the next crisis or Biden failure, or Biden triumph that comes barreling down the pike. And the twenty-plus year Forever War remains unpopular. (See, e.g., here and here.  For an interesting exception, see here.) As a result, Afghanistan could indeed become yesterday’s meat loaf as far as U.S. voters are concerned, and even surprisingly quickly. 

Even so, it’s easy to imagine how fallout from the withdrawal could pose genuine threats to America and keep Mr. Biden “in the woods” politically.

For example, the odds seem good that the Biden administration will not be able to pull all American citizens out of Afghanistan during the partially open window the Taliban victors seem willing to provide – for now. Defense Secretary Lloyd J. Austin III has already admitted that the U.S. military can’t guarantee Americans not already at the Kabul airport safe passage to the airport, and the State Department has advised these individuals to “shelter in place.” Many could be widely scatttered throughout Afghanistan’s Texas-sized territory.

The Taliban might agree to allow the United States to keep troops in the country beyond the August 31 total military withdrawal deadline set by the President – which Mr. Biden now says may be necessary to complete the evacuation. Or it might not. And if its leaders (whoever they really are) do decide to play nice with the United States, some groups in its jihadist ranks might not.

It’s plausible to believe that those Taliban leaders would want the American military completely gone as soon as possible, and therefore have strong incentives to play ball with Washington. But it seems to me just as plausible to believe that they’d find hostages very useful – say, as leverage to prompt the United States to release large amounts of the ousted Afghan government’s funds (which are currently held at the U.S. Federal Reserve), and the International Monetary Fund to release the smaller but not negligible amount of economic credits (called Special Drawing Rights or SDRs) that the previous regime was scheduled to receive about now. (See here for the details.)

If a hostage situation does emerge, then Mr. Biden could find himself with a problem at least as bad as former President Jimmy Carter suffered after the Iranian revolution in 1979. But even if hostages aren’t taken, a Biden administration decision to keep American troops on the ground in the country in defiance of  Taliban wishes in order to find U.S. personnel and escort them to the airport, or even increase the deployment to carry out these missions, could trigger renewed fighting and American casualties. And this fighting could last for weeks and even months.

Afghan refugees admitted into the United States could vex President Biden for years to come as well – and in two ways. First, as noted, if his administration casts too wide a net (and it’s widened already), any number of Taliban or Al Qaeda members or other jihadists could wind up resettling here. Few question the desire to protect Afghans directly employed by the U.S. military or other government agencies – and I don’t, either.

But calls are being issued to extend visas to still other categories of Afghans, and as always, it’s difficult to imagine that all of them could have been adequately vetted in peacetime given that the previous Afghan government wasn’t exactly the gold standard for efficiency or honesty. Now of course, conditions in the country are utterly chaotic, so the vetting challenge looks that much greater.

If any of those resettled in the United States wind up committing terrorist acts, there’ll surely be political hell to pay for the President. In fact, although, as I’ve argued repeatedly (e.g. here) the key to preventing Middle East-spawned terror strikes on America was never sending U.S. forces to chase around that terminally dysfunctional region every new jihadist group it would inevitably spawn. Instead, it was always securing America’s borders.

Consequently, Mr. Biden can now be fairly accused of failure on both these fronts.Thanks to his Afghan pullout, the Taliban might indeed permit jihadists from re-establishing a terrorist base benefiting from the protection of a sovereign state. And it’s reasonable to conclude that Islamic extremists in other countries and regions will be emboldened as well. At the same time, his Open Borders-friendly immigration policies were making it harder to keep them out even before Kabul fell. Talk about the worst of all possible worlds.

There’s a third refugee-related problem that could stain the Biden record long-term also: crime. Europe’s naive admission of literally millions of Afghans and other Middle Easterners fleeing their war-torn lands greatly undermined public safety in countries like Austria, Germany, and Sweden. No comparable problem has yet appeared in the United States. But so far, U.S. refugee admissions have been much more limited – largely, but not exclusively, because of the Trump administration’s more restrictive policies. If their numbers greatly increase during the Biden years, either because of more indulgent policies or failure to secure U.S. borders, all bets are off.

The 2020 U.S. presidential election showed that it’s dangerous to count Mr. Biden out. After all, until his primary victory in South Carolina, he was derided as a political “dead man walking.” In that contest, however, he benefited from powerful political allies like longtime South Carolina Democratic Congressman James Clyburn. I’m straining to see any similar saviors on the ground in Afghanistan or over the horizon. 

(What’s Left of) Our Economy: More of the (Wrong Kind of) Records in the New U.S. Trade Figures

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Canada, CCP Virus, China, coronavirus, COVID 19, Delta variant, Donald Trump, Europe, exports, goods trade, imports, Made in Washington trade deficit, manufacturing, non-oil goods trade deficit, services trade, Taiwan, tariffs, Trade, trade deficit, trade policy, trade war, Wuhan virus, {What's Left of) Our Economy

About a week ago, I wrote here that the new (second quarter) figures on U.S. economic growth displayed some tentative signs of pre-pandemic normality returning to the nation’s CCP Virus-disrupted trade flows. This morning’s release of the detailed official U.S. trade figures for June reveals that those signs (which came from the inflation-adjusted numbers) were awfully tentative, and that pandemic distortions remain the order of the day.

Indeed, the June trade data brought to an end for the time being the pattern this calendar year of the total U.S. deficit and goods shortfall statistics stabilizing on a monthly basis, along with the crucial non-oil goods gap data. As known by RealityChek regulars, those trade flows can be called the “Made in Washington” portion of U.S. trade, since they make up the category of imports and exports whose levels and changes are most influenced by U.S. trade policy. In that way, they differ from oil trade (which is almost never the subject of trade negotiations and other policy decisions) and services trade (where liberalization efforts worldwide have made only modest progress). Moreover, manufacturing trade in June exhibited the same discouraging characteristics. 

There is one important exception to June’s trend break: The China goods deficit and goods import numbers changed only slightly (for the worse). In fact, they’ve stayed in the same neighborhoods since China’s export-heavy economy rebounded from its own virus-induced shutdown in early 2020. These results look like strong indicators that the Trump tariffs have played major roles in reducing the harm done to the U.S. economy by Beijing’s predatory trade practices. So does the resilience throughout the pandemic shown by U.S. domestic manufacturing – since industry dominates Sino-American trade flows.

But the trade records set in June remain noteworthy. After staying right around $70 billion on average since January (with the exception of a brief March move to just over $75 billion), the combined goods and services shortfall rose 6.70 percent,from $70.99 billion in May to $75.75 billion in June – an all-time high that broke the record set in March.

Since goods make up the great majority of U.S. trade flows, it wasn’t surprising that their deficit pattern was identical. They remained consistently in the high $80 billions since January (also with the exception of March) and then grew in June by 4.53 percent, from $70.99 billion to $75.75 billion. And this total also replaced March’s total as the new record.

The pattern was the same for Made in Washington trade. Its monthly deficit totals, except for March, remained in the high $80 billion range since January, too, then broke out in June from $86.73 billion to $92.42 billion – a rise of 6.56 percent to another all-time high that surpassed a previous March record.

Services trade set no records in June, but its $17.43 billion surplus was the smallest since August, 2012’s $17.08 billion. Because the CCP Virus’ Delta variant hadn’t raised the prospect of more economic curbs back in June, this figure will be worth following closely, since services are so vulnerable to virus-prompted restrictions.

Combined U.S. goods and services exports did bump up by 0.58 percent on month in June, from May’s $206.47 billion to $207.67 billion. In addition, that represented the biggest monthly total since the $209.88 billion recorded in December, 2019 – just before the pandemic is thought to have arrived in the United States. But the much greater amount of total imports climbed by 2.15 percent, from $277.46 billion to a new record of $283.42 billion.

At $145.91 billion, goods exports set their fourth straight monthly record in June. But they continued to improve slowly – by just 0.19 percent over the May total. In fact, since March, they’ve only advanced by 1.57 percent in all on a monthly basis, no doubt in part to relatively sluggish growth in most of the world outside the United States.

The much larger amount of goods imports climbed much faster in June – by 1.84 percent on month, to reach their second straight all-time high of $239.09 billion.

As for services, exports in June advanced by a respectable 1.53 percent, to $61.76 billion. The monthly improvement was the fourth straight, and their best performance since February, 2020’s $69.12 billion. But clearly these levels remain depressed.

Services imports in June also set a post-February, 2020 high ($44.35 billion versus $47.06 billion) and increased for the fifth straight month. But they rose more than twice as fast (3.84 percent) as services exports, and their levels are also well below pre-CCP Virus levels.

America’s non-oil goods exports actually fell sequentially on month in June – by 1.62 percent, from a record $129.66 billion in May to $127.56 billion. The much greater amount of imports, however, grew by 1.66 percent, to $219.98 billion, a level that slightly topped the previous all-time high of $219.68 billion set in March.

The U.S. goods trade deficit with China did worsen in June – from May’s $26.32 billion to $27.84 billion. But the 5.79 percent increase trailed that of the non-oil goods gap, the closest global proxy (6.56 percent). The year-to-date totals tell the same story: The China goods shortfall is up more slowly ( 20.81 percent) than the global Made in Washington deficit (24.59 percent).

Back to the monthly figures, U.S. goods exports to China fell by 2.49 percent between May and June – from $12.41 billion to $12.10 billion. Imports, however, were 3.13 percent higher ($38.73 billion to $39.95 billion).

Especially interesting: On a monthly basis, U.S. goods imports from China have inched up only from $39.11 billion to $39.95 billion. For all non-oil goods by this measure, U.S. imports have risen much faster – from $205.08 billion to $219.98 billion. So it seems clear that the Trump tariffs keep pricing many Chinese goods out of the U.S. market.

But although America’s China and non-oil goods trade shortfalls have stayed fairly stable on a monthly basis since January, its manufacturing trade gap has widened substantially. Already lofty enough during the first month of the year at $99.79 billion, it stood 4.87 percent higher in June – $114.06 billion.

Further, this total broke the previous record of $110.20 billion, set last October.

Domestic manufacturing exports improved by 1.81 percent on month, from $95.33 billion to $97.06 billion. But the much greater amount of imports jumped by 4.49 percent, from $202.04 billion to $211.11 billion.

On a year-to-date basis, moreover, the manufacturing deficit has surged by just under 30 percent. At $622.12 billion as of June, it’s headed toward an all-time annual record.

Other manufacturing records or multi-year highs revealed by the June data included a record monthly deficit of $28.14 billion goods deficit with Europe (including its eastern and western regions, as well as Russia); the third consecutive record monthly goods deficit with new world semiconductor manufacturing technology leader Taiwan ($3.49 billion); and the highest goods deficit with Canada ($5.46 billion) since October, 2008 ($5.65 billion).

A single month’s worth of data doesn’t prove anything, so truly credible judgments about the possible return to pre-pandemic U.S. trade normality still can’t be made based on the data. Also crucial is examining trade figures and their changes against the backdrop of the entire economy’s size and its changes, in order to provide crucial context. When looking at growth and contraction rates in particular the challenge is difficult because trade flow changes only affect the rest of the economy after the passage of some time. 

And of course, if the virus’ Delta variant prompts major, nation-wide U.S. economic restrictions and behavior changes, all trade – and broader economic – forecasting bets are off for the time being.        

Our So-Called Foreign Policy: Return of the Lippmann Gap?

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alliances, allies, Biden, burden sharing, China, defense budget, Democrats, Donald Trump, Europe, globalism, Japan, Lippmann Gap, NATO, North Atlantic treaty Organization, Our So-Called Foreign Policy, progressives, Russia, soft power, South Korea, Walter Lippmann

No, it’s not the title of a newly discovered Philip Roth novel. Instead, the ”Lippmann Gap” is a phrase coined by scholars to describe the result of a country’s aims in foreign policy exceeding the means available to pursue them.

It was named after the twentieth century journalist, philosopher, and frequent adviser to leading politicians Walter Lippmann, who called attention to its frequency and dangers in his classic 1943 book, U.S. Foreign Policy: Shield of the Republic. (P.S. In this post, I described a major flaw in Lippmann’s thinking, but he was right about the importance of establishing a sustainable relationship between a country’s ambitions and its ability to realize them.)

Troublingly for Americans, and for other countries that have long relied on the United States for protection, evidence has emerged that the gap could soon return in a big way under the Biden administration – whose principals, including the President, are typically described as diplomatic “adults in the room” making the welcome return to power after the dangerous tumult of the Trump years.

The evidence consists of reporting (see here and here) that the administration later this spring will submit a defense budget request that seeks no new funding over last year’s levels. Of course, this reporting may turn out to be inaccurate. Or the Biden-ites could still change their plans even if it is currently accurate. In addition, negotiations with Congress, which needs to approve these plans, could result in some increases.

Moreover, a flat defense budget request is by no means necessarily bad news for anyone, except for whichever defense contractors lose expected sales to the Pentagon. For example, the Defense Department has long been notorious for wasteful spending. And adopting different priorities, or more efficient weapons and other equipment, could well provide America and at least most of its allies with just as much “bang for the buck” as previously, as changing circumstances produce a shift in deployments from missions judged to have lost some of their importance to missions seen to have become more significant. In fact, I’ve long favored major cuts precisely because the nation spends way too much seeking objectives – like shoring up the defense of Western Europe – which haven’t been necessary in decades, and indeed in theory create greater dangers than they can address.

But there’s no reason to think that such considerations would be driving forces behind a reported Biden defense spending freeze, or near-freeze. And this is where the Lippmann Gap comes in. Because there’s every reason to believe that Mr. Biden intends to expand America’s foreign defense commitments on net, and because in at least one major reason of concern, the main potential enemy (China) keeps strengthening its militaty and has been acting more aggressively in recent years, and because a major object of China’s expansionist aims, Taiwan, has become the manufacturer of the world’s most advanced semiconductors – the computer chips that serve as the brains of an explosively growing number of civilian and defense-related products.

What other conclusions can one draw from the President’s repeated globalist assertions that “America is back,” and that in particular, it means to reassure allies around the world that allegedly become unnerved about U.S. reliability after four years of being (rightly, in my view) harangued by Trump attacks on their own skimpy defense spending, and threats to leave them in the lurch unless their alleged free-riding ends? (P.S. – not only weren’t these threats carried out, but as I noted in this article, in some noteworthy ways, the former President actually bolstered America’s alliance-related foreign military deployments.  Mr. Biden, meanwhile, has decided, at least for now, to let Europe’s members of NATO – the North Atlantic Treaty Alliance – Japan, and South Korea all off the burden-sharing hook, as made clear here, here, and here.)

Indeed, a flat or even reduced Biden defense budget request might come about in part from pressure from Democratic progressives to cut spending significantly. Fifty House members of his party have just urged him to reduce the defense budget “significantly.” And their rationale has nothing to do with the aforementioned potentially sensible reasons for cuts. Their case for a smaller U.S. military emphasizes that

“Hundreds of billions of dollars now directed to the military would have greater return if invested in diplomacy, humanitarian aid, global public health, sustainability initiatives, and basic research. We must end the forever wars, heal our veterans, and re-orient towards a holistic conception of national security that centers public health, climate change and human rights.”

I’m all for many of these particular aims, and also strongly support developing new definitions of national security and how to achieve and maintain it. But the Biden administration seems likeliest not to redefine national security significantly, but at most add these new domestic-oriented objectives on to the existing list of traditional goals. Therefore, if the progressives get even some of what they want, the effect inevitably would be to assume that “diplomacy, humanitarian aid, global public health, sustainability initiatives, and basic research” can substitute adequately for military force in carrying out an American foreign policy agenda that’s growing, not contracting.

Whether or not I believe this (I don’t), or you the individual reader believes, this is beside the point. U.S. adversaries seem unlikely to be impressed with these forms of what political scientists call “soft power.” Hence China keeps boosting its own military budget, and Russia responded to Obama administration Europe troops cuts by invading Crimea and attacking Ukraine.

U.S. allies are reacting skeptically, too. For example, European leaders evidently worry that Trump’s election revealed a strong popular U.S. desire to shed many global defense burdens that the Biden victory hasn’t eliminated. Therefore, there’s been increasing talk, anyway, in their ranks about reducing reliance on U.S. hard power by building up their own. And as I’ve repeatedly written, that would be great for Americans. But it’s sure not part of any Biden plans that have been made public.

A defense budget request fully reflecting the President’s bold “America is back” vow wouldn’t make me especially happy. But it would be far better than one that reopens or widens (depending on your views of current U.S. capabilities) a Lippmann Gap – and indicates to both domestic and global audiences that he really means to carry out globalism on the cheap.

(What’s Left of) Our Economy: Blaming the Restaurant Crisis on…Trump’s Tariffs

Tags

Europe, food, imports, productivity, restaurants, spirits, tariffs, The Washington Post, Trade, Trump, wine, {What's Left of) Our Economy

It’s like the Washington Post, and especially the folks who run its op-ed page, will do anything to slam President Trump’s tariff-centric trade policies. Example number 4,369,589? A piece not from an Offshoring Lobby mainstay, or one of this pressure group’s hired gun think tank hacks, or an academic economist with his or her head stuck in the clouds – but from two of America’s leading chefs and restaurateurs.

I’ll give Post editors and the authors – Kwame Onwuachi and Alice Waters – style points for creativity at least. The article contends that a great way for apparent President-elect Joe Biden to provide some desperately needed help for a national restaurant sector decimated by the CCP Virus would be to lift a set of tariffs imposed by Mr. Trump on European food products. The tariffs, they contend, are adding 25 percent to the costs of restaurants that use these products exactly at a time when few establishments in this usually low-margin sector can afford such burdens.

Unfortunately, all the piece makes clear is that chefs and restaurateurs should stick to cooking and serving and running their own businesses rather than advising the nation on trade, and that the folks at the Post should try requiring their authors to meet some minimal standards of credible argumentation.

After all, as Onwuachi and Waters themselves point out, these Trump tariffs were imposed last October 19. And the nation’s restaurants seemed to be doing just fine until…the pandemic and the lockdowns came along. So blaming the trade curbs for any significant contribution to the restaurant crisis seems a major stretch.

No doubt dining establishments that rely heavily on sales of products stressed by the authors like “wine from France, Spain and Germany, whiskey from Ireland and Scotland, and Spanish olives and olive oil, along with cheeses from all over the continent, pork, and much more” are now seeing their remaining (post-lockdowns) earnings suffering.

But nowhere in the piece are readers given the bigger picture. For example, what share of the nation’s restaurants even serve any of these foods or beverages? And what share of their total costs do such imports from Europe represent? Further, what percentage of these restaurants have closed for good, meaning that tariff elimination won’t provide them with a speck of relief at all? As RealityChek regulars know, presenting economic data in isolation is the first refuge of an intellectual scoundrel.

The authors – and their editors – also seem unaware that lots of domestic substitutes are available for these European products. For instance, on the eve of the pandemic, U.S.-produced wine accounted for about two-thirds of all the wine sold in the country both by value and by volume. I’m no oenophile, but I keep hearing that many measure up quite well against their foreign counterparts – and often better. In addition, not all the imports, or even the choice imports, come from Europe, as connoisseurs of Australian, South American, and South African wines can attest.

It’s a shame that the Trump tariffs won’t enable the restaurants that do maintain an extensive European wine menu to offer their customers exactly what they want, at exactly the prices to which they’re accustomed. But I strongly suspect that diners today are in a pretty supportive, accomodating mood. And if restaurateurs are indeed desperate – which so many clearly are – they won’t gripe excessively about switching to non-tariffed wines.

Moreover, any restaurateur worth his or her salt should have the marketing chops to encourage customers to expand their palates. Heaven knows they’ve succeeded extraordinarily in persuading Americans to sample all sorts of new, exotic, and often downright weird dishes and drinks containing equally new, exotic, and often downright weird ingredients and combinations thereof.

Since wine and other spirits play an outsized role in restaurant sales and profits, it’s that alcohol trade picture that counts most, and it’s enough to refute in large measure the case for saving or even meaningfully boosting the dining industry by rescinding the tariffs. But as opposed to my indifference to wine, I am a cheese lover, and can personally attest that many outstanding domestic varieties are available, too, for gourmet chefs to place on appetizer or dessert plates.

Finally, both the authors and the Post editors ignore the economics maxim holding that businesses facing cost increases can absorb them without raising prices by boosting their productivity. And although cooking, serving, and dining probably don’t strike many as an activities where efficiency can be greatly raised, the industry itself admits that its productivity growth is unacceptably low and needs to get on the stick.

Just as important, unless Unwuachi, Waters, any other spokes folks for their sector, or Post editors can come up with more convincing evidence that U.S. trade policy has decisively impacted their fortunes, focusing on improving productivity would sure be a better use of their time than whining about Mr. Trump’s tariffs.

Making News: Podcast On-Line of National Radio Interview on U.S.-China Relations & the Biden Manufacturing Plan

Tags

Biden, China, election 2020, Europe, European Union, innovation, Joe Biden, Making News, manufacturing, Market Wrap with Moe Ansari, offshoring, technology, Trade, trade war, Trump

I’m pleased to announce that a podcast is now on-line of an interview I did yesterday on Moe Ansari’s nationally syndicated radio show.  Click here and then scroll down a bit to the segment with my name on it to listen to a timely, informative session on the CCP Virus’ impact on U.S.-based manufacturing; on U.S.-China relations and President Trump’s trade war (which could include Europe), and on presumptive Democratic Presidential nominee Joe Biden’s plan for reviving American industry. The segment comes on at about the 23:50 mark.

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

Im-Politic: The CCP Virus Crisis Has Become Even More of a Nursing Home Crisis

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Canada, CCP Virus, coronavirus, COVID 19, Europe, Following Up, lockdown, nursing homes, reopening, seniors, shutdown, Sweden, The New York Times, United Kingdom, Wuhan virus

About three weeks ago, I posted about the degree to which total U.S. CCP Virus-related deaths were occurring in nursing homes and other special facilities for seniors. And I noted that the answer – “really big” – provided significant evidence for the idea that substantial reopenings of the U.S. economy were much more feasible than widely believed.

The reason: If the virus’ main dangers were so highly concentrated in a single, highly vulnerable, and already confined population, then by definition, such dangers to the rest of the public were considerably less serious than widely believed. Therefore, relatively low-risk populations could be permitted to reengage in normal economic activity sooner rather than later.

Three weeks later, the case for faster, wider reopenings is even stronger – along with the arguments for focusing virus containment measures on seniors, and especially those inside or outside such facilities.

For example, that previous post cited data indicating that about twenty percent of all U.S. virus deaths were taking place in elder care facilities. More recently, a comprehensive New York Times survey pegged the share at 35 percent.

Moreover, data are coming in making clear that this pattern is hardly confined to the United States. In Canada, the share has been reported at 81 percent. Across Europe, national shares are thought to be between 42 percent and 57 percent. In the United Kingdom, it’s estimated at 25 percent.

Possibly the most intriguing findings concern Sweden. That’s because its lockdown was the lightest imposed among the wealthier national economies. The overall Swedish virus death rates, however, have been right in the middle of the pack for Europe.  (See here for the latest numbers.) Yet the Swedish government has also reported that nearly half those deaths have taken place in elder care facilities.

In other words, if Sweden had its nursing home act together, its virus fatalities would have been about 185 per million people – which would have put it well behind the United States, Spain, the United Kingdom, Italy, France, Belgium, the Netherlands, and Switzerland. Sweden’s economy, unfortunately, seems unlikely to escape taking a major virus-related economic hit anyway. But the toll seems largely due to its relatively small size and as a result its relatively heavy reliance on foreign trade – not to its failure to shut down more broadly.

The United States, of course, is much less reliant on foreign trade. In theory, then, if its nursing and similar facilities get the aid they need, America’s economy can continue reopening – and even faster than at present – without running major further health risks. Indeed, as I’ve also noted previously, such reopening per se could well curb other emerging public health dangers. Moreover, as observed by the Washington Post editorial board, moving toward the Swedish model might speed up progress toward creating herd immunity in the United States. This status would mean considerable protection against the second virus wave that might arrive along with cooler weather this fall.

As always, “reopening” doesn’t mean an immediate, complete return to the pre-virus normal. And serious uncertainties continue surrounding the nursing homes data, and indeed all virus-related data. But a pattern visible in so many high income countries can’t be dismissed, either, and it should put ever more pressure on backers of slower reopenings to justify their positions.

(What’s Left of) Our Economy: Is the New U.S. Trade Report a Virus Portent or Anomaly?

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China, decoupling, Europe, healthcare goods, high tech goods trade, Ireland, manufacturing, pharmaceutical, pharmaceuticals, PPE, protective gear, services trade, Trade, trade deficit, travel services, {What's Left of) Our Economy

Were this morning’s latest monthly U.S. trade figures (for March) just one of those things? Or a sign of CCP Virus-affected trade patterns to come? Evidence for both propositions can be found in the weeds, though on balance I remain confident that as the nation’s economy remains gravely wounded (and could well face worse), its trade shortfall will continue its recent (and highly beneficial) Trump-era trend of narrowing.

The reasons for dismissing the new trade report as an outlier stem from the tendency (with numerous exceptions) of the gap to narrow when the economy weakens and to expand when it strengthens. So it was a real surprise to find that, from February to March, when all indicators showed that a major downturn was beginning thanks to the pandemic, the trade deficit rose a strong 11.57 percent – from a downwardly adjusted $39.81 billion to $44.42 billion.

Also surprising for a U.S. economy that’s not very export focused but that’s usually voracious importer: The main reason for the deficit’s growth both in absolute and percentage terms was a drop-off in the former. In March, total U.S. overseas sales sank on month by 9.63 percent, from an upwardly adjusted $207.75 billion to $187.75 billion. That was the lowest monthly total since November, 2016’s $185.49 billion. Combined goods and services imports were down, too – but by a smaller 6.22 percent, from an upwardly adjusted $247.56 billion to $232.16 billion. That total was the lowest for a month since December, 2016 ($234.56 billion).

Moreover, in terms of the trade balance, March’s worse U.S. performance can’t be pinned on the virus-produced collapse in travel. Make no mistake about it – international travel both to and from the United States did collapse. In value terms, two-way travel sank from $28.77 billion in February to $13.49 billion. In other words, it was more than cut in half. But the travel services trade surplus actually improved during that period – from $4.53 billion to $4.72 billion. That means not only that, on net, legal visitors to the United States (including students) as usual spent more in America than Americans spent overseas between February and March. It means that foreign spending in the United States exceeded Americans’ spending abroad by an even greater amount.

Another puzzling result that doesn’t have obvious staying power – at least not to me: The biggest single contibutor to the March trade deficit increase was a more than doubling of the monthly goods trade shortfall with Europe – from $11.37 billion to $22.97 billion. That’s the biggest monthly total ever and the biggest absolute increase ever (the figures go back to 1997), and the third biggest percentage increase of all time (after July, 1997’s 418.80 percent and March, 1998’s 205.89 percent – both totals coming when trade volumes were much smaller, and big percentage increases therefore much easier to generate).

The big Europe merchandise trade deficit surge, moreover, came on the the import side. These soared to $56.04 billion in March (another record), and the 26.42 percent sequential rise was the biggest since March, 2011’s 29.35 percent.

U.S. goods exports to Europe didn’t do badly – they hit $33.07 billion in March, the third best total ever. But the monthly increase was a bare 0.26 percent.

Some of the Europe trade results were due to a much bigger goods deficit and much greater goods imports from Ireland – which is a major foreign supplier of pharmaceuticals to the United States. Despite the overall sequential decrease in American merchandise exports and imports in March, trade in pharmaceutical preparations rose both coming and going. The trade shortfall increased by 13.25 percent, with imports rising by 14.92 percent. And the goods trade gap with Ireland (not all due to pharmaceuticals, to be sure) soared by 45.81 percent with imports up 41.91 percent.

It’s true that both the deficit with Ireland and imports from the Emerald Isle fell sharply on month in February. But both totals were all-time highs.

At the same time, India is another big pharmaceutical supplier to the United States, and although its March merchandise trade deficit with America shot up by 47.87 percent month-to-month, imports actually dipped (by 0.37 percent).

And what about March U.S. trade with China – which gave the world the virus, and remains a major supplier of the chemical building blocks of pharmaceutical products as well as protective medical gear?

In an unmistakably good development for those who recognize both the health security and broader economic dangers of doing extensive business with a predatory trader that’s increasingly hostile geopolitically, the U.S. merchandise trade deficit with the People’s Republic plummeted dramatically again – by just over 26 percent month-to-month, to $11.83 billion. You’d have to go back to March, 2004 to find a lower monthly figure ($10.44 billion).

U.S. goods exports to China actually improved sequentially in March – by 16.98 percent, to $7.97 billion. That’s far from the biggest absolute or percentage monthly increase on record. But with China’s economic growth at multi-decade lows due largely to the virus and the Trump tariffs, it’s encouraging that America’s goods exports to China have held up since the Phase One trade deal was signed in January.

U.S. goods imports from China, meanwhile, fell by 13.18 percent on month in March, to $19.81 billion. That total is the lowest since February, 2009 ($18.85 billion), during the depths of the Great Recession.

On a year-to-date basis, the American merchandise merchandise deficit with the People’s Republic is now down an astonishing 32.61 percent. That’s nearly three times more than the comparable drop in the global U.S. goods deficit, and a clear sign that trade diversion and decoupling from China are taking place even as the overall American trade gap narrows – and are likely to continue taking place.

Two other oddities worth noting in the March trade report. First, the manufacturing deficit rebounded from February’s $63.01 billion (the lowest total since February, 2017’s $60.47 billion) to $75.80 billion. That’s a very big 20.30 percent higher. Even though overseas markets for America’s domestic manufacturers are tumbling into recession and maybe worse along with the U.S. economy, manufacturing exports still managed a monthly gain of 3.55 percent in March – to $93.26 billion. But despite signs of weakness in domestic U.S. manufacturing and the overall economy, manufacturing imports shot up by 10.45 percent, to $169.06 billion. It’s difficult to see how either trend lasts until the CCP Virus is brought under control.

Incidentally, the March totals bring the manufacturing trade gap to $220.75 billion so far this year – down 7.01 percent from last year’s comparable $237.38 billion. Manufacturing exports year-to-date as of March are down four percent, and imports have declined 5.38 percent.

Similarly, the longstanding U.S. trade shortfall in high tech goods more than doubled sequentially in March, from $5.13 billion to $10.30 billion. Sure, this increase followed a 55.62 percent plunge in February, but the turnaround is still stunning. And although high tech exports rose in March on month by a healthy 8.55 percent, the big change, as in February, was on the import side – where U.S. purchases from abroad jumped by 22.24 percent.

More detailed March trade data — particularly shedding more light on U.S. trade in healthcare-related goods — should be out from the federal government shortly, and I’ll be sure to keep you up to date on those developments.   

Im-Politic: A (Huge) Nursing Home Factor in U.S. Virus Deaths

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ABC News, CCP Virus, coronavirus, COVID 19, demographics, Europe, Im-Politic, lockdown, long-term care facilities, nursing homes, reopening, restart, seniors, shutdown, WHO, World Health Organization, Wuhan virus

Whenever I hear about a CCP Virus outbreak at a nursing home or similar seniors facility, I wonder how these especially tragic episodes have been influencing the national data. The issue matters greatly, because the numbers could reveal much about the virus’ spread and virulence among Americans not so aged and confined – i.e., the vast majority of the population.

Of course, avoidable and unavoidable testing shortcomings are making all the statistics dodgy.  And state and local authorities’ standards for identifying and reporting CCP Virus cases – and therefore deaths – are both highly diverse and constantly changing.  What’s emerged so far, though, shows that nursing homes and the like are indeed where the disease’s worst effects are appearing, and by wide margins. As a result, however, these statistics also strongly indicate that the virus is much less dangerous for other Americans than originally thought.

The most comprehensive picture we have of nursing homes’ role has come from ABC News. Its examination of state-level numbers concluded that, as of yesterday, at least 10,631 of nationwide CCP Virus-induced fatalities had been long-term care residents. That’s about a fifth of the U.S. total. But the “at least” in the previous sentence is really important. For the ABC numbers are based on information from only 28 of the states plus the District of Columbia. That leaves the nursing homes’ share of fatalities unknown for 22 states. ABC didn’t say which states were and weren’t included in the count, but it’s almost certain that the more state figures are examined, the higher the nursing home share will rise.

One reason for confidence in this conclusion: The World Health Organization (WHO) stated on Thursday that as many as half of all of Europe’s coronavirus-related deaths have occurred in long-term care facilities. Of course, WHO’s performance during the pandemic has been roundly criticized. But you have to assume that it’s found it much easier getting reliable data from Europe than from dangerously secretive China.

It’s also important to note that Europe’s populations are significantly older than the United States’, which no doubt explains much of that towering European estimate. In addition, Europe was hit by the virus earlier. But along with the incomplete nature of the U.S. data, the the demographic gap is narrow enough to suggest that nursing home residents’ share of American deaths will continue growing.     

Combined with mounting evidence (see, e.g., here and here) that the CCP Virus has infected many more Americans than first estimated – meaning that the disease’s lethality looks considerably lower than once feared – the apparent concentration in nursing homes is unquestionably good news for most of the nation (except, of course, if any of your loved ones lives in these facilities). One possible implication:  With the right, targeted, precautions, a more extensive earlier reopening of the U.S. economy is warranted. The bad news, however, is that the virus’ impact is most deadly in one of America’s most vulnerable populations. Let’s all hope that, if this finding holds up, one result will be more mitigation where it’s needed most.

Our So-Called Foreign Policy: A Big Hint that America Finally Needs to Leave NATO

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alliances, allies, Article V, Cato Institute, defense spending, Europe, free-riding, globalism, NATO, North Atlantic treaty Organization, nuclear war, Our So-Called Foreign Policy, Pew Research Center, tripwire, Trump

Whenever I’ve written about America’s security alliances lately, I’ve emphasized the unacceptable dangers they pose to the nation’s safety because they commit the United States to risk nuclear attack to defend countries that clearly now don’t belong on the list of U.S. vital interests – that is, countries so important to America that their independence literally is worth the complete destruction of major individual cities and even genuine armageddon.

Earlier this week, however, a reminder has appeared about another crucial reason to ditch the granddaddy of these alliances – the North Atlantic Treaty Organization (NATO). Revealingly, it also strongly bears out President Trump’s charges that U.S. allies in the region where they’re concentrated (Europe) have been shamelessly free-riding on the United States. Indeed, the new information also underscores how the allied defense deadbeats are not only ripping America off economically (which seems to be Mr. Trump’s main concern), but how their cheapskate defense budgets are fueling the nuclear risk faced by the United States.

The evidence comes in the form of a new survey of the populations of NATO member countries (including the United States) released by the Pew Research Center, and if you stopped with the headline (“NATO Seen Favorably Across Member States”) you’d understandably think that everything is just dandy in alliance-land. But check out the chart below, which for some reason doesn’t appear until the middle of the Pew report. Its central message should outrage the entire nation.

 

For it shows that although NATO populations are confident that the United States “would defend them from Russian attack,” they’re decidedly unenthusiastic about their own countries participating in the defense of another NATO member. Specifically, a median of 60 percent of residents of NATO Europe (along with Canada) countries express such confidence in America’s military (including nuclear) guarantee (versus 29 percent who are not so convinced). But by a 50-38 percent margin, they oppose their own country joining in.

Of the fourteen NATO members surveyed, populations in only four (the United Kingdom, Canada, Lithuania, and the Netherlands) favored using military force to defend a fellow NATO ally. Yet in only four (Turkey, Poland, Hungary, Czech Republic) did majorities not expect the United States would use force to defend them.

The gap was widest in Italy (where only 25 percent favored helping defend another ally versus 75 percent believing that the United States would ride to its own rescue) and narrowest in the Netherlands (where the numbers were 64 percent and 68 percent respectively). The Italians also were the most confident in the United States in absolute terms, and tied with the Greeks for the least willing to help out. The only NATO members in which majorities supported both propositions were the Netherlands, the United Kingdom, Canada, and Lithuania.

Americans should be infuriated by these results for several intertwined reasons. First, the obligation to come to the defense of a fellow NATO member is at the heart of the alliance (and indeed of any alliance) and is spelled out in Article V of the NATO treaty. Although it’s true that members can always ignore legal obligations when push comes to shove, that’s long been much more difficult for the United States – because of its policy of stationing its own forces in many NATO countries (as well as in South Korea) to serve as “tripwires.” The idea has been that once they’re bloodied by attackers, and indeed about to be overwhelmed (because of their relatively small size) American Presidents will have no real choice but to respond with the U.S.’ equalizer – nuclear weapons.

This prospect was supposed to deter attack in the first place, and the (very) good news is that this strategy worked to keep the peace in Europe throughout the Cold War, and is still working. The bad news is that during the Cold War, the main European beneficiaries were countries whose independence was arguably vital to America – like the United Kingdom, (West) Germany, and France. Nowadays, the main beneficiaries are countries whose independence was never even during the Cold War viewed as vital to the United States – principally, the former Soviet bloc countries.

Yet although the stakes have shrunken dramatically, Washington continues to brandish the nuclear sword. And this risky American strategy remains in place – as it always has – because the European allies’ military forces have remained far too small and weak to repel a Soviet/Russian attack on their own, or with the help of modest U.S. non-nuclear forces. Worse, the Pew results also strongly suggest that if war did break out, American leaders could not for long even count on the help of allied forces even if it was provided initially. That’s an unparalleled recipe for disaster on the actual battlefield.

The Pew findings make the reason for this alarming situation glaringly obvious – the allies have skimped on their military spending out of confidence that the Americans would always answer their call. So why shouldn’t they save the big bucks that would be needed for genuine self-defense and use them for other purposes – like generous welfare states? Even better, the Americans would be left holding the nuclear risk bag, since once any conflict on the conflict escalated to that level, the nuclear conflict would be fought over their heads.

In addition, the Pew survey reinforces the results of a poll released last fall and alertly reported by my good friend Ted Galen Carpenter of the Cato Institute (who’s also just come out with an important new book on the subject).

Let’s be totally clear: This European approach has always made perfect sense from a European standpoint. But it not only makes no sense for the United States – it’s a strategy that creates the danger of national suicide because of decisions that still yoke the country’s fate to manifestly unreliable foreign publics.

Weirder yet: Avowedly America First champion President Trump has been steadily increasing the U.S. military presence in NATO’s most vulnerable – eastern European – members without having secured military spending increases from the other NATO countries that are remotely game changing.

It’s tough, therefore, to avoid the conclusion that America’s NATO allies are now giving Washington the broadest possible hint that it’s time for the United States to leave – because they’ve become utterly unreliable on top of their defense free-riding.  Why is the President acting as reluctant as any globalist to take it?