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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Our So-Called Foreign Policy: Mr. President, U.S. Dealings with China are No Game

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alliances, allies, Antony Blinken, Asia-Pacific, Biden, China, Cold War, democracy, Donald Trump, Indo-Pacific, Jake Sullivan, Kurt M. Campbell, national interests, Our So-Called Foreign Policy, Soviet Union

For literally decades, American foreign policy makers, and especially the pre-Trump globalists, fell into the dangerous habit of obsessing about second-order questions (like whether the old Soviet Union was a fundamentally aggressive or defensively-oriented power, whether military force or diplomacy was the nation’s most effective foreign policy tool, whether unilateral or multilateral actions were most likely to succeed, and whether a more or less involvement in world affairs was preferable).

As a result, they typically neglected the paramount first-order questions: Principally, what overseas goals does the United States need to achieve to secure adequate levels of safety and well-being? In other words, which foreign objectives matter decisively for the United States in and of themselves, and which don’t? And those are first-order question because assessing others’ intentions is much more guesswork than science, and because no one can sensibly choose tools for a job without knowing what job they want to do.

(See this 1985 FOREIGN POLICY essay and this 1991 Atlantic Monthly article on the general failure of not only American leaders but of presumed foreign policy experts to think rigorously about national interests. See this 1991 New York Times piece about the hazards of divining intentions as opposed to capabilities. Apologies if the first two are no longer available for free on-line.)

Therefore, it’s awfully depressing to see the Biden administration staging its own version of backwards strategizing. It’s evidently determined to base its China policy on figuring out what kind of relationship it wants with the People’s Republic, and paying much less attention to identifying specific actions the United States wants China to take, stop, and refrain from in the first place.

The Biden approach is completely mistaken for two main reasons. First, whenever relationships are pursued regardless of their impact on particular, concrete interests, these national needs and wants inevitably become subordinated to atmospherics and abstractions and processes – a decidedly unpromising recipe for national success.

Second, the particular relationship on which President Biden and his top aides are focusing – one marked by competition – is so intrinsically ambivalent (especially in the realm of world affairs) that its much likelier to confuse than to provide useful policy guidance. In addition, competition is a concept that evokes the playing field, where both victory and defeat have ultimately trivial consequences, rather than the fundamentally anarchic and much more dangerous international landscape. Consequently, its use tends to downplay even stakes otherwise defined more threateningly.

These obstacles to clear foreign policy thinking and numerous others all rear their heads in statements the new President and his leading advisers have made during the campaign and transition, and since Inauguration Day.

For instance, Jake Sullivan and Kurt M. Campbell, who have become, respectively, Mr. Biden’s White House national security adviser and National Security Council “czar” for the Asia-Pacific region, perceptively noted in a prominent 2019 article that terms used by the Trump administration like “strategic competition,” unless elaborated on, can’t help but connote “uncertainty about what that competition is over and what it means to win.”

They did write of the need to decide what “kinds of interests the United States wants to secure.” And they do dance around some specific objectives, like maintaining unimpeded navigation in Asia-Pacific (or, to use a term more expanive and popular lately because it includes India – “Indo-Pacific”) waters, and preventing China from taking over Taiwan, and safeguarding America’s global technology leadership. 

But the authors also drone on and on about achieving a state of coexistence that “would involve elements of competition and cooperation, with the United States’ competitive efforts geared toward securing those favorable terms” (but never absolutely committed to securing them); and about “accepting competition as a condition to be managed rather than a problem to be solved”; and about how the Chinese competitive challenge differs from its Cold War-era Soviet counterpart; and about how China has become an “essential partner” as well as a formidable competitor with the United States because of the appearance of shared global dangers like climate change and pandemics; and about an “emerging” global contest of social and economic models; and about how to “get the balance between competition and cooperation right.” Indeed, the piece is titled “Competition Without Catastrophe.”

In addition, last year, new Secretary of State Antony Blinken took pains in a lengthy interview to emphasize that although “we are in competition with China,” there’s “nothing wrong with competition if it’s fair” That point is entirely valid in the context of a sporting event, a spelling bee, or other forms of competition with relatively trivial consequences.

At best, however, it’s deeply puzzling when dealing with decisions that can bring either great benefit or harm to an entire nation, and that can create major risks and require massive expenditures of national blood and treasure. In cases where winning and losing matter considerably and even vitally, it should be obvious, that prevailing or figuring out how to cope with defeat are worth the candle. Yet if and when it’s the fairness of the outcome that matters most rather than the outcome itself, why bother competing at all? Worse, these efforts can produce inexcusable wastes of resources that will surely be invaluable in the more important situations sure to come somewhere down the line.

In one instance reminiscent of the Cold War thinking they generally criticize in the China context, Campbell and Sullivan write that winning that competition of social and economic models with Beijing counts significantly because the United States (in unspecified ways to be sure) will be much better off in a world mainly made up of free market democracies than in one dominated by countries that try to emulate China’s totalitarianism.

Their point is fortified by the leading role advanced surveillance systems play in China, which additionally means that the United States must stay ahead in these fields both in order to ensure military superiority when push comes to shove, and to defend itself against Chinese cyber-aggression. Moreover, intuition and common decency lead all Americans to root for the widest possible global triumph of political and economic freedom (realizing of course that the latter can be defined in many different ways).

Even here, though, the framing U.S. strategy as a competition with China can complicate as many choices as it clarifies. For example, a defining principle of Biden foreign policy is that, in the President’s words, “America’s alliances are our greatest asset” in world affairs. Yet if so, then the new administration, as with its Cold War predecessors, will need to recognize that many of its current and desired partners won’t be either political or economic democracies or even close (in Asia, Communist-ruled Vietnam and the quasi-at-best democracies of Thailand and the Philippines come to mind), and that today’s genuine democracies often feel free – as during the Cold War – to ignore or actually undermine U.S. interests (like Germany nowadays regarding both China and Russia).

Finally, it’s all too easy to conclude that the Biden-ites’ focus on second-order questions first and foremost represents a series of word games aimed at masking their inability or unwillingness to identify first-order issues. Take the President’s insistence that he’ll carry out an “extreme competition” with China. Even leaving aside that he immediately proceeded to trivialize the term by declaring that his approach will differ from Donald Trump’s by focusing on “international rules of the road” (another second-order priority), what exactly will be “extreme”? And how does his definition of extreme competition compare with the other varieties of competition detailed by Sullivan and Campbell?

Similarly, Blinken has just ventured that the U.S. relationship with China entails “adversarial,” “competitive,” and “cooperative” aspects. The last category is no mystery. But what’s the difference between the first and the second? Does the first refer to American interests that must be advanced or defended at all costs and risks, or at least major costs and risks? Does the second refer to those situations and interactions where fairness is overriding? 

Sullivan and Blinken in particular admit that they used to belong to the dangerously naive China engagement mainstream of the U.S. foreign and economic policy communities.  But until they, their colleagues, and the President stop talking about the China challenge as if it was a game, ample doubt will be justified as to whether they’ve yet become China realists.           

Our So-Called Foreign Policy: Biden’s Incoherent Iran Nuclear Policy

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Antony Blinken, Biden, Donald Trump, Iran, Iran nuclear deal, Israel, Jake Sullivan, JCPOA, Middle East, nuclear weapons, Our So-Called Foreign Policy, Persian Gulf, Sunnis

In case you dismiss most or all statements during campaigns by office-seekers and their aides as complete baloney, you should take a look at some transcripts recently released by the Hudson Institute of interviews last year with then Joe Biden foreign policy advisers Antony Blinken and Jake Sullivan – who have gone on to become President Biden’s Secretary of State and national security adviser, respectively.

The trouble is that these transcripts make plain as day, among other points, that the Biden view of handling Iran and its nuclear weapons ambitions makes little sense from a standpoint of simple common sense.

The Sullivan transcript – recorded last May – is by far the more thoughtful and serious of the two, but mainly in terms of revealing the fundamental confusion of the Biden outlook.

The central questions surrounding the Iran nuclear issue stem from the “Joint Comprehensive Plan of Action” (JCPOA) signed during the Obama years by the United States, Tehran, China, Germany, Russia, France, and the United Kingdom, which obliged Iran to accept limits on its nuclear research program in return for relief from longstanding international economic sanctions. The Obama administration insisted that even though the Iran nuclear limits would end in 2025, the agreement valuably put off the day when Tehran could produce a bomb on very short notice, and therefore in theory until then defused the greatest potential Iranian threat to American and Middle Eastern security; that a calmer atmosphere could help diplomatic efforts to deal with Iran’s other belligerent behavior; and that the deal represented the best outcome Washington could achieve jointly with other great powers – which were always capable of frustrating unilateral U.S. Iran strategies they considered too confrontational.

Critics (like, eventually, me) countered that the deal left open too many loopholes that could enable Iran to keep making substantial progress toward nuclear weapons capability; that the sanctions relief would give Iran the economic wherewithal to intensify its efforts to gain hegemony over much of the Middle East and Persian Gulf; and that the United States on its own had ample power to cripple Iran’s economic ability to wage proxy wars and sponsor terrorism. And because he basically agreed with the critics, Donald Trump withdrew from the deal in 2018.

The results have been mixed. Unilateral U.S. sanctions have indeed ravaged Iran’s economy – and possibly put at least some constraints on its aggression and subversion, along with other dangerous weapons programs like its drive to create ever more effective, longer-range ballistic missiles. But this behavior has by no means stopped, and the Trump administration’s belief that the pain would foster regime change has been totally far-fetched so far. Further, to protest these sanctions – which Iran calls a violation of the JCPOA – Tehran has said that its own commitments are now null and void, and has taken a series of steps that JCPOA supporters charge demonstrate the failure of the Trump approach, and that deal opponents say Iran was taking clandestinely anyway – or was bound to.

Like his boss (who of course served as Barack Obama’s Vice President), Sullivan is a JCPOA supporter, and the new President has made clear his determination to return to the deal in the belief that Iran will slow down its nuclear research once again. But Sullivan’s remarks also reinforced the case against the deal by unwittingly acknowledging that the Obama-Biden hopes for the kind of changed Iranian behavior that would bring lasting benefits to the region are thoroughly in vain.

Here’s one of two key passages:

“[T]o me, the real issue with Iran, the real limitation on Iran in the region, has not been the availability of cash [i.e., the effectiveness of sanctions]. It’s been the availability of opportunity. And where opportunities have arisen, they’ve taken them. And that was true in the ’80s. It was true in the ’90s. It was true in the 2000s. It was during the 2010s. It remains true today. And even under massive sanction, the Iranians have gotten more aggressive in the Gulf, have remained just as aggressive in Syria and Lebanon, have increased their activities in respect to the Houthis in Yemen, and all of that while under massive economic sanction from the United States.”

I agree with Sullivan’s observation that Iran is so determined to achieve in the Middle East objectives considered dangerous by a broad bipartisan U.S. consensus that it’s pursued this agenda despite paying a major economic price. But does this kind of Iran sound like a country likely to reform in the slightest by the time the JCPOA runs out? Worse, the failure of sanctions to bring Iran to heel, by no means renders inconsequential the resources they’ve denied the country. It’s all too reasonable to conclude that permitting Iran to do business normally with the rest of the world will simply make an aggressive regime much wealthier, and thus able to act more aggressively. As political scientists would say, the result would be a country whose malign intentions haven’t changed but whose malign capabilities are have greatly increased.

The second key passage:

“[M]y view is, if you can take one of the big threats off the board, the Iranian nuclear program, take it off the board, and then use the tools available at your disposal, none of which were stripped from us by the JCPOA, to go after Iran in the region. And to the extent you want to make diplomacy, the central feature of stopping Iran’s malign activities, get the regional actors at the table with the Iranians and stand behind them with some pressure to try to produce a deescalation, say between Iran and Saudi Arabia.”

Here the problem is Sullivan’s apparent belief that, faced with the prospect of being “gone after” by the United States and its other bitterest rivals, Iran will dutifully comply with the JCPOA for the entire length of its duration – which will leave it highly vulnerable to “pressure” to abandon goals that the previous Sullivan passage identified as positively foundational.

It’s far more likely – and I’d call it a virtual certainty – that Iran will do everything possible to prevent this kind of vulnerability/ As a result it can be expected to take every opportunity in the foreseeable future to make the fastest possible progress toward the nuclear weapons threshhold whether the nuclear deal is resumed or not, devoting many of resources made available by sanctions removal to that effort, and continuing even faster (and eventually building a nice sized stockpile) once the JCPOA expires.

Not that there’s no reason for optimism from an American standpoint. For the above scenario makes a U.S. military pullout from the terminally dysfunctional Middle East/Persian Gulf region more appealing than ever. Another reason for optimism for those still worried about Iran despite decisive recent reasons to disengage, like substantial American energy independence:  Trump’s oft-voiced (but only partly-at-best fulfilled) desire to exit had clearly prompted Iran’s Sunni Arab and (nuclear armed) Israeli foes to kick into the next gear their own tacit alliance, which seems more than capable of countering Iranian threats.

Unfortunately, even though in his interview, Blinken stated that a Biden administration would seek to deemphasize the region in U.S. grand strategy in order to focus more on East Asia, President Biden seems bent on keeping the U.S.’ armed regional presence impressively sized.  Can anyone say “Tar Baby” – again?

Our So-Called Foreign Policy: Biden Choices Signal a “What, Me Worry?” China Policy

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alliances, allies, Antony Blinken, BlackRock, Brian Deese, China, decoupling, Jake Sullivan, Janet Yellen, Joe Biden, Katherine Tai, Lloyd Austin, multilateralism, national security, Our So-Called Foreign Policy, Robert Lighthizer, sanctions, tariffs, tech war, Trade, trade war, transition, Trump, U.S. Trade Representative, USTR, Wall Street

Apparent President-elect Biden so far is sending a message about his China policy that’s unmistakably bad news for any American believing that the People’s Republic is a major threat to the nation’s security and prosperity – which should be every American. The message: “I’d rather not think about it much.”

In some limited senses, and for the very near future, the impact could be positive. Principally, although he blasted President Trump’s steep, sweeping tariffs on imports from China as disastrously counter-productive for the entire U.S. economy – consumers and producers alike – he’s stated that he won’t lift them right away. Presumably, he’ll also hesitate to remove the various Trump sanctions that have so gravely damaged the tech entities whose activities bolster China’s military strength and foreign espionage capabilities, along with new Trump administration restrictions on these Chinese entities’ ability to list on U.S. stock exchanges.

Looking further down the road, however, if personnel, as widely believed, is indeed policy, Biden’s choices for Cabinet officials and other senior aides to date strongly indicate that his views on the subject haven’t changed much from this past May, when he ridiculed the idea that China not only is going to “eat our lunch,” but represented any kind of serious competitor at all. In fact, in two ways, his choices suggest that his take on China remains the same as that which produced a long record of China coddling.

First, none of his top economic or foreign policy picks boasts any significant China-related experience – or even much interest in China. Like Biden himself, Secretary of State-designate Antony Blinken is an indiscriminate worshipper of U.S. security alliances who views China’s rise overwhelmingly as a development that has tragically and even dangerously given Mr. Trump and other America Firsters an excuse to weaken these arrangements by making allies’ China positions an acid test of their value. In addition, he’s pushed the red herring that the Trump policies amount to a foolhardy, unrealistic attempt at complete decoupling of the U.S. and Chinese economies.

As for the apparently incoming White House national security adviser, Jake J. Sullivan – who served as Biden’s chief foreign policy adviser during his Vice Presidential years – he shares the same alliances-uber-alles perspective on China as Biden and Blinken, and is on record as late as 2017 as criticizing the Trump administration for “failing to strike a middle course” on China – “one that encourages China’s rise in a manner consistent with an open, fair, rules-based, regional order.” I’m still waiting for someone to ask Sullivan why he believes that mission evidently remained unacccomplished after the Obama administration had eight years to try carrying it out.

On the defense policy front, Biden has chosen to head the Pentagon former General Lloyd Austin whose main top-level experience was in fighting Jihadist terrorists in the Middle East, not dealing with a near-superpower like China. That’s no doubt why Biden failed even to mention China when introducing Austin and listing the issues on which he’d need to focus – an omission worrisomely noted by the U.S. Asia allies the apparent President-elect is counting on to help America cope more effectively with whatever problems he thinks China does pose.

As for the Biden economic picks, Treasury Secretary and former Fed Chair Janet Yellen has expressed little interest in China or trade policy more broadly during her long career in public service. (See here for a description of some of her relatively few remarks on the subject.) His choice to head the National Economic Council, Brian Deese, has been working for the Wall Street investment giant, BlackRock, Inc. – which like most of its peers has long hoped to win Beijing’s permission to compete for a slice of the potentially huge China financial services market. But his focus seems to have been environmentally sustainable investments, and his own Obama administration experience centered on climate change.

One theoretical exception is Katherine Tai, evidently slated to become Biden’s U.S. Trade Representative (USTR). Both as a former lawyer at the trade agency  and in her current position as a senior staff member at the House Ways and Means Committee, she boasts vast China experience.

But history teaches clearly that the big American trade policy decisions, like handling China, are almost never made at the USTR level. Mr. Trump’s trade envoy, Robert Lighthizer, was a major exception, and his prominence stemmed from the President’s unfamiliarity as an outsider with the specific policy levers that have needed to be pulled to engineer the big China trade and broader economic policy turnaround sought by Mr. Trump. So expect Tai to be a foot soldier, nothing more.

The cumulative effect of this China vacuum at the top of the likely incoming administration creates the second way in which Biden’s seems to reflect a lack of urgency on the subject: It signals that there will be no China point person in his administration. It’s true that reports have appeared that the apparent President-elect will appoint an Asia policy czar. But more than a week after they’ve been posted, nothing further has been heard.

All of which suggests that, by default, China policy will be made by the alliance festishers Blinken and Sullivan. And if their stated multilateralist impulses do indeed dominate, the result will be basically a U.S. China policy outsourced to Brussels (headquarters of the European Union), and the capitals of Asia. As I’ve written previously, many of these allies have profited greatly from the pre-Trump U.S. and global China trade policy status quo, and their leaders are hoping for a return to this type of world as soon as possible. And it’s no coincidence that’s the kind of world Joe Biden was happy to help preside over during his last White House job.  

Our So-Called Foreign Policy: Biden Multilateralism Looks Ever More Muddled

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alliances, Antony Blinken, Biden transition, China, decoupling, globalism, international institutions, Jake Sullivan, Joe Biden, multilateralism, Our So-Called Foreign Policy, technology

Attention to anyone in touch with the Biden foreign policy transition folks – I’m offering a deal.

I’ll stop charging that its top members (and especially Cabinet and similar nominees) keep spouting patently and dangerously vapid globalist foreign policy ideas if they provide some evidence that something other than patently and dangerously vapid globalist foreign policy ideas are going to shape their upcoming stewardship of American strategy and diplomacy.

So far, however, the evidence keeps showing that they have a long way to go, starting with Secretary of State nominee Antony Blinken. In his remarks accepting the position (subject to Senate confirmation of course), this quintessential Clinton and Obama administration retread spoke movingly about his family’s Holocaust roots, but committed one of the cardinal sins of not only diplomacy but any policymaking or politicking: He advertised weakness.

On top of failing either to mention or – more likely – recognize that the international cooperation and multilateralism that’s he’s elevated from a foreign policy tactic to a goal in and of itself will inevitably have content, and that therefore America will often need to play hardball in order to ensure favorable outcomes, Blinken emphasized that “as the President-elect said, we can’t solve all the world’s problems alone. We need to be working with other countries. We need their cooperation. We need their partnership.”

It was nothing less than an open invitation for U.S. friends, foes, and neutrals alike to assume that such problem solving efforts matter more to the United States to them, and that they can therefore repeatedly roll Washington by playing hard to get, and often simply stonewalling until the United States caves in to their stances.

And if you think that America’s wealthy, powerful, and influential allies, whose agreement will be rucial to the success of any international cooperative efforts, would never sink to these tactics, you need to learn some Cold War history. Even when the free world faced a Soviet threat that all of its members viewed as existential, countries like (then) West Germany and South Korea, which literally lived on the front lines, successfully free-rode for decades on Washington’s defense guarantees because U.S. leaders continually spoke and acted as if they’d maintain these military (including nuclear) umbrellas at all costs because they were vital to America itself.

To make matters even weirder, shortly before the election, Blinken – the fetishizer of international cooperation and multilateralism — justified these globalist priorities with an argument drawn straight from the very foundation of America First-ism, at least as I’ve defined it.

I’ve written that America First is the foreign policy approach most suited to the United States is one understanding that, although the United States is not strong, rich, and or smart enough to create a benign global environment or meet truly global challenges all by itself, it is plenty strong, rich, and smart enough to remain safe and prosperous in a world sure to stay anything but benign.

So imagine how surprised I was to see this Blinken statement at a foreign policy conference in October, when he was firmly established as a leading Biden spokesman: A new administration’s approach to world affairs would include “humility, because most of the world’s problems are not about us, even though they affect us.”

Now there’s nothing inherently wrong with addressing overseas situations that “affect us,” as opposed to representing mortal threats. If opportunities arise for the United State to better its lot, it’s of course reasonable to pursue them. But they shouldn’t be pursued until U.S. leaders ask themselves whether the best way to achieve such goals is by joining international cooperative efforts, or relying on any foreign policy approaches at all, rather than trying to build up its own capabilities and reducing its own vulnerabilities. As I’ve also written, in many instances, the latter, America First-y approach will be the superior or more promising, if only because the nation will always be able to influence its own affairs much more effectively than the affairs of others.

Finally, even when Biden aides do display some awareness that U.S. foreign policy needs to be something more than a content-free quest for cooperation, regardless of the stakes for Americans, they haven’t made much progress on figuring out what this content should be – or sharing the results with the public.

More than a year ago, the apparent President-elect’s choice for White House national security adviser, Jake Sullivan, wrote in the leading journal Foreign Affairs, that the central task of U.S. China policy must be to find a way to establish a modus vivendi with Beijing recognizing that the People’s Republic is here to stay as a great power. He stated that “Such coexistence would involve elements of competition and cooperation,” which sounds like yet another glib formula for emphasizing means over end. But Sullivan did specify that America’s policies must identify and seek outcomes favorable to U.S. interests and values.”

On broader matters, Sullivan even contended that “Going forward, Washington should avoid becoming an eager suitor on transnational challenges. Eagerness can actually limit the scope for cooperation by making it a bargaining chip.” Hopefully, he’ll communicate this “Don’t advertise weakness” to Blinken and the rest of a Biden administration.

So that’s progress. But in the year that’s passed since this piece came out, we’ve heard little from Sullivan or anyone else connected with Biden on what will be acceptable to a new adminstration and what won’t be, and less in the way of plausible tactics for achieving these goals or creating these conditions.

For example, Sullivan’s description in his article of ways to deter a Chinese attack on Taiwan – or other targets in Asia – demonstrates no awareness that Beijing’s ability to hit the U.S. homeland with large numbers of nuclear weapons looks formidable enough to inhibit conventional American military responses strong enough to threaten Chinese gambits with defeat.

Sullivan allows that Washington will need to use “some enhanced restrictions on the flow of technology investment and trade in both directions,” in order to “safeguard its technological advantages in the face of China’s intellectual property theft, targeted industrial policies, and commingling of its economic and security sectors.”

But because Sullivan’s overarching goal appears to be avoiding the “Balkanization” of “the global technology ecosystem by impeding flows of knowledge and talent,” he’d place limitations on these curbs that would result in a piecemeal response to a systemic threat. And even individual restrictions that are approved would surely be watered down to the point of ineffectiveness thanks to Sullivan’s insistence that they be “undertaken in consultation with industry and other governments” – two groups that have displayed not the slightest inclination significantly to disrupt business with China that they’ve each found tremendously lucrative.

And in fact, Sullivan ends up ignoring his own sage advice about the limits of international cooperation and multilateralism for their own sakes by declaring a faith in their capabilities that looks stubbornly blind. Why else would he end his article with these declarations?

“Establishing clear-eyed coexistence with China will be challenging under any conditions, but it will be virtually impossible without help. If the United States is to strengthen deterrence, establish a fairer and more reciprocal trading system, defend universal values, and solve global challenges, it simply cannot go it alone. It is remarkable that it must be said, but so it must: to be effective, any strategy of the United States must start with its allies.”

Which sounds like we’re back to Blinken-ism. With my offer still firmly on the table.

Our So-Called Foreign Policy: Now the Establishment Media is Praising the Perps on China Policy

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artificial intelligence, Barack Obama, China, Eric Schmidt, Evan Osnos, Financial Times, Google, Jake Sullivan, John Reed, Our So-Called Foreign Policy, tech transfer, The New Yorker, Tom Mitchell, Trump

As RealityChek‘s slogan surely makes painfully clear, the interlocking worlds of politics and policy and media are so shot through with outright hogwash that producing it now looks like standard operating procedure. But every now and then, I come across items that, even by the debased standards of our time (which, contrary to establishment conventional wisdom, loooong predated the Trump era) belong in a class by themselves. And in the last week alone, that category has grown by two statements.

The first came in a January 3 Financial Times report on China’s growing power and influence in Asia and around the world. Authors Tom Mitchell and John Reed seemed bent on making the case that President Trump’s policies and statements had created or threatened to create vacuums around the world that Beijing is (brilliantly) moving to fill – an allegation that’s fact free but now so commonplace that it’s no longer newsworthy or comment-worthy.

Here’s what is – and jaw-droppingly so: letting a former senior Obama administration foreign policy adviser get away with making a statement like this: “There is a sense in Asia that Trump’s election may portend a dramatic power shift.”

The aide, Jake Sullivan, was not only a foreign policy adviser to Hillary Clinton’s presidential campaign and to Obama’s Vice President Joe Biden. He was the head of the State Department’s policy planning staff under Obama. So surely he had something of a hand in making U.S. policy toward China during the Obama years.

And what were the hallmarks of this policy? Doing nothing of consequence to halt the predatory Chinese trade policies that helped Beijing stockpile literally trillions in hard currency that have come in awfully handy for financing a major military buildup and government-sponsored research into advanced defense-related technologies. Doing nothing of consequence to stop China from stealing this knowhow from American companies, or to stop U.S. tech firms from handing it over voluntarily, in exchange for favorable treatment by Beijing. Doing nothing of consequence to stop China’s expansionism in the South China Sea. And doing nothing of consequence to halt or even slow North Korea’s drive to develop state-of-the-art nuclear weapons – including nuclear-capable missiles capable of striking American territory, and thereby of undermining Washington’s commitments to the defense of major allies like South Korea and even Japan.

And Sullivan has the nerve to insinuate that say that Trump’s election is responsible for tilting power balances in China’s favor? That’s like Neville Chamberlain blaming Winston Churchill for giving Nazi Germany the confidence to invade Poland.

The second example concerns the aforementioned U.S. corporate tech transfer to China, and comes from a ballyhooed January 8 New Yorker piece devoted to the same mission (#amazing!) as the Financial Times piece – blaming Mr. Trump for giving away the global store to China.

Catching my attention in particular was author Evan Osnos’ decision to quote the former chairman of Google follow-on company Eric Schmidt’s warning that (in Osnos’ words) “reductions in the funding of basic-science research will help China overtake the U.S. in artificial intelligence (AI) within a decade.” Osnos also let Schmidt speak for himself: By 2030, they will dominate the industries of A.I.”

I have no problem with Schmidt’s opposition to the funding cuts. In fact, I strongly agree. I also take especially seriously his prediction about China’s rapid tech progress. Why? Because under Schmidt, Google was a prime China tech enabler. As I wrote in a Bloomberg View column in 2012, Google products have helped China perfect its (highly effective) internet censorship programs, and its “China University Relations” program had by then established relationships with no less than 15 Chinese institutions. In addition, in 2005, it set up its own research and development center in Beijing.

In other words, Google (and most of the rest of Silicon Valley) has been actively helping China develop the tech capabilities about which its former head is now ostensibly worried.

But it gets much better: Somehow, Schmidt forgot to tell Osnos – and somehow the latter’s own wide-ranging reporting in China missed the fact that – Google has just decided to set up another research facility in China. And its focus? Artificial intelligence. According to its director,

“Besides publishing its own work, the Google AI China Center will also support the AI research community by funding and sponsoring AI conferences and workshops, and working closely with the vibrant Chinese AI research community.”

You’ve heard of “blame the victim?” These two articles could reveal a growing media tendency to “praise the perp.” And evidently if the result is to exalt the establishment, and discredit its critics (especially Trump-ian), so much the better.