Our So-Called Foreign Policy: More Childish Attacks on Trump

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alliances, allies, Council on Foreign Relations, foreign policy establishment, George H.W. Bush, Greece, IMF, International Monetary Fund, international organizations, internationalism, Iran deal, JCPOA, Joint Comprehensive Plan of Action, journalists, Mainstream Media, media, military bases, NAFTA, New Zealand, North American Free Trade Agreement, Our So-Called Foreign Policy, Paris climate accord, Philippines, Richard N. Haass, Ronald Reagan, TPP, Trans-Pacific Partnership, Trump, UN, UNESCO, United Nations, Withdrawal Doctrine, World Bank, World Trade Organization, WTO

I’m getting to think that in an important way it’s good that establishment journalists and foreign policy think tank hacks still dominate America’s debate on world affairs. It means that for the foreseeable future, we’ll never run out of evidence of how hidebound, juvenile, and astonishingly ignorant these worshipers of the status quo tend to be. Just consider the latest fad in their ranks: the narrative that the only theme conferring any coherence on President Trump’s foreign policy is his impulse to pull the United States out of alliances and international organizations, or at least rewrite them substantially.

This meme was apparently brewed up at the heart of the country’s foreign policy establishment – the Council on Foreign Relations. Its president, former aide to Republican presidents Richard N. Haass, tweeted on October 12, “Trump foreign policy has found its theme: The Withdrawal Doctrine. US has left/threatening to leave TPP, Paris accord, Unesco, NAFTA, JCPOA.” [He’s referring here to the Trans-Pacific Partnership trade deal that aimed to link the U.S. economy more tightly to East Asian and Western Hemisphere countries bordering the world’s largest ocean; the global deal to slow down climate change; the United Nations Educational, Scientific and Cultural Organization; the North American Free Trade Agreement, and the Joint Comprehensive Plan of Action – the official name of the agreement seeking to deny Iran nuclear weapons.]

In a classic instance of group-think, this one little 140-character sentence was all it took to spur the claim’s propagation by The Washington Post, The Atlantic, Marketwatch.com, Vice.com, The Los Angeles Times, and Britain’s Financial Times (which publishes a widely read U.S. edition).  For good measure, the idea showed up in The New Republic, too – albeit without mentioning Haass.

You’d have to read far into (only some of) these reports to see any mention that American presidents taking similar decisions is anything but unprecedented. Indeed, none of them reminded readers of one of the most striking examples of alliance disruption from the White House: former President Ronald Reagan’s decision to withdraw American defense guarantees to New Zealand because of a nuclear weapons policy dispute. Moreover, the administrations of Reagan and George H.W. Bush engaged in long, testy negotiations with long-time allies the Philippines and Greece on renewing basing agreements that involved major U.S. cash payments.

Just as important, you could spend hours on Google without finding any sense in these reports that President Trump has decided to remain in America’s major security alliances in Europe and Asia, as well as in the United Nations, the International Monetary Fund, the World Bank, and the World Trade Organization (along with a series of multilateral regional development banks).

More important, you’d also fail to find on Google to find any indication that any of the arrangements opposed by Mr. Trump might have less than a roaring success. The apparent feeling in establishment ranks is that it’s not legitimate for American leaders to decide that some international arrangements serve U.S. interests well, some need to be recast, and some are such failures or are so unpromising that they need to be ditched or avoided in the first place.

And the reason that such discrimination is so doggedly opposed is that, the internationalist world affairs strategy pursued for decades by Presidents and Congresses across the political spectrum (until, possibly, now) is far from a pragmatic formula for dealing with a highly variegated, dynamic world. Instead, it’s the kind of rigid dogma that’s most often (and correctly) associated with know-it-all adolescents and equally callow academics. What else but an utterly utopian ideology could move a writer from a venerable pillar of opinion journalism (the aforementioned Atlantic) to traffick in such otherworldly drivel as

“A foreign-policy doctrine of withdrawal also casts profound doubt on America’s commitment to the intricate international system that the United States helped create and nurture after World War II so that countries could collaborate on issues that transcend any one nation.”

Without putting too fine a point on it, does that sound like the planet you live on?

I have no idea whether whatever changes President Trump is mulling in foreign policy will prove effective or disastrous, or turn out to be much ado about very little. I do feel confident in believing that the mere fact of rethinking some foreign policy fundamentals makes his approach infinitely more promising than one that views international alliances and other arrangements in all-or-nothing terms; that evidently can’t distinguish the means chosen to advance U.S. objectives from the objectives themselves; and that seems oblivious to the reality that the international sphere lacks the characteristic that makes prioritizing institution’s creation and maintenance not only possible in the domestic sphere, but indispensable – a strong consensus on defining acceptable and unacceptable behavior.

One of the most widely (and deservedly) quoted adages about international relations is the observation, attributed to a 19^th century British foreign minister, that his nation had “no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow.” Until America’s foreign policy establishment and its media mouthpieces recognize that this advice applies to international institutions, too, and start understanding the implications, they’ll keep losing influence among their compatriots. And rightly so.

Im-Politic: No Media Accountability for Cockeyed “Experts” on Fast Track, Trade

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Arthur Laffer, Barry Ritholtz, budget defict, China, Condoleezza Rice, fast track, Federal Reserve, Gary C. Hufbauer, growth, Im-Politic, inflation, Jobs, journalists, Laffer Curve, Mainstream Media, NAFTA, Peterson Institute, think tanks, TPA, TPP, Trade, Trade Deficits, Trade Promotion Authority, Trans-Pacific Partnership, Washington Post, WTO

As the House of Representatives prepares to vote tomorrow on granting President Obama fast track trade negotiating authority, investment guru Barry Ritholtz has just reminded us of a huge problem with the way America and its leaders debate such major public issues – and the way the Mainstream Media help frame this debate.

Ritholtz today wrote about how much of that Big Media keeps taking seriously pundits and other so-called experts whose analyses and predictions have been proven flat wrong over the long haul. His example is economist Arthur Laffer, whose famous “curve” served as a prime basis for Reagan-era tax cuts (and is still cited to justify such policies). Ritholz writes that most of Laffer’s recent warnings about the inflationary and budget deficit-busting consequences for America of the Federal Reserve’s super-easy money policies have been wildly off base.

In fairness, that’s not entirely clear for two reasons. First, there’s a heated debate in the economics world over how well the U.S. government statistics measure inflation. Second, the Fed’s monetary stance has been so radical for so long that no one can reasonably be certain yet about even the medium-term effects. But it’s also fair to say that there’s now a heavy burden of proof on Laffer and others in his camp to show why his forecasts will yet be confirmed – and on reporters who keep citing them.

When it comes to the trade debate, the wholesale lack of accountability in the is incontrovertible. Just to review quickly, since the signing of NAFTA launched the current phase of U.S. trade policy, the U.S. trade balance heavily influenced by trade deals and related policies has dramatically worsened in inflation-adjusted terms. I’ve pointed this out for the years spanning the current recovery, but it’s also true going back further. (See the non-petroleum goods balance column in this Census Bureau table.) The inevitable consequence – if you take economics fundamentals seriously – is a drag on economic growth. And anything that drags on growth will surely drag on hiring, and almost certainly depress wages.

These employment and wage effects were predicted by virtually every politician or analyst who was around for the NAFTA debate and criticized the agreement, and is still weighing in on the fast track debate and broader fight over the president’s proposed Trans-Pacific Partnership (TPP) trade deal. (Less attention, unfortunately, has been focused on the more fundamental growth destruction.) These trade critics rightly keep pointing out their record, but how often do you read about this? The closest the Mainstream Media seem to come is treating their foresight as “claims,” which are ipso facto subjects for legitimate debate. They’re not. They’re facts and realities.

To be sure, Big Media has an “out,” at least in principle – President Obama’s insistence that he’s learned the lessons of past trade policy mistakes, and that his TPP corrects them. But only a few news organizations have reported that Mr. Obama has had ample opportunities to demonstrate his progress on the high-profile issue of improving labor standards, and that he’s flunked this test. Even fewer media organizations have reported that the president’s recent trade agreement with Korea is his model for the TPP – and that it’s produced surging trade deficits, which by definition are themselves killing growth and job-creation. So White House claims of a trade learning curve clearly don’t deserve to be taken at face value.

And just as recent and current trade policy critics have been proven right, supporters have been proven dead wrong. And many, unlike Mr. Obama, won’t even admit it, yet are rewarded with prominent media platforms. Take the Washington Post’s recent decision to publish a pro-fast track and TPP tract by former Secretary of State Condoleezza Rice. Rice cited as one prominent reason for her position “the impact of a rising China, creating risks of …in the Asia-Pacific region and beyond. A growing Chinese economy built on openness and fairness would most assuredly strengthen the world economy and, by extension, the U.S. economy. That was the hope that animated the decision to admit China to the World Trade Organization in 2001, embedding it in the rule-based global economy and pushing it toward greater economic openness. Yet, that hope is clouded today by China’s assertiveness in Asia.”

At that point, Post editors could easily have decided “Full stop. Into the reject pile.” The writer after all, has just admitted being completely – and potentially dangerously – mistaken on a major trade policy issue. Worse, although her Post article didn’t mention this, she was President George W. Bush’s national security advisor when this decision was made. Indeed, she endorsed the move the year before. At the very least, the Post should have asked Rice to explain to the paper and to readers why, given the blunder for which she was partly responsible ten years ago, why her judgment has improved since then.

And let’s not forget the long string of media appearances of Gary C. Hufbauer of the Peterson Institute for International Economics. Hufbauer’s rosy projections of NAFTA’s likely results were central to the lobbying campaign for the deal waged by the Clinton administration and its offshoring-happy business allies. These predictions were so wide of the mark that Hufbauer was soon forced to admit, “The lesson for me is to stay away from job forecasting.” Nowadays, this same analyst is being portrayed as an expert on TPP’s prospective impact on U.S. financial regulations. Based on what? Why would anyone assume he knows anything more about this subject than he knew about U.S.-Mexico trade?

The Mainstream Media keep dredging up these so-called experts for several reasons – none of them reflecting well on the press. First, reporters and editors worship credentials. So if Condoleezza Rice used to be both White House national security adviser and Secretary of State, then she must know lots about everything international, right? Even, apparently, if she admits she deserves blame for an epic mistake. Second, many of these alleged experts work for well-funded institutions like think tanks that spend bundles enabling their staff reach the media, and courting and flattering journalists.

And something like credentials-mania is at work here, too. In other words, outfits like the Peterson Institute are large organizations that have obviously attracted considerable financial support. (Never mind that most of it comes from self-seeking special interests.) They’re therefore very good at projecting what an old friend of mine once called “the image of success.” As a result, surely their experts…really are.

More understandably – but of course not defensibly – is how seductive the media finds the pseudo-precision peddled by economists and other social scientists. E.g.: “TPP will raise GDP by 0.23 Percent Over Next 9.4 Years”! What could be more convincing than that? And would intellectual fraudsters or simple hucksters really risk their reputations with projections this detailed?

It’s also important to remember that few members of the American work force are lazier on the whole – both physically and intellectually – than journalists. Nothing is easier than continuing to rely on the same sources that have always been used. So much the better if their views are entirely predictable. Then it’s not even necessary to take new notes. And better yet, many of these experts are publicity hungry and therefore highly media-friendly. They’re both happy to talk to reporters 24/7 and the best have honed impressive quotability skills.

Also likely in play: a powerful herd instinct. That is, if my competitor is quoting Distinguished Special Fellow X, maybe I should, too. In fact, since my boss reads the competition, he or she is definitely going to ask me why I’m not consulting the same oracle. And conversely, it’s correspondingly difficult to seek out new sources – in large measure because this endeavor forces one to do some research and, even worse, to think. And no occupational or social pressures foster such behavior.

It’s tempting to blame the rise of social media and digital journalism for this pundit idolatry. But it was established practice long before the much-bemoaned ’round-the-clock news cycle and powerful, unending pressures to churn out copy almost continually

Finally, as suggested by that previous paragraph, inertia is one of the most powerful forces in the universe. As long as the Mainstream Media aren’t held accountable for its mindless pundit practices, don’t expect them to hold the rest of American politics, society, and business very accountable, either.

(What’s Left of) Our Economy: Crackpot Measures of Economic Progress

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bubbles, consumption, economists, Financial Crisis, housing, imports, ISM, journalists, manufacturing, recession, recovery, {What's Left of) Our Economy

Have you seen the Washington Post’s great “Fact Checker” feature? It features Post reporter Glenn Kessler scrupulously evaluating the accuracy of public figures’ statements, and then rating them on a scale of “Pinocchios”. I’m pleased to announce that Patrick Gillespie’s new post on CNNMoney.com on how to tell if the U.S. economic recovery is “real” and sustainable has inspired me to launch a similar series evaluating such statements (including by journalists) on a scale of “face-palms.”

To his credit, Gillespie – and the colleagues with whom he worked – seem to understand that America’s recent growth doesn’t necessarily mean that it’s out of the economic woods, much less that it’s making progress in fostering prosperity with staying power. To shed more light on the question, they “surveyed numerous economists.” And here’s what they found, and reported with a straight face: More than six years after the outbreak of an historic financial crisis triggered by insane levels of personal spending and home-buying, two of the best gauges of genuine economic health are growing levels of personal spending and home-buying.

Not that boosting consumption and housing couldn’t juice GDP. They could. But if Americans haven’t learned from the economy’s near-death experience that such spending itself doesn’t create healthy growth – and in fact can be a recipe for disaster when artificially propped up – what has the nation learned? In fact, as I’ve reported, those sectors’ combined share of inflation-adjusted U.S. economic activity today is even higher than it was at the end of 2007, when the recession officially started.

And that’s not the only problem with this CNNMoney post. None of the journalistic or economic contributors seems to realize that stimulating consumption per se has only limited effects on growth if most of what’s consumed is made overseas and imported. With U.S. trade deficits on the rise once more now that even modest growth has returned, way too much American spending is creating production and jobs overseas, not domestically. Even worse, what such excessive spending does create is more debt – something else already in oversupply in America.

Gillespie & Co. are on firmer ground with the third “lesser known” economic indicator on which they focus: manufacturing. Industrial and other goods made in America do indeed increase growth in sustainable ways, along with hiring and incomes. But their manufacturing gauge of choice is the series of purchasing managers’ indices compiled and released by the Institute of Supply Management. Almost with each passing month, because of major methodological flaws, these PMIs bear less and less resemblance with U.S. manufacturing reality.

So I’ll give Gillespie’s post five face-palms on my new 1-5 scale – the worst possible grade. And I’ll offer him and the other contributors to his post a new, almost completely ignored indicator that can reveal much more about America’s economic progress than the measures he discusses – whether the number of media reports peddling such hokum is rising or falling.