Im-Politic: Why Biden Can’t Run Even as a Fake China Hawk

Tags

Alexandria Ocasio-Cortez, Asian-Americans, Barack Obama, Bernie Sanders, China, Code Pink, Democrats, election 2020, Elizabeth Warren, Im-Politic, Jeet Heer, Joe Biden, Judy Chu, labor unions, Larry Summers, progressives, racism, Rashida Tlaib, Sherrod Brown, The Nation, Trade, Trump

I know I just wrote about how dreadful Joe Biden’s China policy record has been for decades. But the former Vice President is the presumptive Democratic Party nominee for President, and he could well be sitting in the Oval Office next January. So it’s eminently newsworthy to report that any hopes that a President Biden would recognize these disastrous mistakes, and generally speaking try to continue President Trump’s policy of reversing them, are now lying in ruins.

Specifically, it’s become clear in recent days that any Biden effort to keep his newly made promise in a political ad to “hold China accountable” for its role in unleashing the CCP Virus on the world is going to prove totally unacceptable to his party’s progressive wing – whose support he’s acting like he needs desperately to win in order to defeat Mr. Trump.

Moreover, it’s been reported that one of the campaign advisers chosen by Biden is Larry Summers, a former Clinton Treasury Secretary and Obama administration chief White House economic aide who has always championed reckless trade and broader economic expansion with the People’s Republic. Worse, during the Obama years, Summers was a major obstacle opposing ideas like sanctioning China for its protectionist currency policies – which would have gone far toward stemming the extraordinary increase in Beijing’s economic and therefore military power that took place while Barack Obama occupied the White House. In other words, the Biden campaign will be powerfully shaped by the Democrats’ centrist wing – and its own long record of enabling China.

If you doubt that Summers still backs coddling China, check out this 2018 post – which shows him turning intellectual backflips trying to excuse Beijing’s massive theft and extortion of American intellectual property, and to claim that the Obama policies succeeded spectacularly in bringing China to heel.

The stances of Democratic progressives are less well appreciated – but at least as important given this faction’s success in pulling Biden and other Democratic centrists to the Left this year on a host of issues. Moreover, don’t forget how if they’re unhappy enough with Biden, many of them will stay at home on election day and, as in 2016, help hand victory to Mr. Trump. At the same time, the progressives’ story it’s a more complicated story than the centrists’.

It’s more complicated because two of the progressives’ favorites – Senators Elizabeth Warren of Massachusetts and Bernie Sanders of Vermont – are definitely supporters of tougher and, more important, smarter U.S. China policies. That’s especially true of Sanders, who has voted against every U.S. effort to integrate the American and Chinese economies more widely and deeply during his long career on Capitol Hill. Nonetheless, it’s also true that neither Senator made China a major issue during their presidential campaigns this year.

And one main reason is surely that none of the progressives’ other leading (and younger) lights seems especially interested in China. Commendably, they have condemned China’s horrific repression of its Muslim Uighur minority. But ask yourself – when’s the last time Rep. Alexandria Ocasio-Cortez, for example, condemned the People’s Republic for the trade and intellectual property and investment policies that have stripped the United States of much of its manufacturing base and hammered the wages of manufacturing workers? I couldn’t find any such statements.

Ditto for Michigan Rep. Rashida Tlaib – and she represents a Detroit area district whose economic distress owes significantly on China-related and other trade policy failures. But you won’t even find these words on her website.

But although much of the Democratic Left has had little to say lately about China and trade, signs have abounded that it’s royally ticked off about Biden’s CCP Virus ad – in some cases because of their alleged potential to stoke anti-Chinese bigotry at home, but also because they supposedly blame China for U.S. virus-related losses that they insist are really President Trump’s fault.

Most of this pushback so far has come from Asian-American activists in Democratic ranks who don’t hold political office. But it’s also come from California House Democrat Judy Chu, Chair of the Congressional Asian Pacific American Caucus. Does anyone believe she’ll face much resistance here from the rest of her party?

And non-Asian American progressives have ripped the Biden ad, too – including influential pundit Jeet Heer (national political correspondent for one of the progressives’ flagship magazines, The Nation); Sanders campaign surrogate Josh Fox; and Code Pink, the women-led progressive grass-roots group.

In theory, the Democrats’ still-powerful labor union base could prod Biden to lay out a credible plan to combat China’s many threats to American interests. But its representatives, at least, have been quiet about the virus and its implications. In fact, judging from this recent op-ed piece, its spokespeople seem at least as determined to blame Trump administration blunders for the country’s CCP Virus woes as they are to blame pre-Trump China-coddling and enabling trade policies. Indeed, one of the labor Democrats’ Congressional leaders, Senator Sherrod Brown of Ohio, seems to adopted a “Biden uber alles” position during this campaign, even on China policy.

Yet although both Democratic centrists and progressives will be strongly pushing Biden to soft-pedal criticisms of China for the rest of this presidential campaign, this approach is likely to flop so badly with the American electorate in general (as shown in a post earlier this week) that it’s a natural for President Trump to exploit. And if a Trump campaign hammering China themes creates even more incentive and/or pressure for the President to maintain his hard and smart line against Beijing, it won’t just be his political career that benefits. It will be the entire nation as well. Maybe even the Democrats will start opening their eyes.

Making News: Quoted in the Washington Post Magazine — & More!

Tags

Crain's Cleveland Business, Democrats, Jewish World Review, John Judis, Making News, Sherrod Brown, TechStockStandard.com, The Washington Times, Trade, Trade Deficits, Trump, Washington Post Magazine

I’m pleased to report a nice little spate of media appearances over the last few days.

Most were generated by journalist John B. Judis’ piece in the Washington Post Magazine on how Ohio Senator Sherrod Brown’s decision to skip the 2020 presidential race might have cost the Democrats their best chance to win back the White House.

The backstory of this March 19 article is kind of interesting – John intended it as an article on how Brown’s candidacy actually represented the Democrats’ best chance of 2020 success.  But just before it was scheduled to run, Brown decided to sit the presidential campaign out.  So kudos to John and his editors for turning the article into a retrospective that retains nearly all of its newsworthiness.

Somewhat confusingly, however, if you subscribe to the Post in print, you won’t see the article in your hard copy of the magazine this week.  So you need to access it via the link above.

In turn, John’s article and the point about Brown I made were covered in Crain’s Cleveland Business on March 20 and in Jewish World Review the following day.

Finally, on March 7, the TechStockStandard.com website re-posted my recent Washington Times article on accurately interpreting the latest annual trade figures – and President Trump’s performance on his front.

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

 

(What’s Left of) Our Economy: Mainstream U.S. Trade Policy’s Main Rationale Has Just Been Blown Up

Tags

Bill Clinton, BRICS, China, emerging markets, EMs, Financial Times, globalization, Jim O'Neill, multinational companies, offshoring, Project-Syndicate.org, Sherrod Brown, The Race to the Bottom, Trade, trade agreements, {What's Left of) Our Economy

I’m always struck by how often in the news media or policy writing (e.g., in journals like Foreign Affairs), genuinely game-changing points are made in passing, and for folks with any interest in the trade and globalization issues raised to such prominence by President Trump. And two such instances dealing with this subject just came in the Financial Times newspaper and the website Project-Syndicate.org.

The observation they both made with mind-boggling offhandedness – economic growth in countries dubbed “emerging markets” (EMs) is slowing to rates no faster than those of the rest of the world, and thus rendering them incapable as far as the eye can see of replacing the United States as a global growth engine.

This claim matters decisively for trade policy because these EMs have dominated America’s approach in this field for more than two decades. First identified in the early 1990s, they consist of economies in the developing world that not only boasted enormous populations. But largely because communism and a heavy state role in economic policy had been so thoroughly discredited due to the end of the Cold War, they were steadily transitioning to more free market approaches, and thus were seen to have huge growth potential. China and Mexico were the leading examples, but various definitions of the main emerging markets also included India, Brazil, Russia, Turkey, South Africa, and others.

According to trade enthusiasts, this combination of characteristics was going to make the EMs so important that accessing their vast current consumer markets and even greater consuming and importing potential needed to be Washington’s top trade priority. Their significance was portrayed as all the more important given America’s status as a “maturing” economy whose growth was bound to continue slowing. (Former President Bill Clinton used exactly this term while advocating for an emerging markets push in a document that’s not on-line but that’s cited in my book on globalization, The Race to the Bottom. The document was the 1995 Report of the President of the United States on the Trade Agreements Program and it was published by the Office of the U.S. Trade Representative at the start of 1996.)    

Yet however impressive and promising they seemed, the idea was a crock from the beginning – at least in terms of its importance in driving American trade policy for the foreseeable future. EM cheerleading suffered two fatal flaws. First, despite rapid growth and immense growth potential, the emerging markets were starting from such low bases – especially in terms of their populations’ consuming power – that they wouldn’t become significant markets in absolute terms for many years at best. Second, precisely because they remained so poor and under-developed, their governments invariably realized that their own best growth opportunities came from exporting to much wealthier countries like the United States – where the needed consumption power already existed.

So why the EMs euphoria? As documented exhaustively in The Race to the Bottom, the multinational corporations that dominated American trade policy-making never saw the emerging markets as final consumption markets. They viewed them as super low-cost production bases from which they could supply the U.S. market much more profitably than possible from their domestic factories. Which is exactly why, starting with the pursuit of trade expansion with Mexico at the onset of the 1990s, American trade policy almost exclusively targeted the emerging markets and other very low-income countries (like Vietnam and the countries of Central America) for negotiating new trade deals.

Ohio Democratic Senator Sherrod Brown (a possible 2020 Democratic presidential contender) described the multinationals sales pitch to leading EM China somewhat too charitably when he said in 2015, “while walking the halls of Congress, [lobbyists for the multinationals] talked about they wanted access to 1 billion Chinese customers. What they didn’t say is they also wanted access to 1 billion potential Chinese workers.”

As The Race to the Bottom also made clear, EM touting was star-crossed from the start – even embarrassingly so. As it peaked, in the mid-1990s, many of these same countries started experiencing problems that led to major financial crises even before the decade ended. That is, their markets became evaporating, not emerging, and in numerous cases they kept afloat only by cheapening their currencies, limiting their own consumption and importing still further, and making them more powerful exporters than ever.

Yet the multinationals’ power and influence remained so decisive throughout America’s political (and media) establishment that emerging markets hucksterism continued to justify trade agreements with such countries. Hence the continued repetition of wholly misleading contentions like “95 percent of the world’s consumers live outside the United States” (which I debunked here).

So that’s why I was so interested to see the following in a Financial Times blog post – and by no less than a former senior official at the International Monetary Fund and another leading international economic institution:  

“EM growth has slowed to about 4.5 per cent at present….In the long run, according to the OECD, the potential growth rate of the Briics (Brazil, Russia, India, Indonesia, China and South Africa — accounting for most of EM GDP) is expected to slow further, converging to mature market trend growth of 2 per cent. In other words, the growth advantage of more than 4 percentage points that EMs enjoyed over mature markets in the 2000-2010 period has narrowed to about 2 percentage points and will probably disappear in the long run.”

And guess what? Unlike in the United States, in particular, even much of this EM growth will rely on maximizing exports and minimizing imports. So their importance as markets for American-made goods and services will be even less impressive than this impeccably mainstream analyst suggests.

Equally startling: This Project-Syndicate column by Jim O’Neill. O’Neill, for the unitiated, was perhaps the highest profile EM cheerleader, and coined a popular acronym for those economies that described those he believed most promising: BRICS (Brazil, Russia, India, China, South Africa).

The former Goldman Sachs banker has remained a believer in China, and has actually added some countries to his list of economies he believes will loom much larger in this century. But in the column, he also argued that, if China falters in what he (wrongly, in my view) considers its role as a global growth engine, and the American consumer gets tapped out, none of the other emerging economies “is in a position to match the growth of Chinese consumption today, or even over the course of the next decade.” And by extension, the likelihood of these countries replacing the United States is even more infinitesimal.

Former French leader Charles de Gaulle once famously said that “Brazil is the country of the future…and always will be.” The two examples above show that the same solidly grounded skepticism is also finally seeping into the ranks of globalization cheerleaders. How long will it take before the American political, business, academic, and media establishments finally start paying attention?