Our So-Called Foreign Policy: Biden Keeps Widening That Dangerous Lippmann Gap

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alliances, Biden administration, China, defense budget, Defense Department, inflation, Lippmann Gap, military, nuclear weapons, Our So-Called Foreign Policy, Russia, Taiwan, Trump administration, Ukraine, Ukraine War, Walter Lippmann

As made clear by its latest proposed defense budget, the Biden administration is creating an ever more serious Lippmann Gap problem – and courting greater and greater threats to U.S. national security in the process.

As known by RealityChek regulars, this term refers to a danger warned of by twentieth century philosopher and journalist Walter Lippmann – who argued that a country whose foreign policy objectives were exceeding the means at its disposal to achieve those objectives is headed for big trouble.

And practically since it entered office, that’s the fix into which Mr. Biden’s expansive foreign policy goals on the one hand, and his Pentagon budget requests on the other, keep sinking America. Worse, this year, the predicament seems especially worrisome, since the President is conducting foreign and national security policies that inevitably are super-charging tensions with both a nuclear-armed Russia and a nuclear-armed China.

No matter whether you believe either or both of these policies are necessary or not (and I view the Biden Ukraine/Russia policies as unforgivably reckless, because no vital U.S. interests are at stake, and his China policies unavoidable, because Taiwan’s semiconductor manufacturing prowess has turned it into a vital interest), you have to agree that fire is being played with.

This past week, the administration revealed that it will be asking Congress to approve $842 billion worth of spending on the Pentagon and its operations proper. (As usual, the annual defense budget request additionally includes tens of billions of dollars worth of extra spending, practically all on Energy Department programs for maintaining the country’s nuclear arsenal.)

It’s a lot of money. But it’s only 3.15 percent larger than the funds finally approved for the Defense Department for this current (2023) fiscal year. And when you factor in the administration’s estimate of inflation for 2024 (2.40 percent), in real terms, it’s barely an increase at all. Worse, if you believe that inflation might stay considerably higher, then we’re looking at a prospective defense budget cut in real terms.

Either the President believes that (1) the U.S. military can already handle both the threat of a Chinese invasion of Taiwan and a Ukraine War that might at least spill over into the territory of treaty allies; or (2) that neither event will happen; or (3) that they’ll be spaced out neatly enough to enable existing U.S. forces to handle them one at a time; or (4) that a marginally bigger defense budget will at least put the Pentagon on the road toward building the capabilities it needs to handle these new potential threats before they actually materialize.

Do any of these strike you as safe enough bets?

Nor is this type of Biden administration defense budget request anything new. Last year at about this time, the fiscal 2023 Pentagon budget request was unveiled. `As you may recall, “last year at about this time” was roughly a month after Russia invaded Ukraine, and after President Biden resolved to help Kyiv turn back Moscow’s forces. He ruled out using American boots on the ground, but began providing major military assistance and significantly adding to the U.S. military presence in countries throughout Europe – including those right next to Ukraine that Washington had already promised to protect with nuclear weapons if necessary because (unlike Ukraine), they’re members of the North Atlantic Treaty Organization (NATO).

In addition, since the previous August, the President had stated several times that the U.S. military would come to Taiwan’s rescue if Beijing attacked. Even though the White House has sought to walk back these comments, their number plainly means that the United States has taken on another sizable defense commitment.

But that fiscal 2023 budget request – again, made in March, 2022 – sought only 4.2 percent more in defense spending than was finally approved for fiscal 2022. And after the administration’s expected inflation rate expected, the rise was only 1.5 percent.

Further, Mr. Biden’s first defense budget request (for fiscal 2022), made in April, 2021, sought Pentagon spending that was only 1.6 percent higher than that finally approved for the final Trump administration budget year.

It’s true that this modest Biden request was much bigger than the proposal made by his predecessor for fiscal 2022. But it seemed way too paltry given that at the heart of Mr. Biden’s approach to foreign policy was the promise that America would come charging “back” from four Trump years of alleged retreat from the world stage and in particular neglect of defense alliances.

Of course, defense budget requests are only the first step in the defense spending process, and Congress will surely push through some increases as it’s done in years past. Also crucial to remember: The amount of military spending doesn’t automatically translate into more or less fighting prowess, since spending priorities within the top-line outlay can be and often are shifted to generate more bang for the buck (or achieve other newly added objectives). Indeed, that’s what one aim that the President says he’s aiming to achieve.

Nonetheless, the overall initial budget request certainly limits the extent to which specific programs can absorb more funds without overly shortchanging other important programs. It also tends to exert a gravitational effect on Congress’ political ability to add (or subtract).

Two other big problems to worry about. First, the latest inflation estimates by the Pentagon have been way off. For the 2022-23 calendar year, the actual inflation rate has so far turned out to be nearly three times greater (nearly six percent as of February) than the estimate for that fiscal year (2.2 percent).

The estimate for 2023-24 of 2.4 percent roughly matches the latest forecasts of the Federal Reserve and the Congressional Budget Office. But as noted, even if correct, the extra outlays will be minimal in after-inflation terms, as I’ve argued previously, politicians’ great temptation to stimulate the economy with all sorts of giveaways as a new presidential election cycle gets underway could well keep price increases robust.

Second, decisions to spend even much more on, for example, new weapons or troop readiness can take years to result in more effective forces. So even much bigger Biden requests were never going to work instant miracles.

At the same time, the global threat environment is hardly moving at a snail’s pace. And recent reporting from The Wall Street Journal describes what a mammoth strategic transition the Defense Department needs to make – from a force focused on fighting a Middle East-centric global war on terror to one able to handle two great power threats.

The option that I’d prefer is for closing the Lippmann Gap by reducing some U.S. defense commitments (principally relating to Ukraine, along with further downplaying the Middle East) along with hiking military spending faster (to cope with the mounting Chinese threat to Taiwan). But at the rate the Biden administration is going, America’s worrisome mismatch between its foreign policy reach and its grasp seems sure to keep worsening.

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(What’s Left of) Our Economy: (Much) More Evidence That Tariffs Can Work

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aluminum, Biden administration, China, economics, free trade, inflation, mercantilism, metals, output, prices, protection, protectionism, steel, subsidies, tariffs, Trade, Trump administration, {What's Left of) Our Economy

An independent U.S. government agency that most of you have never heard of just issued a blockbuster report full of evidence that further lobotomizies the clearly brain-dead but longstanding and still-prevailing conventional wisdom on a major economic issue facing Americans – how to deal with the global economy.

The agency is the U.S. International Trade Commission (USITC) and the conventional wisdom is that the sweeping, often towering Trump (and now Biden) administration tariffs on metals and on imports from China have cost the American economy on net.

Just as important: The report’s findings also shred the equally enduring belief that such trade protection causes the beneficiary companies or industries to become fat and lazy – and in particular to stop investing in expansion – because it’s so much easier and lucrative to reap higher profits from the higher prices they can charge from their existing operation.

The tariffs most comprehensively examined were those imposed on steel and aluminum imports starting in early 2018. The USITC looked at both their impact on those metals producers themselves, and on the “downstream industries” that use steel and aluminum.

As might be expected, the study reported that the metals levies – imposed to counteract massive foreign subsidies and other predatory practices – reduced imports of the products they covered significantly between 2018 and 2021 (the last year for which full statistics were available). U.S. purchases of affected foreign steel products sank by an annual average of 24.0 percent, and of their aluminum counterparts by an annual average of 31.1 percent

Further, as might also be expected, users of these metals often had to turn to buying domestically produced steel and aluminum in many instances. (In others, where U.S,-made alternatives weren’t available, they needed to eat the increased prices of the imports.)

But here’s where the conventional wisdom starts breaking down. According to USITC researchers, the price of Made in America steel and aluminum barely budged as a result of the tariffs. For steel, it rose by an annual average of 0.74 percent between 2018 and 2021. For aluminum, these increases were 0.87 percent. That sure doesn’t sound like price-gouging.

And one big reason undermines another claim of the tariff conventional wisdom. These prices hikes were so modest due significantly to output increases of these metals. And the higher output wasn’t due simply to the (modestly) higher prices metals-makers could charge. It reflected greater quantities of steel and aluminum that were manufactured. Between 2018 and 2021, because of the tariffs alone, steel companies boosted production volume (not dollar value) by an annual average of 1.9 percent and aluminum companies by an annual average of 3.6 percent. (See the table on p. 21.)

In fact, as the report notes, “Many domestic steel producers announced plans to invest in and greatly expand domestic steel production in the coming years” and capacity utilization in the industry hit a 14-year high in 2021. That’s resting on their laurels?

But the worst blow delivered by the report to the conventional wisdom was to the claim that the metals tariffs damaged the U.S. economy overall because whatever benefits the metals sectors enjoyed were completely swamped by the harm done to much larger metals-using sectors. (Here’s a detailed version. Unlike the USITC study, it focuses on employment and not output impacts, but undoubtedly there’s a pretty close relationship between the two.) According to the USITC, nothing of the kind happened.

As stated in footnote 342 on p. 125, thanks to the tariffs, steel production climbed by $1.90 billion in 2018, by $1.86 billion in 2019, by $0.92 billion in 2020, and by $1.33 billion in 2021. That adds up to $6.01 billion.

Aluminum production was $1.74 billion higher in 2018, $1.72 billion in 2019, $0.88 billion in 2020, and $0.92 billion in 2021 (footnote 347 on p. 126). That adds up to $5.26 billion. Add these steel and aluminum totals, and you get $11.27 billion in production gains by value attributable to the tariffs.

On p. 132, the USITC estimates that the tariff-induced production decline of steel- and aluminum-using industries averaged $3.40 billion from 2018 through 2021 – or $13.60billion in toto. So American output did indeed fall overall?

Not so fast. As the authors note (p. 125), the annual impact of the tariffs decreased during these years because the percentage of metals imports covered by the tariffs shrank – in part due to deals struck by Washington with various foreign metals producers to end levies on their products in return for agreeing to end illegal practices like dumping and to work harder to prevent previously tariff-ed Chinese metals pass through their countries to America via customs fraud.

So it’s likely that the gap between the U.S. metals output increases generated by the tariffs and the users’ output losses generated by the levies – pretty measly to begin with – would have shrunk and even vanished completely had all the tariffs remained in place. And who can reasonably rule out the possibility that the tariffs would have wound up boosting more American manufacturing production than they reduced – especially if the metals users were able to increase their production despite higher costs by improving their productivity. (See this post for a fuller discussion of the relationship between import use and productivity.)

The report didn’t look at the downstream effects of the much greater tariffs on Chinese goods, but presented evidence that they’ve been economic winners for the United States as well. As the study concluded, the China tariffs per se – also imposed to offset systemic economic predation by the People’s Republic – cut the value of Chinese imports by an annual average of 13 percent, and increased the price of domestically produced competitor products and the value of domestic competitor production by an annual average of 0.2 percent and 0.4 percent, respectively. between 2018 and 2021.

In other words, the China tariffs raised domestic production twice as much as domestic prices. And the problem is….?

The USITC authors admit that their model for evaluating the tariffs can’t capture all their effects. And their conclusions certainly don’t mean that all tariffs will work splendidly all of the time. But it’s arguable that for all the trade liberalization achieved since the end of World War II, protectionism and mercantilism by foreign governments remains widespread.  The USITC report strengthens the case that comparable U.S. responses should be used much more often.     

P.S. I published a detailed look at the impact of the 1970s and 1980s tariffs (including those imposed during the Reagan years) back in 1994 in Foreign Affairs and reported similar conventional wisdom-debunking findings.          

(What’s Left of) Our Economy: No, Immigration Curbs Haven’t Caused U.S. Labor Shortages

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CCP Virus, Center for Immigation Studies, coronavirus, COVID 19, immigrants, Immigration, Karen Ziegler, Labor Force Participation Rate, labor shortages, LFPR, prime-age population, productivity, Steven A. Camarota, Trump administration, wages, workers, {What's Left of) Our Economy

Thanks to the non-partisan Center for Immigration Studies (CIS), one of the biggest and most harmful recent claims about the American economy has been exposed as a sham: that the current shortages of labor about which employers keep whining are due to a shortage of immigrant workers spurred by the Trump administration’s restrictive policies and worsened by the CCP Virus pandemic.

As known by RealityChek regulars, the very idea of a chronic labor shortage – as opposed to the kinds of temporary supply and demand mismatches that occur regularly in every market-based economy – is un-serious mainly because the solution typically is so simple: raise wages enough to attract new employees. And standard labor shortage claims tend to be harmful because they’re usually covers for business demands for more mass immigration – which enables them to keep wages down rather than respond by investing in labor-saving equipment and improving efficiency in ways that boost productivity and therefore benefit the entire economy, especially long term.

But leaving such broader considerations aside, CIS, a Washington, D.C.-based think tank, has demonstrated that blaming immigration restrictions for all the Help Wanted signs that do indeed seem to be appearing all over the country is simply wrong on its face. According to a December 22 CIS study by Steven A. Camarota and Karen Ziegler, the biggest culprit by far is a continuing decline in the number of U.S.-born residents of the country looking for work.

The authors use Census data to show that although the number of immigrants (legal and illegal) working in America did fall from 27.8 million in November, 2018 (the Trump-era peak) and 27.7 million the following November (just before the pandemic arrived in the United States), by last month (the latest available) data, it was back up to 29.6 million. So there the immigrant worker population has not only recovered all of its pre-pandemic losses. It’s 1.9 million greater than its pre-CCP Virus level.

More important statisically speaking, that November, 2022 immigrant worker number is above the level it would have reached had this population’s growth trend going back to 2000 simply continued uninterrupted.

Meanwhile, the number of U.S.-born U.S. residents in the workforce has continued its long-term decline despite a modest rebound from pre-pandemic lows. The standard measure is the Labor Force Participation Rate (LFPR), which shows the share of working-age Americans are either on the job or looking for one.

The LFPR for all U.S.-born residents of the country fell from 77.3 percent in November, 2000 to 74.1 percent in 2019, dropped further in pandemic-y 2020, and has only bounced back modestly as of November, 2022 to 73.5 percent. And the post-2019 fall-offs for the most closely followed groups – “prime age” men and women, defined as the 25-54- year olds – have generally been steeper. As a result, the number of U.S.-born Americans at work now is 2.1 million smaller than in November, 2019.

In fact, Camarota and Ziegler calculate that if the total U.S. LFPR today was the same as in 2000, 6.5 million more U.S.-born residents would be either working or looking for work today. That’s 3.42 times more than the number of foreign-born residents who have been added to the working population during the pandemic era.

So whatever labor shortages have been experienced lately have been home-grown – and unrelated to immigration restrictions. And if the business community and others favoring more immigration were really interested in easing them meaningfully, they’d be spending more of their time figuring out how to attract more U.S.-born residents to the workplace. That wouldn’t boost national productivity or wages. But the social benefits of ending idleness and welfare dependency in the working-age population should hardly be ignored.

Unfortunately, as Camarota and Ziegler write, the push to fill the gap with immigrants both threatens to keep the native-born on the occupational sidelines and increase their vulnerability to crime, addiction, mental health issues, and obesity, as well as to “reduce political pressure from employers and society in general to address” the domestic LFPR decline.

(What’s Left of) Our Economy: Now Biden’s Gone America First on the World Trade Organization

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America First, Biden administration, GATT, General Agreement on Tariffs and Trade, globalism, international law, national security, sovereignty, Trade, Trump administration, World Trade Organization, WTO, {What's Left of) Our Economy

If someone told you that the U.S. government has outsourced to an international organization the legal authority to decide when American national security is endangered – and inevitably how it can respond – you’d probably think they were pretty out there, or shamelessly lying.

Except that’s exactly what happened in 1947, when globalist U.S. leaders agreed to the body of rules aimed at governing international trade in the post-World War II world, and what remained the case for decades afterward. And although last week, the Biden administration moved decisively to restore sanity to U.S. trade policy in this respect, it didn’t make the complete policy about face that’s still needed.

Since protecting a country’s security is by far the Number One responsibility of any national government, such governments need to be the supreme deciders of how to carry out this mission on an ongoing basis. Further, the legitimacy of this authority logically goes double when democratic national governments like the United States’ are concerned. Why should any other power or organization hold any ability to veto or even influence choices made by the American people’s duly elected representatives to ensure their system’s safety, much less survival? Indeed, on what valid basis could such an ability actually exist? The kindness of strangers? Their superior wisdom?

These maxims are so self-evident (as America’s Declaration of Independence might put it), that even the main body of international law (a system not known for its pragmatism) recognizes them as fundamental attributes of a country’s sovereignty – its bedrock right to take whatever steps it considers needed to keep itself in existence. And how can this security be maintained if its leaders lack the unfettered ability to figure out when threats are present and what they consist of, and if they constantly need to be worrying about is whether the policies they choose pass international muster or not?

But the crucial importance of national sovereignty wasn’t so self-evident to American leaders in World War II’s aftermath. For in the bylaws of the General Agreement on Tariffs and Trade (GATT) – the global trade regime that was turned into the World Trade Organization (WTO) at the beginning of 1995 – they agreed to an article that safeguarded a member state’s right to take “any action [to restrict trade] which it considers necessary for the protection of its essential security interests.” Crucially, however, this same Article XXI then proceeded to set out three criteria that such actions needed to meet in order to pass the legality test – including the specification that trade restrictions take place “in time of war or other emergency in international relations.”

These U.S. leaders might have had some decent excuses. First, this was an age when the United States bestrode the world like a titan. How could it be plausibly threatened by mere words on paper? Further, countries outside the Communist camp (none inside signed onto the new trade pact until the mid-1960s) were hardly likely to want to tie America’s military hands since most relied so heavily on U.S. protection.

Second, the GATT lacked effective procedures for enforcing its rules. And third, Washington has always assumed that the Article XXI’s reference to actions that members “consider necessary” means that the entire measure (including the insistence that trade restrictions are legal only in certain types of international conditions) is “self-judging” – i.e., that members’ have the final say over whether it can both define its security interests and the situations in which they can be invoked to override the GATT/WTO’s ban on trade curbs.

But however understandable the U.S. position might have been in 1947, dramatic changes in national and global circumstances over decades should have alerted Washington long ago that Article XXI was bound to cause trouble. Chiefly, America’s predominant global military and economic role inevitably eroded. Many of its allies became formidable economic competitors. The line between military goods and civilian goods – never completely clear – became thoroughly blurred as products incorporating “dual use” technologies proliferated. And the birth of the WTO gave the world trade system a much more effective enforcement system.

Here it’s important to be really specific. It’s not that the WTO can muster a police force, march into the District of Columbia, and compel U.S. officials to follow its dictates. The effectiveness of this dispute resolution system is based on its authority to permit countries claiming to be harmed by U.S. (or any members’) trade practices to respond with retaliatory tariffs – which can be strategically targeted on the kinds of domestic industries powerful enough to launch lobbying campaigns able to force their governments into compliance.

So it’s easy to see why many WTO members – most of which rely heavily on net exporting to the U.S. market to achieve satisfactory levels of growth and employment) would want to use Article XXI to undercut American sovereignty in order to gain advantages for their own industries – including allies who had learned that the United States would continue protecting them and tolerating their defense free-riding even after serious provocations.

Earlier this month, this gambit paid off in spades, as the WTO declared illegal the U.S. tariffs avowedly imposed on steel and aluminum imports for national security reasons by former President Trump in spring, 2018.

Fortunately, in reality, none of the plaintiff countries can legally counter-tariff these U.S. curbs – because that same former President Trump effectively neutered the WTO dispute-resolution system by leaving seats on its appeals panels empty and preventing that body from convening to handle any next legal steps. And to his credit, President Biden has declined to appoint replacements as well.

Also to its credit, though, his administration “strongly rejected” these WTO rulings, and declared that “The United States has held the clear and unequivocal position, for over 70 years, that issues of national security cannot be reviewed in WTO dispute settlement and the WTO has no authority to second-guess the ability of a WTO Member to respond to a wide-range of threats to its security….The United States will not cede decision-making over its essential security to WTO panels.”

Unfortunately, the Biden administration didn’t take this position when it should have – once these foreign suits were filed to begin with. In fact, the administration not only (weirdly) agreed that the WTO does have jurisdiction when national security concerns come into play, but only in the sense that it was required to approve of members’ freedom to invoke these considerations to justify trade barriers. It also went to ridiculous lengths to defend the U.S. position as if WTO members were not able to self-judge their national security claims – to the point of trying to show grammatically that the plaintiffs were misreading Article XXI grammatically.

Think I’m kidding? Here’s how the one of the WTO reports presenting the anti-U.S. ruling described the U.S. effort, including direct quotes from the American brief:

“A premise of the United States’ characterization of Article XXI (b) as ‘self-judging’ is that, based on ‘the text and grammatical structure’ of the provision, ‘the phrase ‘which it considers’ qualifies all of the terms in the single relative clause that follows the word ‘action’. According to the United States, this ‘single relative clause’ in Article XXI(b) ‘begins with ‘which it considers necessary’ and ends at the end of each subparagraph’ and ‘describes the situation which the Member ‘considers’ to be present when it takes such ‘action’. The United States argues from this premise that, ‘[b]ecause the relative clause describing the action begins with ‘which it considers’, the other elements of this clause are committed to the judgment of the Member taking the action.’ The United States thus posits an ‘overall grammatical structure’ of Article XXI(b) according to which a panel may not ‘determine, for itself, whether a security interest is ‘essential’ to the Member in question, or whether the circumstances described in one of the subparagraphs exists'”.

For their part, the plaintiff countries, along with the WTO tribunals, dredged up copies of The Shorter Oxford English Dictionary, Strunk and White’s classic The Elements of Style, and Merriam-Webster’s Guide to Punctuation and Style, among other such sources, to undercut such claims.

But even though the plaintiffs’ complaints are stuck in international legal limbo, the U.S. decision to legitimize and play this game has resulted in an international organization still proclaiming, without challenge, its absolute right to tell American leaders when they are or are not in a war (dictionary definitions are used as the ultimate standard), and even when they or any part of their national economy do and do not face an “international emergency” (a decision the panel specifically arrogates to WTO judges).

Dispositive substantive arguments can be raised against all the WTO tribunals’ conclusions. For example, as stated above, ensuring a nation’s security adequately is a challenge that doesn’t only arise during especially fraught times in international politics. It typically requires steps taken during more tranquil periods to ensure that military capabilities are adequate the moment trouble starts. WTO rules that prevent these measures from being taken until crises break out could simply ensure that they’re not in effect in time for the United States to prevail.

Yet making these points amounts to falling into the same trap into which the Biden administration’s trade litigators ensnared themselves and the country. Instead, Washington should both make emphatically clear that once U.S. authorities justify a trade-restricting measure, the WTO is irrelevant (as the Biden administration eventually declared) and then boycott whatever proceedings are convened.

Plaintiff countries would still be free to try to address these problems either through standard bilateral diplomacy, or counter-measures of their own, or some combination of the two, and let the party with the most leverage come out on top. Trade purists dismiss these practices as descending into a dangerous economic “law of the jungle,” but the United States and the European Union resorted to just this approach to resolve a long dispute about aircraft production subsidies outside WTO auspices. And freed of the cumbersome and inflexible adversarial framework imposed by the trade body’s legalistic procedures, they reached an agreement that satisfied all major stakeholders – including U.S. unions.

Handling these disputes bilaterally will strongly tend to produce lasting results and work in the U.S.’ favor because (a) agreements will reflect real world power balances – not the rulings of a system whose only raison d’etre is to define power out of existence in favor of an abstract equitism that’s completely divorced from global circumstances on the ground – and (b) because the United States enjoys an abundance of such power.

That the globalist Biden administration is acting as willing as the America First-y Trump administration to recognize that, at least when it comes to national security, tinternational trade law is “an idiot” (to quote Dickens) signals an encouragingly fundamental turn in America’s approach to the global economy. Even better would be for the President to make the break as clean and unmistakable as possible.

Our So-Called Foreign Policy: Why Biden’s China Tariff Cutting Talk is So (Spectacularly) Ill-Timed

Tags

Biden administration, CCP Virus, China, coronavirus, COVID 19, currency, currency manipulation, exports, Our So-Called Foreign Policy, tariffs, Trade, Trump administration, unemployment, Xi JInPing, yuan, Zero Covid

If the old adage is right and “timing is everything,” or even if it’s simply really important, then it’s clear from recent news out of China that the Biden administration’s public flirtation with cutting tariffs on U.S. imports from the People’s Republic is terribly timed.

The tariff-cutting hints have two sources. First, and worst, as I noted two weeks ago, two top Biden aides have publicly stated that the administration is considering reducing levies on Chinese-made goods they call non-strategic in order to cut inflation. As I explained, the idea that the specific cuts they floated can significantly slow inflation is laughable, and their definition of “non-strategic” could not be more off-base.

The second source is a review of the Trump administration China tariffs that’s required by law because the statute that authorizes their imposition limited their lifespan. The administration can choose to extend them, eliminate them entirely, reduce all of them, or take either or both of those actions selectively, Some tinkering around the edges may justified – for example, because certain industries simply can’t find any or available substitutes from someplace else. But more sweeping cuts or removals could signal a stealth tariff rollback campaign that would be just as ill-advised and ill-timed.

And why, specifically, ill-timed? Because this talk is taking place just as the Chinese economy is experiencing major stresses, and freer access to the U.S. market would give the hostile, aggressive dictatorship in Beijing a badly needed lifeline.

For example, China just reported that its goods exports rose in April at their lowest annual rate (3.9 percent) since June, 2020. Exports have always been a leading engine of Chinese economic expansion and their importance will likely increase as the regime struggles to deflate a massive property bubble that had become a major pillar of growth itself.

It’s true that dictator Xi Jinping’s wildly over-the-top Zero Covid policy, which has locked down or severely restricted the operations of much of China’s economy, deserve much of the blame. But Xi has recently doubled down on this anti-CCP Virus strategy, and low quality Chinese-made vaccines virtually ensure that case numbers will be surging. So don’t expect a significant export rebound anytime soon without some kind of external helping hand (like a Biden cave-in on tariffs).

Indeed, China seems so worried about the export slowdown that it’s resumed its practice of devaluing its currency to achieve trade advantages. All else equal, a weaker yuan makes Made in China products more competitively priced than U.S. and other foreign counterparts, for reasons having nothing to do with free trade or free markets.

And since March 1, China – which every day determines a “midpoint” around which its yuan and the dollar can trade in a very limited range (as opposed to most other major economies, which allow their currencies to trade freely) – has forced down the yuan’s value versus the greenback by an enormous 6.54 percent. The result is the cheapest yuan since early November 3, 2020.

It’s been widely observed that such currency manipulation policies can be a double-edged sword, as they by definition raise the cost of imports still needed by the Chinese manufacturing base. But the rapidly weakening yuan shows that this is a price that Beijing is willing to pay.       

Finally, for anyone doubting China’s need to maintain adequate levels of growth by stimulating exports, this past weekend, the country’ second-ranking leader called the current Chinese employment situation “complicated and grave.” His worries, moreover, aren’t simply economic. As CNN‘s Laura He reminded yesterday, Beijing is “particularly concerned about the risk of mass unemployment, which would shake the legitimacy of the Communist Party.”

For years, I’ve been part of a chorus of China policy critics urging Washington to stop “feeding the beast” with trade and broader economic policies that for decades have immensely increased China’s wealth, improved its technology prowess, and consequently strengthened its military power and potential. The clouds now gathering over China’s economy mustn’t lead to complacency and any easing of current American tariff, tech sanctions, or export control pressures. Instead, they’re all the more reason to keep the vise on this dangerous adversary and even tighten it at every sensible opportunity.

Those Stubborn Facts: Behind Biden’s Lousy Polls on the Economy

Tags

Biden administration, inflation, inflation-adjusted wages, real wages, Those Stiubborn Facts, Trump administration, wages, workers

After-inflation wages for all private sector workers, Feb.-Oct., 2020: (last Trump year):  +2.81 percent 

After-inflation wages for all private sector workers, Feb.-Oct., 2021 (first Biden year):  -1.84 percent  

After-inflation wages for private non-managerial workers, Feb.-Oct., 2020: +2.84 percent 

After-inflation wages for private non-managerial workers, Feb.-Oct., 2021: -1.53 percent  

 

(Sources: “Average hourly earnings of all employees, 1982-1984 dollars, total private, seasonally adjusted,” Employment, Hours, and Earnings from the Current Employment Statistics survey (National), Databases, Tables & Calculators by Subject, Data Tools, U.S. Bureau of Labor Statistics, Bureau of Labor Statistics Data (bls.gov) and “Average hourly earnings of production and nonsupervisory employees, 1982-84 dollars, total private, seasonally adjusted,” Ibid.)

(What’s Left of) Our Economy: Biden Goes Full Trump on His New Metals Tariff Deal

Tags

allies, aluminum, Biden, Biden administration, China, Donald Trump, EU, European Union, metals, metals tariffs, quotas, steel, steel tariffs, tariff-rate quota, tariffs, Trade, trade wars, transshipment, Trump administration, {What's Left of) Our Economy

I’m old enough to remember when Donald Trump’s decision to tariff steel and aluminum imports from many U.S. allies was almost universally condemned outside his administration as not only unimaginably stupid and economically ignorant (as the supposed case for all tariffs) but downright heinous.

After all: These were U.S. allies that would be paying the price for Trump’s troglodyte protectionism. For decades they’d stood shoulder to shoulder with America in numerous foreign policy crises and showdowns with hostile dictatorships (or at least much of the time) and served as valuable force multipliers (even though their skimpy defense budgets prevented them from providing the United States with much concrete defense help when push came to shove, and needlessly exposed Americans to nuclear war risk). How, moreover, could relying on imported metals from friendly countries endanger U.S. national security – as the Trump administration legally needed to claim in order to slap on the trade curbs. Worse, the Trump metals levies as such left China, by far the biggest metals trade offender, untouched.

Even Trump’s own first Defense Secretary agreed on the tariffs’ cockeyed targeting. So did a fellow named Joe Biden, who during his presidential campaign last year upbraided his opponent for “picking fights with our allies” vowed to “focus on the key contributor to the problem [of a global metals glut] – China’s government.”

So although it’s been telegraphed for some weeks now, it’s still worth noting not only that since his inauguration, President Biden has kept the steel and aluminum tariffs firmly in place, but that his administration has just reached an agreement with the European Union (EU) that makes clear that the two major assumptions that drove Trump’s approach were completely correct.

First, as I’ve demonstrated repeatedly (e.g., here), the evidence is overwhelming both that global metals capacity stems not only from China’s own mammoth overproduction, but from numerous other metals manufacturing countries, and that all of these economies were working in any number of clandestine ways to make sure that most of this overcapacity was dumped into the U.S. market.

That is, they either responded to Chinese product flooding their own markets and threatening their own metals industries by ramping up their own exports to the United States; by modifying these Chinese metals slightly and then sending them state-side as their own products; or by simply permitting Chinese steel and aluminum to be transshipped through their own ports to the United States under false labels.

(This new report shows that China’s strategy of evading U.S. trade barriers has taken another mportant form”: acquiring metals production capacity in third countries – especially in the most profitable, specialty and other high-value metals segments – and using these facilities to ship to America.)

As a result, any U.S. tariffs needed to be universal to be effective – either simply to keep imports under control, or to secure foreign agreement to stop playing footsie with the Chinese. Any other approach would have left Washington continuing to play Uncle Sucker in a game of global whack-a-mole – whose latest round began when direct Chinese exports to the United States were sharply limited by tariffs put in place during the last year of the Obama administration.

Second, the Trump approach recognized that the United States boasted the leverage to achieve success, and the terms of the new agreement with the EU make clear that the former president judged the balance of economic power correctly It’s true that the deal EU saves various American industries from retaliatory tariffs. But in return for restoring these sectors largely unimpeded access to the huge total EU economy, the Europeans have accepted sharply reduced access to American customers.

A U.S. government fact sheet states that tariff-free EU steel and aluminum exports to the United States will be limited to “historically-based” volumes (which have not been specified, but which reportedly will equal only about 60 percent of the immediate pre-Trump tariff totals). Practically all attempted European shipments above that total would be subject to the exact same Trump levies that clearly kept them mostly out of the United States – at least judging from the Europeans’ fundamental complaint. (Trade mavens call such arrangements “tariff-rate quotas.”) In this respect, this EU agreement mirrors those reached by the Trump administration with countries like Canada, Mexico, Argentina, Brazil, and South Korea.

The full details of the agreement haven’t yet been released, so questions remain about enforcement mechanisms – which of course matter decisively for any effort to combat secretive activity like transshipment. But because American-owned steel companies and U.S. steel unions have endorsed the deal, chances are they’ll be effective. And that’s likely to be true for the rest of his trade agenda as long as President Biden keeps going full Trump.      

Im-Politic: Big Neglected Questions About Washington and the Virus’ Origins

Tags

Anthony S. Fauci, Biden administration, bio-weapons, CCP Virus, China, coronavirus, COVID 19, Francis Collins, gain-of-function research, Galveston National Laboratory, Im-Politic, Josh Rogin, National Institutes of Health, NIH, perjury, State Department, The Washington Post, Trump administration, Wuhan Institute of Virology, Wuhan virus

There’s been lots of commotion in recent weeks about the decision by chief Biden medical adviser Anthony S. Fauci and National Institutes of Health (NIH) chief Francis Collins to use federal government moneys to fund research on dangerous coronaviruses at labs in China – and that’s good. As I wrote in January, there’s enough compelling circumstantial evidence that these resources helped create the CCP Virus to warrant detailed investigations and possibly their firings.

What’s less good is that much of the commotion is missing or obscuring other problems with the Fauci-Collins approach to scientific cooperation with China that are at least equally serious, and that could constitute comparable grounds for their dismissal.

To be sure, the current emphases on this matter aren’t exactly trivial. Clearly, if federal funding helped pay for research at one of the two major virology labs in the Chinese city of Wuhan, where the first virus cases have been reported, and that this research created the pathogen that has caused so much illness, death, and economic distress in America and around the world, that would represent one of the worst scandals in American history. There are also the questions of whether the feds funded what’s called gain-of-function research (which is unmistakably capable of producing such deadly pathogens) to begin with, and whether they’ve told Congress the truth about these programs in sworn testimony.

But however grave each of these potential offenses, the figurative jury is still correctly out on each. First, it’s not yet at all certain that the virus even came from either lab, as opposed to some form of natural origin. In addition, since there’s no hard-and-fast scienitific consensus on defining gain-of-function research (here’s an official federal summary of the debate), it’s not yet known whether such activity was actually financed by the federal government. It’s true that there’s a U.S. government definition that applies specifically to grants for such activity. But Washington has also given itself wiggle room in applying it.

As a result, it’s far from obvious that Fauci specifically perjured himself in telling Congress that he’s innocent of such accusations. More frustrating, because the term is so fuzzy, a fair and just conclusion may be genuinely impossible to reach. This holds in principle despite Collins’ claim (not under oath) that NIH has never “approved any grant that would have supported ‘gain-of-function’ research on coronaviruses that would have increased their transmissibility or lethality for humans” – which of course raises the question of what kind of gain-of-function work might have been approved.

Moreover, even if Fauci and Collins did actually approve gain-of-function research in China, that doesn’t necessarily mean that the particular project they subsidized produced the virus in question. And that may never be finally determined, either, because China may well have destroyed the evidence needed to provide a definitive answer.

When it comes, however, to making sure that U.S. international science cooperation policy adequately safeguards America’s health and security going forward, some crucial questions are being neglected so far.

For example, just before its term ran out, the Trump administration stated publicly that even though the Wuhan Institute of Virology (WIV – which received the controversial U.S. research grant) presents itself as a “civilian institution, the United States has determined that the WIV has collaborated on publications and secret projects with China’s military. The WIV has engaged in classified research, including laboratory animal experiments, on behalf of the Chinese military since at least 2017.” Nor has the Biden administration disputed this allegation – even when the President’s national security adviser was asked about it directly.

Further, virus research has always had obvious links to biological weapons research, and there’s no bright line in China (or anywhere in the world these days) between civilian technologies and innovation and military technologies and innovation. No one with any credibility has explicitly charged that Beijing intended the results of its virology research to be used militarily. But no one with a lick of common sense could dismiss this prospect, either. Did either Fauci or Collins consider it? If so, neither has mentioned it yet.

Then there are the secrecy and oversight issues. Fauci has claimed that “You never know” whether grant recipients are trustworthy. But even though governments in both China and the United States (and every other country) keep lots of secrets, military and otherwise, and even though all go overboard with the secrecy too often, who can doubt that China is in a class by itself for blocking transparency, and for lacking systemic means of exposing improperly kept secrets?

In other words, even assuming that the U.S. government can never completely ensure that grantees won’t lie, did Fauci or Collins ever consider that trustworthiness in China is a special problem, and required special monitoring procedures to be in place before any money was transferred – especially given the bio-weapons angle? Not only is there, again, no reason yet to believe that either of them did, Fauci has even told Congress that the Chinese recipients are in fact “trustworthy.” (See the above-linked CNBC.com post.   .

And don’t forget safety – an issue on which the available evidence indicates that lackadaisical attitudes weren’t confined to Fauci and Collins.

A Washington Post article has reported that in 2018 – that is, during the Trump administration – concerns about the WIV’s coronavirus studies led the State Department to send some of its China-based science specialists to the facility to check on its safety conditions. They found enough subpar standards and practices to warn about the risks of a leak causing a pandemic. And here’s where the story gets especially troubling, and where many more questions need to be answered.

According to the Post report, the WIV’s own officials asked for help in this regard, and the State Department inspectors concluded that the best U.S. response was providing assistance – both because they considered the work to be valuable and because the coronavirus research was being supported by “the Galveston National Laboratory at the University of Texas Medical Branch and other U.S. organizations.” That is, the NIH of Fauci and Collins wasn’t the only federal government sources of funding.

It’s not clear that they also got word of the slipshod conditions at the WIV. It’s not even clear that the Galveston lab did. But is it credible to suppose that they were left in the dark? (Its head, interestingly, gave a non-denial-type denial in this April, 2020 interview. To my knowledge, Fauci hasn’t been asked the question.)

All that’s known for sure is (1) that the Post article (and a follow-up Politico piece from the same correspondent, Josh Rogin) reported that the State Department inspectors’ request for more assistance wasn’t granted; and (2) that the NIH-funded research wasn’t suspended until April, 2020.

It’s vital that responses to all these unanswered and sometimes unasked questions be forthcoming.

At this point, therefore, it’s possible that Fauci and Collins are off the hook on the safety issue – and that others who served in the State Department during the Trump years are squarely hanging from it. Otherwise, however, it looks like this pair decided to support dangerous and potentially catastrophic biological research by a regime known for its disregard for the safety of its own people – let alone foreigners – in its pursuit of power, for its eagerness to turn scientific advances into military assets, for its obsession with secrecy and impressive capability for remaining opaque, and, last but not least, for its growing determination to challenge U.S. national security interests.

Finding out why on earth this idea ever entered or stayed in their heads seems a lot more important than haggling over whether in some technical or even legal sense they were or weren’t funding gain-of-function research.

(What’s Left of) Our Economy: February’s Big New U.S. Trade Deficit Driven by Lots of Volatile Internals

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Canada, China, exports, Financial Crisis, Great Recession, high tech goods, imports, manufacturing, Mexico, NAFTA, North American Free Trade Agreement, services, South Korea, Trade, Trade Deficits, Trump administration, {What's Left of) Our Economy

The U.S. monthly trade deficit rose for the sixth straight month in February, to its highest level ($57.79 billion) since some of the darkest days of the last financial crisis (October, 2008’s $60.19 billion). Combined U.S. goods and services exports set their third monthly record ($204.45 billion) in the last four months, but total imports (at $262.04 billion) hit their fifth straight monthly all-time high. New monthly records were also set for goods imports ($214.49 billion), services exports (for the tenth straight month, with a total of $67.27 billion) and services imports ($47.85 billion).

With U.S.-China trade tensions rising, the huge and chronic American trade shortfall with the PRC sank by 18.61 percent on month in February, but the drop was from an unusually high January figure ,and the new total ranked as the biggest February number ever ($29.26 billion). Similar volatility was on display with the U.S. deficits with other trade partners in the Trump administration’s crosshairs, including South Korea, Canada, and Mexico, as well as in manufacturing and high tech goods.

Here are selected highlights of the latest monthly (February) trade balance figures released Thursday morning by the Census Bureau:

>In the process of revealing several new all-time records and multi-year highs and lows, this morning’s U.S. trade balance report also made clear how volatile the nation’s monthly trade figures can be – including those describing the nation’s commerce with major foreign economies whose trade policies have evoked first criticism and now tariffs and threatened levees from the Trump administration.

>The combined U.S. goods and services trade deficit rose in February sequentially for the sixth straight month. The $57.59 billion total, a 1.63 percent increase from January’s upwardly adjusted $56.67 billion figure, was the biggest monthly trade shortfall since October, 2008’s $60.19 billion – when the Lehman Brothers bankruptcy pushed the global financial crisis into a dangerous new phase and ultimately helped usher in America’s worst downturn since the Great Depression of the 1930s.

> U.S. total exports in February set their third new record in the last four months. At $204.45 billion, they were 1.74 percent greater than January’s upwardly adjusted $200.95 billion and 0.41 percent higher than the previous best of $203.61 billion, set last December.

>But U.S. total imports in February set their fifth straight monthly record. The $262.04 billion total was 1.72 percent higher than the upwardly adjusted January level of $257.61 billion – the previous record.

>The $77.01 billion February U.S. trade deficit in goods was also the biggest such total since the last recession – specifically, the $77.63 billion figure for July, 2008. Sequentially, it grew 0.39 percent from January’s upwardly adjusted $76.71 billion.

>America’s services trade remained healthily in surplus in February. But the $19.42 billion excess of exports over imports was the smallest such total since December, 2012’s $18.63 billion. Month-on-month, the services surplus sank by 3.12 percent in February from January’s upwardly adjusted $20.04 billion – the biggest such drop since last April’s 4.88 percent plunge.

>U.S. goods imports set their third record in the last four months in February. At $214.19 billion, they exceeded the January total (the previous record, which has been upwardly adjusted) of $210.86 billion by 1.58 percent.

>Services exports in February set their tenth straight monthly record, rising sequentially by 0.70 percent from an upwardly adjusted $66.80 billion to $67.27 billion.

>Services imports in February set their fourth straight monthly record, rising sequentially by 2.34 percent from a downwardly adjusted $46.76 billion to $47.85 billion. The monthly increase, moreover, was the biggest since August 2016’s 3.67 percent.

>At the same time, reportedly, the February services imports total was fueled in part by payments made by American broadcasters for the rights to televise the Seoul Winter Olympics.

>With U.S.-China trade tensions escalating, the February figures showed that the massive, chronic goods trade surplus run by China with the United States plunged by 18.61 percent sequentially, from $35.95 billion (the second highest monthly total ever) to $29.26 billion.

>The February figure was the lowest since April, 2017’s $27.63 billion, and the monthly decrease was the biggest since last February’s 26.64 percent. Yet the February figure was an all-time February high.

>U.S. goods exports in February declined by 0.30 percent, from $9.84 billion to $9.81 billion – the lowest such total since last April’s $9.84 billion.

>The much larger amount of U.S. goods imports from China sank sequentially by 14.68 percent in February, from $45.79 billion to $39.07 billion.

>The goods import decline was the biggest since last February’s 20.82 percent, and the monthly total was the lowest since April’s $37.47 billion. Yet as with the goods deficit, the new February goods import total was a new monthly record for February.

>A similar story is told by the new statistics for U.S. merchandise trade with South Korea, whose bilateral trade deal with the United States was recently renegotiated.

>America’s goods trade deficit with South Korea also shrank dramatically on month in February – by 65.28 percent, from $1.97 billion to $0.68 billion.

>The February total was the lowest since the 0.56 billion figure recorded for March, 2012 – as the trade agreement went into effect. The month-on-month plummet, moreover, was the biggest since the 70.50 percent drop in February, 2012.

>Yet the January U.S.-South Korea merchandise trade deficit was the biggest since October’s $2.51 billion.

>Still, the composition of the monthly U.S.-South Korea goods trade deficit change differed dramatically from that of the U.S.-China deficit.

>Not only did U.S. merchandise imports from South Korea fall sequentially by 12.05 percent – to $4.97 billion, the lowest such total since last February’s $4.87 billion, and the greatest monthly percentage drop since that month. U.S. merchandise exports to South Korea also jumped on month by 16.36 percent, to $4.92 billion.

>That increase was the biggest percentage-wise since last March’s 22.04 percent.

>The U.S.’ merchandise shortfall with Canada nosedived in February, too – by 89.59 percent on month, from January’s $3.70 billion to $0.38 billion.

>The total was the lowest since last September’s $0.25 billion, and the sequential drop was the steepest since May, 2016’s 95.84 percent.

>But the January deficit was the biggest since December, 2014’s $4.07 billion.

>Most of the U.S.-Canada merchandise deficit’s February monthly decrease came on the American imports side, as these purchases declined by 8.95 percent to $23.92 billion – the largest such decrease since last July’s 11.49 percent, and the lowest such total since that month’s $22.89 billion.

>But U.S. goods exports to Canada also rose on month in February – by 4.28 percent, to $23.53 billion.

>A different kind of volatility was exhibited by U.S. merchandise trade with its other North American Free Trade Agreement (NAFTA) partner, Mexico.

>The American goods trade shortfall with Mexico soared by 46.62 percent sequentially in February, to $6.06 billion. That’s the biggest such increase since the 81.73 percent of March, 2001 – nearly 17 years ago.

>Yet the $4.14 billion January U.S. merchandise deficit with Mexico was the smallest since last January’s $3.95 billion.

>U.S. goods exports to Mexico sank by 7.24 percent on month in February, to a five-month low of $20.22 billion, while goods imports from Mexico climbed by 1.35 percent, to $26.29 billion.

>Volatility in these bilateral deficits was mirrored in February by volatility in the manufacturing trade deficit. This chronic and enormous shortfall plunged sequentially by 15.48 percent, to $73.21 billion. But the January total of $86.62 billion was the second highest of all time.

>Manufacturing exports improved by 2.89 percent sequentially in February, to $88.86 billion, while imports skidded by 6.31 percent, to $162.07 billion.

>High tech goods trade displayed major ups and downs, too. In February, the shortfall cratered 30.96 percent, to $7.93 billion. That was the smallest total since last April’s $6.04 billion.

>But the $11.49 billion January gap was 14.25 percent bigger than the December figure.

Our So-Called Foreign Policy: Still on Globalist Auto-Pilot

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Bloomberg.com, China, foreign policy establishment, globalism, internationalism, Iran, Islamic terrorism, Israel, Middle East, Noah Feldman, North Korea, nuclear weapons, Our So-Called Foreign Policy, Rex Tillerson, Russia, Trump, Trump administration, Ukraine

Clearly, the holiday week between Christmas and New Year’s has brought Americans no respite from transparently witless foreign policy-related Trump-bashing by the Mainstream Media. Hot on the heels of The New York Times‘ classic of fake history spotlighted yesterday in RealityChek came this Bloomberg.com piece accusing Secretary of State Rex Tillerson (and by extension the entire Trump administration) with two of the worst diplomatic sins imaginable – not recognizing instances where the United States lacks the leverage to achieve its goals, and lacking a strategy to solve this problem.

But Noah Feldman’s December 28 column at least boasted one (unintended) virtue: If the president and his top aides read it intelligently, they’ll realize that in many cases, they’re making an even more fundamental, but eminently correctable, mistake. Just like Feldman – and the internationalist/globalist (choose your adjective) foreign policy establishment he’s part of – they keep failing to ask first-order and even second-order questions about America’s role in the world. And strangely, these are exactly the kinds of questions that President Trump often asked when he was candidate Trump.

Feldman, an international law professor at Harvard, correctly observes that the Trump administration has taken on the tasks of ending the North Korean nuclear weapons program, pressuring China to help out in a significant way, persuading Russia to back off in some unspecified way from its campaign to control neighboring Ukraine, weakening Iran’s ability to boost its influence throughout the Middle East, and pushing Pakistan to stop supporting Islamic radicals in the region.

The author also mentions that “Neither [Tillerson] nor Trump is responsible for limits to U.S. leverage” – though maybe he could have made this crucial point before the next-to-last sentence in his article?.

But like the Trump administration, Feldman never bothers to ask exactly why the United States needs to seek these objectives (the first-order question) or whether, if they are essential or desirable, the standard forms of international engagement chosen by the Trump administration (and all of its predecessors as long as they were faced with these issues) are the best responses.

Ukraine policy is the most glaring example of neglecting first-order questions. Whatever you think of Russian revanchism or Putin, it’s inexcusable to overlook that American leaders have never considered Ukraine’s independence to be anything close to a vital or even important interest for two very good reasons. First, it was actually part of the old Soviet Union from 1924 until the end of the Cold War, with absolutely no impact on U.S. security, independence, or welfare. Second, it is located so close to Russia, and so far from the United States, that there is absolutely no prospect that American or NATO military actions could defend or liberate it without resorting to the (possibly suicidal) use of nuclear weapons.

So however tragic that country’s fate has been, the only sane conclusion possible from the standpoint of U.S. interests is that the best Ukraine policy is no Ukraine policy at all. And given this structural American inability to do Ukraine much good, steps like the recent Trump administration decision to supply defensive weapons to the Ukrainians sound like suspiciously like an American decision to fight to the last Ukrainian.

The other three foreign policy challenges obviously can’t be ignored. But the common assumption – especially in the ranks of the country’s bipartisan foreign policy establishment – that the answer involves some mixture of more military pressure or smarter diplomacy (more foreign aid is usually included as well, though it hasn’t figured very prominently in the North Korea, Iran, or Pakistan debates) urgently needs reexamination.

For as I’ve often written, in many cases, Americans could well find it much less dangerous, much cheaper, and much more effective to capitalize on the country’s matchless combination of military strength and geographic isolation to neutralize these particular threats.

To summarize briefly, if Washington pulls U.S. troops out of South Korea, it would eliminate any rational need for North Korea to strike U.S. territory with nuclear weapons (which is all too likely to result from a new Korean war that engulfs those units), and with its own massive nuclear forces, the United States could credibly threaten to obliterate the North if it sent its missiles against America for any other reason. North Korea’s nuclear weapons would still be a problem for its immediate neighbors. But all those countries (including South Korea) are more than powerful and wealthy enough to deal successfully with the North on their own and even singly.

Re Middle Eastern threats, the United States should focus much more on securing its own borders to keep terrorists and much less on defeating them on foreign battlefields – let alone on “fighting their ideology” by encouraging economic development and democracy. The region’s massive dysfunction on every conceivable level (including the cultural) will keep practically guaranteeing that new jihadist or other extremist forces will replace any that are crushed militarily, and that reform efforts will go exactly nowhere.

Further, by now it should be clear to any fair-minded person that the United States has more than enough energy to marginalize the power of Middle East oil producers over its economy and the world economy. And if you don’t like fossil fuels, let’s work harder to boost the use of alternatives. Finally, as with North Korea, America’s own deterrent is the best counter to any Iranian nuclear threat to the U.S. territory.  (And for those concerned with Israel’s security, the Jewish state of course has its own nuclear capabilities.)

The point here is not that any of these more domestic focused substitute strategies will be easy to put into effect or accelerate. The point is that they will be far easier to put into effect or accelerate than their more traditional counterparts, principally because America’s government, society, business community etc will have much more control over these measures than over events abroad.

During this first year of the Trump administration, no one should be the slightest bit surprised that establishmentarians like Feldman (and The New York Times‘ Landler) can’t even conceive that America’s foreign policy is stuck in a box, much less that it’s increasingly and dangerously obsolete. But President Trump ran in large measure as a foreign policy disrupter, and on many critical issues displayed impressive iconoclastic instincts. Why he hasn’t acted on more of them is one of the biggest mysteries of his presidencies so far. It could also be one of his biggest regrets.