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Wednesday, June 15, 2016

Trump killed free trade

I notice Hillary Clinton scrubbed her praise for the Trans-Pacific Partnership from "Hard Choices," the book she *wrote* (wink, wink, nudge, nudge -- you know like they do Trump's books).

That is because in one year's time, Donald Trump has turned the phrase "free trade" into political dog doo. No political candidate will touch it without latex gloves.

Do not take my word for it. Clyde Prestowitz, a former trade official for both Reagan and Clinton (now on the advisory board of the ExIm Bank), pointed out the demise of free trade in this presidential election.

From Prestowitz in the Washington Monthly:
For all his bullying, narcissism, policy ignorance, and shameless self-contradictions, Trump is resonating with voters in significant part because of his willingness to break with the establishment elite on trade. Yes, his talk of slapping 45 percent tariffs on imports, forcing Apple to move iPhone assembly from China to America, and telling our allies to pay us for providing defense is uninformed and unrealistic. (Presidents don’t have the authority to set tariffs. IPhone assembly is low-pay work that won’t raise U.S. wages; we need to make the high-value-added parts. And allies might — and should — increase their own defense spending, but we can’t make them pay us directly.) The public, however, sees in Trump’s and also Sanders’s comments the articulation of a possibly larger truth and the revelation of a possible giant confidence job.
Actually presidents do have some leverage on tariffs in the trade agreements, which Reagan used liberally.

This is an ideas election despite the name-calling by liberals. And Prestowitz gets that:
For seventy years, leaders of both parties have pursued trade deals less to strengthen the American economy than to achieve geostrategic aims, from rewarding political-military allies to fostering development of emerging markets. And they’ve been encouraged in this pursuit by generations of economists who have argued that trade deals, no matter how one-sidedly generous to other nations, are also good for the American economy — which raises the second point. Globalization has changed conditions so dramatically that this orthodoxy is no longer true, if it ever was. With the public now in full rebellion and presidential candidates leading, or at least adjusting to, that revolt, change to our trade stance is coming. What we really need, however, and haven’t seen from any candidate, is a comprehensive strategy that can both strengthen the American economy and meet our geopolitical needs.
Of course these decidedly generous trade agreements come at the expense not of government and big donors, but at the expense of Main Street. For 70 years, shops and factories have closed -- sacrificed at the altar of a New World Order. Prestowitz explained the airiness of the elites in this regard:
It is important to emphasize here the significance of economists, whose role had become quite important in the wake of the Great Depression and who generally meant by the term “free trade” not the reciprocal market opening that the public generally understood it to be but the unilateral opening of the U.S. market regardless of the actions of trading partners. Thus a country might close its market to U.S. imports while engaging in illegal dumping (selling below the cost of production and/or below the home market price) into the U.S. market, and most economists would call that a gift to U.S. consumers. That the gift might be coming at the cost of otherwise competitive domestic producers and workers, or that it might result in the loss of substantial technological skills and capacity, was just never a significant consideration.
Thus from an economist's standpoint this seemed like a good idea because it helps consumers, but then again economists are consumers not producers.

Prestowitz said we must renegotiate these trade deals, which is what Trump has said all along.

From Prestowitz:
The question is how to bring such an agreement about.
Countries will understandably be resistant to changing behaviors that have worked for them. The answer is that the United States should give them an incentive by using all available legal means to halt harmful trade. The White House has the authority to self-initiate anti-dumping actions rather than waiting for complaints from industry. It should do so. A “war chest” similar to that used in the 1980s and ’90s to stop direct export subsidies should be established to counter the investment incentives being proffered abroad. Currency manipulation should be met with counter-intervention in foreign exchange markets by Uncle Sam. These actions would not be ends in themselves, but means to the end of achieving a sustainable world financial order.
The next president will have a new stick to wave to bring other countries together around a new plan. That president can say, in all sincerity, that the American people have had enough. They are no longer willing to support globalization policies that strip the United States of its wealth-creating capacities, and they don’t mind throwing out of office leaders who do. Cut a deal with me, the next president can say, or rest assured the one after me will be worse.
Details, details, details.

Like Reagan before him, Trump brought the Big Idea to the election. Before he entered, the race was going to be whether the red banner or the blue banner won. Hillary wants to make this election about biology. Trump made it about ideas.


Coming soon -- "Trump the Press: Don Surber's take on how the pundits blew the 2016 Republican race."


5 comments:

  1. Funny, for a guy who's so l;ow in the polls and is sure to lose, he has all the Lefties running scared.

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  2. Our recent history regarding trade is not too good. Any trade agreement or treaty will have unexpected and unintended consequences. In the rush to get something approved we have made too many allowances to other countries without securing similar advantages or concessions for ourselves. I'm not for (or necessarily against) slapping tariffs on some items, but the effectiveness of any agreement should not rest on how quickly it is approved but whether it functions as intended. - Elric

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  3. Prestowitz contradicts himself. First he says: Presidents don’t have the authority to set tariffs. Then he says: The White House has the authority to self-initiate anti-dumping actions rather than waiting for complaints from industry. Those anti-dumping actions might not be "tariffs" in name but they sure are tariffs in their effect.

    The truth is, if a President Trump wants to go full-Obama, he can unilaterally break any existing trade treaty he wants and can challenge Congress go to court to overturn him. The countries that are party to any treaty Trump decides to break can sue the US in international courts to force compliance, but what effect would that have? All this would do is to up the stakes in a huge trade war that would cost exporting countries a lot more than the US as it turns away from imports to rebuild its own manufacturing infrastructure.

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  4. Prestowitz (hmmm) wants a"comprehensive" program. Sounds like he really wants a five year plan. Just another socialist troll.

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  5. "That president can say, in all sincerity, that the American people have had enough. They are no longer willing to support globalization policies that strip the United States of its wealth-creating capacities, and they don’t mind throwing out of office leaders who do." Not to mention, paying to supply protection to allies and fellow-travelers with our military.

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