Category Archives: Trade

Trump just handed the Pacific Rim to China

Trump, thinking hard before killing TPP. Feel free to laugh bitterly.

Trump, thinking hard before killing TPP. Feel free to laugh bitterly.

Well, he didn’t just do it. I tweeted about it eight hours ago, but now let’s discuss it here.

Here’s what’s happened:

President Trump began recasting America’s role in the global economy Monday, canceling an agreement for a sweeping trade deal with Asia that he once called a “potential disaster.”

Trump signed the executive order formally ending the United States’ participation in the Trans-Pacific Partnership in the Oval Office after discussing American manufacturing with business leaders in the Roosevelt Room. The order was largely symbolic — the deal was already essentially dead in Congress — but served to signal that Trump’s tough talk on trade during the campaign will carry over to his new administration….

“This abrupt action so early in the Trump administration puts the world on notice that all of America’s traditional economic and political alliances are now open to reassessment and renegotiation,” said Eswar Prasad, trade policy professor at Cornell University. “This could have an adverse long-run impact on the ability of the U.S. to maintain its influence and leadership in world economic and political affairs.”…

Yeah, well, that’s not all it can do, and probably will do.

We’ve heard a lot of nonsense in the past year about TPP, most of which had little to do with what was actually at stake. There was a good piece summing up the situation fairly neatly in the NYT in November after the election. First, it explained, “the deal, between the United States and 11 Asian and Pacific nations, was never just about trade.” So what was it about? Serious, sweeping, grownup-level geopolitics:

The agreement, the Trans­-Pacific Partnership, was conceived as a vital move in the increasingly tense chess match between China and the United States for economic and military influence in the fastest­-growing and most strategically uncertain part of the world. The deal, which excluded China, was intended to give those 11 nations more leverage in that strained match by providing them with a viable economic alternative. And its defeat is an unalloyed triumph for China, the country that President­-elect Donald J. Trump castigated repeatedly over trade…

Now, instead of Pacific Rim nations gathering under American leadership, growing closer in the face of increasing lawless aggression by China, we have China moving to do much the same deal under its own leadership, freezing us out.

And we’re not just talking about weak-kneed nations in China’s geographic shadow, or some of the usual suspects in our own hemisphere, where the Chinese have been steadily wooing friends for a generation:

Australia said on Wednesday that it wanted to push ahead with a Chinese-­led trade pact that would cover Asian nations from Japan to India but exclude the United States. Peru has opened talks with Beijing to join the agreement as well. Even American business leaders are positioning themselves for the potential opportunities in Asia…

Et tu, Australia? One of our four closest friends in the world?

Of course, none of this matters a bit to Mr. America First, who likes to grumble at China but will hand Pacific leadership to it in order to curry favor with his isolationist, xenophobic base.

We’ve been in danger on this issue all year, with gratuitous populism washing over both ends of our political spectrum.

Some of my interlocutors here like to excuse Trump now and then by castigating Hillary Clinton for this or that. Everyone has his or her favorite Hillary sins to cite. Well, you know what I think is the most reprehensible, unprincipled thing she did in the past year?

It was turning away from TPP. And it was the worst because she knew better. Sanders and Trump didn’t but she did. And she lacked the confidence, security and character to stand up to the Feel the Bern crowd, even as the grownups in the Obama administration were working double tides to salvage sound policy.

So we were headed toward the wrong door either way. The only hope was that she might have hesitated when it came time to kill this “gold standard” (her words) agreement outright.

Trump, who is not burdened by knowing better, did not hesitate for an instant. And now, no doubt, they’re breaking out the Maotai in Beijing, because an advantageous position for the cause of freedom in the world just got flipped upside-down….

Hillary now blows to wherever the wind may take her

Wow, Hillary Clinton is really getting desperate.

She is so anxious to placate the emotional left of her party that she has abandoned the Pacific trade agreement she promoted until recently. The WSJ summed up her conversion this way:

Mrs. Clinton was asked on PBS’s NewsHour whether the trade deal is “something you could support?”

Her reply: “What I know about it, as of today, I am not in favor of what I have learned about it. And there is one other element I want to make, because I think it’s important. Trade agreements don’t happen in a vacuum, and in order for us to have a competitive economy in the global marketplace, there are things we need to do here at home that help raise wages. And the Republicans have blocked everything President Obama tried to do on that front. So for the larger issues, and then what I know, and again, I don’t have the text, we don’t yet have all the details, I don’t believe it’s going to meet the high bar I have set.”

So she hasn’t seen the agreement’s text, and can’t speak to the details, but she’s against the deal because Republicans who haven’t held the White House in seven years haven’t raised wages.

Mrs. Clinton previously called the Pacific pact the “gold standard in trade agreements,” and as recently as her memoir in 2014 she praised it as “important for American workers who would benefit from competing on a more level playing field.” At State she took a leading role in promoting the pact and in January 2013 said that “I think the Trans-Pacific Partnership is one way that could really enhance our relationship” with Japan. She supported Nafta and she backed the trade deal with South Korea, but now she’s had a change of heart—or should we say soul….

Basically, she preemptively dropped this hot potato before she even had a good grip on it. But the fact that this agreement is a hot potato shows how far gone her party is.

People go on about how the Republicans have lost their way, being held hostage by the flakes on its fringe, and they’re absolutely right to do so.

Well, the Democrats have the same problem. They have their own Know-Nothings, with notions about trade and growth that seem to have been drafted by Occupy Wall Street, and leading candidates are in their thrall.

It’s been awhile since the party has had sensible Third Way leadership with names such as… Clinton.

Why we need each other: ‘The $1,500 Sandwich’

We tend to put those who place their faith in the market economy at the libertarian end of the political spectrum, as far away from us communitarians as you can get.

But… the fact is that the modern marketplace itself, properly understood, starkly demonstrates that no man is an island, and that we are profoundly interdependent in the modern world.

I enjoyed this little demonstration of that fact in this passage from a Cato Institute blog (of all places), quoted by The Wall Street Journal today:

From an online post by Cato Institute researcher and editor Chelsea German, Sept. 25:

What would life be like without exchange or trade? Recently, a man decided to make a sandwich from scratch. He grew the vegetables, gathered salt from seawater, milked a cow, turned the milk into cheese, pickled a cucumber in a jar, ground his own flour from wheat to make the bread, collected his own honey, and personally killed a chicken for its meat. This month, he published the results of his endeavor in an enlightening video: making a sandwich entirely by himself cost him 6 months of his life and set him back $1,500. . . .

The inefficiency of making even something as humble as a sandwich by oneself, without the benefits of market exchange, is simply mind-boggling. There was a time when everyone grew their own food and made their own clothes. It was a time of unimaginable poverty and labor without rest.

We are light years removed from the society of totally independent yeoman farmers that Thomas Jefferson idealized. And personally, I would never have wanted to live that way, anyway.

I liked this parenthetical from the Cato post, which the WSJ left out:

(It should be noted that he used air transportation to get to the ocean to gather salt. If he had taken it upon himself to learn to build and fly a plane, then his endeavor would have proved impossible).

Kind of reminds me of that joke about the hubris of science:

God was once approached by a scientist who said, “Listen God, we’ve decided we don’t need you anymore. These days we can clone people, transplant organs and do all sorts of things that used to be considered miraculous.”

God replied, “Don’t need me huh? How about we put your theory to the test. Why don’t we have a competition to see who can make a human being, say, a male human being.”

The scientist agrees, so God declares they should do it like he did in the good old days when he created Adam.

“Fine” says the scientist as he bends down to scoop up a handful of dirt.”

“Whoa!” says God, shaking his head in disapproval. “Not so fast. You get your own dirt.”

Actually, the version I heard was more involved, with the scientist saying something like, “First, I’ll mine for the requisite minerals, and…” But the punchline was the same: “Get your own dirt,” or maybe “Make your own dirt.”

You get the idea.

There’s a good REASON why she’s not with you on trade, Bernie

Bernie Sanders is frustrated, or at least he’s letting on to be frustrated, that Hillary Clinton won’t join him and House Democrats in opposing free trade:

WASHINGTON — Vermont Sen. Bernie Sanders called on Democratic presidential rival Hillary Rodham Clinton on Thursday to say exactly where she stands on President Barack Obama’s trade agenda now that Congress is considering it.

“I think our trade policies have been disastrous,” Sanders said during a breakfast sponsored by The Christian Science Monitor. “Secretary Clinton, if she’s against this, we need her to speak out right now. Right now. And I don’t understand how any candidate, Democrat or Republican, is not speaking out on this issue right now.”…

See, there’s a reason Hillary is fudging on the issue, Bernie — she actually has a realistic chance of becoming president, and no president would want to be hobbled with positions such as yours.

And yet, since a lot of people in her party are opposed to free trade, she’s not crazy about taking a bold stance that would make her as nonviable as you are.

Wanting to be president, and seeing the real possibility in front of you, can be a constricting thing…