Not long ago, I attended a joint presentation by two former public servants at one of our local universities. Although the presentation was open to the public, it was technically off the record, and I will not identify them by name. Together they combined service in a White House, as an elected representative, and in a prominent bank. One is a Democrat and the other a Republican and I shall so identify them.
The subject of their presentation, in which the Republican took the lead, was international trade and President Trump's tariff policy. They both explained patiently and confidently that Trump's notions of international trade are obsolete and bear no relation to the realities of our place in the world economy. Trade deficits with individual countries, they argued, simply did not matter. Nor was trade the main cause of our de-industrialization: automation was. Neither one of them mentioned the intimate connection between trade deficits and domestic borrowing, which remains the only way to pay for them. The Republican did say a good deal about Chinese thefts of intellectual property and hoped that President Trump could persuade them to stop. They did make some good points. A real trade war with China (which they insisted, correctly I think, that we are not having now) would make life in these United States extremely difficult. The products we now buy from China include much of our prescription drugs, including penicillin and other antibiotics, which we obviously could not do without. Both of them, but the Republican in particular, stressed the rapid job growth we are now experiencing, and the Republican said at one point that no one should be concerned about the factory across the street closing if they could go to work in an Amazon warehouse instead. I don't think either one of them said anything about union rights or minimum wages. At one interesting moment, the Democrat said that the Republicans had traditionally been the free trade party while the Democrats had expressed more reservations. That is very dubious. Republicans were the high tariff party from the Civil War until at least the 1930s, and Democrats in the 1990s were fully on board with NAFTA and other free trade agreements.
The two presenters spent more than half an hour taking questions, and I finally manged to get recognized just before the end.
"What you have given us, it seems to me," I said, "is the conventional wisdom that we have been hearing from both parties for some decades now. I am not saying that it is wrong. However, Donald Trump is in the White House--which I regard as a very serious matter--because he defied the conventional wisdom on this subject, as well as on others. That allowed him to defeat a slew of traditional Republican candidates and to win the general election narrowly. That tells me that a large number of our fellow citizens simply aren't buying this piece of conventional wisdom, and I wonder how you both see that particular problem."
The Republican, who had been skeptical about Trump all along, immediately replied, "It's still working for him!" and speculated (as most Wall Streeters do these days, it seems) that he would be re-elected. The Democrat said that our rhetoric had to be less divisive and "more aspirational," but added that we simply couldn't be too disturbed by people who say their ambition is to be coal miners. That didn't strike me as a particularly critical group of voters. Like nearly all of our politicians--including Donald Trump--these two evidently represented our elite, and have lost touch with millions of their fellow Americans. The same can probably said of the Democrats who spend their time obsessing about the Mueller report and other transgressions, and about issues of race, gender and sexual orientation. They too are living within a particular part of our population and simply assuming that everyone shares their concerns. The question of how, and whether, we can bridge this gulf in the immediate future seems to me critical.
6 comments:
Obviously if one continued in the same manner as before the Chinese would take over not just low end manufacture but also high end, stealing all ideas via internet espionage and through millions of students and phds working in universities and corporations inthe West. Militarily Ameriica would also lose out. The wealthy have ditched the middle class and played into the hands of China to get richer. This is a short term wealth effect for them by betraying their countrymen whose falling wages are supposed to be evened out by cheap textiles, video game consoles.
The post war ideal of Rockefeller and co. was USA writ large globally. EU was experiment and Euro. WTO also. This was sold as idealism win-win situation. But as in the states back home some backwaters are poor, others rich. A completely open world is full of power centers, dynamic, changing. A behind the scenes elite can't dictate soviet style global social evolution or even steer it as it seems sanctions, endless wars, trade deals, trade blocs such as EU are supposed to do. This game plan has hit diminishing returns long ago when whole nations and regions of te world determined they were left behind to rot as money continues to chase best profits. Cheap manufacture moves out of China to black Africa for example. Even if CP in China were on board with globalist agenda their people would rebel. All politics is local said Tip O'Neill. Current Russian concept of multilateralism with cultural, economic autonomy, i.e. taking the UN charter literally and leaving countries to their own devices, Star Trek primary directive, instead bombing everyone to kingdom come because it itches somewhere on the backside of an American journalist or politician about human rights or coltan reserves in western goboshnesistan.
Likely millenials in USA will elect far left crazies who destroy the system. The European right wing will take back borders, destroy the EU. China and Russia will have to be accepted, along with the Middle East and India as equals not neocolonized appendages of the beltway. If drones from China could drop bombs on Chicago terrorists, 'on suspicion' like our drones do in so many countries then it would look a lot different.
Oh, dear, yes. They are so far out of touch that the next person who comes along claiming to speak for the rights and well-being of the ordinary working stiff and managing to convince people of it would win in a landslide, whatever else he or she advocated. Ave, Caesar!
[People who joke about Orange Julius quite misunderstand who Trump is. He's not Julius Caesar. He's Marcus Licinius Crassus. ]
The question of free trade has been with us since international trade began. When a cheaper or better source of goods comes in, then their are inevitable winners and losers. This is as hard a fact as gravity. We need a more nuanced discussion of free trade than being simply for it or against it.
I just finished reading a book I highly recommend, because it addresses this topic tangentially at first, in giving the history of world trade from 3000 BC to the present day, and then head-on in discussing our current trade climate. The book is "A Splendid Exchange: How Trade Shaped the World", by William J Bernstein. It rightly won both the "Financial Times" and "The Economist"'s best book of the year awards.
I believe Bernstein hit on the proper role of a government in a Capitalist economy when it needs to deal with the inevitable fallout of free trade. You may or may not agree with his solution, but it is at the very least a thoughtful analysis of the pluses and minuses of the various approaches.
Professor
Great post re seminar.
I tried to repost one of my posts re a recent Krugman editorial, but too large.
Here is a reference to my post.
He criticizes the automation assumption of the folks at his conference, just as you appear to, at that of those attending the seminar you discuss.
All the best
Yes.
Where is the bill to fix the infrastructure? Where is the bill to fully address immigration? Where is the bill to fix or supplant Obamacare? Where is anyone truly addressing the opioid epidemic? What are our legislatures doing to retrain workers who have lost their jobs to globalization, except of course, attacking globalization which is not going away, or supporting industries that are soon to go away? Global warming aside, there are environmental issues that beg address, but what is being done about it at the national level? Both Democrats and Republicans refuse to act, though maybe (?) for different reasons.
And true to form, the Democratic party is throwing away an opportunity to defeat Trump and the Republicans by, as you say, “obsessing about the Mueller report and other transgressions, and about issues of race, gender and sexual orientation.”
"So it goes."
Oh, those poor elites, so out of touch with the masses, who are out of touch with reality and voting for anyone that promises enough rainbows and unicorns...
Anyway, what is reality, when all is digital and nothing is real? To all those who care about facts and truth: go hide somewhere, you've well and truly lost the game. It's the age of the con-man, the con-party, the con-message. Good luck with that.
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