Burn it all Down

Globalization, once hailed as a panacea, has proven to be fundamentally corrupt and needs to be blown to kingdom come

Beijing, yesterday

From NPR this morning:

But, by the end of the day, Trump apparently had reached his threshold of market pain. He reversed course, ditching some of the tariffs, because, he said, people “were getting a little bit yippy, a little bit afraid.”

The market rallied Wednesday, but with Trump increasing tariffs to 145% on China, by Thursday, the Dow was down again. And, remember, China has leverage, too, because it buys a lot of U.S. government debt, and they seem to have every intention of using it.

Translation: a serial trade and human rights violator that with the help of decades of corrupt politicians from both parties polluted, price-dumped, and stole its way to a generation of American jobs and revenue, now owns so much of our debt that we must put up with its shit indefinitely. That’s the point of view of our own federal news agency. We have officially cucked ourselves past the point of no return.

Trump or no Trump, the international trade system needs to be blown to hell:

I’ve covered the free trade revolution from different angles for thirty years. I saw a preview of America’s future when the former Soviet countryside, once filled with busy (if inefficient and polluting) factories and farms, became a wasteland of stilled industry, with masses of extraneous ex-workers suddenly wandering cities with nothing to do. Crime and prostitution became growth industries, and political figures like the late General Alexander Lebed made populist runs at power by arguing Russia’s new inability to support itself — I remember a presser where the imposing ex-boxer held up a fist and croaked about the absurdity of Russia importing butter — was an urgent national security issue.

Even Russians soured on globalization faster than American voters, who bought sales pitches first from Republicans, then Democrats about free trade deals bringing better standards of living in the long run. As for lost manufacturing jobs, they were told not to worry: anyone “legitimately displaced” by new policies would be eligible for retraining.

It seemed obvious that NAFTA, the WTO, and the extension of cushy trade arrangements with China and other unfree labor zones were a gigantic end-run around American labor, safety, and environmental laws. It was an asset-stripping scheme, designed to help CEOs boost their share prices by cutting costs of American parts, labor, and regulatory compliance from their bottom lines. There seemed nothing complicated about this, except the marketing challenge. How could corporate management convince Americans, who fought for so long to scrape their way into the middle class, that it was in their interest to compete against countries that didn’t have to follow any of the same rules we did?

The New York Times early on argued the benefits would come in the form of lower prices. In 1984, when the national trade deficit nearly doubled from $69.4 billion to $123.3 billion, the paper said the effect was “good and bad” because “cheap foreign goods help keep inflation down,” by “giving consumers low-priced alternatives but also by encouraging American businesses to operate more efficiently.”

One or the other version of this argument would continue to be floated to American voters for decades, despite year-after-year monster increases in America’s trade imbalance, not just with China but with most of the world.

We were continually told a new service-sector paradise would replace the anachronism of manufacturing. “What’s happening in manufacturing had its counterpart 50 years ago in agriculture,” Michael L. Wachter, a UPenn economist, told the New York Times. “These deindustrialization guys must have had counterparts saying that the American economy is dying because there are not enough people on farms.”

Something big was coming to replace those old factories, and we were told over and about the benefits of access to the “biggest market in the world.” True, previous efforts to gain access to China had ended in tears, but this time it was different, because as the MacNeil/Lehrer News Hour put it in 1994, “after decades of denial and deprivation, the Chinese have money and are ready to shop”:

It never happened. China never opened its markets, and the trade imbalance kept ballooning, alongside persistent complaints about violative practices that reminded me of Wall Street fraud cases I covered. Whether after rulings by the Department of Commerce or the DOJ or the WTO, China would admit to currency manipulation or “relabelling” or some other offense, promise to stop, and just keep going. The fact that they were there to buy whenever the U.S. issued debt was clearly a huge factor in us always turning a blind eye.

In the early 2000s, we began to be sold on the idea that globalization was really working, it was just hard for ordinary Americans to see because they were so wrapped up in bitterness and nostalgia. Papers like the New York Times gave top billing to boosters like David Brooks and Thomas Friedman to castigate the lost-in-the-past crowd and extol the exciting new world of borderless innovation.

I don’t remember anyone on the American left complaining about me savaging these ludicrous Milo Minderbinder-esque celebrations of Friedman about the benefits of globalization. He was jubilant about the future, saying very soon no one would have a choice but to get rich under globalization (what he called the “golden straitjacket”), a system under which maybe not everyone had a job, but everyone would have a share. His seminal work The World is Flat, a whole book based on the wrong premise that a flat world is more interconnected than a round one, argued incessantly that exporting factories to China would magically benefit the very places that lost them:

If General Motors builds a factory offshore in Shanghai, it also ends up creating jobs in America by exporting a lot of goods and services to its own factory in China and benefiting from lower parts costs in China for its factories in America…

In one of the few metaphors he didn’t mangle (because he didn’t invent it), Friedman argued that globalization would work out because a “rising tide lifts all boats.” Then the 2008 crash hit, and globalization-euphoria went out of style. Friedman gave up talking about boats.

Trump’s tariffs returned him to the subject, but with a different take. Friedman this month explained that yes, free trade hasn’t been great for the U.S., but so long as we can accept being taken advantage of a little, it’s all good:

The world has been the way the world has been these past 80 years because America was… a superpower ready to let other countries take some advantage of it in trade, because previous presidents understood that if the world grew steadily richer and more peaceful, and if the United States just continued to get the same slice of global G.D.P. — about 25 percent — it would still prosper handsomely because the total pie would grow steadily. Which is exactly what happened.

A few days later, he decided he wasn’t against tariffs on China. We absolutely should do them, he said, just not alone:

That is why President Trump’s strategy is so foolish. Instead of putting tariffs on the whole world, we should be looking to line up all our industrial allies in a united front to say to China: You cannot make everything for everyone.

This is similar to what Bernie Sanders, a longtime proponent of stiff tariffs on China, is now saying. Tariffs, say Bernie, should be used “selectively,” and not in a way that makes people think, “Oh, God, look at what the United States is doing.” Now it’s, “We are all human beings,” and “We don’t have to hate China” and we have to figure things out “globally.” It’s either fear of actually upsetting China, or of seeming in agreement with Trump, neither of which is a legitimate policy concern. If you’re in favor of tariffs when you know you don’t have the votes but against them once they’re actually in effect, you’re just a politician with no balls.

Are we supposed to go on like this forever, or do something? Even the biggest bank-sucking spokestools in media recognize the situation is untenable, but cling to the idea that something could be done gradually or “incrementally,” as Joe Kernan tried to frame it in an interview with Peter Navarro on CNBC’s Whore Box the other day.

Everyone who follows this site knows I’ve always had an uncomfortable relationship with the Trump phenomenon. At the best of times, I find him puzzling and maybe dangerous, even when he’s being funny or taking aim at deserving targets.

Now he’s president and people seem reflexively to want more criticism of him, but on this issue, what choice is there? The global economy created by both parties from the eighties onward was not only designed to be a giant predatory clusterfuck, but nearly impossible to unwind. Forget “incrementally,” it’s got to be exploded. Would more of the same and a slow death be better?