Ditching TPP Won't Solve the Trade Deficit: President Trump wasted no time tackling his campaign promise to reverse America's trade deficit: On Monday he signed a memorandum withdrawing from the Trans-Pacific Partnership, a move he promised would be a "great thing for the American worker." The withdrawal dovetails with promises to impose tariffs on imports and crack down on American companies that manufacture overseas.
These steps make for great optics. But in economic terms, they're unlikely to move the needle. For the country to improve its trade balance, the president's going to have to do a lot more.
Ripping up trade deals won't achieve much. ...
And it's hard to imagine much good emanating from Twitter-shaming China, or writing a check to the occasional factory to prevent it from outsourcing some of its jobs. Such measures are far too ad hoc to make a systemic difference.
So what would work?...
After explaining five possible ways to improve the trade balance (duties on imports from countries that manipulate their currency, countervailing currency intervention to neutralize attempts to manipulate a currency, capital controls, import certificates equal to the value of a countries exports, and enforceable rules on things like currency manipulation and rules of origin), he concludes with:
... In the 1970s and '80s, as trade deficits became persistent, politicians did not hesitate to respond through these sorts of interventions. Our obsession with unfettered markets has since precluded such efforts, even though our trading partners have not been nearly so constrained. President Trump's ascendancy may change that equation. The question is whether his administration will get it right.
Ditching TPP Won't Solve the Trade Deficit: President Trump wasted no time tackling his campaign promise to reverse America's trade deficit: On Monday he signed a memorandum withdrawing from the Trans-Pacific Partnership, a move he promised would be a "great thing for the American worker." The withdrawal dovetails with promises to impose tariffs on imports and crack down on American companies that manufacture overseas.
These steps make for great optics. But in economic terms, they're unlikely to move the needle. For the country to improve its trade balance, the president's going to have to do a lot more.
Ripping up trade deals won't achieve much. ...
And it's hard to imagine much good emanating from Twitter-shaming China, or writing a check to the occasional factory to prevent it from outsourcing some of its jobs. Such measures are far too ad hoc to make a systemic difference.
So what would work?...
After explaining five possible ways to improve the trade balance (duties on imports from countries that manipulate their currency, countervailing currency intervention to neutralize attempts to manipulate a currency, capital controls, import certificates equal to the value of a countries exports, and enforceable rules on things like currency manipulation and rules of origin), he concludes with:
... In the 1970s and '80s, as trade deficits became persistent, politicians did not hesitate to respond through these sorts of interventions. Our obsession with unfettered markets has since precluded such efforts, even though our trading partners have not been nearly so constrained. President Trump's ascendancy may change that equation. The question is whether his administration will get it right.
MYPLACE can provide a hugely rich and sophisticated dataset, covering young people's attitudes and beliefs in relation, specifically, to far-right and populist ideologies, but in practice covering issues such as class, xenophobia, racism, education and trust in democratic processes and associated social and political exclusion.MYPLACE methodology is described in these terms:
The last decade has seen a notable increase in support for far right parties and an alarming rise of right-wing extremism across Europe. Drawing on a new comparative youth survey in 14 European countries, this article provides deeper insight into young people's support for nationalist and far right ideology: negative attitudes towards minorities, xenophobia, welfare chauvinism and exclusionism in relation to migrants. We first map the support for far right ideology among youth in Europe, and then use multilevel regression analysis (16,935 individuals nested in 30 locations) to investigate which individual or contextual factors are associated with a higher propensity among young people towards getting involved in far right movements. (183)Mieriņa and Koroļeva consider several fundamental theories of the rise of far right activism: social psychological theories of the effects of ethnic diversity on an individual's conception of his or her own identity; the effects of modernization and urbanization on political attitudes; socio-structural explanations ("level of immigration, economic conditions and level of support for the political system"; 187); and the impact of media on political attitudes.
Using new data collected as part of the MYPLACE youth survey, in this article we have explored young people's support for far right ideology and analysed which factors are associated with holding far right views. We find that despite comparatively low immigration rates, young people in post-socialist locations, along with Greek locations, tend to have more negative predispositions and to be more xenophobic and exclusionist towards immigrants than young people in Western European locations. Moreover, we have demonstrated that young Europeans' views on immigrants vary greatly even within the boundaries of one country, thus below-national level analysis should be the preferred strategy in future studies.Or in other words, Mieriņa and Koroļeva find that there are important geographical patterns to intolerance; ethnic nationalism appears to be a cause of intolerance of minorities and immigrants; and economic stress on specific groups appears to be a cause of xenophobia and chauvinism in those groups.
Our analysis shows that negative attitudes towards minorities and immigrants are often rooted in ethnic nationalism, that is, a belief that one has to be born in a country or have at least one ethnic parent for being a citizen of a country. A more over-arching civic national identity – based on respect for countries' institutions and laws – is more likely to create an inclusive, cohesive society.
The data strongly support the instrumental model of group conflict, confirming that resource stress over money, status and, most of all, jobs is an essential source of group conflicts. Living in poverty or seeing poverty facilitates negative attitudes towards minorities and significantly increases xenophobia, welfare chauvinism and exclusionism, especially if immigration rates are high. Far right ideology is especially appealing to groups of society who experience a higher level of insecurity and perceived competition. (199)
Cas Mudde's research suggests that radical right ideology typically rests on nationalism, xenophobia, welfare chauvinism, and law and order.... The ideological core of the new 'populist radical right' ideology ... is a combination of nativism, authoritarianism and populism, of which nativism is considered as the key feature. It holds that 'states should be inhabited exclusively by members of the native group ('the nation') and that non-native elements (persons and ideas) are fundamentally threatening to the homogeneous nation-state. (185)This is an astute, clear, and focused analysis of the heart of far-right ideologies in many countries. And people who have lived through the Trump presidential campaign and the extreme rhetoric the candidate used consistently throughout the preceding year will recognize the point-for-point correspondence that exists between Trumpism and this definition of radical right nativist ideology.
President Trump acted on Monday to keep a signature campaign promise: withdraw the U.S. from the Trans-Pacific Partnership.
Trump's action, an executive order, is mostly symbolic.
As he signed the order in the Oval Office, Trump said, "We've been talking about this for a long time," adding it's "a great thing for the American worker."
It won't put a single penny in any workers pocket. Not a fucking penny
Trump also signed two other executive orders, though NPR has not seen the official language on the orders yet. One is expected to impose a hiring freeze on federal workers, except for defense-related positions;
Gingrich, Trump's political sex-partner, wants to fire all Democrats too
the other may be a reinstatement of the so-called Mexico City policy, which forbids U.S. funding of international family planning organizations that promote or provide abortions.
The TPP, as it's known, is a trade agreement with 12 Pacific rim nations. It was never ratified by the U.S. because of congressional opposition, but which was strongly backed by the Obama administration. It would create a free trade area stretching from Japan to Chile, and was seen as an effort to create a counter weight to China, which is not a party to the agreement.
During the campaign, Trump called the TPP "a horrible deal" and a "potential disaster," that would hurt American workers and companies.
His action on TPP is Trumps first effort to address the concerns over trade that helped propel him to the Oval Office, and there are many more expected. He is expected to begin talks to renegotiate the North American Free Trade Agreement with Canada and Mexico.
In a meeting with business leaders this morning, Trump said, "We want to make our products here."
He also vowed to retaliate against businesses that close U.S. factories in favor of foreign plants. "If you go to another country," Trump said, "we are going to be imposing a very major border tax."
Trump said that right now, "we don't have free trade because we're the only one that makes it easy to come into the country."
This morning, when I looked a the calendar to see what the day ahead would be like, I saw the date: Jan. 19. I was reminded of a Jan. 19 more than a decade ago, when the day took a terrible turn and two men working at one of Don Blankenship's coal mines ended up dead. I'm sure it's another hard day for the families of Don Bragg and Elvis Hatfield. The calendar can be like that for mining families. The winter months especially are way too full of dates that mark one awful disaster or another.
Then shortly after I got to the newsroom, an email alert showed up from the 4th U.S. Circuit Court of Appeals in Richmond, Virginia, noting a new document filed in the Blankenship appeal:
PUBLISHED AUTHORED OPINION filed. Originating case number: 5:14-cr-00244-1.
I clicked, called up the opinion, and hurried to scroll down to the key passage:
Defendant Donald Blankenship ("Defendant"), former chairman and chief executive officer of Massey Energy Company ("Massey"), makes four arguments related to his conviction for conspiring to violate federal mine safety laws and regulations. After careful review, we conclude the district court committed no reversible error. Accordingly, we affirm.
We've got a lot of changes coming our way in this country. Come tomorrow, Donald Trump will be sworn in as our President. Already in West Virginia, we've seen what is likely a similarly significant change. On Monday, Jim Justice stood at the Capitol and took the oath as our new governor.
As a candidate, President-elect Trump certainly talked a lot about doing away with government regulations, especially those he says were killing the coal industry. Governor Justice has promised to fight federal environmental regulations that get in the way of his industry, and says under his leadership. West Virginia will mine more coal than ever before.
There's obviously a lot of evidence that suggests the coal revival that's being promised is very unlikely to happen. But today's events, and the history of what happened today back in 2006, should make us think about this from another perspective.
Remember that there was a criminal prosecution after the Aracoma fire, but it stopped way short of really going after anyone higher up the corporate ladder, as most probes after mine disasters have. And that's despite lots of fascinating evidence that came out during the civil case so diligently pursued by the lawyers for the Bragg and Hatfield families.
Remember that in the Blankenship appeal, three coal associations (including West Virginia's) filed a "friend of the court brief" arguing that it was wrong for U.S. Attorney Booth Goodwin, Judge Irene Berger, and the Blankenship trial jury to essentially criminalize decisions that mine operators make about allocating their resources:
Operating a coal mine is a difficult venture that presents tough decisions for its managers, who are required to navigate a regulatory minefield in order to operate a successful company … Those decisions, especially with respect to production, safety, and regulatory compliance, may at times be imperfect, prone to second-guessing, and, despite the best intentions, even incorrect … However, those decisions should not lead to criminal liability unless it is proven beyond a reasonable doubt that the individual possessed the "evil purpose" necessary to establish that the conduct was illegal, not just general knowledge of the effects of broad regulatory involvement.
Well, the judges at the 4th Circuit weren't buying any of that. Here are some examples of what they had to say about the industry's position in defense of Blankenship's appeal:
— First, the legislative history of the Mine Safety Act contradicts Defendant's and amici's argument that Congress did not intend to punish mine operators for the type of budgeting and business decisions the government challenged here. In particular, Congress repeatedly stated that the Mine Safety Act's enforcement provisions were designed to deter mine operators from choosing to prioritize production over safety compliance on grounds that it was "cheaper to pay the penalties than to strive for a violation-free mine." To that end, Congress said that operators should not balance the financial returns to increasing output against the costs of safety compliance.
— Congress imposes penalties on corporate officers—like Defendant—alongside enterprise penalties because it is often impossible to impose monetary penalties on corporations large enough to deter corporate misconduct. And when the returns to violating a law exceed a potential corporate fine, discounted by the likelihood of the government imposing the fine, corporate officers who do not face personal liability will treat "criminal penalties as a 'license fee for the conduct of an illegitimate business'"—as the government's evidence showed Defendant did here.
— By subjecting mine operators to personal liability, including incarceration, Congress forced mine operators to internalize the costs associated with noncompliance with mine safety laws, even when such noncompliance would be profit-maximizing from a business perspective.
— … Regarding amici's contention that the "unavoidability" and "inexorability" of mine safety violations precludes use of such violations to establish criminal intent … even though "inadvertent" violations may not amount to willfulness, continuing violations in "the face of repeated warnings" allows a jury to infer criminal intent.
— Defendant argues that defining willfully in terms of reckless disregard impermissibly allowed the jury to convict him even if it concluded that Defendant desired "to eliminate and reduce the [safety] hazards and violations" at the Upper Big Branch mine. But just as the law holds criminally liable an individual who drives a car with brakes he knows are inoperable, even if he does not intend to harm anyone, so too Section 820(d) holds criminally liable a mine operator who fails to take actions necessary to remedy safety violations in the face of repeated warnings of such violations, regardless of whether the operator subjectively wanted the violations to continue.
We're going to be hearing a lot over the next four years about regulations, and how they destroy jobs and put miners out of work, and how we really need to stop all that nonsense from agencies like the U.S. Environmental Protection Agency and the federal Mine Safety and Health Administration. When that stuff comes up, we would do well to look at the calendar, and to remember that we have a long history of death and disaster built up in those regulations.
Former Assistant U.S. Attorney Steve Ruby said it better than I ever could, in the legal brief he filed before Blankenship's sentencing hearing:
May 1, 1900, Scofield, Utah: A coal dust explosion at the Winter Quarters mine kills 200
coal miners.
December 6, 1907, Monongah, Marion County, West Virginia: A coal dust and gas explosion at Fairmont Coal's No. 6 and 8 mines kills 361 coal miners.
December 9, 1911, near Briceville, Tennessee: An explosion likely caused by gas and coal dust at the Cross Mountain mine kills 89 coal miners.
March 2, 1915, Layland, Fayette County, West Virginia: A coal dust explosion at the New River and Pocahontas No. 3 mine kills 112 coal miners.
March 8, 1924, near Castle Gate, Utah: A gas and coal dust explosion at the Utah Fuel Company Castle Gate Mine No. 2 kills 171 coal miners.
April 28, 1924, Wheeling, West Virginia: A gas and coal dust explosion at the Benwood mine kills 119 coal miners.
May 12, 1942, Osage, Monongalia County, West Virginia: A methane and coal dust explosion at the Christopher No. 3 mine kills 56 coal miners.
February 5, 1957, Bishop, on the Virginia-West Virginia line: A gas and coal dust explosion at the Bishop mine kills 37 coal miners.
November 20, 1968, Farmington, West Virginia: An explosion at the Consol No. 9 mine kills 78 coal miners. The ensuing investigation determines that the mine suffered from inadequate ventilation and inadequate control of coal dust.
March 9 and 11, 1976, near Ovenfork, Kentucky: Two gas and coal dust explosions at the Scotia mine kill a total of 26 coal miners. December 7, 1981, Kite, Kentucky: A coal dust explosion at the Adkins Coal No. 11 mine kills eight coal miners.
September 13, 1989, Sullivan, Kentucky: A methane explosion at the Pyro No. 9 Slope mine kills ten coal miners. The ensuing investigation determines that an inadequate preshift safety examination contributed to the explosion.
December 7, 1992, near Norton, Virginia: A methane and coal dust explosion at the Southmountain Coal No. 3 mine kills eight coal miners. The ensuing investigation determines that inadequate preshift and weekly safety examinations contributed to the explosion.
January 19, 2006, Melville, Logan County, West Virginia: A fire at Massey Energy's Aracoma Alma #1 mine kills two coal miners. The ensuing investigation determines that violations of the laws on mine ventilation and safety examinations contributed to the deaths. Massey's Aracoma subsidiary later pleads guilty to willful violations of mine safety and health standards resulting in death. Defendant, at the time, was Massey's chief executive officer and chairman of the board.
These catastrophes, terrible as they are, represent only a small fraction of the toll exacted by mining deaths. Since 1900, the earliest year that records are readily available, more than 100,000 workers have been killed in America's coal mines. The great majority of this loss of life
could have been prevented by following well-known principles of mine safety.
This history matters. It is a stark reminder that the laws on mine safety are not just words on paper. They are the bitter fruit of decades of tragedy. We have known for a very long time what makes coal mines explode. We have known for a very long time how to prevent it.
And, sadly, we have known for a very long time that some mine operators will ignore these hardlearned lessons until the law compels them to take notice. The mine safety laws, it is said with good reason, are written in coal miners' blood.
"What is happening in the politics of the US particularly, but also in other countries, is that identity in a form of nationality or ethnicity or race has become a proxy for class."
In 1989, the political scientist Francis Fukuyama's essay "The End of History?" for the National Interest declared the triumph of western liberal democracy: "what we are witnessing is not just the end of the Cold War, or a passing of a particular period of postwar history, but the end of history as such: that is, the end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government." But for Fukuyama, Donald Trump's electoral defeat of Hillary Clinton marks a new age of populist nationalism: "a watershed not just for American politics, but for the entire world order."
In the chorus of experts that seek to offer explanations for the US presidential election results, Fukuyama's analysis has forcefully engaged with the concept of class. On several occasions following the election, Fukuyama has uncompromisingly emphasised that a class division precedes all other divisions related to identity. In a recent article for the Financial Times, he writes: "Social class, defined today by one's level of education, appears to have become the single most important social fracture in countless industrialized and emerging-market countries." Meanwhile, the US Democratic Party is now "the party of identity politics: a coalition of women, African-Americans, Hispanics, environmentalists, and the LGBT community, that lost its focus on economic issues."
Natalia Koulinka: Does the concept of class have a chance to return victoriously to academic as well as public discourse?
Francis Fukuyama: It is more complicated than that. My argument is that class really determines the way people think about politics. The anti-elite anger felt by people who have, at best, high school education, and who have done less well economically, is real. However, many of them do not see themselves as part of the proletariat. They do not think of themselves in economic terms altogether, but rather, in identity terms and foremost in terms of racial identity. So, what is happening in the politics of the United States particularly, but I also think in other countries, is that identity in a form of nationality or ethnicity or race has become a proxy for class. In short, these forms of identity substitute for a class identity.
Thus, many working-class people in the United States do not like Hillary Clinton and the Democratic Party because, these people say, this is a party of minorities – of African-Americans and Hispanics, gay and lesbians and so forth. These people may think, 'all of these groups have big advantages over me. The system is giving them, not me, special treatment, because I am white'. From this line of reasoning, they conclude that it is they who are the minority that have been oppressed and discriminated against. In other words, a discrepancy exists between the fundamental reality, which is social class, and the way people actually think about it. By the way, this is not a new phenomenon. Recall the First World War. In 1914, the socialist and communists all hoped that workers of the world would unite, but instead, they all marched off as Englishmen, or Frenchmen or Germans. This is an example of power commanded by a national identity, even though the class division retains a very strong power, too.
NK: An explanation for the greater attractiveness of national identity can lie in the fact that it readily lends itself to romanticisation. Socialism as a doctrine of the utmost egalitarian society is much more resistant to it.
FF: I agree.
NK: Could you elaborate more on the role you ascribe to education in your explanation of the US election results? Are you saying that it is a lower level of education and not, for example, the material conditions of people that should account for the vote result?
FF: No, no! Material conditions are important. However, how one does economically, what kind of job one can have in today's American economy depends completely on education. It is most probable than not that a higher education, especially in science and mathematics, will result in a good, well-paid job while lack of education promises little hope because most of such jobs have been overtaken by technology. To connect this back to politics, education acts on people's politics indirectly, through the economy, to shape the way people eventually vote.
NK: Many experts mention 'Brexit' in relation to the election results in the United States. But a more thorough look back into the past reveals similar events that took place much earlier. For example, in 1994, the attempts to implement a neo-liberal economic policy in Belarus met such strong resistance that it, too, determined the result of the first presidential elections in the country. In the less distant past, the presidential elections in Bulgaria and Moldova come to mind as well. All of these cases tell us the same story, but for some reason we have chosen to ignore it. You seem to point to a similar problem. "The real question," you write, "should not have been why populism has emerged in 2016, but why it took so long to become manifest." How would you answer this question?
FF: In the United States, a culture of political entrepreneurship requires politicians to convince people that they are able to represent them, that they understand their problems and are going to fix these problems. In this regard, the point that I was making is that no candidate from either party had really done that for the working class. The Democrats had lost touch with the working class a long time ago. As for Republican Party, it is basically dominated by corporate America.
This is what happens in politics in plain terms: political entrepreneurs seize the opportunity to mobilise people around a particular issue. They start speaking to a particular group and then all of a sudden that group realizes, 'yes, we are victims of the system! Yes, the elites are conspiring against us!' I think that is what Donald Trump did. The same thing happened, for example, in Serbia. Why did Serbia turn out so much worse than other countries in Eastern Europe? I think Milosevic was a political entrepreneur himself who saw that big opportunity to get people angry about the situation of the Serbs and get them all mobilised. That was how he rose to power. However, there is no inevitability in this. Sometimes events develop in this direction, sometimes they do not.
NK: Isn't it a tragedy for working-class people that they have to accept a billionaire as their representative?
FF: I do not think that matters. It is much more the message. I do not think they care that he is personally rich. I mean, it is just like in the 1930s, when Franklin Roosevelt headed the populist movement to create the modern welfare state and attacked Wall Street and all these big banks. At the same time, he himself was an aristocrat, came from a rich family, was very well brought up and educated. Nevertheless, people liked him because they thought that he understood their problems and was indeed their representative. To repeat, I do not think Trump's personal wealth is an issue really.
NK: You write, "In the US, Britain, Europe and a host of other countries, the democratic part of the political system is rising up against a liberal part, and threatening to use its apparent legitimacy to rip apart the rules that have heretofore constrained behaviour, anchoring an open and tolerant world." Do you mean that there are two types of democracy?
FF: No, not two types of democracy but two big components to it. Its democratic part has to do with elections and popular choice in general, while its liberal component is about the rule of law, the protection of individual rights, that sort of thing. I am convinced that to have a full liberal democracy you have to have both of those. To put it differently, people have to be able to choose but their choice has to be limited by law and by a certain common understanding of the limits of politics. I see that populism is pushing against that.
Consider, for example, cases with mass media. In all of these populist countries, the press is one of the first targets. The first thing that governments popularly elected with some kind of democratic majority want to do is to shut down critical media voices. Donald Trump is not an exception. At his meeting with the New York Times, he got talking about crooked media. I think this is very similar to what Erdogan is doing in Turkey, Putin has done in Russia, and Orban in Hungary.
NK: So in proportion to the liberal component, how large is the democratic share of 'liberal democracy'?
FF: I think the elections proved that it is fundamentally democratic, even though we have a big problem with money in politics, and I think many Americans will accept that it is a problem. However, if money could have actually determined the outcome of elections, then Jeb Bush should have been the Republican nominee, while Bernie Sanders would not have had any chance against Hillary Clinton. Yet Sanders did extremely well and could have beaten Hillary Clinton, while Donald Trump ended up as president. The latter happened not because he spent a lot of his personal wealth on the campaign. He actually spent relatively little. All this proves, I think, that in the ultimate sense the American people still fundamentally decide.
At the same time, I have to say that money in politics distorts the representation of the popular will by giving certain groups more political clout than others. But this is true for most countries. I mean, poor people in most countries have very little political power because they do not know how to organise and push for their own interests. Corporations, labour unions, as well as many other groups, on the contrary, are well organised and know how to use the political system to their advantage. This is what substantiates my argument that the system is not fully representative. Nevertheless, it still remains democratic, I think.
Francis Fukuyama is an American political scientist, best known for his book The End of History and the Last Man (1992). He is Olivier Nomellini Senior Fellow at Stanford University's Freeman Spogli Institute for International Studies. Natalia Koulinka is a graduate student at the University of California, Santa Cruz. She trained as a journalist at the School of Journalism at Belarusian State University, where she worked as an instructor for several years. In 2008, she won a Knight Fellowship at Stanford University, where she co-founded the Stanford Post-Soviet Post. This interview first appeared on OpenDemocracy.
Photo credit: Daniel Kulinski via Foter.com / CC BY-NC-SA
