Monday, March 12, 2018

Trump Fighting China Acting Like 1930s Nazi Germany

Trade War to avoid a Real War?
Michael Pillsbury, Senior Fellow at the Hudson Institute and author of The Hundred-Year Marathon: China’s Secret Strategy to Replace America as the Global Superpower, described the Trump Administration’s implementation of tariffs on aluminum and steel imports as insufficient measures towards curbing China’s goal of displacing U.S. geopolitical global dominance.

Tariffs on aluminum and steel imports from China should be part of a broader strategy towards restraining China’s hostile geopolitical ambitions, suggested Pillsbury. “It’s pretty widely believed that the tariffs won’t change China’s overall predatory economic policies,” said Pillsbury.

“What I try to expose in one of the chapters in The Hundred-Year Marathon is how China built the kind of policy machine it has today with its economy, and they’re deeply committed to a set of economic policies that involves subsidizing large companies that they call the national champions. These companies as recently as fifteen years ago, none of them on the top 500 companies in the world list. Now 100 of them are.”

China’s economic policies are violative of its commitments as a member of the World Trade Organization, said Pillsbury. “They have a series of techniques they use that involves dumping products [and] buying raw materials with the help of the government,” explained Pillsbury.

“It’s a set of behaviors which they promised they would never do when President Clinton let them into the World Trade Organization. So fairly recently, President Trump has denied them what they wanted; they wanted to be called a free market economy and then qualify for lower tariffs worldwide from all countries, but President Trump, and of most of the European countries, the Japanese, all have denied China to be considered a free market economy, which they’re not.”

“So, the steel tariffs, as you know, were a  matter of great political struggle inside the White House,” added Pillsbury. “We had the departure of Gary Cohn, and perhaps others, who oppose tariffs of any kinds.”

“I consider these tariffs to be just a pin prick compared to what it would take to get China to give up its predatory policies,” said Pillsbury. “The United States sues China more than any other country in Geneva in the World Trade Organization. A lot of the experts who draw the suits up — the lawyers who do it — have told me that there’s far too few lawyers involved. We could sue China double the number of times that we do, and win even more cases, and get other countries to go with us over violations of international trade issues.”

Pillsbury described decades of policies related to China as insufficient in addressing emerging threats related to the one-party state’s rising power. Even marginal efforts directed towards curtailing the Chinese threat have been obstructed by “globalists,” he added.

“The scale of the problem is just far beyond what the level of effort is, so far,” stated Pillsbury. “The globalists are blocking even these small pin prick measures. That’s why the Chinese are probably going to surpass us as an overall economy in the next few years. They’re already passed us, according to the World Bank, in a metric called purchase power parity. They’re on their way to double our economy in about 10 to 15 years and then being triple our economy by 2049. That’s kind of the end date of what they call the 100-year marathon. When you’re triple the size of another economy, you can imagine the kind of influence you can wield. You can just buy assets, companies, and people in the inferior country, and that’s sort of why I wrote the book, is to sound the alarm about these long-term trends. It’s not going to happen this year or next year.”

Pillsbury cast the status quo as shifting the balance of power to China and away from the U.S. “This is the trend we’re going on in both the economic [and] military balance,” Pillsbury said. “The degree to which they influence us through the media and through Hollywood. All of these trends are in the wrong direction. We can turn them around if wake up and decide to do so. But it’s only President Trump who’s made some progress in the right direction.”

Breitbart News’s Senior Editor Rebecca Mansour framed the news media as broadly absent on the issue of an ascendant China. “No one is sounding the alarm on this,” said Mansour. “They’re more concerned on cable news with porn stars. … I look at what China is doing — their expansionist behavior and their rhetoric — it’s very troubling. It does feel like the 1930s, again, and nobody is paying attention They’re incredibly adept at manipulating Western media.”

Pillsbury drew parallels between those pushing for greater U.S.-Chinese relations to 1930s appeasement of Adolf Hitler and Nazi Germany. “In the 1930s, there have been a couple of new studies of what actually happened in the 1930s in America with regard to [Adolf Hitler] and Nazi Germany. There was a huge effort that dominated public opinion that Hitler was our friend and the Nazis were good,” recalled Pillsbury, who pointed to Arnold Offner’s book American Appeasement.

“[Offner] got a hold of all the telegrams and messages from our embassy in Berlin in the 1930s about the rise of Hitler and the Nazi Party, and it makes you sick,” said Pillsbury. “It was all about how we have to work with Hitler, we need to persuade him, and shape his views. There are moderates in the Nazi Party and we have to work with them. It was why the American ambassador had to go to rallies of the Nazi Party so we could get along better with them and change their views. This is only three years before the massive war begins to break out.”

America tends to be slow in recognizing threats from foreign adversaries, surmised Pillsbury. “We have a history as a sort of trusting democracy,” said Pillsbury. “Only a few people in the thirties were concerned about the rise of Hitler and the Japanese military, and they were laughed at. They were considered freaks.

“The Chinese are much more subtle than Hitler and the Nazis. The Chinese are deeply embedded in our society, and they have friends everywhere, not just in Washington, DC. The reason I wrote this book, and I had a very hard time, I had to remove a lot of it at the request of CIA and FBI, but they left a lot in that is new material about how subtle and sophisticated the Chinese are in their strategy toward America. So I hope people buy it. It was  national best-seller. It’s sold more copies in Japan, Korea, [and] it’s coming out in Hindi in India next month. So the neighbors of China are already pretty alarmed.”

“[My book] also has a set of policy measures, what I call the 12 steps,” said Pillsbury. “It’s a play off the Alcoholics Anonymous 12 Steps. The 12 steps we have to take to make ourselves more competitive with China, that to me is the core of it, because they’re outcompeting us.”

“[The Chinese] are subtle and sophisticated in their strategy towards America,” warned Pillsbury, advising political observers not to underestimate China. Pillsbury explained how China punishes foreign critics of its policies.

“They pick out any scholar or think tank person or someone who they believe opposes their views and they will punish that person. They will say, ‘You cannot have a visa to China.’ Two or three of our best experts on China have been denied visas for over twenty years. Whereas if you’re sympathetic [to China], your visa comes through in 30 days.”

Pillsbury shared some recommendations on how to enhance America’s competitiveness relative to China. “The first step is just to recognize the problem,” said Pillsbury. “This step turns out to be the hardest.” Pillsbury called for an “inventory of all the ways the U.S. government helps China” via “a whole series of government programs.”

“The National Science Foundation has over 100 agreements that date back to Jimmy Carter; never reviewed by the Congress,” said Pillsbury. “These agreements require the U.S. government to turn over our fresh scientific findings to the Chinese. We have a huge office in Beijing that does this and the Chinese have been known to kind of, in a cheeky way, they even complain if they read about some new scientific discovery and the U.S. hasn’t turned it over to them. They’ll complain and say, ‘What about this?’ You haven’t given it to us, yet.’ This is really quite shocking when the Pentagon talks about the China threat … that we’re helping China to become more competitive.”

Pillsbury advised Americans to update their perceptions of China. “They have more billionaires, now, than we do,”  said Pillsbury. “There’s a very old fashioned image of China that many people have who shouldn’t, that these are like the laundrymen down on the corner, or somehow they built the railroads and they’re not very sophisticated, and it’s just simply not true. They’re pulling ahead of us in outer space research. They are across the board, now, world leaders in science and technology.”

“It’s not all doom and gloom,” concluded Pillsbury. “There’s still plenty of time to correct these trends.”

Trade adviser ascends in Trump White House

One must only watch a few minutes of Peter Navarro’s economic hyper-nationalist film “Death By China” to understand why President Trump has an affinity for the man.

In the movie’s opening scenes, a flag-painted cutout of the United States tumbles to the ground and is brutally stabbed with a knife. As the map gushes blood, the knife’s handle is revealed to resemble Chinese currency, and its blade is labeled “Made in China.”

Later, animation portrays China as attacking American factories with artillery labeled “currency manipulation” and bombs labeled “illegal tax subsidies.” The term “American carnage” comes to mind as the factories explode, leaving smoldering craters in their wake.

Navarro, now the 68-year-old director of the White House National Trade Council, sees eye to eye with Trump on the need for tough, protective tariffs to insulate American jobs and swat down the meddling tentacles of China’s aggressive economic policy. He scored a major victory this week, as Trump ignored large swaths of his own party and his other advisers and unfurled steep, broad-based tariffs on steel and aluminum.

Increasingly, Navarro has the president's ear. “This is the president’s vision. My function, really, as an economist is to try to provide the underlying analytics that confirm his intuition. And his intuition is always right in these matters,” Navarro told Bloomberg News this week.

When Navarro was brought onto the Trump campaign in 2016, he was the only economist on the team. But his academic work was unrelated to the views he espoused on trade. “When he started out, his field was energy economics, and he published with good journals,” said Amihai Glazer, a professor of economics at University of California, Irvine, where Navarro spent decades teaching at the business school.

At that early point in his career, the Harvard-educated economist was working as an analyst for the Department of Energy. He won the endorsement of the Sierra Club, an environmental group, in his failed run for San Diego mayor in 1992.

Navarro made several more attempts at office, including a bid for Congress and a local city council seat, running as either an independent or a Democrat. He always fell short. Around the time of his last electoral bid in the early 2000s, Navarro started turning his attention to broader economic issues, with a special focus on China.

“He went into macroeconomics, and I don’t think any of his work was published in what are considered good journals,” Glazer said. “The work on international trade and policy toward China is not really academic work. It’s more polemical.”

Glazer’s view is widely shared among economists, who have by and large excoriated Navarro's views on trade. The Economist magazine accused him of “dodgy economics.”  Greg Autry, a University of Southern California professor who co-authored the book version of “Death by China” with Navarro, says the criticism is overblown.

“Although Navarro’s thoughts are considered out of the mainstream, that’s because nobody wants to fund those thoughts,” he said. “I don’t know that Peter’s thinking is unusual, it’s just that that thinking is hard to get to the forefront.”

It was Navarro’s China-bashing that got him noticed by Trump adviser and son-in-law Jared Kushner in 2016, and led him into the campaign and subsequently the White House. In his early days there, his influence waned as ideological foes such as National Economic Council Director Gary Cohn successfully sidelined him.

Now, with Cohn’s impending departure in protest of the new tariffs, Navarro and his views are ascendant at the White House, a prospect that has unnerved many congressional Republicans.

“I think he’s been ‘the’ influential person,” said Rep. Mark Walker (R-N.C.), the head of the conservative Republican Study Committee, which opposed Trump’s tariff decision. “I think you saw with Cohn’s decision which way the president was leaning in terms of who he considers his adviser on this issue, which sets a potential precedent for future concerns as well.”

Sen. John Thune (S.D.), the No. 3 Republican in the Senate, worried that Navarro gives the president bad advice. “His views on trade are completely out of step with the modern world and global economy in which we compete, and represents a school of thought on trade that's very outdated, and if implemented would be very harmful to America's economic interests,” Thune said.

Democrats are also concerned. “Navarro on the outside as a critic was helpful. On the inside doing policy, I’m not so sure,” said Rep. Richard Neal (D-Mass.), the ranking member of the House Ways and Means Committee, which oversees trade.

Autry dismisses the criticism as part of a corporate-driven worldview that has infected both parties. “Certainly he’s not proposing anything much different than what the Chinese and Koreans are doing very successfully in terms of investing in their manufacturing. But if you’re an investment banker from Goldman Sachs, you’re a lot more concerned about your quarterly profits than selling off a factory and its parts to China,” he said.

Cohn is reportedly doing all he can to ensure that his replacement subscribes to more mainstream views, pushing for the National Economic Council's Shahira Knight to take over. But Navarro is reportedly lobbying for the role of chief economic adviser.

Maybe this time, he’ll win.

President Donald Trump has picked former Reagan economist and longtime CNBC commentator Larry Kudlow as his chief economic adviser and director of the National Economic Council.

Kudlow will fill the role vacated by former Goldman Sachs executive Gary Cohn, who left the White House after differing with the president over tariffs to protect America’s steel and aluminum industries.

“Larry Kudlow was offered, and accepted, the position of Assistant to the President for Economic Policy and Director of the National Economic Council,” Sarah Huckabee Sanders said in a statement. In an interview on CNBC, Kudlow said he would be flying down to Washington, D.C. Wednesday night and reporting to work at the White House tomorrow. The news of Kudlow’s selection was first reported by CNBC, the financial news network with which Kudlow has long been associated.

Kudlow is best known for his advocacy of tax cuts. As an informal adviser to the Trump campaign and later the White House, Kudlow helped develop some of the ideas that became the Trump tax cut plan in 2016, which many consider the crowning achievement of Trump’s first year. Last year, Kudlow and co-author Brian Domitrovic published a book lauding the tax cuts of John F. Kennedy and Ronald Reagan.

Kudlow was once an advocate of relatively open immigration but changed his mind in 2015 following terrorist attacks in San Benardino and Paris. The U.S. should “seal the borders” and end all immigration and visas until the system can be made safer, Kudlow wrote.

Kudlow criticized the president’s call for sweeping tariffs on steel and aluminum imports. But as the administration exempted Canada and Mexico from the tariffs, and said it was opening to providing further exemptions, Kudlow appeared to back away from that critical stance. For his part, Trump said Kudlow’s disagreements with tariffs were not a dealbreaker, telling reporters Tuesday that his administration welcomed “divergent opinion.”

People who have spoken to Kudlow say he is “100 percent on board” with the Trump administration’s economic struggle against Chinese domination. Kudlow has praised the administration’s attention to the issue of intellectual property theft and forced technology transfers by China and Chinese companies.

Kudlow has credited Art Laffer, the godfather of supply-side tax cuts, as being formative in his own economic views. Kudlow, in turn, became an economic guru to many Republican and conservative tax cutters, including Jack Kemp and Rush Limbaugh. In addition to serving as a member of the Reagan economics team, Kudlow worked at Bear Stearns until 1994.