04/05/2018
Steve Bannon is cheering on Trump's attempt at a trade war and we hear that a small few UFAA allies are twisted in knots over how to feel about the whole thing.
Let us state emphatically: Trump has no purchase on "economic nationalism." What is lacking here is any semblance of a comprehensive program. President Obama imposed duties on Chinese steel as high as 500% as recently as 2016. Trump did not invent tariffs, so don't let him "own" them for better or worse.
Free trade is still bad. Trump crudely attacking free trade with no real game plan doesn't suddenly make either Trump or free trade good.
In the 19th century London ran a global trade scheme based on Confederate cotton, Chinese tea, Indian o***m and other low-wage goods. This is the essence of the "comparative advantage" theory developed by British agent David Ricardo to explain why America couldn't simply produce their own textiles. As the lowest-cost cotton producer (thanks to slavery), America's natural role in the world in the minds of financial speculators was to concentrate its efforts on cotton exports and maintaining slave wages. Abraham Lincoln's Republican party was America's answer to this system.
Under today's free trade, China and India are meant to dominate industrial production, using cheap labor and designs and methods either purchased or stolen from America's New Deal manufacturers. America is to fight wars and export grain, which in turn keeps developing countries destabilized and desperate for exploitation and cheap labor opportunities.
Managing all this are the same international financiers and speculators that gave the world slavery and the o***m wars.
In light of the facts and in the crudest sense, Bannon is right. America should not simply cede the production of steel, washing machines or anything else to China or any other nation, the Wall Street Journal editorial pages be damned.
But there is no apparent strategy here, and Trump (more correctly, Trump advisor Peter Navarro) is being reckless in courting not just trade war, but organized attacks on the US dollar and financial markets.
The imports to the US of Chinese steel (2% of US imports) and washing machines are trivial. Why is there no tariff on Mexican washing machines or autos? Why no tariff on Canadian steel? Without international cooperation, this amounts to a pointless thumb in the eye of China to give Trump populist cover, not any meaningful protection of the shrinking US steel industry.
What a real program would look like is the UFAA program: a set of protections and incentives including:
• Medicare for All and stronger Social Security to make manufacturers more cost-efficient in world markets.
• A national bank (de facto or de jure) to finance industrial loans at little or no cost, and to limit the threat of Chinese attacks on US Treasuries. The big question mark here – if you want a US steel industry, where is your infrastructure program and how are you going to pay for it? A $5t program focusing on items like high-speed rail networks is going to create enough demand for steel to build an industry.
• Broad-based, structural tariffs to protect the redevelopment of American industries and infrastructure from low-wage imports and product dumping.
• "Parity" or fair pricing on agricultural and other commodities to prevent price shocks to producers and shift focus away from low-price product dumping and back toward domestic consumption, higher food quality and building strategic grain reserves.
• A national Wall Street Sales Tax and regulations on speculators to pre-emptively attack Bannon's supposed enemy and its role in exacerbating the problems of free trade.
Long story short (one could write volumes about the lessons learned from the Fordney-McCumber and Smoot-Hawley tariffs), tariffs are an indispensable element of a larger economic program, which is why China has used them to great effect. On their own, frivolously-targeted, and without any means of encouraging and financing industry and infrastructure, they are short-sighted and have potential to do more harm than good.
Contrary to Bannon's assessment of the mythical "chess-master Trump," these seem to be no different than Trump's wall - a distraction, red meat for his base, and something America will pay for in the end.
Former White House strategist Stephen Bannon dismissed concerns about the stock market's reaction to President Trump's trade moves on Wednesday, telling
