Monday, 4 June 2018

Trump's Bogus Solutions to Trade

It's hard not to be confused by what passes as Donald Trump's foreign and trade policy and indeed his approach to more or less everything. His administration is a deranged, meandering, discursive affair that switches endlessly and unpredictably, one moment being tough and inflexible towards enemies, both perceived and real and the next so accommodating and supine it resembles an unset jelly.  His approach to China, North Korea, his European allies, his Asian allies, his neighbours, his friends and even his own staff and family changes by the hour. Only the Russians seem to be assured of the President's undying consistency and silence.

Trump is not wholly wrong about trade and America's persistent trade deficit. The economics establishment always tells us of course that such deficits are no real problem, but in which position would you rather be in, that of America or of China or Germany?

Trump is simply reflecting the views of the pub philosophers who reflect his base. They see a huge US trade deficit, they see people out of work, old fashioned industries laid waste and foreign products on shelves and on the roads and they resent it and they worry about it. Globalisation has had many benefits, has delivered prosperity, untold riches for some and lifted millions out of poverty. But it has also been hugely disruptive to the old working classes, or the middle class as they call them in the US. Allied to the march of technology and automation it has decimated old certainties and the good and prosperous life of middle America, the halcyon period when Trump was growing up. Yes, apparently he really is a grown up.

Not that Trump's remedies for any of this would make any difference. They are a cri de coeur rather than a policy or strategy. Starting a trade war will not make America great again, unless Trump is intent upon turning the country into an isolated autarky. If only he could be persuaded to read a bit of history he would see that trade wars, for all of their cosmetic appeal, impoverish the very people he is seeking to protect. Even his protection is selective though. His asinine attempt to bring back the coal industry is no better for the poor than the environmental dogma that he is undoing. It is also fundamentally unconservative.

His strategy, such as it is, is bombast and threats, grand gestures and announcements intended to cow his opponents and force them to offer concessions and conciliation. But the world is becoming wise to him. China showed he can be forced to retreat by targeting his political heartlands and his beloved base. It also helps if they offer him and his daughter various personal inducements such as investment and lucrative trademarks. Trump will always do what suits him and his family. It is his fatal weakness as a businessman, politician and as a human being. He is pathologically ignoble.

He will have his big and pointless summit with Kim Jong-Un and it will achieve nothing meaningful except maybe a Trump branded burger joint in Pyongyang - maybe he could sell them some of his failed steaks and vodka at the same time. Of course the optics will be great and the ratings stratospheric and that is all Trump cares about. There will be vague promises nobody can be held to and talk of peace and then the circus will move on. Trump might even get his much desired peace prize - to be fair he will be as deserving of it as Obama was, but that is no recommendation. But the President won't care. He will have his bauble. He can probably show it off at his big military parade and he of course won't appreciate the irony of displaying a peace prize in front of his assembled tanks and guns.

The tragedy of Trump is that he could actually be the transformative president he so clearly wants to be if only he could be bothered to put the work in. China is a massive threat and it needs to be confronted. Only America can do that, but it would be better if it did so in league with the same allies he is currently alienating. If only he had the imagination he could inaugurate a new international system of trade that follows rules and punishes those who break them with isolation from international trade. But that would involve the kind of supranational deals and compromises he has set his face against. In such a deal though he could actually strike a proper blow for freedom, democracy and even peace. Countries that are democratic and engage in fair trade would be allowed entrance to this lucrative alliance. Those who are autocratic and devious like China would be excluded as would those that threaten world peace like North Korea and of course Russia. Such a system would not stop cheaper countries from taking the jobs of middle America but then no system can stop that. It is the natural consequence of capitalism and has largely been a force for good, it has certainly delivered the world we live in and take for granted.

Ultimately free trade if it is used properly and enforces its own rules can be a force for good. But it does not mean that it stops progress. That seems to be the mindset of Trump, one that seems like a very brash and obnoxious version of Pleasantville.

Trading with countries like China was supposed to socialise them and make them more 'western'. It is a theory that has consummately failed because China in particular, but plenty of others, have gamed the system. That is the central reason why the likes of Trump have risen and been elected to disrupt this uncomfortable reality. But Trump's solutions are not solutions at all. Like many populists he has identified a problem but has no idea what to do about it other than shout a lot and throw his weight around.  The world is headed for confrontation because the toddler president wants his win. Trump is going to be transformative all right. But not in the way that he imagines.

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