Despite His Latest Anti-Free Trade Demagogy, Trump Still Rejects a Permanent Across-the-Board Protective Tariff

UFAAUnited Front Against Austerity | TWSPTax Wall Street Party

Morning Briefing | Thursday, June 30, 2016

His Speech a Clumsy Bid to Dupe Disappointed Bernie Sanders Supporters; Delphic Donald Mentions Wall Street Just Twice, Only to Blame Hillary; Trump’s Much-Touted Trade Plan Is Vague and Inadequate; His Definition of Globalization Leaves Out Austerity, Speculation, Derivatives, Union Busting, Deregulation, Currency Chaos, Federal Reserve Malpractice – All Brought to You by Trump’s Allies!

Appropriately speaking in front of what looked like a wall of garbage, candidate Donald Trump on Tuesday, July 28 delivered his most ambitious speech on economic policy so far in Monessen, Pennsylvania. Trump is once again posturing in public as a supporter of protectionism and an enemy of free trade sellouts like NAFTA, CAFTA, WTO, and TPP. But, despite all of his salesman’s art, he cannot conceal the fact of his stubborn refusal to call for any permanent, across the board, protective tariff to shield American agriculture, industry, and manufacturing. A close reading of his latest pronouncements shows that he hardly treads beyond the complaint mechanisms built into the bankrupt free trade treaties of the past quarter-century. And in this department, Trump is actually weaker and more timid than the Obama administration, based on the public record. Trump’s critique of free trade still regards tariffs as abortive and exceptional weapons of temporary trade retaliation, rather than seeing an import duty of 15% (for example) as a fixed and orderly feature of regulated and growing foreign trade, especially high technology US exports, under a traditional Hamiltonian-Lincolnian regime of protectionism and dirigism. At most, Trump is promising to make NAFTA and WTO work more smoothly.

The Monessen speech was apparently Trump’s definitive pronouncement on globalization, tariffs, and trade, and was one of his rare teleprompter speeches. Trump’s website later provided text with footnotes for the address – a sure sign that the fascist had little to do with the preparation.

Trump’s main task in this speech was to make a demagogic bid to dupe the still disoriented supporters of Bernie Sanders. This was reflected in Trump’s attack on free trade sellouts, and even reached into the footnotes, where the vaguely left of center Economic Policy Institute was cited.

If any Bernie followers are tempted, let them mark well the curious fact that, in this speech, Trump almost never mentions the power complex which Sanders has correctly made into the principal target of his campaign rhetoric: WALL STREET. In fact, Trump mentioned Wall Street just twice in the entire speech, both times attempting to imply that Wall Street was connected to Hillary, but not to Trump.

Trump confined his mentions of Wall Street to “Hillary Clinton’s Wall Street funders” and the dark prophecy that she “will do this just as she has betrayed American workers for Wall Street throughout her career.’ Fair enough, but what about you, Don? Hillary is a Wall Street puppet for sure, but the fascist billionaire was already enough of a Wall Street insider in 1990-1991 to enjoy a special sweetheart bailout by Citibank and the New York Federal Reserve when Citibank had been silently seized by federal regulators.1 In case you don’t know how this worked, taxpayers picked up the bill to bail out Donald.

In any case, Trump would have been smart to attack Wall Street much more if he wanted to snare some Sanders stragglers. The fact that he didn’t dare do that shows who controls him, and whom he fears. Bankers.

Voters need to remember that when you vote for a presidential candidate, you are not voting merely for a policy or for an analysis, however much you may like these aspects of a certain candidate. You are voting to give the awesome power of life or death over you and family, since this is implicit in the control of nuclear weapons and launch codes which has been the purview of the presidency since the beginning of the atomic age. This is different from voting for a senator, a congressman, or a governor. That is why the personality, outlook, mentality, and track record of a presidential candidate deserves such meticulous attention.

Everything that Trump said on Tuesday needs to be read within the context of his lifelong hostility to labor unions, collective bargaining, and the rights of working people in general. This is a candidate who wants to reward wealthy corporations which have kept flight capital overseas, rather than bring it home and subjected to lawful taxation. This is the same Trump , who wants to cut the top rate on the federal personal income tax from almost 40% to 25%, providing a bonanza for wealthy predators. This is the same Trump who wants to abolish the estate tax. As of 2016, there is no tax on estates under 5.5 million dollars, meaning that financial parasites who made out like bandits under Reagan, or thanks to the Bush tax cuts can permanently incorporate their ill-gotten gains into their family fortunes thus creating a permanent financier oligarchy. This may even allow Donald Jr, Eric and Ivanka, Trump’s mediocre brood, to maintain their status as finance oligarchs through their inheritance.

As usual, Trump tries to escape all accountability with his usual rhetoric about “great trade deals” to replace NAFTA and the rest, and the “great jobs” he will provide. Trump wants “to immediately renegotiate the terms of that agreement to get a better deal by a lot, not just a little, by a lot for our workers.” How is this measured? What does a great trade deal look like? Will it create 1 million jobs, 5 million jobs, or more? What will it do to average weekly earnings here in the United States? How can we tell if a new trade deal is better by a lot and not just by a little for the workers? Good luck in getting specific, truthful answers on any of this.

Trump would like to blame NAFTA in particular on Bill and Hillary Clinton, but in reality NAFTA was negotiated and signed into law by George H.W. Bush. It is very true that Bill Clinton used his presidential powers to get NAFTA signed into law. But one of the biggest pro-NAFTA organizers in the Congress was none other than the GOP’s Newt Gingrich, who may still be under active consideration as Trump’s vice presidential candidate. So the one-dimensional morality play which the fascist billionaire is attempting to concoct does not ring true.

One of Trump’s problems is that he is by now personally discredited and viewed as an incorrigible liar by intelligent people with the memory that reaches farther back than from one week to the next. The process by which a politician becomes discredited and loses all credibility deserves further study, but there is no doubt that there is a point at which significant parts of the public will tune out a public figure, and refuse to consider anything they might propose, no matter how good it is. The German Emperor William II became known by 1910 at the latest as a monarch who would not keep his word, neither to his own people nor to foreign leaders. The German general and politician von Schleicher had by early 1933 engaged in so many intrigues and betrayals that no one could be found to trust him, a fact that enabled the rise of Hitler. There are surely many Americans who have had it with Donald J Trump. We have tried to keep track of some of Trump’s lies and flip-flops, but these are so numerous that it is almost impossible to keep track of them in a short essay.

Trump wants to pose as a follower of George Washington, Alexander Hamilton, and Abraham Lincoln. He recalls that ‘… Abraham Lincoln warned that “the abandonment of the protective policy by the American government … will produce want and ruin among our people.”

Lincoln presided over the enactment of the Morrill Tariff, the strongest protectionist tariff in US history up to that point. The result of the passage of the highly successful Morrill Tariff was that the free trade, low-wage, and pro-slavery Confederate states left the union and were thus no longer able to sabotage the Hamilton-Clay American System program. We note in passing that those free trade southern states represent the heart of Trump’s political coalition, such as it is.

The Tax Wall Street Party’s answer to Trump is that, if he really wants a return to Lincoln’s version of protectionism, he should first of all propose overriding NAFTA and other trade deals with an actual, permanent, across-the-board, protective tariff – we would recommend 15% as a starting point. Of course, a detailed tariff schedule would most probably include higher import duties on certain commodities.

Trump needs to keep his concept of protectionism as narrow as possible, to avoid offending the Wall Street bankers and speculators who are his actual backers and masters. He wants to limit everything to trade (or even more narrowly to currency manipulation), since this allows him to blame politicians and spare the finance oligarchs he serves. For example, when Trump quotes Lincoln about “the protective policy” of the US government, many modern readers may think that this refers to import duties alone. But let us quote briefly from the 1825 inaugural address of John Quincy Adams, one of the greatest champions of the American system. Here we can get an idea of the numerous ingredients that are required to maintain the trade position of a country:

In Adams’ inaugural address, he stunned the crabbed states’ rights exegetes of the Constitution by announcing that “the great object of the institution of civil government is the improvement of those who are parties to the social compact”, and enumerated the impressive powers that the Constitution afforded to do just that, going on to say that “if these powers may be effectually brought into action by laws promoting the improvement of agriculture, commerce, and manufactures, the cultivation of the mechanic and the elegant arts, the advancement of literature, and the progress of the sciences, ornamental and profound, then to refrain from exercising them for the benefit of the people themselves would be to hide in the earth the talent committed to our charge – would be treachery to the most sacred of trusts.” Adams recommended a national university, astronomical observatories, and a whole array of scientific enterprises. He ridiculed the narrow-minded sectionalism of most opportunist politicians, asking if they were “palsied by the will of their constituents.”

John Quincy Adams saw clearly that successful foreign trade depended on an educated and prosperous labor force, as Horace Mann argued. National economic success requires scientific research, technological development, and modern energy production. Trump likes to reduce the trade question to the runaway shop, excessive imports and unfair foreign practices.

But what about exports? The United States urgently requires a program of high technology exports. This means exports that are also of high capital intensity, high energy density, and backed up by technological innovation, national laboratories, University research grants, and the like. Would Trump like to propose the immediate abolition of the insane Republican budget sequester , which was built into the Satan Sandwich of 2011? So far we have not heard him. Trump has very little to say about exports.

Tariffs by themselves make foreign-made products more expensive. If raising tariffs is all you do, in the short run the living standard will fall, and this will end up as a form of austerity. The US living standard has already fallen by two thirds since about 1971, and further reductions are unacceptable. So, to make the US competitive, we need to invest in education, upgrade skills, and roll back the Reagan Redistribution, which sent vast wealth from the working class, the lower middle class, and the middle class to the pockets of the wealthy elite.

In short, we need to develop and support the industries now emerging over the horizon, rather than merely bringing back runaway shops and sweatshops from the Far East and planting them in a union-free, cheap labor system, which seems to be Trump’s intent.

Trump also argues that US national wealth has been fruitlessly expended in the process of developing or nation building in other countries:

‘But then America changed its policy from promoting development in America — in, in, in America — to promoting development in other nations. That’s what’s happening and that’s what happened.’

That may sound plausible, but Trump’s ghostwriters are simply ignoring some very big facts. The biggest economic boom in US history came between 1945 and 1970 in large part thanks to the European Recovery Program or Marshall Plan, which provided US loans and grants to promote economic reconstruction in Europe and elsewhere after World War II. There was also the benefit of not seeing these nations join the Soviet bloc because of economic despair. This concept is too complicated for Trump, who sees economics very much as a brutal, Hobbesian, zero-sum game.

Trump addressed globalization:

‘Our politicians have aggressively pursued a policy of globalization — moving our jobs, our wealth and our factories to Mexico and overseas.’

Free trade sellouts are of course an important part of globalization, but by far not the only one. One of the essential features of globalization is unlimited and unrestricted flows of speculative hot money across the globe, without any possibility of government intervention or even government monitoring. In some cases. Globalization implies that hot money speculators are able to control the value of currencies, with profound effects on trade. Under globalization, banks are no longer regulated, and can operate against the public interest in any way they choose. Here in the United States, this has included interstate banking and the abolition of the Glass-Steagall Banking Law of 1933. Most destructive of all has proven to be deregulation and legalization of toxic derivatives by Clinton in 2000. Globalization also means the destruction or weakening of labor unions. These are all apparently aspects of globalization, which Trump has no desire to modify. In this sense, we can say that Trump is not really an opponent of globalization, but also a kind of reformer within the globalized world system, who is claiming to get a slightly better deal for the US, but who is not seriously attempting to do this.

Trump is of course great at hyperbole. He claims that the Obama-Hillary regime has done absolutely, positively nothing to activate the enforcement mechanisms in trade deals like NAFTA and WTO. He claims that:

‘When subsidized foreign steel is dumped into our markets, threatening our factories, the politicians have proven, folks, have proven, they do nothing.’

Nothing? Trump needs to claim that Obama has done nothing in order to preserve his spurious anti-establishment cover. In reality, it turns out that Obama has taken some retaliatory measures against Chinese steel dumping that are much more radical than anything Trump is demanding. The Obama retaliation against China involves above all cold rolled steel, which is used to manufacture automobiles.

On March 1, 2016, the press reported that the Obama administration had imposed a punitive tariff of 266% on cold rolled steel to stop Chinese dumping on the US market:

‘The Department of Commerce Tuesday imposed preliminary duties on imports of cold-rolled steel, used to make auto parts, appliances and shipping containers, from seven countries including China, whose steelmakers were slapped with a massive tariff.”2

Shortly thereafter, in the face of Chinese refusal to comply and repeated attempts to dump steel on the US market, Obama escalated to a punitive tariff of 522%:

‘Chinese steel companies have used free trade agreements to flood the world with cheap product, hurting European and U.S. mills. But rather than scrap the deal, the Commerce Department imposed punitive 522 percent tariffs.’3

Trump is gaga about punitive tariffs of 45% and 100% imposed on Japan by Reagan. But Obama has done more. This actually suggests that something more than a protective tariff will be needed. Trump said:

‘I have visited cities and towns across this country where a third or even half of manufacturing jobs have been wiped out in the last 20 years.’

But Trump failed Empathy 101, as we see in his own business operations in Atlantic City, New Jersey. There is so much empirical evidence of the destructive impact of globalization that even Trump can get a few points right. Even Hitler, in order to gain traction, had to talk about real issues. Was the Versailles Treaty unjust? Lord Keynes thought so. Was the war guilt clause a mockery? The evidence says yes. Were the reparations hateful and onerous? Yes. The question was always what Hitler would do if he got power. So free trade has hurt manufacturing. But how about the Volcker interest rate? How about US Steel blowing up steel mills so they could no longer be used? Here are a few things to remember:

$12 Trillion in Lost Production

Let us pause for a moment during the second year of the Reagan presidency to survey the impact on the real economy of the monetary crises, the dollar devaluations, the two oil shocks, and the Volcker orgy of usury. Many believe that the great conflagrations of international high finance have little relevance to economic conditions on Main Street. Reality is otherwise. During the fixed-parity, well-regulated years of the 1960s, officially measured overall US economic growth averaged 4.1% per year. The official GNP expanded by more than 50% during the decade. During the floating-rate and increasingly deregulated 1970s official economic growth was an anemic 2.9% per year, and more and more of this was financial fluff.

Viewed from a longer historical perspective: yearly US economic growth after the Civil War averaged 3.4%. The secular downturn in this figure came in 1973, the year when the parities finally collapsed and the floating rates came to stay. Between 1973 and 1993, US economic growth averaged 2.3% By 1993, the total production lost by the US economy in the floating rate era added up to an estimated $12 trillion in 1973 constant dollars. This means a loss of $40,000 per person, enough to pay off the national debt AND restore the entire infrastructure to its 1973 level, according to the calculations of Jeffrey Madrick in his End of Affluence. Madrick forecast that “by the year 2013 the total shortfall, assuming the economy grows at 1 percent a year less than our historical norm, will amount to more than $35 trillion of lost production since 1973.”

32 Million Jobs Wiped Out

In 1982 Bluestone and Harrison set out to examine the ongoing de-industrialization of America, including such phenomena as the runaway shop, plant closings, flight capital, and disinvestment. Their conclusion was that “it is evident that somewhere between 32 and 38 million jobs were lost during the 1970s as the direct result of private disinvestment in American business.” [Bluestone 1982, 8] Many of these job losses were concentrated in the period after Volcker’s appointment to head the Federal Reserve, when the 20% prime rates (and even higher borrowing rates for less preferred customers) provoked a hecatomb of businesses. The losses were heavily concentrated in the basics – auto, steel, and tires. Between January 1979 and December 1980, US automobile producers announced the shutdown of twenty plants employing over 50,000 workers. Because of the loss of business to suppliers of auto parts, materials, and components, these twenty plant closures forced the shutdown of 80 additional plants upstream. Job losses in the subcontractor and supplier network were estimated at 350,000 by the Congressional Budget Office, and at 650,000 by the AFL-CIO.

Youngstown Steel Plants Destroyed by Dynamite

The Demolition of U.S. Steel, Ohio Works (1983) – the functional equivalent of Trump’s economic policies.

On Thanksgiving Day, 1979, when the Volcker interest rate escalation was already in full swing, the US Steel Corporation placed an ad in the New York Times:

The United States Steel Corporation announced yesterday that it was closing 14 plants and mills in eight states. About 13,000 production and white collar workers will lose their jobs. The cutback represents about 8 per cent of the company’s work force. The retrenchment was one of the most sweeping in the industry’s history….

A fourteenth shutdown hit the US Steel plant in Youngstown, Ohio, where an additional 3,500 jobs were lost. Youngstown at that time was still attempting to recover from the closure of the Campbell Works, owned by the Youngstown Sheet and Tube Company, which had obliterated 4100 jobs. In Youngstown, the steelworkers’ union local and area businessmen tried to buy the plants which had been operated by Youngstown Sheet and Tube. The US Steel management fought implacably to prevent the plants from being put back into production. On April 28, 1982, the US Steel managers used high explosives to blow up four blast furnaces at a Youngstown plant. Television crews were present. Neither Nazi Germany nor Tojo’s Japan nor Stalin’s USSR had ever succeeded in blowing up an American steel mill, but Volcker had succeeded. It was in many ways the defining moment of the Volcker era. No fewer than 15 steel plants closed in the spring of 1985, and many of them were also blown up.

No U.S. policy did more to destroy the industrial base of the country than the Volcker 22% prime rate of the early 1980s, which priced most U.S. commodities out of the world market, leading to a wave of of layoffs and plant closures. In line with Trump’s general contempt for exports, Trump also shares in the general Republican hostility to the Export-Import Bank, one of the most powerful engines of U.S. foreign trade:

“Donald Trump Likes Volcker…He praises the former Federal Reserve chairman, slams the Export-Import Bank…On Bloomberg’s With All Due Respect, Trump praised Paul Volcker, the inflation-taming Fed chairman of the early 1980s, as a role model for the type of central banker he would pick. Volcker, now 87, not only had good ideas but the right style, Trump said.”6

All told, plant closures in the American steel industry reduced the nation’s steel producing capacity by a hefty 11%. According to the United Rubber Workers of America, between mid-1975 and early 1981 there were 24 shutdowns of US tire and rubber plants, wiping out 20,000 jobs. It was during this dismal period that the distinction between “sunrise” and “sunset” industries, and among “rust belt”, “frost belt” and “sun belt” economic regions were coined. But almost half the jobs lost to plant closings during the 1970s were lost in the so-called sunbelt states of the south and west. Despite popular delusions, the proportion of pre-1970 plants that were closed by 1976 was higher in the southern states than elsewhere.’ (Tarpley, 1999)

Trump is eager to use double standards to his own benefit. In his speech he proclaimed that:

‘The people who rigged the system are supporting Hillary Clinton because they know as long as she is in charge nothing is going to change.’

People in glass houses should not throw stones. Hillary’s friends are doubtless an unsavory lot, but what of Trump? He has the corporate privateer and sociopath Carl Icahn. He has sociopath Rupert Murdoch, one of the biggest backers of Brexit vandalism. Why take sides in a clash between two socipathic oligarchical factions, neither of which represents “freedom.”

Trump is still gloating about the Brexit vote:

‘Our friends in Britain recently voted to take back control of their economy, politics and borders. I was on the right side of that issue, as you know — with the people — I was there, I said it was going to happen, I felt it — while Hillary, as always, stood with the elites, and both she and President Obama predicted that one and many others, totally wrong.’

The Brexit vote is fast emerging as one of the greatest acts of vandalism in recent history. Its head honchoes, Nigel Farage and Boris Johnson, are loudmouth political adventurers very much like Trump – opportunists on the make with no program and no idea what to do. Plus, the promises made by the Leave campaign were a tissue of lies, as can be seen from the recent antics of Farage:

Some subscribers to the TWSP Morning Briefing struggle to accept that Trump is lying. Worse than just empty promises, Trump is offering a bait and switch that will result in no positive policies, but will leave us with a ruined economy and a vicious police state that even George Bush couldn’t achieve. Hopefully this immediate about-face from Farage and his lying cronies at the “Leave” campaign will instruct our readers as to the dangers of “trusting your gut” in politics, and the necessity of reasoned analysis and a concrete economic program.

“Immigration is just one of the promises that, according to “Remain” campaigners, have evaporated into thin air now the referendum is over….Hours after the last ballots were counted, Nigel Farage, leader of the right-wing United Kingdom Independence Party (UKIP), distanced himself from a pledge by fellow campaigners to divert £350 million ($470 million) on other areas such as the state-run National Health Service.”7

UK farmers, who have heretofore received 60% of their income from EU farm subsidies, now depend on the “leave” coalition to save them from ruin. According to Agra Europe, UK farmers voted 2 to 1 in favor of “leave,”8 despite the hostility of Johnson, Farage and other “leave” campaigners to farm subsidies, and the lack of clear plans to replace this lost income. Agricultural economists expect a ruinous slump in farm prices that is bound to leave the UK’s gullible farmers with an epic case of buyer’s remorse, as their income is rerouted to City of London banks.

“Before the referendum, before the vote, farmers were being told by the Leave campaign, ‘don’t worry, there will be a replacement, the money we’re sending to Brussels will be in a pot and distributed to farmers, the National Health Service, and education,’” stated Belfast-based freelance agriculture reporter, Chris McCullogh.”9

For those still struggling with cognitive dissonance , it is time to meet Nigel Farage, the ghost of Christmas future.

Another concern is Trump’s private interest in public policy matters. Trump’s love of Brexit cannot be separated from the fact that London has now been pushed aside as the most attractive dwelling place for world oligarchs in favor of New York. This is where Trump has property for rent. So he is talking his book, trying to drum up demand for what he has to sell.

Trump’s next point is that the US merchandise trade deficit is unsustainable:

‘Today, we import nearly $800 billion more in goods than we export. Can’t continue to do that.’

True enough, but if you try to eliminate the trade deficit by means of reducing imports alone, then genocide will be the result. To restore the balance of trade, we need a massive increase in high-technology US exports. We need to export valuable modern things like nuclear fission reactors, soon followed by fusion reactors, turnkey factories in many fields of production, pharmaceuticals, and cybernetics – in addition to improving support for US agricultural commodities and other traditional money-makers. We can help these industries compete and elevate producers by mandating a nationalized Federal Reserve System to reduce the cost of capital to zero by launching several trillion dollars’ worth of long term 0% credit. But Trump never challenges the Federal Reserve.

Trump is an enemy of federal taxation. He wants to cut the top IRS personal tax rate from about 40% to 25%, while abolishing the estate tax. In this speech he hints at using tariffs and import duties to replace taxation, long a favorite argument of anti-government crackpots. Trump noted:

‘Our original Constitution did not even have an income tax. Instead, it had tariffs — emphasizing taxation of foreign, not domestic production.’

This sounds good for billionaires, and not so good for John Q. Public. It is also radically anti-historical. In reality, the great Henry Clay never saw a dichotomy between tariff revenue and domestic tax revenue. The imperative was to fund the government and armed forces. How this was done depended on circumstances:

“Henry Clay ‘… spoke out for the protection of domestic manufacturing, “not so much for the sake of the manufacturers themselves, as for the general interest.” “We should thus have our wants supplied when foreign resources are cut off; and we should also lay the basis of a system of taxation, to be resorted to when the revenue from imports is stopped by war,’ argued Clay.”

Trump is always on the alert against foreigners:

‘The TPP, as it’s known, would be the death blow for American manufacturing. It would give up all of our economic leverage to an international commission that would put the interests of foreign countries above our own.’

Yes, the TPP should not be enacted. Clay and other American System leaders were aware of the ulterior motives of some foreigners:

‘“There is a remedy,” said Clay, “and that remedy consists in modifying our foreign policy and in adopting a genuine American system. We must naturalize the arts in our country, and we must naturalize them by the only means which the wisdom of nations has yet discovered to be effectual – by adequate protection against the overwhelming influence of foreigners.”

But Clay was concerned about rich, powerful, and evil adversaries of the United States, not immigrants coming to build a new life. Trump’s hatred of immigrants is matched only by his fawning affection for figures like Saudi merchant of death Adnan Kashoggi, Rupert Murdoch, and other predatory oligarchs.

Some opponents of Trump claim that NAFTA is not that bad, but this is a foolish and suicidal form of argument – a loser. NAFTA has been a disaster, but Trump’s proposed remedies do not go beyond slogans:

‘… under NAFTA (the North American Free Trade Accord, which includes the US, Canada, and Mexico), the US merchandise trade surplus with Mexico, which was $5.4 billion in 1992, has turned into a deficit of $15.4 billion. If, as NAFTA backers claimed, every billion dollars of US exports translates in to 19,000 jobs, then NAFTA has already destroyed 395,200 jobs, many of them in manufacturing. In an interesting twist, [the economist] Palley also listed the world-wide guild of professional free-trade economists, with their deflationary bias as a cause of the possibly looming depression. As Palley summed up the situation:

The past twenty-five years have witnessed a persistent weakening of structural conditions within the US economy. This weakening has been predicated on changes in labor markets which have undermined the position of American workers, polarizing income distribution and increasing job insecurity. The effects of these changes have been obscured by a debt binge by households and government, and by favorable demographic factors. However, households now face increasing financial constraints, government faces political constraints, and the demographic situation is changing radically. At the same time, in the face of increased capital mobility, wages continue to decline and job insecurity widens. These are the grounds for believing that the next economic recession could spiral into a depression.” [Palley, 58] (Tarpley, 1999)

Trump focuses on China’s entry into the World Trade Organization to the exclusion of other factors:

‘From 1947 to 2001 — a span of over five decades — our inflation-adjusted gross domestic product grew at a rate of 3.5 percent. However, since 2002 — the year after we fully opened our markets to Chinese imports — that GDP growth rate has been cut almost in half.’

Monocausal explanations are great for the purposes of the fascist billionaire, but they seldom stand up to rigorous examination. Trump wants to blame everything on Chinese imports, and no doubt these have played a role. But what about the dot com bubble and the resulting economic downturn between 2000 and the start of the Iraq war in 2003? What about the housing and derivatives bubble leading up to the Lehman Brothers/AIG crisis of September 2008, with depressed conditions persisting for years after that? Much can be blamed on China, but we must save a large share of the guilt for Wall Street. But that is what Trump does not want, since he too is a Wall Street operative and puppet.

Trump seldom gets specific about job creation targets, but here he does give a few figures:

‘America’s job creation deficit, due to slower growth since 2002, is well over 20 million jobs — and that’s just about the number of jobs our country needs right now to put America back to work at decent wages. Wages are very low because there’s no competition and they’re going to go up because we’re going to thrive again as a country.’

Notice that Trump now thinks that wages are too low. This contrasts with his opinion expressed in a nationally televised GOP debate held in November 2015, when he thought that wages were too high, and that the minimum wage should not be increased. Then, between Christmas and New Year’s 2015, he said that wages were too low:

‘Real estate mogul and presidential candidate Donald Trump Tweeted that wages in America are too low Monday, but in the November 10th Republican debate stated that American wages were too high. … In the November 10 Republican debate, Trump stated “[t]axes too high, wages too high. We’re not going to be able to compete against the world. I hate to say it, but we have to leave it the way it is.” Trump was responding to a question about the minimum wage …’4

Trump also vastly underestimates the unemployment and underemployment in the US economy. He also underestimates the number of discouraged workers who would like to work but have given up in despair, in part because Trump and his fellow billionaires refuse to pay decent wages.

A serious job creation program would include not 20 million jobs but 30 million new productive jobs in infrastructure, not in gambling casinos, paid for by 0% long-term credit from the Federal Reserve. In addition, we will require a domestic Marion Barry Marshal Plan with 10 million summer jobs, entry-level jobs, and trainee slots financed by proceeds from the US Treasury through the Wall Street Sales Tax. That makes 40 million jobs, and nothing less will bring the US to full employment for the first time since 1945. The key point is that Wall Street and the Fed will be paying for these jobs, since they caused the depression – pure heresy in the eyes of Trump.

In a gesture rife with freemasonic overtones, Trump’s crescendo is a package of seven actions he proposes to take on trade. Be on guard, since the master of hype will try to portray himself as heroic when his promises are often pathetic:

‘Here are seven steps I would pursue right away to bring back our jobs:

No. 1: I am going to withdraw the United States from the Trans-Pacific Partnership, which has not yet been ratified.’

This is a wholly hypothetical promise which costs him nothing, since this deal has not yet passed.

No. 2: I’m going to appoint the toughest and smartest trade negotiators to fight on behalf of American workers.’

Who does that mean? The corporate raider Carl Icahn, the hereditary enemy of workers? Steve Mnuchin of Goldman Sachs and the Soros interests, Trump’s campaign finance czar? Or the unsavory Paul Manafort, from the law firm usually called the Torturers’ Lobby? Trump continues:

No. 3: I’m going to direct the secretary of commerce to identify every violation of trade agreements a foreign country is currently using to harm you, the American workers. I will then direct all appropriate agencies to use every tool under American and international law to end these abuses. And abuse is the right word.

That sounds impressive, but this is again so generic as to commit Trump to nothing whatsoever. Next point:

No. 4: I’m going tell our NAFTA partners that I intend to immediately renegotiate the terms of that agreement to get a better deal by a lot, not just a little, by a lot for our workers. And if they do not agree to a renegotiation, which they might not because they’re so used to having their own way. Not with Trump, they won’t have their own way. Then I will submit notice under Article 2205 of the NAFTA agreement that America intends to withdraw from the deal.

What does he mean when he says “a better deal by a lot, not just a little, by a lot for our workers?” Does he mean labor safeguards written into a new trade deal? A minimum wage and maximum hours? Trump has never cared about workers. Why is he pretending now to value them? Next point:

No. 5: I am going to instruct my Treasury secretary to label China a currency manipulator. Which should’ve been done years ago. Any country that devalues their currency in order to take unfair advantage of the United States, which is many countries, will be met with sharply. And that includes taxes and tariffs.’

It is true that China has driven their own currency down through competitive devaluations as a means of stimulating exports. But the United Kingdom, the country which invented modern competitive devaluation for trade purposes in 1931, has been manipulating the pound shamelessly for decades. Now, through Brexit, the City of London has devalued the pound significantly once again, and will reap some benefits on the export front. At the same time, the US dollar will rise, and US exports will suffer. So will Trump punish currency manipulation and competitive devaluation only when the Chinese do it, or will be put sanctions on the UK, meaning his pals Rupert Murdoch, Boris Johnson, and Nigel Farage?

Next point:

No. 6: I am going to instruct the U.S. Trade Representative to bring trade cases against China, both in this country and at the WTO. China’s unfair subsidy behavior is prohibited by the terms of its entrance to the WTO, and I intend to enforce those rules and regulations and basically, I intend to enforce the agreements for all countries, including China.

Chinese subsidies are outrageous, but we can fight them best with our own export subsidies, such as those available through the US Export-Import Bank, which needs to be expanded. Trump wants to smash the Ex-Im Bank, an import asset of the American people. Here we see that, despite his many makeovers, Trump remains a crypto-free trader. Final point:

No. 7: If China does not stop its illegal activities, including its theft of American trade secrets, I will use every lawful presidential — hey look this is very easy, this is so easy. I love saying this — I will use every lawful presidential power to remedy trade disputes, including the application of tariffs consistent with Section 201 and 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962.

So many numbers may be intimidating to some, but Trump is here attempting a cheap parlor trick. Trump is threatening to invoke emergency retaliatory tariffs of the kind we have seen Obama use, as in the duties of 266% and 522% applied to the dumping of cold rolled steel. These are not permanent structural regulatory safeguards of the type demanded by the Tax Wall Street Party. Trump’s tariffs will disappear when the crisis is over. Ours are designed to stay over the long run and prevent new crises. We need lasting 15% protection.

To put the braggart Trump in proper perspective, let us compare what Trump boasts he will do with what the avowed free trader Obama has already done. Here is a compilation of Obama’s trade and tariff enforcement measures issued recently by the US Trade Representative:

Since President Obama was inaugurated in 2009, the United States has filed 20 enforcement complaints at the World Trade Organization (WTO) – the chief world forum for trade enforcement. That’s more than any other WTO Member.

And the United States has won every single one of those disputes that has been decided by the WTO so far.

Export figures and industry estimates confirm that these enforcement wins are worth billions of dollars combined for American farmers and ranchers, manufacturers of high-tech steel, aircraft, and automobiles; solar energy exporters, cutting edge service providers and many others. And keep in mind that every billion dollars of American goods and services exports supports nearly 5,800 jobs.

For example, since 2009 the U.S. has won significant cases that affect aircraft ($18 billion in illegal EU subsidies), autos and SUVs (illegal Chinese taxes on over $5 billion annual U.S. exports), steel (illegal Chinese taxes on exports once worth $250 million annually), agriculture (India’s illegal ban on U.S. poultry), clean energy technologies, services exports, and access to raw materials and rare earth elements that are key to production of advanced electronic products and other high-quality U.S. products.

The Obama Administration has brought 11 trade enforcement challenges against China, three against India, and several other complaints against a series of major economies including Indonesia, Argentina, the Philippines, and the European Union. To ensure the greatest economic benefits for American workers and exporters, the Obama Administration has used our trade enforcement actions to emphasize opening these large, strategic markets to which the United States exports a diverse array of products and services.’5

It is not clear that Trump will do any better than Obama. That is why the TWSP’s 15% protective tariff is indispensable.

What Trump views as trade abuse is actually a part of a process of de-industrialization which has been afflicting this country for decades. It has been a deliberate process of wrecking plant and equipment at the same time that the labor force is immiserated. The process can be dated back to the wrecking of FDR’s 1944 Bretton Woods world monetary system by Nixon on August 15, 1971. This is important because Nixon is the common matrix for Trump, the late Roy Cohn, the scurrilous Roger Stone, and the sinister Paul Manafort.

The fake oil crisis of 1973 also played a role in setting US de-industrialization in motion. And the transition to free trade was also key:

‘In his useful book, The Myth of Free Trade, economist Ravi Batra stresses that 1973 constituted a turning point in American history, marking the transition from rising real wages to a falling standard of living. However, he fails to relate this to the leading empirical facts of world history in those years, which chiefly involve the collapse of the Bretton Woods system. About this Batra has nothing to say. Instead, he asserts that 1973 marked the transition from protectionism to free trade in American tariff policy. While this is broadly true, the events which marked this shift were initially not so much changes in the tariff per se as they were entropic changes in the world monetary and financial system, which Batra fails to see. He stresses that “in 1973, for the first time in its three-century history, the United States became a free-trade economy, and has remained so ever since. Thus 1973 was also a watershed year as far as America’s foreign commerce is concerned… Never in pre-1973 history did American wages fall while productivity rose… Not until 1973 was America a free trade economy, and not until 1973 was the generally positive link between wages and productivity – expected and preached by economists for decades – severed… Free trade has done to America what even the Great Depression could not do.” [Batra 1993, 41, 47, 51, 53] These valuable insights need to be supplemented by an awareness that, in the absence of a satisfactory world monetary system, trade will suffer no matter what else individual countries may do or not do about their tariffs.’ (Tarpley, 1999)

Globalization or globaloney has a number of characteristic features. If we want to roll back globalization, as we must, we need to address each one of the following points. Free trade is at or near the top of the list, along with the financial globalization that Trump never mentions. But all of these points, without exception, must be tackled if globalization is to be vanquished:

The Ingredients of Globaloney

  1. Floating exchange rates among currencies, with wild gyrations and no gold convertibility.
  2. Hot money speculation, stockjobbing, and usury, culminating in hedge funds and the $150+ trillion worldwide bucket shop of financial derivatives.
  3. Privately owned and privately controlled central banks, with the private Bank for International Settlements as the flagship, the Federal Reserve, the Bank of England, etc.
  4. Free trade, dumping, and the runaway shop, as in NAFTA, GATT, the European single market [a free trade zone associated with the European Union but broader than the EU] , etc.
  5. Secular deflation; depression as cure for inflation (Keynes in reverse).
  6. Deregulation, especially of financial markets, with growing domination by oligopolies and cartels.
  7. Stagnating and declining world production, especially in basic industry and especially in per capita terms.
  8. Casino society, frantically seeking monetary wealth under the constant threat of systemic crisis.
  9. Permanently high unemployment and declining standards of living, with weak labor unions, union-busting, a shrinking middle class, and fabulous wealth for a tiny, parasitic oligarchy of financiers of about 500,000 persons worldwide.
  10. Anti-statism, with the withering away of the national state, its infrastructure, and its social safety net, except when the insolvency of financial institutions threatens systemic crisis (Bush S&L bailout, Greenspan’s backdoor bailout of US banks at Treasury expense, $50 billion Mexican bailout fund, $500 billion Japanese bailout fund, and IMF bailouts funded by taxpayers of IMF member states).
  11. A race to the bottom among nations (and even among states and provinces) to gut health, environmental, safety, and other regulations, while offering tax incentives to venture capitalists.
  12. Oligarchy, more often referred to under such terms as “the establishment,” “the elites,” “the market, “ “market forces,” or “market democracy.”
  13. Class war of the tiny finance oligarchy against the vast majority of humanity. (Tarpley, 1999, p. 80)

Clearly Trump is not going to address these points, especially the ones that are detrimental to his Wall Street masters. Trump is a counter-insurgency operation against the American people. Don’t let him seize power or we will face economic immiseration far worse than any seen so far.

Trump Wants Import Substitution Based on Failed Prebisch School, Scorns High-Technology Export Campaigns So Successful for Asian Tigers

Whether he knows it or not, Trump is definitely very close in his doctrines to one of the failed Latin American economic schools of the latter 20th century. We have seen that Trump is fixated on reducing the merchandise trade deficit by setting up production inside the country to furnish products which would otherwise consume foreign exchange or generate large debts to trading partners. In other words, Trump would attempt to revive the so-called Import Substitution Industrialization (ISI) methods that were common about 1970, and were most associated with the Argentine development economist Raul Prebisch, who became the leader of the leader of the UN agency UNCTAD.10 Despite some initial success, import substitution was unable to provide rapid economic growth, job creation

Despite some apparent gains, import substitution was “both unsustainable over time and produced high economic and social costs.” Given import substitution dependence upon its developed and isolated markets within Latin America, it relied upon the growth of a market that was limited in size. In most cases, the lack of experience in manufacturing, plus lack of competition, reduced innovation and efficiency, which restrained the quality of Latin American produced goods, while protectionist policies kept prices high. In addition, power concentrated in the hands of a few decreased the incentive for entrepreneurial development.

Contrary to its intent, import substitution exacerbated inequality in Latin America. With a poverty rate greater than 30%, the internal demand that import substitution relied upon was not available. Protective policies and state ownership reduced the incentives for business risk, resulting in decreased efficiency. Lastly, the large deficits and debts resulting from import substitution policies are largely credited for the resulting Latin American crisis of the 1980s.11

Much more successful in economic and political terms was the strategy pursued by the so-called Asia Tiger countries, meaning Hong Kong, Singapore, the Republic of China (ROC) on Taiwan, and the Republic of Korea (ROK). Here the emphasis is not on managing and adjusting imports at all, but the policy is rather built around accelerated rates of high-technology, high-value exports. These nations all achieved remarkable rates of economic growth and job creation, especially during the 1980s.

The Tiger model depends on de-emphasizing domestic consumer production while investing in the modernization of export production and national infrastructure. This method provides significant foreign exchange reserves which can be used, not just for currency stability, but mainly for technological sent. By contrast, import substitution burdens the countries that attempt it with an onerous debt load. The export-oriented Tiger methods come from Alexander Hamilton and Henry Clay by way of the Japanese Ministry for International Trade and Industry.12

In the choice between failed, debt-ridden import substitution on the one hand and the methods of the Asian Tigers on the other, Trump has instinctively made the absolutely wrong choice. He has no understanding of a national economy and is clueless when it comes to organizing a broad-based economic recovery.

  1. http://tarpley.net/was-deadbeat-debtor-trump-too-big-to-fail-in-1990/
  2. ‘U.S. Imposes 266% Duty on Some Chinese Steel Imports; Duties, which affect six other countries, intended to punish dumping to improperly gain market share,´ Wall Street Journal, March 1, 2016, http://www.wsj.com/articles/u-s-imposes-266-duty-on-some-chinese-steel-i…
  3. “U.S. wisely gets tough with 522 percent tariff on Chinese steel: Rather than scrap trade agreements, enforce them properly,” Houston Chronicle, May 19, 2016, http://www.houstonchronicle.com/business/outside-the-boardroom/article/5…
  4. http://dailycaller.com/2015/12/28/its-clear-trump-cant-decide-if-wages-a…
  5. Office of the US Trade Representative, Executive Office of the President, “FACT SHEET: The Obama Administration’s Unprecedented Trade Enforcement Record,” https://ustr.gov/about-us/policy-offices/press-office/fact-sheets/2015/j…
  6. See also: againstausterity.org article on US Export-Import Bank http://againstausterity.org/exim; http://www.bloomberg.com/politics/articles/2015-08-04/trump-the-develope…
  7. http://www.nbcnews.com/storyline/brexit-referendum/could-brexit-be-cance…
  8. https://www.agra-net.com/agra/agra-europe/brexit/analysis-what-will-happ…
  9. http://www.andnowuknow.com/buyside-news/brexit-marks-uncertainty-uk-farm…
  10. https://en.wikipedia.org/wiki/Ra%C3%BAl_Prebisch
  11. https://en.wikipedia.org/wiki/Import_substitution_industrialization
  12. Chalmers A. Johnson. MITI and the Japanese Miracle (1982). Stanford University Press.
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