Trump’s na­tion­al­ism will pre­serve in­ter­na­tional sta­bil­ity

The pres­i­dent-elect has got it right, bring­ing change that is over­due

The Washington Times Daily - - OPINION - By Peter Morici Peter Morici is an econ­o­mist and busi­ness pro­fes­sor at the Univer­sity of Mary­land, and a na­tional colum­nist.

Econ­o­mists and for­eign pol­icy ex­perts fear Don­ald Trump’s eco­nomic na­tion­al­ism will dis­rupt the global in­sti­tu­tions that have fos­tered in­ter­na­tional eco­nomic co­op­er­a­tion and se­cu­rity for seven decades and in­sti­gate chaos. For­tu­nately for un­let­tered folk, Mr. Trump’s got it right and the ex­perts are wrong. Rec­og­niz­ing high tar­iffs and cur­rency ma­nip­u­la­tion ex­ac­er­bated the Great De­pres­sion and con­trib­uted to the rise of mil­i­tarism in Ger­many, Italy and Ja­pan, after World War II, the United States and its al­lies es­tab­lished the Gen­eral Agree­ment on Tar­iffs and Trade (which later be­came the World Trade Or­ga­ni­za­tion) to lower tar­iffs and other bar­ri­ers to trade, the In­ter­na­tional Mon­e­tary Fund to po­lice na­tional ex­change rate regimes, and the World Bank to pro­vide as­sis­tance to de­vel­op­ing coun­tries.

The GATT was in­tended to link to­gether in­sti­tu­tion­ally sim­i­lar mar­ket economies and en­cour­age in­ter­na­tional com­merce based on com­par­a­tive ad­van­tage. Those were sup­posed to cre­ate bet­ter pay­ing jobs in ex­port in­dus­tries to re­place those lost to im­ports — Amer­i­can work­ers would move into au­tos, in­dus­trial ma­chin­ery and high tech as they ceded mar­kets in footwear, tex­tiles and fur­ni­ture.

Things have not worked out that way.

As GATT mem­ber­ship expanded to in­clude Ja­pan and other Asian na­tions, ar­cane forms of pro­tec­tion­ism, mer­can­til­ism and cur­rency ma­nip­u­la­tion of­ten re­placed high tar­iffs and more trans­par­ent bar­ri­ers to trade. Amer­i­can in­dus­tries such as elec­tron­ics and au­tos were tar­geted by for­eign gov­ern­ments and car­tels and se­verely dam­aged. Too few de­cent pay­ing jobs in ser­vices were cre­ated to re­place em­ploy­ment lost in man­u­fac­tur­ing.

Blue col­lar work­ers were ren­dered ob­so­lete. Mid­dle class fam­i­lies in the Mid­west and South were re­duced to poverty and all but ig­nored by Wash­ing­ton — tossed a few bones through ex­tended un­em­ploy­ment ben­e­fits, food stamps, Med­i­caid and in­ad­e­quate re­train­ing pro­grams.

Dis­rup­tions to U.S. la­bor mar­kets, as much as global po­lit­i­cal cor­rect­ness (re­mem­ber folks rail­ing against pro­posed con­ver­sion to the met­ric sys­tem in the 1970s), cre­ated the Rea­gan Democrats who put the Gip­per in the White House. He eased bur­dens by im­ple­ment­ing the Chrysler bailout (ini­ti­ated in 1980 by Jimmy Carter), ne­go­ti­ated re­stric­tions on Ja­panese car im­ports and chal­lenged the pri­vate sec­tor to cre­ate new in­dus­tries with lower taxes and lighter govern­ment reg­u­la­tion.

The lib­eral in­ter­na­tional eco­nomic sys­tem also tends to en­able the worst preda­tory in­stincts of de­vel­op­ing coun­try gov­ern­ments by af­ford­ing them special and dif­fer­en­tial treat­ment.

The WTO and IMF hue to the no­tion that high tar­iffs and other more mer­cu­rial bar­ri­ers to im­ports and for­eign in­vest­ment, ex­port sub­si­dies and cur­rency ma­nip­u­la­tion en­cour­age in­ef­fi­ciency among Amer­i­can work­ers and busi­nesses but in­sti­gate en­ter­prise among their Chi­nese and other de­vel­op­ing coun­try coun­ter­parts. For ex­am­ple, China was per­mit­ted to join the WTO in 2001 while main­tain­ing 25 per­cent tar­iffs on cars, byzan­tine reg­u­la­tions on for­eign com­pa­nies and ac­cord­ing to World Bank es­ti­mates, a cur­rency trad­ing at half the value it would be worth.

An on­slaught of im­ports have ham­mered down U.S. growth, and weak­ened the ca­pac­ity of the Amer­i­can econ­omy to both sup­port both a mil­i­tary with global re­spon­si­bil­i­ties and ad­dress do­mes­tic so­cial needs on a par with other in­dus­tri­al­ized na­tions.

Se­cu­rity ar­range­ments in place since World War II in Europe (NATO) and with al­lies in Asia re­quire that the United States pro­vide the bulk of per­son­nel, naval, air and other re­sources to ad­dress Rus­sian threats in Eastern Europe, ter­ror­ism in the Mid­dle East and Bei­jing’s provo­ca­tions in the South China Sea, while slow growth and demo­cratic pro­cesses in­creas­ingly im­pel Wash­ing­ton to as­sist cit­i­zens and states with health care, ed­u­ca­tion and other needs.

Those con­tra­dic­tions are un­sus­tain­able, and re­spon­si­bil­i­ties in in­ter­na­tional eco­nomic and se­cu­rity ar­range­ments must be re­bal­anced if Amer­i­can pros­per­ity is to be re­stored and global se­cu­rity is to be pre­served.

That is some­thing or­di­nary vot­ers who elected Mr. Trump sense but eco­nomic and for­eign pol­icy ex­perts refuse to grasp.

Don­ald Trump’s call to rene­go­ti­ate in­ter­na­tional trade agree­ments — for ex­am­ple, the rules for com­merce with China un­der the WTO and IMF — and to re­quire Ger­many, Ja­pan and others to pay their fair share of the de­fense bur­den is sim­ple eco­nomic ne­ces­sity.

Granted, he has threat­ened high tar­iffs and to with­draw the pro­tec­tion of the Amer­i­can mil­i­tary from al­lies who don’t pay up, but past ef­forts to bring pow­ers like China and Ger­many to rea­son on trade and de­fense is­sues with­out such threats have failed.

Mr. Trump is no wreck­ing ball — just a change agent, long over­due.

Blue col­lar work­ers were ren­dered ob­so­lete. Mid­dle class fam­i­lies in the Mid­west and South were re­duced to poverty and all but ig­nored by Wash­ing­ton.

IL­LUS­TRA­TION BY HUNTER

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