Trump and Putin – How about Getting Rid of Your Nukes?

The United States and Russia remained at odds, continuing military exercises along the borders of NATO, undermining the Intermediate-Range Nuclear Forces Treaty (INF), upgrading their nuclear arsenals, and eschewing arms control negotiations.

“It’s Two Minutes to Midnight,” Bulletin of Atomic Scientists

I, for one, was much disappointed by the Trump-Putin summit — but not for the reasons most others were. I was not hoping that Trump would punch Putin in the nose or insult him or declare new sanctions. Nor was I hoping he would cancel the meeting.

Although Trump’s performance was characteristically tawdry, I don’t share the views of those who thought the meeting was a disaster because Trump didn’t throw a tantrum over Putin’s alleged order to attack American democracy by allegedly “interfering” in the 2016 election by allegedly hacking into the email accounts of Hillary Clinton and the Democratic National Committee. Allegedly. There’s a word that’s gone from the establishment media’s lexicon.

That allegation has been the subject of many claims and indictments, but claims and indictments are not evidence — and that’s what some of us still await: evidence. Amazingly, some who regard themselves as liberals and progressives think that a demand for evidence is itself evidence that the demander is on Putin’s payroll. I’ve stated my lack of fondness for Putin, which may explain why I have yet to see ruble one.

Anyway, I was disappointed in the summit because it apparently gave no great urgency to what should be the priority by the standard of security for all the people of the world: the two powers’ alarming arsenals of nuclear weapons.

I acknowledge that this subject was not completely absent from the two men’s public statements. (I can’t say what went on behind closed doors.) In their public pre-meeting sit-down Trump, to his credit, did express dismay that the US and Russia account for 90 percent of the world’s nuclear bombs. Okay, good. And during the post-meeting news conference, he repeated it: “We have 90 percent of nuclear power between the two countries.” Unfortunately, he brought this up in order to criticize the Mueller investigation into the Trump campaign’s alleged “collusion” with Russia’s alleged rigging of the 2016 election in Trump’s favor. He followed his “90 percent” statement with: “It’s ridiculous. It’s ridiculous what’s going on with the probe.” That was better than nothing, but the threatening nuclear arsenals deserve their own spotlight and should not be relegated to a reason to disparage Mueller’s dubious investigation. Putin also cited, but more vaguely, his and Trump’s deadly arsenal: “As major nuclear powers, we bear special responsibility for maintaining international security.”

What concerns me is not that nuclear weapons were ignored at the news conference, but how they were talked about. Note:

Putin: “It’s crucial that we fine-tune the dialogue on strategic stability and global security and nonproliferation of weapons of mass destruction…. It [the Iran nuclear deal, which Trump has renounced] effectively ensures the exclusively peaceful nature of the Iranian nuclear program and strengthens the nonproliferation regime.”

And Trump: “We also discussed one of the most critical challenges facing humanity: nuclear proliferation…. I think that the United States now has stepped forward, along with Russia, and we’re getting together and we have a chance to do some great things, whether it’s nuclear proliferation in terms of stopping [it], have to do it, ultimately that’s probably the most important thing that we can be working on.”

Nuclear proliferation usually means big powers stopping smaller or aspiring powers (such as Iran, which has not sought nukes, and North Korea) from acquiring or holding on to nuclear bombs. It typically does not mean Russian and US (or British, French, Chinese, Indian, Pakistani, or Israeli) bombs. But, to complicate matters, Trump saidbefore he went to Helsinki for the meeting: “I will be talking about nuclear proliferation because we are massively — you know what we’ve been doing? We’ve been modernizing and fixing and buying, and it’s just a devastating technology. And they, likewise, are doing a lot.”

So maybe they talked about their own nuclear arsenals. But if they did, why didn’t they tell us? And if they didn’t, why not?

According to the Bulletin of Atomic Scientists, “At the beginning of 2018, the US Defense Department maintained an estimated stockpile of 4,000 nuclear warheads for delivery by more than 800 ballistic missiles and aircraft.” This was a reduction from the 5,113 acknowledged in 2009. The Bulletin continued:

Most of the warheads in the stockpile are not deployed, but rather stored for potential upload onto missiles and aircraft if so decided. Many are destined for retirement. We estimate that approximately 1,800 warheads are currently deployed, of which roughly 1,650 strategic warheads are deployed on ballistic missiles and at bomber bases in the United States. Another 150 tactical bombs are deployed in Europe. The remaining warheads — approximately 2,200, or 55 percent of the total — are in storage as a so-called hedge against technical or geopolitical surprises. Several hundred of those warheads are scheduled to be retired before 2030.

In addition to the warheads in the Defense Department stockpile, approximately 2,550 retired but still intact warheads are stored under custody of the Energy Department and are awaiting dismantlement, for a total US inventory of roughly 6,550 warheads.

As we can see, there have been welcome reductions. The Bulletin attributes the reduction in part to the New START Treaty, which took effect in 2011 and will expire in 2021 but can be extended for five more years. However, it wouldn’t take many of those warheads to destroy the world.

So let’s not pop the champagne just yet. For one thing, the US has missiles on high alert, which Barack Obama expressed concern over when he ran for president in 2008 but did nothing about. His lack of action prompted a group of scientists to write Obama in 2016, urging him to “take U.S. land-based missiles off hair-trigger alert and to remove from U.S. war plans the option of launching these weapons on warning. The United States should encourage Russia to follow suit, but it should not wait to act.” The letter noted that “in 1991, President George H.W. Bush took one leg of the U.S. nuclear triad — bombers — off high alert. The time is right to remove a second leg — land-based missiles — from high alert.” (See “The US still keeps hundreds of nuclear weapons on hair-trigger alert — here’s what it means and why it’s a huge risk” and “Reducing the Risk of Nuclear War.”)

What about the Russian arsenal? The Bulletin of Atomic Scientists writes:

As of early 2018, we estimate that Russia has a stockpile of roughly 4,350 nuclear warheads assigned for use by long-range strategic launchers and shorter-range tactical nuclear forces. Of these, roughly 1,600 strategic warheads are deployed on ballistic missiles and at heavy bomber bases, while another 920 strategic warheads are in storage along with about 1,830 non-strategic warheads. In addition to the military stockpile for operational forces, a large number — perhaps almost 2,500 — of retired but still largely intact warheads await dismantlement, for a total inventory of more than 6,850 warheads.

During the past year, Russia significantly reduced the number of warheads deployed on its ballistic missiles to meet the New START limit of no more than 1,550 deployed strategic warheads. Russia had achieved the required reduction by 5 February 2018, when it declared 1,444 deployed strategic warheads attributed to 527 deployed strategic launchers…. The numbers indicate that Russia has reduced the warhead loading on some of its missiles to below what is normally assumed…. This shows that New START puts real constraints on Russia’s deployed strategic forces. The result appears to be an increased reliance on a strategic reserve of non-deployed warheads that can be loaded onto missiles in a crisis to increase the size of the force, a strategy similar to the one the United States has relied on for several decades.

The US and Russia have been modernizing their arsenals, but the US has a distinct advantage because it is so much wealthier. The Bulletin notes that

Overall, Russia’s nuclear modernization effort will present the international arms control community with new challenges. Unless a new arms reduction agreement is reached in the near future, the shrinking of Russia’s strategic nuclear arsenal that has characterized the past two decades will likely come to an end, with the force leveling out at around 530 launchers with roughly 2,500 assigned warheads. But Russia’s financial crisis represents a significant challenge to maintaining even that force level, as exemplified by the delays of several major weapon systems, like the small ICBM (SS-28) and the rail-based ICBM.

The US spends far more on its military than Russia does. Indeed, the recent increase in military spending ($61 billion) exceeded Russia’s entire military budget ($47 billion).

Nevertheless, at the moment the two active arsenals are about the same size, and even though they have shrunk, they are still capable of wreaking havoc with humanity. Anti-missile technology could make this balance more apparent than real. The US left the Anti-Ballistic Missile Treaty in 2001 and has both worked on an ABM system and talked about deploying it in Europe. If such a system really worked (a big if), it would give the US an advantage over Russia because missile a defense could obviously be used offensively by ending the old MAD (mutually assured destruction) approach, which has deterred each side from using their nukes for about 70 years. For its part, Russia claimsto have developed missiles that can evade anti-missile systems.

At any rate, the destructive power of the two powers’ remaining arsenals demands that Trump and Putin should be talking about at least dramatically reducing the size of the stockpiles and reducing the chance of accidental nuclear war. As noted, New START, under which the two countries also halved their arsenals of strategic nuclear missile launchers, will expire in 2021. Will it be extended?

Fox News reported that Putin told Trump that “Russia stands ready to extend this treaty, to prolong it, but we have to agree on the specifics at first.” Putin said that “we have some questions to our American partners [because] we think that they are not fully compliant with the treaty, but this is for experts to decide.”

How about Trump? Reuters reported last year:

In his first call as president with Russian leader Vladimir Putin, Donald Trump denounced a treaty that caps U.S. and Russian deployment of nuclear warheads as a bad deal for the United States, according to two U.S. officials and one former U.S. official with knowledge of the call.

When Putin raised the possibility of extending the 2010 treaty, known as New START, Trump paused to ask his aides in an aside what the treaty was, these sources said.

Trump then told Putin the treaty was one of several bad deals negotiated by the Obama administration, saying that New START favored Russia.

Trump’s making nice with Putin at a summit cannot overshadow what is really going on. Under Trump, NATO, whose rai·son d’ê·tre is Russia and which continues to expand, has troops on Russia’s border. Trump has authorized the provision of lethal aid to Ukraine, something Obama opposed. Trump is militarily engaged, uninvited, in Syria, a Russian ally. Trump is ginning up hostility toward Iran, a Russian ally. Trump has approved new sanctions on Russia and has expelled diplomats. The climate is not good, although it’s apparently too good for Trump’s so-called liberal and progressive antagonists.

The danger that nuclear weapons could be deployed in a US-Russian clash lies not merely in their intentional use. It lies also in their use at the end of a series of mishaps and misunderstandings. Just because we’ve been lucky since 1945 (when the US dropped the first atomic bombs) does not mean we will always be lucky. The big powers should have no higher aim than to reduce — on the way toward eliminating — this threat.

Trump’s boastful militarism and fascination with weaponry should make us all nervous. He likes to say he understands the destructiveness of nuclear bombs, but where Russia is concerned, he does nothing to inspire confidence that he wants to reduce the chances of war.

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A Public Choice Perspective on Trade

Let’s say you could make a strictly economic case for government interference with people’s trading activities, that is, with their ability to cooperate freely with others across the world. (I have no idea what “strictly economic case” even means, but stay with me.) Would we free traders have to give up? No way.

Why not? Because we could deploy solid persuasive public choice arguments against such interference. I like to think of the Public Choice school of political economy (Buchanan, Tullock, et al.) as emphasizing the incentive problem inherent in government policymaking. Where the Austrians emphasize varieties of the knowledge problem — policymakers cannot know what they must know to plan our economic activities intelligently — the Public Choice school focuses on, among other things, the perverse incentives that policymakers, bureaucrats, and citizens face.

Before public choice came along, people tended to operate on a public-interest model of policymaking. They simply assumed that when a man or woman moved from the profit-seeking private sector to the (misnamed) public, or political, sector, he or she suddenly became single-mindedly devoted to the public interest. Egoism gave way to altruism. (Note the additional assumptions that there is such a thing as the public interest and that “public servants” know what it is.) This devotion need not be examined or even questioned; it was axiomatic. If a politician was exposed as corrupt, he was merely an outlier, like the supposed lone “bad apple” who slaughtered noncombatants at My Lai during the U.S. government’s war in Vietnam.

The Public Choice school questioned the hitherto unquestionable. Perhaps, its proponents said, if we assume that people acting politically are similar to people acting privately, we could make better predictions about outcomes. This simple move exposed the conventional perspective as naive. Of course, people are people, whether acting privately or politically. All are interested in looking after themselves — in raising their incomes, influence, and prestige. Political actors are not issued halos and wings when they enter government jobs. But the resistance to the public choice orientation has persisted, and you can detect the opposing model every day — most especially from newscasters and pundits.

I should add that Robert Higgs makes an important point on this matter. Yes, people are indeed people, but people who are attracted to power are not exactly like the rest of us. Lord Acton famously said that “power tends to corrupt,” but Higgs adds, in effect, that power also lures the already corrupted. This makes the public choice case even stronger.

Thus the public choice and Austrian critiques together deliver a one-two knockout punch to government interference with social cooperation. Contrary to the civics textbooks and pundits, politicians and bureaucrats lack 1) insight into what’s really good for us who constitute the public and 2) the incentive to pursue it even if they knew what it was. Even if voters sincerely intend to benefit all of society and not just their own personal interests (as Bryan Caplan suggests), that doesn’t mean those good intentions will be carried into policy. Human beings enact and execute policies.

Now let’s talk about trade. Gather round, folks, and I’ll tell you the story of the great Chicken War of the 1960s. In response to lobbying by special interests, France and Germany raised tariffs on cheap American chicken imports. To “retaliate,” the U.S. government put a 25 percent tariff on (all countries’) light trucks, potato starch, dextrin, and brandy. The truck tariff, which was known as the “chicken tax,” was specifically targeted at Germany. The chicken war lasted from 1961 to 1964, and then it ended — except for one aspect. The tariff on light trucks stayed in place and exists to this day. (For an accounting of the significant unintended consequences of this tariff, see Bryce Hoffman’s “If You Aren’t Worried about a Trade War, You Don’t Know about the Chicken Tax.”)

If the truck tax was retaliation for the European chicken tariff, and the chicken tariff disappeared, why does the truck tax still exist?

It’s not hard to answer that question. Behind the truck tax was a powerful lobby that didn’t give a hoot about America’s chicken farmers. That lobby enjoyed its protection against foreign pickup trucks, not only German but also Japanese. So why would the automakers want to let go of their shelter from competition merely because the chicken farmers were freed from their foreign tax? They wouldn’t, and they didn’t. As a result, Americans pay more for pickups than should have to. (Bryce Hoffman notes that the tariff would have disappeared with the Trans-Pacific Partnership.)

Note the public choice lesson. Bad unintended consequences will likely flow from government policy, regardless of intentions, because it will be driven by concentrated and well-organized special interests and politicians who usually will be more sensitive to those interests, which can deploy money and votes, than to consumers, who are diffuse and unorganized. (We might say that the consumers’ interest is the best approximation of the public interest.)

That’s only part of the picture. Whenever the government has the power to interfere with our trade, it also has the power to exert leverage on others, including other governments, that may have nothing to do with trade. Thomas Jefferson loved to impose trade embargoes, which he called “peaceful coercion.” This week Donald Trump delayed for 30 days the imposition of new tariffs on imported steel and aluminum from the European Union, Canada, and Mexico. He also moved toward canceling those tariffs for Australia, Brazil, Argentina. Is he seeking something in return for scrapping the tariffs? Is he telling the Europeans that if they do not support his hawkish position on Iran, he will go ahead with the trade restrictions? What did he get in return from the other countries?

We don’t know. But if Trump has the power to restrict trade, he has the power to forgo restrictions in return for other things he wants — and those other things are unlikely to be good for most Americans, not to mention the rest of the world.

David Hume said that in proposing government policy, we should assume that the people who will carry them out are “knaves.” That of course means trade policy too.

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The Dangerous Deficit in Trade Understanding

I was chatting with my tobacconist the other day — I have no rabbi, no priest, no minister, no imam, no chiropractor, and no lawyer, but I do have a tobacconist — when it struck me that my trade deficit with his shop is astronomical.

How could I have let this happen? For the nearly 20 years I have been patronizing his venerable establishment — nay, institution — it is I who has pushed money across the counter (okay, plastic). Not once has he pushed even a red cent to me. Come to think of it, this is also the case with Kroger, Walmart, McDonald’s, and a variety of gas stations.

See the pattern? The money moves in one direction only. What the hell is going on!

Oh, I realize that each time I gave those merchants my hard-earned dollars, I received things — but they were mere goods. But money is where the action is. Everybody knows that in any trade, it’s the money side that wins, right? I think I heard Donald Trump say something along those lines, and he wouldn’t lie. He has a very fine brain — just ask him — so he couldn’t be mistaken.

Yet I have this nagging feeling my torment is misplaced. After all, no one forced me into those stores. I had an internal reason; in the case of the tobacco shop, it’s my habit hobby. That’s right: I wanted the pipe tobacco, groceries, double-cheeseburgers (keto style: no bun, no fries), and gasoline. Still, while I buy from those merchants week after week, none of them has ever bought a damn thing from me. Not once have they paid me to write or an edit an article for them. Not one time!

And yet, this thought nags: does it matter?

Let’s approach the matter from a different direction. Whenever I buy from them, I transfer money to which I hold proper title. It wasn’t a gift, so that means I exchanged services to somebody. Interest. This suggests that bilateral exchange is really trilateral exchange, even if one of the parties is not present. We left the barter economy. Maybe it doesn’t matter, then, that those to whom I sell not the same as those from whom I buy. I’m just not seeing a problem here now. What matters is just that I don’t chronically spend more money than I bring in. (Debt, of course, can be employed responsibly.) But as is evident, a “trade deficit” has essentially nothing to do with a budget deficit.

If I’m right about this, then Adam Smith was being anything by hyperbolic when he wrote in The Wealth of Nations that “nothing can be more absurd than the whole doctrine of the balance of trade.”

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Who’s Afraid of Russian Propaganda?

If the reader will indulge me, I want to relate some further thoughts about the concern over Russia and the American political system. For the sake of discussion I will assume that expressions of this concern are sincere, that “Russia” did what it’s alleged to have done, and that the American political system, over which officialdom is fretting, is generally wholesome. (In fact, I believe those assumptions to be rubbish.)

Nothing exemplifies the divide between the intelligentsia and regular people than the apparent divergent reaction to the phrase “exposed to Russian propaganda.” For most politicians and pundits, no words should strike greater fear in our hearts than those words. Nothing — perhaps not even climate change — could be worse. Yet I have the impression that most other people don’t feel that way. I don’t find it coming up in everyday conversation. From that, I infer that regular people have more good sense than most card-carrying members of the intelligentsia (again taking those members at their word and not as mere H. Clinton supporters bent on retribution for the theft of her birthright).

Polls may indicate otherwise, but maybe that’s because people think pollsters will judge them poorly if they appear unconcerned. A close look at what we’re supposed to be concerned about supports my case for apathy.

Yesterday I was reading a Wired article about Cambridge Analytica that contained this sentence:

[Jonathan Albright, research director at Columbia University’s Tow Center for Digital Journalism] was the first to suggest that Russian propaganda had reached millions more people than the initial 10 million Facebook initially acknowledged last fall.

The sentence linked to an Oct. 5, 2017, Washington Post article — “Russian propaganda may have been shared hundreds of millions of times, new research says” — to which I next turned. There I found this:

Facebook has said ads bought by Russian operatives reached 10 million of its users.

But does that include everyone reached by the information operation? Couldn’t the Russians also have created simple — and free — Facebook posts and hoped they went viral? And if so, how many times were these messages seen by Facebook’s massive user base?

The answers to those questions, which social media analyst Jonathan Albright studied for a research document he posted online Thursday, are: No. Yes. And hundreds of millions — perhaps many billions — of times.

Paraphrasing Albright’s work, Post writer David Timberg writes:

In other words, to understand Russia’s meddling in the U.S. election, the frame should not be the reach of the 3,000 ads that Facebook handed over to Congress and that were bought by a single Russian troll farm called the Internet Research Agency. Instead, the frame should be the reach of all the activity of the Russian-controlled accounts — each post, each “like,” each comment and also all of the ads. Looked at this way, the picture shifts dramatically. It is bigger — much bigger — but also somewhat different and more subtle than generally portrayed.

The Post explains that Albright looked closely at six of the 470 alleged “Russian-bought [Facebook] pages and accounts [since closed down] … and also has downloaded the most recent 500 posts for each of them.” The Post continues:

For six of the sites that have been made public — Blacktivists, United Muslims of America, Being Patriotic, Heart of Texas, Secured Borders and LGBT United — Albright found that the content had been “shared” 340 million times. That’s from a tiny sliver of the 470 accounts that have been made public. Even if those sites were unusually effective compared to the 464 others, Albright’s findings still suggest a total reach well into the billions of “shares” on Facebook.

Frightened yet? Well, hold on.

The Post explains that Albright measured the Russian impact first by “shares”: “how often a post may have made its way into somebody’s Facebook ‘news feed’ — without determining whether any of these users actually read the post” (emphasis added). But more importantly, he is also measured it by “interactions”: “the number of times individual users acted on what they had read by sharing a post with their Facebook ‘friends,’ hitting the ‘like’ button, making a comment or posting an emoji symbol.”

That measurement for those six accounts, Albright’s research showed, was 19.1 million. That means that more people had direct ‘interactions’ with regular posts from just six accounts than saw the ads from all 470 pages and accounts that Facebook has identified as controlled by the Russian troll farm in St. Petersburg, called the Internet Research Agency.

To recap, Russians posted stuff on Facebook that came across millions of people’s news feeds to which many of those people reacted in one way or another. No one can say the material — which contained content sympathetic to conservative and progressive causes, as well as uncontroversial statements — was precisely targeted (as though that were some kind of science) or that anyone actually read it. Sharing, “liking,” commenting on, or posting an emoji symbol to something in a news feed is no guarantee that any particular person paid close attention to or even read that particular item. In other words, we’re given no grounds to believe that this Facebook activity was of any significance whatever.

That conclusion is reinforced by what the Post goes on to tell us:

The other revelation in Albright’s download, including thousands of posts he has put online in an interactive graphic, is that most of them have nothing to do with the Nov. 8 election. Instead they are tailored to fit seamlessly into the ordinary online conversation of their particular audiences — politically activated African Americans, gay women, Muslims and people concerned about illegal immigration, Texan heritage or the treatment of veterans. There is talk of political issues, but relatively little about voting for Republican Donald Trump or against Democrat Hillary Clinton. [Emphasis added.]

If that is so, then how could it have affected potential voters? If that’s the best Putin can do, then why worry? I’d worry more about the Keystone Kops.

Albright thinks what the Russians were up to was keeping people at home rather than getting them to vote one way or other: “A lot of these posts had the intent to get people not to vote.”

How can he know that? Unless a post says, “Boycott the election.” or “Stay home on November 8,” how can one tell a right-wing post intended to keep people home from one intended to mobilize the Trump vote? You can’t.

You especially can’t when the posts included these:

“Elvis was pretty good, but he wasn’t Chuck Berry.”

“When a rapper doesn’t need to swear in every line you know they actually have talent! And some brains.”

“Today, those of us in America who see what [sic] happening to our country, to our freedom, to our future are really alarmed. We don’t want that [sic] a free America will only be a legend to our grandkids. But we can change the situation, because America deserves better.”

“Good morning, dear patriots! Thank God for another day. Don’t waste it!”

“Rise and shine, America! It’s a new day. God bless you!”

“Yes, I’m lesbian and proud. No, I’m not going to make out with a girl for your entertainment!”

And let’s not overlook this one: “What do you want for Christmas”?

Some posts contained statistics and dollar figures, like: “Obama is going to admit 10,000 Syrian refugees, about 72% of whom are men of military age. Refugees are pouring into our great country from Syria. We don’t even know who they are. They could be ISIS. They could be anybody. What’s our president doing?”

Are these numbers accurate? Hell if I know. A better question is this: don’t we routinely see the same sort of stuff from domestic sources?

If we believe the people who claim to be so concerned about Russian Facebook activity, we really ought to be concerned about something much deeper: the apparent fragility of American society. For if the Russians can strike a propaganda blow comparable, as some have ludicrously said, to Pearl Harbor and 9/11, isn’t that also true for any number of domestic websites across the political spectrum? What difference does it make that one source is Russian and the other American? You need to be skeptical about any political speech, regardless of its source; therefore, knowing the source is not important in appraising a statement. We live in a global marketplace of ideas; it’s time we got used to the fact that assertions can come from anywhere. And as long as the U.S. government is policing (often bombing) the world, we should not be surprised if people outside the country may wish to weigh in on American elections. Can you blame them?

Most politicians and pundits don’t see it that way. So they want direct action to keep our politics — WARNING: swallow whatever you’re drinking or you’ll spit it on your keyboard — pure. Yet the people who would crack down on social-media companies and the internet generally to prevent alleged Russian propaganda are logically committed to similar restrictions on domestic sources. Why is homegrown propaganda good and foreign propaganda (excepting Israel’s) bad?

Of course, ridding the political system of propaganda would pose a problem: who would be empowered to decide what is propaganda and what is legitimate campaign content? No doubt a bipartisan commission — modeled on the presidential debates commission — could be arranged.

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Economic Nationalism: Elitism in Populist Clothing

My old friend and former American Conservative editor Dan McCarthy gets it all wrong about Donald Trump’s “national security” tariffs on aluminum and steel.

I won’t discuss Dan’s strictly economic case for the tariffs — I’ve already discussed this— but I want to draw attention to a few other things, beginning with his lament — which is embraced by many other conservatives and progressives — that the American economy has become a “service economy.” In fact, all economies are service economies, as Bastiat well understood. There is nothing intrinsically better about heavy industry. People grow richer when they produce things that other people value. We have no grounds to disparage “services.”

Dan shows he’s not keeping up when he writes, “[A] middle class is hard to imagine in a postindustrial economy consisting of a tiny capital-controlling elite and a vast population of Amazon warehouse workers.” While I oppose all government measures that have created and fostered the capital-controlling elite, Dan is wrong to disparage service workers as mere warehouse drones. (Not that this sort of work is per se deserving of disparagement.) Paul Thanos writes:

The services sector is wide and diverse and covers a wide array of sectors including retail, financial services, digital services, real estate, hospitality, education, health, social work, computer services, recreation, media, communications, and electricity, gas and water supply.

While employment in manufacturing has indeed declined — beginning before the demonized NAFTA, WTO, and Chinese membership in the latter — manufacturing output has done the opposite. As Mark Perry points out:

In inflation-adjusted constant 2014 dollars, US manufacturing output has increased more than five-fold over the last 67 years, from $410 billion in 1947 to a record-setting level of output last year of $2.09 trillion.… Although we frequently hear claims that the US manufacturing sector is dying or in a state of decline, manufacturing output in the US, except during and following periods of economic contraction like the Great Recession, has continued to increase over time, and reached the highest level of output ever recorded in 2014.

It is mainly technology, not trade, that has done away with old-style factory jobs, so there aren’t so many jobs for Trump’s tariffs to save. Dan says little about the many people who could lose jobs — in export and steel- and aluminum-using industries — because of the tariffs. How is that good for “the country” or the middle class?

But doesn’t the elimination of jobs create hardship for those who have to find new work? Of course. Life is change and adjustment. Instead of trying to thwart that inexorable process, the government should remove its special-interest impediments to adjustment, such as barriers to economic and geographical mobility, among them occupational licensing and land-use restrictions. (See my “How the Government and Special Interests Thwart Economic Mobility.”)

Nor need we worry that manufacturing is down as a percentage of GDP. Perry again:

The decline in manufacturing’s share of U.S. GDP over the last forty years is nearly identical to the decline in world manufacturing as a share of world GDP, which fell from 26.6% in 1970 to 16.2% in 2010. Therefore, we can conclude that the declining share of manufacturing’s contribution to GDP is not unique to America, but reflects a global trend as the world moves from a traditional manufacturing-intensive “Machine Age” economy to more a services-intensive “Information Age” economy. [Emphasis added.]

These developments, of course, have come in an economic order that is far from free. Corporatist government intervention has certainly distorted development here and abroad. But we can be confident a truly free market would also have seen the emergence of a “services-intensive ‘Information Age’ economy.” The big difference, I surmise, is that without government privileges, capital would be more widely owned and, as earlier libertarians predicted, bosses would be hunting up workers rather than vice versa.

Be that as it may, Dan is wrong to believe the “service economy” imperils the middle class. Yes, it’s shrinking, but that’s because people are moving up and out of it. Donald Boudreaux writes: “The American middle class, if it is disappearing, is disappearing – contrary to Mr. McCarthy’s implication – not into the lower class, but into the upper class.”

That calls for emphasis. So let’s turn to Scott Sumner (pay attention to the graph Sumner displays): “The main reason that the middle income group has shrunk is that more and more Americans have incomes above the (arbitrary) cut-off point, and fewer and fewer are either “middle income” or poor.”

Dan also buys the national-security argument for the tariffs, something Trump’s own secretary of defense [sic] does not:

[T]he US military requirements for steel and aluminum each only represent about three percent of US production. Therefore, DoD does not believe that the finds in the [Commerce Department] reports impact the ability of DoD programs to acquire the steel or aluminum necessary to meet national defense requirements.

Moreover, if the U.S. government were not policing the world, its demand for resources and labor would shrink considerably, leaving them available for more and better consumer goods. (For more on the national security canard, see this and this and this.)

Dan warns that if the government does not support strategic industries, the country won’t have the capacity to fight and win wars. He has the Civil War and World War II in mind. This requires further examination. One may reasonably attribute many evils to Lincoln’s violent crusade to preserve the Union, including the emergence of a continental, then hemispheric, then global empire that has wreaked havoc for generations. (Secession would have cut the distance of the Underground Railroad dramatically, shortening the escape route for self-liberated slaves, who would no longer be subject to the federal fugitive-slave law.) About World War II, may I point out that this horror could not have taken place had the U.S. government not had the resources to enter the Great War in 1917? Let’s please do a full accounting. World War II gave a big boost to the Soviet Union and the Chinese communists: aren’t those also to be chalked up as products of the U.S. government’s access to awesome industrial power?

I also want to highlight Dan’s mischaracterization of those he calls “free-trade ideologues” and “extreme free-traders.” He writes:

Free-traders are not indifferent to national security nor blind to the benefits a nation derives from having a middle class. But the priority of goods is different: Free-traders tend to believe that only by making economic efficiency the supreme goal of public policy can those other ends be achieved. Division of labor produces greater wealth, and so free trade makes everyone better off, with the harm to those whose manufacturing jobs are lost outweighed by the good that comes from, say cheaper flat-screen televisions. Dollars decide. The figures are the outward and visible signs of the fundamental economic truth. [Emphasis added.]

The economics discipline certainly has had many practitioners who appear to hold efficiency as the supreme goal of public policy. But radical free-traders never put their main case in those terms. From Adam Smith to Richard Cobden and John Bright to Frédéric Bastiat to Lysander Spooner to Henry George to Herbert Spencer to William Graham Sumner to Benjamin Tucker — and right on through to Ludwig von Mises, Milton Friedman, and Murray Rothbard, free trade was a primarily matter of individual freedom and the peaceful social cooperation it spawns. Dollars don’t decide. People do.

Yes, the “system of natural liberty” has the invisible-hand effect of enabling people to get the most value at the lowest cost, but “efficiency” was not to be the goal of government policymaking. (See Rothbard’s “The Myth of Efficiency.”) Let’s not confuse principled free-traders with the technocratic professors who spend their time scribbling equations, drawing curves, and describing one-dimensional “economic man’s” pursuit of material wealth. The free-trade movement, which coincided with the antiwar movement, aimed to liberate people so they could make better lives. (To see why economics is not essentially about wealth and efficiency, see my “The Ubiquity of Economic Phenomena.”)

Earlier Dan writes,

Economic nationalists do not accept the blame made by extreme free-traders that any degree of industrial protection must inevitably lead to less national wealth. But so what if it does? If the price of national security and a durable free middle class is a modest reduction in gross domestic product, the economic nationalist is willing to pay it.

Evidently the economic nationalist is not only willing to pay that price himself; he’s also willing to force it on everyone else. What Dan calls “a modest reduction in gross domestic product” may mean a great deal to the poor who struggle to make ends meet, not to mention advance. At any rate, that price isn’t required for a durable and growing (upper) middle class (and beyond) or security. It’s all cost and no benefit.

An indication of the flaw in Dan’s analysis can be found in this sentence: “For 25 years, free-trade orthodoxy has been a bipartisan consensus among America’s policy elite.” Really? Free-trade rhetoric and a lowering of tariffs (mostly in other countries because U.S tariffs were already low) — yes. But the so-called free-trade consensus has produced government-to-government trade agreements that, while moving tariffs in the right direction, have also included carve-outs for American cronies, such as sugar producers, and imposed rigid freedom-infringing intellectual-property regimes on developing countries. Alas, Dan has allowed himself to be fooled by labels.

Dan’s preference for economic nationalism misses something essential: it is elitism in populist clothing. Politicians, bureaucrats, and their “experts” — that is, an elite — would make life-altering decisions for the rest of us. He mocks free-traders for thinking that the “middle class … must take care of itself.” Who does he think should take care of it? Why, better “leaders in Washington” of course.

“Economic nationalism,” he writes, “requires constant balancing and adjustment if it is to be pursued correctly.” And just who is qualified for that delicate job (and why would the voters recognize him)? Dan ought to reread F. A. Hayek’s Nobel address, “The Pretence of Knowledge.” He should also reacquaint himself with the incentive problems elaborated by James Buchanan, Gordon Tullock, and the public choice school.

“Economic nationalists,” Dan writes, “are intent upon protecting not only certain industries but also a multilayered free-market political and economic order that is anchored by a healthy middle class” (emphasis added). Right, and George W. Bush “abandoned free market principles to save the free market system.”

Economic nationalism, obviously, is a kind of nationalism. Thus it’s tribalism, and tribes have a central leadership that demands sacrifice in the name of collective welfare and security. Another nationalist, John F. Kennedy, said, “Ask not what your country can do for you. Ask what you can do for your country.”

“Neither half of the statement,” Milton Friedman wrote in 1962, “expresses a relation between the citizen and his government that is worthy of the ideals of free men in a free society.”

Radical free-traders recognize the glaring category mistake in Kennedy’s admonition: a country can neither do things for you nor have things done for it.

What free traders oppose and economic nationalists embrace is the presence of rulers who do things to you.

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Trading Places

“What protection teaches us, is to do to ourselves in time of peace what enemies seek to do to us in time of war.” –Henry George

When Donald Trump can propose tariffs on imported steel, aluminum, washing machines, and solar-panels without being roundly booed off the stage, one has to wonder if reason has any power to win the day. Is this truly a democracy of dunces?

Trade is really not that complicated. Kids do it every day, and they know what they’re doing. But something happens when they grow up. Most people never grasp the most basic economics. They harbor what Bryan Caplan calls an anti-market bias. This seems in conflict with Adam Smith’s famous “propensity to truck, barter, and exchange one thing for another,” but that might just mean that people’s explicit notions conflict with their implicit, unacknowledged guide to everyday activities. They also rarely hear anyone make the clear principled case for free trade. Almost everyone in public life is a protectionist to some extent. Even those who lean toward free trade talk as though countries — rather than individuals — trade. Hence their favorable reception of government trade agreements. Once you buy into that sort of collectivism, you are bound for trouble. (Gary Johnson was no help at all in the 2016 campaign. Merely declaring yourself and your running mate “the free traders in the race” — without explanation — teaches no one anything.)

Beyond that, most people have no incentive to explicitly cultivate the economic way of thinking. Each person’s one vote amounts to squat, so voters have no incentive to acquire the tools with which to judge political candidates, who as officeholders have a lot to say about economic matters, e.g., imports, taxation, and regulation.

Still, Americans trade every day with others, so they implicitly “know” why trade is good and why restriction is bad. They like variety, choice, and bargains. Yes, they are nationalists, so they think differently about trade the moment goods and money cross a national boundary. They see virtue in buying “American,” even if “American” means many foreign factors of production. Nevertheless, when they shop, most of the time they act like free traders.

But come on! Even with these headwinds, we free traders — we advocates of the liberty — ought to have prevailed. “Money buys more under free trade,” goes an old British Liberal Party slogan. Why isn’t that persuasive? Perhaps it’s because people don’t ever hear it said. Perhaps it’s too logical, too simple.

“Trade wars are good,” Trump says with characteristic aplomb, “and easy to win.” Well, presidents always think about wars, trade or otherwise, that way. After all, they aren’t on the front lines. (I think of the line attributed to Bastiat: “When goods don’t cross borders, soldiers will.”) With trade wars the front lines are populated by consumers who face higher prices and the industrious folks who want to export their products but can’t or who use now-higher priced imported materials and machines. They get hurt, but most people, being economic illiterates, won’t know it’s the trade restrictors who have inflicted the casualties. In other words, they overlook “what is not seen,” as Bastiat would put it. So Trump will get off scot-free. True, some writers will identify the true culprit — George W. Bush and Barack Obama have been faulted for their steel and tire tariffs — but who reads those writers besides those who already understand? We’re all prone to confirmation bias.

Anyway, here’s the important stuff to keep in mind.

• We live in a world of scarcity, which means we constantly have to make choices and face trade-offs. Time, energy, labor, and resources used in one way cannot be used in another. Therefore, if the government puts its thumb on the scale for one industry or firm, other industries and firms will be unable to obtain the resources and labor services they need to serve consumers, who will have less money after paying higher prices to buy other things.

• We work to live, not vice versa. It shouldn’t take an Adam Smith to recognize that the purpose of production is consumption.

• Individuals, not nations, trade. Remind yourself of this truism and many fallacies melt away. I have no conflict of interest with Chinese or Canadian steelmakers or other foreign producers. On the contrary, we have a harmony of interests.

• Trade is positive-sum, not, as Trump emotes, negative sum. At the moment of an exchange, both parties expect to benefit and can do so — or else they would not trade. (One or both may later decide they’ve made a mistake, but that this irrelevant.)

• Exports pay for imports. The “wealth of nations” does not consist of cash. It consists of access to goods and services. We want what money can buy. But we have to give something up to get what we want. If we didn’t want to buy, we would need to sell. It would be nice if we could get things without having to give up anything, but everyone is in the same boat, so that is not to be.

• “Trade deficits” are not bad. Who cares if in the aggregate the individuals who comprise Group A buy more from the individuals who comprise Group B than the individuals in Group B buy in the aggregate from the individuals Group A? A “trade deficit” will simply be the counterpart to a capital-investment account surplus. Foreigners can’t spend dollars at home, so exporters have essentially two choices about how to use their dollars: buy American-made goods or invest in the United States. (Trump and his team of restrictionists want foreigners to both buy American exports and invest in the United States, but you can’t spend a dollar more than once.) Here is where the typical trade restrictionist shows his lack of discernment: he will start talking about government budget deficits. Now it is true that government debt is one of the things foreign holders of dollars can invest in. But here’s the thing: they couldn’t do it if the U.S. government weren’t running deficits! Balance the budget (after at least drastically shrinking it) and that problem disappears. It’s completely under the politicians’ control. Let’s stop scapegoating China for buying federal debt instruments.

• Finally, you cannot advocate trade restrictions without also advocating state-bestowed privilege. So if you are offended by privilege, you must oppose all trade restrictions. Restricting trade on behalf of a relatively few steelworkers and firms must — must — privilege them over the vast majority of American workers and firms and all consumers. It cannot be otherwise. A few jobs are saved — and in this age of robotics, I do mean a few — at the expense of the many. Why should those few get special government treatment? That question has to be answered before anything else.

When I raise this point with interlocutors, I often hear this comeback: So protect everyone! In other words, since restrictions (taxes) on steel and aluminum imports harm makers and exporters of, for example, autos, airplanes, and spare parts, all we have to do is protect them against their competition. The logic is that all firms and workers should have their foreign competitors hobbled. Then all will be fine. Will it?

Um, no, it won’t be. To see why, imagine that the government built an effective real wall against all foreign goods with summary execution of smugglers. No producer would have to worry about foreign competition. Would we all really be better off? Of course not; we’d all be poorer. Specialization and the division of labor — let’s call it social cooperation — make everyone richer. But, as Adam Smith famously noted, “the division of labor is limited by the extent of the market.” The smaller the market, the less refined the division, the result being fewer goods, more expensive goods, and inferior goods compared to what we’d otherwise in a larger trading area. You can see this by envisioning life in a city that did not permit any outside products (imports): the residents could buy only what someone in that city could make. Sound good to you?

Any constriction of the market area is a move toward literal self-sufficiency, and nothing would guarantee poverty like self-sufficiency. (See Bastiat’s Economic Harmonies for details.) And don’t forget: every producer is also a consumer.

Money buys more under free trade, dammit, and that means new opportunities for people in their role as producers.

The “protect everyone” solution, which should appall anyone who opposes big government, also overlooks what the price system does: it guides (not allocates) resources and labor toward what consumers want most. Remember, at any given time, we can’t have it all (although in time, technology moves us in that direction). When the government restricts trade, it distorts prices and messes up this sensitive guidance system. Someone explain how such disruption and the resulting destruction of wealth make for national security. Moreover, trade wars can become shooting wars. Heaven save from a president emboldened by a belief that the country is economically self-sufficient. (For a debunking of the national-security argument for trade restriction, see this and this.)

And what makes anyone think politicians, bureaucrats, and their appointed “experts” know better how labor and resources should be used? Don’t say those public servants will seek to emulate the market. Why emulate it when we can have the real thing?

So trade restrictionists: stop telling yourself and others that your policies will benefit “the country” — that you’re putting “America First” — because all they would do is (temporarily) benefit a select, well-connected few at the expense of everyone else. The truth doesn’t sound nearly as noble.

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