Trump’s economic advisors

“It is a horrible deal, really horrible, but we’re going to fix that”

This is any particular quote from Trump but applicable to many accords – from NAFTA, the Trans-Pacific Partnership and to many bilateral accords, most recently his attack on he  South Korean Trade Agreement.   The same quote can be said of the Iran Nuclear deal and the Paris Accords on Climate Change Mitigation.   Everything is blamed on prior administrations, but most of the blame still goes to President Obama.

A minor case in point –  on January 12, 2018,  Trump cancelled a trip to the US embassy in London, citing Obama poor decision in moving the Embassy at a cost of 1.2 billion dollars.   It was decided upon by President Bush and not Obama.   Trump rarely lets facts get in his way.

Gary Cohen,  was the head of the National Economic Council,  and chief economic advisor to Trump.   He is generally accredited for Trump’s tax cut and jobs program, signed into law on December 22, 2017.   On March 6, 2018,  Gary Cohen resigned in March, just before the imposition of tariffs on aluminum and steel.  It was widely reported that he was against the tariffs.  Larry Kudlow has been appointed to this position.   Kudlow is a strong believer in  supply-side economics, which means that a cut in federal taxes, will stimulate the economy sufficiently to make up for the loss in tax revenue.  He been dead wrong a number of times, beginning with the opinion that tax increases would dampen the economy during the Clinton administration.  Just the reverse happened, and the economy boomed after this.

Kudlow was a strong advocate of George W. Bush’s substantial tax cuts, and argued that the tax cuts would lead to an economic boom of equal magnitude. After the implementation of the Bush tax cuts, Kudlow insisted year after year that the economy was in the middle of a “Bush boom”, and chastised other commentators for failing to realize it. Kudlow firmly denied that the United States would enter a recession in 2007, or that it was in the midst of a recession in early to mid-2008. In December 2007, he wrote: “The recession debate is over. It’s not gonna happen. Time to move on. At a bare minimum, we are looking at Goldilocks 2.0. (And that’s a minimum). The Bush boom is alive and well. It’s finishing up its sixth splendid year with many more years to come”. In a May 2008 column entitled “‘R’ is for ‘Right,'” Kudlow wrote: “President George W. Bush may turn out to be the top economic forecaster in the country”. By July 2008, Kudlow continued to deny that the economy was looking poor, insisting that “We are in a mental recession, not an actual recession.” Lehman Brothers collapsed in September 2008, creating a full-blown international banking crisis.

Larry Kudlow is well educated, articulate and  very straight forward.  He has been a regular commentator on MSNBC.  His comments is generally appreciated, as he is well informed.  However,  he has been frequently wrong on the basic moves of the economy, I believe because of his philosophical perspective of less government intervention.   This has been chronicled in a book entitled Superforecasting (2015).   The book explains how experts in various fields, do no better than amateurs.

Two key advisers right now, are Peter Navarro, Director of the National Trade Council  and Wilbur Ross,  Secretary of the Commerce Department.   In many administrations, these organizations and individuals might not receive much attention, as they engage in behind the scenes negotiations on trade and commerce.   However,  as fears of a trade war with China,  intensify and concerns of the impact on our economy is debated,  these two individuals are increasingly in the media, particularly in the business news reporting.

Peter Navarro is a very controversial figure at present.  Wikipedia labels him as a heterodox economist, with opinions  outside of the mainstream economistss.   He is also considered a protectionist and isolationist by Wikipedia.   According to the Guardian:

Navarro was a key architect of Trump’s “America First” policy of economic nationalism and a tireless critic of China’s economic policies – one of his books is decorated with a map of America being stabbed in the heart with a knife marked Made in China. Although he has agitated for aggressively protectionist trade policy since joining the Trump campaign in 2016, the tariffs are his first key victory. During the campaign, Navarro, the only economics PhD in the Trump team, described his role as merely a facilitator. “The president – he’s the man who leads,” he told the Wall Street Journal. “He says, ‘I want to do this. How do we do it?’ The way I help is figuring out how you might do it.”

Protectionism, or economic nationalism?  Perhaps the choice of words doesn’t matter; it is the outcomes in the long run that are important.   I’ve included links on Peter Navarro at the end of this blog.

Finally,  a key adviser to Donald Trump is  Wilbur Ross.   His view on trade, as per Wikipedia:

On the subject of foreign trade, Ross has said: “I am not anti-trade. I am pro-trade, but I’m pro-sensible trade. [Being anti-trade] is a disadvantage of the American worker and the American manufacturing community.” Ross has also said that the government “should provide access to our markets to those countries who play fair, play by the rules and give everybody a fair chance to compete. Those who do not should not get away with it – they should be punished.” Initially in favor of the Trans-Pacific Partnership, Ross has said that after examining the agreement, he found it was “not consistent with what was advertised.”[34]

In 2004, The Economist described Ross’s views as protectionist. Germany’s chancellor Angela Merkel has also voiced concerns during 2018 World Economic Forum in Davos over Ross and the Trump administration views as “not the proper answer”.  Ross, at the 2018 World Economic Forum, responded to concerns by noting that “There have always been trade wars. The difference now is U.S. troops are now coming to the ramparts.”

Wilbur Ross has appeared on a number of business news stations, including MSNBC, and I happen to like his straight forward answers to questions.  He always seems to be well prepared, informed and polite.   He chooses his words well.    However, he seems to underplay the affect of the proposed tariffs  might have on the stock market.

How the Trump trade wars will finally be resolved, is difficult to say.   Republican biased news stations say that in the end,   the hard position taken  by Trump will result in China yielding, particularly on intellectual property rights.  Other commentators see only an escalation of tariffs, as China would rather fight than be seen as having given in to the US.   Economic nationalism works on both continents, sometimes escalation is easier than compromise.  Certainly, the sell off in the stock market is based on the potential for a protracted battle.

As I publish this blog, the Dow is poised to drop around 500 points.

I have included a number of links on Cohen, Kudlow, Navarro and Ross.   All individuals  have extensive biographies available on the Internet.

Stay tuned,

Dave

Links:

Wikipedia:Wilbur Ross

Wikipedia:  Peter Navarro 

Peter Navarro, the economist shaping Trump’s economic thinking

Wikipedia:  Larry Kudlow

New York Times:  Larry Kudlow is the new favorite to replace Gary Cohen

Wikipedia:  Gary Cohen 

 

 

 

Winning

Trump hit upon a very simple analogy to politics- sports.  You support your local team.  You don’t say anything good about the New York Yankees if you support the Chicago Cubs.

But Trump’s analogy just doesn’t work in politics.   What gets big results is diplomacy and consistency.  – and that  takes a lot of time and international cooperation.  You can’t slam China one day for currency exchange manipulation  with hostile trade  policies aimed at coercing them into changing, and then the next minute, expect their assistance in an embargo of goods to North Korea.  That’s Trump’s plan apparently.  It really makes no sense.

This “punch them in the mouth and then hug and praise them next , and ask them for a favor”  destroys trust and cooperation.

“To jaw-jaw is always better than war-war” is a famous quote from Winston Churchill.   International cooperation is a buzz word to many, but it is exactly what happens everyday in government.  A lot has happened in the last month that makes me optimistic.

It is not a case of wanting to win,  but how to do it.  The choice is “winning alone” or “winning together.”  The arrests of ISIL terrorists in Belgium made headline news.  But, the capture Khalid Al-Barnawi with Ansaru, a radical terrorist group associated with Boko Haram  in Nigeria and neighboring countries called for celebrations in the street.

“Put your money where your mouth is”, is a great saying.  The US  put a 5 million dollar bounty on Al-Barnawi’s capture.  It is obvious  terrorism doesn’t respect the boundaries of any country.    Boko Haram has caused the death of 17,000 people and caused millions to flee their homes.   Al-Barnawi- may you rest in peace along with your insane and barbarous gang of thugs.

The announcement that China was not going to import coal from North Korea, appears to be another big win for nuclear non-proliferation.  It is part of the UN sanctions against North Korea for their nuclear program.   I suspect a lot of credit goes to John Kerry and Sandra Powers (US Ambassador to the UN) for this  “win” – but it will be a long and frustrating road ahead.  A carrot and stick approach  must be applied and this requires cooperation of the major world powers working within the framework of the UN.  This is why the UN was created,  to resolve disputes without war.  You may get talks going through “stick” policy, but if the carrot isn’t there, nothing will change.    The carrot is a lifting of the sanctions, once North Korea gives up its nuclear weapons program and agrees to highly intrusive inspections.

The US international policy has been to villainize a country to a point, where there is no incentive to change.  The “jaws-jaws” approach has resulted in a better relationship with Cuba- and it was badly overdue. It will take time for many in the US to adjust to the new policy.    Efforts in international cooperation are really bearing fruits, with advances in world health and control of epidemics,  the space exploration and the international  agreements on  climate change.

Mr. Trump should know, the “jaw-jaw”  approach is working.  But, there are no quick wins, or home runs in diplomacy.  Translating talk into action takes time to achieve the necessary unity  and a lot of perseverance.

It is “together wins” not the US wins which will determine the future.

Stay tuned,

Dave

Anastasia Lin and Falon Gong

Anastasia Lin, age 25, is quite incredible.  She is beautiful, talented, intelligent  and articulate in her beliefs.  China has barred her from participating in the Miss World pageant because she practices Falon Gung.

Anastasia Lin barred from China

So what is Falon Gung?   It is a spiritual practice in China.  It preaches virtue.  It encourages its adherents to contribute to society.    Falon Gung is non-political.

Falon Gung

The most gruesome accusation against China is that they routinely imprison and later murder Falon Gung members for body parts (organ harvesting).  The murder of the practitioners  has been well documented.

I don’t think Anastasia ever expected to be thrust into role of human rights advocate.  She was put into a difficult situation, and did what was right.   And did it so well  that she deserves more than a Miss World crown.

Thanks to the efforts of Anastasia Lin, the world is beginning to learn more about China’s deplorable human rights abuse.

Stay tuned,

Dave