My “feature” last night was a spectacularly well-timed documentary on PBS’s long-running Frontline show, “Trump’s Trade War,” focusing mostly on Trump’s trade war with China in particular — which just heated up again when, on the eve of negotiations between the two countries (their trade representatives had been meeting in Beijing and were scheduled to continue their talks in Washington, D.C.) Trump sent out a tweet last weekend announcing that because the U.S. economy is doing so well, he’s raising the 10 percent tariff he unilaterally imposed on a wide range of Chinese goods to 25 percent: “For 10 months, China has been paying Tariffs to the USA of 25% on 50 Billion Dollars of High Tech, and 10% on 200 Billion Dollars of other goods. These payments are partially responsible for our great economic results. The 10% will go up to 25% on Friday. 325 Billions Dollars of additional goods sent to us by China remain untaxed, but will be shortly, at a rate of 25%.” He seems to be saying that his hard line on Chinese trade is actually boosting the economy, while other, more rational capitalists are responding by bidding down the stock market, which suffered one of its biggest one-day losses ever yesterday. The Frontline show was, of course, filmed before this latest development in the U.S.-China trade relationship, but it had a number of interesting themes, including Steve Bannon (dressed as shabbily as we remember) boasting that what he hopes to achieve with a hard line against China on trade is a shift in power within China’s (nominally) Communist regime. The show also featured interviews with Chinese officials and industrialists, one of whom made the intriguing comment that China has chosen to develop their automobile industry not only because that offers direct competition with the U.S. but because modern-day cars, with their heavy reliance on computer technology and the increasing use of composite materials rather than metals to make them, are sort of an acid test for a modern economy: if you can make a state-of-the-art car, you can make just about anything. There was a brief reference to the increasing automation of manufacturing — one U.S. interviewee pointed out that American manufacturing may be shrinking in terms of its total percentage of the U.S. labor force, but it’s increasing in total output — though, as I pointed out during the 2016 campaign, it’s cold comfort to the displaced American worker whether he (or she) lost his (or her) job to a Mexican, a Chinese, or a computer.
The show also chronicled Trump’s never-evolving views on trade — in the late 1980’s he bought into the consensus view at the time that the biggest threat to U.S. economic hegemony was Japan (as did the late professor Chalmers Johnson — I went to a couple of his book events and embarrassed him by reminding him of that), and when the Japanese economy collapsed in the early 1990’s he simply shifted his animus to China. The show also mentioned that one Leitmotif of Trump’s talks about trade is his insistence that other countries are “laughing at us” over our misbegotten trade policies and our willingness to cave in to them out of some abstract commitment to “free markets.” As he told Playboy in a fascinating interview, published in March 1990, that’s probably the best expression of Trump’s world view from the man himself, “We Americans are laughed at around the world for losing a hundred and fifty billion dollars year after year, for defending wealthy nations for nothing, nations that would be wiped off the face of the earth in about fifteen minutes if it weren’t for us. Our ‘allies’ are making billions screwing us.” The Frontline show mentions the endless and unresolved “trade meetings” Trump used to hold with his advisors, and one of the interviewees, former assistant treasury secretary Gary Cole, recalled trying to explain to Trump that a “trade deficit” doesn’t actually mean we owe X amount of dollars to some other country that they can sue us to collect. Cole told Bob Woodward for the book Fear: Trump in the White House that at one point he actually tried to challenge Trump by asking him on what information he based his ideas about trade — and Trump couldn’t come up with anything. Instead he told Cole, “I don’t know why I believe those things, but I’ve believed them for 30 years.”
Aspects of the U.S.-China relationship that did not get discussed on Frontline include China’s continuing and growing investment in renewable energy technologies — while the U.S. under Trump has virtually stopped investing in renewable energy, leading to a possible future in which in order to get ourselves off fossil fuels at long last we will have to buy the technology to do so from China — and the uncomfortable fact that the Chinese government-industrial complex (though they’ve strayed incredibly far from the original ideals of socialism and communism, the Chinese have kept a connection between the state and the private economy so much that it’s hard to draw a strict dividing line between the two — as witness the interview in the Frontline program with a Silicon Valley banker who noted that Chinese investors were coming to him with billions of dollars with which to buy U.S. high-tech companies, amounts of money only the Chinese government could be supplying even though the buyers were supposedly representing “private” Chinese companies) is also the world’s largest holder of the U.S. national debt. I’ve mused in these pages before that some day we might find that China has simply foreclosed on us, and in line with the practice of China in their imperial days they might well make demands on us that amount to “suzerainty and tribute” — i.e., they will let us run our country pretty much the way we want but we’d have to acknowledge that the Chinese were in ultimate control of our destiny, and especially our foreign policy (“suzerainty”), and we’d also have to pay them large amounts of money (“tribute”) to be part of the overall Chinese protectorate.
This show, written and directed by Rick Young, would have been even stronger if it had explored the debt issue (and particularly the extent to which, while talking tough on China in other respects, the Trump administration gave China more leverage over us by funding their huge tax cut for the American rich via more borrowing from China) and the extent to which, by planning their economy for the next 10, 20 and even 50 years, China is poised to catch up with and overtake us in technology after technology. The show mentioned China’s practice of allowing foreign companies to invest in China only via co-ventures with Chinese companies, on terms that require the U.S. partners to give their Chinese co-venturers all their technological secrets (one of the big sticking points in the U.S.-China trade negotiations), but did not mention the equally important fact that the Chinese are sending their brightest students to study in the U.S. and learn our technological secrets from the source, then return with them to China and put their knowledge at the service of Chinese industry and technology to beat us at what used to be our own game. If there’s a moral to this story, it’s that “industrial policy” — a measure of planning ahead for a country’s economic future, deciding which are going to be the next important sectors and guiding investments accordingly — is a much better way to run an economy than the lassiez-faire way we’ve historically done it, in which the very idea of an industrial policy routinely gets rejected as “socialistic.” The Chinese will probably beat us eventually, and self-destructive policies like Trump’s tariffs will only hasten the day when China becomes the world’s economic leader because protectionism cuts both ways: we may be shielding our companies from their competition, but we’re also forcing them to put their own resources into duplicating our achievements and ultimately surpassing them — especially since we will be facing an economic future in which the U.S. owes China tons of money we have no realistic way of paying back!
