Donald Trump has finally won a war. It’s a war he’s uniquely suited to fight, a propaganda war, and he’s successfully waged it on China through his command of Western media.
Stating this doesn’t imply any kind of judgment on my part as to whether he should or should not have waged this war with China. He has and he has emerged victorious, thanks to his reframing the threat from COVID-19 as an evil Chinese plot to kill millions of people.
Now, I’m convinced that the circumstances surrounding COVID-19 were a plot by evil people to kill millions of people and usher in a bleak, authoritarian nightmare they’ve had legislation and action plans written to execute for years. I’m just not convinced it was China that was wholly behind it.
In fact, my fundamental problem with Trump’s China propaganda war vis-à-vis COVID-19 is that it lets the real culprits for how it unfolded around the world off the hook. But, ultimately, that’s a different discussion.
Today’s discussion is about where things stand between the U.S. and China and what’s on tap for the future. Why do I think Trump has won his war against China?
Simple, the numbers.
A recent poll by Bloomberg found that 78% of Americans are willing to spend more for products made in “Not China” than in “China.” Moreover, that poll goes onto say that 40% of Americans now say they won’t buy anything at all from China.
I can tell you that more people I talk with personally here in the U.S. are at this point. I’m not one of them. While, personally, I’d prefer my food, clothing and basic necessities be made as close to home as possible it has nothing to do with antipathy with China or Chinese people.
To me that’s just wise, defensive living. In times of crisis, basic necessities should have supply chains as short as possible. Honestly, I would say the same thing about stuff made in California or Idaho. But economic reality is that Idaho is better at growing potatoes and California almonds than Florida is and therefore those supply chains aren’t likely to change much.
That doesn’t mean, however, my wife isn’t growing potatoes this year or that I’ll miss them if my local Winn-Dixie is out of them because the truck was late or the harvest poor.
It’s called comparative advantage and it is the basis for all productive economic interactions. And in some areas of the economic sphere China is superior to the U.S. currently, and until the dynamic changes people will complain about “Made in China” but they will still buy what they need, especially in a country with 40+ million people out of work being acutely price-sensitive.
But that said the poll numbers found by Bloomberg will rise over the next couple of years because things will get that desperate here in the U.S. and people want to work and be willing to work for less.
That can only happen, however, if the barriers to local commerce are lifted. And that lies at the feet of government at all levels, which are, by definition, funded by the private sector. Like it or not, folks, government has no money of its own. Everything it has it has after taking it through taxes.
Trump is clearly pursuing policies to decouple the U.S. and China’s economy to as great an extent as possible to help the U.S. economy regain its domestic productive capacity. And he’s been very systematic about it. This propaganda war and his attacks on China over their handling of COVID-19 are just the next stage of this.
He began the process with his tax cut plan which cut corporate taxes as well as small business and self-employment taxes, reversing decades of ruinous policy designed to destroy the American middle class and offshore U.S. productive capacity. He’s quietly been slashing federal department budgets and staff and lifting mandates on states.
That process is slow, very slow, during normal operations.
But that wasn’t nearly enough and now he’s faced with the next task, which is to cut taxes again and incentivize the onshoring of manufacturing. His Chief Economic Adviser Larry Kudlow floated that idea last week. Republicans in Congress didn’t like it. And one has to wonder why?
It’s not like the current budget looks anything like what tax receipts are going to total this year or next. The deficit will be above World War II levels. More likely they would rather dole out checks of funny money than not collect the money in the first place. That way the power continues to flow through D.C. rather than go back to the people themselves.
But to change the direction of a now floundering U.S. it is going to take more than that and Trump’s willingness to use his broader powers under the auspice of the COVID-19 national emergency to cut government regulation and red tape is the next step forward on this path.
Never let a crisis go to waste right? Well, the Democrats are pushing for a China-esque total surveillance state and Green New Deal all rolled into one $3 trillion monstrosity, which, if passed, would only make the U.S. even more uncompetitive and hasten its demise.
Trump is finally doing the same thing, by going in the complete opposite direction.
The key to reversing China’s comparative advantages over the U.S. is removing the barriers to commerce which make local production unattractive. It’s that simple. And with oil prices now very low and low for a long time to come, Trump is now fighting lower shipping costs from overseas.
The U.S. maintains an extravagant government at not only the federal level but state and local as well. The American people can follow Trump blaming China all they want, but China is the symptom, government is the disease.
To solve this problem they have to look at themselves and admit this addiction to government itself is the barrier to them getting back to productive, happy lives.
I generally lay that blame for this extravagance at the feet of the cozy relationship between the Federal Reserve and the Treasury department creating money like crazy and allowing Congress and Presidents for two generations now to bribe voters with handouts from our future.
That future is now here.
And as individuals we have to face that.
I’ve said for a long time that anywhere from 20-40% of U.S. GDP is a phantasm born of fake money. It is waste and sloth within a system designed to hollow out the middle class and roll wealth up to an international oligarch class. Remove it and you get a better sense of what GDP and the cost basis for production truly is.
The same thing goes for China, by the way. Strip out the financialization and how much real economy is left?
That oligarch class just pulled the plug on that portion of the U.S. economy and I have no doubt that China had a hand in helping that along. It would be in their strategic interest to do so.
Thanks to Trump’s ham-fisted propaganda the American people now get this in the broadest terms.
And he’s willing to do both great and terrible things to change the dynamic. This much he has shown in spades. This war with China he’s waging has only just begun. He has the American people on his side, now he just has to convince the chattering class in D.C. that the old way of doing things is over.
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