I went camping in the Big Basin Redwoods State Park (thoroughly recommended). It has a store with camping items, including propane lanterns. Ah, yes, I thought, good old Coleman stuff. Wrong. They were made in China. They were exact copies of the American article. How so?
To hear President Donald Trump’s version, the following happens: a) Chinese companies make goods; b) which are loaded on to massive ships; c) which land them at Port Hueneme; d) whereupon defenseless American companies are forced by heavily armed ninjas in black masks to buy them; e) which is why everything is now made in China; f) which is why America has a huge trade deficit ($568 billion in 2017).
In reality, this happens: a) Contracts are freely signed by American corporate buyers with Chinese manufacturers; b) the buyers’ banks issue letters of credit; c) whereupon the goods are made; d) which are insured, shipped and forwarded to the buyers; e) who distribute them to wholesalers; f) who sell them to retailers; g) who sell to you. Trump knows all this. He gets his “Make America Great Again” hats made in China.
Trump is a two-faced liar. He and his fellow billionaires get rich by exploiting Chinese labor in sweatshops (a charge he once dodged by saying he was a “businessman,” deserving admiration). But on the other hand, he brags at rallies that he is a Tough Guy Standing Up to China.
Having lost jobs to China, the crowds adore him. They are clueless. Billionaires like Trump destroyed their jobs once China was admitted to the World Trade Organization in 2001. Since then, 2.4 million manufacturing jobs, alone, have vanished (The Economist, 2016 Global Special Report).
Trump gets it both ways because few people understand the moving parts of the global economic engine. Most people are not interested. (I hear all the time: “It’s just theory.”) Few attempts are made to explain it. Yet it is obvious that the Chinese are not to blame for making goods that American corporate buyers purchase of their own free will. Why would their businessmen turn business away? And there is your answer: America’s billionaires realized they had more in common with China’s billionaires than people like you.
Welcome to America. America’s economy is not run for your benefit, my friend. America is now a “flawed democracy” (The Economist) run for the benefit of its oligarchs.
Trump should get tough with the right people: a) corporate America, which buys Chinese goods and outsources American jobs; b) politicians of both parties who take corporate money; c) lobbyists; d) conservative propaganda factories and professional liars; e) the mass media, for failing to keep Americans informed; f) the Koch Brothers, for turning America into an oligarchy; g) America’s billionaire-friendly tax code that encourages the China trade and the offshoring of American jobs. Note that the cynically titled Tax Cuts and Jobs Act passed by Republicans last year encourages more jobs to be created in … guess where … guess why.
Trump will get tough with the right people when hell freezes. Today’s Republican Party is simply a machine that takes money from you — and your kids — and hands it to the aristocracy.
Trump is insane to get tough with China by himself. In 2001, the West believed that the Chinese would want freedom, democracy, the rule of law and open markets. But recently, the Chinese reversed course, heading back toward central control. Here is the problem:
- The global economy, with its interlocking supply chains, has been redesigned around China.
Therefore, a concerted effort by the West, led by a respected, intelligent American president, is needed to untangle everything. We have the exact opposite. Trump insults our friends, even Canada. He thinks that trade wars are “easy to win.” He slaps tariffs on goods at a whim. Spineless Republicans refuse to stop him. China, Canada and Europe are naturally pushing back with tit-for-tat tariffs, specifically designed to hurt Trump supporters (e.g., soybeans, bourbon, Harley-Davidsons).
China will win this high-stakes game of chicken because we are more dependent on them than they are on us. America’s low-tech exports like soybeans can easily be obtained elsewhere. Our imports of manufactured goods from China are harder to replace. Next, it could turn into a trade war even worse than the 1930s depression because the world’s economies are much more interlinked now. And the autocratic Chinese government could make life difficult for American businesses operating in China, or even close them altogether. Trump is too stupid to realize any of this.
Take heart. King Donald can be stopped by enough good people, as he was with those disgraceful torture camps for children. We can end the Madness of King Donald if we kick out enough Republicans in November.