Making frenemies

 Apparently, one war isn’t enough, because over the weekend, Donald Trump started new wars of trade and words with two of our closest allies. The president has long had a habit of alienating allies and fawning over dictators. We saw that again this week.

First, Trump distanced the US from South Korea and crowed about his relationship with Kim Jong Un in a move that will offend both South Korea and Japan. Just a day before joint exercises with the South Korean military were supposed to begin, Trump abruptly announced that the maneuvers would be “substantially reduced.” That the exercise continued at all was due only to the stated fact that it was too late to cancel them entirely.

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Trump was apparently angry that South Korea has not joined in his Qixotic battle against Iran, but the fact that there is no coalition of the willing rests on the shoulders of Trump and Netanyahu, who decided to start the war on their own without consulting allies, much less expending the diplomatic capital required to build a coalition.

There has long been speculation that Trump would withdraw American forces from the Korean peninsula. While no such announcement has been made, the rift makes that a real possibility. This is the opposite of projecting American power and would benefit China and North Korea, while creating further problems with South Korea and Japan. It might also spur South Korea to become a nuclear power.

Bases in South Korea are not just about the defense of Korea. They are part of an interlocking line of defense that guards the entire Pacific region against Chinese encroachment. When that line is weakened, China gains an advantage.

Trump’s decision was likely economic as well as sour grapes over Iran. South Korea is an economic competitor as well as a trading partner. The Trump Administration said last year that the nation had promised to invest $350 billion in the US. Politico reports that frustration over the pace of that investment, equal to about one-fifth of the South Korean economy, may have played a role in Trump’s decision, but it was never a real possibility that South Korea would export that much wealth to the US.

Economics definitely played a role in the recent rift with Canada. Trump implemented 50-percent tariffs on a variety of Canadian goods on Saturday after trade talks broke down. Canadian Prime Minister Mark Carney has pledged to fight back with retaliatory tariffs “dollar for dollar.” The current US-Canada trade deal was signed by - wait for it - Donald Trump in 2018.

As an aside here, I’m going to point out that Trump made a de facto admission that tariffs raise costs for consumers when he suspended beef tariffs in order to “get prices down.” Again, this was at the same time that he slapped new tariffs on Canada, as well as at the same time that the federal government is refunding tariffs that the Supreme Court ruled unconstitutional.

At this point, Canada had little choice. It is readily apparent that deals made with Donald Trump are not worth the paper they are printed on. A deal can be inked and signed, and Trump will change his mind and demand more concessions five minutes later.

Trump is a bully, and the way to handle bullies is to stand up to them. I’m surprised that our allies have not tried this before now. I don’t think that the Canadian model will be the last time such resistance happens.

At this point, some may accuse me of rooting against my country. Don’t confuse the president with the country. America is my country, right or wrong, but that does not mean that I have to support the actions of its government if I believe them to be unwise or immoral.

Part of loving your country is wanting the best for it. And like a parent who wants the best for his children, that does not mean supporting everything the children do. Tough love includes keeping the kids accountable when they make bad and self-destructive choices, while nudging them back towards the straight and narrow.

What we are seeing now are not policies that will make America great again. We are seeing policies that will make America irrelevant. If our allies can’t trust us to have their backs on security issues, but do trust us to backstab them on trade deals, that’s a recipe for creating an international order that bypasses or excludes the United States.

The fact that American voters have embraced Trump and his quasi-isolationist ideas not once but twice means that we can’t be trusted not to go further down this road in the future, if not in 2028, then sometime beyond. That means that much of the damage that Trump has done to American prestige, power, and relationships might never be repaired. At best, it will take decades to recover.

And we still have two years to go.

From the Racket News 

JD Vance and curse of the cheap goods

 

Vice President JD Vance is the current frontrunner in the 2028 Republican presidential primary, but as with Trump, many Republicans aren’t very excited about the option. This may be why there was a hatchet job on the veep over the weekend in the form of a video clip in which Vance shows his economic ignorance. 

In the short clip, which comes from a longer video interview in 2023, Vance takes the positions that Americans are paying too little for consumer goods and that the dollar’s reserve currency status is an albatross around the neck of the country.

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“I am not sure that I think the reserve currency is actually good for the United States of America,” Vance opined. “I think there’s a good argument that reserve currency is akin to coal in Appalachia; it’s a resource curse, right? It allows your consumers to consume very cheaply, right? That’s been the story of the American economy for the last 15 or so years, even before that. We can just borrow, basically in an unlimited way, because we have the reserve currency. That’s a massive subsidy to incurring debt. The debt is cheaper, even in a raised interest rate environment.” 

“So we have this massive subsidy to cheap debt to the American consumer,” he continued. “That’s good, right? Consuming is important, especially food, medicine, and things like that, but I think it’s a massive tax on American producers.”

Keep in mind that this clip apparently originated at a time when prices were already high due to inflation, but Vance was concerned that American consumers were still consuming too cheaply. In a time of rising costs, that sentiment is not going to play well with voters. 

More insidious is Vance’s dislike for the dollar’s status as the global reserve currency. The Bretton Woods agreement of 1944 established the dollar’s global currency status, and that has been a tremendous boon to the US economy. Transactions all around the world are conducted in dollars as the benchmark currency. This has contributed to American economic strength and helped consumers enrich themselves through the strong dollar. 

Vance is correct that the global dollar has helped the US with cheaper borrowing costs, and that includes the government as well as consumers. The flip side to Vance’s argument is that if borrowing costs go up, interest on the federal debt, currently edging out defense spending as the third largest budget item, will grow as a share of the federal budget and crowd out other items. Without reserve currency status, we might ultimately lose the ability to finance the federal debt at any cost, triggering a Greece-like debt crisis. As I write this, 30-year Treasury yields, the cost of financing the national debt, have risen to their highest level since just before the 2008 financial crisis.

The kicker is that if the US enters an economic downturn because of a debt crisis, much of the rest of the world will follow, thanks to the interlinked global economy. When American consumers buy less, that impacts the economies of countries that export to us. To some extent, that slowdown is already happening due to Trump’s tariffs and trade wars. Our trading partners are looking for new markets as exports to the US drop. Those who can’t have experienced slowing or contracting economies.

The interesting thing for those defending Vance’s view is that our main geopolitical adversaries are also pushing to dethrone the dollar. Russia and China have long been jealous of the advantage that the US gets from the dollar’s global status, and they have been working to push alternatives for years. 

If Russia and China think they stand to benefit from taking the dollar down a few notches, why is someone like Vance pushing the idea? In another 2023 clip, Vance explained his thinking to Fox News.

“While it does have benefits, King Dollar actually has a downside for American manufacturers,” Vance said. “I think our manufacturers could benefit quite a bit. What the reserve currency does, the good thing, is that it means that things are a lot cheaper here in this country. If you travel overseas, you can buy more with the American dollar. The bad thing is it’s really bad for our exporters.”

In essence, Vance’s argument for jettisoning reserve currency status is the same as Trump’s argument for tariffs. They think imports are too cheap, and they want to make foreign goods more expensive so that American consumers will buy more American-made goods. 

The fundamental problem with this view is that the decline of American manufacturing is a myth. US manufacturing output has remained strong for decades, but there are two caveats. Manufacturing jobs have declined due to automation, and manufacturing has shrunk as a share of the GDP as the world transitions to an information-based economy. As with trying to shift aircraft carriers to steam catapultsand build a new class of already-obsolete battleships, the Trump Administration’s manufacturing policy seeks to return us to the past, but you can’t turn back the clock.

Interestingly, Donald Trump seems to realize the importance of maintaining the dollar’s reserve currency status. In yet another video, the president said, “If you want to go to third-world status, lose your reserve currency.”

It isn’t often that I agree with Donald Trump, but this is one of those times. I just wish Trump were more consistent on the issue. Trump may not want to dump the dollar’s global status, but he has advocated for a weaker, inflationary dollar to bolster his protectionist schemes. 

To give Republicans some credit, a lot of the flak came from the last remaining conservatives. Our old buddy, Erick Erickson, was very critical of Vance on both foreign policy and domestic issues, at one point likening the vice president to Candace Owens. Ouch.

If JD Vance gets his way, rather than making America great again, his economic policies are likely to pave the way for American economic decline. As a general rule, we shouldn’t pursue the same economic policies that Russia and China are advocating for, and we shouldn’t elect politicians whose ideas mirror theirs, whether it be dethroning King Dollar or cutting off aid to Ukraine. 

It’s a good thing that the chances of America electing another Republican in 2028 will be near zero after four years of Trump’s mismanagement of the country. 

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CLOWNS TO THE LEFT, JOKERS TO THE RIGHT A new CBS News poll showed that 58 percent of Democrats view socialism positively compared to 38 percent for capitalism. But even 54 percent of Republicans approve of price controls. Democrats were viewed as weak, while Republicans were viewed as extreme. 

The poll also shed light on how the parties view socialism, with Democrats stressing “equality and fairness and public services,” and Republicans equating the term with “government control.” That ties in nicely with what I wrote in “Socialism vs. socialism” a few weeks ago. 

The sad takeaway here is that neither party is very interested in free markets at this point. 

SOUTH KOREA SLAP The Trump Administration called off joint exercises with South Korea as Trump wistfully recalled his good times with Kim Jong Un. 

BOAT STRIKES OUT An intelligence assessment reviewed by the Washington Postfound that Trump’s attacks on boats had “failed to affect the supply or price of cocaine in the United States and had led traffickers to diversify beyond go-fast boats and to avoid international waters, opting instead for larger boats and hemming close to coastlines, where U.S. forces are less likely to open fire.” That’s a poor result for acts that may have been war crimes, or since we aren’t at war, just plain crimes. 

ONLY THREE STATES approve of Trump in a new Newsweek poll. Can you guess them?

ZOIKS AND JINKIES For your viewing pleasure, check out this video of Scooby Doo and the gang investigating the reflecting pool mystery.

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From the Racket News

A glimmer of hope

 

The past few years have largely been a time of gloom and doom. Bad news is followed by worse news. Fake news, conspiracy theories, half-truths, and outright lies rule the internet. It’s easy to get lost in a deep, anxious funk. 

But this week, I saw a glimmer of hope come from primary election outcomes, particularly in Michigan and Wisconsin. 

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Just a few days ago, I wrote about the threat of radicalism from within the Democratic Party that threatens to split the opposition to MAGA. In one of the most closely watched races of the week, Democratic Socialist Francesca Hong was narrowly defeated by David Crowley in the Democratic Wisconsin gubernatorial primary. Crowley had previously withdrawn from the race amid the initially crowded field, but reentered after other candidates dropped out. The victory over Hong, a radical who even opposed Thanksgiving, is a good thing for both the future of the Democratic Party and moderates everywhere. 

Hong’s loss is all the more amusing because right-wing conspiracy theorists had already rolled out posts about late-night ballot drops to explain her victory. In the light of day, these posts, some of which are still up, take on a “Dewey Defeats Truman” vibe. 

There were even signs of sanity from the Republican Party. In Michigan, MyPillow magnate Mike Lindell went down to defeat in the Republican gubernatorial primary. The conspiracy-pushing CEO remained true to form in defeat, claiming election irregularities and refusing to concede. Whether Republicans ultimately win the governorship of Michigan or not, and Lisa Demuth likely has an uphill fight in the general election, the Republican Party, Michigan, and the country in general are better off without Lindell having access to the bully pulpit of a nomination. 

Donald Trump had a somewhat bad night as well. In addition to Lindell, another Trump-endorsed candidate, Darline Graham Nordone in South Carolina, advanced to a runoff but only received about a third of the vote. Both Michigan and South Carolina represented rare examples of Republican voters not blindly following Donald Trump. That’s encouraging. 

These days, hope is where you find it. I’m encouraged to see small signs of both sides embracing sanity, even though I’m sure that we haven’t seen the last of the insanity. Maybe we’re taking baby steps back towards normalcy, and maybe Democrats are realizing that full leftist radical isn’t the way to go. 

Never go full leftist radical. 

I’ll say again that Republicans are about to get a comeuppance for their corruption, abuses of power, and downright incompetent administration of the government. It’s going to be a shellacking for the ages that will include loss of the Senate. Bookmark this and write it down. 

What comes after the election is impossible to predict at this point. I wouldn’t be surprised if Trump and MAGA go full Lindell and refuse to accept the choices of the voters. They’ve done this time and again in the MAGA era. Before Trump leaves office, I also wouldn’t be surprised if political violence increases as MAGA violently tries to hold onto power.

Never go full Lindell or full Trump either. 

But those are concerns for another day. As the old saying goes, the way to eat an elephant is one bite at a time. That saying predates the Republican Party, and I am not endorsing political cannibalism, by the way. 

For the time being, let’s take our victories where we can find them and our hope where we can get it. One day at a time, and one step at a time. 

Maybe, just maybe, we’ll come out of this okay. 

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MASS ABORTION Viral claims say that Massachusetts expanded abortion “until birth.” As Snopes explains, Massachusetts law already allowed abortion in certain extreme medical situations beyond 24 weeks. The new law still requires a doctor to justify the procedure. Late-term abortions are extremely rare and represent only about one percent of abortions. 

A WORD ON OUR POSTING Our faithful readers may have noticed a drop-off in the frequency of our posts. We are still around, but as you are probably aware, both Steve and I have day jobs. Unlike most pundits, we don’t do this for a living. It’s a hobby. And that’s a good thing for our readers. We give you our unvarnished opinions with no need to regurgitate party talking points for clicks. We may not always be right, but we will always be honest with you. Most other outlets can’t honestly say that. (And we’ll be right more often than not.)

From the Racket News