By Charlie Johnston
I have always been a free trader because I am a true believer in the power of largely untethered markets to create wealth and prosperity. That said, I am very pleased at President Trump’s tariff plan – and think it is long overdue. When you look at his actual plan rather than media accounts of it (conservative media and otherwise) what he really sets up is a modified ‘mirroring’ plan. Any nation can avoid the tariffs by simply allowing American goods access to its markets on the same terms America allows access to ours. Pretty straightforward stuff. Rather than sparking trade wars, it will encourage the opening up of markets. Those countries that want to continue to inflict punitive trade restrictions on our goods will find more restrictive rules for sending theirs to our country. If they open up their markets, they have full access to ours.
Ancient wars were often fought to open up trade routes. It is telling that most countries that fought to keep their markets closed were poor – and stayed poor so long as they succeeded in keeping those markets closed. One of the greatest single leaps forward in national economic expansion was accomplished by the Russian Czar, Peter the Great. Starting with a very closed, inward-looking society, he single-handedly dragged it into the modern world. He accomplished it largely by opening vast trade networks with Europe.
The beauty of markets, when they are free and unfettered, is that they have immediate and organic feedback mechanisms. Produce what people want or need at an attractive price, you succeed. Competition keeps you on your toes, always refining your product, service and sales techniques to maintain that success and to innovate. Markets fail when they are distorted. Monopolies and cartels are the most commonly known distortions in economic markets, but government intervention is actually the most common form of economic distortion. Government distortions are perhaps the most insidious. Unlike monopolies and cartels, they start with stated good intentions, which makes it easier to sell them to an unwary public. Sadly, their effects are often more disastrous than intentionally insidious monopolies and cartels. Distort the organic feedback mechanism in markets and they simply stop performing well.
For there to truly be free trade, all markets must be open. The United States has, perhaps, the most open market in the world. We welcome goods and services from almost all nations, with very little restriction. Yet much of the rest of the world puts heavier restrictions on our goods than we do theirs. They say they want a level playing field, but only if the US has its hands tied behind its back and is carrying a 50-pound sack on its back. That is not free trade. If Trump were proposing a round of purely protective restrictions, I would be full-throated in opposing it. As nice as it sounds, that always impoverishes the nation that mounts it. But he is simply telling the rest of the world that any who fetter and weigh down US access to their markets will see their own goods fitted for fetters and weights when they cross US borders. That could cause some short-term pain to the US economy – but it will cause far more pain for the countries that already impose heavy tariffs on our products. Again, Trump’s plan calls for any country which treats our products with the same openness with which we treat theirs to be exempt from these tariffs. In the long term this gives a powerful incentive to open up markets, not to close them.
When Trump jawboned our Nato allies that they needed to pay more of their fair share for our common defense instead of leaving the United States to pick up the bulk of the bill all of the time, many establishment elites got the vapors, claiming he was undermining Nato. Instead, allies picked up the hint and started paying a bit more of their share. This is much the same.
I am for free trade, period. But those conservative commentators who think my commitment to free trade means I must simply nod my head when China charges a 25% tax on all cars coming into their country from America, while it only pays 2.5% for Chinese cars coming into America are not for free trade at all. They are for America playing the chump. Set up protective tariffs and I will get upset. Demand that other countries remove their protective tariffs or face the same, I’m all for it.
Most everyone is celebrating a breakthrough in our confrontation with North Korea. Before anyone pronounces this “peace in our time,” remember we have seen this movie before. In 1994, Pres. Bill Clinton’s Agreed Framework was supposed to end N. Korea’s nuclear ambitions. The rogue nation used the ensuing eight years to refine its nuclear capabilities while receiving vast financial aid from the US, then summarily announced it had withdrawn from the agreement in 2003 and openly operated its nuclear program again. The George W. Bush administration, still young vigorous enough to press N. Korea hard, got a new commitment from the hermit kingdom to abandon all nuclear weapons programs in 2005. But Bush got progressively exhausted in his second term and did not robustly enforce inspections or the agreement. Once again, N. Korea used the time to take US aid to refine its materials and technology until, once again, in 2009, it unilaterally withdrew from its commitment – and this time started shooting off test missiles.
Modern elites have a cultish obsession with talks and treaties with tyrants. It is a bugaboo of all political persuasions (though on the left it is almost a form of sacred worship). The reality is that tyrants use talk and treaties to buy time to strengthen their hand – which is exactly what N. Korea did on both previous occasions it promised to dismantle and forswear its nuclear weapons program. Germany started the 1930’s as a vastly inferior military power to either England or France. That was still the case in the mid-1930’s. With every nation Hitler gobbled up, he claimed it was his “last territorial demand,” holding off retaliation by an exhausted European elite class that desperately wanted it to be true. And with every delay, Germany kept cranking out the armaments and planes of war; arming and training its soldiers. Finally, when it had gone over the threshold of the strength it sought, it made clear, beginning with the invasion of Poland, that there would be no last territorial demand until it was stopped. The elite intellectuals of Europe were stunned: after all, they had all sorts of paper and promises from Germany.
N. Korea is not just a discrete nuclear threat. In 2009 it became nuclear arms merchant and technical advisor to several hostile Middle Eastern nations. Even if it actually kept its promise this time, it wouldn’t mean much if it simply shifted its operational capacity to, say, Iran. We can’t count on an ignorant and dishonest establishment media to keep us informed. You remember the famous Duelfer Report? That was the one that famously said there were no significant caches of weapons of mass destruction (WMD) in Iraq when the US invaded. That was about the only part of the report the New York Times reported – and the rest of the American media took its cues from the grey lady. The media did not clearly report that, after the sanctions imposed in the wake of the 1991 war, Saddam played a double game of deception, trying to convince inspectors that he did not have WMD while trying to convince Iran that he did. His deception was so agile that even his top lieutenants were not sure what the truth was. The media did not report that Saddam was determined, as soon as sanctions were lifted, to aggressively reconstitute all WMD programs – and that he could be up and running within a few months. The media did not report that the Duelfer Report concluded that Saddam was a clear and present danger and that the US needed to act. Even now, over a decade later, almost everyone in the public (and the media) thinks the Duelfer Report concluded that the Iraq War was a huge mistake and miscalculation. That is the exact opposite of what the report actually said. It is hard for Americans to make good decisions when the media is almost uniformly ignorant, dishonest, incompetent and mendacious.
I am heartened Trump will not lift sanctions while negotiations are ongoing. At least he refuses to play the chump for N. Korea in exchange for paper and promises that buy time. After an agreement is reached, if an agreement is reached, there would have to be a consistently resolute inspections regime that included any outsourcing to the Middle East. American resolve would have to be unwavering while we would have to depend on the media to honestly and competently report what is actually going on in any disputes over inspections.
I believe Trump intends to resolve this crisis. I believe he is far more clear-eyed than the previous three presidents and is willing to act forcefully to deter aggression and not be played. But let a few months go by with no rockets flying, let the US catch N. Korea cheating and try to invoke sanctions – and all Kim Jong Un will have to do is get his sister to bat her eyes at the clowns who constitute the modern press corps and N. Korea will be made out to be the victim of the big, bad United States.
In short, with the best of intentions and the most hard-nosed, clear-eyed president in charge of the negotiations, this threat will not pass until the Kim regime has been toppled and consigned to the ash bin of history. I do not want war. I wish China would take Kim out. But without an honest media or opposition, I do not see how this can be ultimately resolved without regime change. Time is not on our side. It is on N. Korea’s.