Does Trump’s Tweet Reveal a Fascist Streak? Not at All

It can be a good tactic to admit to a label before others apply it to you. So, I will say that I have been an “apologist” for Donald Trump since 2016. That implies a policy of seeking a defense of Trump’s presidency, seeking a context that puts the best face on what he does and says.

It is not difficult to fault China on trade policies.

How difficult is that task when it comes to his policy on what his defenders call “the trade war with China”? It is not difficult to fault China on trade policies. Economically, the world’s largest, most powerful, and rapidly rising (and arming) socialist dictatorship does not uphold property rights in principle. (I know, neither does the U.S. But am I far off base to argue there is a difference in principle between U.S. property rights law and practice and Chinese law and practice?)

China has run roughshod over U.S. intellectual property rights, such as patents and copyrights, though only some U.S. companies complain. China has subsidized export industries with the goal of enhancing their competitive advantage in trade. China has erected tariffs to supposedly strengthen home industries. And China remains repressive and discriminatory toward American and other Western businesses.

But, the availability of unlimited labor, including huge numbers of willing and eager unskilled Chinese men and women, at a fraction of U.S. and European wages, has proved irresistible to foreign manufacturers—and a telling competitive advantage for Chinese manufacturers. And that has changed the world, including, it sometimes seems, keeping nominal U.S. inflation (i.e., the consumer price index) frozen despite the “easiest” monetary policy in U.S. history.

Until the Trump administration, U.S. presidents and congresses have ignored or resisted any demands for an American retaliation to the one-sided trade and tariff war conducted by Beijing. It is odd that U.S. administrations so committed to interventionist government policies, with nothing in the way of regulation off the table in principle, have acted like committed free traders toward China.

Of course, there is a justification for that in free-market—let’s say Austrian School—economic policy. But I doubt that such policies underlay the “hands off” policy of Barack Obama or George W. Bush toward China. It is closer to the truth to say that there was no pressure, either popular or special-interest driven, for any administration to do anything about the one-sided Chinese trade-tariff “war.” It was a war that worked miracles for the American consumer and had a ready solution for U.S. companies moving to China (and then resisting U.S. or European tariffs on their goods being shipped back for sale in America or Europe).

Companies that lost out, such as steel manufacturing, or companies not paid by China for their intellectual property, or companies bullied by China about free channels of communication for Chinese people, had no chance of being heard over the deafening purr of satisfaction at benefits of Chinese labor for business and almost miraculously low prices for everyone.

Meanwhile, U.S. governments were on the largest borrowing spree in U.S. history, running up a multi-trillion-dollar debt, and among the chief buyers of U.S. debt—that is, the new chief U.S. creditor—was China.

As they say: What’s not to like? It sure beat the arms race with the blustering, threatening, nuclear-weapons-obsessed Soviet Union in the last quarter of the 20^th century. And that is true even as U.S. military analysts point out that China’s huge new wealth, in the hands of the one-party communist dictatorship, is paying for Chinese armament that in percentage-growth terms far outstrips the United States—most certainly under the Obama administration before the Trump defense spending boost.

There is justification in libertarian economic theory for upholding “free trade” policy toward China, one-sided though it be. Is this what prompted the loud silence of “the right” toward U.S. passivity in the face of China’s unilateral “trade war” tactics?

And, well, to become decidedly parochial, in this discussion, where were the libertarians of various stripes, or the free-market conservatives, when it came to the incredible economic engine of (socialist/capitalist/mercantilist) China? Libertarians and conservatives once advocated a complete trade embargo as the best—and only moral—policy of America toward dictatorships whose use of technology for armaments threatened the rest of the world. What about trade with China, funding an Asian communist behemoth with an unshakeable long-term commitment to become the world’s new superpower and regain respectful obeisance to China as the “middle kingdom” (between heaven and the rest of the lower-earth)?

There is justification in libertarian/Austrian School economic theory for upholding “free trade” policy toward China, one-sided though it be. Is this what prompted the loud silence of “the right” toward U.S. passivity in the face of China’s unilateral “trade war” tactics?

As I understand Austrian School thinking on tariffs and trade wars, free trade on the part of all nations is optimal, but, even when some nations raise tariff and other trade barriers, other nations are still better off maintaining their own free trade policies. In the end, such nations do better. The entire argument is more complex, but, for example, the consumers (including businesses as buyers) of the free-trade nation benefit from the lower prices of imports from the nation that subsidizes its producers. Thus, if the “free trading” nation retaliates with tariffs against imports, its own citizens lose.

Some businesses in the free-trade nation will buy parts and supplies more cheaply from the export-subsidizing nation. Also, the overall free economic regime implied by sticking to free trade policies is long-term highly beneficial to the free trading nation and may even prompt changes in the repressive regime.

I suggest to you, however, that such admirably consistent, principled thinking did not motivate the relatively “hands off” U.S. policy toward China by the Bush and Obama administrations. The United States was benefiting from lower-priced goods, a persistently lower consumer price index, and the most generous (or gullible?) creditor for literally trillions of dollars in U.S. Treasury debt. And, unlike the Russians, at one time, the Chinese are demurely restrained in any talk of armament policy or the ruling party’s politically essential promise that the communist party policy will “make China great again” as the hegemon of Asia and the world’s superpower.

To bring things up to the moment: the Trump administration has departed decisively from the earlier U.S. policy of maintaining a posture of one-sided “free trade” toward China. At most, earlier administrations had remonstrated with China about wholesale intellectual property violations. They had carefully and publicly monitored China’s currency policies to be sure China did not seek a sweeping trade advantage by manipulating the Yuan lower against the U.S. dollar. And had complained of Chinese pressures on social media and other communications companies to cooperate with the communist government in maintaining strict control of political dissent. All of it was very restrained as befits a non-interventionist, “free trade,” hands-off-China policy.

From the 2016 presidential nomination starting-gun, Donald Trump proclaimed he would change all this. He declared China’s trade policy toward the United States and the world intolerable. He blamed that policy for seducing wholesale relocation of U.S. manufacturing facilities to China, leaving American workers behind. He declared China a currency manipulator, repressing the value of the Yuan to gain advantage for its exports. He lamented the decay of U.S. arms-related industries, such as steel, and the transfer of U.S. “defense” related industries to China. He also warned against Chinese rearmament, though hardly with alarm or anything remotely like a “missile gap” scare.

To radically reformulate U.S. trade policy toward China became at least one campaign promise that Trump kept.

To radically reformulate U.S. trade policy toward China became at least one campaign promise that Trump kept. But, he also has acted consistently against environmental policies suppressing energy companies and opposed on all fronts the entire anti-industrial movement based on an exaggerated alarm about climate change, species extinction, wilderness areas, and much else. He has instituted no new regulations and, in fact, instituted a principle to that effect. He has launched no new initiatives of any kind to control business, “rein-in” Wall Street, or otherwise intervene in the economy. And, against blistering opposition, he has seized the opportunity to alter the composition of the Supreme Court toward liberty-respecting and Constitution-upholding justices.

Probably one explanation for the continued strength of the U.S. economy and markets has been almost three years of business confidence that no new domestic regulations, controls, or other economic interventions were under consideration—and Trump indicated no interest in such policies.

But in dramatic contrast to this “laissez faire” attitude is the Trump administration policy toward Chinese trade with the United States and the world. On this question, the argument has become between 1) support for making the “trade war” two-sided, and, 2) continuing the “free trade,” leave-well-enough-alone, hands-off-China policy of preceding administrations Democratic and Republican.

It is worth noting, at least, that the declared policy objective of the Trump administration, reiterated as recently as two weeks ago by leading trade negotiator Peter Navarro, is to force China into a reciprocal free trade/fair practices agreement with the United States. Navarro said: “The tariffs are working. They’re [an] important part of the strategy to bring the Chinese to the negotiating table … it’s important whenever we talk about the tariffs we talk about what we’re fighting for.”

And what is that? Navarro cited measures to curb China’s intellectual property theft and unfair market practices. He mentioned China’s efforts to steal U.S. trade secrets through hacking and technology transfers that are forced on U.S. companies as a condition of market access.”

Now, President Trump has revealed to all, the face of his determination to become “interventionist” toward China. In a statement rapidly gaining infamy, he tweeted:

We don’t need China and, frankly, would be far better off without them … Our great American companies are hereby ordered to immediately start looking for an alternative to China, including bringing your companies HOME and making your products in the USA.

This came in response to the latest salvo in the hot trade war with China, after China said it would retaliate against America tariffs on Chinese exports with additional tariffs on $75 billion of America exports to China.

With a couple of exceptions (e.g., jaw-boning the Federal Reserve to lower interest rates and China trade), Trump has tended to reduce government economic regulation and intervention and proposed no new “initiatives” to control the economy. But his statement, usually abbreviated to “American companies are hereby ordered …” is being cited by both the mainstream media and conservative-libertarians as intolerable intervention in the U.S. economy—portending dictatorship. Based on this one “tweet,” which has no power of an executive order, Austrian School commentators began to compare Trump to Benito Mussolini and Louis XIV.

I believe I justifiably discern some underlying anti-Trump sentiment in these dire predictions. Fascism (called in Germany “national socialism”) is the form of socialism that violates property rights and destroys the free economy not by instituting public ownership of the means of production (communistic-style socialism), but regulations and directives by which government seizes de facto “ownership” that is, (the power of use and disposal) of the means of production. If so, is the policy of the Trump administration toward China a perilous escalation of the regulation and control of business and the economy that moves us closer to a genuinely fascist economic order in the United States?

If so, Mr. Trump has rejected some powerful tools already in place, such as the Obama Administration’s control over energy industries. He has not paid any attention to legislation that was predicted to cripple Wall Street in the wake of the financial crisis. He announced a “replacement only” policy on regulations of all kinds. Does Mr. Trump, instead, have his own covert brand of economic fascism centering on his China policy?

It is worth noting that for the first time in the Trump administration, business, including Wall Street, has reacted with uncertainty, market sell-offs, and other tell-tale signs of an economic policy that casts a pall over investments and other economic planning. That is a distinct downside of any major economic intervention and the mainstream media is predicting or hoping/praying that this will bring down the U.S economy and defeat Mr. Trump’s re-election hopes. Admittedly, though, it is the first economic policy in four years, as I recall, that has interrupted a growing complacency about future economic policy—a policy thus far suggesting either hands-off or a dismantling of controls (e.g., on coal mining, oil drilling).

Writing in Fox News, business executive Andy Puzder argued that in this instance, too, Trump tried hard to be predictable:

President Trump’s strategic counter-tariffs on China have been deliberate, predictable and business-like—contrary to Beijing’s series of broken promises and the self-serving misinformation that China’s state-run media are peddling.

He points out that Mr. Trump made explicit his demands on China and his determination to impose retaliatory tariffs during the 2016 election, and, when in office, waited a year for China to respond in some ways to his warnings.

Puzder writes that

China has failed to uphold the commitments Xi made during the Trump-Xi meeting, forcing President Trump’s hand.

Trump agreed to hold off on a tariff increase because China promised to make large purchases of U.S. agricultural products and crack down on shipments of the illegal opioid fentanyl. But neither of these things has happened.

From the very beginning, Trump has given China every opportunity to negotiate in good faith, telegraphing his tariff increases well in advance and specifying exactly what Beijing could do to avert them.

Puzder is a good example of the school of thought that sees Trump as consistently and predictably increasing pressure on China until Beijing concludes its long-standing mercantilist policies no longer work:

These are neither impulsive nor erratic actions. Rather, they are calculated, measured and firm.

Trump has deliberately structured his tariff increases to gradually ramp up the pressure on China to negotiate a mutually beneficial trade deal. He has also repeatedly detailed what he wants: an end to China’s decades-long history of trade abuses, particularly its theft of technology and other intellectual property from American firms.

American policy, ever since U.S. President Richard Nixon “opened” China to a relationship with America and the world, has been to bolster China’s economy in every way with the expectation that economic success would have consequences for politics, easing the grip of communism and the communist party. This argument had been used for decades to justify trade concessions, even subsidies and technological aid, to the Soviet Union. There are no signs that China has become more liberal politically, but much surprise is expressed that political dictatorship, including totalitarian thought control and social regimentation, has proved compatible with a robust, prosperous market economy.

Here are my unanswered questions about President Trump’s China policy.

Because governments alone are responsible for tariffs, other trade policies, subsidies of export industries, and enforcement of intellectual property laws, if a chief U.S. trade partner, like China, actively asserts such policies to gain economic advantage over its trading partners, who—if anyone—should respond?

Businesses can respond in the sense of making plans and taking actions to adjust to the policies an interventionist country—in this case, a centralized economic dictatorship with total power over “its” economy. But only another government, obviously, can respond in kind. In effect, the Trump administration had to decide between a de facto “libertarian” policy of sustaining free trade in spite of what China does—or an “interventionist” policy of using national policy on trade as leverage over Chinese policy. The latter is called “the trade war.” Actually, Mr. Trump has said quite clearly that he favors consistent free trade as the most desirable policy—but not toward “violators” of the principle. Here, he differs with the Austrian School, as I understand it and have tried to explain it.

Does it matter if the “interventionist” trading partner is not another semi-free economy, but a one-party dictatorship committed to socialism and to regional and ultimately world hegemony?

Ayn Rand, who understood communist Russia well and grasped profoundly the nature of socialism—communistic and fascistic—adamantly opposed any trade, cultural commerce, or even diplomacy with the Soviet Union.

Ayn Rand, who understood communist Russia well and grasped profoundly the nature of socialism—communistic and fascistic—adamantly opposed any trade, cultural commerce, or even diplomacy with the Soviet Union. She felt no different about the dictatorship then called “Red China” (now, we are comfortable with “the People’s Republic”), but in view of the then-dominant Soviet threat advocated a certain rapprochement with China as the far less threatening potential adversary. (It was a brilliant stand, back then, when international socialists were defending the Soviet Union as the stable, “civilized” nation versus the raw threat of Red China.)

What will happen? Already, there have been articles defending and seeking to explain the Trump administration’s China policy. I will quote two.  Rich Mitchell in Conservative Daily News opined that Trump was “winning the trade war.”

He writes: “China’s war on the American economy started long ago with intellectual property theft, high tariffs, and other unfair trade practices that past presidential administrations refused to confront. With Donald Trump in the White House, Beijing’s actions have consequences.”

And he suggests that Trump has harkened to the complaints of “losers” among American companies in the Chinese economic game:

“U.S. and international media have widely reported the pain the trade war is causing U.S. companies, but earlier this year more than 600 American companies signed a letter supporting the Trump administration’s tariffs and stance against Chinese unfair trade.”

Kenneth Rapoza has followed the China trade situation, and the trade scene, and wrote this in Forbes not directly in response to the Trump “diktat”:

“Make no mistake about it, the trade war is absolutely remapping global supply chains … to the detriment of Chinese manufacturing.

“The percentage of China-leaving businesses surveyed by quality control and supply chain auditor QIMA was 80% for American companies and 67% for those based in the European Union.”

And most European companies feeling pressure to leave China (not because of the Trump diktat) “are sourcing goods in South Asia, which saw a 34% annualized increase in inspection and audit demand in the first half of the year, meaning there are more factories there than there were a year ago.”

It seems that countries such as Portugal, Turkey, Vietnam, and Cambodia for the time being are gaining at the expense of China. Like China, all have far lower wage levels than the United States and most of Europe and many pay little attention to the environmental concerns.

There is no predicting the outcome of a “trade war.” If Mr. Trump is sincere about preferring a consistent free trade policy, and is “warring” with China to force it to drop its trade intervention policies, then there could be an ideal outcome in the form of return to free trade.

On the other hand, there are obviously many less favorable outcomes of the trade war.

A question: If, as I believe, Trump is anti-regulation and anti-intervention, why would his “trade war” and increasingly tough talk in that war be motivated by his aspiring to be a Benito Mussolini and to corral the United States into fascistic socialism? Is the argument, by those who claim this, that his explicit disavowals of a socialist America—the most direct any president or presidential candidate has made in decades—apply only to communistic-style socialism? Is the argument that Trump seeks the role of national socialist leader against a communistic leader (say Bernie Sanders)?

That is a whole lot of interpretation to load onto one policy of intervention—tariff and trade policy, where only government can act. And where the “aggressor,” in economic terms, is the world’s foremost socialist dictatorship and the rising world power most directly challenging American (“free world”) influence.

Related Posts:

1. Globalism Is Good
2. What Did Capitalism Require to Emerge?
3. Rand v Hayek: Who Gets It Right?

   

About the Author: Walter Donway

Walter Donway contributes to Savvy Street on political economy, science, and trends in fiction, film, and culture. Walter Donway’s most recent book is Donald Trump and His Enemies: How the Media Put Trump in Office (Romantic Revolution Books: New York, September 2017). His Amazon profile can be found here