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(Un)expected President

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[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] S [/yt_dropcap]hock! Disbelief! Total surprise! Those media (and politicians) who have in the preceding election campaign totally uncritically, but systematically supported Hillary Clinton, try by using such words to convince the public opinion (and themselves most probably) that the election of Donald Trump as the next American President is a total surprise (a mistake, almost). But – this is not how things really are. This is, simply, not true.

On one hand Trump seems to be a surprise to those who conducted an almost unprecedented media campaign for the former Secretary of State and for those too who allowed to be convinced (if not deceived) by this campaign, but on the other hand Trump’s victory is no surprise at all for those who tried, free of all prejudices, to analyze all elements of the election campaign and its foreseeable result. Of course one could argue about the fact that it is tragic for today’s America and its political scene, dominated by Republicans and Democrats who successfully prevent any “third candidate” to come even close to the presidential race, that in these elections we witnessed the confrontation between an excentric millionare, a somewhat dubious businessman and a figure from the reality shows and a woman directly responsible for destabilizing the whole Middle East and for the deaths of hundreds of thousands of people. But, there is not one single word about this from those who are “shocked” and “surprised”.

The campaign started with the firm conviction that the winner will be Hillary Clinton, former First lady, former senator from New York and former Secretary of State. Her victory was, so to say, programmed and she was treated as a favorite in everything and in every moment. This went so far (and we know it thanks to Wikileaks) that the leadership of the Democratic party torpedoed, during the primaries, the campaign of Bernie Sanders who portrayed himself as a socialist and announced a political revolution, thus becoming the most dangerous rival of Clinton. Although not young himself, Sanders and his ideas attracted young voters (some surveys conducted after the election show that in some key states, where Hilary Clinton failed, Sanders would have been victorious over Trump). But, the nomination had to go to Hillary, a favorite of financial circles who financed her campaign either directly, or in advance, paying her enormous fees for lectures in which she said things that she would never repeat in the campaign and before those whose votes she wanted to win. But, besides being a favorite of financial circles, she was a favorite of those political circles too who wanted the continuation of the policy of a “transformed” Barack Obama, a President welcomed with great hopes, who during his first term of Office took a starting position, marked by his speeches in Cairo and Prague, only to become the true successor of George W. Bush, bombing even more countries than he did and inaugurating again, after a short intermezzo, interventionism plus confrontation with Russia as undisputed cornerstones of Washington’s foreign policy.

And so Sanders was eliminated and the nomination went to Hillary Clinton, a women whose intelligence and political experience could not be denied, but who was described by the founder of Wikileaks, Julian Assange, as a person who was eaten alive by her own ambition. On the other side there was Donald Trump, climbing towards the nomination for a presidential candidate, financing in the first stage almost entirely the campaign out of his own pocket. His success was not the result of the policy of the party’s leadership, but mostly of the votes of those who were attracted by his very often extremely rude populism, on the verge of open racism (these characteristics will gradually almost disappear during Trump’s campaign that was to follow). And he got the nomination on a very stormy Republican party’s convention, during which some delegates in protest even left.

And the arena was ready for the confrontation between a political amateur, “racist, sexist and vulgar person” with an experienced politician (although he would say that her experience was a bad one). In this moment the political-media machinery started to work “full speed”. About Trump nothing good could have been said or written, despite the fact that in his first foreign policy speeches, as a presidential candidate, some new and encouraging tones were registered, while at the same time it was not possible (or allowed), at least in the mainstream media, to either say or write anything negative about Hillary Clinton, despite the never brought to end scandal with her using an unprotected server for sending messages as Secretary of State and despite the fact that she obviously lied saying she did not erase any of the messages and that not a single one dealt with matters of national security. The curtain was up for a battle between the “evil” Trump and the “good” Hillary. In reality the curtain was up for a mud-wrestling between two candidates who were not selective at all choosing the instruments to destroy each other. And the propaganda machine continued to work full speed. After each TV confrontation public opinion surveys were published showing Hillary was “convincingly better” in comparison with her opponent (there was, as far as we know, only one exception). After that voters opinion surveys were published, all of them giving Hillary great chances to win and Trump almost none.

Thus the stage was set for the final act – the ritual execution of the candidate who refused to accept that everything was over, until he himself comes to the conclusion that it is over – despite his sometimes openly racist statements and their public echo (mainly abroad) and despite his sexual scandals (real or fabricated, most probably both). But, and this is obvious now, Trump was not acting without knowing what he was doing. Repeatedly invoking the silent majority, he played on the card of the Americans (and there are not only a few of them) abandoned by the society and those who feared they could experience the same destiny. It might be a paradox, but it is true: in the eyes of these people the blonde billionar appeared as some sort of a Robin Hood. In him they saw their last straw. He promised to bring back the factories that fled to “cheap countries”, he announced big projects for modernizing the infrastructure, he spoke about opening new working possibilities and “making America great again”. Former Secretary of State could not respond to this with her cheap slogan about America being great “because it is good” (most probably her staunchest supporters were afraid that someone could ask people from Libya or Syria what they think about both America and her being good). Above all she made both a strategic and tactical mistake: she did not want to deal with Trump as an unworthy opponent; instead of him she choose as her opponent the Russian President, Vladimir Putin, degrading Trump to his mere puppet. Consequently her speeches were more and more anti-Russian intoned and cold war colored, so that Trump with his announcement of talks and deals with Russia (especially in the fight against global terrorism) started to sound moderate and common sense driven (to those who wanted to hear and understand, naturally).

The day of the decision came. And it was, as it was. And we have today President-elect Donald Trump, elected with a convincing majority (of electoral votes, popular votes are not decisive, due to the specific American system of electing the President).His first speech after Hillary Clinton conceded in a phone call to him was well calibrated, low key, but not without substance, it was the address of a statesman. The pledge that he will ban all Muslims from entering the USA disappeared from his web page. And while he is preparing to take over in direct talks with the current President who was obviously forced to join the anti-Trump hysteria, proclaiming him totally unfit for the highest position in the state, some media who all of a sudden see clear, or the Russian media, who never openly sided with Trump, but never demonized him either, have fun exposing politicians form the West with their statement before the US elections and after. Just one example, the British foreign minister, Boris Johnson. Before the elections he boasted how he avoids certain streets in New York, out of fear he might bump into Donald Trump. And after the elections he is “looking forward to work with President Trump’s administration”.

It seems realistic to expect that Trump will disappoint both the European extreme rightists (who are overwhelmed by his victory), as well as liberals (not necessarily of left orientation) who are despairing and exchanging messages of condolences. Trump is without any doubt a conservative, but he comes not out of the same nest as the European neo-fascists who are more and more aggressive with every day passing; he played without any scruples the lowest instincts of the voters to get as many votes as possible, but his domestic policy will most probably be similar to those of Nixon and Reagan. These were, one must admit, not the best times for liberals, but neither were they put before committees for investigating anti-American activities, nor were they forbidden to work. In the field of foreign policy Trump will enter the path of calming down the relations with Russia (that are almost on the boiling point), which is still his “magnum crimen” in the eyes of some European politicians, prisoners of the past; he will enter the path of strengthening (but with Russia and not against it) the fight against global terrorism. Otherwise he will orient America towards itself, putting it in a semi-isolation and giving the US an active role on the international scene only when American interests are in question (and not necessarily interests of the Wall Street). To many he might appear as dangerous, simply because he is an unknown. Potentially he is really dangerous if he insists on denying the global warming and transforms this into American policy. But it seems to us prematurely and simply not serious to judge him today completely negative only because he avoided (in accordance with the law) to pay for years the federal tax and because of his sexual escapades (does anybody still remembers Bill Clinton, the Oval Office and Monica Levinsky?). Equally not serious is to state that his election victory is “a surprise” and “totally unexpected”. This author published in July this year an article under the title “President Trump?”, stating as follows: “The rich businessman whose biggest advantage is that he owes nothing to anybody, because he is until now more or less financing his campaign out of his pocket, presented a mixture of populism, demagogic approach, sounding phrases and pure politics.” Further: “Repeating constantly that he will bring back the sense of security to every American, he openly pledged his support to homosexual community, promising to protect it from any kind of violence (and thanked – as a Republican – the audience for applauding him after this). And he made sure that among his supporters there were representatives of other races (such as ‘Koreans for Trump’).” And finally: “Trump’s first big political speech shows that the battle for the white House will be waged between two at least equal rivals; Trump will without any doubt repeat the slogan used in his speech on the Convention: She says: ‘Everything will stay as it is.’ And I say: ‘Nothing will remain as it is.’ And with some sarcasm, but not without effect: ‘She is asking her supporters to say that they are with her. And I am telling you and the whole of America: I am with you, I will be your voice, I will be your champion.’” Published in July 2016.

In the meantime the “champion” became President-elect. He will take over in mid-January next year. Until then the horror of those who played (for their own interest, but wrongly) on the card of Hillary Clinton, as well as the horror of those who without any real basis believed the she is the Godgiven President f the US, will calm down. Donald Trump, the man who described himself with the words: “I know the system best. So I am the one who can fix it” – 45th President of the USA. So, why not?

Americas

“Is it Live or is it Memorex?” The Real World of Lies

Traci Seltzer-Castillo

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For those of you who are not Americans from Generation X, the tag line advertising and marketing jingle “Is it live or is it Memorex?” became popular in the early 1980s by the American company Memorex (founded in 1961).  This marketing slogan was used to describe the very real audio quality of their cassette tapes (These are archaic audio recording devices used before CDs and after 8-track tapes. They were used in 1970s & 1980s boom boxes. An internet search of these ancient artifacts may be needed). In essence, the listener was to believe that the recorded sound was exactly the same as the original sound of someone speaking.  Later, this marketing jingle became an iconic expression in American popular culture and daily casual conversation to indicate that one is not sure if something is real or fake (not real).  While the topic of lies may seem inappropriate for this form, it is not.  There are many political, economic and political economic examples of how lies have impacted populations, regimes and economies.

What is a lie? It is important to note each person and each culture have their own definition of what is considered a lie; what is considered a white lie; if lying is acceptable, in what circumstances it is acceptable, and how far the truth may be bent before it is considered a regular lie. In American English, the expression is to bend the truth, which means there is some basis of truth but it may be slightly or drastically distorted. It is not the same as a white lie. It is also important to note that cultural norms change over time especially within each new generation, so what was once considered unacceptable 40 years ago may be acceptable now.

Then there is a gray area: Is it a lie to not tell the entire truth, to remain silent instead of truthfully answering a question, to answer a question in a vague way for which the intended meaning could be construed in many ways (e.g. what is called political mumbo-gumbo or word salad; it’s a lot of words that sound good but mean nothing), or how far the truth can acceptably be bent (especially in regards to interpreting information and statistics, truth in advertisements and truth in the news)?  In some situations, remaining silent when asked for the truth is considered an admission of guilt or that there is information the person does not want to tell because of its repercussions or incriminating implications. In regards to interpretation of information and statistics, here is an anecdote that is applicable further into this missive:

A CFO is interviewing prospective candidates for an open position of chief accountant.  The CFO poses the same question to the top four candidates, “What does 2 plus 2 equal?” Their responses:

Candidate 1) 2 + 2 = 4. The CFO replies, “No, you’re wrong. You don’t get the job”

Candidate 2) Most times 2 + 2 = 4 but it sometimes it might equal 3 or 5. The CFO replies, “No, you’re wrong. You don’t get the job”

Candidate 3) Why does it have to equal anything? The CFO replies, “No, you’re wrong. You don’t get the job”

Candidate 4) What would you like it to equal? The CFO replies, “Very good! You’re hired!”

Are white lies considered a gray area? No, not really; they are a unique category in and of themselves. The difference between a regular lie and a white lie is motivation or intent.  The motives for regular lies are for extrinsic gains or reasons; selfishness.  A white lie is typically unselfish, and done for altruistic reasons. White lies are used so that:

1) others’ feelings don’t get needlessly hurt,

2) others are not caused undue stress and anxiety, and

3) one may prevent themselves from having to endure a needless unpleasant situation (for example, when a wife asks her husband if she looks fat, he knows to say no because otherwise he will have a very unpleasant evening.  In the same sense, the wife is expecting him to tell her a white lie because she just wants to hear him say no).

In most cultures, the one person that people tell white lies to the most and is acceptable to do so is mom.  When mom asks her adult child, “Is everything ok with you?”, whether it truly is or isn’t, one must always tell mom “I’m fine” so that she doesn’t worry.

The advent of the technology age has certainly impacted the ability to effectively tell and/or maintain a lie. GPS, satellite imagining, drones, hidden cameras/microphones, blog postings, mobile phone pings, online documents, Snoops.com, fact-checkers, hackers and the public’s demand for transparency have definitely pushed the topic of lies and lying into the spotlight.  Sgt. Manning, Julian Assange and Edward Snowden have all experienced the repercussions for exposing lies. But what about those who told the lies?  Are there repercussions for telling lies?  In the grand scheme of current life, the answer is no, unless the person is an average citizen. In the US, everyone is supposed to be considered equal, but the truth is, there are many who are “more equal” than others, such as businesses, Trump (and his questionable win as POTUS) and Ethan Couch who, in June 2013, used the successful criminal defense of Affluenza to get only probation for driving while intoxicated (drugs & alcohol), speeding and driving without a license. He said that because he was rich, he claims that he wasn’t taught right from wrong, so his actions were not his fault. It may be prudent for Trump to use this same defense for his behaviors and lies.

Unfortunately, through the idea of behaviorism, the lessons learned from the results of lying are not what are expected. In the US, there are whistleblower laws to protect those who tell the truth and expose corruption, yet in 2013, Edward Snowden move to Russia after exposing NSA information; Julian Assange has had to stay in the Embassy of Ecuador in London, England since June 2012 for posting US government documents on his WikiLeaks site; and Private Manning was incarcerated for seven years (2010-2017) because he gave US government documents to WikiLeaks. Of course, in many cases, some secrets must be kept, but this is on a case-by-case assessment).  Again, with the idea of behaviorism, if exposing the truth gets one punished, then it may deter others from telling the truth. The whistleblower laws in the US are like handing the keys to the fox who is watching the hen house. The whistleblower’s identity is easy to determine with today’s technology, and then the whistleblower’s life will be quite unpleasant afterwards, especially if the person would like to be employed. Many companies do not want to hire a whistleblower for fear of a repeat past performance.

As stated above, those who exposed lies have received punishment but those who did the lying received a small bit of public humiliation. The liars’ punishments rarely fit the severity of the crime of lying.  Volkswagen was shamed for lying about their emissions statistics from 2008 to 2015.  Did this company really suffer for its questionable integrity? No. It may have received some monetary fines and a bit of humiliation from the scandal, but their bottom line is still quite acceptable. Facebook’s initial IPO in May 2012 was substantially high, which later, media tells the public that the IPO prices were unsubstantiated due to the withholding of FB’s not-so-dazzling third quarter earnings. Those who found out shortly after the IPO dumped their purchases quite quickly, thus decreasing the stocks’ value in hours or days. The 2002 ENRON and Arthur-Andersen scandal and the 2008 global economic crisis seeds have caused a lot of financial carnage from their lies in the name of making profit. Historically, lies about the severity of industrial-related disasters have also caused lasting effects and carnage on human lives; for example, the 1986 Chernobyl nuclear meltdown disaster, the 1984 Union Carbide disaster (Bhopal, India), and the many drug trial tests by pharmaceutical companies in Africa and India that actually gave diseases to the people and then tried to cure them with new pharmaceuticals. The idea of corporate responsibility may only be a fantasy.

Integrity:  The act of doing what is right when no one is looking or watching. The ethical dilemmas and possible accusations of lies or lying begin when what is right, just, best, legal and moral are not one in the same. There are differing opinions about the definitions of each. When one makes a decision based on only one adjective, it may be perceived as a lie or lying, but is it?

In America, after such scandals like ENRON and Arthur-Andersen, the US government made new laws to prevent such things from happening again. Is it really possible to regulate morality, ethics and integrity with government laws?  The answer is no. The 2002 Sarbanes-Oxley Act (aka SOX, pronounced like socks) was created and enacted to stop such things from happening again. In the constant wake of financial scandals and the public outcry for the US government to regulate the immoral behaviors of businesses (including the accounting profession), on July 30, 2002, President George W. Bush signed SOX into law, which also created a new watchdog organization, the Public Company Accounting Oversight Board (PCAOB), for monitoring the financial reporting methods of publicly traded companies. Obviously, laws are not effective at regulating morals, ethics and integrity because the 2008 global economic crisis occurred six years after the advent of SOX.

Apparently in today’s world, it is acceptable to tell lies if doing so makes profit (monetary or otherwise) or if it gains someone the competitive advantage (such as exchange rate manipulation, government secrets, market first-movers market, untruths in advertisements and news, and the POTUS).

Are there effects of lies that are told by business and/or government?  Due to the idea of behaviorism, many people may subscribe to, “The first time you fool me or lie to me, shame on you. But the second time you fool me or lie to me, shame on me because I shouldn’t have given you a second chance to trust you after you burned me the first time”. Unfortunately, serial lies make people suspicious of others, especially of those who are in positions of public trust like CEOs and politicians, such as Trump and his alternative truth. A certain level of trust must be established for good relations; personal, professional, business and government. Each time lies are exposed, the impacts either 1) make people quite suspicious or paranoid thus they believe everyone lies most of the time, or 2) they accept lies as commonplace and then forget about them as if they never happened. Option #2 is a dangerous slippery slope to losing morality, ethics and integrity.  Perhaps a healthy balance of trust-distrust is an optimal solution, but not necessarily a Utopian one. Perhaps the truth of the matter is that lies and lying are the norm, and condemning them are just an illusion and to satisfy the public.

What a tangled web we weave when at first we practice to deceive – Sir Walter Scott (1771-1832)

Trump and his alternative truth is somewhat a different topic because of the complexities of his motivation for lying (see 1-5 below). Most every day, new Trump lies are exposed. Some Americans feel that he has mental health problems.  However, he seems quite cognizant of his choices and volitions.  It is possible that he is the result of behaviorism.  Here’s why:

1) When people get what they want by lying (especially without getting caught), their choice to lie is reinforced by getting what they wanted (the reward), which encourages them to lie again. No punishment for lying gives people confidence that their lies are believable, and they often start making “more believable” lies to receive bigger “rewards”. However, these new & improved lies are quite unbelievable.

2) When this successful cycle continues over a long period of time, it often becomes a way of life and who they are as a person.

3) They may continue to lie even though they will not gain anything from it (no reward).

4) In some cases, people continue to lie so that they can convince themselves (and others) that their lies are the truth. Is it live or is it Memorex?

5) For many, people will lie when caught in a lie because in the past, lying prevented them from getting into trouble or lying got them out of trouble; again the idea of behaviorism.

Unfortunately, many people cannot remember what lies they have told, so it is quite easy to bring to light the lies. In essence, their own myriad of lies tells on them. What a tangled web we weave when at first we practice to deceive!  Trump should take note of these words of wisdom.

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Americas

President Trump’s tariffs and duties and the transformation of the world economy

Giancarlo Elia Valori

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The 45thPresident of the United States, Donald J. Trump, keeps on repeating he wants to make America “great again”.

Hence, first and foremost, he wants to reindustrialize his country which, in fact, is currently the world champion in  the loss of productive, manufacturing or industrial companies.

The birth of a country that now consumes without producing much, namely the USA, materialized initially under Reagan’s Presidency, but continued rapidly with the successive Presidents.

For example, at the end of the 1960s, the US industrial labour force was at least 35% of the total number of people employed, while currently this labour force is only 20%.

Since 2001 over 70,500 companies with more than 500 employees have been closed down definitively.

The Gospel of Matthew (4:1-11) perfectly clarifies the situation of the post-productive post-economy – if we can use this expression.

Jesus Christ, who was hungry after having fasted forty days and forty nights in the desert, was tempted by the devil who told him: “If you are the Son of God, command these stones to become loaves of bread”.

Jesus answered to the devil: “Man shall not live by bread only, but by every word that comes from the mouth of God”.

Hence Jesus – as a great economist – explains to the devil that we must not change the Creation and replace God, but  instead follow Smith’s liberal and socialist labour theory of value.

Without the processing and transformation of materials – according to their laws – there is no value and therefore not even price.

Only manual or intellectual work, in fact, does transform materials, but never creates and hence does not even destroy them.

Hence we should produce only those goods and services that the market really asks for, without useless miracles, which are already incorporated in the Being as it is.

But let us revert to the economy of the powerful and stable North American de-industrialization process.

However, some sectors of US companies are still active, such as semiconductors and electronics, while clothing, for example, has fallen by 60% despite the US population has almost doubled since 1950.

When this happens, high value-added work increases, while all productive activities having a low incidence of unit value have definitively been delocalized outside the  USA (and the EU – although in this case, the debate has a political, military and strategic nature).

It is worth recalling that immediately before the first subprime crisis of 2016, the US industrial production had fallen by 15% – and this was certainly not by mere coincidence.

Later it started to grow again by approximately 4% – with many sectoral differences -in the years in which the United States managed to move their financial crisis elsewhere.

But let us revert to the factories that the US President deems necessary to make America great again, and to the specific policy of import and export duties imposed by President Trump in record time.

In fact, on March 1, 2018, the President announced it would imposed a 25% customs duty on steel imports from China and a 10% additional one on aluminium imports from China.

This, however, increases the production costs of the aforementioned US sectors that still handle and stand up to global competition, which obviously recoup the money lost from end customers, by increasing prices.

If – like the USA, but perhaps not for much longer – a country still lives on electronic manufacturing and components, the increase in the factory unit prices leads to an increase in the final price and, hence, restricts domestic or foreign markets.

Any price increase, albeit small, leads to a decrease in the buyers of those goods. Pareto taught this to us ad nauseam.

But clearly it was not enough.

Later, on April 3, President Trump announced he would  impose further 25% duties on additional 50 billion Chinese imports of electronics and aerospace products, as well as  machine tools.

This means that – paradoxically, but not too much –  President Trump wants to slow down precisely the  productive sectors that China deems strategic for the future, as shown in its Plan for 2025.

In 2017 China produced a total of 23.12 trillion US dollars, calculated on the basis of power purchasing parity (p.p.p.).

Currently the EU only ranks second, with 19.9 trillion US dollars, again calculated as p.p.p. In 2016 it was the world’s top  producer.

The United States only ranks third, with a yearly product of only 19.3 trillion dollars.

Financial stones cannot be turned into loaves of bread.

In spite of everything, China has a yearly per capita income of 16,600 US dollars, while the US yearly per capita GDP is equal to 59,500 US dollars.

Scarce domestic consumption, all focused on exports, is the Chinese model that has developed since Deng Xiaoping’s “Four Modernizations”, which survives only in an area in which all macroeconomic variables are not left to some “market” invisible hands, but to a central authority.

However, this is exactly the reason why China is the largest world exporter.

Hence it rules end markets.

In 2017, it shipped abroad 2.2 trillion US $ worth of goods and services.

Currently 18% of Chinese products are exported to the United States.

This much contributes to the US trade deficit, which currently amounts to 375 billion US dollars.

China is also the second largest importer in the world, to the tune of 1.7 trillion dollars in 2017.

The mechanisms of interaction between China and the United States, however, are even more complex than we could guess from these scarce data and statistics.

It is not by mere coincidence that China is still the largest holder of US public debt.

In January 2018, China held 1.2 trillion in US government debt securities, i.e. 19% of the US public debt held by foreign investors.

A very powerful monetary, political, strategic and even military leverage.

Obviously China buys US securities to back the value of the dollar, to which the yuan is pegged.

However, it devalues its currency (and hence the US dollar) when Chinese prices need to be kept competitive.

Therefore, while the United States wants to increase the yuan value, with a view to favouring its exports, China threatens to sell its US public debt securities immediately.

The dollar increased by 25% between 2016 and 2016, but since 2005China has devalued the yuan.

A very clear example of aggressive monetary pegging.

Moreover, the issue of China’s unfair commercial behaviour is now long-standing and it was also raised by many candidates to the US presidential elections.

In fact the success of Paulson, the former US Treasury Secretary, was to reduce the American trade deficit with China and to later ask for opening to foreign investment in key sectors of the Chinese economy.

For example in the banking sector, thus putting an end – in some cases – to the Chinese practice of export subsidies and administered and capped prices.

Just deal with realism and intelligence and Chinese Confucianism can find solutions to everything.

The other side of the Chinese miracle, however, is the very high debt of companies and households, which is obviously  still connected to the balance between the yuan and the US dollar.

In this case, however, the programmed slowdown of the Chinese GDP growth and the limits on strong currency exports, as well as the control of wages and profits are enough.

But let us revert to President Trump’s tariffs and duties.

In fact the US President has imposed these new tariffs and duties on Chinese imports to force China to remove the  foreign investors’ obligation to transfer technology and patents to their Chinese partners.

Nevertheless China trades many productsit could also manufacture on its own just because it wants to fully open Western intellectual property rights for its companies.

A few hours later, however,  China responded to President Trump with a 25% increase in duties on 50 billion dollars of US exports to China.

On April 6, President Trump further reacted by stating he would call for the imposition of other duties on additional  100 billion dollars of imports from China.

It is worth noting, however, that this accounts for only  a third of total US imports from China, which is considering the possibility of responding harshly to President Trump by steadily increasing tariffs and duties for all US products entering Chinese markets.

Besides the issue of relations with China, however, the other side of the US tariff and duty issue is the NAFTA  renegotiation, officially requested by President Trump on August 16, 2017.

It should be recalled that the North American Free Trade Agreement is the largest commercial agreement currently operating in the world, signed by Canada, USA and Mexico.

Firstly, President Trump wants Mexico to cut – almost entirely – VAT on imports from the USA and put an end to the programme of maquiladoras, i.e. the factories owned by foreign investors in Mexico, in which the components temporarily imported into that country under a duty-free scheme are assembled or processed.

The maquiladoras programme started in 1965 to reduce the huge unemployment in the North Mexican regions, but currently there are at least 2,900 such factories between Mexico and the USA producing 55% of total Mexican export goods.

They mainly manufacture cars and consumer electronics, which are exactly the sectors that – as already seen – President Trump  wants to revitalize.

Obviously the current US Presidency wants to dismantle the maquiladoras on its Mexican border, where 90% of such companies are located.

Thanks to these special factories, Mexico competes directly with US workers, considering that the local Central American workforce is much cheaper.

Thanks to this mechanism of cross-border production outsourcing – between 1994 and 2010 alone – 682,900 US jobs moved to Mexico, with 80% of US jobs lost in the manufacturing sector.

Moreover, again due to NAFTA, as many as 1.3 million jobs in Mexican agriculture were lost.

In fact, following the removal of duties between the USA and Mexico, the latter was flooded with US produce below cost and subsidized by the State.

All this happened while the Central American administration cut agricultural subsidies – which will soon happen also in the crazy EU – and focused the little State aid left for agriculture to the big haciendas, thus destroying and ruining small farmers.

Liberal and free-trade masochism.

NAFTA, however, also has many advantages for the United States.

Without the tripartite inter-American agreement, North American food prices would be significantly higher, while also oil and gas from Mexico and Canada would be much more expensive for US consumers.

As Carl Schmitt taught us, the American Monroe Doctrine (epitomized by the slogan “America to the Americans”) was developed above all against Europe. Nevertheless, the agreements like NAFTA allow to share – at least partially – the benefits of increased trade between the USA, Canada and Mexico in a less asymmetric way than usual.

The US primacy theorized by Monroe in 1823 and later rearticulated by Roosevelt in his State of the Union address in 1904, with the Roosevelt Corollary whereby  “chronic wrongdoing may in America, as elsewhere, ultimately require intervention by some civilized nation and force the United States, although reluctantly, in flagrant cases of such wrongdoing, to the exercise of an international police  power”, holds true also at economic level.

But are we currently sure that the most civilized nation is still the Northern one?

Just to better understand what we are talking about, it should be noted that the NAFTA agreement is made up of 2,000 pages, with eight sections and 22 chapters.

As such, it is currently worth 0.5% of the US GDP.

Since the official implementation of this agreement in the three countries which have adopted it, North American exports have created as many as 5 million jobs, with the creation of 800,000 additional jobs in the USA alone.

Nevertheless approximately 750,000 other jobs have also been lost in the United States alone, mainly due to the transfer of US activities to Mexican maquiladoras.

Hence a slight surplus.

Moreover, NAFTA has anyway ensured the status of “most favoured nation” to Canada and Mexico and has removed all tariffs and duties for the goods produced in one of the three Member States. It has finally established certain and clear procedures for settling trade disputes between the companies of every country belonging to it.

But above all NAFTA enables the United States to better compete with EU and Chinese products, by reducing the prices of the NAFTA goods wherever they are produced.

Also in this case, however, President Trump has threatened to walk out of the inter-American trade treaty and impose a 35% duty on imported Mexican products.

The aim is obviously to bring back investment in the maquiladoras to the United States.

Is this useful, also with regard to an evident trade war with the EU, Japan and China, as usual?

Is there currently sufficient real liquidity in the United States to back the supply increase which is thus created, with the return of all these productions back home?

Or is the idea prevailing of having everything be bought on credit, with all the consequences we can easily imagine?

Or is it possibly a matter of sending the NAFTA productive surplus back to European, Chinese and Asian markets?

Moreover, with specific reference to another multilateral trade agreement, the Trans-Pacific Partnership (TPP), President Trump announced he would like to establish a series of new bilateral trade relations that the US President likes more than the multilateral ones.

It is worth recalling that the TPP applies to the USA and to other 11 countries around the Pacific Ocean, namely Australia, Brunei, Canada, Chile, Malaysia, Japan, Mexico, New Zealand, Peru, Singapore and finally Vietnam.

All these countries together account for 40% of the total global GDP, which is currently equal to 107.45 trillion US dollars annually. They are also worth over 26% of world trade per year and as many as 793 million global consumers.

Obviously the list does not include China and India, considering that the TPP architecture has been designed to surround, close or at least limit the growth of the two great Asian countries.

President Trump also wants to renegotiate the TPP, which  by2025 is expected to increase trade among all Members States to the tune of 305 billion us dollars per year.

Hence if President Trump walks out of the TPP, many Member States will look to China for replacing the USA – and, indeed, many of them are already doing so.

Therefore the US President’s idea is to make the United States grow – through this wave of various forms of protectionism – by at least 6% a year, with an expected 3% net tax increase.

Too much. It would inevitably lead to high inflation and the classic boom-bust cycle.

If the economy grows by 2-3% a year, the cycle can expand almost indefinitely.

Conversely, if there is too much money looking for too few goods to buy, inflation will always come and the booming phase will stop all of a sudden.

Hence the bust materializes, with the quick reduction of wages and credits, as well as with an increase in prices and interest rates.

Therefore President Trump’s very dangerous idea is that –  in such a monetary and economic context -the United States can keep on borrowing all the liquidity needed because, as he said recently, “we never default, because we can print our currency”.

This is true. But if too many green bucks are printed, interest rates will rise immediately and this new version of Reagan-style supply-side economics will be stopped.

Finally a very serious recession would materialize, which currently would not be so easy to export to “friendly” countries.

Recently the dollar area has much shrunk.

It is no longer true –  as the former US Treasury Secretary John Connally once told to his European colleagues – that “the dollar is our currency, but it is your problem”.

So far, however, President Trump has decided 29 commercial or financial deregulation operations and over 100 internal guidelines and directives to the Administration, as well as other 50 new global market rules discussed by the Congress.

On February 3, 2017, the US President also decided to reform and almost repeal the rationale of the Dodd-Frank Wall Street Reform Act, with rules and regulations further reducing checks and audits on banks, which are no longer obliged to send to the Treasury Ministry data and information about the loans granted.

Moreover the banks with clients’ deposits lower than 10 billion US dollars must not even abide by the Volcker Rule, which forbids banks to use clients deposits to make profit.

Therefore, since 2015, banks cannot hold hedge funds and private equity funds.

Nowadays, however, with the reform of the Dodd-Frank Act, many credit institutions can avoid these difficulties and restrictions and play roulette with clients’ deposits.

For the new US lawmaker, Volcker’s and Greenspan’s policy was a way to avoid the implosion of the US financial system, after the fatal end of the Glass-Steagall Act which had been lasting since 1933.

It is worth recalling that the Glass-Steagall Act had come into force when the Roosevelt’s Presidency decided to imitate the Fascist legislation of the new separation between deposit banks and merchant or investment banks.

Banks did not want the Glass-Steagall Act because they wanted to be “internationally competitive”.

They also wanted to create money at will, regardless of the relationship between investment and collection.

What happened is before us to be seen.

President Trump wants to abolish even the Departments of Education and Environmental Protection, with an increase in military spending that is supposed to lead to a total public deficit of 577 billion US dollars.

Hence, in this new context, can the US Presidency avoid the Chinese commercial pressure and also ensure that the jobs repatriated to the USA from NAFTA, from negotiations with Japan, from the TPP and the rest of the multipolar trade system are such as to back the dollar without creating excessive inflation?

Moreover, all international trade experts agree that it is not the simple and traditional tariff barriers – but rather the non-tariff ones, which are very fashionable today – to cause real problems.

In short, we need to consider trade policy together with  strategy: if US protectionism increases, the growth of peripheral economies will decrease.

Thust here will be increasing possibilities of crisis in developing countries, while China’s desire to replace the USA in multilateral economic mechanisms that directly affect it may increase enormously.

Also the desire of global US competitors, such as the EU, to replace US exports at unchanged rates – at least for a short lapse of time – may increase.

There is no need for dumping – non-tariff transactions and the quality standard of made-in-Europe products are enough.

Therefore, nowadays, nothing is certain.

Certainly not US protectionism, of which we have noted  the dangers for North America and also for its geo-economic partners. Not even universal free trade, which does not consider the political evaluations and the economic, monetary and military planning of the various world commercial areas, is feasible and practicable.

Indeed, as in military policy, a great agreement – as the initial GATT was – is required in the current world market, with a view to establishing – for at least ten years – the areas and spheres of economic and productive influence and their possible future changes.

There is no free trade without planning.

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Americas

Presidents and Peripheral Foreign Policy: Mitigating Ideology in Global Security

Trevor C. Knight

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The United States’ democratic system complicates the development and implementation of foreign policy as leadership changes every four to eight years introduce instability and potential inconsistency. In light of recurring administration changes, the United States has a responsibility to engage with foreign partners in a consistent and cohesive manner. In theory, this is a simple task, but in practice it becomes a complex issue fraught with partisan politics, conflicting ideologies, and innumerable opinions and judgments from politicians and officials throughout the government. Understanding the unique set of ideologies held by a newly elected president is critical to anticipating the ways in which foreign policy will be implemented.

Foreign policy is not simply an amalgamation of a diverse set of equally-significant policies, but a complex system comprised of a small group of core foreign policies supported by peripheral foreign policies. Core foreign policies are generally unchanging across presidential administrations and, in the United States, center on the importance of international cooperation and the acknowledgment that intervention is sometimes necessary, especially when it advances collective security or protects human and civil rights. Core foreign policies reflect strongly held eternal values in the United States, including “liberty, equality, justice, an opportunity to prosper…and a chance to live under the rule of law—not under the thumbs of tyrants.” (McCain 2010, 10)

Compared to core foreign policies, which reflect both good governance and fundamental American values, peripheral foreign policies reflect the personal approach each president takes and are influenced by personal ideologies. Peripheral foreign policies include the prioritization of various aspects of international affairs over others, the emphasis of diplomacy with some nations while others get excluded, and the specific selection of methods by which goals are achieved.US Presidents have considerable freedom to develop their own priorities and goals for foreign policy efforts for the duration of their administration. These priorities may reflect policy positions espoused while on the campaign trail or they may reflect facts relating to national security and internal diplomatic concerns only made privy to the president after his election. Presidents and other decision-makers are influenced by political, social, and economic factors, lensed through their personal beliefs. Understanding the knowledge and opinions held by an incoming president is critical to anticipating the likely periphery foreign policy strategies to be implemented during the coming administration.

Presidential opinions toward social issues in other nations provide insight into the potential for interventionist or isolationist foreign policy positions. Interventionist presidents will often advocate for U.S. foreign policy which fights human rights abuses and aims to alleviate human suffering around the world. (Schwartz 2012, 173) Conversely, isolationist presidents are less inclined to engage in international social justice issues or humanitarian crises. Isolationist presidents may participate in humanitarian action, however, if national security interests are affected or if such action can be used to justify military intervention in regions of strategic importance. (Whittall 2015, 1)Interventionist or isolationist foreign policy positions inherently include economic considerations, as strong economies support interventionist policies, while weak or contracting economies see increasingly isolationist policies. (Whittall 2015, 1-3)

A President’s understanding of domestic and international economics plays a significant role in foreign policy development. During periods of increased competition from other countries, presidents must advocate a foreign policy position which enhances competitiveness and ensures positive trade relations. Inasmuch as foreign policy affects the U.S. economy, economics influence foreign policy: the promise of trade and the threat of sanctions can influence another nation with the same efficacy as the threat of military intervention. (Garten 2005)

As a president’s personal values are reflected in their ideological positions, personal values influence foreign policy development in unexpected ways. Personal values are the amalgamation of beliefs and opinions on social issues (i.e., immigration, racism, sexism, religion, etc.) and life experiences, and form the foundation of personality and overall character. (Schoen 2007, 410-412) Personality traits and values may not be immediately apparent when examining the foreign policy opinions of a president, but because personality traits are connected to and affected by external stimuli, high-intensity events may expose previously unknown traits and values.(Schoen 2007, 412)The influence of personal values on foreign policy can shift a previously isolationist president to adopt interventionist policies, or vice-versa.

Reducing the effects of ideology on peripheral foreign policy not only creates stability within the government, it promotes stability on the international stage through consistent engagement with and messaging from the United States. Cooperation between the United States and its allies will benefit from a more consistent and cohesive foreign policy in which American commitments to its allies will withstand administration changes and a fluctuating personal ideology presence. This stability can also encourage nations to increase engagement with the United States, whereas inconsistent policies based on shifting personal ideology may otherwise discourage diplomatic contact. Failing to address the influence of ideology on peripheral foreign policy thus increases the likelihood of the United States neglecting other nations in need of support, unnecessarily entering into conflict with other nations, or failing to defend itself from external threats.

Officials involved in foreign policy development are encouraged to think critically and engage in introspection and examination of the arguments proposed in favor of or in opposition to a specified foreign policy position. In addition to examining the sources of existing knowledge, officials are encouraged to review information which runs counter to existing opinions or beliefs, or information which comes from different sources, including those holding opposing opinions. Beyond the simple consideration of policy alternatives, divergent information may identify gaps in understanding which may indicate a need for reexamination of available sources or the collection of new information. Officials should also be encouraged to review their own foreign policy decisions and the decisions made by others to consider the influence of their own personal ideologies, not just that of the Commander-in-Chief.

As discussed above, political, social, and economic ideologies have direct effects on peripheral foreign policy decisions and need constant mitigation and vetting. Addressing these influences will help counter their potential negative effects on foreign policy development and help decision-makers create rational foreign policy in the best interests of the global community. Thus, executive and legislative personnel, both elected and appointed, have a responsibility to their constituents and the country as a whole to work to eliminate ideological influence from foreign policy. Shaping rational and coherent foreign policy protects the interests of the nation and must remain the ideal for the president, Congress, and other affected decision-makers.

The above recommendations provide a path toward successful foreign policy development. Understanding the distinction between core and peripheral foreign policies, particularly the influence of ideology on peripheral foreign policy, is an underappreciated aspect of global security analysis. Ultimately, more in-depth investigations into this relationship will open up new discussions and more cooperative dialogue between disparate actors the world over. Hopefully, this will lessen conflict and heighten opportunities for peaceful collaboration.

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