Foreign Policy

Trump's Wrong on Trade With Germany and a Liability to the Anti-NATO Argument

Both Trump and his mainstream critics are wrong about NATO.

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Michael Kappeler/dpa/picture-alliance/Newscom

I've got a few leftover thoughts about Donald Trump's trip to Europe. (Here's what I said about the Middle East portion.) As usual, I oppose both Trump and his mainstream critics. It's possible for both sides to be wrong in a dispute.

First, trade. Trump famously said to Jean-Claude Juncker, the president of the European Union, "The Germans are bad, very bad. Look at the millions of cars that they're selling in the USA. Horrible. We're gonna stop that."

I'm hoping that Trump is a demagogue who really knows better, because I can't believe that anyone could be so ignorant or unintelligent as to think that selling cars to Americans is evidence of badness. I never dreamed that someone who offered me high-quality products was trying to harm me. (He also says Chinese exporters "rape" us.) It's not just basic economics he'd have to be ignorant of; he'd also have to be clueless that German automakers have built cars in the United States for quite a while (the VW Passat, BMW X Series, Mercedes-Benz C-Class), most of them for export, at least in BMW's case.

But even if they weren't building them here, who cares? It's been 241 years since Adam Smith showed that the wealth of nations (i.e., collections of individuals) equals access to products that make life better. "The division of labor"—one of the short list of things that make common people wealthy—"is limited by the extent of the market," Smith wrote. Global trade extends the market as far as possible—until intergalactic trade becomes feasible. It's been only slightly less time since David Ricardo spelled out the principle of comparative advantage, which further elaborated on the source of the gains from trade. (Spoiler alert: we prosper because of our differences, so we shouldn't want the government to "level the playing field.")

The Wharton School surely covered those matters. Was Trump too busy giving freshmen swirlies to attend class? (Evidence for Trump's demagogy rather than ignorance is that his hotel rooms are appointed almost entirely with imported products.)

Trump tweeted on his return from overseas, "We have a MASSIVE trade deficit with Germany…. Very bad for U.S. This will change." But also found in Smith's The Wealth of Nations is this: "Nothing … can be more absurd than this whole doctrine of the balance of trade." Trump apparently does not know that the United States has run so-called deficits in good times and so-called surpluses in bad times, such as during the Great Depression.

Come on, someone with a brain as good as Trump says his is must realize that any "deficit" in the merchandise account is a mirror image of a "surplus" in the capital account. By construction, all such accounts taken together must balance.

When foreigners receive dollars for their exports to America, they have three options for how to use the money: buy American exports, invest here, or trade them to someone else who then faces the same options. They can't spend them at home, just as you can't spend euros at Kroger. Why does Trump want foreigners to buy American products rather than invest here? Investment improves our lives by creating new and better products. If we don't like that foreigners by Treasury bonds, i.e., lend money to the government, there's an easy and obvious solution: the government can stop borrowing.

On top of everything else, Trump either does not understand or does not care that a 35 percent tariff on German cars would be a tax on Americans—and not just buyers of German cars.

One more thing on trade. It's bad enough that Trump spouts such rubbish. But when his National Economic Council director, Gary Cohn, claims that Belgium's trade policies are better than Germany's, we have to wonder what the hell is going on. Under the European Union, both countries' have the same trade policies. Does he not know what Brexit was about?

Now NATO. Trump has learned nothing over the past year. He admits that when, during his campaign, he declared NATO obsolete, he knew nothing about it. He still knows nothing. I'm not saying NATO is a good thing. It's not. I'm saying rather that Trump's cluelessness is no help whatever in making the case against NATO and all such alliances. He's a liability to the anti-NATO argument.

Trump, in keeping with his absurd aggrieved-America shtick, would have us believe that western Europe free-rides off the American taxpayers. The taxpayers are indeed victimized, but the victimizer is Amerca's ruling elite and its bipartisan imperial foreign policy. NATO was never about protecting western Europe. Rather, it had—and still has—two other purposes: first, to give a multilateral mantle to essentially unilateral U.S. imperial actions; and second, to prevent other countries from forging their own peaceful bilateral relations with, previously, the Soviet Union and now Russia. America's ruling elite, driven by geopolitical and economic ambition, would not—and does not now—tolerate what it calls "nonalignment." You are either with us or against us. Otherwise, where would that leave "American leadership"? What would become of the "indispensable nation" and "American exceptionalism"? A bogeyman was/is necessary to justify American world leadership, and Russia fills the bill as the old Soviet Union once did. (ISIS runs a pale second.)

Thus western Europe has been a tool of American machinations, not an ungrateful beneficiary of American self-sacrificial defense. Does anyone seriously believe that the crushing and increasing burden of the national-security apparatus would lighten if European taxpayers were forced to spend more on their militaries?

Fat chance.

This piece was originally published by The Libertarian Institute.

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  1. Sheldon’s back! And talking about Trump!

    Bwahahaha!

    1. Yeah, and he hit a homerun. Great article, as usual.

        1. You misspelled “CLUCK.”

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      1. He sure showed those imperialist, capitalist, running dogs of America!

        1. Never mind the trade deficit, there seems to be a deficit in reading comprehension here.

      2. Yeah, and he hit a homerun.

        Have had my issues with SR int he past, but have to agree. Good article.

  2. “A bogeyman was/is necessary to justify American world leadership, and Russia fills the bill as the old Soviet Union once did. (ISIS runs a pale second.)”
    While I agree that NATO can be used for the imperial-ish reasons you mention, it also served to defend against a very real threat during the Cold War- the USSR.

    Russia is aggressive and has seized the Crimea and threatened smaller countries within its sphere of influence, as the USSR did.

    The USA does not act they ways imperialist nations like Britain did. The USA pushes nations to trade with us at a disadvantage. We don’t occupy nations like Imperial Nations did but it is costly to the USA and is not as good as free trade. On the other hand, global trade depends on stability and open trade routes, which historically were tough to maintain without military power.

    ISIS is a stone age group who wants everyone else to revert back to those times using military force. No thanks.

    1. Seized Crimea? The Russians living there voted to join Russia.

      1. Suppose the citizens of Hidalgo County, Texas vote to join Mexico.

        1. Suppose they do. So what?

          1. And suppose they did so after the Mexican military stormed into the town, and “supervised” the election.

            Then through cut out groups Mexico funded a civil war in southern Texas.

      2. I guess Brighton Beach will become part of Russia then, because the Russians living there voted to join Russia.

        Funny thing about the comments that you made. It clearly identifies you as a Russian. Only Russians say that sort of thing.

        1. I believe in a little something called self-determination. Guys like you only believe in it when you can invoke states rights to justify some oppression of a minority.

      3. Voted to join? Like how Putin has an 80% approval rating in Russia?

        Yeah, I’m sure those things are completely accurate. Just like the 2004 WA State governor’s election. All totally legit.

      4. They seized it militarily and then had a vote.

        1. And Russia tried to do the same thing to eastern Ukraine but that failed.

      5. “The Russians living there voted to join Russia” . . . when under military occupation by the Russian Army, in an election run by the Russian government, with so-called monitoring and exit polling only done by people already on the Russian side. With a reported result of 97.47% for joining Russia.

        And you expect us to take that vote seriously.

        1. Oh, look at all the Fox News brain-washed Russian hating yokels. Of course the predominantly Russian Crimea voted to join Russia. Crimea should never have been made part of Ukraine in the first place.

          1. Actually, my original comment impugning Putin’s popularity was based on a number of things, including an interview with Gary Kasparov, who in addition to being a world chess champion, is also a political dissident and anti-Putin activist in Russia.

          2. Hiding behind the word “predominately” is cute. The Russian-run census of the Crimean population in 2014 reported the place as 65.3% ethnically Russian. How, exactly, did those Russians fill out the 80.73% of all registered voters that supposedly voted for union with Russia that same year?

            Russia didn’t hold an election in Crimea. They didn’t even fake a plausible election in Crimea. They held a theatrical display of polling and then delivered a lie for world consumption. And you swallowed it.

          3. Wow! You really are a Russian, aren’t you?

            At least you admit that Crimea was part of the Ukraine.

            Funny how you think people on here watch Fox news.

            Summer is coming to Russia, tvarische.

  3. “Now NATO. Trump has learned nothing over the past year. He admits that when, during his campaign, he declared NATO obsolete, he knew nothing about it. He still knows nothing. I’m not saying NATO is a good thing. It’s not. I’m saying rather that Trump’s cluelessness is no help whatever in making the case against NATO and all such alliances. He’s a liability to the anti-NATO argument.”

    So he’s right, but he doesn’t know why he’s right and therefore Richman is pissed.

    1. Which is better tan being well ‘informed’ and wrong. ( examples McCain,Graham,Warren,ect )

      1. Yes, it is.
        Sorta like ‘winning ugly’ in football; still a win.

    2. It’s the way he says it! He doesn’t assuage and talk garble gabble like Obama did. So he’s bad.

    3. He’s a liability to the argument. As was clearly outlined in the article, if you could dislodge Trump’s cock from your windpipe long enough to read it.

  4. NATO’s ‘mission’ ended when the USSR fell.. Let Europe solve own problems.. Same for Japan and South Korea. .A completely free trade agreement between tU.S and EU would be a better idea.

  5. But Europe is free riding on US taxpayers when it comes to NATO and the UN.

    1. And I’m tired of supporting 4-week vacations for the wait-staff at some Parisian bistro. Let ’em join the Army if they want to see the world.
      Or at least, Russia’s western border.

      1. Great point. End all foreign aid and military subsidies.

        1. Yeah, we need to save it for domestic subsidies instead.

          1. No, we don’t. But given the choice, one could (but should not) argue that domestic subsidies are better than foreign subsidies.

            1. I’m kind of favoring organ harvesting all the hippies.

              1. After all, brain death was called a long time ago

  6. So the SF Chron’s front page “Trump is a big poopy-head” article today is headlined ‘Green Energy: Too Big to Fail’ or something similar. As if Trump just mandated brown-coal furnaces for every home in the US.
    Anyhow, as evidence, the article cites data from an outfit new to me: “Advanced Energy Economy”.
    It’s a green-wash club; big name sponsors, big time spin, and here’s the money-page:
    http://info.aee.net/aen-2017-market-report
    Mouse over the ‘Advanced Fuel Production’; you’ll get “ethanol”.
    ‘Building efficiency’? Insulation!
    ‘Energy Production’ features such advanced sources as “Hydropower”
    The Chron’s getting desperate.

    1. Looks like the Germans are happy to heat with lignite briquettes, why not us?

      http://www.brikett-rekord.com/

  7. Trump may be a liability to “the argument” but he’s a YUGE asset to an anti-NATO policy.

  8. Sheldon Richman is a twat.

    1. Probably has one too.

  9. The usefulness of a military alliance is determined by the threat it is assembled to address. So the question becomes what is NATO currently designed to defend against?
    The Communist Soviet Union? No longer exists.
    Russia? ISIS? Can NATO be against both Russia and against ISIS? If so, how?
    Russia is a member of the NATO ‘Partnership for Peace’ (what??!!)
    France has been in and out of NATO based on personalities and perceived imbalances of political power.
    What a mess. How about everybody spends whatever it wants on military power, and when the balloon goes up, the survivors get together and divvy up the parts of the world that do not glow at night?

  10. ISIS now calling for “all out war”, presumably against the entire west and all other infidels.

    Good idea. Bring it on, you filthy camel jockeys.

    1. ISIS now calling for “all out war”

      Good luck with that. Mad Dog Mathis says the new rules of engagement are “Annihilation Tactics”.

  11. There’s an argument that NATO was never designed to protect Western Europe from the USSR, but merely a bluff like America’s nuclear umbrella designed to make Western Europeans think they were being protected and keep them from developing their own nukes. Looking at what Europe had done to themselves with conventional weapons in WWI and II, you really want a dozen bickering shithead countries that have been warring with each other for a thousand years getting their hands on nukes for the next time they start threatening WWIII?

    I mean, there’s no way in hell with the size of the Soviet Army staged on the border* that if they decided to roll into Paris anybody would be able to stop them, the war would be over in a matter of hours. Of course, we got pissy with de Gaulle when he insisted the French would have their own force de frappe because he was giving away the bluff – de Gaulle knew if the Soviets rolled toward Paris the US had no way of getting troops there fast enough to stop them and the idea that the US was going to either nuke Paris to dislodge them or nuke Moscow and see half the US nuked in retaliation over Paris was bullshit and he wasn’t buying it.

    1. *Of course, we know now that all those troops in Eastern Europe were neither an offensive threat as we claimed nor a defensive force against us as the Soviets claimed, they were simply an occupation force making sure the Poles and the Czechs and the Hungarians and all the rest of them didn’t start getting all squirmy over the idea that being conquered by the Nazis really wasn’t any worse than being liberated by the Rooskies and might actually have been better.

      1. This. As soon as any Russian troops moved forward to attack NATO their supply lines through Poland, Hungary or Czechoslovakia would have been compromised. Warsaw Pact forces looked imposing on paper, but their ability to actually carry out an assault on the west was another matter.

    2. Hey, do you mind not obliterating the ‘Europeans are sophisticated’ narrative? We still have a lot to learn from them…apparently….so they say….I think.

    3. France had nukes in ’60. The Fulda Gap which the Soviets would have had to attack through is were they would have been used.

      1. Yes, but de Gaulle withdrew from NATO in 1966 to get them under French control.

    4. There’s an argument that NATO was never designed to protect Western Europe from the USSR, but merely a bluff like America’s nuclear umbrella designed to make Western Europeans think they were being protected

      People in countries like Germany understood that they were buffer states and would be annihilated if war actually broke out.

      Nevertheless, being a buffer state with limited democracy and limited free markets was still preferable to being incorporated into the Soviet Union.

  12. The insane things Trump says are a negotiating tactic. Doesn’t everyone know that by now?

  13. Good article. The US should unilaterally end all tariffs and subsidies for all industries and products not related to national security. We should also withdrawl from NATO. That does not mean we don’t cooperate with other nations nor does it mean we can never entire into future alliances to achieve limited specific goals when mutually beneficial. It just means we’re not obligated to go to war over someone else’s problem. We can, but we’re not obligated.

    1. I will add that I am not opposed to forward bases if deemed necessary to national security, and if part of the cost of those forward bases is providing security to the host country, I am not necessarily opposed to that depending on the situation.

  14. Come on, someone with a brain as good as Trump says his is must realize that any “deficit” in the merchandise account is a mirror image of a “surplus” in the capital account.

    You’re absolutely right. But that “surplus in the capital account” benefits doesn’t benefit people equally.

    For example, when you have Chinese investors driving up the prices of US urban real estate, American city dwellers can’t just move to China. When the German government fixes the price of German healthcare for blue collar workers, US blue collar workers can’t just move to Germany

    Free trade works well between nations with free markets. But in trade between free markets and regulated markets, the regulators can export problems and externalities into the free markets through careful regulation.

    Progressive poster boys like Germany and the Nordic countries play that game quite well: they export blue collar unemployment to the US; pollution to China; and inequality to Monaco, Switzerland, and the US. They pay a financial price for that, but socially and politically, they still benefit overall.

  15. According to Hastings Ismay, the first Secretary General of NATO, the purpose of NATO was:

    The purpose of NATO is “To keep the Americans in, the Russians out, and the Germans down.”

  16. NATO was never about protecting western Europe.

    Indeed, it wasn’t. It was about protecting the US from a group of dangerous regimes and war mongers: Italy, Germany, France, Spain, Japan, China, etc.

    It was a political choice (and a good one) to pretend that they were on equal footing with the US after WWII; but these nations have grown up now, and we don’t need to treat them or their fragile egos with kid gloves anymore.

  17. When foreigners receive dollars for their exports to America, they have three options for how to use the money: buy American exports, invest here, or trade them to someone else who then faces the same options.

    They can buy the country. Natural resources. Land. Intellectual property.

    The Chinese are doing that around the world.

  18. I for one think the US should withdraw from NATO. The US taxpayers have been paying 70% of the bill for defending Europe against a made-up enemy. It is the US and Europe that are ringing Russia with military not the other way around.

  19. Is Trump a liability when it comes to privatizing ATC too?

  20. RE: Trump’s Wrong on Trade With Germany and a Liability to the Anti-NATO Argument

    “First, trade. Trump famously said to Jean-Claude Juncker, the president of the European Union, “The Germans are bad, very bad. Look at the millions of cars that they’re selling in the USA. Horrible. We’re gonna stop that.”
    As usual, Trump the Grump is wrong on this one. If I had the money to purchase a European (or any other car from any other country), then I should have the freedom to do so. No choice, no freedom.
    Secondly, why are we in NATO again? I though the Soviet Union collapsed decades ago. I guess I’m wrong.
    Let the Europeans go bankrupt defending their chickenshit countries, and let their kids go to war, fight and die. Americans have spilled enough blood policing the world the past century.

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