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Tags: trump | g7 | messahe | children | behave

Trump Took Correct Message to G-7 but All Children Must Behave Better

Trump Took Correct Message to G-7 but All Children Must Behave Better

Peter Morici By Tuesday, 12 June 2018 11:36 AM EDT Current | Bio | Archive

At the G-7 summit, there was plenty of unstatesmen-like behavior on both sides but the fundamental message President Trump took the Europeans and other allies was correct.

The United States has been a piggy bank they have abused-witness U.S. trade deficits with our allies against the stellar assessments of the competitiveness of the U.S. economy.

Those deficits along with our allies reluctance to spend and in some cases to take risks on behalf of their own security places an enormous tax on the American people-in lost growth and jobs, what the United States must spend on defense and the casualties American soldiers must bear.

Most specifically, Germany expects the United States and its southern European neighbors to run endless trade deficits to accommodate its mercantilist economic strategy premised on trade surpluses. That's why, for example, Germany must import workers while the South endures double digit unemployment and now Italy toys with leaving the Eurozone.

In the wake of the G7 summit, European leaders have concluded Mr. Trump is misguided. That is a terrible mistake that could cost them dearly.

Theresa May is too fixated on Mr. Trump's conduct prior to becoming president to recognize the alignment of UK and US interests and do what responsible national leaders must do-cooperate with other national leaders they don't like.

The French have too much false pride and vanity to listen.

The Germans are happy to exploit the disharmony to continue the ruse they perpetrate on the EU. The euro is undervalued for Germany and overvalued for the South and some other states. That is why Italy elected a Trump-like government and may dump the euro.

All the children at the summit need to start behaving like grownups. Adults pay their own bills and don't put personal dislikes and prejudices in the way of serving those they were hired to serve. And they exhibit more self-control in the public statements-tweeting (Trump), timing (Trudeau), countenance (May) and reasonableness (Macron and Merkel).

Frankly, if they were in my class, I would fail the lot-send them back to high school and tell them not return until they learned to behave nicely and to think more clearly.

I published this in the early days of the Administration, and it provides a neat justification for President Trump's position.

The Message for America's Allies

Allies Must Commit to Trade Reform to Preserve the Common Defense

President Trump got elected by railing against what liberal elites won't admit. The institutions that provided the foundation for post-World War II U.S international security and economic policy - NATO, alliances with Pacific states and the WTO - have grown decadent.

Our richest allies continue to expect the United States to bear too much of the burden - both in lives and treasure - to defend our shared liberty. And the establishment political class and economics profession at large have rationalized that America's richest allies - Japan and Germany - and toughest adversary - China - have run mercantilist regimes that make a mockery of free trade rules, and impose trade deficits, slow growth and falling wages on too many Americans.

As a principal player and no longer a sideline critic, Mr. Trump is forced to accept that the United States needs those forums, as degenerate as they may have become, to negotiate credible Western coalition responses to the three principal challenges tearing at Western security.

President Putin's ambition is to resurrect critical elements of the old Soviet sphere of influence - witness Russia's 2008 invasion of Georgia, seizure of the Crimea and support for Ukrainian separatists and deployment of nuclear capable missiles in its sliver of Baltic territory between Poland and Lithuania.

In the Pacific, China plays a skillful distraction by leaving to the United States the heavy lifting of deterring North Korea's nuclear program. With American resources stretched, Beijing plows the booty of its mercantilism into military modernization, cyber pirating and soft power, and tightens its grip on the international waters of the South China.

Even once ISIS is defeated, the Middle East will not likely be organized into a system of nation states capable of equipping their citizens to thrive in the global economy. No matter what resources Western governments put into nation building, ethnic and religious rivalries will limit the reach of governments, and Islamic extremism will fester to inspire terrorist attacks that Western security forces cannot completely deter.

The legacy of American appeasement of Japanese, German and Chinese mercantilism abounds in the boarded windows and social decay of once prosperous interior cities like Reading, Pennsylvania, but nowhere is more evident than in the president's recently proposed budget.

The administration can only find the $54 billion in additional annual funding it calculates is necessary to equip the military and security agencies to meet the above-mentioned challenges by radically downsizing U.S. foreign aid, diplomatic resources and other instruments of soft power and by eliminating programs essential to long-term economic prosperity - funding for R&D, workforce training and the like.

This Gordian Knot is the legacy of 1.8 percent annual growth during the Bush-Obama years, which in no small measure has been imposed by huge trade deficits. This situation will only worsen to dysfunction over the next decade if the Trump administration does not revive growth to 3.4 percent accomplished during the Reagan-Clinton years.

The United States will not be able to guarantee the military and counterterrorism resources necessary for Western security unless its allies commit to fundamental trade reforms to resurrect American growth and devote substantially more of their own resources to the common defense.

Tinkering with the WTO and other trade agreements won't suffice. Market-based rules for trade can't work when three of the four largest players - China, Japan and Germany - are bent on protecting their markets and maximizing exports. Simply, trading arrangements must be reordered to guarantee balanced opportunities - as measured by balanced trade.

If Japan, Germany and other Western nations can be persuaded to play by those rules but China won't, then the Middle Kingdom should be thrown from the club, and we should all learn to get along without its cheap labor.

Moreover, the time has long passed for the Japanese, Germans and others to spend considerably more on defense and change laws that prohibit the full engagement of their armed forces. Self-defense - whether in commerce or from menacing security threats - is not a choice even for the most peaceable states.

Mr. Trump must find a way to make those deals or the West may find itself as defenseless as Fifth Century Rome.

Sacked three times by invaders, the Western Roman Empire - and with it classical civilization - collapsed into the Dark Ages.

Peter Morici is an economist and business professor at the University of Maryland, and a national columnist. He tweets @pmorici1

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The United States has been a piggy bank they have abused-witness U.S. trade deficits with our allies against the stellar assessments of the competitiveness of the U.S. economy.
trump, g7, messahe, children, behave
Tuesday, 12 June 2018 11:36 AM
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