Daily Archives: 13 January 2017

Linkages

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They didn’t work when Nixon and Kissinger tried it, even though the Soviet Union generally complied, because the revolutions that the USSR was fomenting continued to occur apace after the Soviets stopped fomenting in return for nuclear and economic concessions.

Treasury Secretary Jacob Lew warned ignoring recent steps by Beijing to liberalize its economy would endanger Chinese cooperation on other major geopolitical issues, particularly containing North Korea’s nuclear program.

They’re not working now with the People’s Republic of China, but for a different reason.

And

The departing Treasury secretary further warned against steps that would prompt China to withdraw its support for tougher sanctions against North Korea.

The PRC still isn’t taking steps to “liberalize its economy,” not when it’s actively interfering with its cross-border yuan flows, manipulating domestic interest rates with a view to control who gets to lend or borrow rather than an effort to maintain a stable monetary policy, manipulating its domestic stock markets as it did in 2015 and today with manipulating the legal environment, and on and on.

Nor has the PRC ever cooperated in any meaningful way with respect to sanctions connected to northern Korea’s nuclear weapons program.  The PRC routinely slow walks its agreement to sanctions (which is why their occasional prompt agreement is such news), and it ignores sanction violations as those occur across its border with northern Korea.

And—ignored by Lew—the PRC is accelerating its aggression in the East and South China Seas and increasing its pressures on the nations rimming the South China Sea to deal with them exclusively and one at a time on trade questions.

Before today’s linkages can have effect, the parties at both ends of the lever must be willing to be responsive.

Polemics vs Reasoned Argument

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As the Congress considers import taxes as part of its general tax reform agenda, toy sellers are expressing their concern: they import most of what they sell; their products are manufactured overseas.  Import taxes are surely a thing worth discussing and debating thoroughly, whether they’re essentially cost of goods sold neutral, as Doug Holtz-Eakin argues (the dollar will rise from the tax change and economic growth, and so the dollar cost of imports will fall; the cost of goods sold will simply emphasize taxes more and import costs less), or they’re dangerously like protectionist tariffs, as others argue.

Arguments that are carefully emotion-laden while devoid of facts, though, are inappropriate.  Here’s an example from Steve Pasierb, President of the Toy Industry Association:

We are fully prepared to work productively or be a royal, boisterous, media-friendly pain in the backsides of people who would take away children’s happy birthdays, steal Christmas, and destroy quality US-based jobs.  And no one wants to have to explain to their children why Santa was put out of work.

Such Leftist “feel my pain” three-hankie argument has little credibility and less validity in the sort of reasoned discourse necessary in an economic debate.