Category Archives: foreign policy

Some Thoughts on our Trade Imbalance

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Phil Gramm and Donald Boudreaux had an extensive op-ed in last Thursday’s Wall Street Journal. I have a couple of thoughts on their piece.

Overall, they presented a typical argument regarding international trade balances, and it was sound as far as it goes. However, I’ve never seen an argument for or against US trade deficits/surpluses that take into account the dollar as the world’s reserve currency.

For international trade, how much, really, are local currencies traded for dollars in order to purchase American goods and how much are local dollars traded for foreign currencies in order for Americans to buy foreign goods? How much of those currency exchanges are really just taps of the foreign nation’s dollars held as reserves and similarly replenished into those reserves through ordinary trade-of-goods-and-services exchanges? In other words, how much to buyers and sellers themselves do the currency exchanges and how much of those currency exchanges are actually done from government to government out of government reserve holdings?

Maybe a lot is government to government, maybe a little, but the question needs answers.

Also this:

Has the expansion of global trade “hollowed out” US manufacturing, as Joe Biden claimed in 2022? No. US industrial production today is more than double what it was in 1975, the last time we ran a trade surplus.

What is produced by today’s “industrial production” compared to that of 1975? Or immediately after WWII? That never gets specified. Nor does “industrial production” ever get normalized to account for changes in technology and manufacturing techniques.

A similar definition disconnect exists for services.

Until those specifications are made, claims of industrial production or services changes in either direction are meaningless.

Europe’s Role in Europe

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In a Wall Street Journal article centered on the EU’s dismay over being dismissed from peace talks among Ukraine, Russia, and the US, there was this bit near the end:

Ukraine’s army today is larger and more capable than the German, French, Italian, and British armies combined. Alongside Russia’s, it is also the only military in the world with a wealth of experience in large-scale modern warfare against a near-peer enemy.

That’s how worthless NATO has become, particularly including those western European nation members. Sure, those nations are nattering on about increasing defense spending. French European Affairs Minister Benjamin Haddad:

The message is clear: it’s time to take our responsibilities, to safeguard our own security.

Well, NSS.

However.

Germany, not atypically, has made those commitments before, and then welched on them. And even those western European nations who did consent to send weapons and money to Ukraine held back on them until the US first sent weapons and money to Ukraine, so timid they have been to act on their own initiative.

It’s time for the US to stand up a separate mutual defense arrangement centered on the eastern European Three Seas Initiative nations—nations which directly front Russia and still remember the devastation caused by the barbarian’s jackboots on their necks. Those nations, too, already are at the European forefront in material and financial support, on a per-GDP basis, for Ukraine’s fight for its existence. And then for us to walk away from NATO, which has been shown to be three years, at least, past its Use By date.

Arab Plan vs Trump Plan

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President Donald Trump (R) has laid out his plan for recovering the Gaza Strip from the devastation that Hamas has caused with its war on Israel and with its reign over the Strip for the decades preceding its war. The surrounding Arab states don’t like that plan, for all that Jordan has agreed to accept 2,000 children from the Strip.

Trump then said words to the effect of, if they don’t like his plan, come up with one of their own.

All of a sudden, they’re working on one.

Egypt has launched a diplomatic blitz to corral support for an Arab-led and funded initiative to rebuild the Gaza Strip, setting aside old political concerns in hopes of boxing out a Trump plan that is wildly unpopular across the Arab world.

And

Egypt is also seeking to separate out the question of Palestinian statehood and put it on a different track from the effort to rebuild Gaza[.]

Put up, or shut up. Maybe the Arab states are choosing, finally, the former. Until now, far from shutting up, they’ve been happy to virtue-signal among themselves by yapping from the safety of the sidelines rather than stoop to get their own hands dirty while the Palestinian residents of the Gaza Strip, about whom they pretend to care, continue to be butchered by Hamas.

Defanging the PRC

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At least by a little. As part of the People’s Republic of China’s economic war that it’s waging against us, they have moved to block important mergers involving American and non-PRC companies and today are threatening our major tech companies (and by extension our smaller tech companies and those companies that supply or otherwise do business with these).

Beijing has already said it is investigating Nvidia and Google over alleged antitrust issues. Other American companies in its sights include Apple, Silicon Valley tech company Broadcom, and semiconductor-design software vendor Synopsys, said people familiar with the matter. Synopsys has a $35 billion acquisition awaiting approval by Beijing.

And

[The PRC] said it had opened an antitrust probe against Google.

And

In 2018, amid US-China trade conflicts in the first Trump administration, Qualcomm terminated its proposed purchase of Dutch chip maker NXP Semiconductors after failing to obtain clearance from China.

And

US chip maker Broadcom’s takeover of VMware, valued at $61 billion when it was unveiled in May 2022, was in peril until a meeting between Biden and Chinese leader Xi Jinping in November 2023.

If these companies did no business with companies domiciled in the PRC and did no business within the PRC, that nation would be unable to go after them at all, including having no ability to block mergers between US and non-PRC companies. The PRC’s ability to damage our economy would be restricted commensurately. Of course, withdrawing from the PRC would be expensive in the short run, but it’s a large economic world, and while the PRC is a major player in it, that nation is not the only player. The magnitude of its role, too, would shrink as we reduce our economic ties with it.

Another, central, question is this: what’s the cost of letting an enemy nation have so much influence over our economy?

Why do we Care?

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President Donald Trump (R) is moving to transfer as many as 30,000 illegal aliens with violent criminal histories to Guantanamo Bay for temporary housing until their final disposition is determined. A couple of Fox News‘ news writers are in such a tizzy over the prospect that they enumerated the 15 remaining prisoners—terrorists, the lot of them—along with brief biographies, who are still housed there. The writers seem worried in some inchoate manner about the potential for interaction between the two groups. The writers don’t say so in so many words, but why else would they feel constrained to point out the juxtaposition?

The larger question, which apparently hasn’t occurred to those writers, is this: why would any of us care that violent illegal aliens are being housed in the same facility as violent terrorists? After all, the former already are hardened criminals in their own right.