The Navarro Doctrine A Self-Fulfilling Fudge


#1

The American people are experiencing this moment of de ja vu: in a post-truth era, fudge can generate the truth of itself, and such truth is something we probably will never wish to observe.

Sometime before the general election of 2020, a campaign rally is staged in Wisconsin.

U.S. president Donald Trump gets off his armored car, passing through the crowd with Secret Service agents clustered around him. He jumps onto the platform with his signature posture so familiar to supporters down there, wearing red hats printed with “Make America Great Again” .The scene looks not like a stand-by, but more of an irony.

That morning right after the U.S stock market opens, it starts to plummet. The Dow Jones average lost 7% when closed. World major markets open from east to west at the order of time zone fall one after another. U.S. unemployment rate goes back to 8%. The shinning economic data of two years ago seem like a lifetime afar.

Global industry chain is shattered to pieces by the two-year long trade war. The United States still stands on the top of the chain, but it never sees the return of manufacture industry. Anyone with conventional wisdom understands that it takes at least 3 to 5 years to reopen an assembly line in U.S., while the destruction of trade war is instantaneous.

The fallout of the trade war has decoupled the U.S.-China economic correlation to almost nothing. The Europe, besieged with U.S. trade oppression and a new wave of populism hubbub, is once again on the brink of a secession crisis. Most countries are hiding behind the trade barriers to lick their wounds. And the living standard of the majority of people declined sharply.

Everybody loses direction in great uncertainty. From the headquarter of General Motor in Detroit—the supply chain of spare parts dips into a dreadful mess and the fastest growing markets have closed doors to them—to the farms in Missouri where farmers shift their produce from soybean to corn and then to wheat, but the sales is nonetheless depressing. As for the Apple Park, the Chinese people are launching a campaign of boycotting Apple products which forces Apple to slash its sales expectation of new released products by 30% of the year.

This scenario is not happened yet, but it’s not sensational, because we are riding on the highway leading to it. This is a set of deceptive theory based on lies and anger. It has never undergone rigorous academic arguments, rarely been recognized by professionals, but is placed at the bedside of the 45th president of the United States. It deceived the American people and fooled President Trump as well. The only one who benefited from it is Navarro, a speculator who had failed five times in elections, and had a poor record in financial management.

Welcome to Navarro’s moment of U.S. economy.

Why is the Navarro doctrine a set of fudges

Navarro doesn’t understand China’s economy, neither does he know China, but this panjandrum is championing Washington’s economic and trade policy toward China.

Navarro was a firm free trade advocate in his earlier days. In his 1984 Policy Game, Navarro made it clear that tariffs would inevitably lead to global economic crisis. However, after his repeated campaign failures for public offices, Navarro’s academic views changed radically and became an economic nationalist.

Obviously, this about-face is not based on professional academic researches. Daniel Ikenson, director of Herbert A. Stiefel center for trade policy at Cato Institute, claimed in an article that, “almost every paragraph in Navarro’s column contains factual mistakes”, the analytical errors and the fallacies portrayed as facts in his columns are so numerous that it is bewildering how a person with a PhD in economics from Harvard University—and a potentially devastating amount of influence within the White House—could so fundamentally misunderstand basic tenets of introductory economics.

Navarro doesn’t speak Chinese, and has been to China a very few times, but he turns out to be a China expert with several astounding books, The Coming China Wars - where they will be fought, how they could be won (2006), Death by China: confronting the Dragon - A global call to action (2010), and Crouching Tiger: what China’s militarism means for the world (2015).

There are plenty of well-trained and very-experienced China hands in U.S. universities, think tanks and private sections, whose perspectives on China cover the long spectrum from the left to the right. But even the most hawkish experts would not buy Navarro’s depiction of China.

In the eyes of Navarro, China is the root cause of all the troubles of U.S. economy. Navarro keeps warning the US not to buy anything made in China, because he believes that every penny earned by the Chinese will be used to destroy our country: the toys made in China will poison your kids, the pajamas made in China will self-burn, and the mobile phones assembled in China will even explode. In the policy report to Donald Trump, Navarro openly asserted that the U.S. should use the tariffs as the “negotiating tool” to stop the other countries from subsidizing exports, manipulating currencies and running low cost but heavily polluted factories.

He might have raised the right question. The U.S. does confront the hollowing of industry, the widening of the inequality gap between the rich and the poor, the increasing of the mass unemployment in the rust belt and many other negative impact of the economic globalization. Nevertheless, he found a totally wrong answer. However, compared with most economists, he chose a quite tempting road to salvation for many of the US voters. Rather than those correct but difficult options, blaming China and Europe is obviously more inflammatory and bewildering: they are the trouble-makers, we will make the U.S. great again simply by keeping kicking their asses.

Such a choice is very hazardous, not only because it could not solve the problem but also staggered the opportunity of real meaningful reform for U.S… The so-called new round of the Great Recession is not so sensational, it can come true in the next few years. According to Yale University economist Stephen Roach, the fundamental problem of the U.S. is the economic growth must be driven by consumption, while the deficit of the national saving rate is the Achilles’ heel of the U.S. economy. Hence, when the next crisis comes, the U.S. economy will be more vulnerable. The trade war can’t solve the problem, it will only catalyze a new crisis.

U.S. manufacturers have transformed from making low cost goods to high-valued and sophisticated products, such as digital products, automobiles and airplanes. The production of all of these hi-tech products relies on a stable import source to ensure the obtaining of necessary components and parts.

China is an indispensable manufacturer of these middle products and a hub that guarantees the global supply chain to run smoothly. In fact, the interdependence between the U.S. and China have reached a degree of “Mutual Assured Destruction”, if the assertive Donald Trump might threat to cut off the supply chains of Chinese companies, China could act commensurately. Professor Hiller, a Nobel Laureate and economist at Yale University warns that, in a U.S.-China trade war, China could sever supply chains of American firms, undermine the production models that these firms have long depended on. And it’s very difficult for American companies to forestall the storm. Thus U.S. manufacturing industry has to face a catastrophic consequence if this scenario becomes reality.

Now that the United States took the wrong prescription, the whole world is deranged. But it’s also an undeniable fact that the ongoing recovery of U.S. economy is only possible with a stable global trade environment. If this environment changes drastically, what’s the future of U.S. economic recovery would be?

When the Financial Crisis broke out ten years ago, international community could try to control damage and seek recovery under a multilateral economic framework. But when next financial crisis comes, under a suspicious and disintegrated global economic system thanks to the Navarro Doctrine, our best hope is that the pre-WWI situation would not relapse. The United States already degraded into a “rogue superpower”, please do not drag American into a meaningless and costly war again—that’s what Mr. Bolton excelled a decade ago, this time, Navarro becomes his close partner.

The United States has a proud tradition of running government by successful businessmen and entrepreneurs, their wisdom and leadership in financial and trade area is an indispensable important force of maintaining American global leadership. But for the first time in history, the United States is relying on a poor financial consultant and a third-rate economist to make the most significant decisions, and he does not need the consent of America people, the only man he needs to bedevil is Donald Trump.

Why this set of fudge could be self-fulfilling?

The Navarro Doctrine will become a self-fulfilling lie only when it hijacks U.S., the solo superpower, as hostage. As most critics believe, the U.S. has the every capacity either to consolidate the liberal order, or to jump into abyss with its allies by self-repudiation.

Although Navarro is not the only one who has made a rapid advance in his political career by personal attachment to Donald Trump, he is definitely one of the few who will not achieve their life value without such correlation.

Navarro, an unlucky economist with strong desire for power, had made futile efforts to run for public office five times. He had changed his political identity from a Democrat to an independent, before he shifted to a Republican in 2015 suddenly. But change of politic identity had not sent him into any public office. In an email to Bloomberg, Navarro described himself as a “Reagan-Trump Democrat abandoned long ago by my party on the economy, trade and foreign policy.” This is a truthful confession, if he had ever entered into the circle.

The restless Navarro turned his eyes to China in 2006 when he got a new idea to grasp political influence. He then set up the target of a “vicious China”, shot all his bullets. This has brought him a group of fellow travellers, including those rightists who are addictive to conspiracy theories, Taiwan which seeks independence using U.S.-China rivalry, and those marginalized overseas Chinese dissidents with extremely poor records of predicting China’s future, like Gordon Chang. For Taiwanese and overseas Chinese dissidents, America’s leadership is a tool to help them harvest their political interests.

If the film “Death by China” was only showed in a high-school baseball fund-raising event in the Laguna Beach, then a lie is just a lie. But this documentary reaped an extra loyal audience—Donald Trump, besides high-school students. This political loser, who has never won any local election in San Diego, found a shortcut to the White House. So the lie got not only his feet, but also his brain—Donald Trump.

The White House was certainly a perfect pandemonium. Navarro found his friend, Bannon, and his enemy, Gary Cohen. Their brawl on trade is only a tip of an iceberg of their thought divisions. Thereafter Navarro was once marginalized in the decision-making process.

After his principal ally, Bannon, and foe, Cohen left the White House like flies, Navarro remained with no friends in the West Wing. He could only rely on President Trump. Navarro soon ferreted out the right knack to gain an undefeatable position in a hostile environment of the White House, that was to constantly whet Trump’s fire and fury on trade issue.

From a candidate to the President, Trump had to not only honor his campaign promises, but also readjust his commitment according to the evolution of the environment, especially on the issues with major technical difficulties for implementation, such as health care and trade, the President must fully understand the reality and take the right advice from experts. But on trade issue, Navarro dragged the learning curve of the President back to the starting point, for the simple reason, he encountered Trump there. He knows that his value originated from this point, so did his power. Away from this point, he is nothing.

Another well-known dispute dated back to this May. During the trade negotiation with China, Navarro had a furious quarrel with Mnuchin in shadow of a government building in Beijing. As a veteran politician, Mnuchin clearly understands what the Navarro Doctrine means to the U.S. and world economy. But what dominated Navarro at that moment were probably only his fears about losing the favors from Trump and his hopeless bigotry to his own thought. After all, the bigger you are, the harder you fall.

If Navarro releases the devil from the heart of Trump and pushes the U.S. to board the chariot of hell with fire and fury, then finally he will win, but the Americans will lose. By that time, people might remember that in the summer of 2018, the U.S., at the crossroad, could have many different choices based on the real world, but not those lies from the autocrats. These were the options that will bring the American back to be the respectable world leader, and became great again.


#2

Yup, more or less accurate. We are seeing the end of Realpolitik on the right-wing as they become more ideologically driven and less pragmatic.