Hugh Hendry, founder and former CIO of Eclectica Asset Management, welcomes Lyn Alden of Lyn Alden Investment Strategy for a wide-ranging discussion on international trade and the Eurodollar system. Hendry mounts a nuanced defense of the dollar’s role as the global reserve asset, whereas Alden sees a slow but steady de-dollarization happening around the world, which she expects will continue. Hendry and Alden discuss whether China’s role in international trade is “mercantilist,” and whether its stagnant reserves of U.S. Treasurys is a true macroeconomic bellwether. Lastly, Hendry and Alden look forward to identify potential solutions to these problems, such as digital currencies (Alden’s solution) and ultra-negative rates (Hendry’s solution). Filmed on December 1, 2020. Hugh Hendry’s YouTube channel can be accessed here: https://www.youtube.com/c/HughHendryO….
Key learnings: Alden and Hendry agree that structural forces have prevented the dollar from weakening to the levels implied by its persistent trade deficit. But while Alden thinks the Eurodollar system will expand beyond the control of the U.S., Hendry argues that American commercial banks will continue to control the supply of dollars in reality, and that the U.S. will remain the global monetary hegemon. Hendry has also provided a transcript he has personally edited to clarify some of his points in this interview: https://rvtv.io/3gysJZT
Many Republicans have joined the Never Trump camp, but few have previously been more important to the Party than Stuart Stevens. After working on George W. Bush’s two Presidential campaigns and serving as a consultant for several major congressional candidates, Stevens was Mitt Romney’s top strategist in 2012. He began speaking out against Donald Trump in 2016 and today is an adviser to the Lincoln Project, a political-action committee formed by current and former Republicans to prevent Trump’s reëlection. In Stevens’s new book, “It Was All a Lie: How the Republican Party Became Donald Trump,” he tells the story of his long career in politics and how the party he once worked for has been subsumed by nativism, bigotry, and cruelty. But Stevens doesn’t believe that the G.O.P. was taken over by someone entirely alien to its ideology or behavior. As he writes, “How do you abandon deeply held beliefs about character, personal responsibility, foreign policy, and the national debt in a matter of months? You don’t. The obvious answer is those beliefs weren’t deeply held.”
I recently spoke by phone with Stevens, who was in Vermont. During our conversation, which has been edited for length and clarity, we discussed what a Romney Presidency might have looked like, the ethics of campaign consultants, and how we should evaluate the George W. Bush years.
Your book differs from others in arguing not that the Republican Party has gone wrong with Donald Trump, but that the Republican Party has been going wrong for a very long time. What is the difference in your mind between those two critiques, and why did you think it was important to make the latter one?
I think I wanted to believe for a long time that when Donald Trump came along he was hijacking the Party. A lot of people were wrong about Trump in 2016, but it’s hard to find somebody more wrong than I was. I predicted he wouldn’t win the primary, and I predicted he wouldn’t win the general election. In retrospect, a lot of that was that I didn’t want to believe it. He says he has ninety-five per cent Republican approval, and that’s probably an exaggeration, but let’s say it is eighty-nine per cent or so. You look at what Trump is saying, and the degree to which the Party is comfortable with it, and I don’t know what conclusion to come to other than that Trump very well suits the Republican Party. In the book, I trace the history of the Party from the post-World War Two era, and Trump is one direction the Party could have gone in. I don’t know how else to say it, but it did go in that direction.
Without getting into a question about cause and effect, and how the universe functions, and whether a different future was possible, what do you think held the Republican Party together pre-Trump, and what was attractive to you about it?
What appealed to me was a party that believed in personal responsibility, that character counts, and that was strong on Russia and free trade, and strongly pro legal immigration. It’s not just that the Party has drifted away from those principles, like parties do. As far as I can tell, the Party is actively against every one of them. We’re the “character doesn’t count” party. We’re the anti-personal-responsibility party. We’re the pro-Putin party. I think the only conclusion is that a party that said it believed in these things didn’t really believe in them. If a George Wallace type had run in the Democratic primary in 2016, would that person have won? No. Had that person by some freak accident won, would the Party establishment have coalesced around him? No. They would have said, “This isn’t what the Democratic Party stands for.”
Your book has a huge chapter about racism and the degree to which it’s always been a part of the modern Republican Party. How do you see the effect it had before Trump?
There are always these tensions. There was Eisenhower; there was McCarthy. We look at William F. Buckley now and mourn him for the loss of this erudite voice. Instead we have Sean Hannity. But we forget Buckley started out as a stone-cold racist arguing for segregation. If you go to the Bush campaign that I worked on in 1999 and 2000, when Bush called himself a compassionate conservative and was criticized on the right, he tried to articulate a different vision. Had Bush not become a wartime President, I think it’s fascinating to think what would have happened.
But the Party has existed predominantly as a white party. I think if you’re a business, and you spend sixty years appealing to one segment of the market, you get good at that and not very good at the other. What I think is really striking is that we used to admit this was a failure and talk about it. We used to talk a lot about a big tent. I go back to 2005, when Ken Mehlman, the chairman of the Party, went before the N.A.A.C.P. and apologized for the Southern strategy.
This was the same Ken Mehlman who helped run the Bush reëlection campaign, which used anti-gay-marriage initiatives to turn out Republicans in key states.
What I say about this is that we were far from perfect in Bush world. We played too much to the dark side. But we had an aspiration to be better than we were. I think that’s important. With Trump, he takes your worst self and validates that as your best self. That part of you, we all have it, that feels aggrieved, that feels cheated—the side of you that, when someone cuts you off in traffic, you have that little spirit of road rage. Trump said, That’s your best self. You should empower that. I think that that’s an important distinction.
Bush clearly is a nice guy in certain ways that Trump is not a nice guy. But when you look back at the Bush Administration, and you look at what’s going on now—when you talk about contempt for science and you look at the way the Bush Administration dealt with global warming, when you look at spurning expertise and making decisions and how Iraq ended up playing out and Katrina played out, do you think that even if we see that the intentions were different and that cruelty was not the point of the Bush Administration, to take a phrase from another writer, that there were more commonalities there? And that it’s not a coincidence that the last two Republican Presidencies are ending in failure, assuming that Trump’s Presidency is ending soon?
I think the answer is, yes, those elements were there. Definitely. Look, Bush gets elected. If you look at that picture of him signing [No Child Left Behind] with Ted Kennedy behind him, I mean, today that would be submitted in a war-crimes trial in the Republican Party. It’s unimaginable that that would happen with Trump. There was that side of Bush. What happened after 9/11? Did he demonize Muslims? No, he didn’t. He defended Muslims. There’s that side of him. Obviously, Iraq was a debacle, and we can argue about how that happened, why it happened, what they believed when they went in—but it was a disaster, undoubtedly, one of the great disasters in American history.
I think we played too much on the social-conservative side, particularly, with the same-sex-marriage referendum. I think that’s regrettable. So I don’t think it’s one or the other. I think both. What I’m describing is the tension within that party, that both elements existed. Now that’s not uncommon for a party. You can look at Joe Biden and you can look at Bernie Sanders, and they exist in the same party. There’s an argument to be made that diversity is a strength, though I think the sort of know-nothingness of anti-science is not a strength. I don’t think that’s diversity. I think it’s ignorance.
I think that Bush being there as a leader made a huge difference in an ability to at least assert values of commonality that were not our worst selves. I think with Trump that has been abandoned. Then the question becomes, Do you accept that? In 2015, when I went out against Trump, I can’t tell you how many people in the Republican Party, high levels, were e-mailing me and saying, Thank you for doing this. I can’t do it because of X, Y, and Z, right up to about ten o’clock on Election Night. Then I started getting e-mails saying, Could you maybe erase that e-mail I sent? I think in many ways everything that a lot of us said about Trump in 2015 turned out to be overly optimistic.
If I had said in 2016 that it’s going to be July, 2020, and we’re going to have the worst economy ever in the history of America, the greatest decline in G.D.P. in American history, over a hundred and fifty thousand Americans dead in a pandemic in the last four months, and Donald Trump is talking about suspending elections, people would have said I’m crazy.
It’s not ideal. Let me ask you, though, about your mental state. You write about the deficit and “out of control” federal spending being a phrase Republicans use. And then you say, “But no one really believes in it any more than communicants believe they are actually eating and drinking the body and blood of Christ.” Putting the latter aside for a minute, when you say no one really believes it, are you implying that no Republicans really believe it, or that you didn’t believe it when you were working in Republican politics?
I’ve said before that I probably represented the worst of the American political system. I was a guy who was drawn to politics because of campaigns and not government. You know, I didn’t think I’d be very good at government. I briefly worked on the Hill and I was probably the world’s worst staffer, which, there’s a lot of competition for that. The process of government, which at its base level is usually pretty boring and tedious, just didn’t appeal to me. I really didn’t think about this stuff a lot. I should have thought about it more. You’re not powerless. You can have an impact on this.
The deficit line is just something people say, in the way you say when you see someone you don’t like, “It’s nice to see you.” It’s sort of like a social nicety. If you said to them, “Are you for major deficits?” They would say, “No,” and they would have passed that lie-detector test. But if you had said, “Are you willing to do what it takes to end the deficit?” The answer would have been what happened, “No.” It’s really even worse than that. If you go and you look at the last time that the deficit got wrestled under control, it was under Clinton. In part, that was because Clinton passed a tax increase. If you go back and you look at what we all predicted, and I made a million spots, we predicted economic Armageddon after the Clinton days. Instead, we had the beginning of the greatest period of growth in American history. We were wrong. I think we have to admit that and look at what happened.
Would Mitt Romney have made a good President if he had been elected in 2012?
I think Mitt Romney would have been a great President, and every day I wish that he were President.
Maybe this gets to the fundamental issue we’ve been going back and forth on. I think a lot of people acknowledge that Romney is in many ways a pretty decent, honorable man. Certainly, I think a lot of liberals think this now, and a lot of centrists think this now. At the same time, you’ve just finished talking about how Iraq was a disaster and how Republican economic policies don’t really make much sense. Romney was, essentially, running on “doubling Guantánamo,” and an aggressive foreign policy, and the Paul Ryan budget. If Romney had been elected, would his have been another Republican Presidency that ended the way the Bush Presidency did? Is that sort of more important than the fact that Romney is an honorable guy?
I don’t think that all Republican Presidencies end badly. I don’t think that the Bush Forty-one Presidency ended badly. I think that the W. Bush Presidency is the tragedy of Iraq. I think Mitt Romney is someone who has a proven record of being able to bring people together and being able to solve problems in a practical way not driven by an extreme ideology. I believe that we would have had more control on deficit spending, because you would have had someone who actually could have done something about it, who would have actually believed in it. Unlike Donald Trump who says, “I’m the king of debt,” and can’t pass anything because he can’t bring people together.
It’s interesting why Mitt Romney picked Paul Ryan, and it’s a very personal choice and I don’t want to speak for the senator, but I think he picked him as a governing choice. I mean, he said as much. I think it’s correct. He had no experience on Capitol Hill. He thought that having that experience would be important. Paul Ryan was someone who was well liked across the aisle. I think, together, they could have brought a lot of economic sanity to the country. I think they would have tried. Is it possible in America today to bring the budget down? I think so. I don’t know anyone on the conservative side that can do the same with any credibility.
But Paul Ryan helped pass the Trump tax cuts, which, as you say, were deficit-exploding. He was the one who shepherded it through the House.
Yes, yes. I think when not combined with cuts in the budget, it creates huge deficits that we have. If cutting taxes was a unified theory for Republicans, which it is in a certain class of Republicans, I think it’s proved to be a very false religion. I don’t think that what we invested in cutting taxes has proved to be accurate.
I’m less convinced that Mitt Romney and Paul Ryan and a Republican Congress would have gotten responsible about the federal budget in this alternate universe we’re talking about. Bush also had a budget-busting tax cut. It just seems very integral to what the Republican Party is, completely independent of Donald Trump.
Well, you can’t argue with that, O.K.? Whether or not Romney could have taken the Party in a more productive, rational fiscal policy, we’ll never know. I say this in the book, and I think it’s pretty much inarguable, the idea of so-called trickle-down economics has proved to be nonsense.
Do you think Paul Ryan and Mitt Romney and George W. Bush think it’s nonsense?
I can’t speak for them.
How do you understand his 2012 campaign—that Romney met with Trump—and things like this?
Listen, both those candidates had fifty per cent favorables. Romney got a lot of criticism for not going far enough on stuff. If you go back to the foreign-policy debate, he was criticized for not trying to make Benghazi the center of all evil. In the Republican primary, I remember this well, there was one of those awful raise-your-hand questions: Who believes Barack Obama is a socialist? Mitt Romney was the only person who didn’t raise his hand.
He did write a book called “No Apology,” presenting Obama as some sort of foreign-policy radical.
I think there were huge failures with Barack Obama’s foreign policy. I really don’t know how anybody would argue with that. You could argue that those failures were inevitable, but you can’t look at Syria, the greatest human-rights tragedy in the post-World War Two world, and not think that it was a tremendous, horrible failure. You can sustain two beliefs. I can. One, that Barack Obama is a decent human being, and if Barack Obama were President today the country would be better off. I say that without hesitation, while admitting that there were failures. I think that there was a failure on Obamacare not to be able to come to some greater ability to have both parties support part of it. And probably what we should have done on Obamacare is divide it into pieces. I think it’s governmentally problematic when you have one party pass it.
He did pass a version of Mitt Romney’s health-care plan, but let me ask you, Are you in touch with Romney?
I talk to Senator Romney some. Mainly about books we’re reading and just stuff going on in mutual friends’ lives. You know, the impeachment, for example, I had no idea how he would vote. The stuff that I talk to him about is more like personal stuff.
Do you think that Romney or Bush will endorse Joe Biden? Do you think that they should?
I would be very surprised if they do. I think, particularly, for an ex-President the roles that they play—I mean, there’s a lot of talk about why didn’t President Obama weigh in more in the primary. I think it is a unique role that has serious gravity.
I would be very surprised if Senator Romney endorsed him. My experience with Romney is pretty much that on the record and off the record is the same these days. What he said is that he intends to do what he did last time. I think that’s what he’ll do.
Does that disappoint you in any way?
No. I think Mitt Romney has been heroic. I think the eternal shame of most of these Republicans is going to be, why didn’t we follow Mitt Romney? I mean, Mitt Romney went out [against Trump] in March of 2016, and, had the Republican Party rallied around him, we could have saved ourselves from this incredible debacle and disgrace and humiliation.
Did you ever figure out what his whole Secretary of State flirtation thing was? Do you think that was just trying to be an adult in the room?
I pretty much know what it was about, because I talked to him then. I think it’s pretty much what you would think—that there’s a greater duty to the country, and I think he thought that, out of respect for the office and the process, he should talk to Donald Trump. I think he’s very glad that he was never asked to be Secretary of State, because I think it would have been the shortest Secretary of State tenure in history. I don’t think he would have lasted two months.
Why are Southerners attracted to Donald Trump?
It’s a question I’ve asked myself a lot, because in many ways Donald Trump is the caricature of the rich Yankee that we’re always warned about, who has no manners, no respect for anyone, including women, who is crass, and values money over everything. That’s Donald Trump, and he’s pretty much wildly popular with a lot of polite Southerners. I think that there is a perception of Donald Trump as a fighter that appeals to a Southern Scotch-Irish tradition that loves to fight. I think there was a sense that he was politically incorrect and would tell the establishment, “Screw you.” At the same time, in a lot of these states he did worse than Mitt Romney did. In many ways, Mitt Romney was an unusual fit being a Mormon and also being from Massachusetts. I think that there’s a lot of reluctance.
I’ve found the Roy Moore thing both the most inspiring and depressing event, because you say, “What would it take to get white Republicans to vote for a Democratic moderate?” You say, “O.K., what if the Republican was a child molester?” [In 2018, the Democrat Doug Jones defeated Moore in the race for a U.S. Senate seat, after Moore denied reports that he had made sexual advances toward underage girls in the seventies.] The positive is—and not for the first time—that Alabama was saved by African-Americans and saved by, particularly, African-American women. And saved by evangelicals. You know, one of the things that drives me absolutely crazy is we talk about evangelicals and say Trump is popular with evangelicals, and that’s not true. Trump is popular with white evangelicals.
Same with the way we talk about the working class.
The Lincoln Project ads have obviously been very effective in getting a lot of press. Do you think that they’re aimed more at élites to signal the Republican opposition to Trump, or are you really trying to get voters to switch? I’m not saying the first is necessarily unimportant, but what’s the goal?
I think there are multiple purposes here, and I think the purposes are shifting as the Lincoln Project starts spending more money on television. I think, in part, they’ve existed to give permission to others to say what needs to be said that isn’t being said. Look, I’m just kind of a backup singer in the Lincoln Project. It wasn’t my creation. I’m playing rhythm guitar on this thing. But not having a client is very liberating. You don’t have to worry that if you go too far, it’s going to blow back on your client, because you don’t have a client. I think that part of the role that the project has been able to play is to say what people are thinking, but you really can’t say that out loud. You say it out loud, and I think that’s positive, and I think it moves the needle of discussion. I think that it helps the Biden campaign.
I know that Trumpworld gives every indication of being obsessed with the Lincoln Project, and then it’s a joke when they attack us. Are you crazy? I mean, we’re not running for President. That’s a day that they’re not focussed on the Biden campaign.
Let’s say I’m a little bit of a cynical person, and let’s say I’m, like, look, these Lincoln Project ads have been really good, but the people who are doing it are these former Republican operatives like Steve Schmidt, who was working for Howard Schultz a year ago, and John Weaver, who got in trouble for agreeing to do lobbying for Russia a year ago. It’s all these operatives, and they’re coming together to make money off anti-Trumpism. Why is that too cynical?
There are none of us that couldn’t be making a gazillion dollars working for Trump. The idea that you’re going to go out and run against your own party and that’s going to be beneficial financially is nonsense. Look, we’re political consultants. We even joked about this. “How is it that we became the conscience of the Party?” We’re supposed to be the hacks. We’re supposed to be the people who say, do anything. We don’t confuse ourselves with role models. We don’t confuse ourselves with being candidates. We’re operatives. We’re all appalled at what’s happened in the Republican Party. We have a few skills that we developed over the years, and our choice is one of three things: support Trump or say nothing; O.K., not going to do that. Be quiet; really don’t like that. Or try to use these skills that we have to make a difference.
You sound like Liam Neeson in “Taken.”
Yeah. Well, look, I mean, I don’t think society should look at the total gestalt of the political system and say, “You know, the people I really admire are consultants.” That would be a pretty sick society. You could argue whether or not we’re a necessary evil, but I don’t think that people are going to look at Jeffersonian democracy and say the problem with that Constitution is it didn’t have enough about political consultants. We’re an aberration of a system that has evolved, but it is our system, and we are good at some stuff.
Either Donald Trump is going to be elected President or he’s not. I hope he’s not. We are trying to employ that which we know how to do to achieve that goal. We’re not confusing it with personal nobility. We’re just guys and women that know how to do some stuff, and we’re trying to do it to beat Donald Trump.
Roberto Azevêdo, director-general of the World Trade Organization, has been a proponent of international cooperation, putting him at odds with the Trump administration.
The head of the organization charged with bringing a semblance of order to international trade relations resigned unexpectedly Thursday, adding another element of uncertainty to commerce in the midst of the coronavirus pandemic and escalating trade conflicts.
Roberto Azevêdo, a career Brazilian diplomat, resigned as the director-general of the World Trade Organization effective Aug. 31, the Geneva-based organization said. His second four-year term was not scheduled to end until September 2021.
The W.T.O.’s operations have been crippled since late last year as a result of actions by the Trump administration, which has refused to approve nominees to fill vacancies on a crucial appeals panel that rules on trade disputes.
With Mr. Azevêdo’s departure, which caught officials in Geneva and Brussels by surprise, the organization will lose an advocate of open trade and international cooperation whose views clashed with President Trump’s preference for bilateral power politics.
His resignation also leaves a leadership vacuum at a perilous moment for the world economy.
The pandemic “is the worst shock to global trade that has happened in our lifetimes,” said Josh Lipsky, director of the global business and economics program at the Atlantic Council, a research organization in Washington. “To lose the leader of the W.T.O. is a serious blow. There is a broken global trading system, and it needs leadership to fix it.”
Mr. Azevêdo, 62, did not link his departure to tensions with the Trump administration. Rather, he said he wanted to give W.T.O. members a head start on choosing a successor, which is often a difficult process.
The coronavirus pandemic has brought complex negotiations on issues such as fishing subsidies to a standstill and made it unlikely that agreements would be reached until next year. A debate at the same time about the next W.T.O. director would interfere with attempts to overcome trade disputes, Mr. Azevêdo said.
“The selection process would be a distraction from — or worse, a disruption to — our desired outcomes,” he said during an online meeting with W.T.O. members. “We would be spending valuable time on a politically charged process that has proved divisive in the past.”
World trade was already declining because of Mr. Trump’s trade wars with Europe and China, and has plunged further since the pandemic brought economic activity in many countries to a standstill. The W.T.O. has predicted that global trade could fall by one-third, a decline not seen since the Great Depression in the 1930s.
Recently Mr. Azevêdo has expressed frustration that the United States, Europe, China and other large countries were not coordinating their response to the coronavirus emergency. Mr. Trump has recently stepped up his criticism of China.
“Either we shape up and begin to talk to each other and find common solutions or we are going to pay a heavy price,” Mr. Azevêdo told CNN in April.
Robert Lighthizer, the United States’ top trade official, was conciliatory Thursday. “Despite the many shortcomings of the W.T.O., Roberto has led the institution with grace and a steady hand,” Mr. Lighthizer said in a statement. “He will be difficult to replace.”
Mr. Azevêdo, who was previously a top trade negotiator for Brazil and has worked in Geneva since 1997, also cited personal reasons for his departure. The W.T.O. makes decisions by consensus, which means even one of the organization’s 164 members can stymie progress. The director-general must find a way to thread conflicting national interests and reach accord, a laborious and exhausting task.
Mr. Azevêdo said Thursday that, while he had no serious health problem, he recently had knee surgery. Between that and the lockdown, he said, “I have had more time than usual for reflection.”
Sir James Michael “Jimmy” Goldsmith (26 February 1933 18 July 1997) was an Anglo-French financier. Towards the end of his life, he became a magazine publisher and a politician. In 1994, he was elected to represent France as a Member of the European Parliament and he subsequently founded the short-lived eurosceptic Referendum Party in Britain.
In this interview, Sir Goldsmith discusses the ramifications of free-trade agreements that were about to take place in 1994 (GATT), as you can retrospectively see, he correctly predicted many of the things that happened after that.
It’s all about the power — and the cronyism.
Almost exactly one year has passed since Donald Trump declared, “I am a Tariff Man.” Uncharacteristically, he was telling the truth.
At this point I’ve lost count of how many times markets have rallied in the belief that Trump was winding down his trade war, only to face announcements that a much-anticipated deal wasn’t happening or that tariffs were being slapped on a new set of products or countries. Over the past week it happened again: Markets bet on an outbreak of trade peace between the U.S. and China, only to get body slammed by Trump’s declaration that there might be no deal before the election and by his new tariffs on Brazil and Argentina.
So Trump really is a Tariff Man. But why? After all, the results of his trade war have been consistently bad, both economically and politically.
I’ll offer an answer shortly. First, however, let’s talk about what the Trump trade war has actually accomplished.
A peculiar aspect of the Trump economy is that while overall growth has been solid, the areas of weakness have come precisely in those things Trump tried to stimulate.
Remember, Trump’s only major legislative accomplishment was a huge tax cut for corporations that was supposed to lead to a surge in investment. Instead, corporations pocketed the money, and business investment has been falling.
The truth is that even economists who opposed Trump’s tax cuts and tariffs are surprised by how badly they’re working out. The most commonly given explanation for these bad results is that Trumpian tariff policy is creating a lot of uncertainty, which is giving businesses a strong incentive to postpone any plans they might have for building new factories and adding jobs.
It’s important to realize that Trumpian protectionism wasn’t a response to a groundswell of public opinion. As best as I can tell from the endless series of interviews with white guys in diners — who are, we all know, the only Americans who matter — these voters are driven more by animosity toward immigrants and the sense that snooty liberals look down on them than by trade policy.
And public opinion seems to have become far less protectionist even as Trump has raised tariffs, with the percentage of Americans saying that free trade agreements are a good thing as high as it’s ever been.
So Trump’s trade war is losing, not gaining, support. And one recent analysis finds that it was a factor hurting Republicans in the 2018 midterm elections, accounting for a significant number of lost congressional seats.
Nevertheless, Trump persists. Why?
One answer is that Trump has long had a fixation on the idea that tariffs are the answer to America’s problems, and he’s not the kind of man who reconsiders his prejudices in the light of evidence. But there’s also something else: U.S. trade law offers Trump more freedom of action — more ability to do whatever he wants — than any other policy area.
The basic story is that long ago — in fact, in the aftermath of the disastrous Smoot-Hawley tariff of 1930 — Congress deliberately limited its own role in trade policy. Instead, it gave the president the power to negotiate trade deals with other countries, which would then face up-or-down votes without amendments.
It was always clear, however, that this system needed some flexibility to respond to events. So the executive branch was given the power to impose temporary tariffs under certain conditions: import surges, threats to national security, unfair practices by foreign governments. The idea was that nonpartisan experts would determine whether and when these conditions existed, and the president would then decide whether to act.
This system worked well for many years. It turned out, however, to be extremely vulnerable to someone like Trump, for whom everything is partisan and expertise is a four-letter word. Trump’s tariff justifications have often been self-evidently absurd — seriously, who imagines that imports of Canadian steel threaten U.S. national security? But there’s no obvious way to stop him from imposing tariffs whenever he feels like it.
And there’s also no obvious way to stop his officials from granting individual businesses tariff exemptions, supposedly based on economic criteria but in fact as a reward for political support. Tariff policy isn’t the only arena in which Trump can practice crony capitalism — federal contracting is looking increasingly scandalous — but tariffs are especially ripe for exploitation.
So that’s why Trump is a Tariff Man: Tariffs let him exercise unconstrained power, rewarding his friends and punishing his enemies. Anyone imagining that he’s going to change his ways and start behaving responsibly is living in a fantasy world.
What the strange war over “David French-ism” says about the right.
In March the religious journal First Things published a short manifesto, signed by a group of notable conservative writers and academics, titled “Against the Dead Consensus.” The consensus that the manifesto came to bury belonged to conservatism as it existed between the time of William F. Buckley Jr. and the rise of Donald Trump: An ideology that packaged limited government, free markets, a hawkish foreign policy and cultural conservatism together, and that assumed that business interests and religious conservatives and ambitious American-empire builders belonged naturally to the same coalition.
This consensus was never as stable as retrospective political storytelling might suggest; even successful Republican politicians inevitably left many of its factions sorely disappointed, while conservative intellectuals and activists feuded viciously with one another and constantly discerned crises and crackups for their movement. But the crisis revealed or created (depending on your perspective) by our own age of populism seems more severe, the stresses on the different factions more serious, and it is just possible that the longstanding conservative fusion might be as dead as the First Things signatories argued.
Among them was Sohrab Ahmari, the op-ed editor at The New York Post, whose public career embodies some of those shifts and stresses: An immigrant whose family fled the Islamic Republic of Iran, he began his career on the right as an ex-Marxist secular neoconservative at The Wall Street Journal editorial page and has since become a traditionally inclined Catholic (a journey detailed in his striking memoir, “From Fire, By Water”) and also more Trump-friendly and populist into the bargain.
In the last week Ahmari has roiled the conservative intellectual world with a critique of something he calls David French-ism, after David French of National Review, another prominent conservative writer. This controversy, like the debate over Tucker Carlson and capitalism earlier this year, has been a full-employment bill for conservative pundits. But it probably seems impossibly opaque from the outside, since superficially Ahmari and French belong to the same faction on the right — both religious conservatives, both strongly anti-abortion, both deeply engaged in battles over religious liberty (where French is a longtime litigator). Indeed it is somewhat opaque even from the inside, prompting conservatives engaging with the dispute to wonder, “What are we debating?”
I’m going to try to answer that question here. We’ll see how it goes.
Basically the best way to understand the Ahmari-French split is in light of the old fusion, the old consensus, that the First Things manifesto attacked. French is a religious conservative who thinks that the pre-Trump conservative vision still makes sense. He thinks that his Christian faith and his pro-life convictions have a natural home in a basically libertarian coalition, one that wants to limit the federal government’s interventions in the marketplace and expects civil society to flourish once state power is removed. He thinks that believers and nonbelievers, secular liberals and conservative Christians, can coexist under a classical-liberal framework in which disputes are settled by persuasion rather than constant legal skirmishing, or else are left unsettled in a healthy pluralism. He is one of the few remaining conservatives willing to argue that the invasion of Iraq was just and necessary. And he opposes, now as well as yesterday, the bargain that the right struck with Donald Trump.
Ahmari, on the other hand, speaks for cultural conservatives who believe that the old conservative fusion mostly failed their part of the movement — winning victories for tax cutters and business interests while marriage rates declined, birthrates plummeted and religious affiliation waned; and appeasing social conservatives with judges who never actually got around to overturning Roe v. Wade. These conservatives believe that the current version of social liberalism has no interest in truces or pluralism and won’t rest till the last evangelical baker is fined into bankruptcy, the last Catholic hospital or adoption agency is closed by an A.C.L.U. lawsuit. They think that business interests have turned into agents of cultural revolution, making them poor allies for the right, and that the free trade and globalization championed by past Republican presidents has played some role in the dissolution of conservatism’s substrates — the family, the neighborhood, the local civitas. And they have warmed, quickly or slowly, to the politics-is-war style of the current president.
But what, specifically, do these conservatives want, besides a sense of thrill-in-combat that French’s irenic style denies them? I don’t think they are completely certain themselves; in a useful contribution to the Ahmari affair, R.R. Reno, the editor of First Things, describes their animating spirit as a feeling that something else is needed in American society besides just classical-liberal, limited-government commitments, without any certainty about what that something ought to be.
Still, you can see three broad demands at work in their arguments. First, they want social conservatives to exercise more explicit power within the conservative coalition.
This may sound like a strange idea, since, after all, it is social conservatism’s growing political weakness, its cultural retreat, that led the religious right to throw in with a cruel sybarite like Trump. But there’s a plausible argument that even with its broader influence reduced, religious conservatism should still wield more power than it does in Republican politics — that it outsources too much policy thinking to other factions, that it goes along with legislation written for business interests so long as the promised judicial appointments are dangled at the end, and that it generally acts like a junior partner even though it delivers far more votes.
Lately, we’ve been nerding out about cattle. Specifically, about this one particular set of facts. Every year, the United States exports 500 million tons of beef to Mexico. But every year, the United States imports 500 million tons of beef from Mexico.
We heard this, and thought: How is that possible? Why are we trotting all these cows back and forth across the border? We sent a reporter to the border to find out. The answers to those questions explain a lot about how trade works.