Cromwell

An article in The Atlantic makes the well-worn argument that America needs to stop subsidizing seniors and put more money into younger folks. Does that make sense?

Yes and no. It is true that many seniors own their own homes and some stocks; they have benefited disproportionately from the price increases of the last decade. There are millions of other seniors, however, who do not own homes or stocks and depend almost entirely on Social Security and Medicare. Cutting those programs to alleviate poverty among younger people would be cutting off your nose to spite your face.

Means testing Social Security would be a reasonable possibility, but only for the truly affluent, which means the cost savings would be relatively minimal. As for Medicare, there is no viable market for health care for the elderly; that is why the program was created in the first place. Would it really make sense to put even middle-class seniors at the risk of ruin from medical expenses?

The truth is that the Medicare problem is one of soaring unit costs and demographics, not senior greed, and the increased wealth of seniors is due to fairly unique conditions that could change dramatically overnight, as with the falling home prices during the Great Recession. To the extent the problem needs to be addressed, it should be by imposing higher taxes on capital gains for all wealthy people, not by cutting or means testing Social Security.

Oh, and by the way, a massive transfer of wealth to the younger generations is about to unfold as a result, not of government policy, but of extinction. Just be patient, folks. Your time is coming.

European countries have relatively homogeneous populations that, until recently, had not changed much for centuries. They had monarchs, a well-defined class system, and an established state church. The goal of European reactionaries since the late 18th century has been to protect those national characteristics. But what about America?

America was created as an independent nation on Enlightenment principles–the Declaration of Independence says so. Its population mix changes every year due to large levels of immigration. It never experienced the Middle Ages, so it never had a monarch, a nobility, or an established state church. It is always evolving and is built on constant change. The stasis admired by reactionaries never existed here. So what is an American reactionary to do?

The truth is that they don’t even agree on the timeframe for the society they want to revive. Trump’s apparent preferred date, 1898, was in an era of massive immigration. Taking us back to the Middle Ages, the goal of the reactionary Catholics, is kind of a stretch. The best bet would be the 1950s.

The NYT political columnists are divided on Graham Platner’s candidacy. Frank Bruni and Michelle Goldberg think Democrats are obligated to support him, while David French and Bret Stephens (of course!) believe he is a dangerous extremist who lacks the character to replace Susan Collins. Who is correct here?

Here is my analysis:

1. IS PLATNER SOME SORT OF NEO-NAZI? Definitely not. He combines a personality and background somewhat similar to John Fetterman’s with the progressive ideology of Bernie Sanders. Whatever you think of Bernie’s program, he’s obviously not a left-wing version of Trump.
2. IS COLLINS A RELIABLE CHECK ON TRUMP? No. She voted for all but one of Trump’s egregious nominees and did nothing to bring ICE under control.
3. WILL THE NEXT TWO YEARS REPRESENT A CRISIS IN AMERICAN LIBERAL DEMOCRACY? Yes. The more resistance Trump meets, the more autocratic he will get. Susan Collins will just wring her hands when this occurs. Platner will fight back.

In short, I agree with Bruni and Goldberg. For reasons I will set out in a future post, I have serious doubts that even a Congress with both houses under Democratic control will be able to restrain Trump, but what else can we do?

In the end, as I suspected, there was neither the time nor the inclination to pursue a grand bargain with the Chinese. Trump received the usual vague assurances about purchases of American beef and airplanes, which may be good news for ranchers and Boeing, but not particularly for you and me. For his part, Trump was using language which suggests he can turn off Taiwanese purchases of American weapons when it suits him to appease the Chinese. That suggests–as many of us have long predicted–that Taiwan is now a bargaining chip in our relationship with the Chinese.

If you live on Taiwan, you should be very, very concerned. For the people of America, it is time to give up any illusions that Trump is determined to completely remake our relationship with the Chinese government. China has become, to him, just the first among equals when it comes to ripping us off. Since the Chinese have leverage that other countries don’t, he will leave them alone and direct his bullying tactics at weaker victims.

The American economy continues to lurch forward in spite of the obstacles created by Trump. This is due to spending fueled by the rising stock market, which in turn is the result of AI optimism and huge investments in data centers. At the lower end of the pyramid, consumer confidence has collapsed, and real wages are no longer increasing due to Trumpflation. What does it mean?

That intentionally or not–probably not–Trump has effectively embraced the dollar store economy.

When he was asked about defending Taiwan after the summit, Trump said the last thing we needed was a war 9,500 miles from home.

What? Like the one he already started? He really should have said we don’t need another war 9,500 miles from home.

Like me, you probably cringe when you see Trump sucking up to Xi and other dictators. But look on the bright side–he demands that everyone else suck up to him, so he’s just practicing the Golden Rule.

Instead of being embarrassed by his antics, you should be impressed by his ethics. Right?

Trump typically views negotiations as opportunities to impose his will on his adversaries. That won’t work with China, however. If he wants something from Xi, he will have to give something of equal value in return.

Most of the media coverage prior to the summit focused on Trump’s wish list. The more important questions should actually revolve around the concessions the great man is willing to make to get what he wants.

Taiwan should not be on the table, but here are two proposals that I would actively support:

1. Invite Xi to see his golden statue at Doral ASAP. The Chinese need to see how a cult of personality really works in practice.
2. Leave Elon Musk in Beijing as a hostage.

So Trump is in China today.

Exactly what cards will he play?

Losing face in Iran

Wasn’t part of his plan.

Will he try to give Taiwan away?

Charles DeGaulle had no time for Anglo-Saxon predominance. Inspired by stories about centuries of French glory, he had no intention of letting the Americans, British, and Germans push him around. As a result, he pulled France out of NATO and built up a French nuclear arsenal. France would be a major player on the world stage on its own.

Except it wasn’t. It was just too small. DeGaulle’s successors consequently pursued a different approach–building up the EU, which would prosper and turn into a superpower under French leadership. It was a more pragmatic and realistic version of Gaullism.

The current battle between the center and the right is essentially a struggle between these visions of Gaullism. Macron wants to make the EU great again; LePen has little use for the EU and wants France to be more of an independent actor on the world stage. Could a France under RN leadership actually stand up to the US, China, and Russia? I doubt it.

When he’s not advising Trump to escalate in Iran–Trump has largely followed his suggestions, and look where it got us–Bret Stephens is assuring us that China is a paper tiger, because its government regulates too much and picks winners and losers. Chinese economic success simply can’t exist, according to Stephens’ CL ideology, so it doesn’t. Should we take him seriously?

Let me put it this way. If Stephens had been in Athens during the Peloponnesian War, he would have told the Athenians they had nothing to worry about, because their society was much less regulated than Sparta’s.

What will Xi demand in return for maintaining some sort of equilibrium on trade? Here is a big part of the list:

1. STABILITY ON TARIFFS: The current level of tariffs and the various agreements with the EU and others hasn’t prevented China from increasing its already vast trade surplus relative to the rest of the world. Just don’t do any more wrecking, please.
2. COMPENSATION FOR LOST INVESTMENTS IN THE WESTERN HEMISPHERE: Xi hasn’t done much in response to Trump’s aggression pertaining to the Panama Canal, Cuba, and Venezuela. Expect him to demand compensation of some sort–probably in the form of a freer hand in his own backyard. This could ultimately turn into a spheres of influence agreement.
3. TAIWAN, ALL THE TIME: This is where he really wants the free hand. At a minimum, expect Trump to move carefully in this direction in return for the trade concessions he considers more important.
4. END THE IRAN WAR, PLEASE: China is profiting to some extent from the war, but its fuel stockpiles won’t last forever. Something has to give reasonably soon.

I predicted a decade ago that Trump’s ultimate objective with China was a managed trade agreement. The rumors floating around suggest that I was right; Trump wants a deal that looks similar to the ones he has with the EU, Japan, and South Korea, with commitments for investment and a fixed number for tariffs. It could happen, if not right away; the Chinese typically don’t move that fast.

The premise behind this kind of agreement is that China is not fundamentally different from the EU, Japan, and South Korea; it is simply bigger and slightly more troublesome. Not everyone in the Trump orbit agrees with that conclusion. No less a luminary than Oren Cass has argued that the Chinese present a unique problem, and that permitting vast Chinese investments in America would be a huge mistake.

For once, Cass is right. In ideological and geopolitical terms, China is qualitatively different than the rest of America’s trading partners. It cannot be treated as just another country that wants to rip us off.

In connection with the last post, do you remember the scene in “The Godfather” in which Sonny tells his underlings to make sure that the gun is planted properly, because he doesn’t want his brother to come out with just his private part in his hand? That’s Trump in Beijing. He thinks he has the cards, but no one else does.

Trump likes to talk about the party who has the cards almost as much as he enjoys being called “Sir.” It follows, of course, that he believes he always has them, partly because he’s an American, and partly because he’s Donald Trump, the master maker of deals. But is he right this time, or does China have the cards?

Let’s look at the record. On the plus side, Trump presides over an economy that has been amazingly resilient, given the burdens he has put on it, and his military has performed remarkably well from a tactical perspective. On the minus side, America is blowing up the world with nothing to show for it, and Trump’s party figures to lose the midterm elections, which will result in two years of constitutional chaos. He is also busy alienating America’s allies, which will make taking coordinated efforts to control China’s trade surplus far more difficult. China, for its part, is doubling down on high tech and exports and getting away with it even in the face of stagnation at home. Trump’s efforts to rewrite the international trade rules have had a seriously negative impact on the rest of the world, but not the Chinese. In addition, the Chinese can wreak havoc on the American economy by denying us rare earths. Trump doesn’t have a lever that works as well as that; tariffs certainly haven’t done the job.

In short, yes, China has the cards at this point.