What's conservative or libertarian about Trump?

When I shared a recent op-ed column from the National Review about Sarah Palin's endorsement of Trump's candidacy, which was not particularly kind to either of those public figures, a friend of mine made the suggestion that the National Review seemed to have abandoned its tradition of supporting conservatives and libertarians in their fight against the Republican establishment.

I conceded that he may have been right about the National Review's change but I had to ask my friend what was so conservative or libertarian about Trump. After all, whenever I listened to his stump speeches or debate performances, it mostly seemed to be about how he, through the apparent sheer force of his will, would ban Muslims from entering the US or about how he would get the Mexican government to pay for a giant wall separating the two countries or how he got a lot of flak for talking about these problems and how he's going to continue talking about them.

Everyone loves to pretend/believe that "president" is another word for "emperor," especially during election seasons and no one loves to indulge in that fantasy more than the political candidates themselves. As far as I am concerned, however, Trump and Sanders take the cake. My thoughts on Sanders are well known; as are my thoughts on Trump. As for Trump, I am almost convinced that he is a clown who has somehow accidentally misplaced his makeup kit.

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My friend persisted, however, and told me that I ought to visit Trump's official website and read his campaign position papers so that I may judge him more objectively. 

I have to admit that I had never bothered to read his campaign position papers. As someone who has often had to tell Ayn Rand-bashers that they ought to actually read Rand's works as opposed to what Salon has to say about her work, I realized that it was hypocritical of me to pass such judgments on Trump without getting the goods straight from the horse's mouth.

After all, considering the grueling nature of cable news cycles and the even more unforgiving beast that is the Twitterverse, it is easy to magnify one moment of stupidity to paint a person as something entirely that he may not be. Can anyone imagine how much more Howard Dean's scream would have damaged him had Twitter existed at the time of his candidacy?

So I went on Trump's website and I saw that there were a total of five campaign position papers. I did not have the time to read all five of them. The topic that I chose to read was the one that matters to me most among the available topics -- the one titled "Reforming the US-China Trade Relationship to Make America Great Again."

And, folks, it was a doozy!

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Right from the bat, the paper claims that since China's entry into the WTO in 2001, "Americans have witnessed the closure of more than 50,000 factories and the loss of tens of millions of jobs."

Aside from the fact that there is no data to back up that claim, even if that number were true, this is yet another example of post hoc ergo propter hoc. That is because that claim conveniently neglects to mention the effects of the dotcom bubble burst or the Great Recession or the battering effects of high oil prices on the construction industry in the mid-2000s.

So almost from the moment I started reading, I couldn't help but frown and shake my head.

The other theme that Trump's paper continually hammers on is that America needs leadership and strength at the negotiating table with China.

The moment people hear this sort of talk, anyone with any sense whatsoever should begin to ask themselves if that truly is an original thought that no one had before. It's not (see here, here, here, here, here, here, here, and here). Hell, Bill Clinton once called the Chinese government "the butchers of Beijing" before granting China "most-favored-nation" status after he became president.

Outside of the fantasyland called primaries season, neither the United States nor China can afford to be particularly difficult with one another because, whether they like it or not, the two countries share the largest trade relationship in the history of the world. A child might be able to take his toys and go home if he decides that he doesn't like his friend anymore, but that is not the way that effective international policy is made.

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Trump's other argument is that China's "Great Wall of Protectionism uses unlawful tariff and non-tariff barriers to keep American companies out of China and to tilt the playing field in their favor."

Trump says this unfair playing field puts American businesses and workers at a disadvantage -- that the game is rigged and that the outcome is for Americans to lose.

This is an old political chestnut and a dirty trick that is meant to distract people long enough to forget their own personal interests. This lie was exposed by Milton Friedman in his 1980 PBS documentary, Free to Choose. In the episode Tyranny of Control, Friedman said:

"When anyone complains about unfair competition, consumers beware. That is really a cry for special privilege always at the expense of the consumer. What we need in this country is free competition. As consumers buying in an international market, the more unfair the competition the better. That means lower prices and better quality for us. If foreign governments want to use their taxpayers' money to sell people in the United States goods below cost, why should we complain? Their own taxpayers will complain soon enough and it will not last for very long."

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Trump also thinks that declaring that China is a currency manipulator will somehow get the Chinese to think seriously about the United States. Currency manipulator! Then what the hell does that make the Federal Reserve?!

Also, the fact that people still believe in the myth of the Chinese government being "a currency manipulator" is a bad thing for the rest of the world just goes to show how desperately the vast majority of people in the world need to study basic economics. This entire myth can be punctured by just asking a few basic questions.

• How can Beijing artificially devalue the yuan without such devaluation causing the prices of Chinese exports eventually to rise?

• Even if Beijing could devalue the yuan for a long time, would that not raise Chinese producers’ costs of purchasing the many inputs that they buy on global markets? How could this possibly lead to economic growth?

• Just like the case with "unfair" subsidies, how does the artificial lowering of the prices of Chinese goods harm consumers from other countries? Don't people typically like it when prices of the goods they buy fall?

In other words, isn't Trump saying that he believes that consumers should be forcefully prevented from spending their money in ways that they judge to be best for them, and instead be forced to spend their money in ways that he judges to be best for the benefit of a select few American corporations?

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Now it is true that China requires foreign corporations such as Boeing and Intel to transfer proprietary technologies to their Chinese competitors as a condition of entry into the Chinese market. However, Trump goes on to say that this is intellectual property theft.

But one has to wonder -- if Boeing or Intel felt that they were being bamboozled by Beijing, that the costs of such technology transfers were greater than the benefits of being allowed entry into the Chinese market, wouldn't those corporations voluntarily decide to cease all of their operations in China?

In other words, isn't Trump saying that if he is elected president, he will use Big Government to forcefully prevent American corporations from entering into voluntary trade agreements?

And lastly, he says that he will "strengthen the U.S. military and deploy it appropriately in the East and South China Seas."

I believe that is called the Asia Pivot.

So let's recap. Even Trump's trade policy proposals, which are supposed to be the branier arguments that take place away from the camera, are vague and can only be called economically illiterate at best or deceptive at worst. Even if they weren't unrealistic, his policies would require great expansion in the powers of the government, which is decidedly not a conservative or libertarian position.

Republicans do remember this guy, right?
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I have not read the other four papers on the website. Frankly, reading this one and explaining why it is so horrible has been enough for me. So is he a conservative or a libertarian when it comes to other topics such as immigration or gun control? I can't say. And frankly, I can't bring myself to read any more and I don't give a damn. But if this paper was anything to go by, I have some serious doubts about the claim.

Did Korea's Economic Development Require State Protection?

A common argument that is often brought up to argue against free market capitalism is Korea's economic development. Many argue that despite the fact that President Park Chung-hee was a dictator, one thing that people cannot argue against is the economic development that Korea enjoyed under his 17-year-long rule.

Specifically, what those people are usually referring to is the series of protections, quotas, tariffs, and subsidies that President Park had given to what were then nascent chaebol companies.

One such defender of that point of view is Professor Ha-joon Chang, an economics professor at the University of Cambridge, and the author of such books as Bad Samaritans, Kicking Away The Ladder, and 23 Things They Don't Tell You About Capitalism.

Professor Ha-joon Chang
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Much can be said about his books, and I plan to do so in the future. For now, however, I will focus only on his defense of the infant industry argument, which is an idea that argues that emerging businesses and industries require government protection – in the form of tariffs, subsidies, and quotas – from their more entrenched competitors, particularly foreign competitors.

In that article that I linked earlier from The Independent, Professor Chang compares nascent industries to his six-year-old child. If this weren't a cringe-worthy moment of stupidity and/or academic dishonesty, I don't know what is.

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Moving on, in Bad Samaritans, Professor Chang makes the argument that Korea's economy did not develop because of neo-liberal economic policies, but rather due to heavy government involvement in the economy. There is no question that that is true.

There is also no question that Korea's rapid economic growth was nothing short of miraculous. There is a reason that it is often referred to as the Miracle on the Han River. But is that proof that protectionism was what allowed Korea's economy to develop so quickly? Well, that's quite hard to confirm considering the fact that Singapore and Hong Kong, which practised freer trade policies, went through much quicker and greater economic development.

“But they are city-states; they cannot be compared to a country that is so much bigger like Korea,” I often hear people say.

Fine, fair enough. Then one has to wonder about China and India. Both countries are much bigger than Korea and their economies grew much more quickly after they began to liberalize their respective economies (see here and here).

Of course, this is certainly not to say that government controls and economic programs are non-existent in Hong Kong or Singapore or China or India. They are not free market economies. But they have shown that freer markets do lead to greater growth.

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Another point that Professor Chang does not mention is that subsidization and other forms of government protections do not guarantee economic survival or development in any way, stretch, or form.

Yes, Korea is an example of an economic success story. However, we also have to look at other examples where protecting infant industries were not successful. For example, African cotton farmers want their governments to end the subsidies programs for their respective national industries so that they can finally compete in the international market; and which African country's economic development could ever compare with Korea's economic growth?

The problems of protecting infant industries are not limited to African countries. In the United States, despite the government's efforts to prop up Solyndra, a company that specialized in manufacturing solar cells, with up to US$535 million of taxpayers' money, the company still declared bankruptcy.

Similar examples can be found in Korea, too. Samsung was certainly one of the chaebol conglomerates that the Korean government helped to protect and nurture. However, Samsung is not the only business that got so much love from the government. Another industry that has gotten a lot of love from the Korean government is the rice industry. So why has Samsung become an internationally well-known name but there isn't a single Korean food-producing company that is as well-known outside of Korea?

In other words, no amount of subsidies or trade protections ever seems to be able to prevent what was always doomed to fail from failing.

So what does Korea owe its economic success to? That is a difficult question to answer; much more difficult than Professor Chang would like for his readers to believe. It's certainly not free market economics. As Professor Chang has shown, the Korean government has been heavily involved in Korea's economy. But as I have shown, freer markets like Hong Kong and Singapore have grown more quickly than Korea and subsidies do not guarantee success.

Though that specific question may be harder to answer, what is much easier to answer is that Korea's economy did not develop because of the government's protections, subsidies, and overall involvement in the economy, but rather in spite of them.

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Korea Needs to Liberalize Its Rice Market

I realize that I said that my next post was going to be my second installment of “Super Fun Economic Review” about the Korean government's increasing hints about depreciating the value of the Won.

Rest assured, that post is coming. However, it's taking longer than I had anticipated.  In the meantime, I wanted to upload this post.

Just today, I read an article in The Diplomat about Korea's refusal to liberalize its domestic rice market to international trade. A few days ago, I also read a very impressive article about this same topic that was written by Eric Deok-jin Song who works over at the Korea-based libertarian think tank, Center for Free Enterprise (자유경제원).

As the article was written only in Korean, however, I have taken the liberty of translating the article into English.

I think that this is a good time to state that I am not affiliated with the Center for Free Enterprise in any way whatsoever. Furthermore, any mistakes in the translation are mine and mine alone.

The first two picture files in this post were from the original post, but I have added the other pictures myself.

Is rice life? How much longer will the taxpayers' money be spent to subsidize rice? Rice has already been losing its status as the country's staple food. From 1995 to 2014 whereas rice production increased about 10%, the amount of rice that has been imported has increased 8 fold. The only two countries in the world that have not opened up their rice markets are Korea and the Philippines. Continuing to subsidize rice is a waste of the taxpayers' money.

The white signboard that the man is carrying reads "쌀은 생명이다," which means "Rice is Life."
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The Ministry for Food, Agriculture, Forestry and Livestock says, “For the future of the rice market, the best decision that we have made was to begin to import rice, but to impose tariffs on imported rice.”

With the government on one hand that says that the opening up the rice market can no longer be delayed and opposing farmers on the other hand claiming that such a move would cause irreversible harm, the differences between the two sides are sharply contrasted. It should be noted that Korea made a promise to the international community to open up its rice market in the Uruguay Round of multilateral trade talks in 1994.

By claiming that rice is unique to Koreans, the Korean rice market has received “preferential treatment” and has been waived from opening up the market at great cost. What was the great cost? For failing to open up the market, Korea was obligated to import up to 51,000 tonnes of rice in 1995. That obligation has steadily increased and this year, Korea is obligated to import up to 409,000 tonnes of rice this year alone. At the end of this year, Korea's grace period will come to an end. Korea can no longer afford to delay opening up the market.

The first two lines above and below the Korean and the Philippines flags say "The only two countries in the world that have not opened their rice markets are Korea and the Philippines."
The circles and the text in the middle of those circles say "Rice production has fallen from 4,690,000 tonnes to 4,230,000 tonnes.  Korea has had to increase its obligatory rice imports from 50,000 tonnes to 400,000 tonnes.  An average Korean's rice consumption has fallen from 532 bowls per year to 336 bowls per year."
The last line says, "How much longer will the taxpayers' money be spent to subsidize rice? How much longer will we be forced to import rice?  It is time to compete with imported rice."
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Despite having protected the rice market much more and much longer than any other industry, Korea's agriculture industry has barely survived. Despite continuous large-scale investments, Korea's agriculture industry's competitiveness remains at a standstill. Due to a decline in the number of farming households, more and more people have begun to abandon their farms. As a result, only senior citizens and low-income families continue to live in rural areas, which threatens to shrink Korea's agriculture industry even further. Although rice production has increased somewhat, average income has fallen, which has caused a great income disparity.

Opening up the rice market will provide our agriculture market with new opportunities. Korean agricultural products are popular in China. That is because the Korean brand is considered a trustworthy brand by Chinese consumers. Opening the rice market will not lead to imported rice flooding the Korean market but rather an increase in our exports to overseas markets. Now is the time to increase the rice industry's competitiveness and to focus on the debate of raising tariffs.

Korea's agricultural industry stands at a crossroad. It can either crash as a declining industry tends to do or it can find ways to become a competitive industry. Using competitiveness as a springboard, it has to find the right direction in order to become an advanced agricultural industry. It has to extricate itself from all of its excessive protections and move away from its land-intensive production methods in order to pursue more capital-intensive production methods.

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The Confederation of Farmers Alliance that has long opposed the opening of the rice market has already begun to engage in all-night sit-ins and other forms of protests. Instead of engaging in unreasonable protests, they have to embrace market principles and the entrepreneurial spirit. In order to transform the industry into a competitive one, and to transform it from one focused on 공자유전 (耕者有田), which is established in Article 121 of the Republic of Korea Constitution which states that “the State shall endeavor to uphold the notion that those who till the land will use the land,” to one that is focused on 경자용전 (經者用田), which is the notion that those who can manage the land can use the land. Furthermore, the regulations and restrictions on the agriculture industry ought to be abolished.

Only this effort can lead to an increase in new capital investment that is needed to increase the industry's competitiveness and establish an international business that can compete globally.

That large businesses are always opposed to entering the agriculture industry in Korea is worrisome. Dongbu Group, which had built a state-of-the-art facilities in a tomato production facility but faced opposition from farmers groups and had no choice but to discard millions of tomatoes. Dongbu Group had even signed a contract to export domestically produced tomatoes to Japan. However, the farmers and the farmers groups opposed this. After having lost millions, Dongbu Group withdrew from the tomato business.

Toyota, the symbol of Japanese manufacturing, on the other hand, has built and is strengthening their agricultural productivity. The agriculture business is gaining strength to becoming a vital business in the future.

Whenever a free trade agreement has been signed be it with Chile, the United States, the European Union, ASEAN, Australia, or Canada, the farmers have never failed to angrily protest. Yet even with the importing of Chilean grapes, domestic grape production has increased. The beef market has been opened but Korea's beef industry has not weakened. It is the same with other agricultural goods. The farmers have begun to improve their quality, scientific methods, and have begun to become more competitive.

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Although competition and opening up markets can threaten domestic businesses initially, it has in fact strengthened the domestic industry.

Agricultural products have increased in value and improved their income levels. People have to accept this new change and farmers must stop thinking of themselves as farmers and instead think of themselves as “farmakers” and “farmarkets.” Farmers have to accept the entrepreneurial spirit that can only exist within capitalism and only this can ensure the successful development of a competitive agricultural industry.

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