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Trump’s Trade Delusion

Halfway across the Pacific Ocean, Donald Trump heard the closing statements from the G7 summit in Quebec (which he had left early to meet North Korean dictator Kim Jong-un in Singapore).

All the G7 countries had signed up to an anodyne closing communique that papered over the huge gap between the United States and the other six on world trade – but Canada’s Prime Minister Justin Trudeau then said once again that he would answer Trump’s big new tariffs on steel and aluminum imports with new Canadian tariffs hitting US exports just as hard.

He had said it before, including to Trump’s face just the previous day. The other national leaders present in Quebec said exactly the same thing, and none of them had changed their positions before the final communique was agreed. But Trump flew into a rage.

No jumped-up leader of a rinky-dink country like Canada was going to get away with talking to the president of the United States like that. Trump retracted his endorsement of the joint communique, called Trudeau “very dishonest and weak”, and hinted heavily that his next target would be Canada’s car-making industry (which is almost completely integrated with its US counterpart).

No surprises here. The other countries of what used to be called ‘the West’ have grown used to Trump’s tweeted outbursts, and French President Emmanuel Macron restricted himself to saying that “international co-operation cannot be dictated by fits of anger and throwaway remarks.”

True enough, but what also needs to be said loudly and often (but generally isn’t) is that the whole confrontation over trade is irrelevant to Trump’s real political concern, which is vanishing American jobs. He’s not just barking up the wrong tree on this issue; he is baying at the Moon.

Trump’s line is that the very high unemployment rate in the United States (which he is almost alone among American politicians in acknowledging) has been caused by free trade. The evil foreigners took advantage of gullible Americans to make free trade deals, and then lured ruthless American manufacturers to relocate their factories in their low-wage homelands.

This only made sense for American manufacturers if there was more or less free trade between their new base and the United States, so that they could still sell their products back home without tariffs. For Trump, therefore, free trade is the mother of all evils. But while more than a million American jobs did get sent abroad like that in the 1990s, very few have been exported in the past fifteen years.

In the first decade of the 21st century, the United States lost one-third of all its manufacturing jobs, and the vast majority of them were killed by automation. They didn’t ‘go’ anywhere. They just vanished.

It happened first in what became known as the Rust Belt, because that was the main centre of assembly-line industry in the US. Assembly lines, which break a complex task down into a series of simple and highly repetitive actions, are the easiest thing in the world to automate.

Job destruction then slowed down until other new computer-driven technologies matured: self-driving vehicles, on-line shopping, ‘dark’ factories and warehouses. But they are ready now, and the carnage in retail jobs, driving jobs and warehouse jobs is just getting underway. To worry about free trade while this is going on is pure folly.

Not only has the ‘offshoring’ of jobs virtually stopped, but there is a new phenomenon called ‘reshoring’. Some American manufacturers are bringing their factories home, because with full automation you have to hire only one-tenth of the high-paid American workers you used to employ, and by reshoring you get to work in a predictable legal environment in your own language.

Trump can do a lot of damage to employment both elsewhere and in the United States by launching a trade war, but he cannot ‘bring the jobs back’. They are gone for good, and a lot more will follow. Automation may be slowed down here and there for a while, but eventually it will eliminate at least half the existing jobs – and the notion that it will create equivalent numbers of new good jobs is an amiable myth.

So while the leaders of other rich countries will have to divert some attention and effort to coping with the negative impacts of Trump’s trade war, they must not let that become their obsession too. It’s a side issue, though potentially a very expensive one.

In Canada, in France, in Japan, in all the developed countries, the real problem is the same as it is in the US: the inexorable advance of automation and the resulting hemorrhage of jobs. So devote most of your attention to that, and only respond to Trump’s declaration of trade war to the extent that is politically unavoidable.

In the end, you’ll be glad you did.
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To shorten to 700 words, omit paragraphs 10 and 12. (“It happened…automation”; and “Not only…language”)

Trump and Trade

Like Mexico, Canada is in the North American Free Trade Agreement, which Donald Trump has described as “the worst trade deal…ever signed in this country.” Unlike Mexico, Canada thinks that Trump is not planning to hurt it. But no good deed goes unpunished, so Canada’s Prime Minister Justin Trudeau should be very careful.

Canadians felt good when Trudeau responded to Trump’s ban on Syrian refugees by tweeting: “To those fleeing persecution, terror and war, Canadians will welcome you, regardless of your faith. Diversity is our strength. Welcome to Canada.” Feeling morally superior to Americans is one of Canadians’ favourite pastimes, and in this case it is self-evidently true.

The United States took in 12,587 Syrian refugees last year; Canada, with one-ninth of America’s population, accepted almost 40,000. Yet there have been only two “lone wolf” Islamist attacks in Canada in this century, each killing one person and neither carried out by an immigrant. Terrorists have just murdered six Canadian Muslims in Quebec City, but Muslim immigrants pose no appreciable danger to non-Muslim Canadians.

In reality, there is no significant danger from Muslim immigrants to America either. Most of the 28 major massacres in the United States since 9/11 were carried out by white right-wing extremists, and those that did involve Muslims were almost all committed by native-born Americans.

But Trump’s “executive orders” are not just driven by ignorance and panic. He is consciously manipulating public opinion, and Canada’s response to his ban on Muslim immigrants undermines the script he is working from.

If Trump’s domestic opponents use the Canadian example to discredit Trump’s story about the mortal danger posed by Muslim immigrants, the man might claim that lax Canadian immigration policy is a threat to the United States and apply “extreme vetting” measures to Muslim Canadians who want to cross the border.

He might even ban Muslim Canadians from the United States entirely, or require visas for all Canadians. That would impose huge inconvenience and cost on Canadians, but Donald Trump can basically do whatever he wants to his next-door neighbours. So Justin Trudeau would be wiser to do good by stealth and not attract too much attention in the US.

Mexico’s President Enrique Peña Nieto has a much bigger problem. He was well aware of Trump’s campaign promise to build an “impenetrable, physical, tall, powerful, beautiful, southern border wall” to keep out illegal Mexican immigrants, and to make Mexico pay for it. But like most people, he couldn’t believe that Trump meant it literally.

After all, who in their right mind would want to build a 10-metre high concrete wall, also extending a couple of metres underground, along more than half of the 3,100-km US-Mexican border? (The rest is mountains and rivers.) It would cost between $10 billion (Trump’s estimate) and $30 billion plus (construction consultants Gleeds Worldwide).

Building the wall isn’t going to stop the estimated 45 percent of illegal Mexican immigrants who arrive quite legally by car, bus or plane, but overstay their visas. It isn’t exactly urgent either, given that the net flow is now southward: since 2014 more Mexicans have been going home each year than arriving in the US.

The wall is really just symbolic, a demonstration of political will, but Trump has promised to build it and he will. Can he also make Mexico pay for it? Actually, he probably can.

Last Thursday Mexican officials were in Washington preparing for President Peña Nieto’s visit when Trump suddenly tweeted: “If Mexico is unwilling to pay for the badly needed wall, then it would be better to cancel the upcoming meeting.” Peña Nieto, deeply humiliated, did cancel the meeting. He had no choice.

But on Friday, the two presidents had an hour-long phone call that the joint statement described as “productive and constructive”. There were no details, but they did discuss “the current trade deficit the United States has with Mexico,” among other things. “Fixing” that trade deficit is probably how the circle will ultimately be squared.

Mexico’s exports to the US were $271 billion last year; its imports were only $213 billion. Trump wants to change that, and Peña Nieto has no option but to submit. And somewhere in the deal that there will probably be a clause that lets Trump claim Mexico is paying for the wall while Mexico can still deny it.

Canada-US trade is roughly in balance, so Canadians will probably not suffer severe pressure unless Trudeau really irritates The Man. The total volume of US-China trade is about the same, but China sells the US four times more than it buys from it.

That can’t be “fixed”, and Trump cannot be persuaded to let it ride. There will be tears before bedtime.
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To shorten to 725 words, omit paragraph 9. (“After…Worldwide”)

Canada Back to the Middle

There’s an old joke that goes: Why did the Canadian cross the road? Answer: to get to the middle of the road. Likewise (so they say) if you cut the average Canadian open you would find two words engraved on his or her heart. One would be “moderate”. The other would be “nice”.

Stephen Harper, who was four months short of 10 years in office as prime minister when he was swept out of power in Monday’s election, was a moderate right-wing politician, although he pretended to be a hard right one. Six of his 10 budgets were in deficit, and he ended up adding $CAD150 billion ($159 billion) to Canada’s national debt.

Even when faced with a global recession, that’s not what hard-right politicians do. Similarly, the New Democratic Party (NDP) is a very moderate left-wing party by anybody’s standards (except those of Americans) – and Justin Trudeau’s Liberals have always believed that they owned the middle of the road. The 78-day election campaign, which was a tight three-horse race until the last couple of weeks, was not about ideology at all. It was about political style. Stephen Harper didn’t do “nice”. His default setting was “nasty”, and he positively revelled in it.

He was a control freak who instinctively tried to hurt and smear those who disagreed with him, and in his government even the time of day was a state secret. His attack ads against rival politicians were vicious, he was visibly contemptuous of journalists and the opposition parties, and he almost took pride in being disliked. In fact, Harper once joked that he couldn’t even get his friends to like him, but that was only a half-truth. He had no real friends in Canadian politics, even in his own Conservative Party.

Yet he stayed at the top of national politics for almost a decade because he actually ran a reasonably effective government that shielded Canadians from the worst effects of the post-2008 recession. His manner was unpleasant, but he was no radical. Harper never even won 40 per cent of the popular vote, but that wasn’t necessary in a three-party system where no party ever achieves that holy grail of politics.

Even in the midst of the current pro-Liberal “landslide” – 186 seats out of 338 seats in parliament – the Liberal Party won only 39.5 per cent percent of the popular vote. What finally defeated Harper was the fact that enough Canadians had grown sick of the nastiness that they were willing to vote for whichever party had the best chance of beating him. At the beginning of the election campaign that looked likely to be the NDP, but a typical piece of Harper nastiness took them down. The great niqab debate was what did the NDP in.

Only two Canadian Muslim women have ever insisted on wearing the face-covering during a citizenship ceremony, but the Conservatives turned banning niqabs into a “wedge issue” – and NDP leader Thomas Mulcair said Muslim women should be allowed to wear them. So did the Liberal leader, actually, but it didn’t hurt Trudeau because identity politics is not a big thing in most parts of Canada.

It’s a huge thing in French-speaking Quebec, where the politics has been mostly about Quebec nationalism and separatism for two generations. Rival identities are not welcome in such an environment – and almost half the NDP’s seats were in Quebec. Eighty per cent of Quebecers wanted to ban the niqab, and when Mulcair said he opposed a ban the party’s support there collapsed. A typically nasty piece of political manipulation, but in fact the Conservatives had been too clever.

Previously undecided voters whose only objective was getting rid of Harper swung behind the Liberals when they appeared to be the only party that could do the job. Harper might still be in office today if he had just let the two opposition parties split the anti-Harper vote evenly between them. There are times when nastiness just doesn’t pay.

In the end, Trudeau won just by being sunny, positive and nice. He talked a great deal about “change”, because that was what the anti-Harper voters wanted to hear, but he didn’t go into much detail.

Trudeau promised a few flagship policy changes to get people’s attention – pulling Canadian warplanes out of Iraq and Syria, slightly higher taxes for the rich and slightly lower taxes for the middle class, maybe legalising marijuana – but his core social and economic policies aren’t going to be radically different from Harper’s. They can’t be, because otherwise he’d have to leave the middle of the road. He will, however, be much nicer than Stephen Harper.

More Anti-Terrorism Laws

Left-wing, right-wing, it makes no difference. Almost every elected government, confronted with even the slightest “terrorist threat”, responds by attacking the civil liberties of its own citizens. And the citizens often cheer them on.

Last week, the French government passed a new bill through the National Assembly that vastly expanded the powers of the country’s intelligence services. French intelligence agents will now be free to plant cameras and recording devices in private homes and cars, intercept phone conversations without judicial oversight, even install “keylogger” devices that record every key stroke on a targeted computer in real time.

It was allegedly a response to the “Charlie Hebdo” attacks that killed 17 people in Paris last January, but the security services were just waiting for an excuse. Indeed, Prime Minister Manuel Valls said that the law was needed to give a legal framework to intelligence agents who are already pursuing some of these practices illegally. France, he explained, has never “had to face this kind of terrorism in our history.”

Meanwhile, over in Canada, Defence Minister Jason Kenney was justifying a similar over-reaction in by saying that “the threat of terrorism has never been greater.” Really?

In all the time since 9/11 there had never been a terrorist attack in Canada until last October, when two Canadian soldiers were killed in separate incidents. Both were low-tech, “lone wolf” attacks by Canadian converts to Islam – in one, the murder weapon was simply a car – but the public (or at least the media) got so excited that the government felt the need to “do something.”

The Anti-Terror Act, which has just passed the Canadian House of Commons, gives the Canadian Security Intelligence Service the right to make “preventive” arrests in Canada. It lets police arrest and detain individuals without charge for up to seven days. The bill’s prohibitions on speech that “promotes or glorifies terrorism” are so broad and vague that any extreme political opinion can be criminalised.

In short, it’s the usual smorgasbord of crowd-pleasing measures that politicians throw out when they want to look tough. It won’t do much to stop terrorist attacks, but that doesn’t matter as the threat is pretty small anyway.

France has 65,000,000 million people, and it lost 17 of them to terrorism in the past year. Canada has 36,000,000 million people, and it has lost precisely 2 of them to domestic terrorism in the past twenty years. In what way were those lives more valuable than those of the hundreds of people who die each year in France and Canada from less newsworthy crimes of violence like murder?

Why haven’t they changed the law to stop more of those crimes? If you monitored everybody’s electronic communications all the time, and bugged their homes and cars, you could probably cut the murder rate in half. The price, of course, would be that you have to live in an Orwellian surveillance state, and we’re not willing to pay that price. Not just to cut the murder rate.

The cruel truth is that we put a higher value on the lives of those killed in terrorist attacks because they get more publicity. That’s why, in an opinion poll last month, nearly two-thirds of French people were in favor of restricting freedoms in the name of fighting extremism – and the French parliament passed the new security law by 438 votes to 86.

The government in France is Socialist, but the opposition centre-right supported the new law too. Prime Minister Stephen Harper’s Conservative government in Canada is seriously right-wing, but the centre-right Liberals were equally unwilling to risk unpopularity by opposing it. On the other hand, the centre-left New Democrats and the Greens voted against, and the vote was closer in Canada: 183 to 96.

And the Canadian public, at the start 82 percent in favour of the new law, had a rethink during the course of the debate. By the time the Anti-Terror Act was passed in the House of Commons, 56 percent of Canadians were against it. Among Canadians between 18 and 34 years old, fully three-quarters opposed it.

Maybe the difference just reflects the smaller scale of the attacks in Canada, but full credit to Canadians for getting past the knee-jerk phase of their response to terrorism. Nevertheless, their parliament still passed the bill. So should we chalk all this up as two more victories for the terrorists, with an honourable mention for the Canadian public?

No, not really. Islamic State, al-Qaeda, and all the other jihadis don’t give a damn if Western democracies mutilate their own freedoms, as it doesn’t significantly restrict their own operations. The only real winners are the security forces.
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To shorten to 725 words, omit paragraph 9. (“Why…rate”)