Dave Merrick
2018-06-11 23:22:47 UTC
https://www.nationalreview.com/magazine/2017/04/03/peter-navarro-donald-
trump-propaganda/
Peter Navarro is positioned to give the president a lot of bad advice
In the collected works of Peter Navarro, there is a peculiar paradox: Some
of the dullest prose imaginable challenges the sharp edge of Hanlons
razor, the aphorism that advises us: Never attribute to malice that which
is adequately explained by stupidity. Professor Navarro of the University
of California at Irvine has hanging on the wall of an office or a den
somewhere a doctorate in economics from Harvard; barring some Forrest
Gumplevel chain of coincidence, it does not seem likely that anything as
innocent as stupidity explains his literary output, which consists of a
few how-to-make-money-in-the-stock-market books (an actual title: If Its
Raining in Brazil, Buy Starbucks) from earlier in his career and a half
dozen or so low-minded books about China with such talk-radio-ready names
as Death by China and The Coming China Wars, two books that contain 80
exclamation points between them, as well as several pamphlets summarizing
the main points of his books.
He is President Donald Trumps house China intellectual, the only one of
his close advisers who is a credentialed academic economist, albeit one
whose area of specialty is utility companies, not international trade.
(Our most famous scholar of trade economics, Paul Krugman, apparently was
not available for service in the Trump administration. Pity.) Navarro has
been named head of the newly created National Trade Council, a position in
which he is well positioned to do a great deal of damage to the Trump
administration, to the United States and its economic interests, and,
possibly, to the world. Thats quite a step up for a man who was teaching
undergraduate econ to business students until a few months ago.
It will not escape your notice that his career bears more than a passing
resemblance to that of Elizabeth Warren. Both entered public life as
academics; both attempted to build fortunes and reputations on popular
financial self-help books (Elizabeth Warren offered the Dave Ramseyish
Ultimate Lifetime Money Plan); Warren, possibly owing to her being a woman
of color (Pantone code 11-0602 TPX), secured a more prestigious academic
appointment than he did, but UC Irvine isnt nothing; both individuals
were instrumental in the creation of federal agencies, though Warren
ultimately was prevented from leading the Consumer Financial Protection
Bureau she dreamt up; both sought public office, with Warren coming to
serve in the Senate and Navarro running for office four times as a
Democrat, losing races for mayor of San Diego, San Diego city council,
county supervisor, and Californias 49th congressional district; both have
a taste for populist arguments against international trade, and both have
made environmental concerns a prominent part of their anti-trade
positions: Vice President and Nobel Laureate Al Gore has been transformed
by an avalanche of scientific facts from a left-wing crazy to the planets
most authoritative political voice on the subject, writes Navarro.
And both are battier than Bruce Waynes basement.
Professor Navarro, among other things, makes economics errors that would
be obvious to an undergraduate. This has been commented on at some length
elsewhere, most prominently after he published a review of the Trump
economic plan (a review co-authored with Wilbur Ross, who is not an
economist but is now secretary of commerce) in which he proffered the
schoolboy argument that, because GDP is defined as the sum of consumption,
investment, government spending, and net exports, eliminating our trade
deficit with China would add substantially to GDP. In economics terms, he
has mistaken an accounting identity for real-world causality; in laymans
terms, this is horsepucky, a mistake that an econ professor like him
really shouldnt be making, as Noah Smith of Bloomberg put it.
Net exports means exports minus imports, and, because the United
States currently runs a trade deficit, that figure is negative. And it is
not a trivial figure: Our trade deficit with China in 2016 equaled about 2
percent of GDP. But eliminating that trade deficit would not add 2 percent
to GDP; imports are subtracted from the GDP model because they already are
counted in other consumption and we dont want to double-count them. As
Catos Dan Ikenson puts it in his savage write-up of Navarros economic
illiteracy his words in The Hill: Imports have nothing to do with
GDP other than the fact that they increase when the economy is growing
and they tend to decrease when the economy is contracting. . . . There is
no inverse relationship between imports and GDP, as Navarro asserts. He
calls Navarros appointment an assault on the fundamental premise that
public policy should be rooted in fact and reason.
Deficits in trade are married to surpluses in investment. The Chinese
choose to consume less and invest more for many reasons: One is that China
is still poor and does not wish to be, and its leaders understand that
real prosperity does not come without real investment; another is that any
Chinese national with the wherewithal to invest outside of China is smart
enough to know that doing so is prudent when you live under a police state
that is by necessity always one serious economic crisis away from civil
unrest.
Professor Navarro never gives any serious consideration to the actual fact
of trade-offs between consumption and investment, trade-offs being the
coin of the realm for economists doing economics. For him, trade is mainly
a moral question: While Chinas unfair trading practices constitute the
major reason the United States runs huge trade deficits with China, he
writes,
these unfair practices are not the only reason. At least part of Americas
huge trade imbalance problem may be traced directly to its nearly decade-
long descent into a living beyond ones means lifestyle. This is a
lifestyle that has been accommodated both by chronic federal budget
deficits and a surfeit of easy money from the Federal Reserves printing
press.
None of that is true. Neither is his related claim that China effectively
acts as the United States central banker, as he repeatedly puts it. A
little less than half of U.S.-government debt held by the public is owned
by foreign governments and institutions, and China is not the biggest
overseas holder of that debt: Japan is, as of the most recent (December
2016) figures from the Treasury Department. The third-biggest holder of
U.S. federal debt abroad is Ireland, followed by see if you can identify
the trend here the Cayman Islands, Brazil, Switzerland, Luxembourg, and
the United Kingdom. The belief that Beijing has some special hold on U.S.
finances is a myth. To the extent that there is a stranglehold, it is
mutual: Luo Ping, then Chinas top bank regulator, told an audience of
American financiers and regulators in 2009: Except for U.S. Treasuries,
what can you hold? Gold? You dont hold Japanese-government bonds or U.K.
bonds. . . . We know the dollar is going to depreciate, so we hate you
guys, but there is nothing much we can do. He wasnt wrong about that,
and the prospect of China firebombing its own assets in a fit of anti-
American pique is far-fetched.
Professor Navarro almost certainly knows this. Professor Navarro almost
certainly does not care. His fearful books and risible policy analyses are
not written for the Dan Ikensons of the world, or even for those freshman
econ students who could spot the errors in his work. They are written for
partisans and true believers. This is a very large audience Sean
Hannitys audience but Navarros most recent policy analysis was written
for the smallest of all possible audiences, an audience of one: Donald J.
Trump.
Navarros China books are also written to stir emotion, not light.
He refers to Diego Garcia as one of the most strategic bases in the
American matrix, a phrase that is without meaning. (Vetoing panda
proliferates genocide in Darfur, on the other hand, is worthy of Lawrence
Ferlinghetti.) He offers absurd historical quantifications such as this
gem: Across a broad swath of world history, in fully eleven of the
fifteen times since 1500 that a rising power like China faced an
established power like the United States, war resulted more than 70
percent of the time.
He is very, very fond of that broad swath, sweep, whatever, e.g., It
should be clear from this broad sweep of history that since taking power
in 1949, the Chinese Communist Party has consistently engaged in repeated
acts of aggression and violence over a period spanning more than six
decades. Well figured again. When you juxtapose this Chinese history
against that of Americas own exceedingly violent modern record, this is
indeed a highly combustible mix. One hears in that some echoes of Trumps
defense of Vladimir Putins murders and suppression: Weve got a lot of
killers. What, do you think our country is so innocent?
His policy prescriptions are fanciful and moralistic (Question whether
you really need what you are about to buy from China), and he falls into
the familiar academics conceit of believing that he knows a great deal
more about other peoples businesses than do those people, who run them.
E.g.: I always marvel at this lemming-like offshoring behavior. . . . In
the parlance of business strategy, these executives have failed miserably
in performing a complete risk assessment of moving their facilities to
China. In an earlier life, I was involved in corporate risk-assessment,
which is much more granular (one of my chores was counting up the number
of ransom kidnappings in Santo Domingo) than the grand sweep of
Professor Navarros point of view. The brain trust in Cupertino almost
certainly has given a lot more thought and genuine study to Apples
vulnerabilities vis-à-vis China than Peter Navarro has.
I should probably mention the plagiarism. So far as I can see, Professor
Navarro does not copy the work of others word for word (except for an
unattributed quotation from Toby Keith), but his work sometimes relies
heavily on uncredited sources. For example, in a section on Chinese-made
counterfeit goods, he asks the reader to consider a number of scenarios:
developing a rash from using fake Head and Shoulders shampoo made with an
irritating ingredient, having ones fire-alarm system destroyed by fake
Duracell batteries, having a reaction from fake Viagra, etc. Those name-
brand examples appear in a piece by ABC News that is substantially similar
to Navarros text, as well as in an earlier Chicago Tribune report. If one
of my undergraduate students had turned in a similar piece of work, I
would have flunked him for it.
But this is part of Professor Navarros throw-it-all-and-see-what-sticks
approach. It leads him to some strange places, such as suggesting that
China is likely to dissolve into a state of internal chaos and that one of
the possible triggers is an HIV pandemic. He refers to this possibility
as Chinas Ticking HIV/AIDS Time Bomb in The Coming China Wars (2008).
In reality, China has an HIV-infection rate less than one-thirtieth that
of the District of Columbia. HIV is an issue in China, as it is almost
everywhere, but it is a minor one, even in comparison with more advanced
countries such as the United Kingdom. Professor Navarro merrily ignores
the entire context.
His sloppiness with sources is general. Navarro cites a Rand Corporation
report suggesting that China is behind Irans nuclear program without
mentioning that the report is a quarter-century old, that it identifies
China as a moderate threat to U.S. interests, or that subsequent Rand
analysis suggests that Chinese involvement with Iranian nuclear ambitions
seems to have ended around 1997. He does not even cite any particular Rand
report, simply attributing a long quotation to the Rand Corporation.
Professor Navarro does not have much of an eye for the future, which is a
problem for a man in the futurism business. He foresees American streets
clogged with shoddy Chinese-made cars:
Pulling out of the gas station back into traffic, you are horrified to see
a sporty little compact car made in Shanghai scream through a red light
and plow directly into a school bus when the cars counterfeit brake pads
fail. Fortunately, none of the children are badly hurt, but the driver
winds up in the morgue after the front end of his Made in China car
crumples because of its low-quality steel and the driver-side airbag
failing to deploy.
There are a few Chinese-made cars for sale in the United States: Volvo,
for instance, makes some cars there. The bumpers are pretty good. Trump
fretted that China is maneuvering to control the worlds oil supply and
that a partnership between Beijing and Caracas (this while Hugo Chávez was
running the show) threatened to starve the United States of oil. Since
then, the United States has become a petroleum exporter, and, as I write,
the oilmen in Houston are watching queasily as the price of crude dips
below $50 because of an oil glut.
As a wise man once said, it is difficult to make predictions, especially
about the future. But Professor Navarro does not seem to understand the
present very well, either. In fact, his understanding of the Chinese
authorities economic strategy is exactly backward. He argues that Beijing
intentionally maintains an artificially high unemployment rate in order to
coerce workers into accepting wages that are low and stagnant. In reality,
Chinese workers wages have been rising from 5 percent to 7 percent (or
more, by some estimates) per year for years, while unemployment has been
relatively low. As unemployment has increased in recent years, Beijing has
gone to great lengths to convince the Chinese people that the labor market
is tighter than in fact it is. Beijing knows that an army of unemployed
men is an army that it must take seriously. Far from using the threat of
unemployment to motivate workers, the powers that be in China fear a
general sense of job insecurity more than they fear anything else short of
an invading army.
One could go on. But there would be no point. Trump feels the need for
occasional intellectual window-dressing: Consider his endless references
to the academic highflyers in his family and his recent boast that we
have by far the highest IQ of any cabinet ever assembled. But he is in
fact deeply anti-intellectual, which is one of the reasons he prefers to
be advised by cranks and fast-food titans than, say, subject-area experts.
Professor Navarro is, as I understand it, an excellent scholar of
utilities. He does not have any special competence on the subject of
China, on the economics of trade, or on American trade policy. He is a
crude and ridiculous propagandist one with a federal portfolio and a
place of honor in the Trump administration.
trump-propaganda/
Peter Navarro is positioned to give the president a lot of bad advice
In the collected works of Peter Navarro, there is a peculiar paradox: Some
of the dullest prose imaginable challenges the sharp edge of Hanlons
razor, the aphorism that advises us: Never attribute to malice that which
is adequately explained by stupidity. Professor Navarro of the University
of California at Irvine has hanging on the wall of an office or a den
somewhere a doctorate in economics from Harvard; barring some Forrest
Gumplevel chain of coincidence, it does not seem likely that anything as
innocent as stupidity explains his literary output, which consists of a
few how-to-make-money-in-the-stock-market books (an actual title: If Its
Raining in Brazil, Buy Starbucks) from earlier in his career and a half
dozen or so low-minded books about China with such talk-radio-ready names
as Death by China and The Coming China Wars, two books that contain 80
exclamation points between them, as well as several pamphlets summarizing
the main points of his books.
He is President Donald Trumps house China intellectual, the only one of
his close advisers who is a credentialed academic economist, albeit one
whose area of specialty is utility companies, not international trade.
(Our most famous scholar of trade economics, Paul Krugman, apparently was
not available for service in the Trump administration. Pity.) Navarro has
been named head of the newly created National Trade Council, a position in
which he is well positioned to do a great deal of damage to the Trump
administration, to the United States and its economic interests, and,
possibly, to the world. Thats quite a step up for a man who was teaching
undergraduate econ to business students until a few months ago.
It will not escape your notice that his career bears more than a passing
resemblance to that of Elizabeth Warren. Both entered public life as
academics; both attempted to build fortunes and reputations on popular
financial self-help books (Elizabeth Warren offered the Dave Ramseyish
Ultimate Lifetime Money Plan); Warren, possibly owing to her being a woman
of color (Pantone code 11-0602 TPX), secured a more prestigious academic
appointment than he did, but UC Irvine isnt nothing; both individuals
were instrumental in the creation of federal agencies, though Warren
ultimately was prevented from leading the Consumer Financial Protection
Bureau she dreamt up; both sought public office, with Warren coming to
serve in the Senate and Navarro running for office four times as a
Democrat, losing races for mayor of San Diego, San Diego city council,
county supervisor, and Californias 49th congressional district; both have
a taste for populist arguments against international trade, and both have
made environmental concerns a prominent part of their anti-trade
positions: Vice President and Nobel Laureate Al Gore has been transformed
by an avalanche of scientific facts from a left-wing crazy to the planets
most authoritative political voice on the subject, writes Navarro.
And both are battier than Bruce Waynes basement.
Professor Navarro, among other things, makes economics errors that would
be obvious to an undergraduate. This has been commented on at some length
elsewhere, most prominently after he published a review of the Trump
economic plan (a review co-authored with Wilbur Ross, who is not an
economist but is now secretary of commerce) in which he proffered the
schoolboy argument that, because GDP is defined as the sum of consumption,
investment, government spending, and net exports, eliminating our trade
deficit with China would add substantially to GDP. In economics terms, he
has mistaken an accounting identity for real-world causality; in laymans
terms, this is horsepucky, a mistake that an econ professor like him
really shouldnt be making, as Noah Smith of Bloomberg put it.
Net exports means exports minus imports, and, because the United
States currently runs a trade deficit, that figure is negative. And it is
not a trivial figure: Our trade deficit with China in 2016 equaled about 2
percent of GDP. But eliminating that trade deficit would not add 2 percent
to GDP; imports are subtracted from the GDP model because they already are
counted in other consumption and we dont want to double-count them. As
Catos Dan Ikenson puts it in his savage write-up of Navarros economic
illiteracy his words in The Hill: Imports have nothing to do with
GDP other than the fact that they increase when the economy is growing
and they tend to decrease when the economy is contracting. . . . There is
no inverse relationship between imports and GDP, as Navarro asserts. He
calls Navarros appointment an assault on the fundamental premise that
public policy should be rooted in fact and reason.
Deficits in trade are married to surpluses in investment. The Chinese
choose to consume less and invest more for many reasons: One is that China
is still poor and does not wish to be, and its leaders understand that
real prosperity does not come without real investment; another is that any
Chinese national with the wherewithal to invest outside of China is smart
enough to know that doing so is prudent when you live under a police state
that is by necessity always one serious economic crisis away from civil
unrest.
Professor Navarro never gives any serious consideration to the actual fact
of trade-offs between consumption and investment, trade-offs being the
coin of the realm for economists doing economics. For him, trade is mainly
a moral question: While Chinas unfair trading practices constitute the
major reason the United States runs huge trade deficits with China, he
writes,
these unfair practices are not the only reason. At least part of Americas
huge trade imbalance problem may be traced directly to its nearly decade-
long descent into a living beyond ones means lifestyle. This is a
lifestyle that has been accommodated both by chronic federal budget
deficits and a surfeit of easy money from the Federal Reserves printing
press.
None of that is true. Neither is his related claim that China effectively
acts as the United States central banker, as he repeatedly puts it. A
little less than half of U.S.-government debt held by the public is owned
by foreign governments and institutions, and China is not the biggest
overseas holder of that debt: Japan is, as of the most recent (December
2016) figures from the Treasury Department. The third-biggest holder of
U.S. federal debt abroad is Ireland, followed by see if you can identify
the trend here the Cayman Islands, Brazil, Switzerland, Luxembourg, and
the United Kingdom. The belief that Beijing has some special hold on U.S.
finances is a myth. To the extent that there is a stranglehold, it is
mutual: Luo Ping, then Chinas top bank regulator, told an audience of
American financiers and regulators in 2009: Except for U.S. Treasuries,
what can you hold? Gold? You dont hold Japanese-government bonds or U.K.
bonds. . . . We know the dollar is going to depreciate, so we hate you
guys, but there is nothing much we can do. He wasnt wrong about that,
and the prospect of China firebombing its own assets in a fit of anti-
American pique is far-fetched.
Professor Navarro almost certainly knows this. Professor Navarro almost
certainly does not care. His fearful books and risible policy analyses are
not written for the Dan Ikensons of the world, or even for those freshman
econ students who could spot the errors in his work. They are written for
partisans and true believers. This is a very large audience Sean
Hannitys audience but Navarros most recent policy analysis was written
for the smallest of all possible audiences, an audience of one: Donald J.
Trump.
Navarros China books are also written to stir emotion, not light.
He refers to Diego Garcia as one of the most strategic bases in the
American matrix, a phrase that is without meaning. (Vetoing panda
proliferates genocide in Darfur, on the other hand, is worthy of Lawrence
Ferlinghetti.) He offers absurd historical quantifications such as this
gem: Across a broad swath of world history, in fully eleven of the
fifteen times since 1500 that a rising power like China faced an
established power like the United States, war resulted more than 70
percent of the time.
He is very, very fond of that broad swath, sweep, whatever, e.g., It
should be clear from this broad sweep of history that since taking power
in 1949, the Chinese Communist Party has consistently engaged in repeated
acts of aggression and violence over a period spanning more than six
decades. Well figured again. When you juxtapose this Chinese history
against that of Americas own exceedingly violent modern record, this is
indeed a highly combustible mix. One hears in that some echoes of Trumps
defense of Vladimir Putins murders and suppression: Weve got a lot of
killers. What, do you think our country is so innocent?
His policy prescriptions are fanciful and moralistic (Question whether
you really need what you are about to buy from China), and he falls into
the familiar academics conceit of believing that he knows a great deal
more about other peoples businesses than do those people, who run them.
E.g.: I always marvel at this lemming-like offshoring behavior. . . . In
the parlance of business strategy, these executives have failed miserably
in performing a complete risk assessment of moving their facilities to
China. In an earlier life, I was involved in corporate risk-assessment,
which is much more granular (one of my chores was counting up the number
of ransom kidnappings in Santo Domingo) than the grand sweep of
Professor Navarros point of view. The brain trust in Cupertino almost
certainly has given a lot more thought and genuine study to Apples
vulnerabilities vis-à-vis China than Peter Navarro has.
I should probably mention the plagiarism. So far as I can see, Professor
Navarro does not copy the work of others word for word (except for an
unattributed quotation from Toby Keith), but his work sometimes relies
heavily on uncredited sources. For example, in a section on Chinese-made
counterfeit goods, he asks the reader to consider a number of scenarios:
developing a rash from using fake Head and Shoulders shampoo made with an
irritating ingredient, having ones fire-alarm system destroyed by fake
Duracell batteries, having a reaction from fake Viagra, etc. Those name-
brand examples appear in a piece by ABC News that is substantially similar
to Navarros text, as well as in an earlier Chicago Tribune report. If one
of my undergraduate students had turned in a similar piece of work, I
would have flunked him for it.
But this is part of Professor Navarros throw-it-all-and-see-what-sticks
approach. It leads him to some strange places, such as suggesting that
China is likely to dissolve into a state of internal chaos and that one of
the possible triggers is an HIV pandemic. He refers to this possibility
as Chinas Ticking HIV/AIDS Time Bomb in The Coming China Wars (2008).
In reality, China has an HIV-infection rate less than one-thirtieth that
of the District of Columbia. HIV is an issue in China, as it is almost
everywhere, but it is a minor one, even in comparison with more advanced
countries such as the United Kingdom. Professor Navarro merrily ignores
the entire context.
His sloppiness with sources is general. Navarro cites a Rand Corporation
report suggesting that China is behind Irans nuclear program without
mentioning that the report is a quarter-century old, that it identifies
China as a moderate threat to U.S. interests, or that subsequent Rand
analysis suggests that Chinese involvement with Iranian nuclear ambitions
seems to have ended around 1997. He does not even cite any particular Rand
report, simply attributing a long quotation to the Rand Corporation.
Professor Navarro does not have much of an eye for the future, which is a
problem for a man in the futurism business. He foresees American streets
clogged with shoddy Chinese-made cars:
Pulling out of the gas station back into traffic, you are horrified to see
a sporty little compact car made in Shanghai scream through a red light
and plow directly into a school bus when the cars counterfeit brake pads
fail. Fortunately, none of the children are badly hurt, but the driver
winds up in the morgue after the front end of his Made in China car
crumples because of its low-quality steel and the driver-side airbag
failing to deploy.
There are a few Chinese-made cars for sale in the United States: Volvo,
for instance, makes some cars there. The bumpers are pretty good. Trump
fretted that China is maneuvering to control the worlds oil supply and
that a partnership between Beijing and Caracas (this while Hugo Chávez was
running the show) threatened to starve the United States of oil. Since
then, the United States has become a petroleum exporter, and, as I write,
the oilmen in Houston are watching queasily as the price of crude dips
below $50 because of an oil glut.
As a wise man once said, it is difficult to make predictions, especially
about the future. But Professor Navarro does not seem to understand the
present very well, either. In fact, his understanding of the Chinese
authorities economic strategy is exactly backward. He argues that Beijing
intentionally maintains an artificially high unemployment rate in order to
coerce workers into accepting wages that are low and stagnant. In reality,
Chinese workers wages have been rising from 5 percent to 7 percent (or
more, by some estimates) per year for years, while unemployment has been
relatively low. As unemployment has increased in recent years, Beijing has
gone to great lengths to convince the Chinese people that the labor market
is tighter than in fact it is. Beijing knows that an army of unemployed
men is an army that it must take seriously. Far from using the threat of
unemployment to motivate workers, the powers that be in China fear a
general sense of job insecurity more than they fear anything else short of
an invading army.
One could go on. But there would be no point. Trump feels the need for
occasional intellectual window-dressing: Consider his endless references
to the academic highflyers in his family and his recent boast that we
have by far the highest IQ of any cabinet ever assembled. But he is in
fact deeply anti-intellectual, which is one of the reasons he prefers to
be advised by cranks and fast-food titans than, say, subject-area experts.
Professor Navarro is, as I understand it, an excellent scholar of
utilities. He does not have any special competence on the subject of
China, on the economics of trade, or on American trade policy. He is a
crude and ridiculous propagandist one with a federal portfolio and a
place of honor in the Trump administration.