Peter Morici, University of Maryland business professor and former director of economics for the U.S. International Trade Commission, appeared on Monday’s Breitbart News Daily to discuss his weekend column for the New York Post, “Trump Can Get Us the China Deal We Deserve.”
“All along, when I would go to the mainstream media to do interviews, I’d be confronted by liberals who’d say, ‘Under what authority could he institute a tariff?’ Well, the answer is, he’s got plenty of authority under existing U.S. legislation to institute a 45 percent tariff, and if it’s ‘draconian,’ then they’d better repeal New York Times columnist and Nobel laureate Paul Krugman’s Nobel prize because he suggested the same thing,” Morici told SiriusXM host Alex Marlow.
He noted the Left’s previous embrace of sweeping executive power is one of the many things that has become “very inconvenient” for them since Trump’s election. Another was “abandoning all those white folks in the middle of America.”
With the threat of tariffs as a lever, Morici said we could “renegotiate the accession agreement China signed to enter the WTO.”
“We had a bilateral accord with them. We agreed to let them in. And it was a terribly one-sided deal, negotiated by – guess who? – Bill Clinton,” he recalled. “For example, they have a 25 percent tariff on cars. We have a 3 percent tariff on cars. One of the best-selling vehicles in China are Buicks, but we can’t make them here and sell them there. They have all kinds of administrative barriers to letting stuff in.”
“It’s time to rebuild Wilkes-Barre and Reading and places further west,” he urged. “And we can do that if we hit the Chinese hard enough with a good trade sanction, and say, ‘You’ve got to sit down and negotiate and open up your market finally and revalue your currency.’ If we do that, first of all, we’ll get a bump to economic growth of about $400 billion, about 2 percent of GDP – you know, initial dividends. And after that, economic growth will pick up at least one percentage point a year.”
“You know what a difference it would make to have 3 percent growth instead of 2 percent growth, in terms of the money that we need to fix our roads, rebuild our cities, put people back to work? It would be enormous. You know, we’re not going to go back to the kind of factory jobs we had in 1970. The technology has changed. But technology is always changing. We’ve always had automation. What’s different about today is we’ve had 16 years of mainstream Republicans and Democrats selling out the American worker, and it’s time to take it back,” Morici declared.
Marlow noted that conservative economic thought has traditionally been much friendlier to free trade than Trump’s platform, as seen in the writings of intellectual giants like Friedrich Hayek and Milton Friedman.
“I think my conservative colleagues are still where they’ve always been. They don’t want to do anything about China,” Morici observed. “They think it’s just fine to have going on what’s going on. But then again, they live off dead people’s money and write their articles from lovely buildings in Eastern universities and on the West Coast that aren’t affected by this. When you don’t look outside, what you don’t see can’t affect how you think.”
“If you go back to neoclassical trade theory, what we teach in the graduate courses in economics, it’s based on balanced trade,” he noted. “If you import more and you export more, by specializing in what you do better – and this is in my article – you get more GDP. You get more goods. You get more stuff. It’s a positive-sum game. It’s not a zero-sum game or a negative-sum game. It’s a positive-sum game. But if the system’s rigged, if you’re blindfolded in the marketplace and the other guy has got eyes in front of his head and behind his head, he’s gonna win. It’s that simple. Think of it as an NFL football game, where your team can only run the ball. You can’t win that way.”
Marlow posited that the most serious error made by conventional punditry and pollsters was believing Rust Belt voters would “come home” to the Democrats, when Trump was, in fact, able to win their support in the 2016 election by running on the issues Morici described.
“Actually, I don’t think they got them ‘wrong’ in terms of where their sentiments were,” he replied. “What they didn’t do correctly was estimate properly their turnout. They didn’t realize how angry they were, how willing they were to come out.”
Morici said it will be up to Donald Trump to deliver on his promises to the constituency he turned out, in defiance of conventional wisdom.
“He’s got to get tough with China, and he’s got to start to do something about rebuilding those cities and towns. You go to Reading, Pennsylvania, to Lucerne County, where Wilkes-Barre is, and points further west, all the way out through Michigan and even into parts of Minnesota – we didn’t win Minnesota, but it exists there – the towns and communities are devastated. That’s where you have the oxycontin addiction. That’s where you have lots of suicides, and things of that nature,” he said.
Marlow asked Morici for his assessment of the stock market boom that erupted after Trump’s election.
“The thing is, we had a ‘Trump scare’ about two weeks before the election. People started to realize he could win, and the stocks went down,” Morici recalled. “But you know, after a certain point, you step back and say, ‘What would happen if we had a Trump presidency?’ You know, we’re not going to have as big a tax cut as he campaigned on, but we’re gonna have a tax cut. We’re not gonna ship back 11 million people because we can’t, physically. But we are going to have better border control, and likely, an immigration policy that focuses on the needs of the economy and the ability of people to assimilate.”
“We’re gonna have, not complete deregulation; that would be folly! Jared Burnstein was all over me on NPR this morning, saying they want to get rid of all the bank regulations. You don’t hear them saying they want to do that. They want to prudently regulate banks, not over-regulate them, so the banks will make loans again,” he continued. “You start to step back, and you realize, gee whiz, this sounds like Reagan’s economic program!”
Morici saw a number of similarities between Reagan’s situation in 1980 and Trump’s in 2016: “Okay, hold on. When Ronald Reagan took over, he had a mess on his hands from Jimmy Carter, just like Barack Obama had a mess on his hands from the worst Republican president in modern history, George W. Bush. Reagan’s unemployment rate was actually bigger, 10.8 percent. His economy proceeded to grow, during his recovery over the same period, four-and-a-half percent a year, and create twice as many jobs, in a much smaller economy than Barack Obama. Now, which way works better? Cutting taxes or raising taxes? Regulating the economy or prudently managing the economy?”
“Also, Reagan had the Plaza Accord to get on top of the Japanese about – then, their undervalued currency. Barack Obama told the Chinese, ‘If you don’t do something about this, I can.’ They called his bluff. And you know what happens when Barack Obama draws a red line: people get red ink on their shoes, and nothing happens,” Morici charged.
“What Donald Trump has to do more than anything else to succeed is, he has to do something that George W. Bush and Barack Obama never could do, and that’s show the courage of his convictions,” Morici advised. “When you really come down to it, Barack Obama is a very weak man. He’s very capable of giving big speeches in front of loving college students – who subscribe, thanks to their professors, to his left-wing views. He is not very good at facing up on an even playing field to an intellectual who thinks differently than him. And when it comes to other world leaders, like Putin or the president of China, he just shows up weak and failing.”
“Trump has to show us he’s a different man when it comes to that. He’s got to show us the courage of his convictions. And you don’t have to be a great intellectual, which Donald is not, and he admits it. But you do have to have something Harry Truman had, who was nothing more than a haberdasher: the courage to go belly to belly with Putin and push back,” he said.
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