Friday, September 4, 2020

The economy, Il Duce. Trump stirs the Squadrismo to violence to hide the Chinese economic recovery

A recent article in Foreign Affairs was headlined Xi Jinping Is Not Stalin: How a Lazy Historical Analogy Derailed Washington’s China Strategy points out:

    Chinese citizens enjoy much greater autonomy over their own economic well-being than Soviet citizens did in the early days of the Cold War—a product of China’s more open, market-oriented, and globally integrated economy. On this dimension, the comparison is not even close.
    Look to foreign policy, and the analogy unravels further. Stalin openly proclaimed his desire for a global communist revolution, hoping to create a network of socialist states under Moscow’s rule—and it wasn’t just talk. In the early years of the Cold War, his Red Army soldiers, intelligence officers, and Communist Party agents aggressively imposed communism across Eastern Europe. He provided aid to Mao’s Chinese Communist Party and covert assistance to communists in Greece, encouraged proxy military forces in the Korean War, and supported coups around the world.
    Xi, by contrast, has not orchestrated the overthrow of a single regime. ...Xi has yet to instigate a coup, arm insurgents, or invade a democracy and install a communist regime. Little suggests that he seeks to subvert American democracy. (Russian President Vladimir Putin has been much bolder and more aggressive on that front.)
    The Trump administration undoubtedly would like a Stalinist leader to be in charge in Beijing, if only to better mobilize and unite Americans against him. But China “as it is” is not ruled by a new Stalin. Asserting otherwise doesn’t change that fact and gets in the way of developing a sophisticated, successful U.S. policy to contain, deter, and engage China over the long haul.

Hidden in most of the anti-communist political rhetoric of this Presidential Election is the evidence of a significant failure in the Trump Administration's China trade policy. One might even assume that a significant reason why so many Republicans oppose the Great Economic Lockdown of 2020 is the subject of the article headlined at the top of this post.

A summary of the dilemma for the Paleoconservative Republican Trump Administration can be found in the article:

    Robert Gwynne, a shoe manufacturing and exports specialist in Guangdong, said reviving competitiveness in the United States and elsewhere to compete with China would not be quick or easy.
    “To get it back,” he said, “you’re looking at 20 to 30 years, depending on what business you’re in.”

The Use of Violence and Fear to Distract Voters

A rapid restructuring of a complex economy sustained by free trade cannot be done in a country committed to the idea of democracy. Effectively, this is a curse for Paleoconservative republicans who advocate:
  • ultranationalism embracing in law the aspects that characterize and distinguish the United States as an autonomous political community including a common language and shared cultural traditions reinforced by restrictions on immigration,
  • regionalism based upon states' rights as expressed in the 10th Amendment including the decentralization of government social policy which with regional differences should favor paternalism and Christian traditionalism while limiting multicultural programs,
  • economic nationalism through federal policy and treaties limiting free trade, establishing tariffs, and implementing protectionism, while facilitating capitalism by assuring the unrestricted ease of interstate commerce and facilitating workers sharing generally in business profits through stock ownership,
  • noninterventionism in the conduct of American foreign policy, limiting the size of military commitments outside the United States,
  • cohesiveness among individuals and prioritization of the group over the self in order to defend and to sustain ultranationalism, economic nationalism, regionalism, and noninterventionism.
Whether he understands the implications, every indication is Donald Trump's ideological preference for government, our government, is that of a paleoconservative republican, otherwise known as fascist. As expressed by Trump in March 2019 such a system depends upon the threat of violence from the military to police, from biker groups to racist groups. He is doubling-down on that in the campaign at this time.

All of this leads to a review of history and the similarities with Italy after WWI. The lack of an adequate political history education has resulted in Americans confusing Mussolini's Italian nationalist economic agenda with Hitler's Nazi movement that came to power in Germany a decade later. That is a potentially dangerous view.

Whether You Call It Paleoconservative or Fascist, It's UnAmerican

We won't re-explore the commonality between the personality cults of Trump and Mussolini. For more on the subject read Yes, Barack...Donald Trump is a fascist but not a Fascist, a paleoconservative not a conservative or enter "Mussolini Trump" in a Google search.

While there are some commonalities in their personas and even appearance, it is important to note that Mussolini was operating within the communications constraints of 1920. Trump has instant electronic media at his disposal in 2020.

Their lives have nothing in common. Benito Mussolini's father, Alessandro Mussolini, was a blacksmith and a socialist, while his mother, Rosa (née Maltoni), was a devout Catholic schoolteacher. Mussolini thought of himself as an intellectual and was considered to be well-read.

In 1902, Mussolini emigrated to Switzerland, partly to avoid compulsory military service which might make one think he was like Trump. But that move was specifically focused on objections to policy. In 1915 he volunteered to serve in WWI and in February 1917 was wounded in action severely enough that he had to be evacuated from the front.

Between 1919 and 1920 an intense social conflict occurred in Italy, particularly between militant groups we would call the left (Socialists) or the right (Squadrismo  aka Blackshirts which became the inspiration for Adolf Hitler's S.A.). To make a long story short, a 39-year-old Benito Mussolini came to power in 1922 under a parliamentary coalition until the National Fascist Party seized control and ushered in a one-party dictatorship by early 1925.

Italy at the time of Mussolini's rise had a serious lack of strategic resources to sustain competition in a 20the Century industrial economy. So Fascist Italy began exchanging natural resources from Soviet Russia for technical assistance from Italy in the fields of aviation, automobile and naval technology.

Referring to the economics of John Maynard Keynes as "useful introduction to fascist economics", Mussolini initially spent Italy into a structural deficit that grew exponentially, but did expand the economy.

Trump, who substantially increased the U.S. structural deficit, has identified for his constituents a serious strategic lack in the American technology economy. As explained in The New York Times article, much of the production of consumer technology is not done by Americans. Simply we cannot sustain a technology economy on our own. Yes, jobs in other countries support that economy. Now the focus has turned on China which does, in fact, seem to be evolving innovative technology built on earlier, now out-of-date American-developed technology.

In Trump's Administration, the United States has aggressively attempted to restrain trade with China with a goal to have Americans rebuild their own technology and other consumer goods production.

Unfortunately for Trump's goal, Covid-19 appeared at a time when the U.S. government had naively chosen to believe that pandemics were not a threat and therefore was not prepared to take appropriate action. It has effectively prevented many companies from implementing plans to move production.

Making the situation more complicated, unlike the 39-year-old Benito Mussolini who served 21 years as Prime Minister, Donald Trump is 74. And unlike Mussolini, President Trump is limited to two four-year terms within a national government designed to be unwieldy in a country divided into 50 self-governing states.

(In fact, in the Constitution the Presidency was not given strong powers in domestic affairs. Unfortunately it was Democratic Presidents who assumed more power and Democratic-led Congresses that transferred Congressional powers to the President. It wasn't until the rise of Paleoconservative Republicans that the problem with Democratic thinking became Democrats.)

Trump does appeal to many middle class voters because the American middle class lost out during the economic globalization of the last few decades when compared to the wealthiest class in the first world and to almost everybody in Asia. As explained in another Foreign Affairs article The World Is Becoming More Equal: Even as Globalization Hurts Middle-Class Westerners:

    The results highlighted two important cleavages: one between middle-class Asians and middle-class Westerners and one between middle-class Westerners and their richer compatriots. In both comparisons, the Western middle class was on the losing end. Middle-class Westerners saw less income growth than (comparatively poorer) Asians, providing further evidence of one of the defining dynamics of globalization: in the last 40 years, many jobs in Europe and North America were either outsourced to Asia or eliminated as a result of competition with Chinese industries. This was the first tension of globalization: Asian growth seems to take place on the backs of the Western middle class.
    These facts supported the notion that the rise of “populist” political parties and leaders in the West stemmed from middle-class disenchantment. Our graph became emblematic not only of the economic effects of globalization but also of its political consequences.
    The COVID-19 pandemic has so far not disrupted these trends and in fact might lead to their intensification. The remarkable deceleration of global growth resulting from the novel coronavirus will not be uniform. Chinese economic growth, while much lower now than in any year since the 1980s, will still outpace economic growth in the West. This will accelerate the closing of the income gap between Asia and the Western world. If China’s growth continues to exceed Western countries’ growth by two to three percentage points annually, within the next decade many middle-class Chinese will become wealthier than their middle-class counterparts in the West. For the first time in two centuries, Westerners with middling incomes within their own nations will no longer be part of the global elite—that is, in the top quintile (20 percent) of global incomes. This will be a truly remarkable development. From the 1820s onward—when national economic data of this kind were first collected—the West has consistently been wealthier than any other part of the world. By the middle of the nineteenth century, even members of the working class in the West were well-off in global terms. That period is now coming to an end.

Third Way Democrats in power, of course, effectively have been unaware of the implications of this. In the February 16, 2016, post writen well before the 2016 party conventions, Hillary Clinton's Dilemma: the Centrist Third Way Policies of Bill's Presidency vs. Young Women the following was offered:

    Trump is right. And while pundits dismiss this as pandering to voters' anger and frustration, both Trump and Sanders frame the problem as that of the political economy of intertwined economic and political systems. All working class voters, not just the younger ones, know that there is something like this wrong in our country and believe correctly that this does them harm. The informed young Democrat realizes that the path to their stress was paved by Bill Clinton.
    Unfortunately, Bill Clinton embraced the centrist Third Way philosophy of governance. It is a hopeful philosophical construct that seeks the pursuit of greater egalitarianism in society through action to increase the distribution of skills, capacities, and productive endowments, while rejecting income redistribution as the means to achieve this. In doing this, it pretends to be a kind of change on democratic socialism that Bill Clinton embraced. To quote one Republican we all know: "I gotta ask the supporters of all that, 'How's that hopey, changey stuff working out?'"
    The problem is the centrist Third Way is not a variant on democratic socialism or even the philosopihical traditions of the New Deal and Great Society. It is a deviant. And every well-informed young black lesbian who grew up in a single-parent household knows this.
    I would prefer that the Hillary Clinton campaign, which has already moved slightly away from the centrist Third Way, move much further toward the political philosophy represented by the economic policies of Presidents Franklin Roosevelt and Lyndon Johnson. That would be better for America and for those critical Millennial Democratic women and for a very large number of unemployed young men.

We are now at a point that for 29 million people their source of income is unemployment insurance. Yes, the immediate cause is the pandemic. But the truth is most of those 29 million were struggling before Covid-19. They never experienced the union-built labor economy of the period between 1950-1970 that allowed expansion of a prosperous middle class. Other Americans did gain from that which makes it easy to identify one problem in the Democratic Party that must be corrected:

While two men in their 70's are running for President, those 29 million workers are facing a time when Americans who identify as white workers "with middling incomes...will no longer be part of the global elite—that is, in the top quintile (20 percent) of global incomes." It appears the pandemic will accelerate the timeline of that decline.

The are two ways to address this. The most pernicious would be to sacrifice real income improvements to freeze the existing hierarchical system of the global income distribution. That would also require slowing any gain in equity by minorities in the United States.

Any other option will require ingenious innovative thinking that must come from the Millennials. It's hard for someone as old as this writer to imagine success within the confines of the 18th Century governmental structure of the United States. It's easy for someone as old as this writer to imagine Paleoconservative thinking within the confines of the 18th Century governmental structure of the United States.

Having so many people in government being as old as this writer is a problem. But some of us know this about any battle between socialism and fascism over economics, beyond the fact that both are unAmerican. State socialism is a political and economic philosophy encompassing an economic and social system characterized by state ownership of the means of production. State fascism as practiced in Italy involved a controlling private sector economic policy that included:
  • the opposition to class struggle to create more productive society through the economic collaboration of the classes (fascist syndicalism);
  • the critical importance of economic productivity as a revolutionary force, ss productivists, rather than distributionists;
  • the elimination of free trade and initiation of protectionism;
  • the recognition and support of various cartels (consorzi) that had been created by Italian business leaders since Mussolini took office;
  • the nationalization of holdings by large banks which had accrued significant industrial securities;
  • the sale of most state-owned telephone networks and services;
  • the elimination of thestate monopoly on life insurance;
  • the return to private ownership of a metal machinery firm;
  • the awarding of concessions to private firms to set up tolls on motorways;
  • and more.
Some of this is more 1920's than 2020's. But take hard look at the Trump Administration's actions over the past three years and you'll find more than a slight resemblance. And in 2020 the gradual opening of federal lands to development in the face of Climate Change really stands out.

Ironically the Chinese single party government has mixed the use of state socialism and state fascism in an effort to become the significant economic world power. How we counter that without a one-party dictatorship should be the only concern of the two parties. It does not appear that the paleoconservatives in the current Administration see that as a concern.

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