President Joe Biden has said it. Antony Blinken has said it. Jake Sullivan has said it. “Foreign policy for the middle class.” I think I’ve heard Kamala Harris say it too. It comes from a report that Sullivan and others wrote while he was at the Carnegie Endowment.
Yesterday (March 3) Secretary Blinken gave a speech, “A Foreign Policy for the American People.” It looks like that speech is an upgraded version of the report. What I take from the report and the speech is that the Biden administration is bringing a new approach to foreign policy, and, more importantly, that they can change. I’ll work through the speech in a later post, but here’s the report.
“Foreign policy for the middle class” combines two concepts not usually combined, but the two interact in many ways. The report highlights these interactions and attempts to provide ways to make those interactions more favorable. International trade is an obvious point of contact, but others are addressed in the report as well.
The report has eleven authors, about evenly divided between foreign policy and economic experts, some expert in both. The team is bipartisan, with a tilt towards Democrats. Part of the study was a survey of people in Colorado, Nebraska, and Ohio to determine how they saw the connection between their economic prospects and foreign policy. The three states were chosen to represent different aspects of the American economy: Colorado, resource extraction; Nebraska, farming; and Ohio, industrial. Of course, there is overlap among the categories. The surveys were published separately but are not referenced in the report.
The report defines “foreign policy” and “middle class” on page 9.
“Foreign policy” in this study serves as shorthand for foreign, defense, development, international economic, trade, and other internationally oriented policies perceived by those interviewed for the project as impactful to their economic well-being.
The report takes its definition of “middle class” from the Pew Research Center: a middle-income range for a family of three of $48,505–145,516. That range was adjusted for the cost of living in the three states.
Those interviewed for the project often described a “middle-class standard of living” as the ability to secure a job with adequate pay and benefits to meet their monthly expenses, tend to their families’ medical needs, buy a car, own a home, help their kids pursue decent postsecondary school education, take an annual vacation, save for retirement, and not be saddled with crippling debt.
The preface notes why it’s important to link the middle class and foreign policy. Despite the conflation of racial antagonism with economic issues by Donald Trump and others, the United States faces real economic issues, particularly the expanding income gap and uneven opportunities for participating in the economy. It is the interplay of foreign policy with those issues that the report attempts to address.
A 68-page report by 11 authors cannot work through that interplay and provide detailed recommendations for action. The authors lean toward recommendations; some justification is offered, but the organization of the report is unclear in its purpose and uneven in its treatment. Exploring the links between domestic politics and international relations is important. Too many Americans believe that 10% of the national budget or more goes outside the country, when the total Department of State and aid budgets are more like 1% of the whole. Globalization isn’t going away, so we need better ways to deal with it and get the public behind the policies relating to it.
Unfortunately, this report can’t be used in this way. I’ve puzzled over it for several weeks now and can’t distill a message beyond “Foreign policy for the middle class.” Which I’m hearing less frequently. It’s significant that the administration isn’t distributing thousands of copies of the report.
Let me throw up my hands and list the main ideas. If you are interested in polls, the material from Colorado, Nebraska, and Ohio may be worth perusing if it is released. By and large, according to the report, the people polled in Colorado, Nebraska, and Ohio see interconnection with the world as a good thing but have reservations. In a later post, I may make suggestions on how the report might have been better.
Their overall conclusions:
- First, the prime directive of everyone in the foreign policy community— not just those responsible for international economics and trade—should include developing and advancing a wide range of policies abroad that contribute to economic and societal renewal at home.
- Second, foreign and domestic policymakers need to collectively redress the country’s growing distributional challenges. The broad middle class and those struggling to join it do not benefit enough from the fruits of global economic growth and market access. And they also bear too much of the burden of global shocks and dislocations and of the trade-offs that come with foreign policy–related decisions made in Washington.
- Third, the policy community needs to adopt a more collaborative, integrated approach to domestic and foreign policy making and to embrace more policy innovation.
The COVID-19 pandemic exacerbates many of these issues, but it also provides impetus to make the recovery match the goals of a foreign policy for the middle class.
Pages 6 through 33 deal with why previous approaches are found wanting and explaining the approach. To summarize those 27 pages, I’ll assume that yes, we need a new approach.
- The global pandemic provides an opportunity for changing policies. Much of this discussion is consistent with the American Rescue Plan now in Congress. Much needs to be done at home.
- How to expand international trade so that it benefits all sectors of the economy. The report recognizes this as a hard problem. Trade agreements like the United States-Mexico-Canada Agreement (USMCA) should be reviewed for their effects on various economic sectors in deciding whether similar agreements should be sought. Public hearings could be held throughout the country as major U.S. trade policy decisions are being formulated and finalized.
- US trade laws should be modernized to improve responses to unfair trade practices such as state subsidies that lead to overcapacity. Trade enforcement authorities are spread across the government, which makes it harder to provide a clear and decisive response. Likewise, conflict resolution in international trade needs to be improved.
- Close gaps in national tax and regulatory frameworks and in labor and environmental protections. These gaps allow practices that undermine the middle class. Large multinationals can reduce their tax liabilities and erode tax bases at home. Gaps in regulatory frameworks allow large, dominant firms to engage in anticompetitive practices. Gaps in labor and environmental practices give firms leverage against US labor and allow them to avoid the cost of polluting. (p. 40)
Of course we must have a National Competitiveness Strategy (NCS), which, the report says, will drive policy innovation (p. 42). The record of such things, particularly when focused on an abstraction, is not encouraging.
- The NCS would drive both public and private investment in industry. The bulk of the investment would be private, and more creative policies are needed to stimulate that investment. Suggestions are given, like competition among communities for government grants that would stimulate private investment (p. 45).
The report focuses correctly on small and medium enterprises (SMEs) as centers of job creation. They need to be helped to compete globally. US Export Assistance Centers need to be beefed up. Export promotion needs stronger internal coordination within the federal government (p. 47).
Chapter 4 begins with the idea of foreign policy protecting the middle class from “the worst happening.” That last is not explicitly defined. Seven points to protect the middle class (p. 49):
- Bolster U.S. diplomatic leadership to mobilize effective global action and better advance middle-class interests.
- Manage strategic competition with China to mitigate risk of destabilizing conflict and counter its efforts toward economic and technological hegemony (Summary on p. 53).
- Anticipate risks in a digital future and improve international policy coordination to reduce the threat of a digital crisis and promote an open and healthy digital ecosystem.
- Boost strategic warning systems and intelligence support to better head off costly shocks and build up protective systems at home.
- Shift some defense spending toward R&D and technological workforce development to protect our innovative edge and enhance long-term readiness.
- Strengthen economic adjustment programs to improve the ability of middleclass communities to adjust to inevitable changes in the pattern of economic activity.
- Safeguard critical supply chains to bolster economic security.
The international affairs budget must be preserved, but so must the defense budget. “Major defense cuts are unwise.” A defense of continuing the defense budget at current levels is on p. 58. The report does not come to terms with the great disparity in the two. Production of essential goods must be brought back to the US. Increased R&D funding in the national laboratories and elsewhere is a response to technological competition.
The recommendations are fairly standard for a report of this type. Many of the recommendations are good. The report is something that might be used to urge Congress to support legislation. It can also serve as a checklist for the public to watch the direction of the administration.
The recommendations change little in any fundamental way. Whether the public can be engaged is an open question, although it will take more than this report to do it. The framing of the report and the use of the slogan by top Biden officials indicate a willingness to change.
Cross-posted at Nuclear Diner
Frank Wilhoit
There can be no such thing as American foreign policy. Every mention of any overseas entity is a allegory for some domestic faction. This goes back at least as far as the Red Scare of 1919 and probably all the way back to the beginning.
brantl
I am so sick of the democratic party and the professional commentariat talking solely about the middle class; the rich can take care of themselves, but what about the working poor? I hate that we have apparently ceded that segment of the population as some kind of lost cause. WTF is up with that? John Edwards was the last person to say diddly squat about the poor, and while there were several things wrong with John Edwards, this was one of the things that he was right about.
germy
Wow. It’s nice to have a real administration again.
Is it too much to ask we get eight years to fix things, while keeping the House and Senate?
germy
Those two words shouldn’t even be next to each other.
The working poor shouldn’t even exist.
If a person is working, then they shouldn’t be poor. But we’ve had a low wage economy for years. That needs to change.
Cheryl Rofer
@brantl: When I was working on this post and talked to people about it, that was the most common reaction I got. Blinken’s speech yesterday was “Foreign Policy for the American People,” so I suspect he got that reaction too.
I’m going to write a post about the speech too. I think one of the messages to take from both the report and the later speech is that this administration can learn. Fast.
brantl
@germy: yep, and I will bet you that they are half of the population. Not in terms of what we statistically call poor, I’m talking about the people that are existentially jammed up by one missed paycheck.
WaterGirl
@brantl:
Have you taken notice of the fact that Biden’s American Rescue Plan will cut child poverty in half?
Another Scott
– I think you need to finish that sentence (or FYWP ate part of it). I see it’s the same at NuclearDiner.
Thanks for the summary and your thoughts. The report sounds like a useful addition to the things that policy makers should be thinking about in the short-medium term.
It does sound, though, like it reflects continued conventional thinking. Like since the USSR imploded the US needs a new big enemy and of course it has to be China. There are obvious issues with Xi’s China, especially for the Uighurs and for neighboring countries, but I don’t know that 19th Century thinking about Great Power Competition is the way to address it…
I would hope that COVID-19 would be a wakeup call for policy-makers. The lesson isn’t that “China makes too much of our stuff, so obviously we need to make it all here again”, it’s that supply chains are global and world-wide resilience is needed. No country can be self-sufficient anymore. We have to work together or we will all suffer.
Similarly, the US is 4.mumble% of the world’s population. Industry and knowledge is expanding around the world and that is a GOOD THING. We cannot impose outcomes any more, but we can still lead among equals when we put in the work and the investment. We can also learn a lot from our fellow Earthlings.
Climate Change is here and it’s going to get worse before it gets better. We all need to work together on it. Doing so sensibly will make the world better, richer, and more peaceful.
Thanks.
Cheers,
Scott.
Cheryl Rofer
@Another Scott: Thanks! Removed.
To be Frank
But exporting jobs to fight communism in Asia has been such a successful technique. No meaningful expansion of Communism beyond China, check. Complete gutting of US unions, check. Domestic reduction in icky industrial activities, check. Expansion of financial services industry to create nice white-collar jobs for all the new college graduates, check. Increased foreign demand for agricultural products allowing US farmers to over-produce without creating a domestic glut, check. Cheaper goods allowing wage stagnation, increased return on capital, and expanding wealth gap, check.
How could anyone complain, look at all the checks. The only meaningful unions left are those involved in the production of Military goods which conflicts both parties. It worked just like it was supposed too.
And now the Chinese have a market-based economy, so according to the plan, it’s only a matter of time before they have a market-based government (democracy wins!)
Geminid
@brantl: I thought Joe Biden’s recent public endorsement of unionization supported the interests of working poor Americans. And the ACA’s provision for expanded Medicaid brought real benefits to the working poor. Virginia alone added 400,000 residents were added to the Medicaid rolls between 2018 and the onset of the pandemic.
I read that changes by the Covid relief bill in the Earned Income Tax Credit would lift many families out of poverty. Although controversies over the minimum wage and eligibility for relief checks get much more attention. Increased SNAP funding is a good thing too.
But much more can be done. I think a good infrastructure funding bill could create a lot of good paying jobs. What else would you suggest?
brantl
@WaterGirl: that’s a start, but the rhetoric is still wrong. We need to start talking about the inherent dignity of all working people, and that it needs to be recognized with a livable, working wage. How much dignity is there in doing your best, and still having to starve, or not pay your other bills, or not be able to get medicine for your family? Over the past 30 years (rhetorically at least) liberals have written off the poor, and Republicans haven’t cared about them at all, for at least 50 years.
AND the current definition of poverty doesn’t account for half of real poverty, either.
Carlo
Thanks, Cheryl. I appreciate your diving into the report, and bringing back those takeaways.
I like the architecture. Or, I should say, I like the fact that there is an architecture. So far as I can see, the last time the US had a coherent framework organizing national strategy was during the cold war. That strategy, which was, with some deformations over time, Kennan’s Long Telegram and “X” article, was entirely negative, in that it was defined completely in terms of ideological, diplomatic and military opposition to the Soviet Union. After 1991, when the USSR disappeared, the various stabs at national strategy — especially the neocon era under W — seemed like either revivals of cold war ideas with a new “main enemy”, or just muddlin’ through while dealing with domestic messes, or Trumpian chaos.
The 30 years since the USSR collapsed have brought some clarifying elements into view — climate change, income (and wealth) inequality, populist threats to democracy, a financial crisis, recognition of the simplistic errors of classical liberal trade theory, interconnectedness and it’s implications for global security (e.g COVID-19), that allow a clearer view of the elements to be assembled into a new architecture, many of which are brought out in this report. It looks like a good and overdue start to me.
JimV
Thanks for your work on this. I get most of my important news from this site due to posts by you and Anne Laurie and others.
brantl
@Geminid: Democrats need to be fighting for upping the minimum wage, nationally and locally, everywhere. There should be no job that depends on a government contract, that doesn’t pay $15 an hour. We can legislate that. And the states should do it as well as the feds.
Omnes Omnibus
@WaterGirl:
I think the concern is that, no matter who the policies actually help, the working poor never really get mentioned. If they don’t get mentioned, fewer people talk about them. And thus they disappear from view – and policy. Hell, look at the discussion about the stimulus payments here yesterday. Lots of sturm und drang about few solidly middle class people not getting their reduced stimulus payments, but virtually no mention of the fact that people married to someone without an SSN could now be eligible to receive payments. Which do you think would more affect the working poor?
Nettoyeur
Sorry to say this, but most Americans who earn consistently below media income do not care about foreign policy, unless it concerns expression of gut feelings or family concerns (like military service). Most people above median income start with similar attitudes, but mostly care about how foreign policy might help or hinder them in making more money or provide them with interesting vacation travel. Anything more than that only concerns narrow groups of people who have reasons to care about one or another foreign policy issue. Forign policy only becomes a major political concern when it involves wars with real costs or large economic movements. Ypu can survey forever, but this is what recurrence to the mean will yield.
guachi
If I were in charge, I’d have a foreign policy centered on democracy and basic religious rights. Countries that were democracies or moving toward greater democracy would have enhanced trade and diplomatic relations.
Omnes Omnibus
@Nettoyeur: Whether they care about FP or not, FP affects them.
Roger Moore
@Carlo:
I don’t think that’s quite right. I think the immediate post-Cold War period with GHW Bush and Clinton had a reasonable goal of trying to help out the former Communist countries. You can see it as the logical extension of our Cold War policies. It certainly wasn’t perfect- Yugoslavia was an unmitigated disaster, and we didn’t help the former Soviet Republics as much as we should have- but it did a lot to help countries in central and eastern Europe. It also greatly boosted our standing in those countries. We might well have done even better if we hadn’t been distracted into GWOT.
WaterGirl
@brantl: I don’t disagree about language. I get annoyed when even Jen Psaki says “as a mother, I am appalled about what was happening at the border” (or whatever the subject is).
Motherhood doesn’t magically confer some moral superiority or ability to recognize evil.
Lyrebird
@Omnes Omnibus:
I am glad to see the administration is responding… I guess they couldn’t call it “Foreign Policy for More Americans than Me, My Offspring and Top Donors” but if that’s what they are trying to say, that should make that more clear.
BTW I just love saying “the President” without a sick feeling in my stomach.
WaterGirl
@Omnes Omnibus: Totally agree with everything you have said here.
Enhanced Voting Techniques
Considering that Colorado is the only one of the three states with a functioning economy that explains why the low definition of middle class.
schrodingers_cat
Cheryl, does the report say anything about this administration’s posture towards India whose slide into fascism continues apace with human rights violations left, right and center.
Omnes Omnibus
@Lyrebird:
The rhetorical move from “Middle Class” to “American People” should help with that.
ETA: As Cheryl noted in a comment above.
@WaterGirl:
That’s because I am right.
Major Major Major Major
Oh thanks, I hadn’t heard about the speech or the report. I’ll have to circle back and read this later…
Another Scott
@Enhanced Voting Techniques: Ohio is an extremely diverse state – it’s a microcosm of the whole country in some ways. Farming, aerospace, supercomputers, specialized manufacturing, crushing poverty, old money mansions, Cleveland Clinic, opioid crisis, shacks in Appalachia, etc., etc.
But, yeah, I’m not sure how polling of people in 3 states sensibly informs national policy on foreign relations, etc. I should look at the report…
Cheers,
Scott.
Geminid
@Nettoyeur: As far as the average American’s concern with issues of foreign, you are correct in saying that most of the time these matters are not salient issues. But I like the idea of surveying this broadly defined “middle class,” because so much of our policy work is done by what I think of as an upper-middle class professional elite. And not just foreign policy, either. While in some respects these folks are cosmopolitan, in other ways they very insular in outlook. This survey might help open their minds some.
BruceFromOhio
Reading your summary (and having not read the report) this appears as a way to get the many, many conversations started, rather than being a “here, do this, and everything will be fine” artifact.
And that feels like the objective here. Real change starts slow, with some well of detailed water to draw from to get it moving. You have to start somewhere, this may be it.
ETA: And THANK YOU, Cheryl, for doing the reading and crafting the summary. Getting more people engaged is what’s needed, and your post provides that opportunity.
Cheryl Rofer
@schrodingers_cat:
I don’t recall anything about India specifically, but human rights are a part of the report. It’s on a more general level. I think the only other country mentioned besides the US is China, which presents an immense challenge.
Cheryl Rofer
@BruceFromOhio: Good points. You will see more of this in my post on Blinken’s speech. Definitely movement from the report.
PJ
@Roger Moore: In former Eastern Bloc countries, and in particular in the former Soviet Union, our explicit policy was to privatize national assets as quickly as possible. The ostensible goal, as with the plans to privatize Social Security here, was to make ordinary people wealthier, but the result was that, through legal and illegal means, for the most part, a small group of people – mostly former Communist apparatchiks – wound up with everything, and most people got nothing. Note that at the time there were no securities laws, or if they existed, they were brand new, and no one had any experience in how they worked or how to enforce them. And Western businesses got access to natural resources and ownership of profitable state enterprises. At the same time, their markets were flooded with heavily subsidized agricultural products from Western Europe. Economically, it was a really shitty thing to do.
PJ
@WaterGirl: whenever anyone begins a statement with, “As a ______,” you know they are trying to give their argument more moral or intellectual weight that the statement itself does not carry.
BruceFromOhio
@Another Scott:
This. The buckeye lacks the extremes of other places (earthquakes, wildfires, hurricanes, drought, rising sea levels) and it certainly does not represent every aspect of other states. At a broader level with respect to the experience and behavior of citizens, it’s a fair comparison. This is the same state that sends leaders as diverse as Senator Sherrod Brown, Congresswoman Marcia Fudge and Q-Crank Jim Jordan to DC.
Poe Larity
The neocons were well into a Pivot to China when 9/11 got in the way of grand strategery. It took over two decades for Trump to come along and reset to a populist Perot-Buchanan FP.
Am more interested in how this new form of thinking will transform class warfare into warfare for classes – who would Amazon bomb? Which middle class jobs are most threatened? Jobs like truckers Self driving trucks with drones flying your Uyghar made kitchen utensil to your door and ringing your Alexa?
Another Scott
@PJ: As I recall, the USSR’s economy had collapsed. Things had to be done quickly. Yes, lots of mistakes were made with the benefit of hindsight, but it’s not at all clear to me that any other path proposed at the time by outsiders would have worked out better.
E.g.:
FWIW.
Cheers,
Scott.
brantl
@WaterGirl: Psaki, is trying to make it be seen as a human issue, not a liberal one; who’s going to attack her as a mother? Answer: no one with brains, leaving only the knee-jerk republicans.
BruceFromOhio
@Frank Wilhoit:
Is it more accurate to frame it as ‘American Economic Policy’ ? That’s how it appears when juxtaposed with ‘American Middle Class.’
PJ
@Poe Larity: The main neo-con vision, at least that I saw at the time in the late 90’s, was the Project for A New American Century, which explicitly advocated war and the threat of war to build a Pax America around the globe that would ensure American hegemony, and, of course, peace (eventually) and prosperity for the flower-throwing third world peons who would benefit from our firm guidance once all of their country’s assets had been privatized and the market worked its magic.
Another Scott
@brantl: She’s smart.
I think it was her first press conference where she said (roughly):
“We’re going to have press briefing every day. Except on the weekends, of course. I am not a monster.”
Cheers,
Scott.
schrodingers_cat
@Cheryl Rofer: Thanks Cheryl. Do you think anything will come out of writing about my concerns to the State Dept’s India desk?
YY_Sima Qian
@schrodingers_cat: The conventional bi-partisan wisdom in DC, and in the Biden administration as far as I can tell, is that human rights abuses and growing illiberalism among US allies and quasi-allies will be lightly touched, when the Great Power Competition with China and Russia (especially the former) is the central defining feature and organizing principle of US foreign policy. There has not been much commentary from the US toward growing illiberalism in India, Poland, Czechia, and Japan, even though the trends were clear even back during the Obama administration. The more vocal criticism of illiberalism in Hungary, Turkey and the Philippines coincided with the first 2’s flirtations with Russia and the latter’s with China. Human rights abuses in hard authoritarian regimes such as Vietnam are also largely ignored by both US government and media, because Vietnam is a useful piece to counter China. So, don’t expect much commentary on India (other than verbal slaps on the wrist), not when India is one of the linchpins in US’ strategy to counter China. Just like the US muted its criticism of human rights abuses in China in the 80s, because China was a de facto ally against the USSR.
IMO, it is almost never useful to ascribe moral motivations to, or expect moral conviction from, national governments and their foreign policies. The range goes from the immoral (North Korea), to the amoral (China), to those that give pretty lip service to “values” but whose values almost always lose to interests when the two conflict (that would be most of the “West”), mass hypocrisy is a given. I think rationality, predictability and a somwhat enlightened sense of self-interest is the best we can hope for, and it would be a very good thing if most governments can actually manage that.
I think the only US president that possibly had a true values based foreign policy was Carter, maybe.
To be Frank
Ohio reminds me of the old joke Brazilians love to tell (I have subbed “Ohio” for “Brazil” in this telling.)
The angels go to God and ask, “Why do you favor Ohio over all?” To which God responds “Why do you think that?” The angels reply “The seasons are all kind, the land fertile, the hills rich, and there are no hurricanes, no earthquakes, no volcanos, no natural disasters.” To which God replies “Did you consider the Ohioans?”
Cheryl Rofer
@schrodingers_cat: I think it’s always helpful to write to people in the government, and it looks like Biden intends that his people do more listening.
That said, keep in mind that an hour or so ago, Tom Cotton was badgering Colin Kahl, one of Biden’s State Department appointees and part of the team that negotiated the Iran nuclear agreement. The whole State Department team isn’t in place yet. Further, as you’ll see in my next post on this topic, Covid is the administration’s first priority across agencies. I think that what Biden would like to do on foreign policy is to avoid making anything worse until Covid is under control. You won’t see any big new initiatives until probably next year. But I suspect there may be conversations with Indian officials below the level of what is reported in the news.
Cheryl Rofer
@YY_Sima Qian: Although the neocons are trying hard to sell the theme of Great Power Competition, it’s clear from the report and Blinken’s speech yesterday that the Biden administration has no interest in it. Also from the Interim National Security Strategic Guidance, which came out yesterday. I’ll try to get to that too.
I think we’re going to see some different foreign policy from this administration, although there won’t be big initiatives until Covid is under control.
WaterGirl
@PJ: Absolutely true.
WaterGirl
@brantl: Good point.
YY_Sima Qian
The dire and still growing distributional challenges in the US is an entirely domestic policy matter, I am not sure how foreign policy would have any effect even at the margins. The US benefited enormously from the decades of globalization, from the “liberal international order” that that gave preponderance of influence to the US and western developed economies, and the Dollar’s status as global reserve currency. The US exchanged astronomical amount of physical goods with printed paper. The failure maintain a more diversified industrial base and to more equitably distribute the benefits of globalization was entirely a domestic failure. To the extend that people in the US feel foreign countries are “cheating” with industrial policy and state subsidies, that is because the US (and the UK) drank the neo-liberal kool aid, and East and Southeast Asia did not, and Europe only drank a half dose.
IP theft is a separate matter that does have foreign and trade policy relevance, but people need to keep in mind that stealing IP and talent is almost always a key feature of countries playing catch up (the US, USSR, Japan, South Korea, Taiwan, China, etc.).
YY_Sima Qian
@Cheryl Rofer: Will be very interested to read your take, as well as Adam L. Silverman’s.
I will happily take rationality, predictability and a somewhat enlightened sense of self interest. I am resigned to frequent hypocrisy (managing the domestic politics almost requires it). And even Great Power Competition need not be a bad thing, depending on the terms and the boundaries. Competition is unavoidable (I think Biden promised “extreme competition” with China), because that is the way humans beings are wired. The existing great power and the emerging great power (re-emerging in the case of China) will have a very tense relationship, see US and UK before the rise of Wilhelmine Germany shifted the UK’s fearful gaze east. The difference in systems of government and the espoused values between the US and China merely heightens the difference.
Another Scott
@YY_Sima Qian: Good points, but trade and foreign policy does (of course) affect domestic businesses and thus the domestic workforce.
Before GATT and the WTO the US instituted things like the Chicken Tax that slaps a 25% tariff on light trucks exported to the USA. Which is still in place. Which is a big part of the explanation why they’re so expensive and so profitable.
Simultaneously, being committed to “free trade” (unless one has very good lobbyists!) means that it is difficult for the US to protect its own industry in more than a few cases. So domestic producers can be at a disadvantage compared to foreign producers that do not meet the same health, safety, wage standards (for sometimes understandable and appropriate reasons).
Of course, one can, and should (I think), argue that economies evolve over time and it’s important to be investing in new industries and an educated populace and workforce so that the choice isn’t between: propping up sugar producers and whale oil refiners; and mass unemployment and riots. That part is overwhelmingly domestic, but can be affected by trade rules.
Japan was notorious about restricting auto
exportsimports by demanding that each car be completely disassembled and inspected for “safety”. China (correct me if I’m wrong), generally demands that foreign investment have a domestic partner with at least 50%+1 control. There are lots of things that countries do (sometimes for good reasons, sometimes not) that the US has generally been reticent to do because the US wants trade barriers to fall.My $0.02.
Cheers,
Scott.
Zelma
@YY_Sima Qian:
“I think rationality, predictability and a somewhat enlightened sense of self-interest is the best we can hope for, and it would be a very good thing if most governments can actually manage that.”
Even that is a lot to hope for because the concept of “national self interest” is simply too broad. Whose interest? The consumers who love the cheap stuff from lower income countries? The workers who can’t compete with cheap labor? The farmers who want to sell their crops to the world? The stockholders and corporate execs who want the cheapest labor and the highest profits? The financiers who love the unfettered flow of capital? The businesses that thrive on immigrant labor?
I could go on about how diverse “national self-interest” is. I don’t think most Americans care much about foreign policy except in the most limited sense. And many are abysmally ignorant about the world beyond our borders and are probably kind of xenophobic to boot.
All I’m hoping for from the Biden administration is rationality. If they want to spin it as a “Foreign Policy for the American People/ Middle Class,” fine. The world is a mess, just as it’s always been. At least we will have competent people in charge.
Nettoyeur
@Omnes Omnibus: True, but most Americans only rarely care because they don’t think they need to care. In connection with my scientific career, I have spent 15 of the last 40 years living and working in Russia, Japan, France, Australia, and Germany, so I have been directly affected by international affairs. But the last I looked, only < 1/2 of the US Congress even have passports—and these are by and large people who can afford to travel overseas. In contrast, large numbers of ordinary people in the other countries I have lived in have traveled to internationally. A majority of the world’s population is at least bilingual. But very few Americans not of foreign parentage are. On the whole, few citizens of the the post WWII US, the richest, most powerful country in history. Very sad, and also dangerous.
YY_Sima Qian
@Another Scott: China has joint venture requirements for a large number of industries, with foreign investment capped at 50%. Strategic industries (which is very broadly defined), foreign partners are confined to minority shares. However, this is starting to change with the latest round of economic reforms, with foreign ownership allowed more industries, starting with finance and automotive.
Contrary to the conventional wisdom in the West, the JV and technology transfer requirements have not been major drivers in China’s technological advance (high speed rail may be the only exception). Most foreign companies (at least the MNCs with the means to do so) were careful not to transfer the most advanced core technologies, and the Chinese JV partners (often state owned enterprises) got fat and lazy because the JVs were easy cash cows. The Chinese automobiles industry is a case in point. Decades of JVs and associated tech transfers from all of the international big names have not made the Chinese automakers competitive in vehicles running on internal combustion engine. The sole exception, Geely, is privately owned, did not have a JV, but instead got its big break by buying Volvo teetering on bankruptcy.
The opportunity for the Chinese automobile industry came with the rise of electric vehicles. The Chinese government saw it as a historic opportunity to catch up and take lead in a field where everyone is starting from nearly the same level, and nurtured the industry via purchase subsidies and easy access to license plates to the consumer, tax rebates and cheap land to the producers, and creating demand by mandating government and taxi fleets be converted to electric. These policies also created a big bubble with all kinds of dodgy hot money coming in. Then Tesla was allowed set up a wholely owned factory in Shanghai with Chinese money (free land, and loans from Chinese banks), got it running in record time. Tesla’s entrance has shaken up China’s e-vehicle sector, for the better. Most of the dilettantes chasing after government subsidies have been chased out, leaving a few strong players that will likely give Tesla a run for its money (BYD, Xpeng and Nio), starting from the Chinese market. The Chinese government also required Tesla to source most of the components within China, which helped to strengthen the entire supply chain and ecosystem in China. Chinese companies (BYD and CATL) have already been among market leaders in batteries for several years. Industrial policy in action. The US’ professed free trade absolutism (except for agriculture and aerospace) was always misguided.
The kind of knowledge transfer that have been helpful in China’s technological advance is the natural diffusion via people who have studied and worked overseas returning to China, or people who have worked at foreign companies in China leaving to join Chinese companies or set up their own. Yes, IP theft is a significant part of it, as well, but not nearly as much as being portrayed. More than anything, advances are driven by demand (necessity, after all, is the mother of all invention), helped by not being burdened with obsolescent legacy infrastructure (such as copper wire and credit card). However, in China the government, via industrial policy, often create that initial demand until an industry reaches critical mass, before stepping back. The massive build out of China’s high speed rail network is the reason Chinese train producers were able to quickly further develop and evolve beyond the initially licensed technologies transferred from Siemens, Kawasaki and Bombardier, with the portion of imported subsystems steadily dropping. The same goes for the rails and the signals and control systems.
YY_Sima Qian
@Zelma:
I think the answer is all of them, as they all represent key interests and participants in the national economy. However, for the past decades US national interest has been exclusively defined by capital, via political and policy elites beholden to capital.
schrodingers_cat
@Cheryl Rofer: Thanks Cheryl!
lowtechcyclist
I think this would be a good first step. With the Trans-Pacific Partnership, for instance, it seemed that all the negotiation had been done before the American people were more than dimly aware of it, and all we really got a chance to weigh in on was: thumbs up or thumbs down?
A more democratic process would have started before negotiations with our trading partners began: a discussion of what goals our negotiators were planning to seek, and were they the right goals; what asks were other countries likely to make, and whether we thought any of them were deal-breakers. And so forth.
The other thing that came to mind in the TPP debate was the ISDS, the Investor-State Dispute Settlement process. Why do investors get a special means for overturning national policies under the rubric of a trade treaty? Where’s the Labor-State Dispute Settlement process? How about Environmental Groups-State Dispute Settlement?
Sure, the TPP would have had labor and environmental standards, just no way for anybody but another party to the treaty – another nation – to hold a party to the treaty to those standards. And given the multitude of interests a nation has to consider in its dealings with other nations, that would have been extremely unlikely.
Of course money talks, but to formally give big money a special seat at the table like that was appalling. (And then you find out it’s already part of earlier trade deals like NAFTA/USMCA.)
TL;DR: there should be means for all sorts of interest groups to hold states to account in such a deal, not just investors.
ETA: Thanks, Cheryl, for bringing this topic up and giving us your summary!
Nettoyeur
@Omnes Omnibus: True, but most Americans only rarely care because they don’t think they need to care. In connection with my scientific career, I have spent 15 of the last 40 years living and working in Russia, Japan, France, Australia, and Germany, so I have been directly affected by international affairs. But the last I looked, only < 1/2 of the US Congress even have passports—and these are by and large people who can afford to travel overseas. In contrast, large numbers of ordinary people in the other countries I have lived in have traveled to internationally. A majority of the world’s population is at least bilingual. But very few Americans not of foreign parentage are. On the whole, few citizens of the the post WWII US, the richest, most powerful country in. Very sad, and also dangerous.
@Roger Moore:
@Roger Moore: I agree with Roger. I was funding and monitoring a physics project in Moscow in that period to keep Russian scientists doing important energy-related work. By the late 90s, that faded as oligarchic corruption and general chaos too over at the end of the Yeltsin regime. The US could have done more and better work to help keep Russians–esp. old people–from starving back then. Instead, we funded (lavishly) US advertising companies and economics gurus who had zero or negative effects on the welfare of the Russian people. The chaos led to a demand for Napoleonic leadership in Russia, and they (and we) got it with Putin who was seen as a hero in his first term.
Nettoyeur
@Omnes Omnibus: True, but most Americans only rarely care because they don’t think they need to care. In connection with my scientific career, I have spent 15 of the last 40 years living and working in Russia, Japan, France, Australia, and Germany, so I have been directly affected by international affairs. But the last I looked, only < 1/2 of the US Congress even have passports—and these are by and large people who can afford to travel overseas. In contrast, large numbers of ordinary people in the other countries I have lived in have traveled to internationally. A majority of the world’s population is at least bilingual. But very few Americans not of foreign parentage are. On the whole, few citizens of the the post WWII US, the richest, most powerful country in. Very sad, and also dangerous.
@Roger Moore:
@Roger Moore: I agree with Roger. I was funding and monitoring a physics project in Moscow in that period to keep Russian scientists doing important energy-related work. By the late 90s, that faded as oligarchic corruption and general chaos too over at the end of the Yeltsin regime. The US could have done more and better work to help keep Russians–esp. old people–from starving back then. Instead, we funded (lavishly) US advertising companies and economics gurus who had zero or negative effects on the welfare of the Russian people. The chaos led to a demand for Napoleonic leadership in Russia, and they (and we) got it with Putin who was seen as a hero in his first term.
@PJ: You are right. I remember talking to young Russian scientists in the first years of Putin’s presidency….they were thrilled that their research was being funded, they were being paid on time, and that life was safer. Putin was a hero to them.