I’ve grown frustrated by the WSJ editorial boards tone deaf posture regarding international trade. The editorial board continues to sound didactic and worse yet, academic in its understanding on US trade.
It reminds me of why Sam Rayburn (President Johnson’s mentor) told Johnson why he never trusted Harvard types. Rayburn heard how brilliant Kennedy’s cabinet was, and admonished Johnson that Kennedy’s Harvard cabinet, its best and brightest should run for Sheriff. For those who cannot remember the ’60’s here’s a review. Kennedy’s cabinet was composed of Harvard types who were clearly bright, in Rayburn’s view too bright. Rayburn admonished Johnson for placing his trust in intellectuals. Here’s the full quote: “In his 1972 epic on the origins of the U.S. war in Vietnam, the great journalist David Halberstam told of then-new Vice President Lyndon Johnson’s coming back from his first meeting with the top people President John F. Kennedy had picked to serve in his administration. Johnson was dazzled by how brilliant they all were and told his mentor Sam Rayburn how smart each Kennedy appointee was. After listening to his fellow Texan, Rayburn said: “Well, Lyndon, everything you say may be true, but I’d feel a whole lot better if one of them had ever run for sheriff.”
I’d fell a whole lot better if the WSJ understood how a President defeats his opponents before taking the battlefield. Sun Tzu taught that “every battle is won before its fought“. Even better, when asked how he defeated Napoleon at Waterloo, Wellington replied that the “fight is decided the night before”. Meaning whoever possessed better supply lines, communication routs and allies would win.
This is what the WSJ editorial board does not understand, Trump is angling for a comparative advantage by enveloping the democratic voting bank that is blue-collar workers. He intuitively knows that Wall Street remains permanently divorced from main street. He also knows that American trade partners will do anything to retain access to US markets. Both Wilbur Ross and Peter Navarro know this; didactic types wedded to print don’t.
The Journal continues to frame America’s engagement with international trade in terms a CEO would understand, but not the working stiff. The WSJ reported that the flip side of our deficit is a substantial flow of investment into the US in terms of FDI measured as acquisition, creation or expansion of a US subsidiary. However, many times said investments never reach the US worker in terms of wage increases or other tangible benefits. Its a balance sheet win only.
Peter Navarro and Wilbur Ross were always right: “Historically, the U.S. has had a comparative advantage in manufacturing because of its high rates of technological innovation, correspondingly high rates of capital investment and worker productivity, strong protections for intellectual property, and wide availability of low-cost energy.” (WSJ Op-Ed 04/16/18)
This is why the war against China will be won fiscally with tax cuts, currency appreciation and sound money.
If the editorial board of the WSJ ran for Sheriff or understood applied international economics, it would understand the advantage team Trump seeks with bombastic rhetoric aimed at keeping mercantile authoritarian regimes off balance.