Thursday, June 28, 2018

We Need to Talk About Reactionary Centrists


We Need to Talk About Reactionary Centrists

Sympathizing with the right while punching left is not the neutral position pundits seem to think it is

Go to the profile of Aaron Huertas


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Apr 25

Wehave a crisis of lopsided political polarization in the United States.

There are fewer moderates than ever in the Republican Congress. Republican Senate majority leader Mitch McConnell has thrown out the rule book to undermine healthcare and steal a Supreme Court seat. The United States is the only country with a major political party that denies the scientific reality of climate change. Republican state legislatures are attacking people’s voting rights instead of trying to win their support. And right wing media routinely promotes conspiracy theories, from questioning Barack Obama’s citizenship to suggesting that the Parkland student activists are “crisis actors.”

But despite these developments, a great deal of popular political commentary still approaches our politics with a strange form of unearned evenhandedness. Opinion columnists, influential academics, and think tankers feel a need to occupy a middle ground, even if it’s one that is increasingly a product of their own imaginations. As a result, they wind up giving the right wing a free pass or accepting its worst impulses as a reality we have to live with, while reserving their criticism and armchair quarterbacking for anyone to their left.

I’ve come to call these pundits “reactionary centrists.”

Reactionary centrist (n) — Someone who says they’re politically neutral, but who usually punches left while sympathizing with the right.

Reactionary centrism is an ideological stance that isn’t really centrist at all. It can elevate a speaker in the mainstream media as a liberal-ish critic of liberalism and make someone feel good about being above it all and not taking sides, but it’s increasingly a stance that leads to sloppy thinking, especially as the Republican party continues to lurch rightward and away from democratic rule. We should identify reactionary centrism when we see it, challenge it, and ask what reactionary centrists could be doing instead to more productively contribute to public debates.

Reactionary centrists think politics is about positions, not actions

Did you know Exxon supports a carbon tax? Well, that’s what they say when they’re challenged to do something about climate change. But you’d be hard-pressed to find anyone on Capitol Hill whose ever felt pressured by the company’s lobbyists to actually pass a carbon tax.

Taking a political position is a cheap form of political action. But a lot of our thinking about politics is grounded in the idea that positions are more important than what political actors actually do to build and use power. Positional thinking leads reactionary centrists to the conclusion that if only the left and right could meet in the middle, wherever that middle is, we could settle contentious debates.

For instance, writing in Enlightenment Now, cognitive scientist Steven Pinker posits that if only the left embraced nuclear power, they could compromise with the right on climate solutions. But he doesn’t account for the fact that mainstream environmental groups have been exploring deals like this for years with little to show for it.

The cap-and-trade emissions trading debate in 2009 and 2010 was an attempt to use a market-based emissions reduction system to bring businesses and Republicans on board, including Republicans who supported carbon pricing and taxpayer subsidies to boost the nuclear industry. A handful of Republicans did come along, just enough to squeeze the bill through the House, but not enough to make a deal happen in the Senate. Most of the House Republicans who voted for cap-and-trade were primaried out of office in 2010 for daring to compromise with Democrats on anything. The story of Obamacare was quite similar.

When Vox’s Ezra Klein challenged Pinker on these facts during a podcast, it became clear that Pinker was not familiar with this political history or with the real advocacy positions of mainstream climate groups. Yet Pinker’s views still hold sway in the science and tech world, with prominent philanthropists like Bill and Melinda Gates promoting his book as a must-read.

More fundamentally, Pinker’s book admonishes the left to change its stances on climate policy. But why not tell the right to change their stances instead? It’s a question we too often fail to ask because conservative movements have made antipathy to compromise a key part of their political worldview. In admonishing the left to find more ways to work with the right, reactionary centrism does the right’s job for them.

For Pinker and a lot of people who don’t work in politics, public debates look like this:

https://cdn-images-1.medium.com/max/1600/1*lOOBl4xiWZpDJ6eXtKhxWA.png


And it feels good to believe that there’s a noble compromise to be had in the center. But the Republicans who are in power right now are telling us with their words, their actions, and their political muscle, that they’re not interested in one. Failing to listen to them—and blaming the left for not doing enough to compromise with them—is a recipe for sloppy thinking.

In political science terms, what the right is doing is shifting the Overton Window in their direction, trying to make extreme ideas such as climate denial, undermining voting rights, and dismantling the social safety net appear mainstream. Reactionary centrists, in urging the left to compromise with the right, play into this strategy.

https://cdn-images-1.medium.com/max/1600/1*MrRgON1uxE6U1OL94QY1PA.png

A generalized example of an “Overton Window.” Credit: Hydrargyrum via Wikimedia Commons, CC BY-SA 2.0

Online leftists jokingly dismiss “horseshoe theory” with “fishhook theory,” an illustration of how the right, in refusing to compromise, drags mass perception of where the middle is over their way.

https://cdn-images-1.medium.com/max/1600/1*ZX5WvZ0iX0nyvpW0I-0Z9A.png


And on issues where political actors disagree about the very reality of a problem, finding middle ground can not only be impossible, but actively misleading.



So what does an alternative path look like on an issue like climate change? In short, trying to win. The climate mobilization last year showed how interconnected groups can work together to build political power around a platform of climate, jobs and justice. Organizations like the Sierra Club and the People’s Climate March, for instance, are doing more work to protect voting rights in marginalized communities—the same predominately black and Latinx communities that are the most likely to suffer from environmental injustice and the most reliable voters for environmental champions.

https://cdn-images-1.medium.com/max/1600/1*Dh9FCBCiedu7C7AryLgHQA.png

Map of the NYC Climate Mobilization in 2017. A physical manifestation of the climate coalition.

This is a tougher, longer-term path to walk than negotiating a grand bargain on nuclear power. But it has the helpful advantage of being grounded in reality and enjoying the support of actual climate advocates. The fact that Pinker doesn’t lead with work like this suggests that his own politics are more focused on appeasing the right than building power on the left.

Reactionary centrists need an intolerant left to match the intolerant right

Pinker is among many scholars who worry that intolerance on the right is being matched by a different kind of intolerance on the left. To be clear, reactionary centrists don’t deny that the hard right is bad and terrible. They see the neo-Nazis in Charlottesville, the conspiracy theories, the voter suppression, the censorship of government researchers, the ICE agents picking people up off the street. But then they look for something, anything on the left to balance this out so they can stay in the middle.

This analysis lacks a sense of who actually has power on each side. Do we really think that a student activist group protesting a controversial speaker is as much of a threat to free speech as a Republican president who calls for jailing journalists and firing protesting NFL players? Of course not, but why then do Pinker and other scholars and pundits keep coming back to campus free speech debates as an example of lefty intolerance? Maybe their own positions in and around academia bias them toward caring more about these debates, but it may also speak to a deep need to perform a centrist balancing act that isn’t backed up by the facts.

And in some cases, reactionary centrists’ need for an intolerant left causes them to make stuff up or uncritically pass on obvious misinformation.

Jordan Peterson, a Canadian psych professor and best-selling author, came to fame for insisting that a Canadian human rights law would require him to use specific gender pronouns in his classroom. There was nothing in the legislation in question that actually did so, and Peterson’s claims were routinely debunked by law professors, the Canadian Bar Association, transgender rights groups, and members of the Canadian Parliament. But Peterson was able to use his criticism of a fictional radical leftist position to elevate himself as a reasonable middle man, even as he professed to sympathize with liberal positions on labor and worker’s rights. Peterson has found himself a welcome guest on the campus free speech moral panic media circuit, from David Rubin’s podcast to Real Time with Bill Maher, where iconoclasts can conflate progressive activists disagreeing with them with having their views suppressed and their rights trampled.

Rubin, a former Young Turks host, says he ditched the left for its purported intolerance of competing views. But in doing so, he routinely promotes sensationalized stories about campus protests directed at conservative speakers. And in at least one case, he’s helped promote an entirely fake leftist critic. The Twitter account “Official Antifa” lambasted a talk he was set to give, counting him among “racist, anti-LGBT fascists” who weren't welcome on campus and he took the bait, sharing their post to mock the left. But as Buzzfeed exposed in 2017, the account is not run by anti-fascist organizers, but by trolls who are trying to discredit the left and get amplified by commentators like Rubin. Bari Weiss, an opinion columnist for the New York Times helped them out when she cited Official Antifa’s take on Rubin as an example of left wing campus intolerance. The Times had to issue an embarrassing correction and Twitter, at long last, finally suspended the fake account.

These incidents are silly, but they speak to the deep need some pundits have to punch left, even if they’re punching at works of fiction. They also fail to recognize the outsize power of right wing news media on conservative politics and how right wing news outlets routinely lie to their audiences about campus activism, taking out-of-context stories from right wing advocacy groups like Campus Reform and laundering them them through more staid commentary magazines like the National Review and Weekly Standard, eventually pushing them into columns and op-eds in mainstream publications like the Times and Wall Street Journal.

Reactionary centrists also elevate these incidents, in part, because they believe that intolerance on the left somehow causes polarization on the right. But the mechanism by which this occurs is never explained. Amy Chua, a Yale law professor who has written a book about political tribalism, blames the left for the rise of Trump and the so-called “alt-right” white nationalists. In her telling, if the left had more tolerance for mainstream right wing views or tamped down discussions of topics like cultural appropriation, the right wouldn’t be as tribal. In making this argument, Chua ignores the role that right wing media plays in misrepresenting views on the left and stoking resentment on the right. But as evidence, she offers a handful of blog comments around the 2016 election purportedly written by conservatives who were troubled by Trump and the hard right, but who were somehow more troubled by campus activists and so-called “identity politics.” Chua never seems to have asked herself if these comments are genuine or simply a form of right wing concern trolling based on messages propagated in the right wing press.

Indeed, if you only watched Fox News, you would think that Black Lives Matter is a violent street gang, not a wide-ranging civil rights movement with a detailed policy platform and community anti-violence initiatives. You might also think that students activists spend all their time trying to deplatform right wing speakers. You’d never hear about the widespread activism among students to reduce their debt load, increase their wages, and organize their peers. And you’d definitely never hear about religious colleges that routinely fire employees and suspend students for violating right wing forms of political correctness.

The truth is that if everyone on the left followed the advice of Peterson, Weiss, Rubin, and Chua, Fox News would still lie to its base to keep them whipped up about something. It’s just what they do. And taking right wing propaganda at face value is perhaps the worst error reactionary centrists make.

But when questioned on another Ezra Klein podcast about the pervasive power of Fox News on the American political right, Chua refused to engage with how the network spreads resentment, fear and misinformation. Instead, she said cable news generally was bad, keeping herself firmly in the middle.

Even more prosaically, professional centrist groups like No Labels have found themselves misrepresenting the ins-and-outs of wonky policy debates on healthcare premiums to paint Democrats as if they’re as ideologically hardwired and compromise-averse as Republicans. Not only were they wrong in that instance, but political scientists would scoff at the notion that the parties are equally polarized.

https://cdn-images-1.medium.com/max/1600/1*Ve5hgsX5uFUxeq_Lvuw6wg.png


These are hard political realities to acknowledge. Our national political system is deeply different than it was in 1985. But retreating into a fantasy world where the right can heal itself through the power of centrism or noble compromises exclusively made by the left is no solution at all.

Reactionary centrists have to prop up the moderate right

Reactionary centrists often enter into political debates with the presumption that they should always be cool, level-headed, and respectful. And that’s nice, but politics is a very contentious field precisely because it’s how we resolve otherwise unresolvable conflicts. Further, a lot of reactionary centrists are part of a chattering class in publishing and academia that views respectful discussion as the central goal of politics rather than the building or use of power, the granting of rights, or the distribution of resources and wealth. Thus, they work overtime to elevate the views of what they consider moderate or reasonable voices on the right, even though those voices have very little power in policymaking. And they give far too much credit to actual powerful political actors on the right for being reasonable when they’re actually quite extreme.

This leads to some truly strange commentary. For instance, Conor Freidersdorf, in attempting to criticize The Atlantic’s decision to fire the incendiary right-wing blogger Kevin Williamson, ties the incident to the literal destruction of the American project.

More specifically, I dissent from the way that Williamson was dragged, regardless of his position. That dragging would be a small matter in isolation, but it is of a piece with burgeoning, shortsighted modes of discourse that are corroding what few remaining ties bind the American center. Should that center fail to hold, anarchy will be loosed.

But what is the nature of this anarchy and its loosening? This is left to the reader’s imagination. I doubt most Americans even know who Kevin Williamson is.

Similarly, Sam Harris flipped out at Vox Media for publishing a criticism of an interview he did with Charles Murray, a right wing political scientist whose uses data about race and IQ to argue for dismantling civil rights programs. Harris’s beef? One day science may say something inconvenient for the left, therefore liberals have to demonstrate that they can respectfully discuss race science with Charles Murray while ignoring Murray’s policy goals. For Harris, being able to avoid criticism from outlets like Vox is more important than the public policy debates he wants to participate in. And he’d rather invest his time, energy, and considerable podcast platform into presenting a moderate version of Charles Murray’s views than elevating the voices of civil rights activists or scholars who work on ending racial discrimination.

When pressed on these issues, again by the infinitely patient Ezra Klein, Harris demonstrated that while he thinks everyone else is politically biased, he is not.

That discussion reminded me of so many others I’ve had with researchers who participate in political debates. They think the middle is where they’re supposed to be regardless of where the sides stand in a debate, but they can’t quite explain why. If you point out their political biases and the effects of their political advocacy, you’ll get a blank stare, a denial, or simply have accusations of bias thrown back at you.

For instance, Judith Curry, an atmospheric scientist who rose to prominence among climate deniers for criticizing other researchers, endorses a handful of right-wing policies on climate change, including revisiting the Environmental Protection Agency’s finding that carbon emissions endanger public health and creating a “red team” to challenge official climate science.

When I pressed Curry to acknowledge that she was engaging in political advocacy, including testifying about these issues at the invitation of Republican members of Congress and conducting a deeply misleading interview with Fox News, she insisted that she isn’t really an advocate and doesn’t have an ideology at all. But in this case centrism — and a particular reactionary form of centrism—is the relevant ideological stance. In Curry’s case, it led her to tell Congress to follow the lead of right wing think tanks on climate science and to tell Tucker Carlson that climate change could be both good and bad while also, at Carlson’s prompting, trashing Al Gore. The fact that someone can do that while still claiming to occupy an ideological middle ground is mind-boggling, but reactionary centrism persists precisely because it is so often unthoughtful.

Roger Pielke Jr., another researcher who has made a career out of criticizingclimate scientists for their political advocacy has made some similarly odd leaps about just how moderate and compromise-happy conservatives are in the Trump era. For instance, after Trump’s election, he dismissed Trump’s climate denial and embraced the view that he was actually quite flexible on climate policy, advising scientists that they should work with the administration:

Despite Trump’s rhetorical nods to the social conservative wing of his party during the campaign and his enthusiasm for convenient conspiracy theories, he is clearly a pragmatist with little worry about changing his policy preferences.

Needless to say, that hasn’t panned out. More recently, he has tried to dismiss the Trump administration’s widespread scientific censorship as a form of “neglect,” insisting that a president who believes climate change conspiracy theories and appoints a wrecking crew to lead the EPA actually doesn’t care about these issues.

Yet when engaged on these points, particularly the pervasive nature of climate denial, Pielke Jr. still blames the environmental left for not being welcoming enough of views on the right. Although he has liberal values, Pielke Jr. has secured his position as a go-to expert for right wing political actors, including being called in to testify by Republicans at the same hearing Curry participated in.

It’s OK to take sides

There is a role for centrism in our politics. But moderation or centrism as a goal is easily exploitable by the modern right, especially for public figures who see political debates in purely partisan and positional terms.

At best, reactionary centrism is a lazy response to politics. If progressive groups are doing something you can describe as distasteful or beneath you, or ineffective, that’s an excuse to avoid the hard work of participating in the progressive political movements that are actually trying to make our politics better.

But at worst, reactionary centrists fail to critically assess how the right operates in America and wind up playing along with its agenda as a result.

There’s always going to be disputes between Democrats and Republicans that require compromise. But increasingly, the disputes we face are over basic rights and realities. Is climate change real? Does everyone deserve the right to vote? Are democratic institutions worth defending?

In this era, taking sides on those issues is of fundamental importance. The goal of any progressive political program should be to build power, strengthen democracy, and deliver more benefits to more people.

There’s plenty of room for compromise along the way, including compromise with committed centrists and conservatives. But one should never be blinded into compromise as a goal in and of itself. Compromise and standing in the middle is a tactic and a tool, not an ideology. And in an era where the right refuses to compromise on anything, reactionary centrism isn’t centrist at all.

Reactionary centrists should understand these dynamics, question their own largely unexamined political beliefs and ideological biases, and ask themselves if what they’re doing with their public advocacy work is actually accomplishing what they think it is. And I hope in giving a name to this stance we can debate reactionary centrism for what it often is: an unthoughtful ideological stance that helps a speaker build their platform, but fails to make our democracy stronger.

Go to the profile of Aaron Huertas

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Democracy is pretty cool. We should try it some time. Voting rights, science policy, political communication and grassroots activism.




Tuesday, June 26, 2018

Please Bookmark This Post. Seriously. By Josh Marshall


Please Bookmark This Post. Seriously.

By Josh Marshall, talkingpointsmemo.com


June 25th, 2018

2 min

josh marshall

Sarah Sanders just again complained that Democrats support “open borders and rampant crime” that she claims comes with “open borders.” These are straight up lies, so blatant and frequently repeated that I thought it was important to provide links here which can allow anyone who is willing to state and repeat the actual facts again and again and again.

First, in 2013 the Senate passed the Border Security, Economic Opportunity, and Immigration Modernization Act, the most recent iteration of so-called ‘comprehensive immigration reform.’ The bill was a mix of things both parties wanted, substantial funding for border security along with a path to citizenship for undocumented immigrants already in the country, etc. Here’s the actual text of the bill. The bill had critics on the right and left. But it included a huge amount of money and laws for border security and efforts to prevent illegal immigration. It is demonstrably not an ‘open borders’ bill. All 52 Democratic Senators voted for it as did the two independents who caucus with the Democrats. This is the clearest, most concrete and dispositve evidence that this repeated claim by Trump, Sanders et al. is a provable lie.

Second, “rampant crime.” The through line connecting all of President Trump’s rants about immigration policy is that immigration is a security issue, that there is a clear connection between the scale of immigration and crime. This is false. All credible studies, approaching the question from a variety of angles, find that immigrants – legal and not – commit crime at a dramatically lower rate than native born Americans. The scale is striking, ranging from 50% the rate of the native born to as low as 20%. Here are studies from The National Academy of Sciences, National Bureau of Economic Research, CATO. Here’s an overview of research from the Times. The evidence is consistent and overwhelming. Immigrants commit crime at dramatically lower rates than the native born. And large influxes of immigrants actually appears to bring the crime rate down in areas of high concentration. Immigration does not drive up crime rates at all. The entire premise of Trump’s immigration arguments are based on a demonstrable lie.

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Trump, deals and the flea-market bargaining of the world By Josh Marshall


Trump, deals and the flea-market bargaining of the world
By Josh Marshall
I am about at my wit’s end with Times’ analysis and trend pieces. Just stop! (A subject for another day.) But this one on Trump’s deal-making and actual failure to make really any deals in 17 months as President contains a highly salient quotation, which we will need to think about a lot over the coming years. The words are from Daniel M. Price, a Bush era trade advisor. “What the president seemingly fails to understand is that in foreign policy and in trade policy — unlike in real estate transactions — the parties are all repeat players. The country you insult or seek undue advantage over today you will have to work with again tomorrow.”

This is a topic we’ve talked about before, one that is very basic to international affairs and even basic business and legal studies theories of mediation and negotiation. I’d written about this at length in a number of posts. But late last year TPM Reader DM pointed me this post by Bill McBride at the Calculated Risk economics blog. It’s a clear and concise explanation.

In general, there are two types of negotiations. There is the “win-lose” type (or Distributive negotiation) where one party receives more and the other party receives less. This is the common approach when buying a car or real estate, or haggling at a street market.

The other type of negotiation is “win-win” (or Integrative negotiation). This type is used when negotiating between a company and a worker’s union, with long term suppliers, negotiating agreements between international allies – and even with adversaries.

The tactics for the two types of negotiations are very different. In the first type (win-lose), bluffing, threats (like threatening to walk away), even lying are commonly used. (Sound familiar?)

The approach to an integrative negotiation includes building trust, understanding the other party’s concerns, and knowing the details of the agreement – with the goal to reach a mutually beneficial agreement.

Price’s and McBride’s points are basically the same. If you’re going to be dealing with the same players again and again, using threats or bad faith to make a one-sided deal really isn’t necessarily in your longterm interest. Because you’re going to have to deal with that cheated player again. This doesn’t even work as well in real estate as Price suggests. Consider Trump himself. No US banks would even do business with him before he became President. Lots of people in lots of industries wouldn’t do business with him anymore because he’d simply cheated too many people.

Here’s another favorite post of mine from June 2016 (the correspondence is from August 2015) in which a New York real estate executive who’s done business with the Trump Organization and knows that world explained Trump’s MO. It’s a mix of schmoozing, chaotic head games and threats that puts adversaries off balance and gets them to agree to terribly disadvantageous agreements and sometimes even keep coming back for more. It’s worth rereading. You’ll recognize a lot of it.

All of which brings us back to the Presidency. President Trump has torn up TPP, the global climate agreement, DACA, the Iran nuclear agreement. He’s threatening to do the same with NAFTA. He hasn’t replaced any of these with anything else. And he’s accomplished nothing on the trade front other than an escalating round of tariffs and reprisals. We can mock Trump over these failures. And we should. But the bigger point is that this approach is highly unlikely to ever work. But it’s the only mode he knows so he keeps doing it over and over again. It’s also uniquely damaging for the United States. The whole global system of alliances, trade regimes, international bodies and the rest is one that uniquely advantages the United States. Trump is like a revisionist power upending the US imperium or global order. Yet he’s the US President. The damage is immense. We need to give thought to how we will collectively undo it.






Monday, June 25, 2018

Tariffs Are the Wrong Response to China, by Matthew C. Klein


Tariffs Are the Wrong Response to China, by Matthew C. Klein
Barron’s magazine
June 22

The trade conflict between the U.S. and China is escalating. After repeatedly accusing the Chinese government of “economic aggression,” the U.S. government is considering imposing tariffs on as much as $450 billion of goods imported from China. China cannot respond symmetrically—it imports too little from the U.S.—but it could easily devalue its exchange rate or use discriminatory regulations to harm the profitability of American multinationals.


American anger is justified: Chinese policies have systematically distorted the world economy at the expense of U.S. workers. But tariffs are the wrong response. They will penalize regular Americans while doing little to address China’s harmful practices. Those practices have caused at least as much harm to ordinary Chinese as they have to the rest of the world.


China’s economic policies are a product of the Communist Party’s intolerance of alternative centers of power. After the pro-democracy movement met its violent end in 1989, Deng Xiaoping’s program of “reform and opening up” was modified so that party elites could capture as much of China’s new wealth for themselves as possible.


The result is that China is now one of the most unequal societies in the world. Between 1980 and 2010, the share of income officially earned by the top 1% of Chinese households rose by about nine percentage points.
Explained: The Developing U.S.-China Trade war
Barron’s breaks down which industries could get hurt the most, and why.


This likely understates the gains of the elite because it does not count their control of the corporate sector, which benefits from the authoritarian government’s hostility to collective bargaining. In most countries, nonfinancial corporations pay their employees about two-thirds of the value of what they produce. In China, however, workers get only 40%.


Unlike most other countries, taxes and government benefits in China do not transfer spending power from the rich to poor. Disposable household income is only about 45% of China’s gross domestic product. The personal income-tax system collects only about 1% of GDP, while taxes on consumption and forced social security “contributions” take in about 14% of GDP.


The perverse result is that low earners pay effective tax rates around 35%, while higher earners pay rates as little as 10%. Meanwhile, the Chinese government limits health care, pensions, education, and unemployment insurance through the so-called hukou system of household registration. Hundreds of millions of migrants who moved from the countryside for jobs in cities are ineligible to receive government benefits even when they have paid for them, because they are not officially residents of the city where they live.
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The Chinese financial system is also rigged against ordinary households for the benefit of politically connected elites. Most Chinese have few investment alternatives to bank deposits and real estate, while the four big party-controlled banks pay interest rates on deposits far below the cost of capital and pass along the savings to favored corporations in the form of cheap loans. Private businesses have to fight for financing and savers get stuck with inadequate returns, but the “vested interests”—Chinese Premier Li Keqiang’s term—can borrow at preposterously low rates.


Since Chinese households cannot depend on the government to cover health expenses or retirement, the rational response to low interest rates is to save even more than they otherwise would to compensate for the lack of compounding.


This deliberate concentration of wealth has crushed household consumption. The share of China’s national income spent by households on goods and services collapsed from about 52% in the early 1980s to less than 36% by 2010. The flip side of this was the meteoric rise in China’s national savings rate from about 32% to more than 50%. While things have marginally improved in the past few years, household consumption in China is still less than 40% of GDP. The world average is about 60%.
Tariffs Are the Wrong Response to China


While much of the wealth transferred from Chinese workers is spent on construction projects and other forms of fixed investment, a large chunk is used to buy financial assets abroad, often from the U.S. The Chinese government alone has spent about $4 trillion acquiring foreign assets since 2000. Rich Chinese households and private businesses have spent another $3 trillion on top of that, according to official data, although the true number could be even higher after accounting for surreptitious capital outflows.


China’s repressed consumption and state-sponsored capital outflows have their counterpart in massive trade surpluses. China exports almost $1 trillion more in manufactured goods than it imports, for example, a surplus worth more than 1% of the world’s GDP. China may be the workshop of the world, but the Chinese people cannot afford to buy what they produce. Instead, foreigners buy Chinese goods with money stolen from Chinese households by the Chinese government. Foreign workers are also victims of this arrangement, because their cheap goods come at the price of lost jobs and rising debt.
Tariffs Are the Wrong Response to China


The trade conflict between the U.S. and China is therefore a consequence of China’s internal class conflict. Tariffs will not fix anything as long as China’s elites remain committed to extracting as much as they can from Chinese workers. The better approach would be to hit those elites where it hurts: Western governments should coordinate to ban Chinese investment in their countries, starting with housing. The U.S. and its allies should also become the champions of Chinese workers, especially rural migrants deprived of basic government benefits.


While Chinese rebalancing is ultimately a choice for the Chinese people, the rest of the world can help by refusing to tolerate the negative spillovers of China’s harmful domestic policies.


Write to Matthew C. Klein at matthew.klein@barrons.com


Follow @M_C_Klein
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