Streetwise Professor

Trump fired his 2d trade salvo last week.  Unlike the the previous one on steel and aluminum, which first appeared to be aimed at everyone and then due to various exceptions and exemptions is hard to know who will actually take the hit, this blast is clearly aimed squarely  at China.  Moreover, the rationale for the salvoes is quite different.  The allegation relating to the metals was that other countries were unfairly favoring domestic producers and exporting to the US at unfairly cheap prices, the China-directed blast is a response to systematic Chinese theft of intellectual property, an issue of longstanding that the US has repeatedly bitched about, but not taken action against.

These issues are quite different, and as Doug Irwin notes, whereas economists are largely opposed to tariffs like those levied on steel and aluminum, they have a much more open mind on taking on China on IP issues.

They are indeed quite different.  A simple analogy comes to mind.  When someone sells you a car below cost, they are doing you a favor.  When someone steals your car, and then sells it back to you, they are harming you–and adding insult to injury.  Steel and aluminum fall in the first category, IP theft in the second.

This should be a debate about tactics: how can Chinese theft be deterred and diminished?  I don’t know the answer to this question, but given the systematic failure to make progress on this issue for years, I wouldn’t rule out Trump’s tariff-based approach out of hand.  Maybe he is talking a language the Chinese understand.

What I can state with absolute certainty is that this is not a battle between principled free trader nations and retrograde protectionists, with China in the former role and Trump in the latter.  Anyone who treats it as such is not to be taken seriously, and indeed deserves brickbats.

Let’s be clear.  Virtually every government around the world criticizing Trump’s protectionism is hypocritical to the n-th degree.  Even with Trump’s recent actions, the US is less protectionist that the Europeans and the Japanese, and let’s not even start with the Chinese, whom Adam Smith would have recognized for what they are: aggressive mercantilists.

Two wrongs don’t make a right, but I’ll be damned if I listen to lectures from the Europeans, Japanese, or particularly the Chinese about the American threat to the world trade system.  Look in the mirror, jackholes.

It is particularly infuriating to see Tim Cook of Apple mouth pieties about embracing free trade–while speaking in Beijing, no less:

“Countries that embrace openness, that embrace trade, that embrace diversity are the countries that do exceptionally,” Mr. Cook said during a panel discussion at an economic forum here Saturday, when asked what message he would like to bring home to Mr. Trump. “And the countries that don’t, don’t,” he added, without mentioning the president by name.

OK, Timmy–do you have the balls to give that sickeningly sanctimonious homily to Xi Jinping?  The US is infinitely more open than China.  And if you think that the Chinese are all into diversity, Timmy, you are even a bigger idiot than I thought.

But of course Timmy doesn’t have the balls, because he knows that if he challenges the Chinese autocracy they will make Apple’s life miserable, whereas by dissing Trump he’ll get accolades in both Beijing and the “elite” circles in the US.  A profile in cowardice, not courage.

In fact, by criticizing the speck in the US eye while ignoring altogether the beam in Beijing’s, Cook is carrying Xi’s water like a good little flunky.  Objectively his criticism of Trump (and if you don’t think that who he was aiming at despite his not mentioning Trump’s name, your IQ is about the same as Stormy Daniels’ bra size) helps China in a confrontation with the US over an issue in which China is overwhelmingly in the wrong.

Again, the issue here is NOT about free trade.  It is about theft, and whether imposing penalties on the thief’s exports is the appropriate way to deter theft.  His phrasing implicitly supports the Chinese framing of Trump’s actions, which is as an attack against trade and openness, which is a grotesque distortion.

Given the extremely asymmetric threat that Apple faces from displeasing the president for life in China (who has virtually unlimited power)  vs. displeasing the president for at most 6+ more years in the US (who is hamstrung by myriad Constitutional and political constraints), it is understandable why Cook would sell out his own country by serving as its adversary’s mouthpiece.  But we should understand that’s exactly what he’s doing, and as a result ignore his homilies, and direct at him the scorn he so richly deserves.