Daily Archives: August 20, 2018

George Marshall vs. John Brennan

The media is going crazy about the fact that Donald Trump revoked the security clearance of former CIA chief John Brennan.  Trump has been criticized by a number of senior former intelligence and military professionals.  The media has particularly emphasized the letter by retired Adm. William McRaven, who was the Navy Seal commander.  I particularly look up to former CIA chiefs Robert Gates and William Webster, who wrote to support Brennan.

More than them, however, I look up to World War II General George Marshall, who went on to be Secretary of State and namesake of the Marshall Plan.  As General Petraeus said in this interview with the Armed Forces Journal, General Marshall did not vote, because he felt that even the slightest degree of political participation would compromise his professional independence and judgment.  In this article, General Petraeus said he had not voted since he was a major general.

Of course, none of the people signing these letters was an active duty officer.  Nevertheless, the non-political position take by Marshall and other conscientious officers illustrates the importance of nonpartisanship among the military and other public servants.  If these officers feel so strongly about an issue that they cannot continue to serve, then they have to leave the service.  This is what happened to the State Department’s Foreign Service during the first year of the Trump administration under Secretary of State Tillerson.  The Foreign Service lost many of its senior officers.

The US has had a number of military presidents, starting with George Washington, but by and large they have retired and gone through the traditional political process.  One exception to this military deference to the political system may be General Douglas MacArthur.  MacArthur appeared to defy President Truman’s orders during the Korean War.  When he tried to appeal to Congress and the people over Truman’s head.  The firing led to a Constitutional crisis; Truman’s popularity fell to 22 percent, but he prevailed and MacArthur faded away.

Compared to George Marshall’s non-partisanship and MacArthur’s firing, the removal of John Brennan’s security clearance is nothing.  Brennan appeared to be a strong supporter of Hillary Clinton and the Democratic Party while he was still head of the CIA.  His partisanship, combined with the accusations of Russian interference in the US election placed a huge cloud over the CIA and the rest of the intelligence community from President Trump’s perspective.  He thought that the Democrats were trying to invalidate his election and that the CIA was helping them.  Pompeo’s terms as head of the CIA seems to have helped close the rift between Trump and the CIA, but tensions remain because of the continuing Mueller investigation.  Brennan, who has accused Trump of treason, clearly wants to see Trump removed from office.  We’ll see whether that happens.  Trump certainly has no obligation to help Brennan remove him from office.

John Oliver on Trade

I just watched John Oliver’s “Last Week Tonight” show on trade and I was disappointed.  Usually his main topic is well done, but tonight’s was not.  He said there is no such thing as a trade deficit, when clearly there is.  Just Google “trade deficit.” Investopedia says:

A trade deficit is an economic measure of international trade in which a country’s imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets. It is also referred to as a negative balance of trade (BOT).

From <https://www.investopedia.com/terms/t/trade_deficit.asp>

Oliver seems to be saying, as many anti-Trump people do, that there is no trade deficit because you get something for the money you send to another country.  We may pay China much more for goods than China pays us, but we get lots of T-shirts in return for the extra money.  This is like saying that you can charge all you want on your credit card, because you get lots of stuff for the money you charge.  At some point, you have to pay the bill.  That is true in trade, too.

He also criticized the amounts cited by the administration as “trade deficits.”  He probably has a point but only regarding the definitions.  The huge numbers cited as “trade deficits” were probably numbers for a “balance of trade over an extended period.”  The Census Bureau says the monthly US trade deficit in goods with China for 2018 averaged around $35 billion.  The New York Times, hardly a conservative mouthpiece, said the annual 2017 “trade deficit” with China reached a record $375.2 billion.  The US finances its trade deficit with China by giving China IOUs, selling bonds to China that the US will have to pay off or roll over one day.  Bloomberg reported that China last year held $1.18 trillion of US debt, up $126.5 billion from the previous year.

Oliver also said that a tariff is stupid because it is a tax on ourselves, which is to some extent true, but he ignores the fact that there are various purposes for taxes.  The point of a tariff is not at this time to raise money, but to penalize what appears to be bad conduct.  It’s true that raising prices of aluminum and steel will raise the price of goods made from aluminum and steel in the US in the short term.  But if China subsidizes its steel exports to the US to make Chinese steel so cheap that no one in the US will buy American steel, then American steel companies will go bankrupt.  Then, when there are no American steel producers, China can raise the price of its steel to whatever it wants, and American end users will find themselves paying much higher prices for steel and having to raise prices for US consumers, or go out of business.

Oliver said trade is a complicated issue, but then he tried to oversimplify it, doing a disservice to his viewers.  Trump’s trade adviser, Peter Navarro, is not a conventional economist and is probably leading our trade discussions (or war) in the wrong direction.  But Oliver made Navarro look good by failing to present an accurate picture of the US trade situation.