"Stop China" Kumbaya: Tom Friedman joins Steve Bannon

Trade wars make strange bedfellows. So is the current standoff between US and China. After three decades of diplomacy and WTO-like agreements, President Trump is trying sanctions and open confrontation to cajole China into respecting international rule of law and intellectual property.

According to Friedman -the most iconic mouthpiece for globalization since its famous book "The Lexus and The Olive Tree" coined the term twenty years ago, back in 1999-, it's due time for a "High Noon" moment of reckoning. Here's Friedman on the subject and on the record in his NYT op ed column:

"I’m glad Trump is confronting China on its market access barriers. Those are the real issue — not the bilateral trade imbalance. This is long overdue. But trade is not a zero-sum game. China can thrive and rise, and we can, too, at the same time. That’s what’s been happening for the past 40 years. But we’d be even better off if China offered the kind of easy access to its market for U.S. manufacturers that it enjoys in America. It’s time to recalibrate U.S.-China economic ties before it really is too late.  

What do I mean? China’s formula for success had three pillars. 

The first was a lot of hard work; delayed gratification; high savings; smart investments in infrastructure, education and research; and a Darwinian system of capitalism. In China’s “jungle capitalism,” 30 companies in the same business emerge and compete to see which becomes the alpha male and wins the government’s backing to go global. This system has produced high levels of innovation — Alibaba, Tencent, DJI — despite a censored internet, lack of a free press and an authoritarian government.

The second pillar was a system of cheating on World Trade Organization rules; the forced transfers of technology; the stealing of the intellectual property of others; nonreciprocal trade rules; and massive government support for the winners of both its Darwinian competitions and inefficient state-owned industries. 

The third pillar — never acknowledged by China — was a stable global trading system built by U.S. statesmen and sustained by the U.S. Navy. It’s been the U.S. Navy in the Pacific that has assured China’s trading partners there that China’s economic domination wouldn’t result in China’s geopolitical domination over them — and therefore made them open to massive trade and investment from China."

Bannon used the financial CNBC network to celebrate Trump's war trade stance:

This "coming together" in a tough stance reached even the Democratic trade committee chair, the rabid anti-Trump Chris Van Hollen, asking for even tougher stances on chinese companies such as ZTE

Economic forces seem to be realigning against China in a long-term game-changing bet. Market signs seem to indicate that there is no shortage of players wanting to gamble for this option. The stakes are high, the dimensions and global character of China's economic position in the world make the ripple effects on the interconnected international economy hard to predict:

In any case, the new strategic scenario seems headed to break the self-imposed boundaries of conventional wisdom, particularly the myth of an invincible authoritarian, state-controlled China model advantage over free market, entrepreneurial economies of the West.

For Trump's base, the realities of his trade war look different:

Free trade doesn't necessarily mean "free range" , one-sided trade deals, particularly when the other side has been voicing for years a "Made in China 2025" plan with targets of 90 percent "made in China" products.

It begs to wonder what kind of free trader is the government that accepts deals with an ultra-nationalist partner with an ultra-mercantilist policy such as China.

In any case, Trump is not provoking a trade war, but reacting to one that started decades ago and has been escalating at broad daylight.

It takes two to tango. This might be a rocky dance.

Peter Pan Politics

While the country experiences once again the closing of its own government because its two parties play "chicken" withholding funds to pay for the functions they were entrusted to oversee, it's hard not to see government institutions operating as high-school playgrounds.

With a President that communicates by tweets and brags about himself as an old adolescent and public officers and CEOs turning their offices in frat houses and having public temper tantrums, it is not illogical to think that power turns Americans into versions of Peter Pan -that eternal child invested with magic powers that refused to grow-. 

Or perhaps it's the other way around, and Americans vote for Peter Pans that promise to take them away from hard choices in magic trips to Neverland: MAGA, the Great Society, and so on.

In the meantime, back into reality, things don't change. They only get worse.

Government shutdowns are a perfect example of what happens when bad behavior isn't punished. 

There are no punishments for this obvious dereliction of duty. Nobody gets fired, sued or  goes to jail. Government is allowed to stop working without penalties but the governed keep being fined or even serve jail sentences for not paying the taxes. And our soldiers can face court martial for not showing up, even if their paycheck is retained.

Sooner or later, of course, the consequences of not keeping the basic services will come back to affect us and then, adult behavior will return briefly to clean the mess left behind. Moreover, it will be adult behavior what will keep basic services running on the backs of unpaid public servants.

Psychologist Erik Erikson defined adulthood as the sixth and seventh of eight stages in the life cycle. Unlike children, adults' focus is on providing care to others, taking responsibility for those who can't provide for themselves -the too young and the too old-.

Psychoanalist Eric Berne added an interesting explanation: adult behavior is defined as negotiating between our "wants" or impulses and our duties dealing with the constraints of reality.

We would love to double our spending, but we can't do it unless we increase our income before. We cannot hold a debt that exceeds our possibilities of repaying and making a living at the same time. We can't stop eating for too long, and our creditors can't keep loaning additional money to us  indefinitely.

We know we cannot lose our control with our neighbors in ways that will generate retaliation and turn our daily life in constant confrontation and stress.

As adults, we know all that, but as partisan voters we seem to prefer Peter Pan and pipe dreams such as self-paying tax cuts or entitlements. Even more:both parties in the United States now support both options at once: tax cuts AND increased spending.

All of course, will be solved by issuing IOUs  and passing them to the next government  each four years arguing that "growth" or "well-being" fairies will take care of reducing it.

What we did as a society with our last budget surplus speaks volumes. Paying up the debt? Well, not. Neither what Milton Friedman recommended at the time (2000). Friedman considered debt relief politically unfeasible (he knew Americans better) but economically correct, but thought that individual Americans would know better how to allocate the surplus than the Peter Pan government. 

Friedman was half-right and half-wrong. American voters decided for giving themselves a "tax cut" but authorized their government  -POTUS and COTUS- to balloon the spending with a 2 trillion dollar debt war of choice in Iraq for the following 8 years. 

The newly added debt established the foundations for the current 19-trillion-dollar debt.

Winston Churchill's comment on American's behavior seems to describe also that of a Peter Pan:

Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.

Partisan voters are played by their faction leaders into Peter Pan politics merry-go-rounds.

The last time adults were asked to take the floor was, arguably, when the Bowles-Simpson Debt Commission issued its report (2001). 

With Peter Pan politics and politicians in full swing, it's good and sobering giving them the last word to remind reader that reality hasn't changed but in size -quite like tall adolescents-: