Beware of Populists Bearing Jobs....

The 2016 U.S. presidential election campaign has been one for the ages-- although not for the best of reasons. Particularly among Republicans, the debate of the 2016 campaign has put on display some of the ugliest facets of American political campaigns (see last post).

However, you'll be happy to know that a far more acceptable form of populist deceit in elections remains alive and well in both parties; the politics of opposition to trade liberalization. There's no comfort in that for those who see the merits of trade liberalization (myself included), but it could be construed as comforting for those who seek some refuge in something that makes sense to them in this campaign. The latest candidate skirmish on trade policy took place in the Democratic Debate in Flint, Michigan the other night; a rust-belt state, and ground zero for this kind of rhetorical mush.

Yet, in my view, there's good news ahead. The populist protectionism of the campaign has, in the postwar period, nearly always returned to default liberalism. Unfortunately for those that really buy into the rhetoric of protectionism, I have bad news for you; you're being lied to.

Let me explain.

In (slight) Defense of Incivility

There's been a lot of hand-wringing over the nastiness of this year's presidential primary season, especially on the Republican side of things. If you aren't up to speed, look no further than the most recent GOP debate held in South Carolina on February 13.

I have a lot of mixed feelings about the downward spiral some believe we are on. I think the demolition derby we are watching has often been devoid of substance and hasn't always showed Americans at their best. Yet, to those who dismiss it all as just another sign of American decline, I'd like to suggest that they are missing something pretty important about how a lengthy, even nasty, process like this is pivotal in establishing a critical personal connection to candidates.

Energy Ministers Meeting: Reinforcing the Low Bar for Trilateralism....

This past Friday (February 12), North America's Energy Ministers got together in Winnipeg to announce a new trilateral effort on energy cooperation. The idealist in me reacted like this:

Hey, great. Perfect timing. The North American energy sector could use a boost. Moreover, the whole notion of 'trilateral' anything in North America seemed to have died. Was the Winnipeg announcement as sign of things to come? Was trilateralism being put back on life-support? Was it an early example of Prime Minister Trudeau's commitment to renew Canada's relationship with Mexico? 

Then, reality sinks in once again.....

Open Note to Trudeau 2.0 on North America

Dear Prime Minister Trudeau,

It seems you are headed to Washington March 10 for a little soiree with President Obama. The President likes you and is getting his staff to throw a big party. A State Dinner; the first for a Canadian Prime Minister in nearly two decades. Good on you. But before you get too carried away with "reset buttons" with Washington, I'd like to make a simple plea.

Canada's most important interests can be found right here in North America. Washington is top of the list. However, if, as you claimed during your campaign, you are serious about revitalising "North America," I'd like to see you get on your plane March 11 and go to Mexico City.

The Obama Years.... My Two Cents

There's something about great political theater that makes it impossible to ignore. Debates, campaign speeches, congressional hearings,.... all of it great theater. State of the Union Addresses (SOTU) are no different, but Tuesday night's SOTU was special because it was President Obama's last. Obama's presidency will be debated and re-hashed by historians for years to come. But since I've been asked about the President's speech, and his legacy, in the days since, I thought I'd throw out a few early observations about his presidency as he heads for the exit.

The laundry list that follows is both incomplete and, in most cases, deserving of book-length treatment. Moreover, it's just my two cents.

Expectations
In 2008-2009, Barack Obama was electrifying. Full stop. A war-weary country looking over the cliff into a financial abyss, was hungry for change. Most didn't get what they were hoping for, including among many of the President's most ardent supporters. In many ways, it's not Obama's fault. It's ours. We expect too much of presidents. We imbue in them the capacity to do things that are extraordinarily difficult to achieve. A lot of that difficulty is intentionally built into the U.S. political system. For that, we have James Madison to thank. Yet, in my view, the expectations we heaped on President Obama went far beyond those we normally assign. I was among them. Like many, I am also disappointed in the last 7 years. But in many ways, our hyperinflated expectations set a standard of judgement that set us all up for disappointment.

Obama is a transformational figure because of who he is and what he represented as the nation's first African-American president. It was a presidency the country needed. But sadly, and undoubtedly because of some of my own inflated expectations, I'm not sure his presidency will be seen as especially transformative.

The Fed, Mugabe Bucks, and the Yuan

One of the nice things about the Christmas holiday period is the chance to catch up on some reading. I finally put the finishing touches on two really interesting books; Tim Geithner's memoir, Stress Test, and a book Lawrence McDonald's Colossal Failure of Common Sense about the failure of Lehman Brothers. Both are compelling points of view on the unprecedented and chaotic days of 2007-2009. One of the most interesting elements of both books is the role of the state, and officials at the U.S. Federal Reserve, in particular.

Is Monetary Policy Out of Bullets?

Over the years, I have become more and more interested in the conduct of monetary policy, perhaps because it seems to be in a fascinating period of sustained crisis and re-evaluation. Monetary policy has always been an inexact kind of policy instrument aimed at mainly at price stability, but in a kind of mission creep, has also become responsible for stimulating employment. The most obvious way in which the Federal Reserve indirectly influences the interest rates you and I pay, and therefore economic activity, is by altering the Fed Funds Rate; the interest rate the Fed charges commercial banks to borrow money. For almost a decade, the Fed Funds Rate has been set close to zero. Because the Financial Crisis essentially froze much of the lending between banks and from banks to consumers, the Fed has been loathe to increase the interest rates it charges banks to borrow. In effect, the Fed has been without one of its chief policy instruments for a decade.

Trumping the TPP

In early November, I argued that the release of the text of the Trans Pacific Partnership wasn't the start of a long fight over Congressional approval, but somewhere closer to the mid-way point on a road stacked toward approval of the deal. To put things in baseball terms, we were in the 5th or 6th inning of a game that was already being won by the proponents and architects of the deal. As I said then, it will be an ugly fight with lots of atmospherics. But on balance, I still give the edge to the TPP being approved in the United States.


But what are we supposed to make of the U.S. Senate Majority Leader's comments Thursday saying that the TPP should not come before Congress for approval until after the November 2016 presidential elections? Moreover, Mitch McConnell (R-KY) is not alone. Senator Orin Hatch (R-UT), chairman of the Senate Finance Committee-- where any TPP implementing legislation will be considered-- has also questioned the merits of the TPP. Yet, both were among the 47 Senate Republicans that voted for the Trade Promotion Authority (TPA) facilitating the Obama Administration's final push to complete the TPP negotiations this past fall.

What's going on? Is the TPP text so bad that McConnell and Hatch (among others) are now reversing themselves? Did the Administration effectively lie to everyone on Capitol Hill back in June during the TPA debate? Did Congress fall asleep afterward and take their eyes off the TPP negotiations? Did the White House fail to consult with Congress-- as required by TPA-- about the TPP as it was being negotiated? The answer to all of these questions is NO!

The real answer might be Donald Trump!!!!

Currency Manipulation and the TPP

In the days since the text of the Trans Pacific Partnership was release, I and many others have been scouring the text looking for what's new? Apart from the scale of the TPP as a regional trade agreement, it doesn't appear to be the case that there's been much dramatic innovation.... with one big exception; a side agreement on currency manipulation.

Currency manipulation has become an important, polarizing, and misunderstood political issue in recent years. In Tuesday night's Fox Business News GOP Debate, for instance, Donald Trump railed against China's alleged manipulation of the Yuan and celebrated the inclusion of currency provisions in connection with the TPP. Senator Rand Paul then pointedly reminded Trump that China wasn't part of the TPP.

But how well does anyone understand what currency manipulation really is, why the issue has become a political football, or what the TPP Side Agreement actually proposes? In this post, I'll try and offer an answer or two, but along the way suggest that one of the reasons for the confusion is that the definition of currency manipulation (for political purposes, especially) is in the eye of the beholder.

Ken Taylor, 1934-2015

The Academy Award winning film "Argo" was on television the other night and I was again reminded of the drama that unfolded in the aftermath of the Iranian Revolution and the hostage crisis at the U.S. Embassy in Tehran in the 444 days between November 4, 1979 and January 20, 1981.

"Argo" was certainly entertaining, but it was also a disappointingly U.S.-centric tale of an elaborate ruse to smuggle six American hostages out of Iran. "Argo" only makes the briefest of mentions of what is known in Canada as the "Canadian Caper." The fact is, Ken Taylor and the entire Canadian diplomatic mission in Tehran played a far riskier and important role than "Argo" gives credit for.

Ken Taylor died October 15.

Elephants vs. Donkeys in 2016 May be a Lopsided Affair.....

There are exactly 365 Days to Election Day!!!!  Just getting warmed up, too.

When the governor's mansion in Kentucky was won by a Republican last week, many were taken by surprise. Perhaps they shouldn't have been. I began writing a post about the grim political landscape faced by Democrats in this cycle, and the disappearance of moderates in either political party. While it's certainly the case that Hillary Clinton's remarkable week of successes in the middle of October has given new life to her campaign and lifted the spirits of many Democrats around the country, that enthusiasm seems misplaced if you begin looking at races for anything other than President. While the GOP frequently looks like it's in a state of perpetual civil war, Republicans have lots of reasons to be feeling pretty good about themselves heading into next year.

TPP Text is Out, But Has it Already Been Approved?

It's out! The text of the Trans Pacific Partnership has been released. A Titanic fight over Congressional approval now begins in the heat of a presidential election campaign.

• I've linked the Full Draft text here.
• The Washington Post has a solid story on the early alignment of some of the politics. 
• The Obama Administration has also rolled out a new TPP web-site for distributing information (the Administration's view, of course) about the agreement.

I predict the TPP will be approved. In some ways approval is already baked into the process. It will be close, and put a lot of crass populism on display, but it may already be 2/3 of the way toward being approved.

As I noted in my last post on the TPP, there are a number of pressures pointing in favor of approving this deal, many of which have little to do with the economic merits of trade liberalization. Out of curiosity, I went back and looked at each of the last several Fast Track votes in Congress to see how close things have actually been. Recent votes have been nail-biters, but unless there's something in the text no one has foreseen, the TPP has basically already been approved.  Institutionally, Fast Track itself is a big piece of the puzzle. But in the case of the TPP, so do the Republican majorities behind the one piece of Obama's agenda they seem to like.