Transcript: Eamonn Fingleton - The Man Who Predicted Trump Now Predicts He Will Fail - 14 November '16
Thom Hartmann: On the line with us is our old friend Eamonn Fingleton, commentator with Forbes magazine, author of numerous books including In the Jaws of the Dragon. His website fingleton.net and Eamonn is coming in from, you're in Ireland right now, right?
Eamonn Fingleton: Yes I am, Thom. Good to talk to you again.
Thom Hartmann: It's great talking with you. Thanks so much for being with us. So, you predicted Donald Trump would win the Republican primary back in the day, and you predicted he would win the White House. Why?
Eamonn Fingleton: Well, my first prediction was in February of this year and the basic point it seemed to me was that flyover country was being ignored in the discussion. People in Washington who control what is written about in the political debate didn't seem to take on board that the rust belt was really seething with rage about the way that the economy has been run in the last 25, 30 years.
Thom Hartmann: Yeah, 30 years of neoliberal so-called free trade policies have just wiped out much of America and and neither party was addressing it. Donald Trump was, and I was on the air saying, you know, on trade he's right - he's diagnosed the problem correctly. And, but by the way, Bernie Sanders was saying the same thing and it was getting the same kind of reaction, you know, look at Bernie just, you know, wiped out Michigan. He just took Michigan. And so did Trump. And I think it's for the same reason. They were both saying blow up these trade deals.
So you're an expert on this stuff. You write about economics for Forbes magazine, among others, and you've written books on this and particularly on trade. What, how do, in fact, you noted in one of your articles that that we no longer in the United States even make the silicon for advanced chips. It's all made in China. So we literally can't make any kind of military weaponry without China's giving us the raw materials. How the hell do we recover from that kind of damage of, you know, 35 years of this neoliberalism?
Eamonn Fingleton: Right. That's one question and other question is, how the hell is Trump going to get the economy moving again? Because he wants to get manufacturing back but you can't get blood out of a stone. All of these key industries have migrated. The more advanced of them gone to Japan or to Korea or to Germany and then the middling level ones are in, of course, China.
Thom Hartmann: Yeah. Actually it was Japan makes the silicon, right?
Eamonn Fingleton: Yes
Thom Hartmann: My mistake. But, so, if the United States, let's take Trump out of the equation for a minute because I think he's going to, he's such a bumbler, but we'll see, I mean we'll see where this goes. But in the absence of democratic republican politics, Trump or, you know, whoever, what should we be doing in the United States to bring, first of all, should we bring manufacturing back home? I mean, you know, the position of the Third Way Democrats and the entire Republican Party for 35 years has been, you know, manufacturing jobs are crappy jobs. Who wants those kind of jobs? We need information industry jobs, right? So should we bring manufacturing back, and if we should, how do we do it?
Eamonn Fingleton: Well, the first question is easy. Absolutely, the manufacturing sector has to be strengthened. You have to bring back the serious manufacturing industries, meaning the capital-intensive ones, the ? intensive industries. But how do you do that? It seems to me that tariffs are the solution, but they're going to be very unpopular if he really goes at it in a serious way. He would have to apply essentially a tariff to the entire world because if he doesn't, if he applies tariffs simply to China then the manufacturing for the American market will move to Vietnam, it will move to Brazil, it will move to Mexico, Canada, wherever. So, if he wants, seriously wants to get manufacturing back he has to use tariffs right across the board.
Thom Hartmann: But we had tariffs against the entire world for 200 years. It worked, didn't it?
Eamonn Fingleton: Absolutely, it did. You're well-informed on the history of the United States. That story has been very much suppressed in the last 50 years. But yes, America was for its most successful decades very protectionist.
Thom Hartmann: Yeah, the George Washington administration at the behest of Alexander Hamilton, 1791 he presented is his 11 point plan on trade, his Report on Manufactures, most of it was adopted by 1793. The entire federal government from the George Washington administration to the Abraham Lincoln administration was funded by tariffs a hundred percent. From the Lincoln administration to World War One two thirds of the government was funded by tariffs. World War One to World War Two, one third of the government was funded by tariffs. And now, you know, our tariffs are pretty much non-existent.
It seems to me like we should be able to just look back and say gee, what worked? But then you get these guys, the smartest guys in the room, like Paul Krugman and Tom Friedman who say, 'oh, but that was then and this is now. It's a new world. We've got technology, we've got computers, we've got robots. Things are changing. It's not just you're losing manufacturing jobs because you don't because you lost factories, you're losing manufacturing jobs because of robots and therefore you're fighting a battle from the 19th century.' What do you say to that?
Eamonn Fingleton: Well, I would direct people's attention to the trade balance - the current account as you know is the widest measure of trade. Last year the United States ran a deficit of 463 billion dollars on current account. That deficit had to be financed. It was financed mainly by China, Japan, Korea, Germany, Saudi Arabia. These countries have been buying US Treasury bonds and they've been doing it as, frankly, a power play, because in return for America borrowing from these countries, Washington has to turn a blind eye to for instance the protectionism in East Asia. There's a deal there. It's not explicitly stated but it's obvious that that's going on.
So, how does America eliminate its trade deficits? Well, one way of answering the question is to direct your attention to countries that don't have trade deficits, they have trade surpluses. So all this talk about the technology has changed so that everything is much more productive now in manufacturing and we need fewer live human beings to produce the goods, that is not how things appear in, for instance, Japan, in Germany to name two countries that have very high wages, wages comparable to American levels
Thom Hartmann: And they have essentially protectionist trade policies, do they not? Only they don't do it with tariffs, they do it with VAT taxes and domestic content requirements and regulations and that kind of thing?
Eamonn Fingleton: Absolutely, yes. If you look at these countries' roads and look at the brand names on the roads, they are local companies that make the cars on the roads.
Thom Hartmann: Yeah, you go to Germany, all you see are German cars.
Eamonn Fingleton: Yes, right, and even more so in Japan. I mean, Volkswagen is a match for Toyota everywhere else in the world but not in Japan. It has about one percent of the market in Japan. Worldwide, it has about twenty-five, thirty percent.
Thom Hartmann: Right, and South Korea, you know, started out with protectionism. I believe you wrote about that at some length, you and and Dr. Chang, I think it was, out of Oxford, "Pulling Up The Ladder", I think is his book. ["Kicking Away the Ladder" by Ha-Joon Chang - ed.]
. But, so, if we brought back tariffs, every country that we have a trade agreement with would say that we are in violation of the trade agreement, it would go to investor state dispute settlement, we would be found guilty, we would be fined, we would get nailed, so the president should simply get us out of those agreements?
Eamonn Fingleton: I think that it's in character for Trump really to sort of bulldoze his way through and frankly that's what he's going to need in this instance. I think that if he goes the legal route as it were and tries to comply with all sorts of international agreements, he's going get nowhere. So he has to take the law into his own hands, frankly.
Thom Hartmann: Yeah, which is basically what Bernie Sanders was suggesting doing, too. Here's the problem from my point of view: if Trump does that and is successful and bring those jobs back, the Republican Party is going to get credit for something that they have fought against through their entire history. I mean, every single one of these trade deals was authored by Republicans and passed through the both the House and the Senate by a majority of Republican votes. Trump figured out that that was a lousy position and he fought the entire Republican Party on this. Every single one of his primary opponents said he was crazy about trade. And if he does this and if he's successful, we're going to have more Republicans, more Republican policies and that gives me the creepy-crawlies.
Now, I realize you're not a political commentator, but how do I deal with this?
Eamonn Fingleton: Well, I think that there's a big if there. I have a feeling that for all Trump's nationalistic fervor he's not going to succeed. That's very unfortunately my analysis, that he has the right ideas for trade and manufacturing but the problem, the rot has just gone too far.
Thom Hartmann: And his own party is by and large opposed to all this stuff. I mean, you've got all these Republican members of Congress who are bought and paid for by industries that are manufacturing overseas
Eamonn Fingleton: Yeah, absolutely. That was the point I was going to make and also the lobbyists are just moving in and there's evidence that some of them are going to be inside his administration.
Thom Hartmann: Right. Yeah and you've got Reince Priebus as his Chief of Staff. You know the old saying, 'personnel is policy'. It looks like policy is going to be Republican policy with populist rhetoric and I think that's a prescription, that's dynamite. That's a prescription for disaster, for an explosion.
Eamonn Fingleton: I checked on Priebus today with a very well-placed source in Washington and yes, the news I have is that he's a trade ideologue, free-trade ideologue.
Thom Hartmann: Right, and, you know, he's out of Wisconsin, he's been in politics forever, he's a conventional Republican, he's held their conventional Republicans together. He sort of, you know, he's a good buddy with Paul Ryan. So it's going to be real interesting when the people in Indiana who Trump promised he was going to stop their Carrier factory from going to China, when he doesn't stop it, what do you think?
Eamonn Fingleton: Well, yeah, and it's, basically Trump doesn't have the Republican Party behind him and he has achieved miracles in getting himself elected. Maybe he'll achieve another miracle in turning the Republican Party around on these issues but it's hard to see how he's going to do it.
Thom Hartmann: Yeah, yeah. It's an amazing time that we live in and there's some some real serious challenges here. Eamonn Fingleton, commentator at Forbes magazine where way back in February he predicted Trump is coming, author of numerous books including In the Jaws of the Dragon, fingleton.net is his website.
Eamonn, it is always an honor and pleasure to have you on this program. The door is always open. Thank you so much for being with us today.
Eamonn Fingleton: Thank you Thom.
Thom Hartmann: Great talking with you. We'll be back.
Transcribed by Sue Nethercott.