Following President-elect Trump's surprise phone call on Friday with the Taiwanese President Tsai Ing-wen, the response has been predictable if not disheartening. Academics in D.C. this morning are claiming that, “Trump…doesn’t have clue.” An expert at the University of California added that the call was “impulsive.”
Regrettably, my Democratic Party pushed back too. By its measure, Trump demonstrated his “incompetence” and threatened our national security. Senator Chris Murphy (D-CT) went so far as to say that Trump’s actions might push the nation into war with China.
What academics and my party don’t understand is that he’s not interested in starting a war. He simply recognizes that we’re already in one. And he’s giving voice to its long-suffering victims: millions of voters in places like North Carolina, Ohio, and Michigan.
To understand the battlefield, readers should travel to North Carolina and talk to the former workers at Alpha Aluminum. For decades, these swing-state voters produced foil for eventual use in cigarette packages. This past summer, however, over 100 American workers lost their jobs. The reason? Cheap Chinese aluminum imports.
The result? Carolinians are scrambling to feed their families while workers in faraway Zhenjiang collect what used to be an American paycheck.
The story of Alpha is the story of U.S. manufacturing for the past three decades. Economists in liberal enclaves pushed for “globalization,” arguing that cheap goods made abroad would fatten the pocketbooks of all us back here in the United States. Despite pleas from unions, our elected leaders happily agreed. Both Republicans and Democrats signed up for NAFTA and, later, China’s entry into the World Trade Organization.
But all did not go well. From steel plants in Ohio to furniture factories in North Carolina, American companies suddenly found themselves competing against Chinese labor that paid a few pennies to each of Joe Six Pack’s dollars. You don’t need a PhD in Keynesian economics to predict the result: U.S. companies shut down, or moved operations abroad.
To be sure, Americans have gotten a lot of cheap goods in return for this deal. But there’s a catch: millions of voters no longer have the jobs – or a livable income – to afford them. Initially, economists believed that this would be a temporary condition. Surely, they argued, these unemployed workers would find new jobs that paid just as good as the old.
Last summer, however, academics released a study that took 38 pages to acknowledge the obvious: they were wrong. It turns out that our political class had sold off the American dream to the Chinese and given blue-collar workers – and their communities – an economic nightmare in its place.
But it gets worse. That’s because China hasn’t been content to just take American jobs through unfair competition. They’re stealing them via cyber-warfare too.
Consider the case of U.S. Steel. In 2011, the Chinese government hacked its way into U.S. Steel’s computer systems and stole trade secrets. They passed the information to an assortment of Chinese steel companies, allowing these competitors to produce advanced steel products. As a consequence, we lost market share, and jobs.
Or consider the case of American Superconductor, which produces advanced software for wind turbines. In 2011, the company discovered that the Chinese Government had stolen its source code, giving it to their own corporation Sinovel. The result? Over 600 American workers lost their jobs and the company took a $1 billion hit in shareholder value. Adding insult to injury, China’s Sinovel later sold its wind turbines to the State of Massachusetts, paid for with taxpayer dollars.
The Chinese goal in all of this is clear: grow their economy through theft, and at the expense of American innovation.
Smart Democrats know this. And, indeed, President Obama made a series of threats to the Chinese demanding that they stop. But, according to my former colleagues in the intelligence community, the hacking continues.
Enter President-elect Trump and his “undiplomatic” phone call.
Only Mr. Trump knows why he accepted the call from China’s nemesis, Taiwan President Tsai Ing-wen. But Trump spokeswoman Kellyanne Conway has made it clear that the President-elect was fully aware of the call’s implications. And reporting from Trump insiders suggests that the phone call was part of a long-planned chess move to warn Beijing that our relationship was about to change.
Politically, Trump has now beaten Democrats twice in one week. His efforts in Indiana to save jobs at Carrier made him look tough and focused on the American worker. And now he’s pushing back against the greatest job killer of all: Communist China.
So rather than bash Trump reflexively, I beg my party to be smarter. Stop broadcasting knee-jerk press releases over phone calls, especially when they’re designed to punish a thief. Instead, let’s double down on Trump’s move.
How? Debt forgiveness.
China owns $1.3 trillion of U.S. debt, which is a massive burden that could otherwise go to the rebuilding of our inner cities and crumbling infrastructure. A savvy Democratic Party could suggest that Trump renegotiate that debt, deducting the total cost of what they’ve stolen from American industry – and American workers. Costs of cyber warfare on the U.S. economy are calculated at some $250 billion a year. Trump should work with the CIA, NSA, and Departments of State and Treasury to tally China’s responsibility from that amount and make them pay through bare-knuckle negotiations.
Make no mistake, Democrats cannot simply be an echo chamber for the President-elect as he tackles tough issues abroad. The country needs a faithful opposition to hold him accountable, especially when it comes to conflicts of interest related to his many foreign resorts and buildings. To the point, there are troubling reports that he’s considering a hotel deal in Taiwan’s capital Taipei.
Still, we have to be smarter than simply being the Party of No, especially when it comes to taking on China. Not only is it a political loser, we’ll be viewed as cowardly. Beijing has gotten away with economic murder for far too long. It’s time we fought back.