The recent dustup over whether the Trump administration should withdraw the United States from the NAFTA accord cast the ongoing power struggle inside the White House in sharp relief. The conflict, often characterized as a duel between Steve Bannon and his ilk (nationalists) and Jared Kushner and his crew (“globalists,” according to Bannon), isn’t necessarily the choice we would want: who would pit wealthy elites against “burn baby burn” nationalists with the fate of the country at stake? But this is the choice we have, and we should breathe a sigh of relief that, for now, the elites are calling (most of) the shots.
The globalists who won this round are, by and large, precisely what their opponents deride them as: urban, wealthy, connected to the web of influence that flows from Wall Street to Washington, and more comfortable with a modified economic status-quo than a Jacobean recasting of society. They include the well-to-do Gary Cohn of the National Economic Council, formerly president of Goldman Sachs; Kushner, Trump’s son-in-law, scion of a New York-New Jersey real estate family; and others, such as Dina Powell, also late of Goldman, Treasury Secretary Steven Mnuchin, and Ivanka Trump.
Meanwhile, the nationalists headed up by Bannon scorn the current system as corrupt and self-serving, and they scorn the Beltway web of money and power they call the “swamp.” They scoff at expertise as an effete adjunct to the powers that be, and would prefer the broad and undefined brushstrokes of revolution to the hard work of reform. But while that can make for a great stump speech, it doesn’t work so well as governing, and it isn’t designed to.
Thus, the globalists have apparently found it easy to overtake them. Thanks in large part to their influence, the administration made a complete policy reversal on NAFTA between dawn and dusk last week, with reports in the late morning indicating that an executive order pulling the United States out of the deal was in the works, followed by late-night phone conversations in which Trump assured leaders in Canada and Mexico that he intended only to get moving on renegotiating the pact and has no current intention of torpedoing it. Those 12 hours were an apt microcosm of the first 100 days, characterized by threats, leaks, ambiguity and then volte face. That it began the way it did remains troubling; that it ended the way it did indicates that for now, actual policy is being driven not by the red-meat nationalism of Bannon and his acolytes, but instead their nemeses, the wealthy elites.
The administration’s globalists speak the same language as the hundreds of mega-company CEOs who have visited the White House these past 100 days, and they support a modified version of the liberal-internationalist economic order that has dominated Washington for decades. They (including established Republican senators such as Orin Hatch of Utah, Pat Roberts of Kansas and others) might like to see NAFTA modified to reflect, say, rules of origin in a world where products are increasingly made in many countries and not one, but they recoil from the disruption that pulling out would cause. They might agree on corporate tax reform as a means to reduce the incentives of large companies keeping trillions of dollars offshore, but not on a radical overhaul of the tax system. And they do not share a pure zero-sum view of global commerce that sees a gain for someone else as a loss for us.
While these elites are easily caricatured — Sen. Elizabeth Warren (D-Mass.) recently dismissed the group as “rich guys making each other richer” — juxtaposed to the nationalists, they appear to have at least some notion of the greater good that entails attention to the complicated lattice of policy. That means not labeling China a currency manipulator, tearing up NAFTA, pulling back from NATO, charging South Korea for missile defense and so on because of an awareness that each radical move would entail a host of radical reactions. When things are going well for you, you tend to be pretty wary of radical shifts with unforeseeable outcomes, which, it turns out, makes for better governance.
Historically, the White House has often been the scene of factions fighting for influence, but it has been some time since the infighting has been this intense and the worldviews so at odds. Franklin Roosevelt’s first years were characterized by bitter internecine battles (especially between Harry Hopkins and Harold Ickes) over who would design and control various relief programs. The acrimony between members of Abraham Lincoln’s war Cabinet was palpable. Yet, even in those cases, the clashes were more over power, influence and personality and less over grand vision.
The opposing currents in the first months of the Trump administration are certainly about power and influence, but they also represent starkly different views of the world and what to do about its problems. The economic nationalists, we now know all too well, indeed see the world as a zero-sum contest for economic gains, with a static pie from which the United States can either take a bigger slice or a smaller one, hence the focus on trade deficits as a simplistic marker of whether we are “winning or losing” at trade.
Trade deficits, however, are a lousy way to assess relative gains. The optics are simple, and the way we calculate GDP reinforces that: Negative trade balances negatively impact GDP. But that points to the limitations of GDP, not to the negative effects of trade. Cheaper Nikes from China, better phones assembled in Shenzhen, Ford assembling cars in Mexico largely for sale in Mexico, all have benefits for Americans that we do a poor job of capturing statistically. Republican senators from Texas, Arizona and elsewhere get that, which is why they were so vehement in their reaction to the possibility of disrupting NAFTA. The nationalists in the White House see only negative numbers, and believe that it means that we are down, and they (whoever they are) are up.
Yet solutions require more than an emotional response: They require expertise, or at least the willingness to look at how each action can trigger unintended consequences and to think through alternatives carefully and deliberately. The current ascendancy of the globalists constitutes a basic recognition by Trump (intuitively and unconsciously perhaps) that economic nationalism is an attitude in search of a policy, and that its only policies are the economic equivalent of starting a nuclear war. Don’t expect Trump to sound any different than he has, but actual economic policy is looking a less radical by the day. That is far cry from the reforms we need, but it is far preferable to the revolution that we do not, and for that we can thank Trump’s wealthy elites.