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The King of Kowtow

Summary:
I suppose the North Korean leader is the best example of someone who frequently demands that his subjects kowtow. But that’s basically for domestic consumption. What about governments that try to get foreigners to kowtow? In that class, there are only three countries that matter. Number two and three are obviously China and Russia, in whatever order you choose. Russia demands subservience from former members of the Soviet Union, such as the Ukraine and Georgia. China demands that foreign companies censor speech that annoys the Chinese government. And they occasionally demand technology transfers as the price of investment. But the US is far and away the biggest abuser of kowtow. We demand kowtow in so many different areas that I could write a book on the

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I suppose the North Korean leader is the best example of someone who frequently demands that his subjects kowtow. But that’s basically for domestic consumption. What about governments that try to get foreigners to kowtow? In that class, there are only three countries that matter.

Number two and three are obviously China and Russia, in whatever order you choose. Russia demands subservience from former members of the Soviet Union, such as the Ukraine and Georgia. China demands that foreign companies censor speech that annoys the Chinese government. And they occasionally demand technology transfers as the price of investment.

But the US is far and away the biggest abuser of kowtow. We demand kowtow in so many different areas that I could write a book on the subject:

1. Sanctions. We sign an arms control agreement with Iran. Other countries cooperate. Then we elect a new president who abandons the agreement and then insists that all other countries follow his whim, despite the lack of expert opinion in his favor. No other country in the world is so arrogant in demanding that everyone agree with their foreign policy.

2. FATCA. We demand that other countries provide all sorts of private information on overseas Americans, or even people that aren’t actually Americans but happened to be born in the US. But when other countries ask us to reciprocate, we often refuse to share private information about their citizens. We are now the world’s leader in providing international tax shelters, often using state-registered dummy corporations. We demand the Swiss do what we say, but refuse to do the same. No other country is so hypocritical on tax issues.

3. Exchange rates. We demand that other countries set their exchange rates at a level that we approve of. When the Japanese tried to devalue in the early 2000s in order to escape from deflation, the Bush administration told them to stop. We get to tell the Japanese where to set their exchange rate, but they don’t get to tell us where to set our exchange rate. No other country in the world does this.

4. Industrial policy. We have all sorts of candidates, in both parties, advocating this or that industrial policy. From the discussion, you’d almost think that a country has the right to determine its own industrial policy. But that’s only true of the US. In the 1980s, we complained about Japan’s industrial policy, and today we complain about China. But how would we react if China started telling us how to run our economy? In this case, other countries do occasionally follow the US lead, but mostly in WTO-type disputes. The US is unique in demanding changes in industrial policy that are essentially unrelated to trade.

There are dozens of similar examples. It’s only fitting that the King of Kowtow has a new president who actually thinks he’s a king. Trump was enraged when a few “disloyal” Republicans had the temerity to criticize his obviously corrupt actions. But now even silence is not enough. No matter what he does, he wants GOP members of Congress to affirmatively praise his actions, regardless of how appalling they are. The level of obsequiousness that he demands would make a medieval despot like Tamerlane blush.

There are plenty of countries that are worse than Russia and China, and many more that are worse than the US. But these three countries stand out for their combination of power and arrogance. Look for India to join the club over the next few decades—they’re well on their way.

The King of Kowtow

PS. Still don’t think Trump is worse than Nixon? How about this:

DOJ lawyers sought to invalidate that request for documents on Tuesday by claiming that a key legal ruling from 1974, which paved the way for the House to prepare impeachment articles against President Richard Nixon, should no longer apply, the outlets said.

The argument reportedly stunned Judge Beryl Howell, the chief district judge for Washington, DC.

Or this:

Patrick Cotter, a former federal prosecutor who was on the team that convicted the Gambino crime family boss John Gotti, said he’s struck by the parallels between Trumpworld’s handling of the impeachment controversy and the mafia’s playbook on pushing back against charges leveled against it..

Michael Cohen, Trump’s longtime former lawyer, testified to Congress in February that the president runs his operation “much like a mobster would do.”

Former FBI director James Comey has frequently compared the president to a mob boss and said that when he first met Trump, he couldn’t shake the feeling that he felt he was dealing with the Cosa Nostra.

“It’s not about anything else except the boss,” Comey said while giving a talk at the 92Y in New York City last year. “It’s a fear-based leadership.”

FBI investigators who examined whether the Trump campaign conspired with Russia during the 2016 election also treated the case like they would an organized-crime syndicate, particularly through the use of cooperating witnesses.

Some of you thought my comments about Trump in 2016 and 2017 were hysterical, but everything I suggested is becoming obvious to anyone that isn’t blind. This is going to be fun.


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Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment".

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