Having been at the inception of the international trading order, first for The Economist magazine and later with Morgan Stanley, I can tell you that the initial reasons for unleashing globalization have long been forgotten.

It’s really very simple.

If someone is making a ton of money off of you, they are less inclined to blow you up. Profits are a great pacifier, and no one wants to destroy the people who have been buttering his bread.

During the 1960s, the US defense establishment went into a panic when China exploded its first atomic bomb.

Some 59 years later, the exponential growth of trade between our two countries have caused the risk of a mutual nuclear war to fall to near zero.

And what country in the world today would love to bomb the US off the face of the earth if it had the remotest ability to do so?

North Korea, which conducts no trade to speak of with the US.

There is another big reason why protectionism fails.

It is counterproductive in its impact on the American economy.

And not in a small way.

There are more than 45 million Americans living in abject poverty, stretching every dollar they have to make ends meet, saving nothing.

The apparel industry employs 135,000 Americans.

Can one really justify tariffs that increase the price of clothing for the 45 million in order to save a few of the 135,000 low-wage jobs?

A three-year 15% tariff enabled domestic producers to raise their prices, thereby increasing the costs of many American manufacturers. 

By one estimate, each U.S. job “saved” cost $550,000 as the average bolt-nut-screw worker was earning $23,000 annually.

Ronald Reagan imposed “voluntary restraints” on Japanese automobile exports, thereby creating 44,100 U.S. jobs.

But the cost to consumers was a staggering $8.5 billion in higher auto prices, or $193,000 per job created, six times the average annual pay of a U.S. autoworker.

And there were big job losses in sectors of the economy into which the $8.5 billion of consumer spending could not be spent, like clothing.

 

In 2012, Barack Obama boasted that “over a thousand Americans are working today because we stopped a surge in Chinese tires.”

But this cost about $900,000 per job, paid by American purchasers of vehicles and tires.

The non-partisan Peterson Institute for International Economics says that this money taken from consumers reduced their spending on other retail goods, bringing the net job loss from the job-saving tire tariffs to around 2,500.

I could go on and on.

In researching this article, I stumbled across the map below showing the largest trading partner for each individual state.

While most states have Mexico or China as their largest trading partner, you would NOT believe some of the results!

Nevada-Switzerland
South Carolina-China
Delaware- Belgium
Florida-Brazil
Connecticut-France

So the bottom line here is to let free-market capitalism work unrestrained, and let whatever creative destruction taking place proceed full speed ahead.

Creative destruction is something the US does better than anyone else.

It’s why the US still has the largest and strongest economy by a mile, with the best major country long-term growth rate.

Don’t mess with success. You may not like the alternative.

 

 

Marines are familiar with the concept of the ‘Old Breed.”

In WWI, it was a reference to those who fought the dreaded Huks in hand to hand combat in the Spanish American War in the Philippines. In WWII, it was those who fought in WWI and the banana republic wars that followed. During Vietnam, if was a reference to WWII veterans.

Today General James Mattis has “Old Breed” status in the new Marine Corps. The corps knows him as the “Warrior Monk,” a reference to his personal library of 7,000 books, almost entirely in military subjects. His code name was “CHAOS.”

Troops call him “Mad Dog,” an ironic reference to his modest, controlled approach to everything. In fact, every rank gets a new reading list of military history when promoted so Mattis knows how to precisely address them with future orders.

So, when I had the opportunity to meet him with some senior officers at the Marines Memorial Club in San Francisco, I jumped at the chance.

My family has long considered Mattis our in-house general. As a commander of the First Marine Division, he was my boss in the Gulf War and my nephew’s in Iraq. Both my father and my uncle served in the Marine First Division on Guadalcanal, which I will be visiting in a memorial ceremony in January.

General Mattis was the Secretary of Defense fired by Donald Trump at the end of 2018. Mattis gave two months' notice to ease the transition to the next Secretary of Defense. In one of the pettiest moves I have ever seen, Trump refused to accept the notice and ordered him out of his office immediately.

The big difference Mattis had with Trump was over the value of our foreign allies. Mattis considers them essential, having managed large multinational forces in the Persian Gulf War, the Afghanistan War, and the War in Iraq.

Trump considers allies useless and expensive. Trump won and Mattis walked, preceded by General H.R. McMaster, another intellectual leader of our modern military.

Today, Mattis absolutely refuses to speak on the matter, unwilling to comment adversely on a former commander while still in office. Once Trump is out, it may be another matter. I can’t wait.

It was great listening to Mattis with a group of insiders, several of whom who had served with him in past campaigns. Occasionally, he’d say, “Thanks for laying out that minefield in Iraq right when I needed it,” or “We really appreciated those helicopters you gave us in Afghanistan.”

Mattis is highly critical of Chinese expansion in the South China Sea, the so-called “War of the Dots.” He sees Russia’s primary goal as the breaking up of NATO, crucial for Western Europe’s defense. He believes that climate change is a major threat to national defense.

Mattis is also in favor of the mutual defense with Japan. Mattis liked to inspect the front lines firsthand and more than once a Marine found that the general had dove on top of them to avoid incoming fire.

Mattis, a native of rural Washington state, came into the Marine Corps as a member of the naval ROTC in 1972. His reading of history is so extensive that he believes every contemporary battle has already been fought sometime in the past. All he has to do is identify which battle in history is being repeated and he will know the outcome.

One has to be an avid historian just to be following what he is saying. In the course of an hour and a half, I strained to recall references to Xenophon, Von Clausewitz, Bismarck, Napoleon, Patton, and the Battle of Fallen Timbers. The Persians clearly blew it at the Battle of Thermopylae in 480 BC.

Mattis supports the “two-state solution" for Israel, arguing that west bank settlement are a threat to peace. He didn’t believe that the Iran Nuclear deal was a perfect agreement, but thought it was a mistake for Trump to tear it up. Mattis has never been married, devoting his entire life to the Marine Corps.

As our meeting came to an end, there were even a few comments about him making a future run for the presidency, which he laughed off. As I walked out, I thought, “Wow, they certainly don’t make them like that anymore."

Jim Mattis is two years older than me.