Chapter 2: Trump’s Perception of the American National Capability
2.2 Trump’s Discourse on U.S. Economic Capability
國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
To truly comprehend the goals of Trump’s foreign policy and his plans to achieve them, it is essential to look at both his rhetoric and his actual reactions toward the U.S.
domestic and international challenges.
In the following two sections, the author looks at the Trump’s discourse about U.S.
economic and military powers. The author examined his rhetoric on the major underlying factors that President Trump deemed contribute to the decline of the American power and its global leadership. From the theoretical perspective, the tenets of realism do admonish that the decline of economic and military powers can ultimately tilt the balance-of-power among great powers. Therefore, Trump’s warning rhetoric cannot just come out of thin air.
The decline of economic and military powers may be relatively eroding the basis of U.S.
national capabilities, especially when we turn our focus on the debate of the issues of Sino-U.S. relations.
2.2 Trump’s Discourse on U.S. Economic Capability
On December 18, 2017, President Donald Trump released his first annual U.S. National
Security Strategy (NSS) in which he stated that “An America that is safe, prosperous, and
free at home is an America with the strength, confidence, and will to lead abroad.”19 As opposed to claiming that he set a positive strategic direction for the United States, President Trump has repeatedly criticized the previous administration for weakening the American economy by outsourcing companies and factories overseas and allowing massive illegal immigrants to enter the U.S. and take away the jobs that would have otherwise gone to19 U.S., The White House, National Security Strategy of the United States of America, December 2017, accessed December 20, 2017,
https://www.whitehouse.gov/wp-content/uploads/2017/12/NSS-Final-12-18-2017-0905.pdf.
‧
American citizens.20 However, while Trump issued ominous proclamations about the rapid decline of the U.S. under his predecessors, many political observers remained skeptical of his words.
To verify Trump’s statements, the author seeks to measure the current U.S. national capability by employing the theory of realism. Offensive realists categorize a state’s national power into latent economic power and actual military power; these two powers are interrelated in the sense that latent power encompasses the social-economic resources that can be used to construct military capability.21 A state’s economic power is mainly based on its wealth and overall population. Yet, Mearsheimer only used wealth to measure latent power because he presumed that wealth encompasses both “the demographic and the economic dimensions of power.” Although a large population has enormous potential for economic developments, it is not guaranteed to generate wealth for a state.
Wealth is a rather unsubstantial concept that has to be represented by more material-based indictors. For example, Mearsheimer used the Gross National Product (GNP) and industrial capacity as indicators of a state’s “mobilizable wealth,” which referred to the maneuverable social and economic resources that a state can translate into military assets.22 GNP is used to estimate “the total value of all the final products and services turned out in a given period by the means of production owned by a country’s residents.”23 Industrial capacity is further categorized into iron and steel production, population size, and energy consumption.
20 Tom Hamburger, Carol D. Leonnig, and Zachary A. Goldfarb, “Obama’s Record on Outsourcing Draws Criticism from the Left,” The Washington Post, July 9, 2012, accessed September 18, 2018,
https://www.washingtonpost.com/business/economy/obamas-record-on-outsourcing-draws-criticism-from-the-left/2012/07/09/gJQAljJCZW_story.html?noredirect=on&utm_term=.524a28ca9a8c.
21 John J. Mearsheimer, The Tragedy of Great Power Politics (New York: W. W. Norton), 55-82.
22 Ibid.
23 Jim Chappelow, “Gross National Product,” Investopedia, May 9, 2018, accessed July 24, 2018, https://www.investopedia.com/terms/g/gnp.asp.
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
In contrast, the author employs the real Gross Domestic Product (GDP) and the annual and quarterly GDP growth rate as the main indicators of America’s wealth. Unemployment rate, the Dow Jones Industrial Average (DJIA), and national debt are supplements to the analysis. The U.S. industrial capacity is assessed with annual steel and crude oil production.
The ensuing statistic figures are mostly extracted from the Trading Economics online databases which compiles reports from U.S. government agencies and international organization, including the U.S. Bureau of Labor Statistics (BLS) and the Bureau of Economic Analysis (BEA), the World Bank, and the World Steel Association (WSA).
To begin with, the author chose GDP over GNP as the indicator because it can better reflect the competence of the American economy. GNP is used to measure the total value of goods and services produced by the nationals of a state in one year, which includes the incomes they earned overseas, but do not cover the profits made by foreign entities in that state. Conversely, GDP encompasses the returns made by both citizens and foreign residents in that state, and do not consists the profits that its nationals generated in foreign markets.
Accordingly, in estimating the value that the American market can produce, GDP is the more qualified index.
Figure 2.1. United States GDP from 2009 to 2017. Trading Economics, accessed August 27, 2018, https://tradingeconomics.com/united-states/gdp.
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
39
As Figure 2.1 demonstrates, the U.S. GDP seems to be growing at a steady pace over the past decade. Yet one can be misguided to presume the economic conditions of a state without taking a second look at the GDP growth rate, which delineates the ratio at which a state’s GDP changes from year to year. Figure 2.2 reveals that the GDP growth has been rather fluctuant during President Obama’s administration. In fact, President Obama had an average of 1.5 percent growth rate24, and he was criticized as “the first president in modern history not to have a single year of 3 percent growth.”25
Figure 2.2. United States Annual GDP Growth Rate from 2009 to 2018. Trading Economics, accessed August 27, 2018, https://tradingeconomics.com/united-states/gdp-growth-annual.
It seems fair to remind that President Obama had inherited a crumbling U.S. economy which was wrecked by recession and years of war in the Middle East. An article in the
Politifact, a political fact-checking website, insisted that the economy performances should
be analyzed with the more reliable “quarterly” GDP growth rate rather than “annual” growth
24 Katie McKenna, “Obama’s Final Economic Record Not Great,” Fox Business, March 30, 2017, accessed on May 25, 2018, https://www.foxbusiness.com/markets/obamas-final-economic-record-not-great.
25 Ryan Teague Beckwith, “Hillary Clinton Email: Donald Trump Reaction Transcript,” Time, October 28, 2016, accessed September 28, 2018,
http://time.com/4550004/hillary-clinton-email-fbi-reopen-donald-trump-transcript/.
‧
rate.26 Citing a report from the Bureau of Economic Analysis, the article persisted that when observing quarter-by-quarter, the U.S. economic growth had in fact surpassed three percent during several periods of President Obama’s tenure.27
Notwithstanding the truth of this argument, the precipitous slumps and surges in growth within short periods of time, as seen in Figure 2.3, shows the instability of the U.S.
economy.28 For instance, economists had pointed out that “the surge in economic growth in the second and third quarters of 2014 was due in large part to a boom in energy investment.”29 This boom first began with the rapid growth and high energy demands of emerging markets like the BRICs countries. Added with the cuts in crude oil production by the Organization of Petroleum Exporting Countries (OPEC), oil price was driven to unprecedented height in the first decade of the new millennium. As a result, the U.S. was propelled to increase domestic oil production and enhance its mining technology. But when the growth in the emerging countries began to slow in 2010, energy prices tumbled and the subsequent bust dealt a heavy blow to the U.S. economy in 2014.30
26 Joshua Gillin, “Trump’s Claim About Weak Economic Growth Under President Obama doesn’t Tell the Full Story,” Politifact, October 31, 2016, accessed on September 28, 2018,
https://www.politifact.com/truth-o-meter/statements/2016/oct/31/donald-trump/trumps-claim-about-weak-eco nomic-growth-under-obam/.
27 U.S. Department of Commerce, Bureau of Economic Analysis. Gross Domestic Product, 2nd Quarter 2018 (Third Estimate); Corporate Profits, 2nd Quarter 2018 (Revised Estimate), September 27, 2018, accessed on September 28, 2018,
https://www.bea.gov/news/2018/gross-domestic-product-2nd-quarter-2018-third-estimate-corporate-profits-2n d-quarter-2018. Note that the link connects to the updated version of the report.
28 “Quarterly Growth of the Real GDP in the United States from 2011 to 2018,” Statista, accessed September 27, 2018,
https://www.statista.com/statistics/188185/percent-chance-from-preceding-period-in-real-gdp-in-the-us/.
29 Conor Sen, “2014 Had Great GDP Quarter, Too. It Didn’t Last,” Bloomberg, July 28, 2018, accessed on September 25, 2018,
https://www.bloomberg.com/view/articles/2018-07-28/u-s-economy-2014-had-a-great-gdp-quarter-too-it-didn -t-last.
30 Greg DePersio, “Why Did Oil Price Drop So Much in 2014,” Investopedia, January 29, 2018, accessed on September 28, 2018
https://www.investopedia.com/ask/answers/030315/why-did-oil-prices-drop-so-much-2014.asp.
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
41
Figure 2.3. Quarterly Growth of the Real GDP in the United States from 2011 to 2018. Statista, accessed September 27, 2018, https://www.statista.com/statistics/188185/percent-chance-from-preceding-period-in- real-gdp-in-the-us/.
The rhetoric in U.S. liberal media would contribute the current economic growth and lowering unemployment rate to President Obama, and, at the same time, condemn Trump for the insignificant growth in wages and in the numbers of new jobs created. Yet the author finds it difficult and illogical to agree with critics like Ezra Klein, who remained unwavering in the belief that President Obama should take all the credit for bringing America out of recession while the new Trump administration is to blame for the decline in U.S. economy.31 First, by their own logic, Trump should not be accounted for the inert growth at the start of 2017, as the performances in the first quarter of a new presidency is attributed to the previous administration.
31 Ezra Klein, “The Truth About the Trump Economy,” Vox, August 24, 2018, accessed on September 26, 2018,
https://www.vox.com/policy-and-politics/2018/8/24/17759940/donald-trump-economy-jobs-growth-obama.
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
Statistic shows that the American economy has turned for the better and achieved several high records since President Trump took office. For example, the annual GDP reached a historic height of 19390.6 USD billion in 2017, and the growth rate climbed to 4.1 percent in the second quarter of 2018 which is highest since 2014. Trump has also announced in early October 2018 that the unemployment rate had fell to 3.7 percent, the lowest record since 1969.32 It is noteworthy that the unemployment rate between 1948 and 2018 averaged at 5.77 percent, but the annual score in most of the Obama years had been well above this average.33 Similarly, Klein’s argument that Trump did worse than his predecessor in job creation was in clear contradiction with the facts—Bloomberg reported that 200,000 new jobs were created in January 2018; Heritage Foundation also showed that the U.S. has added 223,000 jobs in May.34
32 Donald J. Trump, “Just Out: 3.7% Unemployment Rate is the Lowest Number Since 1969!” Twitter, October 5, 2018, accessed October 5, 2018,
https://twitter.com/realDonaldTrump/status/1048197648807854080.
33 Trading Economics. “United States Unemployment Rate,” accessed on August 27, 2018, https://tradingeconomics.com/united-states/unemployment-rate.
34 See Sho Chandra, “U.S. Adds 200,000 Jobs; Wages Rise by Most Since Recession,” Bloomberg, February 2, 2018, accessed on September 30, 2018,
https://www.bloomberg.com/news/articles/2018-02-02/u-s-added-200-000-jobs-in-january-wages-rise-most-si nce-2009; Tim Doescher, “3 Million People Have Found Jobs Since Trump Took Office,” Heritage
Foundation, Jun 1, 2018, accessed on September 30, 2018
https://www.heritage.org/jobs-and-labor/commentary/3-million-people-have-found-jobs-trump-took-office.
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
43
Figure 2.4. United States Unemployment Rate from 2008 to 2018. Trading Economics, accessed on August 27, 2018, https://tradingeconomics.com/united-states/unemployment-rate.
The decrease in unemployment rate and the increase of new jobs created have caused fear about inflation. For instance, after the Bureau of Labor Statistics (BLS) released the January job report, the Dow Jones Industrial Average (DJIA) plunged 1,175 points on February 5, 2018—the largest single-day point drops in record, as shown in Figure 2.4. This plunge was aroused by the fear of inflation as the workers’ wages rose at the fastest pace since 2009.35 Fortunately, the market recovered as quickly as it had stumbled, and economists have considered it healthy for the stock prices to let off pressure rather than be overinflated and break out into a major crisis.36 Overall, the DJIA has seen multiple record-breaking performances since Trump came to office. For example, it broke pass 20,000 points for the first time in history on January 25, 2017. The Dow had again reached a record
35 Akin Oyedele, “Jobs Report Beats as Wage Growth Soars at its Fastest Pace Since the Great Recession,”
Business Insider, September 7, 2018, accessed on September 30, 2018,
https://www.businessinsider.com/us-jobs-report-unemployment-rate-august-2018-2018-9?utm_source=ths_se ptjobsreport&utm_medium=blog&utm_content=augunemploymentrate&utm_campaign=thehiringsitearticles_
b2b.
36 Avie Schneider, “Dow Plunges 1,175, The Biggest Point Drop in History,” NPR, February 5, 2018, accessed September 30, 2018,
https://www.npr.org/sections/thetwo-way/2018/02/05/583325123/stocks-extend-losses-with-dow-dropping-m ore-than-300-points-at-the-open.
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
25,000 points on January 4, 2018, and within days, it climbed to 26,000 points on January 17, 2018, marking the fastest 1,000-point rise ever seen.
Figure 2.5. Dow Jones Industrial Average from 2009 to 2018. Trading Economics, accessed September 29, 2018, https://tradingeconomics.com/united-states/stock-market.
If these indicators provide any implications, the U.S.’s wealth does seem to have been diminishing since the turn of the millennium. While it is unreasonable to attribute the decline of the American latent power to any single President, there is no arguing that their policies have brought underlying impacts. Richard Epstein, a Senior Fellow at the Hoover Institution, explored the economic implications of individual legislations passed under the Obama administration.37 Epstein approved the positive effects of the American Recovery and Reinvestment Act (ARRA), only that it was relatively short-lived and had left behind a legacy of protectionism for the long run. He also reviewed the 2010 Patient Protection and Affordable Care Act (ACA), the Dodd-Frank Wall Street Reform and Consumer Protection Act, and the 2011 America Invents Act (AIA). Epstein concluded that these three bills failed to stimulate economic growth, and had either caused confusion in the U.S. health-care insurance or laden investors with overregulation.
37 Richard A. Epstein, “Not Obama’s Economy,” Hoover Institution, August 27, 2018, accessed September 28, 2018, https://www.hoover.org/research/not-obamas-economy.
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
45
In international balance-of-power, a state’s aggregate national wealth is perhaps of less concern to offensive realists than the industrial capacity, which indicates how capable a state is in transforming its economic resources into military assets. To measure the U.S.
industrial strength, the author looked at the crude oil production and volume of annual steel production, shown in Figure 2.6.
Figure 2.6. United States Crude Oil Production. Trading Economics, accessed September 30, 2018, https://tradingeconomics.com/united-states/crude-oil-production.
Statistics show that President Obama “has presided over the biggest increase in oil production in American history,” which came as a result of the boom in shale oil production.38 By 2016, the U.S. emerged as the number one petroleum producer if liquefied natural gas is included in the count. As previously mentioned, the explosive production had led to the energy bust in 2014; but as the U.S. GDP growth rate went into freefall, the
38 Matt Egan, “America’s Biggest Oil Boom Came Under Obama,” CNN, July 21, 2016, accessed on October 1, 2018, https://money.cnn.com/2016/07/21/investing/trump-energy-plan-obama-oil-boom/index.html.
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
production momentum carried on.39 By July 2018, the crude oil had reached a record high of 10964 BBL/D/1K.40
The U.S. steel production offers a somewhat more complicated picture. Steel production averaged at 7912.19 thousand tones between 1969 and 2018. Disregard the record low output of 3,799 thousand tones in 2009, the overall production over the past decade did not seem to have deviated far from the average. In September 2018, the steel industry yielded a volume of 7,251 thousand tones. As Figure 2.7 shows, the month-by-month steel production appears to be rather fluctuant; this is perhaps caused by a number of reasons, but they are beyond the scope of this thesis.
Figure 2.7. United States Steel Production. Trading Economics, accessed October 1, 2018, https://tradingeconomics.com/united-states/steel-production.
The foregoing section has made clear of the fact that the GDP and other relevant figures do reveal that America has indeed been losing its wealth. However, according to the theory of offensive realists, the indicators used to measure industrial capacity offer a
39 Kimberly Amadeo, “Behind the U.S. Shale Oil Boom and Bust,” The Balance, May 18, 2018, accessed on October 1, 2018, https://www.thebalance.com/us-shale-oil-boom-and-bust-3305553.
40 “United States Crude Oil Production,” Trading Economics, accessed September 30, 2018, https://tradingeconomics.com/united-states/crude-oil-production.
‧ 國
立 政 治 大 學
‧
N a tio na
l C h engchi U ni ve rs it y
47
generally positive yet somewhat ambiguous view; that is, numerous underlying factors contribute to the wax and wane of state power, and latent economic capabilities comprise but a small part of national power. Having employed various indicators to measure the U.S.
latent economic power, the author then turns to look at the American military power in the next section. From the perspective of offensive realists, military capability is of the utmost importance in maintaining the U.S. international leadership and the U.S.-China balance-of-power.