Trump Adviser Peter Navarro: Reagan Critic, Industrial Policy Fan

Donald Trump always sounded just like a Bernie Sanders Democrat when talking about international trade. "We have one issue that’s very similar,” he said, “and that’s trade."  That Trump-Sanders hostility to trade liberalization, in turn, is identical to that of the AFL-CIO and the Economic Policy Institute, a leftist think tank created and largely financed by labor unions.

It should be no surprise that Donald Trump’s most influential adviser and spokesman on international trade, Peter Navarro, is a former unsuccessful Democrat politician who seems closer to an old-style Bernie Sanders leftist Democrat than to a Bill Clinton “New Democrat.”

The only academic among Trump 13 economic advisers, Navarro returned to being an economics professor at U.C. Irvine, after losing San Diego mayoral election to Republican Susan Golding. In 1993 Navarro wrote the book, Bill Clinton’s Agenda for America.

With one caveat, the book was full of glowing praise for everything Clinton promised to do – notably lots more federal spending (which, ironically, fell substantially).

Navarro’s doubts about Clinton concerned NAFTA, which Bush created but Clinton promised to change. “I thought the NAFTA agreement ought to have been more properly called ‘SHAFTA,’” says Navarro.  But he notes that “candidate Clinton later acknowledged the problems of the environment and lost jobs raised by NAFTA, and called for wage safeguards and stricter environmental regulations. It remains to be seen whether this was merely rhetoric, or a serious concern that will have policy follow-through.”

Putting NAFTA aside, giving Clinton the benefit of doubt, Navarro concluded, “if Clinton and Gore carry through with their agenda . . . we will become more globally competitive, our educational system will improve, better protection will emerge for our environment, our cities will be rebuilt, and, most important of all, hundreds of thousands of jobs will be created.”

Navarro dismissed Reagan’s seven years of 4.4% annual GDP growth as “The Failure of Reaganomics” and the “Trickle Down Rip-Off.” He thought Reagan spent far too much on Defense. Maybe so, but that helped dissolve the USSR which later made it easy for President Clinton to spend much less.

Navarro was almost as fearful of Japanese industrial dominance in 1993 as he now is of China. For some reason (perhaps the United Auto Workers), he even worried Japan would “locate many of their plants within U.S. borders to avoid the certain protectionism they saw coming.”

The way to beat such winners, he argued, was for the U.S. to become more protectionist and dirigiste. “Countries like Japan, Germany, France and Taiwan have very sophisticated industrial policies,” wrote Navarro, while “Reagan and Bush Administrations. . . [were] clinging to a free-trade philosophy.”  Without a protectionist industrial policy and generous grants and subsidies the U.S. couldn’t possibly compete, since “Japan and Germany were devoting over 10 times what the U.S. was spending on public infrastructure and new technologies.”

“The essence of a national industrial policy,” Navarro explained, “is a full partnership between government and business. . . [T]he role of government is to help a nation’s businesses compete by providing technological assistance, subsidies and protectionist measure such as tariffs and quotas.” In other words, Crony Capitalism - an open invitation to mass corruption.

Industrial policy advocate Peter Navarro may now seem a peculiar choice to advise a Republican presidential contender, but such peculiarity is not unprecedented.

John McCain’s adviser was the loyal Democrat, Mark Zandi.  He’s the so-called “independent expert” mentioned by Hillary Clinton in the first debate, and he’s the loyal hyper-Keynesian Democrat who predicted wondrous results from Obama’s “stimulus” scheme. Zandi is also the nameless “leading private forecasting firm” who’s most responsible for the Obama team’s infamously wrong Romer-Bernstein forecast of January 2009. 

McCain didn’t do so well by turning to a Democrat ideologue for economic advice. That lesson was apparently lost on Mr. Trump.