04/15/2017

Peter Navarro: Trump’s Nutty Economics Professor

Kevin D. Williamson, National Review

The president would do well to ignore his adviser’s advice on China.

In the collected works of Peter Navarro, there is a peculiar paradox: Some of the dullest prose imaginable challenges the sharp edge of Hanlon’s razor, the aphorism that advises us: “Never attribute to malice that which is adequately explained by stupidity.” Professor Navarro of the University of California at Irvine has hanging on the wall of an office or a den somewhere a doctorate in economics from Harvard; barring some Forrest Gump–level chain of coincidence, it does not seem likely that anything as innocent as stupidity explains his literary output, which consists of a few how-to-make-money-in-the-stock-market books (an actual title: “If It’s Raining in Brazil, Buy Starbucks”) from earlier in his career and a half dozen or so low-minded books about China with such talk-radio-ready names as “Death by China” and “The Coming China Wars,” two books that contain 80 exclamation points between them, as well as several pamphlets summarizing the main points of his books.

He is President Donald Trump’s house China intellectual, the only one of his close advisers who is a credentialed academic economist, albeit one whose area of specialty is utility companies, not international trade. (Our most famous scholar of trade economics, Paul Krugman, apparently was not available for service in the Trump administration. Pity.) Navarro has been named head of the newly created National Trade Council, a position in which he is well positioned to do a great deal of damage to the Trump administration, to the United States and its economic interests, and, possibly, to the world. That’s quite a step up for a man who was teaching undergraduate econ to business students until a few months ago.

It will not escape your notice that his career bears more than a passing resemblance to that of Elizabeth Warren. Both entered public life as academics; both attempted to build fortunes and reputations on popular financial self-help books (Elizabeth Warren offered the Dave Ramsey–ish Ultimate Lifetime Money Plan); Warren, possibly owing to her being a woman of color (Pantone code 11-0602 TPX), secured a more prestigious academic appointment than he did, but UC Irvine isn’t nothing; both individuals were instrumental in the creation of federal agencies, though Warren ultimately was prevented from leading the Consumer Financial Protection Bureau she dreamt up; both sought public office, with Warren coming to serve in the Senate and Navarro running for office four times as a Democrat, losing races for mayor of San Diego, San Diego city council, county supervisor, and California’s 49th congressional district; both have a taste for populist arguments against international trade, and both have made environmental concerns a prominent part of their anti-trade positions: “Vice President and Nobel Laureate Al Gore has been transformed by an avalanche of scientific facts from a left-wing crazy to the planet’s most authoritative political voice on the subject,” writes Navarro.

And both are battier than Bruce Wayne’s basement.

Professor Navarro, among other things, makes economics errors that would be obvious to an undergraduate. This has been commented on at some length elsewhere, most prominently after he published a review of the Trump economic plan (a review co-authored with Wilbur Ross, who is not an economist but is now secretary of commerce) in which he proffered the schoolboy argument that, because GDP is defined as the sum of consumption, investment, government spending, and net exports, eliminating our trade deficit with China would add substantially to GDP. In economics terms, he has mistaken an accounting identity for real-world causality; in layman’s terms, this is horsepucky, “a mistake that an econ professor like him really shouldn’t be making,” as Noah Smith of Bloomberg put it.

“Net exports” means “exports minus imports,” and, because the United States currently runs a trade deficit, that figure is negative. And it is not a trivial figure: Our trade deficit with China in 2016 equaled about 2 percent of GDP. But eliminating that trade deficit would not add 2 percent to GDP; imports are subtracted from the GDP model because they already are counted in other consumption and we don’t want to double-count them. As Cato’s Dan Ikenson puts it in his savage write-up of Navarro’s “economic illiteracy” — his words — in The Hill: “Imports have nothing to do with GDP — other than the fact that they increase when the economy is growing and they tend to decrease when the economy is contracting. . . . There is no inverse relationship between imports and GDP, as Navarro asserts.” He calls Navarro’s appointment an “assault on the fundamental premise that public policy should be rooted in fact and reason.”

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