The Wall Street Journal - 07.09.2019 - 08.09.2019

A12| Saturday/Sunday, September 7 - 8, 2019 ** THE WALL STREET JOURNAL.

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“She’s completely untrainable...

every morning I still have

to sit on her head.”

THE WALL STREET JOURNAL

Japan Is Not Keeping Agreement With Korea

Your editorial “Protectionist Diplo-

macy Goes Global” (Aug. 3) correctly

describes the recent Japanese export-

control measures against Korea as

“retaliation.” The Japanese govern-

ment’s argument in its Aug. 23 letter

(“Japan Is Adhering to Its Treaty

With Korea”) rings hollow given

Japan’s shifting rationale.

The Republic of Korea Supreme

Court affirmed the right of the plain-

tiffs—Koreans who “were brought

against their will and forced to work

under harsh conditions” (in the

words of the Japanese delegation to

Unesco in 2015) for companies that

were part of Japan’s wartime indus-

trial machinery—to be paid compen-

sation by the defendants. The plain-

tiffs had tried their cases in Japan,

encouraged by Japan’s own position

that individual rights to claims had

not been extinguished.

Korea has faithfully complied with

the 1965 claims agreement with

Japan and has no intention of break-

ing it. Without negating the agree-

ment, the Supreme Court ruling

points out that damages suffered by

the victims of forced labor directly

linked to the illegal colonial rule and

war of aggression by Japan were not

covered by the agreement as Japan

had refused to accept legal responsi-

bility for the colonization of Korea

during the prolonged negotiations

leading up to the agreement.

We have endeavored to find a for-

mula that would fulfill the Supreme

Court judgment while keeping the

1965 agreement intact. Unfortunately,

Japan has stonewalled dialogue and

instead retaliated on the trade front,

while propagating its unilateral claim

that Korea is violating international

law. At the heart of the problem is

Japan’s historical revisionism and un-

willingness to fully come to terms

with the past. But we stand ready to

engage in dialogue with Japan to

overcome the challenges and work to-

gether toward a shared future.

KIMIN-CHUL

Foreign Ministry Spokesperson

Republic of Korea

Seoul

Pepper ...

And Salt

Let’s Debate How Best to Measure Inflation

U.S. Bureau of Labor Statistics Com-

missioner William Beach’s response

(Letters, Aug. 30) to our “Americans

Are Richer Than We Think” (op-ed,

Aug. 22) is instructive. He rightly

notes that the Consumer-Price Index is

widely used, that the BLS is impartial

and transparent, that both measure-

ment and operational errors are mini-

mized, that the BLS conducts rigorous

research and that many improvements

have been made since 1978. We know

all that because one of us was the as-

sistant commissioner in charge of

many of those improvements and even

co-authored a paper in the Journal of

the American Statistical Association

with former Commissioner Janet Nor-

wood analyzing them.

It is really striking that Mr. Beach’s

response doesn’t directly address ei-

ther of the two substantive points of

our paper.

First, at no point does he contradict

our conclusion that the chained CPI-U

would be a better choice for inflation

adjustments to all economic indicators,

government transfer payments and

taxes. This index was developed and

published by the BLS and is a perfect

example of the research he praises. We

would have expected him to welcome

the wider application of this important

breakthrough from the BLS.

Second, he offers no evidence refut-

ing the findings that significant re-

search continues to show an upward

bias from the introduction of new

items. Much of the relevant research

has been done by he BLS, and we urge

the administration and Congress to

support greater efforts to make im-

provements. Many researchers in aca-

demia, business and the BLS itself

know how to do this. What is missing

is the will and direction to get it done.

We welcome his invitation for de-

tailed technical discussions and ea-

gerly accept.

PHILGRAMM

Helotes, Texas

JOHNEARLY

Ridgefield, Conn.

Mr. Gramm is a former chairman of

the Senate Banking Committee. Mr.

Early is a former assistant commis-

sioner of labor statistics for consumer

prices and price indexes.

CORRECTION

The AARP’s 2017 revenue from roy-

alties was $908 million. The figure

was misstated in the Aug. 30 op-ed

“AARP’s Interests Diverge From Its

Members’.”

The Trade Uncertainty Principle

P

resident Trump tweeted Friday that
“The Economy is great. The only thing
adding to ‘uncertainty’ is the Fake
News!” Sorry, sir. The econ-
omy is fair to good, but it’s no
longer as great as it was last
year, and a major reason is
the uncertainty caused by Mr.
Trump’s trade policy.
The President is right that
many in the media are cheerleading bad eco-
nomic news for political reasons. They want
him to lose. Certainly it’s amusing to see liberal
economists who denied any damage from the
uncertainty of Barack Obama’s hyper-regula-
tion now fret about the uncertainty from trade
policy.
But these columns have been consistent in
pointing out the harm from both, and our goal
has been to prevent economic damage and
maintain the faster GDP and wage growth in
2017 and 2018 that were sparked by Mr.
Trump’s tax reform and deregulation policies.
Our goal is to prevent a recession, not to talk
the country into one, and it does no one any
good to ignore reality.
On that score, two reports this week show
the trade damage. Friday’s labor-market report
for August shows that job creation in the
goods-producing economy has slowed to a
trickle. Mining and logging lost jobs for the
third month in a row while manufacturing pro-
duced a mere 3,000, after only 4,000 in July.
This reflects declining demand for U.S. goods
around the world due to slower growth abroad
caused in part by Mr. Trump’s protectionist
shock to the global trading system.
The evidence for protectionist damage has
been clear for months in corporate earnings re-
ports and the declining pace of business in-
vestment, as CEOs cite policy uncertainty for
being more cautious. And now comes statisti-
cal confirmation in a study released this week
by Federal Reserve economists.
The economists did a statistical analysis of
newspaper articles and earnings-call tran-
scripts to measure what they call “trade policy
uncertainty,” or TPU. They then used that and
other data to estimate the impact of TPU on
economic growth and industrial production in
the U.S. and the world.
“We find that the rise in TPU in the first half
of 2018 accounts for a decline in the level of
global GDP of about 0.8 percent by the first
half of 2019,” the economists write. That dam-
age would be diminishing now if trade tension
had abated, the study shows.
But the economists cite the impact of a sec-
ond wave of “TPU shocks” in the second quar-
ter of this year. That’s when the China-U.S.

trade talks broke down amid mutual acrimony

and Mr. Trump used tariff threats to coerce

Mexico to reduce the flow of migrants from

Central America.

“ThetotaldragonGDP

from the two waves” of trade

tensions “is expected to in-

crease through early 2020, cu-

mulating to an impact of just

above 1 percent,” the econo-

mists write. That’s a big number and no mere

abstraction. It’s essentially the difference be-

tween the 3% annual GDP growth trend follow-

ing tax reform and the 2% path of recent months.

The Atlanta Fed is now predicting that growth

in the third quarter may be a mere 1.5%.

Slower growth means less job creation and

slower wage gains. The shame for economic

policy is that this also gives the political left

an opening to dismiss the gains from Mr.

Trump’s other policies. These should be unde-

niable and they are clear even in the mediocre

August labor report that showed an increase

of 130,000 net new jobs.

The jobless rate for black Americans fell

0.5 percentage points to 5.5%, the lowest since

the Labor Department began keeping track in

1972. These monthly data can fluctuate be-
      cause of relatively small sample size, but the
      black jobless rate is down 0.8 percentage
      points from a year earlier. The jobless rate for
      Hispanics fell 0.3 points to 4.2%, also an his-
      toric low.
      The labor participation rate is up year over
      year by 0.5 points to 63.2%, and for prime age
      workers age 25-54 it has climbed back up to
      82.6%, not too far from pre-recession levels.
      Gains in average hourly earnings are holding
      at 3.2% year over year and close to 4% if you
      include the increase in hours worked. This is
      the reason Americans give Mr. Trump a high
      approval rating for the economy.
      iii
      Mr. Trump’s trade policy has put all of this
      laudable progress at risk. The services side of
      the economy, which is less dependent on trade,
      has been resilient, and consumer spending has
      held up well. This may help the economy skirt
      a bigger downturn that would unwind these
      gains and create an opening for Democratic
      proposals that are much further to the left
      than Mr. Obama’s.
      But Mr. Trump and Republicans should be
      especially worried about the Fed’s estimate
      that the trade damage will continue through
      early 2020. He may not want to believe any-
      thing from the Fed. Then again, we predicted
      this result two years ago. Bad policies have
      negative consequences, whether they come
      from the right or left.

New evidence that

tariff shocks have put

economic gains at risk.

Long Live the Incandescent Bulb

G

ood news, Americans. If you like old-
fashioned incandescent light bulbs, you
can keep buying them. The Energy De-
partment on Wednesday ex-
tended the lifespan of incan-
descents, which the Obama
Administration in its twilight
sought to extinguish.
Among Congress’s dimmer
ideas was to create lighting ef-
ficiency standards in 2007 that effectively man-
dated the phase-out of incandescent bulbs.
Americans were told higher-efficiency bulbs
would save them thousands of dollars and re-
duce the nation’s carbon emissions. Where have
you heard this before?
Conventional incandescents have already
been supplanted by higher efficiency “halogen”
bulbs that are virtually indistinguishable. But
the Obama Administration in its waning days
sought to ban halogens too and extend effi-
ciency standards to certain incandescent lamps
that were exempted by Congress.
The Trump Administration is proposing to
rescind the Obama regulations. “More stringent
standards are not economically justified,” the
Energy Department concludes.
While high-efficiency lights like LEDs can re-
duce energy costs, their up-front costs are
higher. Depending on the light fixture, consum-

ers may not make up the purchase price for

years if at all. The Energy Department calcu-

lates that the payback period for halogen infra-

red lights (which are more ef-

ficient than regular halogens)

is three times longer than the

product life.

The Trump Administration

will allow consumers to do

their own cost-benefit analysis

including the functional and aesthetic trade-offs.

A homeowner in New York where electric costs

are among the highest in the country and utilities

subsidize efficiency improvements may make a

different choice than a renter in Dallas.

Liberal groups are predictably howling that

this lighter regulatory touch will increase car-

bon emissions. But many consumers will proba-

bly still replace incandescents with LEDs as

they become less expensive and more func-

tional. The price of a 40-watt LED bulb has de-

creased to $2 from $50 in 2011 as the technol-

ogy has improved. Consumers can now also

adjust the brightness and color of LEDs.

Even the National Electrical Manufacturers

Association, which supports giving consumers

a choice, says this “will not impact the market’s

continuing, rapid adoption of energy-saving

lighting.” At least the Trump Administration is

letting there be choice.

The Energy Department

will now allow you to

choose your lighting.

Death of a Dictator

A

frica’s postcolonial era produced many
tyrants, but few as destructive as Zim-
babwe’s Robert Mugabe. The perverse
accomplishment of the dicta-
tor, who died Friday at age 95,
was to make a thriving country
impoverished, corrupt and op-
pressed.
Mugabe was born in the
British colony of Southern
Rhodesia and studied in South Africa. He became
an enthusiastic Marxist and joined his country’s
independence movement in the 1960s. The for-
mer schoolteacher turned into a guerrilla com-
mander and served more than a decade in prison.
After Zimbabwe became an independent state,
he was elected Prime Minister in 1980.
Widely reviled at the end of his life for his
many abuses of power, he was feted across the
globe earlier in his career by politicians and in-
tellectuals who should have known better. He be-
came a champion of anticolonialism on the left
and was even knighted by Britain in 1994. By
then the military he controlled had killed thou-
sands of political opponents and civilians.
Today Zimbabwe is a broken land thanks to
his authoritarian politics, socialist economics
and corruption. Unlike magnanimous Nelson

Mandela in South Africa, Mugabe seized produc-

tive farmland from white owners. The economy

collapsed as capital fled and hyperinflation took

hold. Mugabe adopted a para-

noid style that blamed the out-

side world. His countrymen

saw through the ruse of their

Savile Row-suited oppressor

and periodically tried to chal-

lenge his rule, but he hung on

by violently suppressing dissent.

Mugabe died out of power after he was de-

posed by an erstwhile deputy in 2017. Yet even the

disaffected cronies who ousted him find some

value in Mugabe’s old-left rhetorical flights. Pres-

ident Emmerson Mnangagwa Friday called his

former boss “an icon of liberation, a pan-African-

ist who dedicated his life to the emancipation and

empowerment of his people.” The left, especially

in Africa, picked up the theme.

Other Africans know better, which is why

Zimbabweans periodically tried to rebel against

Mugabe’s rule and why recently other govern-

ments have abandoned socialism. Mugabe’s leg-

acy is a nation in tatters with few mourners

among average citizens. His admirers in Africa

and the West, including New York Mayor Bill de

Blasio, might ponder why that is.

Admired on the left,

Robert Mugabe led a

thriving country to ruin.

REVIEW & OUTLOOK

OPINION

James Mattis on Duty and Our Democracy

Gen. James Mattis has done his

country an important further service

with his essay “Duty, Democracy and

the Threat of Tribalism” (Review,

Aug. 31). It is an encouraging insight

into the values that animate not only

him but the great majority of the

men and women who serve the U.S. It

also provides a timely warning

against scorched-earth partisanship. I

do, however, have two reservations.

First, he states that “ideology

should have nothing to do” with the

decision whether to serve a particular

administration. This idea is defensi-

ble only up to a point. The word “ide-

ology” is a little tendentious, and had

he instead written “values” or “moral

standards,” the potential dangers of

this injunction to serve whoever hap-

pens to be in office would have been

clearer. It was obvious in 2016 to any-

one who cared to look that President-

elect Trump had been an unscrupu-

lous (and incompetent) businessman

before running for office, that he had

trafficked in racist incitement, that

he held crude views about interna-

tional relations inconsistent with the

quest for a more humane, peaceful

and prosperous world.

Second, in his recitation of the

qualities needed in a leader—intellec-

tual agility, respect for subordinates,

appreciation for the importance of al-

lies, a rejection of tribalism—Gen.

Mattis implicitly condemns their ab-

sence in President Trump. But he

oddly fails to include integrity in this

list. Perhaps for someone like himself,

its inclusion went without saying, but

for anyone charged with sending

young men and women into harm’s

way—and certainly for someone re-

sponsible for decisions of war and

peace—nothing is more important.

COL.S.R.STURM (RET.)

USAF

Kraainem, Belgium

The admiral with whom Gen. Mat-

tis worked at NATO seemed in not-

too-subtle a way like President

Trump, who seems unable to coach

and get the best from people, who

rather screams: “More tariffs.” It

sounds like Gen. Mattis would love to

have the opportunity to tell Mr.

Trump: “Go home.”

I wonder whether Gen. Mattis is

offering himself to the American peo-

ple for one more job. Knowing his

modest, gosh-not-me demeanor from

working with him when he was a ma-

jor, I suspect he would deny it. Ah,

would that the next president be a

combination of supposed Democratic

and Republican values, fiscally re-

sponsible, congenial with allies, car-

ing about the environment and effec-

tive in ameliorating our economic

society for all Americans. Jim Mattis

fits that description.

CLARICED.ANDERES

Saunderstown, R.I.

Gen. Jim Mattis writes that the

Marine Corps has an admonition:

“When you’re going to a gunfight,

bring all your friends with guns.” But

the friends who show up to a gun-

fight need to actually bring guns and

in sufficient number to be more than

window dressing.

RICKCUNNINGTON

Oro Valley, Ariz.

Gen. James Mattis and two presidents.

NICHOLAS KAMM/AFP/GETTY IMAGES