David P. Goldman: Steve Bannon Understood Economic War with China, Rest of Administration ‘Defeatists’

WASHINGTON, DC - FEBRUARY 2: (AFP OUT) (L to R) White House Chief Strategist Steve Bannon and White House Chief of Staff Reince Priebus look on as President Donald Trump meets with Senate and House legislators, in the Roosevelt Room at the White House, February 2, 2017 in Washington, DC. …
Drew Angerer/Getty Images

Economist and author David P. Goldman joined SiriusXM host Alex Marlow on Monday’s Breitbart News Daily to discuss Steve Bannon’s departure from the White House, which Goldman described as “disappointing.”

“Steve Bannon was a man of vision, and I think the loss of his counsel to the president will hurt the United States,” he explained.

“In particular, as I wrote last week, Steve is the one person among the people who talk directly to the president who understood that Making America Great Again means winning an economic war with China,” he continued. “The rest of the administration are defeatists in that respect. They think we can’t win it. I think that’s one of the decisive wedge issues in the White House right now.”

“China’s economy will double in the next seven years,” Goldman pointed out. “China’s economy is as big as ours now. Seven years from now, it will be twice as big. They will be spending a lot more than we will on defense R&D and basic R&D.”

“The establishment used to say, ‘Don’t worry about the Chinese, they only steal, they only copy, they’re not creative.’ Now we’re finding out that when they want to be creative, they can,” he cautioned. “Remember, the Chinese invented everything that went into the Industrial Revolution – from gunpowder, to the printing press, to the magnetic compass. They know how to invent.”

“The question is, is America’s capacity for innovation going to be mobilized to counter that? We’ve got people like H.R. McMaster, with Henry Kissinger and other establishment figures behind him, going to the president sounding like Saruman in that Lord of the Rings movie when he tells Gandalf, ‘Gandalf, we must ally with Sauron, he’s too powerful.’ That’s what McMaster is telling the National Security Council,” said Goldman.

“If you don’t believe me, go out and read a really dreadful book by a Harvard professor called Graham Allison, it’s called The Thucydides Trap. McMaster bought a couple of dozen copies of the book and assigned that as required reading to every senior person on the National Security Council, and that’s what the book says,” he elaborated. [Note: the full title of the book in question is Destined for War: Can America and China Escape Thucydides’s Trap?]

Goldman agreed with Steve Bannon’s analysis that “we can’t bluff the North Koreans.”

“They’ve got thousands of artillery barrels aimed at the capital of South Korea, Seoul, which is only 35 miles from their border. It’s well within artillery range. They can flatten the city, kill 10 million South Koreans, in 24 hours. Unless we dropped a nuclear bomb on the gun emplacements, we couldn’t wipe them out. They’re too deeply dug in. And of course, a nuclear bomb would create fallout, which would drift across the border and kill the South Koreans too,” he explained.

“So it’s not a military option, it’s simply a matter of arithmetic. We can’t bluff the North Koreans. We can only play a long game which neutralizes them. For example, if we had the kind of missile defense that Ronald Reagan promised us back in 1983, so we could shoot down any nuclear missile they put in the air, that would pretty much clip Baby Kim’s wings,” he said.

“That’s the kind of long game that Steve Bannon was talking about – a massive response to establish unquestioned American technological superiority in strategic weapons. We lost that under Obama,” Goldman lamented.

“We’ve spent, as the president kept saying, five trillion dollars playing nation-building games in Iraq and Afghanistan and got nothing out of it. If we had spent just a tiny fraction of that money in defense R&D, building up our national labs, giving scholarships to engineering and physics students – the kind of stuff that we did when Russia put up Sputnik in 1957, the kind of things Ronald Reagan did with the Strategic Defense Initiative – if we had applied a fraction of that money, China would be terrified of us,” he argued.

“We’d be light years ahead of them. We can innovate in a way the Chinese can’t – if we try to. But it’s like a tortoise-and-hare situation: we’re the hare, we’ve been asleep, the tortoise is creeping past us,” he warned.

Goldman said it is crucial to understand that “most American companies and European companies are being offered access to the Chinese market if they give away the family jewels, in terms of technological know-how.”

“That’s how the Chinese gain a lot of the know-how. We want to shut that off, shut off the flow of technology transfer to China. A lot of American companies will scream bloody murder if we do that because they are making good money, in the short term, selling us down the river. So you’re not going to get a big corporate constituency in favor of a national security ‘America First’ kind of technology policy,” he said.

“Another thing we could do, and I’ve argued for this in a number of venues: the Defense Department is buying computer chips made in China for our fighter planes. All of these could have back doors. The security of a computer chip is built in. It’s not software, it’s hardware. So we’ve got huge vulnerability,” he cautioned.

“We should have a 100 percent ‘Buy American’ policy for all high-tech defense bills,” Goldman advised. “The contractors will scream bloody murder because it will cost them a great deal more. In fact, it will cost the taxpayers more. But there are some things we need to pay up for because they’re a life-and-death matter.”

“The main thing we should do is innovate and create new industries the Chinese can’t copy,” he said. “That’s what we did in the 1980s, 1990s. That’s how we crushed the ‘evil empire’ of the Soviet Union.”

“Now, China would love America to have the export profile of Brazil,” he added. “They’ll buy all the oil, all the liquified natural gas, all the soybeans, all the steel we want to sell them. They’re happy for us to be like a Third World country, selling raw materials and sundry finished goods. But they want to dominate high-tech manufacturing, and in my view, that’s the decisive battleground.”

Goldman stressed his thesis that the world owes Steve Bannon a debt of gratitude for backing the Trump administration down from a military confrontation with North Korea without sacrificing American policy goals for the region.

“I don’t know whose idea it was in the White House to try to bluff Baby Kim with the ‘fire and fury’ threats. The fact is, we have very poor intelligence in North Korea. The guy could be a Chinese puppet who is acting rationally and just bluffing. He could be an all-out lunatic. We don’t know. If you don’t know if there’s a lot of gasoline spilled in the basement, you don’t start tossing matches down the stairs,” he counseled.

As for China’s role in the North Korean crisis, Goldman pointed out that “China has been supplying Kim with components for his missiles.”

“It’s been widely reported in the major press,” he noted. “When North Korea launched a satellite earlier this year, the booster rocket fell into the sea. The South Korean navy claimed it, and they could see tons of ‘made in China’ components. We know very well, and the administration, in fact, has said this, that Chinese companies are supplying many components – both Chinese-made and made elsewhere – to North Korea, and sanctions were put on Chinese and Russian companies if you recall. But there’s only so much we can do to pressure China unless they’re really scared of us.”

“China now has surface-to-ship missiles that can sink American aircraft carriers. They have quiet submarines that can sit on the bottom and lie in wait for our ships to come by. They control the South China Sea because they’ve spent hundreds of billions of dollars developing the weaponry to do so. They’re no longer terrified of us,” he warned.

“In 1996, there was a Taiwan crisis,” he recalled. “Bill Clinton sent two American aircraft carriers to the Taiwan Straits. The Chinese backed down because an American aircraft carrier was the 800-pound gorilla back then. It no longer is.”

“We have a set of new technologies, particularly in ballistic missile defense, that we need to develop with crash programs, that will backflip the Chinese and make it clear that they couldn’t win a war against us. That’s how we beat the Russians in the 1980s. We didn’t have to fight them. They knew they would lose because of the massive defense buildup that Ronald Reagan instituted,” said Goldman.

Marlow asked how the United States could kick off a military renaissance that would change China’s balance-of-power calculations.

Goldman replied that President Trump should begin with a speech comparable to the one given by President Ronald Reagan at the dawn of the Strategic Defense Initiative, calling on the nation to use “all of its creative resources to do this.”

“We need several things. I mentioned a couple of them. One is, shut off the technology flow to China. Secondly, 100 percent domestic sourcing for sensitive defense goods. Then, we need to start putting the money we need to into R&D in a massive way,” he said.

“Our defense R&D is about half of what it was, as a proportion of GDP, in the Reagan years. That means to get back to where we were when Reagan was winning the Cold War, we need to double defense R&D. That’s going to be expensive, but those things always pay for themselves, because the civilian spinoffs of high-tech R&D for the military have always been hugely beneficial. That’s where we got the Internet, lasers, optical networks, semiconductors – virtually everything we use in modern technology all started with military R&D,” Goldman observed.

Breitbart News Daily airs on SiriusXM Patriot 125 weekdays from 6 a.m. to 9 a.m. Eastern.

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