Monday 5 March 2018

Trade War ahead

Trade wars get you nowhere, but they can be hard to avoid.


One of the markets of the decline of liberalism over the past 20 years has been the failure of the WTO (Previously GATT) to make further progress and build on the achievements of the mid-1990's.


There are many reasons for this;


- Globalisation has been so successful and become endemic, the need to promote trade has therefore fallen as people thought the battle was won and politicians no longer gained much political capital from signing trade deals (something in the UK at least Brexit will change).


- China has spent a long time getting into the WTO process on its own terms, and using the traditional Chinese policy of taking things very slowly, has succeeded. With the world in a great place to receive Chinese exports, China has no interest in changing the status quo.


- Also though, of course, the contradiction of globalisation is that it has been unevenly distributed. China and Asia as a whole have done very well, Europe OK but not so much, relatively America has done badly  - we may have noticed since the Great Financial Crash that politics has started to be heavily impacted by some of these changes.


- Which in turn has led to Trump and his businessmen's eye for helping out the US firms. This plays really well to his voting base. It is not very likely to help the world economy though, as tit for tat economic barriers will reduce global trade overtime and lower overall GDP.


Which in and of itself will affect the largest trading countries the most, which at the moment is the group doing the grandstanding. Of course, underlying Trump's anger are some stark truths, Chinese steel is very cheap, the central government has over-procured kit and enable effective dumping on the world market, they have done the same with Solar panels. This does indeed hurt US steel manufacturers - but longer term, it helps make cars, bridges and buildings cheaper in the US. It acts as a transfer of Chinese labour and wealth back to the US. This is a good thing, in the UK for a long time we realised that it was better to be the best at a few things or grow new industries than to try and prop up the failing ones. As a result we had an overall economic transformation, even with the deeps scars it left behind.


It requires a grand vision though to see this, which is why trade wars are the operative of base political operators. Sadly at the moment, politics across the world is very base (see Italian elections today where no centrist parties are going to be near Government, imagine the UK with a UKIP/Green stand-off as the two biggest parties), so we maybe discussing trade war impacts for sometime to come.

8 comments:

david morris said...

Tims' penn'orth


http://www.desertsun.co.uk/blog/?p=6810

Nick Drew said...

I read that China intends all the trade deals they sign around the "New Silk Road" / One Road One Belt (whatever) will have disputes settled in Chinese courts

good luck with that

(What's that you say, Mrs May? You've already agreed ..?)

Malcolm Stevas said...

So "no centrist parties are going to be near Government" in Italy? That's because the electorate has become fed up to its back teeth with those "centrist" parties. It's a shame that too few people in our country, failed by an electoral system weighted heavily against newcomers, were motivated to emulate the Italians: for as long as anyone can remember, we've been governed by a centrist duopoly taking Buggins's turn, putting on a Punch & Judy act in the House - then repairing to one of their several subsidised (by us) bars for a friendly natter.
The Tories describe themselves as "centre right", a bland euphemism for social democrats: Labour has traditionally presented itself as sort-of centre Left - though today we're offered the Marx Bros brand of batty student-Lefty gibberish.
Neither has much (if any) credibility or moral compass any more. Neither has much (if any) competence, even - though Corbyn & McDonnell carry this absence of competence, real world experience and credibility to pantomime depths of absurdity...
"Populism" such as UKIP? Bring it on. This is the Party that gained 12.6% of the vote in 2015, for one seat: the AfD in Germany had exactly the same percentage last year, and enjoys 90+ seats in the Bundestag. A lot more people here should be a lot more angry, and stop voting for the centrist charlatans with their overweening sense of entitlement to our votes.

Electro-Kevin said...

Malcolm - Indeed. The only thing I blame Boomers for is their tolerance and cowardice faced with this cosy triopoly.

The David Willetts proposal of a council tax levy on Boomers' hoarded wealth (what ? House equity ?) will see a slump in house prices. Bye bye hoarded wealth.

All it will mean is that the average £1500 a year won't be spent where the millennials work. Bye bye hair dressers, cafes, pubs and shops.

If we're going to get socialism whichever way we vote why bother turning out ?

Malcolm Stevas said...

EK - quite... I stopped voting Tory perhaps 25 years ago, declined to vote at all in a couple of GEs since there was no-one I liked or trusted standing in my constituency, and otherwise voted UKIP. As you say, why bother voting when you just get different versions of the same thing from the cosy centrists?

Anonymous said...

Willets suggestion is typical politician problem solving. Why try and do something hard, like actually fix problems, when we can just dip into taxpayers pockets?

And then they wonder why people dislike them so.

Anonymous said...

"we realised that it was better to be the best at a few things or grow new industries than to try and prop up the failing ones. As a result we had an overall economic transformation, even with the deep scars it left behind."

What are these new industries? And I see an "overall economic transformation" built on debt, both personal and national - look at our balance of payments. Our "increased household income" since 1979 has come from our wives having to work to pay for our "increased wealth" in the form of inflated house prices, and our increased consumption from that plus credit.

There's been an economic transformation since 2005, all right - in the direction of hand car washes, chicken takeaways and nail bars.

Mister Ess said...

Anon: "Our "increased household income" since 1979 has come from our wives having to work to pay for our "increased wealth" in the form of inflated house prices, and our increased consumption from that plus credit."

Exactly. And now that all the women have been subsumed into the debt ponzi, we need some new entrants to keep it all propped up. I give you: mass immigration.