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The costs of America’s lurch towards managed trade

K1052

Lifer
Aug 21, 2003
35,197
8,521
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The agreed increase in sales to China is large and rapid. According to an analysis by Chad Bown of the Peterson Institute for International Economics (with whom your columnist hosts a podcast), China has, in effect, pledged to increase its purchases of certain American agricultural products by 60%, and manufactured products by 65%, by the end of this year compared with levels in 2017 (see chart). This must happen regardless of economic conditions in China
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You could feed me 4 manhattans and I STILL wouldn't remotely believe this will happen.
 
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Vic

Elite Member
Jun 12, 2001
47,660
7,735
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Funny how much 'free market capitalist' Republicans hate free market capitalism.
 

1prophet

Diamond Member
Aug 17, 2005
5,210
456
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Greed is good and profit only matters, the Achilles heel of western democracies especially the United States,

American businesses believed they found a pot of gold without all those costly strings such as living wages, healthcare, environmental laws, labor laws, and safety rules as well as all the taxes and maintenance costs of having a state side factory, you know the trickle down that actually works but cuts into that almighty sacred profit,


and China figured out how to take advantage of it while playing the coolie to American businesses under the guise that they will one day become a modern democracy, democracy through free markets, or so Westerners naively believed.

Trump is 20 years too late trying to close that barn door because that Chinese horse left long ago.

In 2001, the Americans and Europeans naively thought that China was moving toward a market economy and would respect the rules of the World Trade Organization. Nearly 20 years later, they are disillusioned.

In accepting China into the World Trade Organization in 2001, Western leaders were largely misled. Some 20 years later, the European Union and the United States are aware of being tricked. It’s a painful awakening. The rise of populist movements, questioning of globalization, widening of inequalities and the risk of trade wars are the embodiment of this. The West is paying today for its naiveté regarding China’s ways.

In anchoring China to the commercial system built at the end of World War II (by the General Agreement on Tariffs and Trade, then by the WTO), Brussels and Washington thought at the time that Beijing was going to adjust its economy, that China would gradually move toward a market economy and respect the rules of a liberal, non-command economy.* Europe and America thought about the opening of a market of more than 1 billion avid consumers of goods “made in America” or “made in Europe.”
Bill Clinton Defends the Addition of China to the WTO

In 1999, Bill Clinton, then president of the United States, ardently defended the membership of China in the WTO. “We’ll gain tough new safeguards against surges of imports, and maintain the strongest possible rules against dumping products that have hurt Americans in the past. … Bringing China into the WTO … will promote the right kind of change in China. ... Encouraging China to play by international rules is an important step toward a safer, saner world,” he claimed. That was a wonderful promise that still hasn’t come to pass.

Since joining, China has been playing its own game. It has taken a very different path from what the West anticipated.

“The WTO was conceived as an international organization aiming to facilitate commerce between market economies, in which the role of the state is limited,” explained Elvire Fabry, senior researcher at the Jacques-Delors Institute, in a memo penned last May. In 2001, the challenge was colossal for Beijing. Its economy rested on a very large public sector mostly run by the central government. The West set a deadline of 15 years to make the necessary changes associated with privatization and deregulation of state-run enterprises. Without those changes, the entire WTO would be in danger, a warning that today seems prophetic.

Today’s China is characterized by reinforcement of the powers of China’s president for life (Xi Jinping), an increasingly authoritarian regime, the omnipresence of the state in the economy, large government subsidies and the persistence of government-owned enterprises – this is so far from the standards set forth by the West that in 2016, Washington and Brussels reneged on their promise to characterize China as a free-market economy.
China Doesn’t Respect WTO Rules
The mistake is to have thought that in China, state-run capitalism would be able to cede ground to market capitalism, because for Beijing, the Western model is in decline.

There is another significant difference: China doesn’t have the same notion of time as Europe or America. An example? A Western company would never finance a project that would not be profitable; not so with China, which thinks in the very long term. With its decades’ worth of public financial power, it doesn’t need to concern itself with short-term profitability unless its strategic interests call for it. This is that much easier when the state maintains a chokehold on the economy, which would be unthinkable in the West’s capitalist system.

Last May, the European Union ambassador to the WTO estimated that the current global trade imbalance and production overcapacity are due to non-free market manufacturing methods. Since 2001, researcher Fabry again observed, sizable Chinese government subsidies have focused as much on the steel and glass industries as on the paper industry, or even the spare car parts industry. And whether or not an attempt at Chinese economic liberalization has actually been made since the financial crisis, the emphasis on state enterprises has only been reinforced. “Today they represent close to 40 percent of China’s core industrial assets and 80 to 90 percent of market share in strategic industries,” Fabry said.

Ultimately, for all China says about the merits of free and open markets, it has let itself off the hook. Asked about the naiveté of the West, Pascal Lamy, former director general of the WTO, admitted in an interview in Le Monde last June, “China paid a lot more for its acceptance into the WTO in 2001 than other developing countries. [...] Two particular issues should have been handled better – government subsidies to businesses and access to public contracts – from the moment China started developing quickly.” Let’s not forget about intellectual property theft and misappropriation of foreign technology, which the European Union and the United States are more and more forcefully denouncing. Apart from the fact that the economy is more closed in China than elsewhere, foreign companies face all sorts of intimidation if they don’t transfer their know-how to the Middle Kingdom.**
’Made in China 2025’ Fear

The Chinese government’s “Made in China 2025” plan offers a perfect illustration of local practices. For China’s economic partners in Europe and the United States, this plan could have offered them opportunities. “In principle, the global economy has good reasons to welcome China in its search for increased innovative capacity, on the condition that China respects the principles and rules of the open market and fair competition,” noted the Mercator Institute for China Studies in its study “Made in China 2025,” published in 2016. “However, in its current form, ‘Made in China 2025’ represents exactly the opposite: the government systematically intervenes in the national markets in order to encourage and facilitate the economic domination of Chinese businesses and handicap foreign competitors.” Washington and Brussels have reason to rage against Beijing. The time has come to reassess commercial relations and reform the rules of the WTO. Brussels and Washington must again bring China to the negotiating table, and not get fooled again.

*Editor’s note: Unlike market economies such as the U.S., England and Japan, a command economy is organized by a centralized government which owns most, if not all businesses, and whose officials direct all the factors of production. China, North Korea and the former Soviet Union are examples of command economies.

**Editor’s note: Middle Kingdom is the Chinese name for China; it dates from around 1000 B.C., when the Chou Empire believed it occupied the middle of the earth, surrounded by barbarians.
 

pmv

Diamond Member
May 30, 2008
6,971
2,285
136
Can't say I'm convinced that China's admission to the WTO is the source of all populism and social dischord in the West, any more than Putin's social media team are. Still seems to me to be largely self-generated.

But there does seem to be something in it. Why, though, if China is still a 'command economy' has it suddenly become so much more succesful at it? How come that led to economic stagnation and eventual collapse for the Soviet Union, and starvation in North Korea, and to chaos in the old communist China? Clearly it is not a 'command economy' in the traditional sense. It's at least partially capitalist, red-in-tooth-and-claw.

How come the communist world has become so much more effective at undermining the West since it stopped being recognisably communist? It seems like the lesson is 'if you can't beat them, join them...and then beat them from within'.
 

Perknose

Forum Director & Omnipotent Overlord
Forum Director
Oct 9, 1999
44,183
3,822
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https://soundcloud.com/citationsneeded%2Fepisode-98-the-refined-sociopathy-of-the-economist
Coincidentally this was just published by Citations Needed. Good look at the Economist's 150+ year history. (yes, long enough for them to have some rather interesting opinions about slavery.)
I'm curious as to what your personal take on The Economist as it exists today is. I mean, does it stand in the seventh circle of hell for you as the Democratic Party might, possibly because the Dems have establishment roots and once had an entire wing (Dixiecrats) who were openly racist?

I ask because, for me, politics is the art of the possible. Our current situation is dire. I can't let the perfect be the enemy of the good (enough.) Change on a national scale, in a democracy and absent a bloody revolution, is maddeningly incremental and often enough, two steps forward, one step back.

"Sleepy Joe" can be embarrassing in his "old man" stumbling and with parts of his past record, but he's a decent, honest man who, for instance, convinced Barack to change his stance re: gay marriage.

I trust his character.

Our house is burning, man. I'm taking my place in the bucket brigade.

If you hand me a pail that's only half full of muddy water, I'm not too "ideologically pure" to not do my part and pass it on.

In short, if it comes to it, Biden/ (Warren/Klobuchar/Whomever?) 2020! :eek:
 

jmagg

Golden Member
Nov 21, 2001
1,618
169
106
The more i listen to Joe, the more i think of an arrogant person who thinks hes above it all. Klobuchar has a much better chance imo.
 

pmv

Diamond Member
May 30, 2008
6,971
2,285
136
I'm curious as to what your personal take on The Economist as it exists today is. I mean, does it stand in the seventh circle of hell for you as the Democratic Party might, possibly because the Dems have establishment roots and once had an entire wing (Dixiecrats) who were openly racist?

I ask because, for me, politics is the art of the possible. Our current situation is dire. I can't let the perfect be the enemy of the good (enough.) Change on a national scale, in a democracy and absent a bloody revolution, is maddeningly incremental and often enough, two steps forward, one step back.

"Sleepy Joe" can be embarrassing in his "old man" stumbling and with parts of his past record, but he's a decent, honest man who, for instance, convinced Barack to change his stance re: gay marriage.

I trust his character.

Our house is burning, man. I'm taking my place in the bucket brigade.

If you hand me a pail that's only half full of muddy water, I'm not too "ideologically pure" to not do my part and pass it on.

In short, if it comes to it, Biden/ (Warren/Klobuchar/Whomever?) 2020! :eek:

Even with a bloody revolution, it's _still_ incremental, and certainly two steps forward and one step back. If not one step forward and two steps back. And a few steps sideways. Just with much more violent steps.

I've always considered the Economist to be very right-wing, but a more rational and analytical kind of right-wing than that which has long constituted the US right (and increasingly at least parts of the UK right). As I remember it, it's quite gullible about socio-biology, but to me what most sums it up was an issue (around the time of the financial crisis) that featured multiple different pleas to capitalists to be alturistic and put defending capitalism and makets ahead of concern for their own self interests as individuals. To me that illustrated the contradiction at the heart of that world view, while at the same time demonstrating they are smarter than the average Republican.


PS I'm actually starting to feel a bit nervous that Sanders might turn out to be a US Corbyn. I feel bad even voicing the thought, because I personally would vote for him if I had a vote. I just fear it may be optimistic to think that any current potential leader can really resolve the problems - it might be a choice between different forms of failure. Corbyn wasn't the cause of Labour's defeat, his weaknesses were just a concequence and symptom of the deeper structural issues. The US may be in an analogous situation.
 
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Blackjack200

Lifer
May 28, 2007
15,991
1,656
126
I'm curious as to what your personal take on The Economist as it exists today is. I mean, does it stand in the seventh circle of hell for you as the Democratic Party might, possibly because the Dems have establishment roots and once had an entire wing (Dixiecrats) who were openly racist?
I think that the Economist has not changed too much in since the 19th century. It has changed its language to remain within the bounds of acceptable discourse, but its values are the same. It is a publication written by and for capitalists who have a perspective that I do not share.

I ask because, for me, politics is the art of the possible. Our current situation is dire. I can't let the perfect be the enemy of the good (enough.) Change on a national scale, in a democracy and absent a bloody revolution, is maddeningly incremental and often enough, two steps forward, one step back.
Politics is a struggle for power and resources. Forgetting that is how you end up with a toothless Democratic party full of grifters and corruption. FWIW, this is why Sanders is so rough around the edges and cantankerous compared to an Obama or a Biden. He's not a smoke-blower. He's fighting for people.

"Sleepy Joe" can be embarrassing in his "old man" stumbling and with parts of his past record, but he's a decent, honest man who, for instance, convinced Barack to change his stance re: gay marriage.

I trust his character.
I think Joe Biden is an unremarkable minor-league politician from Delaware. He subscribes to the national consensus on foreign policy, and he has a lengthy track record of advocating cuts in social security, supporting the drug war, supporting the crime war, and building the carceral state. He is comically corrupt, as many small-time Democrats are. He built a ton of soft power by remaining in his seat for such a long time, and then leveraged that to a national profile in 2008. He will be absolutely slaughtered by Trump if he is the nominee.

Our house is burning, man. I'm taking my place in the bucket brigade.

If you hand me a pail that's only half full of muddy water, I'm not too "ideologically pure" to not do my part and pass it on.

In short, if it comes to it, Biden/ (Warren/Klobuchar/Whomever?) 2020! :eek:
I honestly wonder what liberals think would happen if a Biden or Kobuchar was elected president. Do they think that would put the fire out? It's incredible to imagine that anyone would think that, but I think a majority of them do.
 

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