U.S. Politics 2018

[Kirkhill]

In the ineffable words of Bill Murray: "It just doesn't matter."

https://www.salon.com/2018/04/06/yes-a-blue-wave-is-coming-but-that-doesnt-mean-donald-trump-is-facing-political-doom/

Policies and personalities are not connected.  And by all accounts the Yankee system is surviving nicely, as it has in the past, repeatedly, regardless of who is in charge.  So it seems to be working as designed.

 

[Kirkhill]

Anyone who thought that the global trade could continue the way it has been going, had their head in the sand, China has blocked pretty much everyone from access to their markets, while demanding full access for themselves. Trade for them has always been another form of warfare, now they are upset that someone does the same to them. China can ill afford to lose access to the US market, a downturn in the Chinese economy has political ramifications for the party.

CONTEST FOR THE FUTURE
Trump’s Right to Say He’s Not Launching a Trade War With China. He’s Doing Something Bigger.
No one likes trade friction, but after decades of failing to stop Chinese theft of American intellectual property, there are no more no-cost solutions.
Gordon G. Chang
GORDON G. CHANG
04.06.18 4:58 AM ET

https://www.thedailybeast.com/trumps-right-to-say-hes-not-launching-a-trade-war-with-china-hes-doing-something-bigger

 

[Altair]

Anyone who thought that the global trade could continue the way it has been going, had their head in the sand, China has blocked pretty much everyone from access to their markets, while demanding full access for themselves. Trade for them has always been another form of warfare, now they are upset that someone does the same to them. China can ill afford to lose access to the US market, a downturn in the Chinese economy has political ramifications for the party.

Sure, but the same guy slapping tariffs on China is whining about "Chinese unfair retaliation" when China slaps tariffs on the US.

Speaking of political ramifications, I'm not sure americans appreciate 5 months worth of gains wiped out of the stock market.

 

[Kirkhill]

Oh, what the heck.  It's Friday and I feel like going for the Trifecta.

The Tenacity of Trump
The president lies prodigiously, but when it comes to campaign promises on immigration, trade, and other issues, he’s working hard to keep them.


Kevin Lamarque / Reuters

DAVID A. GRAHAM

https://www.theatlantic.com/politics/archive/2018/04/the-tenacity-of-trump/557318/

Tall tales, beoting, flyting, bragging and boasting have been around for a very long time.  Not everybody takes words at face value.  Let the deed shaw!

 

[Bird_Gunner45]

Anyone who thought that the global trade could continue the way it has been going, had their head in the sand, China has blocked pretty much everyone from access to their markets, while demanding full access for themselves. Trade for them has always been another form of warfare, now they are upset that someone does the same to them. China can ill afford to lose access to the US market, a downturn in the Chinese economy has political ramifications for the party.

China today equals the USA from 1812 to 1945. During this period the US was a junior partner in the Pax Brittanica (the Monroe doctrine was originally a joint US-UK document) and used the Royal Navy to both have access to foreign markets and save on military spending while maintaining heavy tariffs on imports (notably steel). The UK was the US on this tegards- champions of free trade and internationalism.

That said - the genie can't be put back into the bottle as China is unlikely to accept going back to the poverty of the 1980's and like the US in the 1940's is growing past it's junior partner status. The US and China have a mutually beneficial relationship right now- US money provides Chinese jobs while cheap Chinese goods run the US consumer driven economy in the same way UK money provided US jobs and cheap US goods created cheap goods in the UK.

The economy of the US that existed in the good old days is gone and won't return. China will not willingly go back into poverty nor destroy it's own economy for the US. That's why it's Trump and those who don't understand the economy or history who have their heads in the sand.

 

[Altair]

China today equals the USA from 1812 to 1945. During this period the US was a junior partner in the Pax Brittanica (the Monroe doctrine was originally a joint US-UK document) and used the Royal Navy to both have access to foreign markets and save on military spending while maintaining heavy tariffs on imports (notably steel). The UK was the US on this tegards- champions of free trade and internationalism.

That said - the genie can't be put back into the bottle as China is unlikely to accept going back to the poverty of the 1980's and like the US in the 1940's is growing past it's junior partner status. The US and China have a mutually beneficial relationship right now- US money provides Chinese jobs while cheap Chinese goods run the US consumer driven economy in the same way UK money provided US jobs and cheap US goods created cheap goods in the UK.

The economy of the US that existed in the good old days is gone and won't return. China will not willingly go back into poverty nor destroy it's own economy for the US. That's why it's Trump and those who don't understand the economy or history who have their heads in the sand.

More importantly, the problem any American President is going to have is time. The Chinese can maintain an unpopular or damaging policy in perpetuity if they see the long term gain in it.For every action that hurts China, China will match it with actions that hurt America. How long can Trump keep up with a damaging trade war?

Not long enough to hang with a country with an unchanging government.

 

[Bird_Gunner45]

More importantly, the problem any American President is going to have is time. The Chinese can maintain an unpopular or damaging policy in perpetuity if they see the long term gain in it.For every action that hurts China, China will match it with actions that hurt America. How long can Trump keep up with a damaging trade war?

Not long enough to hang with a country with an unchanging government.

Also very valid points. The stability of China isn't as rock solid as we in the west might believe it is, so there's a strong possibility that the CCP isn't as willing to push itself to the brink. That said, they certainly have more flexibility than the US does.

 

[Colin Parkinson]

China today equals the USA from 1812 to 1945. During this period the US was a junior partner in the Pax Brittanica (the Monroe doctrine was originally a joint US-UK document) and used the Royal Navy to both have access to foreign markets and save on military spending while maintaining heavy tariffs on imports (notably steel). The UK was the US on this tegards- champions of free trade and internationalism.

That said - the genie can't be put back into the bottle as China is unlikely to accept going back to the poverty of the 1980's and like the US in the 1940's is growing past it's junior partner status. The US and China have a mutually beneficial relationship right now- US money provides Chinese jobs while cheap Chinese goods run the US consumer driven economy in the same way UK money provided US jobs and cheap US goods created cheap goods in the UK.

The economy of the US that existed in the good old days is gone and won't return. China will not willingly go back into poverty nor destroy it's own economy for the US. That's why it's Trump and those who don't understand the economy or history who have their heads in the sand.

You forget that they are both speaking very much to their internal audiences. A reduction in Chinese access to the US market will only hurt the US for a short bit, it would stir manufacturing and force them to look elsewhere for materials. Trumps biggest challenge is not to isolate other markets at the same time. China has other markets, although the African one is more a of a drain than a return at present. Both countries will survive, but the Chinese model may have to change, they rely greatly upon bribes and threats, if enough countries limit economic ties with them, then it reduces the economic activity for China and forces them to deal with lesser states without large GDP's. We might end up with 2 large trading factions, with trade barriers imposed between them, but not with others in their faction. 

 

[Altair]

You forget that they are both speaking very much to their internal audiences. A reduction in Chinese access to the US market will only hurt the US for a short bit, it would stir manufacturing and force them to look elsewhere for materials. Trumps biggest challenge is not to isolate other markets at the same time. China has other markets, although the African one is more a of a drain than a return at present. Both countries will survive, but the Chinese model may have to change, they rely greatly upon bribes and threats, if enough countries limit economic ties with them, then it reduces the economic activity for China and forces them to deal with lesser states without large GDP's. We might end up with 2 large trading factions, with trade barriers imposed between them, but not with others in their faction.

China has the biggest market already in their corner, their own. They are moving quickly to a consumer based economy as opposed to a export driven economy, and soon they will be in the position where what they produce will be gobbled up domestically, like America of old.

The one area where they are lacking is in the high tech sector, but they are catching up quickly, and if trump starts to shut them out of the US high tech market as this trade war grows, it may only accelerate the Chinese as they attempt to manufacture more high tech good at home to make up for what they will no longer be getting from the US.

China already a patent leader for the past few years, that's not going to change now, if anything, it may speed up if China loses access to the US market.

 

[Bird_Gunner45]

You forget that they are both speaking very much to their internal audiences. A reduction in Chinese access to the US market will only hurt the US for a short bit, it would stir manufacturing and force them to look elsewhere for materials. Trumps biggest challenge is not to isolate other markets at the same time. China has other markets, although the African one is more a of a drain than a return at present. Both countries will survive, but the Chinese model may have to change, they rely greatly upon bribes and threats, if enough countries limit economic ties with them, then it reduces the economic activity for China and forces them to deal with lesser states without large GDP's. We might end up with 2 large trading factions, with trade barriers imposed between them, but not with others in their faction.

Government's have always spoken to their internal audiences, particularly when you look at US elections held during the 1812-1945 period, so this is nothing new, nor is populism. A reduction in Chinese access to the US market will not stir manufacturing, only move it from China to somewhere else as the reality is that the US consumer wants to go to Walmart and buy a shirt for $10. This can't be done in the US or Canada, which is why these jobs moved oversees (same as during the 1800's). It also assumes that the US market can rely internally on itself, which isn't the case, and that the US manufacturing industry could convince other western nations to "buy US" instead of purchasing the goods from China for far less. In the "good old days" the US pines for, there was also the reality that the major industrial powers had spent 6 years bombing each other and couldn't produce items locally and that the US was flush with money due to war loans to the UK (sort of like China is today with war loans from the US). These factors don't exist anymore.

Trump's biggest challenge is, in fact, Trump.

 

[Altair]

Government's have always spoken to their internal audiences, particularly when you look at US elections held during the 1812-1945 period, so this is nothing new, nor is populism. A reduction in Chinese access to the US market will not stir manufacturing, only move it from China to somewhere else as the reality is that the US consumer wants to go to Walmart and buy a shirt for $10. This can't be done in the US or Canada, which is why these jobs moved oversees (same as during the 1800's). It also assumes that the US market can rely internally on itself, which isn't the case, and that the US manufacturing industry could convince other western nations to "buy US" instead of purchasing the goods from China for far less. In the "good old days" the US pines for, there was also the reality that the major industrial powers had spent 6 years bombing each other and couldn't produce items locally and that the US was flush with money due to war loans to the UK (sort of like China is today with war loans from the US). These factors don't exist anymore.

Trump's biggest challenge is, in fact, Trump.

Trumps biggest challenge is that the US economy has geared itself for the post industrial age of consumerism, high tech development and finance. It cannot shift itself into the manufacturing giant of the past, producing everything from planes to shoes to T-Shirts. Slap as many made in america tags on these products as you want, people are not going to spend 40 dollars on a T-shirt.

No President has the power to make such a monumental shift in the economy, all he's going to do it shift it from china to some other country that can make it on the cheap.

 

[Kirkhill]

More importantly, the problem any American President is going to have is time. The Chinese can maintain an unpopular or damaging policy in perpetuity if they see the long term gain in it.For every action that hurts China, China will match it with actions that hurt America. How long can Trump keep up with a damaging trade war?

Not long enough to hang with a country with an unchanging government.

Even in China things change.

Tiananmen 1989
Death of Mao 1978
Communist Revolution 1949
Nationalist Revolution 1911
Boxer Rebellion 1900
Average Dynasty Period 149 years (based on this data - https://en.wikipedia.org/wiki/Dynasties_in_Chinese_history )

It serves the Party well to pretend that China is unchanging and takes the long view.  For the same reason Popes and Kings take regnal names: they tie history to the institution and diminish the role of the person, the clan, the city and the Order in power struggles.

 

[Altair]

Even in China things change.

Tiananmen 1989
Death of Mao 1978
Communist Revolution 1949
Nationalist Revolution 1911
Boxer Rebellion 1900
Average Dynasty Period 149 years (based on this data - https://en.wikipedia.org/wiki/Dynasties_in_Chinese_history )

It serves the Party well to pretend that China is unchanging and takes the long view.  For the same reason Popes and Kings take regnal names: they tie history to the institution and diminish the role of the person, the clan, the city and the Order in power struggles.

True, however when push comes to shove, in a game of chicken that a trade war represents, Americans will get fed up with trump faster than a revolution is going to happen against Xi

 

[Jarnhamar]

So how does a trade war work in laymen terms? Are the prices of all the shitty items in dollarama going to go up? Are US companies going to have to start making stuff in the US and not Chinese sweatshops? 9 out of 10 items in your reach right now are probably made in China, maybe it would be good for the US to be less consumed by 'things'.

 

[Colin Parkinson]

Government's have always spoken to their internal audiences, particularly when you look at US elections held during the 1812-1945 period, so this is nothing new, nor is populism. A reduction in Chinese access to the US market will not stir manufacturing, only move it from China to somewhere else as the reality is that the US consumer wants to go to Walmart and buy a shirt for $10. This can't be done in the US or Canada, which is why these jobs moved oversees (same as during the 1800's). It also assumes that the US market can rely internally on itself, which isn't the case, and that the US manufacturing industry could convince other western nations to "buy US" instead of purchasing the goods from China for far less. In the "good old days" the US pines for, there was also the reality that the major industrial powers had spent 6 years bombing each other and couldn't produce items locally and that the US was flush with money due to war loans to the UK (sort of like China is today with war loans from the US). These factors don't exist anymore.

Trump's biggest challenge is, in fact, Trump.

If he can bump manufacturing even by 5-10%, he will be looked at kindly. China's goal was to make the world beholden to them through economic means and military. A trade war is a much bigger threat to them, than they would admit. China's history has been that of expansion and collapse due to internal factors. There are a lot of internal factors that the government barely controls as it is. If the economy drops enough, then Xi's support base will collapse quickly and the knives will come out. The party will remain, but the head would be different. 

 

[Altair]

So how does a trade war work in laymen terms? Are the prices of all the shitty items in dollarama going to go up? Are US companies going to have to start making stuff in the US and not Chinese sweatshops? 9 out of 10 items in your reach right now are probably made in China, maybe it would be good for the US to be less consumed by 'things'.

trade wars are bad because everyone gets hurt by them.

So trump slaps tariiffs on steel.  Great for American steel producers,  more Americans buy their steel as a result.  Bad for auto manufacturing because they need that steel for cars. American steel is more expensive and that cost is passed on to the consumer. Consumers buy less cars as a result. Auto manufacturers calculate that people are buying less American man cars,  lay off autu workers.  Internationally,  same thing,  people buy less American made cars because they cost more now. Now expand this to every industry that uses steel. And to make things worse,  because this is a war,  the nations you hit with tariffs then place tariffs on you,  let's say,  guess what,  American cars. So as a result,  American auto manufacturers get hit with a double whammy. More expensive cars because of more expensive steel and more challenges to export them due to higher price and tariffs.

So by trying to engage in a trade war,  America risks rising inflation and increased unemployment at the same time. In this case,  they auto worker has to pay more for everything with steel in it,  and doesn't have a job due to being laid off.

Yay trade war,  but let's expand this to hundreds of different products from planes to soybeans. See the potential for disaster?

 

[Jarnhamar]

It does, thank you.

 

[Cloud Cover]

Some interesting graphics and facts from PolitiFact (a fact checking org).  Does anyone have a reference to a quantifiable and reliable source that US steel or aluminum is actually more expensive than Chinese products?

 

[Bird_Gunner45]

That's the rub though- a trade war with China will not bring those manufacturing jobs back unless Trump implements heavy incentives/subsidies for company's to maintain low prices. So, barring socialism this is simply a strategy based on a weak understanding of international economics, populist rhetoric, and a forlorn hope to return to a post world war II world which doesn't exist anymore. It's like his talk of resurrecting the coal industry. The coal industry is dead- he'd be better to introduce programs and initiatives to move those area away from coal which would allow them to move forward and be better for them. Hoping for the future to not come is like being the typewriter salesman who refuses to see the computer as a threat.

For Canada, I hope we don't engage in this and can reap the rewards of American backwardness through more trade elsewhere, taking our eggs out of one basket and moving them around.

 

[Colin Parkinson]

Some interesting graphics and facts from PolitiFact (a fact checking org).  Does anyone have a reference to a quantifiable and reliable source that US steel or aluminum is actually more expensive than Chinese products?

It would depend on how they define steel imports, it may hold true for raw plate and stock, however steel products like gantries, transmission towers, refinery modules are almost all made in China. So it's the large value added steel products I suspect is the concern.