Quote:
Originally Posted by Spartacus713
OK, if tarriffs are not the way to respond in your view, what is the right way to respond? No pie-in-the sky, academic theoretical postulating. It doesn't have to be a sure thing, but please provide some sense of how we might respond EFFECTIVELY to this situation, in your view.
Also, I hope you are not going to start going on about multi-lateral institutions such as the WTO or the UN, as this is the path of dilatory acquiescence. It would be remarkably INEFFECTIVE.
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Don't worry, not an economist.
And you're right. Actions under the WTO maintain the status quo - the rules of international trade, as currently negotiated - but do not address substantial imbalances.
This is a fascinating thread ... for again there is a shift in political and party interests. The populist take is quite compelling with good arguments but the tool under discussion (Trump-style tariffs) is potentially so ineffective and dangerous that it's hard not to turn to the GOP for common sense.
Policies that could be effective are out of reach since they would require the support of Congress - and THAT Trump does not have here. Hence, his tariffs.
More, some of the proposals (including the ideology) that would support the populists' end-game got left behind with the Democrats when they left that party for Trump. Or (and I'd agree here, in part) when the Democrats became as corporation-driven as the Republicans.
I KNOW the above seems to make little sense - but that's reflective more of the situation I think than my take. One hopes.
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So - to start. Frankly, I think we're screwed. Bad enough to have two parties so divergent that there's no common ground. On this particular issue, even those parties have splintered with no effective commonality between the White House (Trump-style populism) and Congress (GOP).
1.
Diplomacy. No argument there needs to be some sort of reset with China. No way to assess the potential here. Like I mentioned earlier, Bush was working to BUILD commonality ... Obama dealing with the fall-out from the recession (although he at least used the WTO-style tools in place) ... Trump is off on this UNILATERAL tariff-thing with no doubt Tillerson and USTR left in the dust. Then there is N. Korea when we potentially NEED Chinese intervention more than ever before. What happened to Trump's deal-making ability?
2.
Statism. What we've had is unrestrained capitalism - could we at least open a role for the state? There is fury that China is not playing by the rules, but except for the WTO unfortunately the rules we want are our own. Sure, we can try to threaten with the size of our market - and China may accede - for a few years but make no mistake they have an endgame in mind - and it is world economic domination. But our methods simply have to be effective in the end. If they are proving not ... then maybe the problem is US.
Start with TRAINING. The US provides more options, opportunity (assuming you can self-fund) but perhaps the state-supported (with corporate partnerships) German-apprentice style is simply more effective. And here I would fault Obama's college-for-all proposals.
Moving on to PARTNERSHIPS. No argument, China (and other countries that illegally or not subsidize and throw up regulatory firewalls) choose certain industries to support BECAUSE they are effective. This is anathema to how we do business but there has got to be some sort of middle ground between corporatism and communist style ownership. I'd argue the Chinese have found it and are eating our lunch.
One role of increased government might be to try to move beyond US-style short term corporate planning, again possibly with government involvement. The Chinese take a much longer viewpoint when making certain decisions - tying up mineral rights in Africa and so on. They are investing in African countries (infrastructure) while we've got Americans fussing about small amounts of foreign aid.
3.
Role of Government - in mitigating the fall-out. I'd argue that certain industries and jobs were sacrificed in the 2000s - in part for national security. Some countries (I believe) recognize that workers in their 50s etc. are unlikely to be retrained or be able to relocate etc. and provide additional "state support" or "minimal income" when manufacturing jobs are lost. For this, corporations that benefit SHOULD be paying extra taxes etc.
I'd far prefer that direct taxes be imposed and funds be expended to promote policies that work (training, loans to promising industries etc. and/or mitigate the negative impact on workers) than to in essence impose a tax on consumers via increased prices from tariffs. THAT's not populism.
EDITED TO ADD - Here's an example of how China effectively controls its destiny in a way that would be impossible in the United States. Earlier, I mentioned that Bush did not take action on the first or later complaints against Chinese imports after they joined the WTO. HE no doubt viewed these as distinct decisions potentially affecting small industries. The Chinese, on the other hand, were adamant about NOT triggering trade sanctions and could well have held back on imports. Here they: (1) take the long view and (2) had the ability to dictate to industries how they should behave.
Now that is not US-style capitalism BUT it is the fight we are in. Perhaps just like the 19th century battle patterns gave way to guerrilla warfare ... there's room for some flexibility. I'd argue that does NOT include the quick-and-easy to implement but still nuclear-option of a trade war.
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