Thoughts on Protectionism
As the US toughens up its negotiating stance on trade, it seems that ghosts from the Great Depression haunt the land
Consider the following
Europe’s financial system is incredibly cosseted.
The big loser is the local saver.
In the US, regulatory protectionism has seen the courts grab jurisdiction over US dollar deals made worldwide.
Until a case is resolved, foreign institutions that contest rulings may be excluded from the US financial system.
Then there is China, which long protected its markets using financial repression
This kept its currency undervalued and helped build up foreign exchange reserves.
China now seems to think it has enough roads, bridges and reserves and is moving in the opposite direction.
Protectionism can be simply thought of as state-directed action to change the price of production at home compared with abroad
What the examples above from the world’s big economic regions show is an extraordinary effort over 20 years to change relative prices.
Compared to the sins of recent decades, I do not find the likely US measures especially egregious.
Remember that when the Smoot-Hawley tariff was passed in 1930, impacting more than 20,000 imported goods, the US was running a huge current account surplus.
Trump’s protectionist measures look tame compared to previous insanities.
You don't want to miss a Crypto news?
Follow me on Twitter and Facebook
What president Trump is trying to do I admit does not seem to be as intense as past decisions from other previous US presidents, but the reality is the US economy is so fragile that any lame excuse will likely destroy the system. Look at 2008/09. Manufacturers that build cars and other industries came to a halt just because some numbers on the trade exchange bellied up. US is running on fumes and most people know it. It is not if there will be another financial crisis, but when.
"I am struck that our cherished elites have discovered a form of government intervention that they do not like, especially given their support for so many other “interventions” in recent decades."
OK given that the elites are supposed to be devious couldn't they be saying they don't like protectionism when they actually do?
Yes! you just exactly pointed out what is currently going in the market. I definitely agree with you on this. With, Trumps over protectionism, more and more countries will boycott trading with the US. Many European countries have had second thoughts about depending on trades with the US and have decided to grow their own Economies.
Regulations on the other hand is a key factor like you mentioned. This is why Exchanges such as Binance and Bitfinex are moving to Europe. Europe is becoming looks to be very open to Economic development.
A great post, i must confess. Cheers!
I remember reading once that protectionism is the best formula to develop into a real superpower. At least in the early days if a country really allows for its domestic industries to grow then they can open up their borders .Very interesting read
Indeed it is !
China did it perfectly.
Beautiful
nice blog sir good political trump
To listen to the audio version of this article click on the play image.
Brought to you by @tts. If you find it useful please consider upvote this reply.
a great post
You got a 5.26% upvote from @postpromoter courtesy of @vlemon!
Want to promote your posts too? Check out the Steem Bot Tracker website for more info. If you would like to support the development of @postpromoter and the bot tracker please vote for @yabapmatt for witness!
Yeah, but then we also need to take into account the VERY SIGNIFICANT issue of intellectual property. I watched a documentary a few years ago about the major auto companies opening shop and being FORCED to fork over their intellectual property as part of the deal for getting product made cheaper overseas for the US domestic consumer. I believe it was Ted Koppel who interviewed one of the Chinese major auto company Chinese subsidiary, who when questioned about the morality of taking the intellectual property and using that to produce different versions of the product (by CHINESE companies) and then "dump" them at deep discount to the US market this nasty Chinese jerk arrogantly said he had no problems with this. This is the Chinese mentality (generally speaking). You can't trust them, and they ULTIMATELY DON'T play fair. The WE'RE the ones holding the bag and putting the pieces back together. Call me racist, or whatever, but I am a STRONG advocate of China being as ISOLATED as possible in terms of international affairs. The reason for this is that they have shown CLEARLY that they are not willing/able to play fair yet, and this could very possibly lead to SERIOUS mililtary conflict down the line (potentially sooner than many of us realize at this point). Let's just hope that PROPER negotiation and systems of "checks and balances" can be put into place to create a FAIR playing field IF the world is forced into sustained, multilateral cooperation...