President Trump seems hell-bent on starting a trade war with the rest of the world, including some of our closest allies as well as the 2nd biggest economy on the planet, China. His justification is that the trade deals the US has entered into with these nations are unfair to our interests, that we are, in essence, shipping American jobs overseas, hurting local industries and businesses, and exposing us to unfair trade practices. And then there’s the balance of trade issue: they sell us more stuff than we buy from them, so there is a net flow of purchasing power from our economy into theirs.
Its hard not to agree with the President. China, in particular, levies tariffs on our goods, but sells hers here duty-free. They negotiate manufacturing deals with American producers and marketers that guarantee that China will have access to American technology and investment without any reciprocal obligations on her part. And as if that weren’t enough, they simply ignore our laws and protections against commercial piracy, its not just that they conduct industrial espionage, they do it openly and brazenly. Although capable of producing products of high quality, they also exploit markets in America for dumping cheap and substandard industrial goods, some of them so poorly made they are health and safety hazards. You will recall the Chinese drywall that emitted toxic fumes that sickened homeowners and corroded brand-new plumbing and wiring. Hundreds of thousands of newly-constructed homes were affected.
When challenged legally on these actions, the Chinese are slow to respond, EXCEPT when they feel that American retaliation will
negatively and effectively hurt one of their industries. In those cases, we promptly receive full satisfaction, which only demonstrates they are perfectly capable of doing the right thing, just that they frequently choose not to.
These sorts of conflicts emerge in all trading relationships, which is why we have trade deals in the first place. All countries (including the USA) sometimes engage in these practices, usually to protect threatened home industries and workers and provide low prices to domestic consumers. They dump commodities, subsidize domestic companies, levy import taxes, manipulate currency exchange rates and engage in various other practices to give their own businesses a break. This is normal, and probably necessary, and managing this process is why countries negotiate and sign trade agreements. But in the case of China and the US, it does appear to be approaching a crisis.
So how have we, for a long time the strongest and most powerful economy in the world, allowed this situation to emerge? I refuse to believe its stupidity and weakness on the part of our trade negotiators. Neither do I believe its some sinister conspiracy conducted by Liberal traitors, Democratic do-gooders and shadowy cabals of Illuminati or Masonic forces. This situation evolved naturally, due to easily anticipated and highly predictable economic forces. No, this is just how capitalism works, what is beneficial to the most powerful and influential capitalist organizations isn’t necessarily what is best for a capitalist economy.
American business has learned that it is much more profitable to market merchandise than it is to develop and manufacture new products. Give the consumer good stuff at low prices and they will buy it. Manufacturing, physical plant and labor problems (not to mention the risks of developing and marketing new products) can be exported. Let the Chinese, (or the Germans or Japanese) worry about it. They are so desperate to develop their economies that they are willing to borrow capital, invest in new tech, train workforces, and take big risks. In other words, be entrepreneurial. We don’t have to. All we have to do is ship those Sonys and Toyotas, all those sneakers and t-shirts, microwave ovens and color TVs, and all we have to do is market them.
Besides, let us not forget China’s billion-plus customers are the world’s biggest potential market. Gaining access to that market is the Holy Grail of American consumerism. Its a prize worth trading your mother and firstborn for so selling out your country is mere chicken feed in comparison. Marketing is where the profit is, not R&D, manufacturing, product development. We have become an economy of middlemen, a nation of shopkeepers.
When we negotiate trade deals with foreign countries, our leaders will be influenced (and dictated to) by Walmart, Nissan America, Amazon and other marketing organizations, not by lobbies that represent American manufacturers and workers. Those influences may or may not even be owned by Americans or represent American firms. It doesn’t matter, Capital is globalized now. The trade deals we negotiate with foreign countries make it very profitable for companies whose primary business is marketing foreign goods. Trade policy in America is not designed by technical experts struggling to get the best possible deals for American businesses, consumers and workers. It is determined by elected officials whose campaigns are financed by American corporations and trade associations involved in marketing foreign goods and services.
If you have any lingering doubts about the accuracy of this analysis, look at how Mr Trump’s “trade war” strategy is being received by big commercial interests, like Wall Street, the Chamber of Commerce, the Right-wing think tanks and the “traditional” or “free trade” Republicans. They are sweating bullets and shitting bricks because they know that even though Trump may be right about this issue, he doesn’t have a clue about how to actually resolve it. Besides, they don’t want it resolved, do they? There is no Deep State, just Deep Capital:
Crony Capitalism is the only kind there is.
Balance of payments? No one puts a gun to our heads and forces us to buy foreign goods. Its not a Chinese crime if they make better and cheaper stuff than we do. Its ours.
Sometimes, not often, but sometimes the Law of Supply and Demand works to the consumer’s benefit. I’m just as ready to take a patriotic hit for my country as the next man, but why should I? I’ll start buying Detroit cars when Detroit starts buying Pittsburgh steel and when Pittsburgh steel starts hiring Pennsylvania steelworkers.