Tasmanian Times

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

Economy

First salvo in a trade war that could lead to a global recession …

First published March 12

President Trump has declared that ‘trade wars are good’ and that ‘they’re easy to win’.

This, accompanied by his move to impose tariffs on imported steel and aluminium, is the first salvo in a trade war that could lead to a global recession, the loss of millions of jobs and an increased threat of political, economic and military conflict between the major powers.

Australia, as a most loyal ‘friend’ of the USA has been granted dispensation and exemption from such a trade war. This is hardly cause for celebration. Trade wars, economic nationalism and a retreat behind tariff barriers is only and can be only seen as a dangerous signal to the world and Australia remains a part of that world.

This world, for better or worse, is dominated by capitalism. Capitalism is a globalising economic order and has been globalising since capitalism first emerged. Clocks, in this sense, cannot be turned back.

Such globalised capitalist relations that increasingly by-pass national governments and institutions, necessarily become problematic for nation-states. Industries move to where profit can be maximised. Investments and capital quickly flow to these new more profitable manufacturing centres. There are winners and losers.

In reacting to the inevitable problems experienced by individual states, there has been what has been broadly described as a ‘return’ to economic nationalism. Economic nationalism is the antithesis of capitalist globalisation and yet it is growing in direct proportion to capitalist globalisation.

The sociologist, Sam Pryke, defines economic nationalism as an attempt to create, bolster and protect national economies in the context of world markets. It is an economic policy that places capitalist nation-states and global capital on a clear collision course.

There are indications that protectionist measures within national economies are being actively promoted. The World Trade Organisation in 2016 describe a “relapse in G20 economies’ efforts at containing protectionist pressures. Not only is the stockpile of trade-restrictive measures continuing to increase, but also more new trade restrictions were recorded”.

A decade earlier, former Chairman of the US Federal Reserve, Ben Bernanke cautioned against such an economic shift and the negative consequences it might have for the global economy.

There is a tendency, in times of economic difficulty, as we have witnessed since the GFC of 2008, to play more overtly upon nationalist sentiments. Its most blunt expression being in the slogans of let’s make America, or Russia, or China, or Australia – insert country of choice – great again. National leaders, and populists from either left or right, react by promoting a national appeal which quickly finds enemies. This is in no way a new phenomenon.

Martin Wolf of the Financial Times has written extensively of the attempt to reverse the trend toward globalisation that occurred at the end of the 19th century with economic nationalism leading to a stifling of free trade, militarisation, imperialism, and ultimately to war.

Wolf is by no means alone in expressing these fears.

Former US Treasury Secretary, Lawrence Summers, writing in 2016, spoke of an unease regarding perceptions that people have that ‘open’ economic policies in recent years are producing a political backlash. The managing director of the IMF, Christine Legarde, remarked that “I hope it is not a 1914 moment and I hope that we can be informed by history to actually address the negative impact of globalisation … because it has historically delivered massive benefits and it can continue to do so”.

She was referring specifically to Britain’s decision to leave the European Union, but equally significant in this context have been nationalist sentiments in relation to US-Russia relations, US-China relations and the rise of nationalist political groupings across the globe.

The global economy, since 2008 and the GFC, has struggled. The level of global trade has fallen and concerns have been expressed that global security, both political and economic, is under real threat. Peter Holmes, writing in the NATO Review repeats what he describes as an ‘adage’ that “if goods don’t cross frontiers, soldiers will”.

He sees a real possibility of a return to the conditions that dominated thinking in the 1930s and is concerned at a return to policies of protectionism. He lists a variety of ‘threats’ with China and Russia being prominent on his list. Holmes’ comments were made in 2009. Eight years on and things are no better. Trump’s effective declaration of trade war is an echo of the infamous Smoot-Hawley Tariff of 1930. While the Democrats tried to unpick this massive imposition of protectionist policies a few years later, it still played a significant role in the economic and eventual military conflicts that followed.

In refusing to learn from history, the world is being hurled into a regressive period of economic nationalism which pits country against country. It is a scenario that cannot hope to provide anything like a positive outcome for the majority of the world’s population.

While governments seem to be spiralling into resurgent economic nationalism and while tariffs and protectionist walls are being built, it is worth remembering that 1318 transnational corporations currently account for 60 per cent of global wealth. The most powerful 147 of these corporations control 40 per cent of the total global output and wealth. Fifty-one per cent of the biggest ‘economies’ in the world are individual corporations and 41 per cent of these are based in the United States.

The renewal of nationalism, politically and economically, has serious implications. We need, in such moments of heightened tension and concern, to keep in the forefront of our minds just why President Trump is choosing to travel this dangerous path.

It is not simply because his administration lacks balance or is irrational. The global economy is increasingly integrated. Nation-states play a less fundamental role than in the past. National economies are suffering and shrinking.

The welfare state is being unravelled. The global power of the US economy is being threatened. A contradiction is evident between a globalised capitalism and an increasingly constrained nation-state system of governance.

The call to nationalist sentiments and to a power that is no more, may have an immediate, if momentary, appeal, but it provides no answers for the people who inhabit those states and who suffer when economic crisis occurs. Other considerations and other options need to be considered. We simply cannot afford to build protectionist walls.

*William Briggs has lived and worked in Hobart for the better part of his life. He is a former teacher of English and History in a variety of Tasmanian high schools. For three years he worked as a foreign correspondent, based in Moscow. He has long had an interest in foreign relations and international affairs and recently completed a PhD from Deakin University with a major focus of interest in International Relations and Global Political Economy.

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10 Comments

10 Comments

  1. Russell

    March 24, 2018 at 12:50 pm

    Why wait for everyone else to do something for you?

    Get off your backsides and make an effort yourself.

  2. Russell

    March 24, 2018 at 12:49 pm

    Apart from weapons of misery and destruction, what does America have to sell to the world to base their trade war on?

    Nothing, unless you like fuel-guzzling monster trucks.

    Good luck USA, you’re gonna need it.

    My advice to everyone – grow and make your own, or get whatever you need dirt cheap at your local tip shop as everyone throws it out to get the latest model each year.

  3. mike seabrook

    March 17, 2018 at 2:19 am

    take a cold shower – after the trade shock the chinese with their system of power and authority (consider individual security and democracy limits) have a lot of levers they can pull which could delay the worst of the nasty effects for a couple of years – for precedents look at zimbabwe, venezuela.

    devaluation of the australian dollar would ameliorate the effect on farmers, miners etc. and illusion of house prices will fool many ( when considered us $ accounting unit)

  4. Simon Warriner

    March 16, 2018 at 6:33 pm

    In order to get at the truth of the tariff issue you need to understand that both Lib and Lab jump to the sound of the same whistle. Once you understand who is blowing the whistle the way to correct the problems that free trade brings, and the real purpose of free trade in the first place, become clearer.

    Globalisation suits only the globalists.

    It leaves local communities powerless in the face of remote bureaucracies whose endless rules are little more than an excuse to impose ever harsher penalties for ever more piffling infractions of increasingly pointless rules.

  5. max

    March 16, 2018 at 3:14 pm

    Why privatise anything? It is hard to see how Paul Keating’s five great achievements – the floating of the dollar, the letting in of foreign banks, the privatisation of Qantas, the winding down of tariffs and the sale of the Commonwealth Bank – look any good any more.

    Keating’s floating of the dollar has been a whale of a success too. It means, this week, that hundreds of export businesses, farms in particular, will go broke, and China, which doesn’t float its money, will soon rule the world. He took off the tariffs too, which meant that instead of we taxpayers getting back 10 cents for every Hong Kong t-shirt we bought, and instead of having a clothing industry that kept employment in country towns and kept those country towns going, we made nothing out of the t-shirts we bought and devastated hundreds of thousands of lives. What a great idea that was.

    John Howard, who should have known better, jumped on the bandwagon and was instrumental in privatising power utilities, and look where that has got us.

    We dropped tariffs, sold the farm and we are suffering the stupidity of globalisation – and our leaders think [i]Trump[/i] is an idiot. (This, accompanied by his move to impose tariffs on imported steel and aluminium, is the first salvo in a trade war that could lead to a global recession, the loss of millions of jobs and an increased threat of political, economic and military conflict between the major powers.)

    Is Trump an idiot – or is he the first leader to see the light at the end of what has been the dark tunnel of globalisation?

  6. Ted Mead

    March 16, 2018 at 12:32 pm

    Many people have, and probably still do, rave about Paul Keating’s economic achievements. – I don’t!!!!!

    The Keating government’s decision to remove tariffs spelt the end for much of our manufacturing industries. Since the 1990’s our manufactured products has been declining at a great rate of knots. This has destroyed our traditional work place opportunities, particularly for the young and unskilled.

    Whilst I think industrial manufacturing jobs are not great for one’s soul, I know through experience that you can move on at some point in life if you are at least given an opportunity to make a start. Those opportunities are no longer there for those young ones who can’t find themselves in college through financial disadvantage.

    With modern technological innovations, menial tasks will become a thing of past, but this will presents even more socio-economic work issues in the future.

    When our car manufacturing factories shut down they should have been converted into making renewable energy products that would not only provide jobs, but would stimulate the economy and rapidly assist in the national infrastructure that is going to be required in the future!

    A world recession, if not depression, is inevitable at some point. This will have dire ramifications of the work force, though it may stop the iniquitous environmental destruction that is currently out of control.

    Compounded by the global warming impacts that will kick-in in the next couple of decades, there’s not a lot to look forward to if you are a young disadvantaged person.

    There is no leader in this country who has any vision or moral responsibility to even consider what lies ahead for future generations . The next polling date is where their calendar ends!

    The last state and federal elections are a testament to the blindness of society.

    George Orwell’s dystopian 1984 hits the nail on the head!

  7. Tony Stone

    March 14, 2018 at 8:07 pm

    #3 Max, there are no jobs, other than casual and part time now. There will be no more job growth, just profit growth and rationalisation.

    Many public servants have been moved onto short term contracts, once the current older generation of PS have retired on their massive pensions/super. Those coming after them will all be contracted and or part time.

    The future is as bright as blown globe and just a fragile. The economic direction and model being used by all political parties, is a death wish. They are extremely programmed ideologues, all they can see is the mirror in their heads, reflecting their insane ideologies.

    They will continue down their merry path of destruction, firmly believing they are right. Even when all the facts show they are wrong, big time.

  8. max

    March 12, 2018 at 4:23 pm

    # 1 … Tony It is good to hear a voice of reason in a world gone mad.

    When I went to school the world I knew was one of certainty – study, learn and get the job you wanted. Tariffs ensured jobs, jobs let you buy houses and cars and anything else, and the harder you worked the more you could achieve. This certainty let you plan ahead into what I thought was going to be a perfect future.

    What have my grandkids been given with globalisation? Forced to go to a school to 11 and 12 with no job prospects, while earn or learn is all they are told. With no way to plan ahead, uncertainty and despondency lead to drugs and suicide – and we wonder what has gone wrong with the youth of today

    Malcolm is bragging about all the jobs he is creating like jobs in the service industry. Just what are these jobs in the service industry? Are they high paid skilled jobs that give pride of achievement?

  9. spikey

    March 11, 2018 at 11:51 pm

    capitalism and economics are both mental disorders
    promoted by those with most to gain
    or hang on to
    if master slave systems get unbalanced
    the masters have a lot to lose
    not just financially
    once the delusions are shattered
    the reality of their
    revolting anti-social parasitic ideals
    have historically caused
    heads to roll

    i’m an open minded
    understanding pacifist

    most aren’t

  10. Tony Stone

    March 11, 2018 at 8:01 pm

    A global recession would be fantastic for the future as it would slow down the rate of social, environmental and biological destruction.

    Reintroducing tariffs would be the best thing Aus and other countries could do to stop the economic and social rot. It would instantly create many new small manufacturing businesses because currently they can’t compete with the shoddy cheap imports.

    Capitalism is the death knell for rational social life and economic rationalisation, and is the catalyst for collapse.

    Populism is the only way to go for a viable future because for too long the useless elites been running the show. Now it’s time for the people to take control and save the future from the degenerate morons destroying it.

    Contrary to the claims of the ideological elite, economic rationalisation has destroyed jobs and created worldwide growing poverty.

    When Aus had tariffs we had full employment, large numbers of small business, and major industry.

    Now we have very little manufacturing industry, huge balance of payments debt and we are totally reliant upon importing essential goods. Massive underemployment, removal of penalty rates and the demand, and the job is more important than anything else in life. This is a perfect example of true enslavement of the people.

    They are also forcing the population to pay for televised sport by removing it from free to air TV and only having it on foxtel. No competition, and with never-ending gambling and alcohol adverts paying extra for special events.

    In Aus, major corporations control just about everything and the politicians do their bidding, no matter what.

    Then you add the insanity of the enslaved political empty heads giving away all the people assets and resources to the corporate world.

    We now pay exorbitant prices for driving on major roads, and for all goods and services. In return we get commodities that have very short life spans and they are thrown away and packaged in ecologically destructive plastics.

    We can see the results of capitalism and economic rationalisation in glaring detail every where. Over population, degraded environments, violent urban areas, growing homelessness, failing health systems, pathetic transport services and constantly increasing pollution.

    Yep, capitalism is a great way for the human race to suicide.

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