Tag Archives: trade

Random thoughts – keeping you on your toes

Trade War

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On its own war is defined as a state of armed conflict between different nations or states or different groups within a nation or state.

A trade war does not include armed aggressions (which typically has life or death consequences) but all of the other aspects of widespread conflict including unpleasant results apply.

Illogical

War, whether violent and destructive with associated loss of life or just destructive making lives miserable rarely have outcomes that are worth the cost.

The trade war results in negative impacts for all participants and even for the innocent bystanders (the global community).  Waging this kind of operation has an emotional foundation but if logic were applied there would never be a war of any kind.

In the television series Star Trek, the fictional Vulcan race was culturally based on pure logic.  As a people, they could not think and act in any way that was not logical.  Hence, no wars, of any type, ever.

Justification

The current US versus China trade war is based on fairness.  The US accused the Chinese of not operating with fairness in the realm of trade.

Fairness defined as impartial and just treatment or behavior without favoritism or discrimination.  Unfortunately, all of these descriptors are very subjective.

What one person, group or another entity view as just or without favoritism could easily be quite different from others perspective.  So ultimately the trade war is justified by a biased opinion leading to emotional angst between all the stakeholders.

We can see how this can lead to war.  How illogical.

 

Random thoughts – keeping you on your toes

USMCA

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For those of you not tracking the long and boring NAFTA re-negotiations, the United States, Mexico and Canada decided to do away with free trade.

They did arrive at a trade agreement which was renamed the U.S. , Mexico, Canada Agreement (USMCA) at the request (or perhaps insistance) of the U.S.

The removal of “free trade “ and from the title was quite appropriate.  Although still about trade it is focused on rules and restrictions, not free exchange of goods.

All about me

From the start of negotiations the U.S., through it’s stalwart spokeperson Donald Trump, declared the objective was to get the U.S. what they wanted.

The win-win negotiation principal arising from research at the Harvard business school, was disregarded.  

Historic results have shown this approach is typically not sustainable and while it does provide some immediate satisfaction ultimately things will turn out badly.

Already, cracks

It is probably precipitous to say the current stock market sell off is due to the U.S. trade stance, however anticipation of the impact on the world wide economy is surely a factor.

The problem with the my way or highway approach is it only works when backed by power.  The bully’s approach only works as long as the opponents give in. 

With any luck the coming U.S. mid-term elections will change the political power structure and sanity will return.  At least one can hope.

 

Random thoughts – keeping you on your toes

Trade War

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Canada has announced retalliation against the steel and aluminum tarrifs the U.S. has decided to enforce against Canada.  Laughably the U.S. rational for the tariffs is national security.

I refer to this as  laughable simply because the tight political and geographic alignment between Canada and the United States makes the consideration we pose a security threat simply ridiculous.

Nobody Wins

Free trade should be a prized practice and lack thereof disdained.  For me this is very much like the basic philosophical misalignment between communist economies and capitalist.

Human motivation is a very real factor in these two models.  At a very high level, conceptually, the reward incentive is reduced in a communist economy because everyone shares.

When effort is not tied to gain there is less incentive to work hard and therefore output suffers.  In the capitalist model effort is linked to results.  If you work harder, your gain is greater.

Free trade works like capitalism, what you put into it affects what you get out, without having to worry about artificial constraints.  If the government is influencing your ability to profit, through trade restrictions, this may have a short term positive effect but in the long term,  like most purely communist economies, all will crumble.

Why Fight

Ultimately everyone looses in a war, whether physical or a trade war of wits.  War is bad for the human condition and those who believe it is a way to achieve what is right are in fact very wrong.

Free trade or restricted trade, it is what it is (albeit free trade is obviously better).  However war is very bad no matter how you look at it.

Random thoughts – keeping you on your toes

Restricted Trade Practices

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I often wonder what would happen if the only constraint on buying and selling goods and services (world wide) was supply and demand.  What effect would this have on the worlds economy.

Trade restrictions,  both political and financial have long histories around the world.  Basically for as long as countries have existed.  There are no examples of unrestricted trade to examine.

Unfortunately without the benefit of real experience the argument over controlling a societies destiny based on geography becomes philosophical and emotionally entrenched.

Patriotism has a cost

Countries enable specific societal and cultural practices to be enforced within controllable boundaries.  What if these constraints did not exist?

Laws, both creation and enforcement would need to be managed worldwide.  Is this feasible without regional boundaries covering specific populational sizes and associated areas?

It has never happened so far in the history of humanity. So albeit might be a good idea, seems like something that is not going to happen organically.

For me, intuitively, removal of artificial barriers to buying and selling sets the value bar in the most realistic way.  Of course,  it eliminates the opportunities for exercise of control and power through political practices, therefore,  those in governing roles find it a hard concept to grasp.

It’s all about me

Lately on a world wide basis, whether exemplified by Brexit or Trump trade positions or Euroexit politics, people are becoming insular and focused on “it’s all about me”.

Trade is good as long as it benefits me (my country). What benefits me is probably at the detriment of others, but thats okay. What a sad attitude.

And the truly sad part is currently this view is becoming more and more popular world wide.