Free trade has made the world richer.
Lol
As with anything that becomes accepted as a universal truth, my approach is to challenge and question it.
That sums it up perfectly and explains why some aren't happy.As with anything that becomes accepted as a universal truth, my approach is to challenge and question it.
Has free trade really, actually made us richer?
Comparing now with pre-free trade what I can see is:
Manufactured goods are a lot cheaper in real terms.
Pretty much everything else is more expensive in real terms, in some cases drastically so.
Society is now far more divided. If you're a highly paid professional, a licensed trade or are in management then you're doing nicely. Most others not so much.
Things that were taken for granted are no longer givens. Go back 30 years and anyone with a full time job could afford their own house, they could afford a car, they could afford to drink at the pub, they could afford utilities, and so on. And whilst I certainly don't advocate it, many smoked and doing so was easily affordable.
Now in 2025 can someone with a basic job, something that isn't a profession, licensed trade or management, do the same? Can they buy themselves a 3 bedroom house with a backyard? Can they also have a car? Can they afford to go out for a drink? Do they turn the heating on when it's cold or do they have to think seriously about the cost of doing so? Do they even water the garden or is cost an issue?
Suffice to say I'm not at all convinced it's really making society wealthier. For managers, licensed trades and selected professionals it's all nice yes, but for those outside that group I'm far from convinced it's a benefit.
I suspect there's a lot of confusing the benefits of technology with the impact of free trade in all of this.
I agree technology has assisted but trade has also been part of the equation.As with anything that becomes accepted as a universal truth, my approach is to challenge and question it.
Has free trade really, actually made us richer?
Comparing now with pre-free trade what I can see is:
Manufactured goods are a lot cheaper in real terms.
Pretty much everything else is more expensive in real terms, in some cases drastically so.
Society is now far more divided. If you're a highly paid professional, a licensed trade or are in management then you're doing nicely. Most others not so much.
Things that were taken for granted are no longer givens. Go back 30 years and anyone with a full time job could afford their own house, they could afford a car, they could afford to drink at the pub, they could afford utilities, and so on. And whilst I certainly don't advocate it, many smoked and doing so was easily affordable.
Now in 2025 can someone with a basic job, something that isn't a profession, licensed trade or management, do the same? Can they buy themselves a 3 bedroom house with a backyard? Can they also have a car? Can they afford to go out for a drink? Do they turn the heating on when it's cold or do they have to think seriously about the cost of doing so? Do they even water the garden or is cost an issue?
Suffice to say I'm not at all convinced it's really making society wealthier. For managers, licensed trades and selected professionals it's all nice yes, but for those outside that group I'm far from convinced it's a benefit.
I suspect there's a lot of confusing the benefits of technology with the impact of free trade in all of this.
Free trade has made SOME in the world richer.
Yes Mick, as long as the elite's are getting their junk cheap, the poor are just collateral damage, the fact the working poor can't even afford to rent is a minor issue.
The fact is China and to a lesser degree Russia are trying to undermine the U.S fiscally through Brics and the Belt and Road initiative and militarily by building up their inventory of equipment and technology.
The U.S, well Trump in particular can see that unless the West gets off their butts, it is only a matter of time before the World order flips, China is investing a hell of a lot into developing countries like Indonesia, Malaysia, Thailand etc so those countries will be more receptive to ditching the U.S dollar as reserve currency.
Unless the West stops the slide into third world style economies, it is only a matter of time before it actually happens, just ask yourself "if we didn't have the iron ore, coal and minor minerals, what would keep our dollar at its current level"?
So even the EU has a collapsing economic model, they have expensive energy and can only sell their product, on historical respect for quality.
As China's manufacturing standards improve, the perceived difference between the Chinese and European product will narrow, but the cost difference will increase, China's will get cheaper due mainly to volume, cheap energy and cheaper labour costs.
It is only a matter of time before the Chinese product is comparable with the European or American product, much the same as happened with Japanese products, they went from Jap crap to best in class.
No doubt what Trump is doing is going to hurt financially, but my guess is unless the West changes, they will hurt a lot more in the long run.
Do I think Trump is a unattractive person and personality? Absolutely.
Do I think he is right in what he is doing? Most of it yes, because the ingrained operandi modus in the West entrenched.
There is a huge amount of money being made by smoke and mirrors and money printing.
IMO at the moment the only way the West can stop the slide is by tariffs, this negates the advantage that China has and slows their sales.
That should in turn mean that China will have to increase their prices at home, to compensate for loss of sales to the major U.S market, that in itself would become inflationary for china and their wages will have to climb.
It wont stop the rise of the second world countries, but it should slow the rise, hopefully it ends up with the countries on a level playing field, without tariffs in the future sometime and most countries with similar living standards.
This whole process was put in place in the 1970's, with the Lima Agreement, it was meant to raise third world countries out of poverty and it has worked to a degree.
But it was never intended, to send first world countries into poverty, from my recollection.
Europe needed to get its house in order, way too much bludging, pizzing in each others pockets and group hugs, while the house burns down.
IMO Trump has stoked up the wrath of the multinationals, all their inventory that they source from China, is going to hit their bottom line and CEO's pay packets.
Just my thoughts, but it sure is interesting times.
100%.
And just like that, the age of American empire, the great Pax Americana, ended.
Our government thinks it can simultaneously:
This bit is an excellent summary
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WASHINGTON, DC - MARCH 07: U.S. President Donald Trump delivers remarks on the jobs report from the Oval Office at the White House on March 07, 2025 in Washington, DC. The U.S. economy added 151,000 jobs, with the unemployment rate rising slightly to 4.1%, according to the Bureau of Labor Statistics. (Photo by Anna Moneymaker/Getty Images) | |||||||||
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Everyone in the country at the moment, albeit from different vantage points, seems to have the same question: What the actual **** is going on? Is the plan to have permanent tariffs? Are these meant as the basis of some kind of negotiation? Are we going to have blanket tariffs as the basis of a system of corruption in which favored industries and companies gain exemptions in exchange for fealty and cash? (So, countries as universities and law firms?) Is the idea just to replace income taxes with tariff income and fundamentally shift taxes to the middle and working classes? At a basic level, the entire MAGA movement, and Donald Trump from whom all of it stems, simply doesn’t grasp the nature of American power or its limitations. In their view, the United States is the natural and inherent dominating power in the world. We’re the most powerful and the strongest. And starting from that view they look out onto the world and think if we are in charge why don’t we act like we’re in charge? Instead of acting like we’re in charge, we do a lot of consulting and asking. That’s weak and leads everyone to take advantage of us, protecting their industries while we keep our markets open, letting their defenses atrophy and relying on our protection, etc. It’s lost on them that the U.S. is not actually the inherently dominating power on the planet. U.S. primacy is based yes on a vast military, access to the American domestic market, American wealth. But really it’s based on America’s role as the custodian of a global system that on balance works quite well, at least for the other advanced economies of the world. It provides a general peace, a system of more or less known rules enforced with some consistency, a U.S. primacy that keeps the peace without dominating other middle powers, etc. The U.S. global order is like a trampoline with a bowling ball in the middle; like a giant star, the very fabric of the system is subtly angled in the U.S. direction. But on balance it works. The U.S. is the first among equals more than a dominating power. In other words, precisely what MAGA views as examples of weakness are the bases of American power. Donald Trump wants to hold the rest of the world in subjection. But the U.S. simply isn’t powerful enough to do that. It may have been just after World War II for a while. But it certainly isn’t now. That’s also why the American primacy has so long outlasted the Soviet one, whose satellites tore away from it at the first opportunity, and even before any real opportunity: because the U.S. primacy actually worked quite well for allies in Europe and East Asia. Donald Trump is only able to look at America’s persistent trade deficits. The role of the dollar as the global reserve currency and the massive advantages it brings are lost on him and that’s what makes the trade deficits in some ways inevitable and also sustainable. It also gives the U.S. a whole series of other vast advantages, one of which is being able to borrow and borrow and have it mostly not matter. Yesterday, a friend sent me this video from a Youtube Channel called Money & Macro. It’s quite good. I really recommend it. It’s basically an effort to make sense of what the goal and plan of all this chaos really is by looking closely at the arguments of Trump’s Treasury Secretary Scott Bessent and his Chair of the Council of Economic Advisors Stephen Miran. The argument goes like this … The global neo-liberal economic order created in the early 1980s by Reagan, Thatcher and the G7 powers has de-industrialized the United States to the point where it has become not so much an economic problem as a national security one. You can’t remain the dominant military power without a dominant or at least robust industrial base because that’s how you sustain a war-fighting machine. That is what made the U.S. so critical in World War II. So how do you re-industrialize without losing the dollar’s role as the global reserve currency? Because to a great degree it’s the global trade in dollars and the dollar’s outsized value that makes trade deficits so persistent. The plan goes something like this. Put huge tariffs on everyone, create a lot of chaos and near-term pain. But their pain will be greater than our pain. And eventually the other countries will come calling, wanting to cut deals because their economies are all based around the need for access to the U.S. domestic market. Then you cut deals in which other countries peg their currencies to the dollar. That locks them into using the dollar as the global reserve currency while also allowing the value of the dollar to fall and thus allowing the re-industrialization of the United States. How much sense this makes in narrowly global economic terms I’ll have to leave to others. But the video’s host, Joeri Schasfoort, makes a pretty strong case that whatever its merits, this is the plan of these two key Trump advisors. Joeri Schasfoort argues that the plan actually does make some sense on its own terms. The fatal flaw is that it relies on the buy-in of all these other countries. It relies on these other countries trusting U.S. protection and fair-dealing. And the countries of the world are hardly going to have a lot of trust in a country which has just bullied them into a new and unequal global economic regime through what amounts to extortion and force. And yes, that really is the problem. This whole plan amounts to a highly destructive power play in which the U.S. will force the countries of the world to knuckle under and accept Trump’s demands. (Any of this sound familiar? It should.) But you come back to the essential problem: the point of a global trade regime is something that is enduring. But how enduring are deals made under duress? Probably not very. It goes back to the essential point: is the U.S. strong enough, economically and militarily, to coerce the rest of the planet into a new economic regime of its own choosing? I doubt it. And to the extent it can do it short term, by creating a kind of bum rush or panic response, how enduring can that be? No one stays in a deal agreed to under duress. They leave at the first opportunity. But the whole theory has a much bigger problem. We all know there is a persistent desire, need, insistence on figuring out the plans behind Donald Trump’s seeming chaos. But that whole enterprise is flawed. There is no more plan here than a giant worm consuming everything in its path has. It eats and it moves forward. That’s all there is. What you have is a man who can only understand relationships through the prism of domination. There’s the dominating and the dominated. And you want to be the first and not the second. He also thinks countries can only be great and rich if you make a lot of heavy industrial products. That’s where the thinking stops. There’s a lot of grievance and a general nostalgia about the 1950s. But that’s really where the thinking stops. There is no thinking really. There’s a set of impulses. Now, given Trump’s great political power, he attracts to him people either who have ideas that seem similar to these impulses or for whom these impulses fit well into their theories or strategies. And to be clear the world is due for a reform to its system of global economic and trade governance. So lots of people have ideas. Some good, some bad. People like Bessent and Miran sidle up to Trump. And in the process of sidling up to him and gaining influence with him, his goals and actions do take on more shape and coherence, on the surface. So there is sort of a plan. Miran and Bessent have one. It has some impact on Trump. But really it’s just the same guy with the same impulses, with a desire for domination and who’s super hung up about trade deficits. And that’s the chaos. Because everyone’s desire to find a plan is based on magical and wishful thinking. None of it is real. And Donald Trump is still the guy making it up as he goes along every day. This brings us back to another point about Donald Trump. Trump’s self-image is that of a deal maker. But there are different kinds of deals. There are collaborative deals like the ones commercial businesses make with each other. So I make a widget and I contract with you to make one of the parts I need for my widget. You make money. I make money. It works. Great. If it stops working for both sides that deal is going to fall apart. Or it will need to be renegotiated. This is the nature of business deals in the real economy. But there’s another kind of deal … say, the kind of deal when I sell you my car. If I get you to pay way more than it’s worth, I win and you lose. It’s binary. The only way for me to win in fact is for you to lose. I only know I won when I can see that you lost. This kind of deal only works if it’s a one-off. I don’t care if you’re mad. I don’t need to sell you another car. If you look at Donald Trump’s career, it is heavily, heavily based on the latter kind of deal. And that kind of deal is only possible with some degree of razzmatazz, coercion or deceit. That really is his understanding of what a deal is: getting something over on the other guy. And that’s what we see here. To the extent that there’s any plan it’s basically a fast-action power play; Trump is pulling on the economic powers of the world to bum rush them into a newly subservient global trading regime. But really there is no plan. Even calling it a “regime” is falling into the Trump/retcon house of mirrors. That notional plan is just something players like Miran and Bessent have tried to impose on Trump’s impulses and grievances. But he remains in charge. So their notional plans don’t really mean anything. It’s not that different from Trump’s war against the “Deep State.” Trump doesn’t give a crap about the federal bureaucracy or what it does. It’s just something he got mad about during his first term because he got saddled with so many federal investigations and the “Deep State” was the thing that made it hard for him to break the law or generally use the U.S. government as his personal property. For him that’s like the general counsel’s office investigating the CEO. What the ****? Then too a lot of people who had deeply articulated and pre-existing visions of stripping down the state gathered around him. Because his impulses and anger were useful. And here we are. We saw this in the furious Wall Street run-up from November to January. Everyone wanting to convince themselves that Trump had a plan and that it was one that would be good for them. There must be a plan, right? The lure of magical thinking runs so damn deep. This is the most consistent pattern of the Trump era, the quest to divine some underlying plan or theory when all it really is is a degenerate huckster following his gut. It’s retcon, retcon, retcon all the way down. And here we are. |
Another way to look at all this is to consider what drives major social and political shifts in society?
If countries become more independent, yes. Another scenario is that other alliances may form that won't be friendly to the West. Places like Indonesia and Malaysia (perhaps Japan, South Korea and Pacific nations) may gravitate to China which would not be good for us, unless we do the same.
The tariffs on Vietnam 46%!!! will force them to turn to China when they were previously the poster child.
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