Word has it that NAFTA re-negotiations are not going well. Robert Samuelson writes that's because Donald Trump has misdiagnosed the problem:
What made America great in the 1950s and 1960s were the strength of its economy and the recognition that freer trade was a powerful political force promoting prosperity and cementing Western alliances.
It is this system that Trump is repudiating on the grounds that it has backfired on American workers and firms. “We are not going to let the United States be taken advantage of anymore,” he said in his trade speech Nov. 10. Poor trade agreements and abuses by our trading partners have caused U.S. trade deficits, the president said.
To be sure, the United States should be more aggressive in pursuing trade complaints against countries that steal intellectual property (patents) or engage in dumping and illegal subsidization of exports.
Still, these are not the major sources of our trade deficits. That distinction belongs to the dollar’s status as the major global currency, used to conduct trade and cross-border investment.
This drives the dollar’s value higher, making U.S. exports more expensive and U.S. imports cheaper. Given the nature of the resulting trade deficits — and as is obvious from the economy’s present state — the United States can achieve “full employment” and run trade deficits simultaneously.
Trump, of course, understands none of this. Ego is no substitute for intellect.
8 comments:
I disagree with Samuelson's assertion that "freer trade was a powerful political force promoting prosperity and cementing Western alliances." Freer trade can be a good thing but it can also be bad. Selling arms to renegade nations or pressuring nations to squelch environmental protection does not lead to better relations. We should remember that the West had free trade with Germany during the thirties and up to about 1942. We know how that worked out.
Note: I'm not against trade. I just reject the categorical "trade is good" propaganda.
Point well taken, Toby. Unfortunately, your prohibition against arms trade and environmental protections are lost on Trump. The same is true for Samuelson's arguments. Trump claims to have gone to "the best schools." He didn't learn much while he was there.
The point is also lost on Trudeau.
When you're not very bright, you just point and shoot. Trump has completely overlooked (and perhaps by choice) the real cause of the US downfall, both economically and politically. Instead of looking at other countries as the bogey men, he should look much closer to home, and that would be the very large and now multi-national corporations who have moved their operations to countries with cheap wages and whom he is now wanted to award extravagant tax reductions to as their reward.
In fairness, Toby, he says he held up TPP negotiations to get language into the agreement that as more favourable for labour standards -- particularly child labour standards. But I take your general point. Selling arms, for instance, does not seem top bother Mr. Trudeau.
Trump only knows how to assign blame, Lulymay -- to everyone but himself. And he knows nothing about taking and accepting responsibility.
Owen, I suspect that Chrystia Freeland had more do with the TPP negotiations than Trudeau. I'm sticking my neck out here but I think Freeland is the one who has a conscience, the one who is fighting to put labour and environmental standards into the trade deals. Trudeau may speak up but he follows the script. I think Freeland writes the script.
Given what Freeland has written in the past -- I'm thinking of her book Plutocrats -- I suspect there's some truth to what you say, Toby.
Post a Comment