Trade

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Views on Trade

Here's the thing:

  1. Protectionism is bad
  2. Predatory free trade is bad
  3. Finding the balance is good.

In general, free'er trade is better. But when countries subsidize and industry, with the intent of destroying other countries infrastructure, they can outcompete others on this uneven playing field.

In the short term, and for most people in the target country -- this is good. Their cost of goods goes down, and since there are more consumers than producers -- who cares if a few hundred thousand are getting screwed over for the benefit of a few million?

But in the local economies that are destroyed (because they can't adapt as fast as they were predated on), it's major bad. It also can undermine that infrastructure and delay innovation. (Longer supply chains have a cost, and you can make one country dependent on another -- so there are some national security implications).

Also allowing it, is rewarding bad behavior -- and going to encourage more of it.

So that gets us to Trump/Tariffs. What is the purpose, what is the duration, etc?

If the goal is to threaten a Tariff to stop getting the predation and unfair competition (that does hurt some segments of your market). And you can change their policy, and remove the Tariff, then this is a good thing.

If the Tariff is going on forever just to protect a special interest and give them better mark-ups, it's definitely a net bad thing.

And there's degrees in the middle.

So trade wars are like real wars. If there's a stated easily obtainable objective, and an endgame in site -- and it stays focused (and it's to end a bad regime/practice). I'm kinda OK with it.

If this is going to be a penis measuring contest and a quagmire, and both sides are just playing ego games and tit for tat, or protecting their own industries, etc. Then it's way way bad.

So it boils down to what happens.

I think/hope Trump is just using this to get concessions, and will bargain out of a trade war. And that's what winning looks like. He helped reduce an injustice and gives nothing up. But if the other side won't concede, and this becomes one-upsmanship by the idiotic EU or morally bankrupt China, then this gets everyone bloodied. I'd rather avoid that, but I'd rather the other side backed down and understood they were the asshats that started it. Unfortunately, many won't do that. So do you let them continue unchallenged, or to get in a brawl?

Trade Memes

References

  • Links