Tag: Trump

China shock

A digression – an important digression – into trade policy. Maybe a little heavy-going, but important!

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Apropos my comments in my last post on de-industrialisation, there’s an interesting article in the current (July) edition of Prospect, by the FT’s economics leader writer, Martin Sandhu.

Has the cause of growing inequality in the rich world since circa 1980 been caused by globalisation or technological change? In Sandhu’s words, by the late 1990s ‘… the economics profession settled on the consensus that technology more than trade was to blame. Then China joined the World Trade Organisation.’

He quotes Autor, Dorn and Hanson’s paper, ‘China Shock’, and highlights their conclusion that ‘Chinese competition had localised but substantial negative and long-lasting effects on the places particularly exposed to it’. ‘On one estimate more than half of [US] factory job losses can be attributed to the China effect.’

’… the imbalanced effect of trade liberalisation can only be corrected if the losers are compensated out of the overall gain – but more redistribution and greater public goods are not on the cards in Trump’s deck.’

Of course technology is also a key factor, so too the shift of power away from labour to capital – not least, the decline of trade unions.  Benefits have also been hit hard – even more in the USA than the UK.

‘It is no surprise that that people feeling powerless and alone in the face of their demotion yearn to regain control – to ‘take their country back’. That is what Trump promises them.’

So too the UK. ‘The same dream of regaining control …fuels the growth of socially-conservative nativist right-wing parties in Britain, France, Germany, Scandinavia and central Europe.’ Some of the same grievances have been picked up by Bernie Sanders as well as Trump. (We have nothing directly comparable in the UK.)

But whereas Trump talks of putting up trade barriers the Brexit message has been all about lowering barriers with the rest of the world , ‘to escape the walls of Fortress Europe’ – a rigorous free trade message. (Both the USA and UK insurgencies are of course agreed on immigration.)

Also bear in mind that economic theory ‘predicts that the effect of low-skilled immigration is the same as freer trade with countries that have a lot of low-skilled labour’. Put another way, freer trade (especially negotiated from a position of lesser rather than greater advantage post-Brexit) will hit hardest those areas already suffering.

(Some will course want to rubbish economic theory. That’s the mood of the moment.)

The impact of Chinese imports on British industry, and the resultant job losses, has been far far greater than the impact of immigration. And yet it’s immigration on which the Leave campaign has focused.

And the impact of free trade? Now that we’re escaping from an EU that’s perceived to be the over-regulated and slow-moving ?

‘…Brexit will not lead to a bonfire of the regulations, but a redoubled effort to harmonise rules – that’s what trade openness increasingly means.’

There’s an obvious and striking irony here – we put behind us the EU and harmonisation, and negotiations over TTIP (the Transatlantic Trade and Investment Partnership), and we find that we’re faced with just the same issues when we seek to negotiate free trade deals around the world. But without the clout the EU gives us.

More than ever it’s apparent that immigration for the Leave campaign has been a target of convenience. The issues we face as a country with regard to our future prosperity are of a very different order. Which is not to say that we shouldn’t pay heed to the specific impacts of immigration, but our future lies in facing up to the global context in which we operate, and in which we will be, post-Brexit, less equipped to operate.

And our response as a country to those who feel excluded and resentful will involve strategies which simply aren’t part of the Leave agenda. That’s the absurdity of the situation in which we find ourselves.

 

A battle against ideas??

There’s an anti-intellectual, anti-ideas, anti-authority (academic as well as political) mood out there, encouraged and fired up by the media. In the USA by Fox and shock-jocks, and Trump and his cohorts. In the UK by much of the popular press and, sadly, by Brexit campaigners. See below for two contributions, both with Facebooks videos, which highlight the dangers such attitudes present.

One, a Barack Obama speech to the Rutgers University Class of 2016. ‘In politics and in life, ignorance is not a virtue. It’s not cool to not know what you’re talking about… But when our leaders express a disdain for the facts, when they are not held accountable for repeating falsehoods and just making stuff up, when actual experts are dismissed as elitists, then we’ve got a problem.’

See: https://www.facebook.com/BusinessInsider.Politics/videos/1015027085240290/

As seen from the UK – ideas are out of fashion, reliable sources of information are cast as biased, or worse – establishment. Boris’s suggestion yesterday that Cameron had bought the support of big business by offering government contracts is the latest, and most absurd, example.

There have been dubious claims from leaders on the Stay side. But the weight of misinformation put out on the Brexit side takes some beating.

Almost every organisation of note, business and European, every country in Europe, groups like the Five Eyes security group (UK, USA, Canada, Australia, New Zealand) – they have all come out in favour of staying in. Are they all tainted, biased, dishonested, bribed? Are they all to be damned as elitist and establishment?

Obama’s is a rallying-cry, and a reminder of what we stand to lose.

And, two, there’s a Brexit ‘film’ doing the rounds… It begins with the words, ‘We, the people are being cajoled… into surrendering our democracy and freedom.’ ‘The EU is turning into a dictatorship.’ But, given that we’re a key member of the organisation, the selfsame EU, which determines those regulations, and if we leave we’ll have them foisted on us, it’s a very dubious argument.

Happily you don’t have to put up with any further commentary from me. There’s a very good riposte: https://www.facebook.com/scientistsforeu/videos/787984157970262/

If Scientists for EU will forgive me I’ll quote the first paragraph:

‘The whole documentary is about the need for deregulation. It’s fundamentally a neoliberal infomercial, painting history through the mantra of deregulation leads to growth and regulation leads to stagnation. They tell us that the EU is over-regulated, so we need to get out – and then we will economically prosper. That’s the thesis. The only problem is that they have no business/ economist backing whatsoever. Instead of interviewing CEOs of Airbus, Rolls-Royce, etc (all of which have come out for Remain), the documentary interviews just the standard clique of Nigel Lawson, Daniel Hannan, James Delingpole, Nigel Farage, etc… Politicians and right-wing journalists – with Kate Hoey thrown it.’

Do check it out.

 

Obama chops Trump down

Lovely to see – to hear – Obama chopping Trump down. Being president is not about a being a talk show host, about marketing, about publicity, it’s about making difficult decisions, and some are unpopular, some will hurt people, and being well-briefed in your dealings with other world leaders – they too have ‘their own crowds back home’. That last point I especially liked – you, Donald, are not alone in this world.

There’s a piece in the Economist on American conservative talk radio, hosted by the semi-crazed (Rush Limbaugh, Glenn Beck) who somehow in the rarefied air of the prairies don’t just to get a hearing but strike a few big chords – or a few bum notes. If bum notes are all you hear, would you recognise a chord?

Does it give joy to Trump to be supported by such people – how much of a conscious game is he playing with them – feeding them pap?

Ted Cruz is no better, but while you feel that for Trump it is a big game, and a big ego, for Ted Cruz it is deadly, evangelically serious. He also feeds the talk shows with great material. The trouble is – he believes it all, and he can express himself with a degree of coherence. And he is so sure he’s right that compromise and balance, which is what the American constitution requires, gets shown the door. And America becomes ungovernable, as it halfway is now.

What also bugs me is Cruz’s call on the Bible, and Jesus, to support him. He sure as hell – almost literally – wouldn’t get close to the pearly gates. America has always been too good – the prairies again – at creating its own religions.

Only one small pleasure in all this – a little bit of humour – Fox News almost the good guys. They do at least have a small idea that politics is about governing – and governing, as John Kasich the best of the Republican contenders has made clear, is a serious matter, about results and balanced budgets and not public platforms.

The UK is – to use totally the wrong expression – a different ballgame. But we also have the same populist right-wing nonsense to deal with and it’s big in the media – thank God we’re spared talk shows. But we do, sadly, have the Mail.

Obama mentions that one aspect of government is looking out for the underdog – ‘standing up for people who are vulnerable and don’t have some powerful political constituency’. And that is the ultimate litmus test of any politics.

To quote Bob Dylan’s Chimes of Freedom, which I’ve done before:

Tolling for the aching ones whose wounds cannot be nursed/ For the countless confused, accused, misused, strung-out ones an’ worse/ An’ for every hung-up person in the whole wide universe/ An’ we gazed upon the chimes of freedom flashing