Trumpnomica or a correction?
There are some scholars that hold that a “closed fist” or “open hand” are mitigating factors in discussions of analogies regarding globalization. The former requires logic; the latter requires rhetoric. Okay, so the reader can surmise that the closed fist resembles a conservative approach; an open hand, a liberal approach. Perhaps, that is overly simplistic, however for our purposes, and the current climate surrounding American tariffs on those nation-states that appears to be at a trade advantage with the United States, seems fair .1) Kornprobst, Markus. “Closed Fist, Empty Hand or Open Hand? Globalization and Historical Analogies”. Metaphors of Globalization. Palgrave MacMillan. 2008. 4 April 2018.
That the United States has a trade deficit with China that amounted to 275 billion should be of no surprise to anyone who has been listening to Donald John Trump during his campaign for President or as President of the United States that government was turning right and inward. Changes are afoot now as Trump calls the shots and is picking his fights with gusto towards Canada, Mexico and China, in particular relating to money matters. The first bolt was shot out of Washington on January 17, 2017 when he signed the order to withdraw America from the Trans-Pacific Partnership trade agreement (China is not a signatory, at present.) So, is it a case of two global heavyweights going toe to toe with round – one starting with China’s ascent into the WTO in 2001. Many may ask: how did American leaders stand by and watch the trade deficit with China grow from 6 Billion USD with China in 1985, according to the United Stated Census Bureau. To sort of top it all off, Bloomberg reported in January 2018 that China held approximately 1.2 Trillion USD in government bonds or debt. Now, history does show this trade deficit is not a partisan issue as America has pretty much divided it’s time in the Oval Office between Democrats and Republicans. The U.S. government’s thirst for debt has caught up with them and now Trump the business mogul is tabbed to put Humpty back together. Okay, so he has to look outside first to find ways to bring in a bigger paycheque for his supporters and the electorate. Protectionism or common sense? If you take over a money l0sing business then you have to make changes. And, The Donald knew what he was getting into so this mash job should come as no surprise. The result: America finds itself heading into a trade war with a major creditor and customer. Is this the ugly side of globalization? Yes, I think globalization has presented many opportunities to some folks and cheaper consumables. But, at the cost of manufacturing jobs seems fanciful because within those manufacturing walls, factories and offices exists professionals that sell, manage and innovate to grow their brand. That is the “fly in the ointment” of the pro globalization crusaders.
Since the WW II period, Western allies formed the Bretton Woods monetary system that linked their currencies to gold and fixed the return on their dollar. Russia attended those meetings but was not a signatory because they felt that it was an instrument of Wall Street. Mao hadn’t succeeded in conquering China until October 1, 1949 and had a GDP of $119.00 in 1952 and was not sophisticated economically to be in those discussions despite a population of 541, 670,000. 2) “Expansion”. CountryEconomy.com. 4 April 2018. <https://countryeconomy.com/demography/population/china?year=1949>. Economic expansion has risen dramatically since Deng began reforms in 1978 with a 2017 GDP of $8836.00. Comparatively, China has much growing to do economically. However, collectively with a 1.3 billion population, they rank 2nd globally in economic terms. Current modifications to China’s Constitution have given unlimited terms to President Xi with the goal of transforming China into a major global force. Militarily, China has expanded her sphere in the Spratley islands and South China Sea where a treasure trove of energy deposits lie and is the gateway for shipping that is considered extremely high traffic. The United Nations Conference onTrade estimates that traffic at 1/3 rd of global maritime shipping with a value of 3.37 trillion in 2017. “How much trade transits the South China Sea?” ChinaPower.CSIS: Centre for Strategic and International Studies. 4 April 2018. <https://chinapower.csis.org/much-trade-transits-south-china-sea/>.
The Bretton Woods system was abandoned in August 1971 as the United States discontinued the convertibility of it’s currency to gold, allowing it to free-float prompting others such as England to allow the pound the same distinction. This was known as the “Nixon Shock” at the time. After the 2008 financial crisis, there were talks among leaders about reviving Bretton Woods to fix currencies, though the appetite was not strong enough for a switch back to a Bretton Woods system. With an absence of a multi-lateral tool for the developed economies to congregate to discuss economic issues, the G 7 was formed during 1975 and is vehicle for discussion on money matters. So goes trade organisations, so goes capitalism. And yes, socialist nation states have had multilateral channels for peace such as the Warsaw Pact, and recently, BRICS (Brazil, Russia, India, China, South Africa) provides members with economic compensation on an emergency basis. International trade organisations provide a guarantor for emergencies and the prospect for strengthening globalization. My concern for globalization is: are the goods getting through and when they are, why the high prices– see the Fair Trade produce that seems invisible on most shelves at the grocery store. The international community has a responsibility to help those nation states that are less advantageous. Yes! However, echoing Adam Smith for a moment…”It was not by gold or silver, but by labour, that all the wealth of the world was originally purchased.” America needs to create jobs to regain it’s footing. And, with Canada stockpiled with talent, we have to put it to work or risk losing that skilled labour. Looking at the China – U.S. model, a correction is overdue.