6 ms·

We are all mercantilists now

59 points by andsoitis 1y ago

churchill 1y ago
Watching intelligent people across America defend tariffs has been shocking/amusing, to say the least. We all understand that for most of human history, everyone lived at a subsistence level because we all had to farm our food, bake our bread, sew our clothes, build our own houses, etc. Specialization is what makes the luxury and wealth of the modern world possible: you do one thing all day long and convert it to cash, then exchange value with people who do other stuff to get what you want. And since they're operating at scale, they can build more houses, make more stuff, etc. that you ever can if you did it yourself. So, you pay less for more stuff. International trade simply takes it to the next level. For instance, the average American will not bend over to pick cocoa beans for chocolate for even $100k/yr. Many of you will argue, but all I'll say to you is that there's a reason agricultural work is referred to as back-breaking work. There's also a reason why farmers have the highest rate of suicides. Even if the American eventually agrees to do it, the cost will be so prohibitive that buying chocolate will be out-of-reach for everyone but the rich. Abundance ended; the end. Now, using tariffs, the US gov. wants to take money away from customers and use it to prop up inefficient businesses that should be outsourced to other places that can do it well. If the CCP wants to subsidize solar panels and sell them to you, why not accept free panels funded by diluting the wealth of Chinese workers and savers? The main argument mercantilists use against free trade is that after establishing a monopoly, incumbents can raise prices. They forget that there's competition, even among solar manufacturers in China and anyone trying to bait and switch would be driven out of business by smaller, hungrier players. And in this example, PV lasts 40-50 years and once you buy it, they can't gouge you. No country has benefited from free trade like America; no bloc has benefitted like the West. You're mad at China for lifting hundreds of millions from grinding poverty, without realizing that Chinese mass production has cushioned the effect of all the money-printing by Western economies for decades now. Hundreds of millions of Chinese workers going into cities to work in manufacturing are the reason why many middle class workers across the West can afford cheap consumer goods, despite their government's dumb financial decisions. But, it's okay: we'll see how it plays out.
andsoitis 1y ago
"The four tenets of Modern Mercantilism include: - The state has a large role in orchestrating the economy to increase national wealth and strength. - Trade balances are an important determinant of national wealth and strength, and trade deficits should be avoided. - Industrial policy is used to promote self-reliance and defense. - National corporate champions are protected."
- notahacker 1y ago
  Feels a bit stretchy that... Trump strongly believes the second point but is [even] less convinced of the importance of the other three points than previous US administrations (they're actively sabotaging a lot of the state organs that could orchestrate the production of US national wealth, and seem to regard national corporate champions as entities to demand protection money from more than entities to actually protect) China does believe in the role of the state and industrial policy and corporate champions but I don't think they actually believe the trade balance is a measure of strength, and they've been pursuing broadly similar policies for decades. The EU might be slightly more interested in linking defence to industrial policy than it used to be and a lot less trusting of the US as a trade partner, but its state aid sits under the same Single Market restrictions it always has and it certainly isn't making the mistake of trying to maximise its trade surpluses. And most of the rest of the world is trying to industrialise via Chinese imports and wondering why the US is being weird.
Findeton 1y ago
It's sad because Adam Smith wrote The Wealth of Nations in part to debunk Mercantilism. Smith wasn't right on everything, but he was right to criticize Mercantilism. For example, if trade imbalances were so bad, we should sink any ship that comes into the US as this reduces trade imbalances (absurd example from Bastiat btw).
- TimorousBestie 1y ago
  [flagged]
- js8 1y ago
  Theory of comparative advantage is probably wrong, though. There are huge advantages for a nation in doing (pretty much) everything, and having research close to application, and having tool makers close to their users. Analogy with human specialization is flawed, because human attention span is limited. Even there the famous Heinlein quote on versatility still applies.
  - energy123 1y ago
    Juche doesn't work. The theory of comparative advantage is not wrong.
    - linksnapzz 1y ago
      If current trends continue, North Korea will be around longer than South Korea. Ironic, no?
      - deleted 1y ago
        [deleted]
      - justonceokay 1y ago
        There is no reason to believe trends will continue. Countries populations are stabilizing, not trending toward zero.
      - 1y ago
hooverd 1y ago
No? Our President doesn't know what tariffs are. A lot of this is enabled in part by all these capitalists rolling over and submitting.
- Spivak 1y ago
  The orange figurehead, probably not, but the people actually pulling the strings and writing all those executive orders absolutely do. The folks in power might be misguided but they are acting purposely creating more protectionist policies. To what end I think is anyone's guess. I don't think it's clear how an isolationist US benefits us when right now we have every country in the world giving us real tangible wealth in exchange for paper.
  - CalChris 1y ago
    > absolutely do I'm not convinced. There is no coherence in their decisions, well any more than tossing out red meat. We can't even call them protectionist policies. It's just populism. Still, I agree about isolationist. But we started down that road with W and are now running off that cliff with Trump. Not coherently but enthusiastically.
    - Spivak 1y ago
      Look, I'm not agreeing with this admin's policy direction, and I certainly don't want the world they envision that this policy will drive us toward—there's plenty of reasonable skepticism that it won't even have the desired knock on effects they're hoping for, but I do think the folks at the helm know broadly what the levers they're pulling do. I worry the level of stupidity that their critics project on them is both inaccurate and is so severe as to essentially excuse their actions and absolve them of any responsibility for them.
      - CalChris 1y ago
        We disagree. To reduce it to a few words, I think that you see policy (even if misguided policy) and I just see populism, entertainment if you will. I think the purpose of the article is to remind us what mercantilism is. But again, I don't see this as mercantilism which has a coherence, and instead just as populism which doesn't. Putting a heroin addict in charge of Health and Human Services and shutting down vaccine development is not policy. It's populism.
bediger4000 1y ago
So 40 years of "Free Market" absolutism, which was a central pillar of conservative economics, gets reversed just like that? There's consequences to mercantilism. For starters, the best products may no longer win. Justifying anything by "best product won due to consumer choice" will be a laughable reason. Justifying respect for founders and CEOs as intelligent or better isn't possible. A successful founder or CEO is just better at sucking up or whatever it takes to be blessed by authority. There's some consequences to this reversal to conservatism as well. How can any thinking man believe a justification from principles now? They're reversible. Conservatives lose any kind of intellectual high ground, even in retrospect. Are they reasoning from principles now or were they doing it then? Can't tell.
- MassPikeMike 1y ago
  I agree that in our current system, consumer choice generally determines which product wins. But does the best product really always win? As a fan of BeOS, it doesn't seem that way to me.
  - loudmax 1y ago
    Arguably, there wasn't a free market. Jean-Louis Gassée has been on record criticizing the Microsoft Windows monopoly of the late 90's, early 2000's.
- loudmax 1y ago
  A lot of people who describe themselves as "conservative" have completely abandoned formerly conservative values: the rule of law, moral integrity, personal humility, and so on. I'd prefer we not call these people "conservative" because those old values have real merit.
  - monero-xmr 1y ago
    I live in a major American city run by progressive democrats, like all major American cities, and petty crime is rampant. The "rule of law" here doesn't seem to apply to anything except murders because reporting anything else takes hours at the station to even get them to file a report, let alone solve anything (hah!). Even worse, the apparatchiks that run local politics never believe anything they do is wrong and entirely lack personal humility. It is hard to square this being a "Republicans Only!" problem when I see so much of the same all around me.
tharmas 1y ago
On trade imbalances: Trump expects Canada, a country of 40 Million people, to buy as much goods from the USA, a country of 300+ Million people. And if you subtract the oil that the USA buys from Canada, Canada has a trade SURPLUS with the USA. That is, apart from selling oil to the USA, Canada buys MORE from the USA than the USA buys from Canada, a country roughly one tenth the size. This trade war isn't about righting trade imbalances. It's about the USA exerting leverage over countries that it can get away with. Just like a Mafia Don. Or to quote a crude summary from Peaky Blinders: "Big $ucks small". That's the philosophy of the Trump Administration in a nutshell.
- monero-xmr 1y ago
  What would you recommend Canada do now, other than get the US to change its mind? This seems like the reality now
  - metalman 1y ago
    Just before the plandemic, China put in an offer on everything that Alberta could produce, and that deal never got past the first stage, and then, we kidnaped the daughter of the guy behind Huawie, all the rest of the anti China stuff and now we are here, watching Trump fly out to entertain Putin......perhaps Canada can put together a very special surprise for both of them
  - tharmas 1y ago
    Invest heavily in the Electricity grid. Both AI Data Centers and The Transportation Grid (Electric Vehicles, Batteries). These two sectors are only going to grow and they require massive amounts of electricity. Peak Oil is going to happen soon 2020-25. China's oil demand in 2025 dropped from previous years. Even in the "drill baby drill" USA refineries are closing do to falling demand in the USA. The private sector does not see new pipelines as economically viable. Trudeau had to step in to finish the Trans Mountain twinning. Existing pipelines that go to the USA are only at 75% capacity. If Canada wants to ship oil to Europe or Asia they should ship it by rail. It would be foolish to spend money on new pipelines when overall demand for oil is declining. And by the time these pipelines would be completed Peak Oil would be a done deal. Develop more trade with Asia and Europe (which the current govt appears to be trying to do). A big problem is this emerging multipolar world means the USA is going to increasingly pressure Canada to become even more of a vassal state. This youtube channel has excellent information about Canada's Engergy Future: Energi Media https://www.youtube.com/@EnergiMedia/videos https://www.youtube.com/@EnergiMedia/videos
marcosdumay 1y ago
We always were. There was no point in history when governments weren't mostly mercantilist. The WTO was entirely built on the idea that "if you insist on hitting your face that hard, I'll hit my face and then you will see it!"
ertgbnm 1y ago
The only problem I have with articles like this is that it frames what Trump is doing with an air of intention. Most readers will obviously think that becoming mercantilist is a bad idea. However, readers will also walk away with the notion that these actions have all been done with the a grand plan in mind. The reality is much more stupid though. Recent policies have been made without any plan to begin with. There is no driving philosophy of "we must create modern mercantilism" and the resulting policies being a coherent plan to bring about that change. Instead actions are being made based on the split second decision making of a moron would lacks the most basic understanding of economics much less mercantilism. This is a decidedly worse world than one in which the plan is simply a bad one. A bad plan would at least be coherent and something that our allies could predict and make their own plans around. Nevertheless, I think the thesis is broadly correct as being the outcome of recent actions.
- analog31 1y ago
  I don't think so. Recent actions are not delivering an industrial policy, or promoting research. They are not addressing the distribution of "wealth and power" which is possibly more important than its magnitude.
- ambicapter 1y ago
  I don't think they're gracing him with an air of intention. I think they're just looking at what he's doing and finding the closest model that makes reasonably accurate predictions about the future.
- tootie 1y ago
  True. And in a few years we'll find out how much Trump has actually affected the nation's trajectory. His trade policy is an absolute 180 from GOP orthodoxy and members of his own party have mostly said "we'll do what the president wants" and not "we think this is a great idea". I'd wager a lot of this policy gets undone at the first opportunity.
  - UncleOxidant 1y ago
    > I'd wager a lot of this policy gets undone at the first opportunity. You're likely right, but it likely won't happen for about 3.5 years during which time much damage will be done.
tantalor 1y ago
> as countries defected and adopted mercantilist policies, the global system lacked sufficient authority to stop them. Each time another country adopted mercantilist policies, it pushed others to react similarly This is just a prisoner's dilemma.
- moomin 1y ago
  A good way of understanding the function of the EU is as a way of negating prisoners dilemma effects, or at least externalising them.
geremiiah 1y ago
It's kinda funny that Americans look at the German economy and think they want to be in that situation. You would rather have an economy based on manufacturing cars, rather than one based on leading in tech? You sure?
- Workaccount2 1y ago
  People want Germany's 1,350 average annual working hours compared to America's average 1,765 hours, and then tax billionaires to make up the difference. Probably wouldn't work out well, but that is the shiny object they are transfixed on.
  - OscarCunningham 1y ago
    The PPP median income of the US is 36% higher than Germany. If they want 30% fewer working hours then they can have it now, and 6% left over.
    - Workaccount2 1y ago
      German economic growth has been shrinking for decades and is now in decline (negative growth). Meanwhile the US has been chugging along at a steady 2-3% for that same time period. Ironically, PPP is exactly the kind of myopic metric Germany would use to self-access right now.
- bitshiftfaced 1y ago
  What makes those two things mutually exclusive?
- legitster 1y ago
  > "Each of you in your private household would know better than that. You don’t regard it as a favorable balance when you have to send out more goods to get fewer coming in. It’s favorable when you can get more by sending out less.” - Milton Friedman Being obsessed about trade deficit is missing the forest for the trees. If you can run a successful modern economy just by sending out slips of paper, that's a great deal. That said, even Friedman made a caveat for national defense. If war breaks out and you have no manufacturing capacity, there are theoretically bad problems there. It also doesn't account for cultural concerns. Maybe a country that doesn't have enough manual labor jobs develops weakness and stagnation?
legitster 1y ago
> China turned a slow drip into a death spiral. While many countries pushed the boundaries before China did, its economic size and the effectiveness of its mercantilist policies broke the pre-existing order. Through currency management, public procurement, state subsidies, protectionism, and other implicit subsidies, China has developed a range of leading industries, including electric vehicles, solar power, and batteries. China's rise can be attributed to taking advantage of the neoliberal order. Many of their nationalistic successes come through things like currency manipulation, hiding illegal subsidies, intellectual property theft, and using state monopolies to bully other nations and their corporations. It's a prisoner's dilemma. If everyone copies China's playbook, there is nothing left to take advantage of. We will all be poorer for it. It cannot be understated that we are getting front row seats to the end of Pax Americana. In a world where countries can no longer enjoy reliable trade for commodities, we are going to revert to a world of imperialist land grabs and violence.
- mooreds 1y ago
  > It cannot be understated that we are getting front row seats to the end of Pax Americana. In a world where countries can no longer enjoy reliable trade for commodities, we are going to revert to a world of imperialist land grabs and violence. I don't agree with everything Peter Zeihan writes, but he did a good job of capturing this in "The end of the world is just the beginning"[0]. It feels like it is going to be a rough couple of decades. 0: https://zeihan.com/end-of-the-world/ https://zeihan.com/end-of-the-world/
- Workaccount2 1y ago
  >In a world where countries can no longer enjoy reliable trade for commodities When the firefighters get blamed for causing fires because they are always present every time there is one.
armchairhacker 1y ago
Are countries other than the US and China adopting tariffs and becoming "mercantilists"?
libraryatnight 1y ago
Smart enough to see it, smart enough to understand it, thinks we're dumb enough to not realize he and his ilk helped it along. These men yearn for the pyre.
romesmoke 1y ago
> A version of Greg's research was published in the Wall Street Journal. This is not research; it's an opinion piece by a Bridgewater employee that may prove right in the years to come. Plus, the rhetoric of differentiating China from the "free world" paints a Big Red Flag over the article's face.
- holmesworcester 1y ago
  When did China become part of the free world?
  - romesmoke 1y ago
    The joke's on anyone outside of China thinking they're free.
  - readthenotes1 1y ago
    During the Umbrella Revolution I guess
  - tremon 1y ago
    Around the same time the US left it. It's all relative, after all.
OscarCunningham 1y ago
It's wild how people keep on talking about the prisoner's dilemma in the face of economist consensus that the selfishly dominant strategy is free trade. It's consistently easy for special interests to convince the public that tariffs are part of a sophisticated strategic/moral dilemma, while in fact they're just handouts. Likewise the glorification of China. The idea that the Communist Party might make bad economic decisions is never considered.
m3047 1y ago
He's talking about a fait accompli: > But as countries defected and adopted mercantilist policies, the global system lacked sufficient authority to stop them. It's not the future. It's now.

59 points by andsoitis 1y ago

Watching intelligent people across America defend tariffs has been shocking/amusing, to say the least. We all understand that for most of human history, everyone lived at a subsistence level because we all had to farm our food, bake our bread, sew our clothes, build our own houses, etc. Specialization is what makes the luxury and wealth of the modern world possible: you do one thing all day long and convert it to cash, then exchange value with people who do other stuff to get what you want. And since they're operating at scale, they can build more houses, make more stuff, etc. that you ever can if you did it yourself. So, you pay less for more stuff. International trade simply takes it to the next level. For instance, the average American will not bend over to pick cocoa beans for chocolate for even $100k/yr. Many of you will argue, but all I'll say to you is that there's a reason agricultural work is referred to as back-breaking work. There's also a reason why farmers have the highest rate of suicides. Even if the American eventually agrees to do it, the cost will be so prohibitive that buying chocolate will be out-of-reach for everyone but the rich. Abundance ended; the end. Now, using tariffs, the US gov. wants to take money away from customers and use it to prop up inefficient businesses that should be outsourced to other places that can do it well. If the CCP wants to subsidize solar panels and sell them to you, why not accept free panels funded by diluting the wealth of Chinese workers and savers? The main argument mercantilists use against free trade is that after establishing a monopoly, incumbents can raise prices. They forget that there's competition, even among solar manufacturers in China and anyone trying to bait and switch would be driven out of business by smaller, hungrier players. And in this example, PV lasts 40-50 years and once you buy it, they can't gouge you. No country has benefited from free trade like America; no bloc has benefitted like the West. You're mad at China for lifting hundreds of millions from grinding poverty, without realizing that Chinese mass production has cushioned the effect of all the money-printing by Western economies for decades now. Hundreds of millions of Chinese workers going into cities to work in manufacturing are the reason why many middle class workers across the West can afford cheap consumer goods, despite their government's dumb financial decisions. But, it's okay: we'll see how it plays out.

andsoitis 1y ago

"The four tenets of Modern Mercantilism include: - The state has a large role in orchestrating the economy to increase national wealth and strength. - Trade balances are an important determinant of national wealth and strength, and trade deficits should be avoided. - Industrial policy is used to promote self-reliance and defense. - National corporate champions are protected."

notahacker 1y ago
Feels a bit stretchy that... Trump strongly believes the second point but is [even] less convinced of the importance of the other three points than previous US administrations (they're actively sabotaging a lot of the state organs that could orchestrate the production of US national wealth, and seem to regard national corporate champions as entities to demand protection money from more than entities to actually protect) China does believe in the role of the state and industrial policy and corporate champions but I don't think they actually believe the trade balance is a measure of strength, and they've been pursuing broadly similar policies for decades. The EU might be slightly more interested in linking defence to industrial policy than it used to be and a lot less trusting of the US as a trade partner, but its state aid sits under the same Single Market restrictions it always has and it certainly isn't making the mistake of trying to maximise its trade surpluses. And most of the rest of the world is trying to industrialise via Chinese imports and wondering why the US is being weird.

Findeton 1y ago

It's sad because Adam Smith wrote The Wealth of Nations in part to debunk Mercantilism. Smith wasn't right on everything, but he was right to criticize Mercantilism. For example, if trade imbalances were so bad, we should sink any ship that comes into the US as this reduces trade imbalances (absurd example from Bastiat btw).

TimorousBestie 1y ago
[flagged]
js8 1y ago
Theory of comparative advantage is probably wrong, though. There are huge advantages for a nation in doing (pretty much) everything, and having research close to application, and having tool makers close to their users. Analogy with human specialization is flawed, because human attention span is limited. Even there the famous Heinlein quote on versatility still applies.
- energy123 1y ago
  Juche doesn't work. The theory of comparative advantage is not wrong.
  - linksnapzz 1y ago
    If current trends continue, North Korea will be around longer than South Korea. Ironic, no?
    - deleted 1y ago
      [deleted]
    - justonceokay 1y ago
      There is no reason to believe trends will continue. Countries populations are stabilizing, not trending toward zero.
    - 1y ago

hooverd 1y ago

No? Our President doesn't know what tariffs are. A lot of this is enabled in part by all these capitalists rolling over and submitting.

Spivak 1y ago
The orange figurehead, probably not, but the people actually pulling the strings and writing all those executive orders absolutely do. The folks in power might be misguided but they are acting purposely creating more protectionist policies. To what end I think is anyone's guess. I don't think it's clear how an isolationist US benefits us when right now we have every country in the world giving us real tangible wealth in exchange for paper.
- CalChris 1y ago
  > absolutely do I'm not convinced. There is no coherence in their decisions, well any more than tossing out red meat. We can't even call them protectionist policies. It's just populism. Still, I agree about isolationist. But we started down that road with W and are now running off that cliff with Trump. Not coherently but enthusiastically.
  - Spivak 1y ago
    Look, I'm not agreeing with this admin's policy direction, and I certainly don't want the world they envision that this policy will drive us toward—there's plenty of reasonable skepticism that it won't even have the desired knock on effects they're hoping for, but I do think the folks at the helm know broadly what the levers they're pulling do. I worry the level of stupidity that their critics project on them is both inaccurate and is so severe as to essentially excuse their actions and absolve them of any responsibility for them.
    - CalChris 1y ago
      We disagree. To reduce it to a few words, I think that you see policy (even if misguided policy) and I just see populism, entertainment if you will. I think the purpose of the article is to remind us what mercantilism is. But again, I don't see this as mercantilism which has a coherence, and instead just as populism which doesn't. Putting a heroin addict in charge of Health and Human Services and shutting down vaccine development is not policy. It's populism.

bediger4000 1y ago

So 40 years of "Free Market" absolutism, which was a central pillar of conservative economics, gets reversed just like that? There's consequences to mercantilism. For starters, the best products may no longer win. Justifying anything by "best product won due to consumer choice" will be a laughable reason. Justifying respect for founders and CEOs as intelligent or better isn't possible. A successful founder or CEO is just better at sucking up or whatever it takes to be blessed by authority. There's some consequences to this reversal to conservatism as well. How can any thinking man believe a justification from principles now? They're reversible. Conservatives lose any kind of intellectual high ground, even in retrospect. Are they reasoning from principles now or were they doing it then? Can't tell.

MassPikeMike 1y ago
I agree that in our current system, consumer choice generally determines which product wins. But does the best product really always win? As a fan of BeOS, it doesn't seem that way to me.
- loudmax 1y ago
  Arguably, there wasn't a free market. Jean-Louis Gassée has been on record criticizing the Microsoft Windows monopoly of the late 90's, early 2000's.
loudmax 1y ago
A lot of people who describe themselves as "conservative" have completely abandoned formerly conservative values: the rule of law, moral integrity, personal humility, and so on. I'd prefer we not call these people "conservative" because those old values have real merit.
- monero-xmr 1y ago
  I live in a major American city run by progressive democrats, like all major American cities, and petty crime is rampant. The "rule of law" here doesn't seem to apply to anything except murders because reporting anything else takes hours at the station to even get them to file a report, let alone solve anything (hah!). Even worse, the apparatchiks that run local politics never believe anything they do is wrong and entirely lack personal humility. It is hard to square this being a "Republicans Only!" problem when I see so much of the same all around me.

tharmas 1y ago

On trade imbalances: Trump expects Canada, a country of 40 Million people, to buy as much goods from the USA, a country of 300+ Million people. And if you subtract the oil that the USA buys from Canada, Canada has a trade SURPLUS with the USA. That is, apart from selling oil to the USA, Canada buys MORE from the USA than the USA buys from Canada, a country roughly one tenth the size. This trade war isn't about righting trade imbalances. It's about the USA exerting leverage over countries that it can get away with. Just like a Mafia Don. Or to quote a crude summary from Peaky Blinders: "Big $ucks small". That's the philosophy of the Trump Administration in a nutshell.

monero-xmr 1y ago
What would you recommend Canada do now, other than get the US to change its mind? This seems like the reality now
- metalman 1y ago
  Just before the plandemic, China put in an offer on everything that Alberta could produce, and that deal never got past the first stage, and then, we kidnaped the daughter of the guy behind Huawie, all the rest of the anti China stuff and now we are here, watching Trump fly out to entertain Putin......perhaps Canada can put together a very special surprise for both of them
- tharmas 1y ago
  Invest heavily in the Electricity grid. Both AI Data Centers and The Transportation Grid (Electric Vehicles, Batteries). These two sectors are only going to grow and they require massive amounts of electricity. Peak Oil is going to happen soon 2020-25. China's oil demand in 2025 dropped from previous years. Even in the "drill baby drill" USA refineries are closing do to falling demand in the USA. The private sector does not see new pipelines as economically viable. Trudeau had to step in to finish the Trans Mountain twinning. Existing pipelines that go to the USA are only at 75% capacity. If Canada wants to ship oil to Europe or Asia they should ship it by rail. It would be foolish to spend money on new pipelines when overall demand for oil is declining. And by the time these pipelines would be completed Peak Oil would be a done deal. Develop more trade with Asia and Europe (which the current govt appears to be trying to do). A big problem is this emerging multipolar world means the USA is going to increasingly pressure Canada to become even more of a vassal state. This youtube channel has excellent information about Canada's Engergy Future: Energi Media https://www.youtube.com/@EnergiMedia/videos https://www.youtube.com/@EnergiMedia/videos

marcosdumay 1y ago

We always were. There was no point in history when governments weren't mostly mercantilist. The WTO was entirely built on the idea that "if you insist on hitting your face that hard, I'll hit my face and then you will see it!"

ertgbnm 1y ago

The only problem I have with articles like this is that it frames what Trump is doing with an air of intention. Most readers will obviously think that becoming mercantilist is a bad idea. However, readers will also walk away with the notion that these actions have all been done with the a grand plan in mind. The reality is much more stupid though. Recent policies have been made without any plan to begin with. There is no driving philosophy of "we must create modern mercantilism" and the resulting policies being a coherent plan to bring about that change. Instead actions are being made based on the split second decision making of a moron would lacks the most basic understanding of economics much less mercantilism. This is a decidedly worse world than one in which the plan is simply a bad one. A bad plan would at least be coherent and something that our allies could predict and make their own plans around. Nevertheless, I think the thesis is broadly correct as being the outcome of recent actions.

analog31 1y ago
I don't think so. Recent actions are not delivering an industrial policy, or promoting research. They are not addressing the distribution of "wealth and power" which is possibly more important than its magnitude.
ambicapter 1y ago
I don't think they're gracing him with an air of intention. I think they're just looking at what he's doing and finding the closest model that makes reasonably accurate predictions about the future.
tootie 1y ago
True. And in a few years we'll find out how much Trump has actually affected the nation's trajectory. His trade policy is an absolute 180 from GOP orthodoxy and members of his own party have mostly said "we'll do what the president wants" and not "we think this is a great idea". I'd wager a lot of this policy gets undone at the first opportunity.
- UncleOxidant 1y ago
  > I'd wager a lot of this policy gets undone at the first opportunity. You're likely right, but it likely won't happen for about 3.5 years during which time much damage will be done.

tantalor 1y ago

> as countries defected and adopted mercantilist policies, the global system lacked sufficient authority to stop them. Each time another country adopted mercantilist policies, it pushed others to react similarly This is just a prisoner's dilemma.

moomin 1y ago
A good way of understanding the function of the EU is as a way of negating prisoners dilemma effects, or at least externalising them.

geremiiah 1y ago

It's kinda funny that Americans look at the German economy and think they want to be in that situation. You would rather have an economy based on manufacturing cars, rather than one based on leading in tech? You sure?

Workaccount2 1y ago
People want Germany's 1,350 average annual working hours compared to America's average 1,765 hours, and then tax billionaires to make up the difference. Probably wouldn't work out well, but that is the shiny object they are transfixed on.
- OscarCunningham 1y ago
  The PPP median income of the US is 36% higher than Germany. If they want 30% fewer working hours then they can have it now, and 6% left over.
  - Workaccount2 1y ago
    German economic growth has been shrinking for decades and is now in decline (negative growth). Meanwhile the US has been chugging along at a steady 2-3% for that same time period. Ironically, PPP is exactly the kind of myopic metric Germany would use to self-access right now.
bitshiftfaced 1y ago
What makes those two things mutually exclusive?
legitster 1y ago
> "Each of you in your private household would know better than that. You don’t regard it as a favorable balance when you have to send out more goods to get fewer coming in. It’s favorable when you can get more by sending out less.” - Milton Friedman Being obsessed about trade deficit is missing the forest for the trees. If you can run a successful modern economy just by sending out slips of paper, that's a great deal. That said, even Friedman made a caveat for national defense. If war breaks out and you have no manufacturing capacity, there are theoretically bad problems there. It also doesn't account for cultural concerns. Maybe a country that doesn't have enough manual labor jobs develops weakness and stagnation?

legitster 1y ago

> China turned a slow drip into a death spiral. While many countries pushed the boundaries before China did, its economic size and the effectiveness of its mercantilist policies broke the pre-existing order. Through currency management, public procurement, state subsidies, protectionism, and other implicit subsidies, China has developed a range of leading industries, including electric vehicles, solar power, and batteries. China's rise can be attributed to taking advantage of the neoliberal order. Many of their nationalistic successes come through things like currency manipulation, hiding illegal subsidies, intellectual property theft, and using state monopolies to bully other nations and their corporations. It's a prisoner's dilemma. If everyone copies China's playbook, there is nothing left to take advantage of. We will all be poorer for it. It cannot be understated that we are getting front row seats to the end of Pax Americana. In a world where countries can no longer enjoy reliable trade for commodities, we are going to revert to a world of imperialist land grabs and violence.

mooreds 1y ago
> It cannot be understated that we are getting front row seats to the end of Pax Americana. In a world where countries can no longer enjoy reliable trade for commodities, we are going to revert to a world of imperialist land grabs and violence. I don't agree with everything Peter Zeihan writes, but he did a good job of capturing this in "The end of the world is just the beginning"[0]. It feels like it is going to be a rough couple of decades. 0: https://zeihan.com/end-of-the-world/ https://zeihan.com/end-of-the-world/
Workaccount2 1y ago
>In a world where countries can no longer enjoy reliable trade for commodities When the firefighters get blamed for causing fires because they are always present every time there is one.

armchairhacker 1y ago

Are countries other than the US and China adopting tariffs and becoming "mercantilists"?

libraryatnight 1y ago

Smart enough to see it, smart enough to understand it, thinks we're dumb enough to not realize he and his ilk helped it along. These men yearn for the pyre.

romesmoke 1y ago

> A version of Greg's research was published in the Wall Street Journal. This is not research; it's an opinion piece by a Bridgewater employee that may prove right in the years to come. Plus, the rhetoric of differentiating China from the "free world" paints a Big Red Flag over the article's face.

holmesworcester 1y ago
When did China become part of the free world?
- romesmoke 1y ago
  The joke's on anyone outside of China thinking they're free.
- readthenotes1 1y ago
  During the Umbrella Revolution I guess
- tremon 1y ago
  Around the same time the US left it. It's all relative, after all.

OscarCunningham 1y ago

It's wild how people keep on talking about the prisoner's dilemma in the face of economist consensus that the selfishly dominant strategy is free trade. It's consistently easy for special interests to convince the public that tariffs are part of a sophisticated strategic/moral dilemma, while in fact they're just handouts. Likewise the glorification of China. The idea that the Communist Party might make bad economic decisions is never considered.

m3047 1y ago

He's talking about a fait accompli: > But as countries defected and adopted mercantilist policies, the global system lacked sufficient authority to stop them. It's not the future. It's now.