The trade war is just heating up, and it seems like President Donald Trump is prepared to weather the economic storm. He seems intent on staying the course, despite the number of people who are warning about the risks associated with protectionist policies and other 18th-century mercantliist endeavors.
Economist Nouriel Roubini is one of these experts sounding the alarm on a trade war.
Speaking in an interview with Bloomberg last week, Roubini was frank in his analysis of a trade war:
“Trade war is not a zero sum game, it is a negative sum game. In a trade war everybody is a loser,” he said.
“Already, $3 trillion of national wealth in the equity market have been wiped out by statements and actions on China. U.S. rightly or wrongly feels that the rise of china is going to be a threat to the U.S. economy and security.”
But there was another interesting statement he made:
“I have a slightly pessimistic view because the economic nationalists are in and those who are internationalists are out.”
There is the problem.
The economic nationalists appear to essentially want to lead a Robinson Crusoe existence, or, at the very least, have government-managed trade that only benefits their side. On the other hand, the internationalists want to eradicate national sovereignty and have government-managed trade that benefits a select few. Both sides also typically want to increase the size and scope of government.
For the average person, they will take an either/or approach. The economic nationalists will fight against the interference of the United Nations, World Trade Organization, or trade deals like the Trans-Pacific Partnership (TPP). The internationalists will oppose tariffs, at least for now.
But you can support global free trade while opposing globalism. The Mises Institute’s Ryan McMaken recently wrote about this very thing in a superb op-ed titled “The Difference Between Good Globalism and Bad Globalism“:
If we wish to end this confusion, though, we need to separate political globalism from economic globalism.
When we do this, we find that economic globalism is a force for enormous good in the world, but political globalism is primarily a tool for increasing the power of states.
As to economic globalism, we can see that again and again that the free flow of goods and services, unimpeded by states, improves international relations and increases standards of living. Where governments have increasingly joined the “globalized” economy, extreme poverty declines while health and well being increases. Latin American states that have embraced trade and freer economies, for example, have experienced growth. Those states that stick to the regimented economies of old continue to stagnate. These benefits, however, can be — and have been — achieved by decentralized, unilateral moves toward free trade and deregulated economies. No international bureaucracy is necessary.
This is economic globalization: opening up the benefits of global trade, entrepreneurship, and investment to a larger and larger share of humanity.
Meanwhile, political globalization is an impediment to these benefits: Political globalists at the World Health Organization, for example, spend their days releasing reports on how people shouldn’t eat meat and how we might regulate such behavior in the future. Political globalists hatch new schemes to drive up the cost of living for poor people in the name of preventing climate change. Meanwhile, the World Bank issues edicts on how to “modernize” economies by increasing tax revenues — and thus state power — while imposing new regulations.
It’s essential to make these distinctions. Economic globalism brings wealth. Political globalism brings poverty.
Economic globalism is about getting government out the way. It’s about laissez-faire, being hands, off, and promoting the freedom to innovate, trade, and associate freely with others.
Political globalism, on the other hand, is about control, rules, central planning, and coercion.
Some careless observers may lump all this together and declare “globalism” to be a wonderful thing. But when we pay a little more attention to the details, things aren’t quite so clear.
This is why it is critical to not have any government involved in global trade. You allow genuine free trade: you can trade with anyone you want, whether they’re within your borders or they’re in the other side of the world.
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