Why the Trade War is Good

As someone who has questioned the orthodoxy of unfettered open markets for years, I am sympathetic to both sides of the free trade debate. Without delving into unprovable and ungeneralizable details, what can be said of the case of most liberalized countries is that liberalization does three things: it reduces consumer prices when giving consumers access to goods from international markets which have comparative advantages at production, it also benefits those with movable capital as they seek markets to buy and sell at higher margins, the benefits of which to a limited extent make it to workers, and it causes temporary unemployment stemming from the death of lower-value added industries in high income countries as labor market rates equilibrate and capital goes to where it is more suited and industries remain more technologically adept at production. In general, it seems to be a net positive, increasing global productive capacity and efficiency, and bringing out competitiveness. However, the caveat is that it causes some large structural issues that also need addressing, and the international trade system has no means to do this without the government. Top-heavy capital accumulation needs to be mitigated by taxation and social provisions, essentially social redistribution, to keep the system in balance and ensure equality of opportunity for all people, especially those left out of the economy as a result of the shifts, and even small companies. Governments need to harmonize labor, environmental and health standards to ensure there isn’t a race to the bottom. And finally, structural imbalances created by the system, like agricultural monocropping, or overfishing in international waters need to be addressed internationally. With these in hand, the international trade system should be an overall benefit to the people of the world, if the people and the planet are kept in consideration.

Notwithstanding this, there are exceptions to this good. The liberalization of China has led to its massive economic growth, dragging the country from a decade of famine and civil unrest that decimated their population, to becoming one of the largest economies in the world, producing and consuming nearly one fifth and one tenth of world goods and services, respectively.

This growth, unfortunately, has led to a disturbing trend. The increase in economic cooperation between China and the rest of the world has meant that the political ties and interdependence have grown with much of the world too. However, because of the relative size of China’s military power and economic market, their influence has been one sided, and this has led to a once synchronized chorus of international voices criticizing their human rights record slowly whittling down. In the last twenty years, the major powers who once loudly denounced the infamous Tiananmen massace which killed hundreds of unarmed student protesters in 1989, not even thirty years later, are all startlingly silent on the revelations that China is forcibly imprisoning somewhere between two hundred thousand and several million Uighurs. China has admitted to the internment camps, labelling them re-educational and vocational facilities, and yet even the often sanctimonious European Union makes only vague platitudes, and offers no consequences. Put simply, China is too big to be scolded, and this sets a horrible precedent for the international regime of human rights than has existed since the UDHR signed after WWII.

The US and others have made significant mistakes supporting brutal rights-violating regimes over the years. Regardless, the international world order is built on the premise that no actor is too big to go unpunished, leader unscolded. What is abundantly clear too, is that under the Trump administration, international relations is not thought of as purposefully standing up for American values and promoting US interests abroad, but is rather transactional and personal. Decades long alliances have been strained as Trump had personal disagreements with leaders, while tyrannical murderous dictators, like Mohammed Bin-Salman and Vladimir Putin have been taken at their personal word that all the bad things that Trump’s very own government and CIA accuse them of are all fabrications. This is the pinnacle of naivety and Trump is a tool. To value trade deals with Saudi Arabia over American values that go back decades point to a wholesale tarnishing of our image and our conscience as a nation of freedom and justice for all, a concept Americans have fought and bled for, even in foreign lands and for foreign souls. The only light at this point is the trade war with China.

Regardless of the economic consequences of this act, Peter Navarro has managed to convince Trump that reducing the economic costs imposed by China outweigh his self declared personal friendship with autocrat, Xi Jinping. This has the potential to signal a massive shift in relations between not only the US and China, but China and the world. With reduced economic ties, China can finally be called out for what they are, a bellicose and belligerent Soviet-style state which values autocracy, domination, and the preservation of their power over everything. Vice President Pence hinted as much in his recent comments, and there has been a clear breakdown in the relationship over the course of strained meetings, insulting press conferences, and provocative military acts on both sides. This strain, which on its surface may seem to benefit neither country, actually benefits the world. As long as it goes on, it gives the United States the political room to call out China’s abuses, be they the concentration camps that they’ve introduced, their desire to go to war to illegally annex Taiwan, or their militarization of the South China Sea in contravention of every neighbor in the region and a binding international tribunal ruling they’ve ignored, simply because they can.

China is a bad actor, and the Chinese Communist Party reeks of decay as their ability to control their people grows more tenuous with every step they take towards Orwellian totalitarianism. Without economic interests holding the world back, perhaps we can rediscover our values, and once again find the courage to take a stand in the face of evil.

Staff writer and photo: Ari B

Graph credit: howmuch.net

https://www.ft.com/content/627ab75c-4256-11e8-97ce-ea0c2bf34a0b

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https://www.bbc.com/news/world-asia-china-46111865