Trade wars and stupidity

So the US Congress is guilty of the usual crowd pleasing stupidity, they\’ve added protectionist measures to the bailout bill. However, the important thing is not what they do in their foolishness but what we do in response. Sadly, this isn\’t looking good.

European Commission representatives and diplomats from the British, French, Canadian and Mexican embassies in Washington have all launched an intensive lobbying operation to convince senators to strike the provisions from the bill they will debate this week.

A Western diplomat in Washington made clear that otherwise a trade war was in prospect. "The EU has said it will not stand idly by and let this happen. I\’ve not heard words that strong from Brussels in 20 years," the official said.

We should indeed stand idly by of course. Sure, shout about how silly they\’re being but if they go ahead we should do precisely sweet fuck all.

For there\’s a basic fact about trade that all too many people don\’t get. Indeed, it seems that the trade negotiators don\’t get it.

Imports are what make us rich, exports are just the shit we do to buy them.

If the Americans decide that they don\’t want to import steel then that makes them poorer. Absolutely the last thing we want to do if they do is to limit our own imports thus making ourselves poorer.

We just don\’t want a trade war and whatever the US does it is still in our hands as to whether we have one or not. Our reaction should be (but sadly won\’t):

"You\’re making all Americans poorer. Have fun, we decline to do the same to all Europeans."

6 thoughts on “Trade wars and stupidity”

  1. They are just following in FDR’s footsteps – he did lift the US out of the Great Depression didn’t he? (Wikipedia says so, so it must be true.)
    Next will be the central planning, price controls and high inflation.

  2. the US has run a chronic trade deficit for at least 40 years
    has it gotten richer??
    has china gotten poorer??
    china exports a lot of stuff..
    by your saying (of who gets richer) ssems to be in contrdiction of real life facts..

  3. em butler, you think the US is poorer now than in 1969? China exports and imports, but it didn’t used to, now it does and they are becoming richer.

    That’s where Tim’s argument confuses me. Imports make us richer, exports are what we do to pay for them. But if we can’t export, we can’t afford to import, so America makes us poorer as well, no?

    The EU’s approach is MAD, mutually assured destruction. If you launch a trade missile at us, we lob one at you. It may not be the best economic strategy in the short-term, but possibly it’s the best in the long-term if it stops thinking like this scary comment on Brad Delong’s blog:

    “Canada knows well that putting up with the US violating NAFTA now and again is part of the package.”

  4. dear Mr potato head
    you asked
    ” you think the US is poorer now than in 1969?”
    the short answer is yes
    being a home grown native of the US I watched it happen
    it took 3 years to pay off a car in the 1960s
    now it takes 5 years(before crisis)…
    now few can afford a car at all..
    a minimum of 60 years of destroying the currency (while getting “richer”) is paying off big time..

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