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ECONOMICS AND FINANCE

DEMOCRAT CANDIDATES CAN'T DISTINGUISH THEMSELVES FROM TRUMP

12/31/2019

5 Comments

 
A question arose at Quora that Vince Dhimos has decided first to answer at New Silk Strategies.
 
Q: ARE US DEMOCRATS AGAINST THE TRADE WAR WITH CHINA?
 
https://www.quora.com/Are-US-Democrats-against-the-trade-war-with-China
 
The trouble with the US political system has always been that the two parties and the candidates within the same party must struggle hard during each election campaign to distinguish themselves from each other. Because they are not fundamentally different in vital aspects of economics, military affairs and foreign policy. They're for an eternal war and an eternal ballooning debt. This is why while some Democrat candidates carp at Trump for his trade war, none of them are offering any specific proposals on how to end it and their ideas are all over the map, as reflected in this Reuters article.
 
And the trouble with the trade war is that it was something that most ranking Democrats and Republicans have actually desired to some degree or other in recent decades. Because it was a pipedream gone sour. They had hoped the free trade relationship between the US and China would drive a wedge between Russia and China, and just the opposite happened, and they had hoped China would become America’s workshop without costing Americans a dime. In fact, it degraded the US manufacturing base.
 
It all goes back to the 80s when Congress was debating whether or not to grant Most Favoured Nation status to China. At that time, it was the Democrats who resisted the most. In general terms, most politicians agree they were right. The US has created a monster.
 
Nixon had floated the idea of free trade with China amidst his project of opening up to China and establishing better relations with the country.
 
Nixon’s economic policies suggested he wanted an America that could get rich, or stay rich, without doing any of the traditional things that make or keep countries rich. It was also Nixon who initiated talks with Saudi Arabia to persuade that country and its Gulf State partners to use only US dollars in its oil trade and to keep all its reserves in US Treasuries, thereby creating a new currency concept, the petrodollar. He knew that the more a currency is used in world trade settlements, the stronger it gets, and the idea was to have the dollar become the hegemon among currencies, giving the US unlimited economic and political clout. The offer was that if Saudi went along with this, the US would use its military to protect its oil fields and the ruling family, who passed as royalty but in reality were nothing but uncouth glorified dictators. In 1974 Nixon and King Faisal in fact did sign such an agreement, which was kept under wraps and became a taboo topic among economists. Indeed, Nixon was the president who had just taken the US off the gold standard, and not only is there something inherently sleazy about having a currency held afloat with absolutely no real backing but it was clear to keen analysts that this arrangement could lead the US – through blackmail or excessive zeal to please the Saudis – to wage wars purely to please these dictators. So no one wanted to talk or write about the deal and the vast majority of Americans were therefore unaware of it, enabling the US to contrive conflicts with countries like Iraq and Syria that were disliked by the Saudis but posed no actual threat to the US people without having the sheeple suspect skullduggery. And of course, the pressure was twofold, since the countries on the Saudi blacklist were equally hated by Israel, creating a perfect storm for the hapless Shiites in the Middle East.
 
The idea of getting something for nothing, which underlay the petrodollar deal, was the child of the same brains that cooked up the China trade scheme, which, if properly managed, would allow China to become a colony for the US that would do its dirty labour and allow America to focus on finance instead of the economy. It was therefore akin to the Fed’s currently fashionable idea of just simply printing up dollars out of thin air, and the political class’s idea of using petrodollar hegemony as a bludgeon to beat into line any country daring to oppose US policies, even to the extent of renouncing their own economic interests, as Trump is currently trying to do with Germany.
 
Americans on both sides of the aisle and in both the grassroots and among the Establishment elite, in thrall to the Exceptional Nation narrative, have never been able to admit that the scheme of making China into a giant sweat shop; of allowing a brutal dictatorship to forge US foreign and military policy, thereby effectively turning the US military into a mercenary force; of simply printing money instead of addressing the real sector of the economy, and of bullying Europe into buying overpriced US LNG instead of the cheap Russian gas delivered by pipeline – in short, all these schemes, are blatantly sleazy and deeply immoral and no respectable nation would ever dream of treating other nations so shabbily. US and Israeli propaganda maintains that the Muslims are to blame for all the conflicts in the Middle East – ignoring the massive Western role therein – while the US political class blames China and Russia for its own economic shortfalls. Yet it is a “Christian” nation that is stealing the sustenance of the rest of the world and threatening their security with its degenerate policies, which lack even an ounce of love and tample the golden rule.
 
The unconsidered China trade scheme has not worked out to the US’s advantage, and those who promoted free trade with China in the 80s would now like to walk back their mistake.
 
But unfortunately, China has grown far too strong for any economic measures to work out well in America’s favour.
 
Bluntly put, it is too late.
 
Trying to undo the mistake of letting China get fabulously rich by attempting at this late hour to make it poor again is akin to murdering one’s grown child as a birth control method. The child is fully grown and is stronger than anyone could have imagined. And it comes in a package with Russia.

This baby can’t be put back in the womb and then extirpated. It’s grown up. We need to deal with it, and to do that, we also need to grow up. That will be the hard part.
 
 
Relevant:
 
https://www.washingtonpost.com/business/2019/08/07/democrats-struggle-present-united-front-trumps-trade-war/
 


5 Comments
John M Stassi
1/1/2020 04:20:25 am

“I think we can be reasonably confident that if the American population had the slightest idea of what is being done in their name, they would be utterly appalled."
-- Noam Chomsky, Interview, September 19, 2001
https://chomsky.info/20010919/

I am no longer as confident about the American population's capacity for righteous indignation in response to atrocities committed by our country as Chomsky was in 2001.

How about you, Vince?

Reply
Vince
1/1/2020 06:17:54 am

I used to spout nonsense about the "Deep State" keeping the people in the dark, but now I see web sites and news outlets telling the truth about many things but they just keep on bleating. I have lost my faith in "the people." It's the culture.

Reply
John M Stassi
1/2/2020 01:06:23 pm

It seems to me that Paul Simon was on to this a half century ago:

"A man hears what he wants to hear and disregards the rest."
-- Paul Simon, The Boxer (1969)

John McClain
1/1/2020 05:52:02 am

I was a teen, when Nixon chose to throw away the last ties to commodity value, and the dollar. I'd had zero formal education on economics, I was in high school, eye's deep in physics, Etymology, German, and advanced Trig and Introduction to calculus.
I knew at six, arriving back in "the States" having lived in Spain, then Italy, two years apiece, our money wasn't backed by gold, as our Constitution demanded, states is the sole means of "minting coin, of silver and gold, and establishing relative value, and with foreign currency", as the form demanded of Congress.
I made money as a child, making jewelry out of silver coin, as it disappeared from our "change", ultimately, paying "face and a half" for silver, and ending my work, when not paid.
Our, the U.S. government's, actions from a century ago, with the establishment of an illegal, unconstitutional "federal reserve", actually a private corporation, was entirely for the purpose of turning our fiscal system, a monetary system, into a "useful means to tax the whole trading world, as hegemon", deliberately intent on replacing earnings, with imposed power, squeezing revenue, from subordinate countries.
The "choosers" were of moneyed interests, most, "Families of old money", as well as those new monied families, seen as "up and coming, progressive". Such people have never earned money, always simply taken it. They saw no loss with the end of production in the U.S., just the loss of the costly middle class, actually expecting wages, commensurate with the skills necessary to produce profits.
All that was desired in the end, was to have "unskilled labor, unable to organize, for being too large, with ever conflicting needs and wants" deliberately fomented by the partners in this crime, the mass media, and the corporate giants, intent on getting "through that door", to be "one of them".
Actually, the true intent was to use China for production, and reduce America, to a "vacation land for the privileged, served the a people, reduced to abject poverty, willing to do such work rather than starve.
Our government was well aided by the ease in which all Nations could invest in what once were sound, substantial debt instruments, of real value, which necessarily had to fall into "junk bond status", once the value printed, exceeded the actual economic growth, which was shortly after its inception.
I do find it odd, it is only fifty years later, other, truly Sovereign Nations, recognized the predatory nature, and began hedging their money with gold, and for this reason, even those most active, have just barely, think Russia, finally balanced their "sheets" with actual capital, invested, and "gold, stored", surpassing their total, actualized, "national debt".
China, a close second, not even close, solely because of scale of debt, and scale of ambitions, fully intent on "growing out of debt" by massively increasing "the Global Commons, and the trade that will go with it".
The sole U.S. effort, left available, is keeping the world unstable, so the dollar can't be rejected, and given our status, over-extended in every imaginable direction, we are reaching the sole, rational, logical conclusion: we are almost ready to fall over the edge of the cliff, and our government is so out of touch with real math, you know, adding numbers, getting sums, parsing them against others, knowing facts, they don't even know any next move will crumble the edge and begin the slide, that only portends the fact, "it's actually too late to turn back". "There are none so blind as those who "Will" not see. We shall indeed, "reap what we have sown".
Semper Fidelis,
John McClain
Vanceboro, NC, USA

Reply
John M Stassi
1/2/2020 01:27:05 pm

What you quite accurately and colorfully describe, John, is an example of what Marx called class struggle or class warfare.

Maximizing profits for the shareholders, irrespective of the damage it does to society at large is the first and only commandment of what has come to be called "shareholder capitalism."

The godfather of this philosophy is Milton Friedman:

The view has been gaining widespread acceptance that corporate officials and labor leaders have a “social responsibility” that goes beyond serving the interest of their stockholders or their members. This view shows a fundamental misconception of the character and nature of a free economy. In such an economy, there is one and only one social responsibility of business—to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition, without deception or fraud. […] Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their stockholders as possible. This is a fundamentally subversive doctrine.
-- Milton Friedman, Capitalism and Freedom (1962)

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