First Stages of the US vs. China Trade War
The recent U.S. versus China protectionism scuffle entered a new level of silliness today. If you recall, earlier this week, the Obama administration attempted to boost U.S. manufacturing by slapping a 35% tariff on Chinese tires. China fired back with a formal WTO complaint, plus rumors of doing the same to American chicken and auto part exports.
Heh, well today, American poultry experts have returned fire with the help of The New York Times: “We have these jumbo, juicy paws the Chinese really love,” said the NYT expert, “so I don’t think that they are going to cut us off.”
That’s right, the U.S. contends that the Chinese appetite for overgrown U.S. chicken feet is so insatiable that it will squash the trade dispute. They can conduct a legendary Olympic Games, build nuclear bombs and space shuttles, but NO WAY they can match our chicken feet.
Really… how could anyone live without?
“Besides from being just ridiculous,” notes Chris Mayer. “I find stories like this very worrisome. History gives us some chilling lessons.
”I think most people tend to take globalization for granted. In other words, most people think that the world is getting smaller and more connected all the time. This is really not true when you look at the longer historical picture. It ebbs and flows.
“For instance, a pretty good, if dense, book on the history of world trade titled Power & Plenty makes one thing very clear. ‘If anything,’ the authors note, ‘history suggests that globalization is a fragile and easily reversible process.’
“Where it gets chilling is during the Great Depression: ‘When the system was hit… the result was wholesale protectionism, and a renewed disintegration of international commodity markets.’
“The authors go on to show how the collapse in trade led to all kinds of bad things. It created mass unemployment in places such as Germany, which was a big factor in Hitler’s rise to power. In Italy, the Depression contributed to Mussolini’s rise to power. The rise of tariffs and trade disputes also fanned imperialistic flames in Japan as it sought to gain self-sufficiency through conquest. All of this contributed to the outbreak of World War II.
“In any event, many people call what we are going through today the Great Recession — the worst global slump since the 1930s. And I wonder if the playbook will follow the path of the 1930s. It seems as if it might.”