Friday, April 02, 2010

Command and control

Land and People:

Syria was able to build a low debt, high foreign reserve economy under a "command-type" economy, which mitigated the impacts of the financial crash. But now, they have to introduce neo-liberal economy in order for the new plutocracy to empty the coffers and to destroy the productive sectors, agriculture and industry.

China, on the other hand, wants to develop the productive sectors of its economy while retaining some measure of control. This forms the centerpiece complaint of US capital in its ongoing trade dispute with China, as reported in a feature article by BusinessWeek:

A Jan. 26 letter to the White House from the U.S. Chamber of Commerce, the Business Software Alliance, and more than a dozen other groups representing hundreds of multinationals such as Microsoft, Boeing, Motorola, Caterpillar, and United Technologies, warned of "systematic efforts by China to develop policies that build their domestic enterprises at the expense of U.S. firms."

Or yesterday's Financial Times:

[M]any US industries complain that they face significant non-tariff barriers to trade”, the report said. “These barriers include, for example, regulations that set high thresholds for entry into service sectors such as banking, insurance and telecommunications . . . and the use of questionable sanitary and phytosanitary measures to control import volumes.”

As an aside, it's worth noting that the World Trade Organization defines "sanitary and phytosanitary measures" as "ensuring that your country’s consumers are being supplied with food that is safe to eat" -- which from the perspective of US exporters is doubtless used against them, since few such standards apply here.

Stripped of its technical language, the US-China trade dispute is a power struggle between US capital and a foreign government not yet subordinated to its needs. Daniel Ikenson of the Cato Institute, writing in today's Wall Street Journal, underscores the point that "trade" is a misnomer which describes the overseas operations of US companies, so that a tariff on "Chinese imports" would in fact penalize US firms:

Consider how many fewer iPods Apple would sell; how many fewer jobs iPod production, distribution and sales would support; how much lower Apple's profits and research and development expenditures would be; how much smaller the markets for music and video downloads, car accessories, jogging accessories, and docking stations would be; and how many fewer jobs those industries would support. Multiply that by the hundreds of other devices and gadgets, computers and Blu-Rays, and other products designed in the U.S. and assembled in China from components made in the U.S. and elsewhere.

As the US-China trade debate heats up, it's worth keeping some of these considerations in mind. Moreover, it's instructive to consider how little ordinary Americans or Chinese factor into the overall equation, except as political afterthoughts.


Enron said...

This is the definition of irony, no?

JRB said...

Freedom is just Leninism without the long-term planning.

Ben There said...

Haven't stopped by in awhile but I just spent some time catching up and I remembered why I come here. Excellent work brother. Keep it up.