Trump's tariff war is the final act of a broken system

The commercial program of President Donald Trump is a corrupt and chaotic mess.

He made trade concessions to China after his government agreed to invest hundreds of millions of dollars in a Trump brand seaside resort. He announced a modest trade action against steel and aluminum and declared that it was a "trade war" – at the both "good" and "easy to win". He then turned to China. without any apparent justification. The President even threatened the Ecuadorian economy with crippling sanctions if his government offered public support for breastfeeding

Like so many Trump debacles, its fanaticism creates an appearance of radicalism – a dramatic break with a consensus stable and happy. Washington Post columnist Catherine Rampell lamented that he is getting rid of more than 300 years of established economic knowledge. The economist Paul Krugman, Nobel laureate, was more modest, accusing Donald Trump of jeopardizing a free trade system that dates back to former President Franklin Delano Roosevelt

. and the globalization that the United States had taken since the 1990s. Centrist think tanks held major conferences calling for restructuring relations between the United States and China. Hillary Clinton, Elizabeth Warren and even libertarian experts from the Cato Institute agreed that there were serious problems in the way trade agreements were applied

Trump does not pursue a strategy coherent and consistent commercial On some subjects, it is difficult to distinguish him from Bill Clinton or Barack Obama, while on others, he breaks with the recent past. But even here, Trump is not the destroyer of order and harmony, but the product of a corrupted and broken system.

To understand what is happening and where it went wrong, we must start from the beginning. What economists are accustomed to call "free trade" or "globalization" has another, less flattering name: colonialism

Human beings have traded across political boundaries as well long as human beings have registered their activity. But free trade in the modern sense was the conceptual innovation of David Ricardo, a brilliant British economist of the nineteenth century. In his Magnum opus of 1817 "On the Principles of Political Economy and Taxation", Ricardo set out the theory of comparative advantage: if each country focused on what it did best , and then exchanged with other countries, get to enjoy the best of everything. In the process, Ricardo argued that every country would become richer in this way than it was trying to produce alone at home

To illustrate this point, Ricardo presented a thought experiment in which two countries, Great Britain and Portugal, produces only two goods – wine and cloth. In the 19th century, Portugal was famous for its wine, while the European nobility coveted the beautiful British textiles. Imports of good Portuguese wines were difficult for British winemakers, and if the British government wanted to protect its domestic vineyards, it could set tariffs against Portuguese wines, making foreign products more expensive in British stores. And that could be very good for wine growers.

But there are only a lot of workers. Someone who spends the day breaking the grapes can not devote the same time to running a loom. Rates could not change the underlying problems with the British wine industry – the soil and climate on a semi-arctic rocky island simply were not good for grapes. As a result, supporting the inefficient UK wine industry would undermine the resources of its much more productive textile operations. This waste would result in lower overall production of wine and cloth. And perhaps the worst of all, it would mean that British drinkers should be content with their own ugly wine.

The obvious solution was to leave politicians out and let people do what they would naturally in the absence of government interference – trade freely.

"Under a perfectly free trading system, each country naturally devotes its capital and labor to jobs that are most beneficial to everyone," wrote Ricardo. "This pursuit of individual advantage is admirably linked to universal good of all. "

Ricardo was on something, but he took a lot for granted to assert his point of view.He did not have much to say, for example, about the way the British textile industry actually worked In the real world, the spinning and weaving mills of England relied on cotton from India and the United States. cheap – and British plants, by extension, so wonderfully efficient – because plantation owners used forced labor and violent exploitation to reduce costs

. dec acts of violent submission as components of an impartial and balanced system. Ricardo has converted a wide range of political choices – including the very existence of the British Empire and American slavery – in what appeared to be a mere mathematical truth: More trade equates to a more great prosperity. But the mantra of "free trade" of the nineteenth century was, among other things, a euphemism to enrich the slave owners.

The rhetoric of free trade almost always fulfills a magical function: it erases ugly and violent political realities and replaces them with clean and natural progress. For its evangelists, free trade is not just a way to maximize profits and production. It offers a path to the elimination of human evil. Cordell Hull believed that free trade offered a cooperative basis for the prevention of war, while libertarian high priest Milton Friedman believed that it opened the way to political rights such as freedom of speech and religion [19659023] "Commercial liberalism" is the key to an "international alliance" against "authoritarian politics", while House Speaker Paul Ryan (R-Wis.) Defends it as a means of promoting "primacy" of law "," women's rights "and"

And yet history does not show a clear pattern between tariff levels and freedom, war, democracy or autocracy. " Ryan's enthusiasm, for example, was issued in support of a free trade agreement concluded with the Kingdom of Bahrain in 2004. In 2017, according to the non-profit group Human Rights Watch , the government of Bahrain closed the only independent newspaper in the country and imprisoned his most prominent human rights activist.

In the 19th century, "free trade" was a doctrine that called for the limitation of trade barriers between the European imperial powers that plundered the rest of the world. When this system collapsed during the First World War, the ensuing destruction on the European continent created a deep sense of nostalgia for the pre – war order and the Ricardian ideals that prevailed. He had encouraged. Over the next decade, state leaders and diplomats made Herculean efforts to restore the collapsed trade regime. But they were frustrated by the explosions of violence, such as the French invasion of the Ruhr, Germany, in 1923; political instability, such as the collapse of the Weimar Republic; and speculative financial implosion, like the stock market crash of 1929.

Rates were largely incidental to this story, coming late into the game as a decade of dysfunction fell into the Great Depression. The United States adopted the Smoot-Hawley Tariff Act in 1930, increasing tariffs on approximately 20,000 goods. In 1931, the British government raised its own tariff and devalued the pound. Retaliation reprisals were carried out among other nations. These prevented the recovery of the Golden Age lost in the twilight of the European Empire, but they did not cause the Great Depression. The system was already defeated.

It was time to think otherwise. And finally, an economist entered the world stage with the power of intellectual fire to overthrow Ricardo.

John Maynard Keynes grew up as an ardent free-swinger, considering the free movement of goods "almost as a part of the moral law". But the war and the depression changed in the opinion. Although he still cherished the international free exchange of ideas, knowledge, art, hospitality, [and] travel, "technological advances seemed to have left a lot Observations from Ricardo's Observations Although climate and culture played a certain role – the British would never be great winemakers – these products were tangent to an industrial order dominated by heavy manufacturing. You could make a car anywhere.The advantages of national specialization faded.

"Most mass production processes can be performed in most countries and climates with almost equal in efficiency, "notes Keynes in a 1933 essay.There would be costs for any nation that would like to make the lion's share of its economy a national concern.But innovation has significantly reduced the cost of # 3 9, abandoning free trade National self-sufficiency, he wrote, quickly became "a luxury we can afford if we wanted to."

And Keynes believed that he could very well have reasons to want it. "It does not seem obvious today," he wrote in 1933, "that the penetration of the economic structure of a country by the resources and influence of foreign capitalists, depends closely on our own economic life on the fluctuating economic policies of foreign countries. "

" In any case, "he continued," the era of economic internationalism did not particularly managed to avoid war. "

Keynes developed these ideas in his most famous book, General Theory of Employment, Interest, and Money, who, he said, offered national governments the tools they needed to take care of their national economies without picking on their neighbors.He urged readers to think of his work as a kind of textbook. Alternatives to the economic strategies of imperialism. ays effectively managed their domestic demand, they would not need to plunder resources, exploit foreign workers or undermine foreign markets to improve domestic prosperity.

Many of Keynes's economic tactics became commonplace in the late 1930s. The use of deficit spending to pull countries out of the Great Depression and financial regulation to mitigate the cataclysmic cycles of Wall Street and London. For policymakers around the world, Keynes was king.

Efforts to integrate these domestic policy innovations into a global trading system, however, were quickly absorbed by the Cold War. In the rivalry between the United States and the Soviet Union, tariffs, subsidies and exchange maneuvers became tactical methods used to gain allies and punish enemies.

But the language of "free trade" and its supposed liberationist potential persisted as the new great powers of the twentieth century struggled with the rights and claims of newly formed nations emerging from colonial rule. By the late 1970s, the apartheid government in South Africa had become the center of an intellectual and political conflict with global implications

L & # 39; South Africa was both an ally of the United States and a Soviet Union. Huge profit center for more than 160 US companies, including General Electric, IBM and Hewlett-Packard. The profit margins were incredible – more than twice that American companies could earn on a typical international investment.

The key to all this was a cheap labor force. The black population of the nation can not form unions, engage in collective bargaining, strike, relocate or vote. According to estimates, Africa Today a university journal published by the University of Indiana, apartheid officials had administered about 850,000 lashes against the black population between 1954 and 1964 only to maintain the demand for better treatments. Colonialism had abandoned its 19th century European military uniform for a modern American business suit.

Terrible conditions for the South African people have pushed American anti-apartheid activists to demand that companies and investors withdraw money and resources. South Africa until the government of apartheid is replaced by a democratic order. As the disinvestment movement gained momentum on university campuses, a group of neoliberal lawyers and economists began to advance arguments explicitly attacking the prospect of democracy in South Africa under pretext that a democratic policy would be incompatible with free markets and free trade.

The Wesleyan University Quinn Slobodian historian details this project in Globalists: The End of the Empire and the Birth of Neoliberalism. Milton Friedman the most important defender of the time against democracy, argued that universal suffrage in South Africa would be "a very dense voting system in which special interests would play a role. much more important. It was essential not to let the "political market" interfere with the economic market. As with Ricardo, abuses on the ground have evaporated in the air economics theory.

In the 1980s these arguments were too lewd to gain much favor in American politics. Thus, President Ronald Reagan and a host of future Republican brokers, including Grover Norquist, Jack Abramoff and Jeff Flake, have advanced a modified version: The best way to reform the apartheid government was not to cut his money but by the magic of free trade.

to a set of corporate responsibility principles underlined by the Philadelphia pastor and General Motors director Leon Sullivan, who called for equal treatment of black and white workers. According to these voices, the additional US investment would bring American values ​​and freedoms to South African workers and lead to political reform.

"American companies that have withdrawn that respected the Sullivan Principles, have done a lot of good for the black population there," Flake told the Senate of Utah in 1987 [19659048] working as a lobbyist for a Namibia. mining company with substantial operations in South Africa. "Since 1977, they have contributed more than $ 140 million to black education, social programs, housing, and when our societies pull out and these sanctions are opposed, they leave these South African affiliates the Sullivan's principles, and that would make just a profit. "

By the time Flake testified, however, free traders had essentially lost the battle over apartheid. The anti-apartheid law of 1986, voted on Reagan's veto, imposed economic sanctions against the country that were lifted only when the apartheid government set up a series reforms, including the release of Nelson Mandela from prison.

The experience of American corporations in South Africa was not far from the dominant neoliberal intellectuals as the Cold War drew to a close and as international negotiators began to craft the treaties that would create the world. ;World organization of commerce. As Slobodian notes, these agreements aimed to control emerging democracies and prevent them from pursuing Keynesian economic policies that would privilege the rights of their citizens over the interests of US and European capital.

By eliminating tariff barriers with countries that had poor labor standards and human rights abuses, these trade agreements encouraged US firms to move their domestic jobs to countries where labor was Work was cheap. While most agreements accorded little importance to labor rights, these provisions were rarely applied in practice. In countries like Guatemala and Colombia where the United States has finally concluded North American type agreements, dozens of trade union leaders have been murdered every year after the signing of free trade agreements , most unpunished . ] If the new jobs in the factories of the developing countries were designed to take people out of extreme poverty, limits to the generosity of the new system, as demonstrated the death of 1,100 workers in a Bangladesh. Factory manufactured clothing for US retailers in 2013.

But although the architects of the WTO continued to use the language of "free trade", they had left behind the idea of ​​free – Ricardo exchange. They did not just talk about fares anymore. They wanted to transcend national borders and enter the national political life of post-colonial nations to block the potential rules of labor, the environment and consumer protection before they are drafted while guaranteeing broad rights for international investors. The same was true for a new list of commercial pacts. Former President Bill Clinton began signing a law beginning with NAFTA. These rules had little or nothing to do with Ricardo's ideas on comparative advantage. They were not based on natural differences in climate, culture or expertise. They were an attempt to construct an international law that favored a particular unequal policy.

The spirit of this new era of globalization was most evident in the field of intellectual property – a technical and arcane arena with life and death implications. millions of people. Once again, South Africa has become the epicenter of a global economic conflict The WTO and the AIDS Crisis

Damir Sagolj / Reuters

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