From another message board;
"Tumbling Towards Global TRADE WARS:
In the latest sign of friction over trade, on June 23, the US and the European Union [[EU) raised the stakes
in a growing dispute with China by lodging a joint case at the World Trade Organisation [[WTO) over
export quotas on raw materials. The US has already introduced controversial “Buy American”
legislation. Now, China has responded with its own near carbon copy “Buy Chinese” provisions. Beijing
has banned all its local, provincial and national government agencies from buying imported goods except
in cases where no local substitute exists. It did so in words similar to the trade provisions in the US.
A Short Economic Take On Protectionism:
All attempts at protectionism are attempts to insulate local producers from wider competition and [[it is
claimed) to boost local employment. Protectionism is easily economically refuted. If an internal
producer has the choice of buying its resources at an international price of 80 or an internal price of 100,
it will, if free to do so, choose the lower price. Having bought, it stands with 20 left over with which to
invest in other things. But if it is forced to buy internally at 100, it will not have that extra 20 and
therefore it will not be making any other internal purchases. The internal economy must contract.
Global politicians were dumbfounded by this plain economic principle in the early 1930s after they had
raised tariffs to “protect” internal jobs from the infernal waves of cheaper imports from other places.
They then compounded their first economic mistake by hammering export subsidies in the form of
borrowed funds and taxpayers’ money in behind their own exports, trying to “undersell” the tariff barriers
erected by other nations. That never lasted long. Other countries quickly slapped countervailing duties to
match the export subsides of their trading “partners”. Global trade shuddered to a near halt.
As Usual - Nothing Has Been Learned:
Once this stage of “competitive subsidies/duties” had been reached in the early 1930s and trade had all
but ground to a halt, the huge internal public works programs began. Sound familiar? Massive internal
infrastructure programs began in all counties, paid for with newly borrowed money. Budget deficits
exploded all over the world. Unemployment stubbornly refused to fall and became a permanent feature.
Taxes on high earners and the wealthy were raised massively to cover the enormous costs of all this.
When companies failed or went broke under these additional burdens, other bureaucrats stood ready with
government subsidies to keep them running - even if now bankrupt. Does THAT sound familiar?
Now, in the US and many other countries around the world, everybody is waiting for the stimulus."
Sorry this a private newsletter so I cannot post a link to the full article.
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