Is It The Economy, Stupid?

Cannibal Recipes.

Cannibal Recipes.

Looking back over several hundred years’ of so-called civilized existence – both in the United States and the world at large – I’m beginning to wonder if the oft-quoted Clinton campaign line about the economy is really true. I’d argue that, contrary to times past and because of globalization, economics is no longer a zero sum game, where if America wins, by definition China must lose, or vice versa. We appear to all be in this soup together. I’d further argue, based on that same review of time, there is an inverse correlation between economics and warfare, at least on a large scale and maybe even on a small scale. So rather than advocate for things to do (or not), to improve the US economy, I’m tempted to stick to my previous thesis. And what is that? That within the next decade or so, the world will – once again – be engulfed in a war of global proportion. And the very act of going to war will be the creator of an economic boom during the war, and afterward for the victor(s) – and depending on which side wins, maybe for the losers too.

But, you argue, how can that be? It is settled dogma that with the advent of nuclear weapons, global war is impossible. Maybe it’s difficult, if not impossible to visualize, but that doesn’t make it impossible to happen. So let’s talk about these two points separately. First: my point that we’re in the soup together. Second: that some or all of us will forget that reality, and try to take from others to enhance ‘us’.

We’re in the soup together. In 1985, the balance of trade (imports minus exports) between the US and China was nearly zero. In every year since then, Chinese imports to the US have exceeded our exports. Our exports have grown arithmetically; imports have grown, if not exponentially then definitely logarithmically. In 2015, we imported $4 worth of Chinese goods for every $1 worth of goods we sold them. So the US is a critical trading partner for China. How critical? The US is China’s number 1 trading partner. It’s number 2 partner is Hong Kong, which is a little bit like trading with itself, geographically speaking. Number 3 is Japan, but the total amount exported is one quarter of its exports to the US. What do we buy from China? Electical equipment and power generation equipment are #1 and 2, respectively. Then it’s stuff you’d expect: toys & games, furniture, clothing and shoes.

So, you say? What’s your point? Let’s say DtheT follows through with his campaign promises regarding China. And what were those promises? Oh, OK – force me to repeat them. He said he’d label China a currency manipulator, and place sanctions on them. Yes, he can do that unilaterally as a result of the Trade Act of 1974. That would undoubtedly trigger retaliation from China, at a time when it’s already more difficult to do business there. Why is that? Because China wants to sell stuff to itself, virtually eliminating the imports they require now. The government is heaviy subsidizing Chinese industries that will manufacture most of what they import from the US. DtheT will aid and abet them in this pursuit. In addition, by putting tariffs on Chinese goods and making them more expensive, consumers in the US will pay more. And the effect? There will be a hit on the cost of living in the US. Who will be most affected? Those same people that voted for him…farmers that export agricultural products to China, the Boeing company’s workers that make airplanes that China will instead buy from Airbus. So effectively, we are in this soup together. DtheT can’t hurt them without sacrificing us. Awesome. Breaking for lunch – be back in a few.

aleppoSo now on to this war thing.

That was a longer-than-expected break – the internet was down all afternoon. Comcast just can’t seem to keep things running out here.

So this war thing. The number one cause of modern warfare is ideological change. Really – look it up. And you certainly have to admit we’re about to have a sea change in ideology in this country. Oh, and when people around the globe were polled and asked, “What is the greatest threat to world peace?” The majority of people answered The United States of America. How ’bout them apples? So we have an ideological change and a man in charge who’s thin skinned and ready to make radical change. Does that not sow the seeds of potential conflict with some of the major players around the globe? You betcha…but whose side will we be on? Will we be the “good” guys? Doubtful..not with friends like Vlad the Impaler and Bashar Al Assad. We will continue to frighten the bejesus out of most of the occupants of the civilized – and not so civilized world.

So how will this thing start? Geez, you really want more specifics, eh? My best guess continues to be the Middle East, primarily because most of the misery in the world seems to live there. Aleppo is about to fall back into the hands of the ‘government’ of Syria, such as it is. So what then? Assad will preside over a country at least half of which has been destroyed by war. Who’s going to help him pay to rebuild it? Will the nearly 4 million refugees return, or will they continue to try to make new lives elsewhere? And which elsewhere? Those opportunities are quickly drying up with nationalism and anti-Muslim sentiment spreading like wildfire across the globe. These facts all look to me like a repeat of the 1930’s, with major upheavals caused by nationalism and ideology. The US will soon be exporting these instead of wheat, corn and airplanes. Time to hunker down. Pay off debts, plant a garden and get some chickens. It’s my strategy, and I’m stickin’ to it.

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