The Washington Outsider

Threat Level Trump: Trade War or Free Trade?

3/19/2016

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Donald Trump’s rapid ascend to the center of the political world has been fueled by one controversy after another.  Although Trump has said enough distasteful and troubling remarks throughout the 2016 Primary Election to offend pretty much everyone, including his stalwart horde of supporters, he has contributed to the political process by fracturing the alliances that have allowed the political establishment to shun outsiders, which is forcing special interests to reveal their priorities.  He has also forced the world to face uncomfortable issues, such as racial tensions surrounding illegal immigration and Muslim migration into the US, through his blunt stances against these groups.
 
The strength of democracy is rooted in the ability of people to freely express their needs and wants, so the interests of the entire population can be properly addressed in a balanced fashion.  The ability to recalibrate public policy to reflect the interests of the population, instead of adhering to the interests of a stagnant political class, enables functional democracies to thrive over long periods of time with added stability.  In accordance, Trump’s influence is an opportunity to infuse new blood into the world of the political elite.  It is also a chance to openly and honestly confront public policies that are misaligned with the interests of the American People as a whole.
The Global Forecasting Service of the Intelligence Unit of The Economist has qualitatively determined the election of Donald Trump is currently the sixth greatest threat to the ability of businesses to reach “target profitability.”  Where uncertainty surrounding what President Trump’s public policies would look like and his provocative nature are factors in this threat assessment, the largest concern seems to be that “he has been exceptionally hostile towards free trade….” Reflecting on the media coverage of this assessment, which characterizes Trump as a threat to “global stability” and “the global economy,” it is clear how high world elites prioritize “free trade,” not just trade or the prevention of a trade war.
 
What this threat assessment fails to recognize is that Trump is not the problem.  In this case, Donald Trump is fulfilling the promise of democracy by representing the growing backlash against free trade and the manner in which trade agreements, such as NAFTA and TPP, are negotiated to serve special interests.  The push for free trade, in general, fails to recognize the widespread lack of faith in “free trade” and the belief that free trade is a net negative to average people.  Where pro-free trade advocates like to trumpet around statistics that demonstrate the aggregate benefits of free trade, the apparent economic impact of free trade on the average individual’s finances is harmful. 
 
In theory, a trade war is devastating to an economy, because it creates barriers to trade, thus starving the economy of economic activity.  Not only do increases in tariffs raise import and export prices, they undermine the sustainability of global production by raising the cost of outsourcing too quickly.  Sharp increases also create a lack of uncertainty, which inhibits consumer spending and capital investment, thus helping to stall and destabilize the economy.  Because growing anti-free trade sentiments are pushing America, and the world, toward a global trade war, the failure of Donald Trump to become the next US President will not abate this movement against free trade.
 
That said, the economic interests of trade partners shift very rapidly with the changing nature of the economy, especially in an era defined by democratic uprisings and a pull back from rapid globalization to community-centered thinking.  Because a stable global economy depends on healthy national economies, national economies must be built on industries that serve the local needs of a people with locally plentiful resources that are as local as possible with excess production being used to participate in the global economy.  As such, trade agreements must be recalibrated regularly to reflect shifting economic interests.  Unfortunately, NAFTA and TPP do not include maintenance provisions. 
 
Instead of feeding opposition to trade and provoking a dramatic embrace of trade wars, which the American People do not seem to fear, the best course is to turn to diplomacy.  It is necessary to confront this misalignment of the population’s interests and public policy.  This is particularly important when recognizing the geopolitical processes like the resovereignization that is threatening the EU and driving the aggressive nationalist behavior of Russia and China.  In terms of economic policies, this means addressing the economic interests of a nation’s majority.  To do this, government should seek to economically empower their peoples, including business owners, through leverage.
 
The biggest issue with unfettered free trade is that it deleverages workers and localized businesses by forcing them to compete as part of a global workforce struggling to provide for global demand.  Because free trade essentially turns the global economy into a lowest bidder economy, the future bargaining power of workers in poor countries is also hindered.  Based on “supply and demand,” a massive global workforce without enough work means workers face downward pressure on their wages.  Conversely, the need to enhance global supply to meet global demand puts upward pressure on the cost of natural resources and goods.
 
With that in mind, businessmen like Donald Trump see the world in terms of deal making and bargaining.  When the parties involved in a business deal have equal leverage and/or act to address each others’ interests, the most viable and mutually advantageous deal is likely to be produced.  When one party has greater leverage over the others, that party has an advantage.  When the advantage is too great and/or successive deals continually neglect the interests of the other parties, either the negotiations or the business deals will collapse.  A lack of adequate leverage prevents workers and localized businesses from pursuing their interests to the detriment of the whole economy.
 
Celebrities and CEOs are routinely able to extort millions of dollar in pay for their services. The average person cannot do this. The reason is that affluent people have greater leverage when they are seeking compensation, i.e. the potential revenue they can make their employers affords them leverage. For most other individuals, education, expertise, union membership, professional affiliation, and a whole host of other factors give them varying degrees of leverage.  Reflecting on America’s Golden Age, the much of the Twentieth Century was spent empowering the masses with greater leverage.
 
Some of this was accomplished by government bolstering the leverage of individuals with the force of law, e.g. the Labor Movement.  This was seen with the passage of laws designed to protect worker rights, customer rights, civil liberties, and the environment.  Additionally, the expansion of education afforded more people greater leverage in the economy, until too many acquired college level degrees. In other cases, nongovernmental actions, such as the organization of labor unions, allowed individual workers to establish an equal footing against abusive corporations.
 
In the 1980 and 1990's, the push for accelerated economic globalization forced workers in wealthy Western countries to directly compete against those working in under-regulated, under-taxed, far poorer nations. NAFTA, for example, was sold to the American People as an opportunity to gain access to new markets and cheaper goods, even though cheaper, less durable goods do not increase living standards.  In general, NAFTA deleveraged workers in the US, Canada, and Mexico. China's special trade status was an even bigger assault on individual power due to the size of the Communist country.

In contrast, the formation of the Europe Union helped give the US a stronger economic partner and allowed the Europeans to balance American influence in the global economy.  Unfortunately, it also created layers of bureaucracy that put distance between the Peoples and their democratically elected leaders, thereby undercutting the democratic authority of individuals. In all, the over "liberalization" of international trade undercut the ability of governments to tax, regulate, and protect their national economies, thus neutralizing the leverage governments had once extended to their Peoples.  In other words, countries outsourced their economic sovereignty and deleveraged their Peoples.
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      • Justice for All: The Case for Legal, Social, Economic, and Personal Justice
      • Why Hardliner Thinking in the NSA and CIA is Doing Damage
      • On the Baby Boomer’s Self-Centeredness
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      • What Modern Day Revolutionaries Need to Learn from Leader's like Mandela
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      • How Honesty Relates to the Great Recession
      • Why the Middle Class and Rich Need to Support Their Long-term Interests
      • The Aristocratic Republic of the United States of America
      • Discussing the Need for Community Support
      • Why New Forms of Capitalism and Socialism Will Compliment Each Other
      • The Reason We Need to Understand What it is to Be Poor in America
      • Why the World Needs to Reinvest in America
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      • Why Does Terrorism Exist?
      • US Influence: The Value of American Citizenship Around the World
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      • The Role of Substitution in Decision Making
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      • Relating Circular, Inductive, and Deductive Reasoning to the Scientific Method and Religion
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      • The Need for Greater Economic Leverage >
        • Evaluating NAFTA and TPP
        • Undercutting Logistics with the Underpaid Independent Contractor
        • Unions: Hindrance or Essential to Free Markets
        • Eminent Domain Used Against Banks
        • Haitians Sue the UN for Failure to Help With Cholera
        • Looking at How Corn-based Ethanol and Other Alternative Energy Subsidies Stack Up
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        • Irish Sovereignty Lost Before Bailout
        • Why Sudan's Greatest Long-Term Hurdle is Our Lowest-bidder Economy
        • Reduce US Imports by Buying American Made Products
      • Ending the need for government support and tackling poverty
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        • On Questioning the Need to Address Economic Disparity
        • Minimum Wage is Not the Problem
        • Responding to the "Blip"
        • Why Education Is Not The Civil Rights Issue Of The Twenty-First Century
      • Considering the Impact of the Capital Gains Tax Deduction
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        • Capitalism Versus Socialism
        • The Negatives of Socialism
      • Stealing Intellectual Property
      • Changing Business Models: From Enduring Entities to Cash Cows
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      • Dealing with the Issues Surrounding the Patenting of Self-replicating Technologies
      • Is Technology Threatening Jobs?
    • Education >
      • The Role of Education in Creating a More Dynamic Workforce
      • Primary Education in America and the Changing Needs of Society
      • The Greatness of the American Education System
      • Ideas for Improving the United States Education System
      • Are Teachers Treated as Professionals?
      • Is Engaging Parents in Their Children's Education a Major Factor in Turning Around Low-performing Schools?
      • Should Grants Be Awarded to School Districts that Try Innovative Methods to Improve Student Achievement?
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      • On Reading the US Constitution
      • The Senate should not do more to limit the powers of the Judicial Branch
      • On the DOJ Justifying the “targeted Killings” of US Citizens
      • Corporations Do Not Have the Same Rights as US Citizens >
        • Corporate America Pleads the First
      • Discussing the Constitutionality of Per Capita Taxes
      • Was the California Supreme Court Right in Legalizing Gay Marriage?
      • Should the Bible Continue to Be Used for Swearing-in Ceremonies and in Courtrooms?
      • Should Religious Student Clubs Be Allowed in Public Schools?
      • Should the Government Control Talk Radio to Make it More "balanced"?
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        • Are We Losing Our Second Amendment Rights
      • Eminent Domain Used Against Banks
      • Should a Woman Have the Right to Choose Abortion? >
        • Should Fathers Be Able to Opt Out of Parenthood?
      • Should Smoking Be Allowed in Public Places?
      • Is Teen Driving a Right or a Privilege?
      • Should US Companies Be Required to Provide Equal Pay to Women and Men?
      • Is eighteen too young to vote?
      • First Amendment Rights: The Priviledge of The Press
      • Do Mandatory Seat Belt Laws Violate Individual Rights?
      • Should cell phone use be banned while driving?
      • Dealing with the link between video game violence and children's behavior
      • Should police have to submit to routine drug and alcohol testing?
      • Public schools should not impose mandatory drug testing on students
      • Are High Taxes on Cigarettes Proper?
      • Should pharmacists be required to violate their religious beliefs and dispense the "Morning After Pill?"
      • Should school counselors uphold patient privacy or report students who become unstable?
  • For the record
    • Ongoing Issues >
      • Red Dawn in Ukraine: Understanding the Actions of Russia >
        • On Russia’s Coercion of Ukraine
        • The Russian Annexation of Crimea in the Eyes of the World
        • Putin Has Overplayed His Hand With Crimea
        • Ukraine in Terms of Resovereignization
        • Avoiding a Conflict Between America and Russia Over Ukraine
        • What Drives the World’s Interest in Russia’s Actions in Ukraine
      • China’s Aggressive Pursuit of Interests Demands a Global Response
      • Iran Makes a Deal: A Start to a Long-term Diplomatic Effort to Denuclearize Iran >
        • On the Future of a Nuclear Negotiations with Iran
      • America's Sphere of Influence: Retaking South-East Asia >
        • Power in Asia: Looking at the Power Shift in Japan
        • The China Paradox: Why America is Worried About China
      • Assessing US Support of Israel >
        • Tread Softly Israel for a Heavy Step May Be Your Undoing
      • Understanding the Dysfunctional Nature of the US-Pakistani Relationship
      • Recognizing the True Threat Behind the Current Unrest in the Middle East >
        • Reacting to the Escalating Crackdown in Syria
      • Assessing the Threat of North Korea >
        • Answering North Korea's Call for Food Aid: Breaking the Vicious Cycle Forced Upon Us by a Warring Nation
        • Dealing with the Restarting of the Korean War
        • North Korea Attacks South Korea
      • Dealing with the Ill-effects of Climate Change
      • Racial Inequality and Oppression Do Truly Exist in Today's Society
      • Should energy independence be a high priority in the US?
      • An overview of world wide Human Rights violations
      • Nuclear Threat from Pakistan
      • Return of The Cold War?
    • World >
      • Coverage of FIFA World Cup is a Chance to Focus on Poverty >
        • The FIFA World Cup Offers Benefits for More Than Brazilian Soccer Fans
        • FIFA Can Bring Brazilians Together as a Nation
      • Being Prepared for Any Potential Dangers at the FIFA World Cup Games
      • Treading Softly on the Politicizing of the 2014 Sochi Olympics Over Gay Rights
      • Why NATO Operations in Libya Lack a Well-defined Mission
      • China Hijacks the Web
      • Lessons from the Great Japanese Earthquake of 2011
      • A Modernizing Cuba Offers an Opportunity for Capitalists
      • The Seeds of Democracy Take Root in the Middle East
      • The Rebirth of Democracy in Tunisia
      • What May Come from the Hurt Revolution in Libya
      • Responding to the Violence of Qaddafi and Other Besieged Leaders
      • Embracing the Rise of a Democratic Egypt
      • Protests in Afghanistan Turn Deadly for Coalition Forces and UN Personnel
      • Haiti: Another Failing Humanitarian Investment
      • What Karzai Can Learn from Calderon
      • START II: A Necessary, Easy Success that Nearly Failed
      • Why Does the U.S. Government Support Independence for the Breakaway Serb Territory of Kosovo but Oppose Independence for the Breakaway Georgian Territories of Abkhazia and South Ossetia?
      • Iraq's Electric Issues: When Human Wants Trump Economic Sense
      • The International Community Reacts to Wikileaks: We May Be Moving Toward a Third World War in Cyberspace
      • On Climate Gate
      • Assessing Obama's Afghanistan War strategy
      • 2009 Iranian Presidential Election: The Fallout
      • Resolving Sri Lankan Conflict through Free Media
      • What are the Global Consequences of Russia's Invasion of Georgia
      • The War in Iraq: an assessment of President Bush's surge strategy
      • Drug War: Actions of Venezuela, Columbia, Ecuador in terms of Resovereignization
      • Is the Iraq Refugee Crisis America's Responsibility?
      • US support for a united Kosovo, Abkhazia, and South Ossetia: why?
      • Should the US withdraw from Iraq?
      • Setting a Timetable for Troop Withdrawal from Iraq is a Terrible Mistake
      • War on Terrorism is needed
    • Law and Order >
      • Rape in the US Military
      • Ethics of Force-feeding Guantanamo Bay Detainees
      • Reacting to the Aftermath of the Tucson Massacre
    • Economy >
      • Affordability Drives Fear of Obamacare and the Individual Mandate
      • Is the Economy Built for a Job's Recovery?
      • Gutting Healthcare Reform of the Individual Mandate
      • Arizona Budget Cuts Lead to Lethal Healthcare Rationing:
      • Shameful Collection Practices of American Banks
      • The Fed Reveals it Actually Undertook an International Bailout
      • Thoughts on French Budgetary Reforms
      • Seniors Start Businesses
      • The Case for Slimming Down the US Military to Make it Better
      • Looking at the Obama Administration's New Approach to Economic Policy
      • Should the Government Regulate the Credit Card Industry?
      • The Big Three's Big Chance
      • The Unhealthy Tone of the Healthcare Reform Debate
      • Should the federal government offer a bailout for home owners?
      • Environmentalists: Do They Do More Good Than More Harm?
      • Responding to Scott Walker's Contribution to the War on Unions
    • US Government >
      • America Needs to Focus on the Impending Fiscal Crisis
      • Reacting to the Bush Era-tax Cut Extension Deal
      • Quitting the Obama Revolution: The Fickle Nature of American Politics
      • John Boehner's Circus
      • Is the Fed Putting Itself in Jeopardy?
      • Wikileaks Goes After the US State Department
      • Discussing the Political Environment Surrounding the 2011 Budget Debate
      • What the Democrats Can Do to Ensure a GOP Year in 2012
      • What the 2010 Midterm Actually Said
      • Congresswoman Kathy Dahlkemper
      • Democrats Minus Nancy Pelosi Equals Opportunity
      • Terrorists Go Postal: The Terrorism Threat Reexamined
      • Victory in the 2008 Election: Reaction to Barack Obama'a Win >
        • Expectations for Barack Obama
      • President Obama's first one hundred days
      • John McCain's Negative Campaign
      • Reasons People did not Elect John Mccain
      • History judges the George W. Bush Administration
      • Should the next US President focus on domestic issues?
      • President Bush, should he resign or be impeached
      • Should the Ban on Government Sponsored Assassinations be Repealed
    • Off Topic >
      • A Face of America’s Greatest Generation
      • A Story About a Man Who Made the World a Better Place
      • Making the World a Better Place
      • The Bipolar Ethical Nature of Google
      • Learning Computer Plays Jeopardy
      • Verifying Medicine is the Real Thing
      • Taking a Practical Step Forward in Optical Computing Using Slow Light
      • Scientists Take a Closer Look at How Lithium Batteries Work
      • Remarking on the First Blizzard of the 2010-2011 Winter Season
      • Driving in the Snow: Acceleration is the Key
      • How People in Northwest PA Are Coping with the Increasing Cost of Oil
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