Trade Wars Are Class Wars
A provocative look at how today’s trade conflicts are caused by governments promoting the interests of elites at the expense of workers\ \ Trade disputes are usually understood as conflicts between countries with competing national interests, but as Matthew C. Klein and Michael Pettis show in this book, they are often the unexpected result of domestic political choices to serve the interests of the rich at the expense of workers and ordinary retirees.\ \ Klein and Pettis trace the origins of today’s trade wars to decisions made by politicians and business leaders in China, Europe, and the United States over the past thirty years. Across the world, the rich have prospered while workers can no longer afford to buy what they produce, have lost their jobs, or have been forced into higher levels of debt. In this thought-provoking challenge to mainstream views, the authors provide a cohesive narrative that shows how the class wars of rising inequality are a threat to the global economy and international peace—and what we can do about it.
Stats for nerds
9recommend
24mentions
12people
2020–2026years
79% recommend21% neutral
Mentions per year
What Hacker News says
- A current account deficit is a capital account surplus.
We can pay for imports with things we make or things we own. To a first approximation, making things employs people and owning things does not. If we pay with things we make, our economy employs people. If we pay with things we own, the jobs disappear while stocks/bonds/real estate soar.
If you want the whole story from an actual economist, read "Trade Wars are Class Wars" by Klein and Pettis.
- > We were 10 years from paying off the national debt when Clinton left office. 10 years!
To be fair, if the US government had continued paying off the debt, the only way the (global) books would've balanced would've been for the US populace and businesses to take on waaaaayyyyyy more debt. Not sure if that would've been better.
(For a much better explanation of this, read Trade Wars are Class Wars).
- > We literally can't lose
Who is "we"? Trade deficit dollars are recycled into assets, which compete with exports in the balance of payments. If you have a big house and fat brokerage account, you win big. If you have a job building shit, you lose big. If you have a job building tradeable shit and a low net worth, may god have mercy on your soul.
If you want the full economist version, "Trade Wars are Class Wars" by Klein and Pettis
- It's worth tracing this through every level in order to get the causality correct.
Triffin's Dilemma says that in the case of the modern USA, assets will be pumped. Macroeconomics says asset pump = export dump.
The way that economics dumps exports is by raising the bar (strong currency = poor customers, expensive assets = expensive houses = expensive labor, costs go up, price goes down, profitability is squeezed). Eventually the bar became impossible to hop without a cheat code like "good brand and no R+D" or "software level profitability".
At the individual level, manufacturing pay went in the shitter as the jobs dried up while house prices and stock prices went through the roof... so everyone who could became real estate agents, or doctors overcharging real estate agents, or sellers of investment scams to venture capitalists.
What's wild is that this happened to the Spanish, the Dutch, the English, and by the 1960s Triffin could see that it would happen to the US as well.
If you want details from an economist who does his homework, "Trade Wars are Class Wars" by Klein and Pettis.
- Also, there is a massive conflict of interest associated with trusting the opinions of companies actively engaged in labor and environmental arbitrage. Opinions of politicians and think-tanks downstream of them in terms of funding, too. Even if those opinions are legitimately more educated and better reasoned, they are on the opposite side of the bargaining table from most people and paying attention to them alone is "who needs defense attorneys when we have prosecutors" level of madness.
If anyone is looking for an expert opinion that breaks with the "free trade is good for everyone all of the time lah dee dah" consensus, Trade Wars are Class Wars by Klein & Pettis is a good read.
- > Taking the US dollar as world reserve currency for granted.
It's the exact opposite: US citizens got fed up with the domestic problems created by Triffin's Dilemma and wanted out.
Remember, the "imperial revenue" in our model doesn't get helicoptered into the economy, it pumps assets. Stocks, bonds, and real estate. Your share of the imperial loot is proportional to the value of the assets that you own, and worse, even if you don't have a big house and fat brokerage account you still have to compete with people who do and they're going to bid up the price of anything that doesn't have highly elastic supply. Health care, housing, and education are the ones creating problems. America got a great deal, but most Americans got a raw deal: costs went up, income didn't, misery ensued.
Pumped bonds allow (force, really) the government to run deficits (homework: what breaks if they don't? It happened in Clinton's term, you can go and check) and to some extent that distributes the money. There's the whole services narrative which held that the services sector would pump hard enough to backfill manufacturing, but it never did. The people who got the door slammed in their face are no longer convinced that the door is their path to prosperity and now they want to tear the whole thing down.
If you want to hear an actual economist talk about this, see "Trade Wars are Class Wars" by Klein and Pettis.
