... and Trump has started his tirade against NAFTA...
And the likely outcome: a quote from Trump reading roughly "No one knew trade deals could be so hard."
I think Trump will learn the hard way that trade negotiations will make his health care reform attempts look like a child's game. And there is a simple reason... international trade negotiations are NOT like running a business.
If it were, there would be nothing to renegotiate. The US would have gotten what they wanted the first time around. Trade negotiations would only last long enough for each country involved to size up their opponents and walk away with a deal weighted accordingly.
In international trade though, things are pretty much backwards to that. The massive size of the US economy is actually to its detriment. They have FAR more to lose than anyone else. If NAFTA dissolved and existing trade agreements were reinstated everything would become more expensive for everyone basically. That is, of course, an over generalization. But the net effect will be negative for all parties involved. And the party that will hurt the most will be the largest.
The smaller entities will hurt, but with smaller economies, they'll have an easier time re-allocating those goods to other countries. And let's face it... the US doesn't really produce goods, and the ones it does produce are neither unique nor the cheapest. US exports will tank. And guess what, Canada and Mexico are two of the US's largest export destinations.
He may be able to "fix" or help out some of the sectors he addressed during his campaign, but he won't get a unilateral trade agreement. So, in return for changes which help those sectors, he will likely be forced to choose other sectors to "punish".
THIS is EXACTLY why trade agreements often take MANY years and span multiple political shifts before they are finally enacted. They are incredibly complex games of give and take. And, anyone involved would rather just slap tariffs on your goods than give more than they are able to take back.
I've said it before, and I 'll say it again. The right answer is not trying to bring back jobs which are dead or dying or bolstering sectors which are dwindling. The correct answer is to either implement something akin to UBI or work to train these people in more valuable sectors. The net effect of propping up dying industries is that you will be able to breathe a few more years of life into them, but at the end of that you will be totally SOL on whatever replaces it.
Let's take coal and oil as examples. Oil still has some life in it, but it is being pushed out of relevance slowly. And the ENTIRE WORLD... the U.S. INCLUDED is moving over to renewable sources of energy. THERE IS ABSOLUTELY NOTHING Trump can do to stop this short of ripping up the constitution and becoming a dictator. IT WILL HAPPEN. Those jobs will disappear NO MATTER what you do try and save them. And, if you divert all of your resources to those dying industries you will have NONE to invest in what replaces it.
I GET IT! People are losing jobs. Living in poverty. Etc.... It sucks. IT IS THEIR FAULT if they are unwilling to adapt to the present reality. Sure, some are too old. Again, things like UBI or other forms of financial assistance can help those who truly have no capacity to adapt. The lack of such problems is the fault of the people and of the government. These are NOT unsolvable problems. Refusal to retrain doesn't make your sector of the economy grow.
They are painful problems. They are complex problems. They are undesirable problems. BUT THEY ARE NOT FUNDAMENTALLY UNRESOLVABLE!
Back to trade. Every trade agreement hurts someone. A "good" trade agreement allows all parties involved to focus on their relative areas of expertise. This is accomplished by lowering or removing tariffs or limits on goods another country is better suited to supply and raising or instituting such measures on areas where you are better suited. The net result is goods will primarily be purchased from the more affordable (and also typically, most able source). This results in a recession in sectors locally where the same goods can no longer be acquired as cheaply as they can abroad. If this game of give and take is successful though... both countries will experience net positive growth and consumers in both countries will achieve a better quality of life at a better cost. Some people on both sides will lose their current jobs or revenues or something. But that money, and them some, will be diverted into other industries.
A unilateral agreement. One which favors one party over another would see their trade partner decimated. This would weaken their buying power which would (in time) hurt the country with the supposedly favorable agreements ability to continue to export goods.
You see? If you make an agreement whereby you use your clout to take away all of your friends money... they no longer have money to help your friends out by buying their goods. And this is exactly why the size of the US actually diminishes their clout.
I can tell you, as a Canadian, I run across (and buy) a LOT of American goods. They are made in America and successful at being sold here because A) America probably has a stronger economy in that sector and B) existing trade agreements made it conducive to my buying those goods. And everyone of those I buy, puts money into American pockets. If Trump throws out NAFTA, there would be nothing to stop the Canadian government from saying... oh, all those American goods we're buying... MASSIVE FUCKING TARIFFS. Now, prohibitive costs mean that not one cent further will go to American's. It will likely be more expensive to get the same things in Canada, but still less than it would cost to get them imported under the new tariffs. In fact... that is EXACTLY HOW TARIFFS ARE DESIGNED TO WORK.
If I sound angry. I AM. I can't tolerate this level of stupidity. The belief that Trump or the US has some magical ability to leverage trade agreements to fix their problems at everyone else's expense. Let alone that they would have any right to do so if they could or that it would even make sense. Just because you CAN do something, doesn't always mean you SHOULD.
I think Trump will learn the hard way that trade negotiations will make his health care reform attempts look like a child's game. And there is a simple reason... international trade negotiations are NOT like running a business.
If it were, there would be nothing to renegotiate. The US would have gotten what they wanted the first time around. Trade negotiations would only last long enough for each country involved to size up their opponents and walk away with a deal weighted accordingly.
In international trade though, things are pretty much backwards to that. The massive size of the US economy is actually to its detriment. They have FAR more to lose than anyone else. If NAFTA dissolved and existing trade agreements were reinstated everything would become more expensive for everyone basically. That is, of course, an over generalization. But the net effect will be negative for all parties involved. And the party that will hurt the most will be the largest.
The smaller entities will hurt, but with smaller economies, they'll have an easier time re-allocating those goods to other countries. And let's face it... the US doesn't really produce goods, and the ones it does produce are neither unique nor the cheapest. US exports will tank. And guess what, Canada and Mexico are two of the US's largest export destinations.
He may be able to "fix" or help out some of the sectors he addressed during his campaign, but he won't get a unilateral trade agreement. So, in return for changes which help those sectors, he will likely be forced to choose other sectors to "punish".
THIS is EXACTLY why trade agreements often take MANY years and span multiple political shifts before they are finally enacted. They are incredibly complex games of give and take. And, anyone involved would rather just slap tariffs on your goods than give more than they are able to take back.
I've said it before, and I 'll say it again. The right answer is not trying to bring back jobs which are dead or dying or bolstering sectors which are dwindling. The correct answer is to either implement something akin to UBI or work to train these people in more valuable sectors. The net effect of propping up dying industries is that you will be able to breathe a few more years of life into them, but at the end of that you will be totally SOL on whatever replaces it.
Let's take coal and oil as examples. Oil still has some life in it, but it is being pushed out of relevance slowly. And the ENTIRE WORLD... the U.S. INCLUDED is moving over to renewable sources of energy. THERE IS ABSOLUTELY NOTHING Trump can do to stop this short of ripping up the constitution and becoming a dictator. IT WILL HAPPEN. Those jobs will disappear NO MATTER what you do try and save them. And, if you divert all of your resources to those dying industries you will have NONE to invest in what replaces it.
I GET IT! People are losing jobs. Living in poverty. Etc.... It sucks. IT IS THEIR FAULT if they are unwilling to adapt to the present reality. Sure, some are too old. Again, things like UBI or other forms of financial assistance can help those who truly have no capacity to adapt. The lack of such problems is the fault of the people and of the government. These are NOT unsolvable problems. Refusal to retrain doesn't make your sector of the economy grow.
They are painful problems. They are complex problems. They are undesirable problems. BUT THEY ARE NOT FUNDAMENTALLY UNRESOLVABLE!
Back to trade. Every trade agreement hurts someone. A "good" trade agreement allows all parties involved to focus on their relative areas of expertise. This is accomplished by lowering or removing tariffs or limits on goods another country is better suited to supply and raising or instituting such measures on areas where you are better suited. The net result is goods will primarily be purchased from the more affordable (and also typically, most able source). This results in a recession in sectors locally where the same goods can no longer be acquired as cheaply as they can abroad. If this game of give and take is successful though... both countries will experience net positive growth and consumers in both countries will achieve a better quality of life at a better cost. Some people on both sides will lose their current jobs or revenues or something. But that money, and them some, will be diverted into other industries.
A unilateral agreement. One which favors one party over another would see their trade partner decimated. This would weaken their buying power which would (in time) hurt the country with the supposedly favorable agreements ability to continue to export goods.
You see? If you make an agreement whereby you use your clout to take away all of your friends money... they no longer have money to help your friends out by buying their goods. And this is exactly why the size of the US actually diminishes their clout.
I can tell you, as a Canadian, I run across (and buy) a LOT of American goods. They are made in America and successful at being sold here because A) America probably has a stronger economy in that sector and B) existing trade agreements made it conducive to my buying those goods. And everyone of those I buy, puts money into American pockets. If Trump throws out NAFTA, there would be nothing to stop the Canadian government from saying... oh, all those American goods we're buying... MASSIVE FUCKING TARIFFS. Now, prohibitive costs mean that not one cent further will go to American's. It will likely be more expensive to get the same things in Canada, but still less than it would cost to get them imported under the new tariffs. In fact... that is EXACTLY HOW TARIFFS ARE DESIGNED TO WORK.
If I sound angry. I AM. I can't tolerate this level of stupidity. The belief that Trump or the US has some magical ability to leverage trade agreements to fix their problems at everyone else's expense. Let alone that they would have any right to do so if they could or that it would even make sense. Just because you CAN do something, doesn't always mean you SHOULD.
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