Hi Vince, this mercantilist system that looks to take over from the global system could easily take us to war, based on the ideas that are outlined in the graphic. I realise most articles we read are US centric, but it pays to look at it from the other angle as well, and from that view, I'm not sure the rules are going to be very workable. I found it useful to pick a few countries and products, and to see how they would fare in a mercantilist world viewed from thier vantage point, rather than the US's and based on what it says on that graphic.
For example, European luxury goods exports. According to the chart in the article, the US would raise taxes on Vuitton goods, Ferraris and french wines, to take just a few examples. So far so good, because the sector of Americans who enjoy these products are more or less impermeable to higher prices. The question is that if colonies are not allowed to trade with non colonies of the US, what happens to France and Italy when they want to sell these products to Asia? If we take the view that Europe is a colony of the US, based on its dependence on US energy, its restrictions concerning trade with China (Huawei 5G), the tribute it pays - and will be paying - to the US military industrial complex without retaining any control of its own military strategy,; if we also account for the US's extraterritorial control over European business to the extent of the fines levied on banks like the BNP for trading without regard to sanctions, do we assume that European businesses will accept the restrictions for the benefit of American mercantilism? What is in it for Europe except for the staging of war (again for the third time)? I cant see the European public allowing it without any serious resistance. That might not be a world war, but with 450M people in Europe, it is still a big civil war.
Next I looked at China. In a mercantilist word, they would seek the competitive advantage as they have done in the last 25 years, except this time round they are not selling plastic toys; they are selling heavy machinery, power stations, communication and photovoltaic equipment, EV cars and soon to be, aeroplanes. If we are working on the basis of a free market, Airbus, Boeing, Westinghouse, Siemens, Thales, Catepillar, etc...and a number of Japanese companies, are going to be facing stiff competition, perhaps competition they can't match for price/quality and speed of execution. We have already seen Mr. Trump at work on how to compete with the Chinese industrial onslaught, but what we don't know is what will happen if the US campaigns to force China's trading partners to impose tariffs on Chinese machinery. based on monetary reserves they have stored in the US Fed. Inside the BRICS are some ex-western colonies so I dont see how such a pressure campaign could result in a war-free trading system. When forced to take sides, the ex-colonies within the BRICS are likely to go with the solution that enriches them the most while also providing them with autonomy of governance. That implies they will lose their reserves before they are able to create the alternative non-dollar trading system. And if they are also storing gold in london or the US, forget it....it'll be gone.
What about Latin America? Is it a colony of the US?, yes probably; it is begrudgingly a colony, although it contains elements of resistance within it. Would they be forced to stop selling raw materials to China? What happens to China's investments in Latin American countries, and to what lengths will the Chinese go to protect them? There may not be a peaceful solution to mercantilism in this region.
On the other hand, the Global south does not contain western controlled colonies, except in a few small pockets. On the question of raw materials, excluding the US which has an abundance of most of the needed raw materials, they are to be found in abundance in Latin America, Canada, Africa ad indonesia to name the major ones, whilst a narrower range of commodities in the energy sub-sector can be found in the GCC/West Asian region, plus Russia and the Stans. I wont delve into Africa, because although it is potentially a battleground for the great powers, it is already very much controlled by China. The UK has the Commonwealth of course, but it hasn't got the resources to leverage any power on this geographical location. The Brits just dont have the money to compete.
As for Canada, they are not going to get the opportunity to sell any of their commodities to other than the five-eyes countries and Europe, so this one is straight forward enough, and i suggest the Stans are still in the orbit of Russia through their regional tariff-free trading system. Kazakhstan for instance has pledged the next five years of uranium production exclusively to Russia.
Shipping could be affected by the suggestion that US cargoes must use US ships. If the Jones Act is extended across all oceans for American ships, it would privilege a handful of US companies, but they are not sufficient in size and number to handle all of US trade. I dont see how limiting US trade to US ships could work but international tonnage worldwide is unlikely to take this set of rules without working around it. Depending on how the US enforces the rules, it is hardly going to be without the risk of degrading relationships, so, I find the chart dictates too many conditions that are just not going to work without a fight. Forcing the golden billion to stick to the mandates of the US for the greater good of the Western system, is like predicting war in no time at all.
Hi Vince, this mercantilist system that looks to take over from the global system could easily take us to war, based on the ideas that are outlined in the graphic. I realise most articles we read are US centric, but it pays to look at it from the other angle as well, and from that view, I'm not sure the rules are going to be very workable. I found it useful to pick a few countries and products, and to see how they would fare in a mercantilist world viewed from thier vantage point, rather than the US's and based on what it says on that graphic.
For example, European luxury goods exports. According to the chart in the article, the US would raise taxes on Vuitton goods, Ferraris and french wines, to take just a few examples. So far so good, because the sector of Americans who enjoy these products are more or less impermeable to higher prices. The question is that if colonies are not allowed to trade with non colonies of the US, what happens to France and Italy when they want to sell these products to Asia? If we take the view that Europe is a colony of the US, based on its dependence on US energy, its restrictions concerning trade with China (Huawei 5G), the tribute it pays - and will be paying - to the US military industrial complex without retaining any control of its own military strategy,; if we also account for the US's extraterritorial control over European business to the extent of the fines levied on banks like the BNP for trading without regard to sanctions, do we assume that European businesses will accept the restrictions for the benefit of American mercantilism? What is in it for Europe except for the staging of war (again for the third time)? I cant see the European public allowing it without any serious resistance. That might not be a world war, but with 450M people in Europe, it is still a big civil war.
Next I looked at China. In a mercantilist word, they would seek the competitive advantage as they have done in the last 25 years, except this time round they are not selling plastic toys; they are selling heavy machinery, power stations, communication and photovoltaic equipment, EV cars and soon to be, aeroplanes. If we are working on the basis of a free market, Airbus, Boeing, Westinghouse, Siemens, Thales, Catepillar, etc...and a number of Japanese companies, are going to be facing stiff competition, perhaps competition they can't match for price/quality and speed of execution. We have already seen Mr. Trump at work on how to compete with the Chinese industrial onslaught, but what we don't know is what will happen if the US campaigns to force China's trading partners to impose tariffs on Chinese machinery. based on monetary reserves they have stored in the US Fed. Inside the BRICS are some ex-western colonies so I dont see how such a pressure campaign could result in a war-free trading system. When forced to take sides, the ex-colonies within the BRICS are likely to go with the solution that enriches them the most while also providing them with autonomy of governance. That implies they will lose their reserves before they are able to create the alternative non-dollar trading system. And if they are also storing gold in london or the US, forget it....it'll be gone.
What about Latin America? Is it a colony of the US?, yes probably; it is begrudgingly a colony, although it contains elements of resistance within it. Would they be forced to stop selling raw materials to China? What happens to China's investments in Latin American countries, and to what lengths will the Chinese go to protect them? There may not be a peaceful solution to mercantilism in this region.
On the other hand, the Global south does not contain western controlled colonies, except in a few small pockets. On the question of raw materials, excluding the US which has an abundance of most of the needed raw materials, they are to be found in abundance in Latin America, Canada, Africa ad indonesia to name the major ones, whilst a narrower range of commodities in the energy sub-sector can be found in the GCC/West Asian region, plus Russia and the Stans. I wont delve into Africa, because although it is potentially a battleground for the great powers, it is already very much controlled by China. The UK has the Commonwealth of course, but it hasn't got the resources to leverage any power on this geographical location. The Brits just dont have the money to compete.
As for Canada, they are not going to get the opportunity to sell any of their commodities to other than the five-eyes countries and Europe, so this one is straight forward enough, and i suggest the Stans are still in the orbit of Russia through their regional tariff-free trading system. Kazakhstan for instance has pledged the next five years of uranium production exclusively to Russia.
Shipping could be affected by the suggestion that US cargoes must use US ships. If the Jones Act is extended across all oceans for American ships, it would privilege a handful of US companies, but they are not sufficient in size and number to handle all of US trade. I dont see how limiting US trade to US ships could work but international tonnage worldwide is unlikely to take this set of rules without working around it. Depending on how the US enforces the rules, it is hardly going to be without the risk of degrading relationships, so, I find the chart dictates too many conditions that are just not going to work without a fight. Forcing the golden billion to stick to the mandates of the US for the greater good of the Western system, is like predicting war in no time at all.