Föhrenbergkreis Finanzwirtschaft

Unkonventionelle Lösungen für eine zukunftsfähige Gesellschaft

Posts Tagged ‘Protectionism’

What Could Spoil 2020?

Posted by hkarner - 17. Januar 2020

Anatole Kaletsky is Chief Economist and Co-Chairman of Gavekal Dragonomics. A former columnist at the Times of London, the International New York Times and the Financial Times, he is the author of Capitalism 4.0: The Birth of a New Economy in the Aftermath of Crisis, which anticipated many of the post-crisis transformations of the global economy. His 1985 book, Costs of Default, became an influential primer for Latin American and Asian governments negotiating debt defaults and restructurings with banks and the IMF.

The most probable scenario for the global economy and financial markets this year is fairly obvious: continued GDP growth, rock-bottom interest rates, and rising equity prices. It’s more useful to identify which unlikely events would alter this likely benign scenario – and consider how unlikely they really are.

LONDON – The traditional January game of economic forecasting for the year ahead hardly seems worth playing when the predictions have been the same for a decade. In 2020, it is even more likely than it has been every year since the financial crisis that the global economy will continue growing, interest rates will remain at rock-bottom levels, and stock markets will keep rising. 

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The Restructuring of the World

Posted by hkarner - 28. September 2018

Michael Spence, a Nobel laureate in economics, is Professor of Economics at NYU’s Stern School of Business, Distinguished Visiting Fellow at the Council on Foreign Relations, Senior Fellow at the Hoover Institution at Stanford University, Advisory Board Co-Chair of the Asia Global Institute in Hong Kong, and Chair of the World Economic Forum Global Agenda Council on New Growth Models. He was the chairman of the independent Commission on Growth and Development, an international body that from 2006-2010 analyzed opportunities for global economic growth, and is the author of The Next Convergence – The Future of Economic Growth in a Multispeed World.

Trade protectionism, together with fears over the national-security implications of technological development, are contributing to a balkanization of the world order. This is not good news for the United States as it faces an intensifying rivalry with an increasingly powerful China.

MILAN – The global economy is undergoing a far-reaching transformation. Change is being driven by shifts in countries’ populations, productivity, wealth, power, and ambitions, and accelerated by US President Donald Trump’s moves to reshape supply-chain structures, alter cross-border investment incentives, and limit the movement of people and technology across borders.

The tensions that these changes are producing are most apparent in escalating disputes over trade. Notwithstanding some dislocations in emerging economies, markets’ reaction to the tit-for-tat tariffs so far has been only muted. Investors probably assume that it is all just part of a renegotiation process that will ultimately produce new rules of engagement for global business – rules that are even more favorable to the powerful.

But such assumptions may underestimate the complexity of the issues at play, beginning with the politically salient matter of where investment and employment are created. On their own, tariff and trade barriers, if viewed as transitory negotiating tactics, will not significantly change global investment patterns or the structure of global supply chains and employment.

Protectionists like Trump argue that the power of tariffs and other trade barriers lies in their ability to curb cheating and free-riding. The implication is that such measures can help to eliminate the tensions, imbalances, and polarization associated with globalization.

“Cheating,” of course, is in the eye of the beholder. State subsidies for specific sectors, including preferential treatment of state-owned enterprises, may be regarded as cheating. So may requiring technology transfer in exchange for market access, public procurement favoring domestic entities, acceptance of unsafe work environments and exploitative labor practices, and exchange-rate manipulation.

The test of free-riding is whether a country contributes too little, relative to its capacity, to the provision of global public goods, such as defense and security, scientific and technical knowledge, mitigation of climate change, and absorption of refugees. The culprits depend on the topic in question.

But whatever the downsides to cheating or free-riding, tackling these behaviors is unlikely to eliminate the conditions that have contributed to economic, social, and political polarization. After all, labor arbitrage has been the core driver of the organization of global supply chains for at least three decades – accelerating, of course, with China’s rise – with significant distributional and employment effects. It seems unlikely that, had China and other emerging economies adhered to the letter of World Trade Organization rules, the distributional effects of their integration into the global economy would have disappeared.

What, then, is the real purpose of the tariffs? Trump could be interested only in leveling the playing field, at which point he will accept global market outcomes. But it is more plausible that this is all part of his strategy – echoed by leaders in a growing number of countries worldwide – to win support by asserting national priorities and sovereignty.

Such efforts are pushing the world toward a more balkanized system. Moreover, the challenges and fears raised by advances in technology, especially digital technology, with regard to both national security and economic performance are also propelling the world toward greater fragmentation.

Fifteen years ago, few would have predicted that mega-platforms like Google or Facebook would become key players in areas like image recognition, artificial intelligence, and the development of autonomous vehicles (including military vehicles). Yet that is exactly what has happened. In fact, Google is now a defense contractor (though it may not renew its contract).

Given the security implications of these developments, as well as a host of issues like data privacy and security, social fragmentation, and foreign interventions in elections, countries are unwilling to leave the Internet unregulated. But they are also unwilling to delegate regulation to a supra-national body. As a result, many are taking matters into their own hands, leading to a growing divergence among countries regarding Internet regulation.

Reflecting the national-security tilt of these initiatives, the scope and authority of the Committee on Foreign Investment in the United States – responsible for reviewing the national-security implications of foreign ownership of US companies or operations – has recently been expanded.

Despite these efforts, however, the fact remains that innovation cannot easily be blocked by national borders. On the contrary, the diffusion of ideas may well become the most consequential dimension of globalization in the future.

While this may complicate national-security planning, it represents powerful new opportunities for business, even as trade faces headwinds. Already, there has been an explosion of innovative, digitally-based business models, many of which could become powerful engines of inclusive growth, especially in emerging economies. Digitally-enabled ecosystems, with open architecture and low barriers to entry, are one example of an emerging model with considerable economic potential.

There is one more crucial dynamic that will shape how the global economy will develop in the coming decades: the strategic rivalry between China and the US. At this point, it is impossible to say precisely what form this rivalry will take. What is clear is that every part of the global economy will be affected by the mix of cooperation and competition that emerges.

In the face of a powerful rival, one might expect the US to pursue a strategy focused on building, expanding, and consolidating alliances with natural allies – that is, countries with similar governance structures and shared views about the benefits of international cooperation and open markets. Instead, Trump has alienated longtime allies and attacked multilateral structures and institutions, all while antagonizing China in what is quickly becoming a two-player game.

This is a bizarre strategy. Whatever advantage Trump thinks he will gain by positioning the US in opposition to its natural allies will be dwarfed by the losses. A split between the US and its traditional allies, if it becomes a permanent feature of the new global order, would lead to deeper fragmentation among the world’s market-oriented democracies. That will surely shift the long-term balance of power in China’s favor, as it moves steadily toward becoming the world’s largest economy.1


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Protectionism for Liberals

Posted by hkarner - 15. August 2018

Robert Skidelsky, Professor Emeritus of Political Economy at Warwick University and a fellow of the British Academy in history and economics, is a member of the British House of Lords. The author of a three-volume biography of John Maynard Keynes, he began his political career in the Labour party, became the Conservative Party’s spokesman for Treasury affairs in the House of Lords, and was eventually forced out of the Conservative Party for his opposition to NATO’s intervention in Kosovo in 1999.

The ability of companies to allocate jobs globally changes the nature of the discussion about the “gains from trade.” In fact, there are no longer guaranteed “gains,” even in the long run, to those countries that export technology and jobs.

LONDON – Liberal revulsion at US President Donald Trump’s mendacious and uncouth politics has spilled over into a rigid defense of market-led globalization. To the liberal, free trade in goods and services and free movement of capital and labor are integrally linked to liberal politics. Trump’s “America First” protectionism is inseparable from his diseased politics.

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More than 1,000 economists warn Trump his trade views echo 1930s errors

Posted by hkarner - 5. Mai 2018

Date: 04-05-2018
Source: The Guardian

President’s ‘economic protectionism’ harkens back to errors that fueled Great Depression, say experts including 14 Nobel winners

Trump’s rhetoric harkens back to mistakes that drove the world into the Great Depression, the economists say.

Over a thousand economists have written to Donald Trump warning his “economic protectionism” and tough rhetoric on trade threatens to repeat the mistakes the US made in the 1930s, mistakes that plunged the world into the Great Depression.

The 1,140 economists, including 14 Nobel prize winners, sent the letter on Thursday amid an escalating row over trade between the US and the European Union. Trump has imposed tariffs on steel and aluminium imports but has granted temporary reprieves to the EU, Australia and other countries.

“In 1930, 1,028 economists urged Congress to reject the protectionist Smoot-Hawley Tariff Act,” the authors write, citing a trade act that many economists argue was one of the triggers for the Great Depression. Den Rest des Beitrags lesen »

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Punishing America First

Posted by hkarner - 8. April 2018

Date: 07-04-2018
Source: The Wall Street Journal

Trump to Iowa: You’ll have to suffer while I force Xi Jinping to give in.

Donald Trump and his advisers spent much of Friday telling everyone that the U.S. is not in a trade war with China, but investors weren’t buying it. Equity markets took a major header, falling by more than 2% across the board. Maybe investors are starting to look at the damage Mr. Trump may do to the Farm Belt states and to the GOP’s chances of holding Congress.

Mr. Trump raised the stakes late Thursday in his tariff showdown with Beijing, vowing to impose another $100 billion in tariffs on Chinese goods in light of its “unfair retaliation” after his initial $50 billion in tariffs. The latest target list still hasn’t been drawn up, and the silver-lining crowd is hoping that Mr. Trump was merely popping off as part of his negotiating strategy. Maybe that’s right. But then China popped off in return, saying it is ready to “forcefully” strike back if the new tariffs are imposed.

That’s the problem with protectionism. The other side can strike back, and businesses and markets don’t know when the politicians will decide to stop pounding their chests. Den Rest des Beitrags lesen »

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Nationalist movements have lost some recent battles, but it’s way too soon to think they are receding

Posted by hkarner - 24. Januar 2018

Date: 23-01-2018
Source: The Wall Street Journal
Subject: A Fractured World: Nationalism vs. the Global Liberal Order

The global liberal order is holding up better than many feared a year ago.

In Europe, right-wing populists lost elections to the establishment in the Netherlands, Austria and France. U.S. President Donald Trump has prioritized traditional conservative causes like tax cuts over protectionism.

But globalists should not breathe easy. The nationalist insurgency is both growing and metamorphosing. It is not just eating away at relations between countries on issues such as free trade; it is also eroding the institutions and norms that prevail within countries.

This is not a problem for the global economy yet, as a synchronized upswing drives growth and stock prices higher. But it’s a shadow over the future. Populists sustained by legitimate grievances at the cultural and economic upheaval caused by globalization often govern by authoritarian or divisive means, undermining the stable, rules-based environment that businesses crave. Den Rest des Beitrags lesen »

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Protectionism Will Not Protect Jobs Anywhere

Posted by hkarner - 3. August 2017

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Posted by hkarner - 17. Juni 2017

Date: 16-06-2017
Source: Newsweek

French President Emmanuel Macron and Donald Trump don’t have many obvious parallels, although they both enjoy a handshake more than is strictly necessary.

But while Macron’s platform is avowedly liberal both economically and socially, his plans for European trade have a distinctly protectionist flavor. You might even say he wants to “make Europe great again” and “put Europe first.” Or something.

More than a third of French voters backed the hard-right, Euroskeptic protectionism of Marine Le Pen in the recent election. Elsewhere in Europe, parties who want to close borders and stop globalization have surged in recent years. Macron is seeking a pro-European response to this movement, or, as he put it in his presidential manifesto, a Europe that “concentrates on major challenges and dares to defend its interests and values in the world.” Den Rest des Beitrags lesen »

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Macron will EU auf mehr Protektionismus trimmen

Posted by hkarner - 15. Juni 2017

Frankreich fordert besseren Schutz gegen die Übernahme strategischer Firmen – ein Streitpunkt für den kommenden EU-Gipfel.

Wien. In der kommenden Woche hat Emmanuel Macron seinen ersten Auftritt auf einem EU-Gipfel. Im Gepäck hat der neue französische Präsident nicht nur freundliche Worte für seine Kollegen, sondern auch ein brisantes Arbeitspapier: Paris fordert Brüssel zu gemeinsamen Schritten gegen Übernahmen von Unternehmen in Schlüsselbranchen durch nicht europäische Investoren auf. Das berichtet die „Financial Times“.

Für seinen Vorstoß für ein „schützendes Europa“ ist Macron kräftiger Applaus aus Berlin und Rom sicher. Vor allem Deutschland sorgt sich schon seit Längerem um einen „Ausverkauf“ seiner Hightech-Unternehmen an chinesische Staatsfirmen.

Vor allem aber dürfte ein Schwenk in Richtung Protektionismus die europäische Position gegenüber Donald Trump deutlich schwächen. Bisher grenzt sich Europa ja als Herold offener Märkte gegen die „America first“-Politik des US-Präsidenten ab. Wenn der alte Kontinent künftig auch nur leicht in dieselbe Richtung tendiert, wird die Kritik an Trump rasch unglaubwürdig. Den Rest des Beitrags lesen »

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Whistling Past the Geopolitical Graveyard

Posted by hkarner - 9. Mai 2017

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