So I can report that @M_C_Klein and @michaelxpettis’ “Trade Wars are Class Wars” is good beach reading. Woke up with a few thoughts after finishing it last night.
1. It’s not about trade wars. It’s a history book about global imbalances. The title is #2020 clickbait.
1. It’s not about trade wars. It’s a history book about global imbalances. The title is #2020 clickbait.
2. It’s light on the past decade since the financial crisis. In fact it feels like there’s more written about 2008 and MBS than the rise of populism.
3. Hobson’s idea that exports and “over production” are a false economy is seductive. But it ignores human ambition.
3. Hobson’s idea that exports and “over production” are a false economy is seductive. But it ignores human ambition.
4. It is very light, it seems to me, in attributing any changes in economies to technological revolutions. Part of the reason the US has been willing to sacrifice some manufacturing jobs is that whole new industries have been created. This book ignores those new industries.
5. It has a classic American lens on the world that creates some funny biases. Hamilton’s manufacturing push (via IP theft, protectionism, etc) is therefore lauded. His “Report on Manufactures” is “magisterial”. Anyone else following Hamilton’s model is somehow predatory.
6. That applies to the view of deficits/surpluses. American surpluses seem to be good. Anyone else’s are bad...
7. The telling of the 19th century rise of the American economy seems to ignore it was built in part on the back of slavery. (Which seems a key missing part for a book about inequality.)
8. The sections on China and Germany are very good. They tell the story of the epochal moments in history both economies have been going through well. But doesn’t that imply their surpluses (which are a result of policies to deal with historic transitions) may be transitional?
9. The fact that the past decade isn’t dealt with very much means that there’s a potential hole in their argument left unaddressed. How should we explain record lows in US unemployment hit before the pandemic? And rising wages?
10. And finally (because I need to go back to the beach) I have a broader thought that gnawed at me throughout: This telling of economic history (like many) completely ignores the role of companies and consumer choices...
10 (cont). I’m thinking of a few things. It dismisses FDI as a tax dodge and argues “productive investment” is rare. Which, it seems to me, doesn’t explain the $9tn+ stock of FDI in the US. Ie all the foreign-built factories in the US. (Data here: unctad.org/sections/dite_…)
10 (cont). The book seems to argue that German car companies should only sell cars in Germany. And that any sales or production outside Germany (as Hobson would argue, I guess) are somehow an economic crime.
10 (cont). Which ignores that German cars are very good cars that consumers want. And that is really the final point. Too often we forget consumer choices and quality affect trade flows. Apple is a success because people like iPhones. Ditto for Toyotas and Subarus.
Coda: Next on the list is this by my old colleague @davidpilling, which seems like a good one in an age of broken economic data...
One reason why I’d like to have read much more about changing dynamics in past decade...
