1/7
Senator Cotton says "There’s no natural level of people, goods, or money moving across borders; it’s a policy choice that must be made by the people and their representatives.”
ft.com/content/58700e…
Senator Cotton says "There’s no natural level of people, goods, or money moving across borders; it’s a policy choice that must be made by the people and their representatives.”
ft.com/content/58700e…
2/7
He's right, of course, and Republicans should question a commitment to financial globalization that was always more ideological than practical (and out of synch with the party's history). Their views however are still based on Peter Navarro's obsolete understanding of trade.
He's right, of course, and Republicans should question a commitment to financial globalization that was always more ideological than practical (and out of synch with the party's history). Their views however are still based on Peter Navarro's obsolete understanding of trade.
3/7
If this were just about measures to prevent core US technologies and industries from being acquired by China or undermined by foreign mercantilism, it might make sense. There is nothing wrong with Washington being as protective of strategic industries as Beijing.
If this were just about measures to prevent core US technologies and industries from being acquired by China or undermined by foreign mercantilism, it might make sense. There is nothing wrong with Washington being as protective of strategic industries as Beijing.
4/7
But the obsession with bilateral limits misses the point. In a globalized world with extremely low (and declining) frictional costs, bilateral constraints are largely irrelevant. Closing one door will cause the same capital and trade to enter through another door.
But the obsession with bilateral limits misses the point. In a globalized world with extremely low (and declining) frictional costs, bilateral constraints are largely irrelevant. Closing one door will cause the same capital and trade to enter through another door.
5/7
More importantly, the idea that preventing financial outflows from the US to China will benefit the US and hurt China is based on the idea that the world suffers from scarce savings and that businesses are battling each other over access to capital.
More importantly, the idea that preventing financial outflows from the US to China will benefit the US and hurt China is based on the idea that the world suffers from scarce savings and that businesses are battling each other over access to capital.
6/7
This hasn't been true for decades. On the contrary, the world suffers from excess savings and weak demand. China struggles to find places to park its huge net exports of capital while the US, unfortunately, is forced to absorb excess Chinese and global savings.
This hasn't been true for decades. On the contrary, the world suffers from excess savings and weak demand. China struggles to find places to park its huge net exports of capital while the US, unfortunately, is forced to absorb excess Chinese and global savings.
7/7
By limiting financial flows from the US to China, however ineffectively, Washington is actually making the PBoC's job a little easier, and to the extent it has any meaningful impact on trade (doubtful) it is more likely to increase the US trade deficit than reduce it.
By limiting financial flows from the US to China, however ineffectively, Washington is actually making the PBoC's job a little easier, and to the extent it has any meaningful impact on trade (doubtful) it is more likely to increase the US trade deficit than reduce it.
• • •
Missing some Tweet in this thread? You can try to
force a refresh
