The United States just ended its first session of trade talks with China. In theory, this is supposed to be a negotiation where China confesses to voluminous trade crime and the United States walks away with big concessions. No confessions or concessions will ever be made. So what’s the point?
Simply having these talks opens up the subject within the United States. Free trading globalists who consider themselves to be more moral than protectionists are forced to answer reasonable questions like:
- Does China steal American intellectual property?
- Does China require all American companies to set up partnerships with Chinese companies if they want to produce goods for the Chinese market?
- Does China block Google, Facebook, and Microsoft from their market or are these companies simply unable to compete locally?
- What is the “Made in China 2025“ initiative?
It is virtually impossible to respond to these questions without conceding that China is engaged in rampant protectionist behavior. The question then changes: Are we OK with trading with China on their/these terms? This is big progress. For the past 20 years trade with China has been called “free“. American presidents going back to Bill Clinton have sought popularity by facilitating unlimited imports of opium (cheap consumer goods) from China. We have been in a consumption stupor, unable or unwilling to see the costs.
My sense is that even the most liberal media outlets who want to denounce all Trump initiatives are really struggling with the narrative surrounding these talks. They have changed their argument [weakened it] to excoriating steel tariffs but they know that such denouncements don’t address the greater problem. Fine, steel tariffs have a poor return, so how (else) do we fight back against dumping?
This situation is so outrageous that even Donald Trump can’t soil it by association. He still may screw it up with inappropriate policy but the genie is out. It’s hard for me to see politicians coming out in favor of globalism and its embedded free trade beliefs ever again. They may eschew populism as pandering to xenophobes but they see the merit of this trade fight. Authors like Ian Bremmer and Robert Kuttner are on the circuit offering intellectual support. Even The World is Flat – guy – Tom Friedman issued a sort of mea culpa last week! Up to now such voices were mute.
The hard part is still ahead of us – applying good policies that may raise the price of that 4K TV you wanted. We need to swing the pendulum back toward workers and away from consumers or else we will continue to see zero (real) wage growth forever (regardless of how low the fake unemployment rate goes.).