The west is running massively expansive monetary and fiscal policy. The only reason that is not causing extreme inflation is that we import deflation from China. Were we to stop that prices and interest rates would jump and asset prices would collapse.
That we print money, expanding the monetary base, and at the same time China stockpiles USD and other western currencies, effectively decreasing the same monetary base.
The Chinese government prints much more money though. Inflation is much more serious in China. The official stats doesn’t reflect this, but it’s clear for anyone who’s familiar with price changes in China
Just a reminder, mouth pieces for China does not speak the truth nor their actual intention. They are posted to lead you to think many will bankrupt, ( which they won't ).
It is now owned by Jack Ma (Alibaba / 1688.com) but it takes a decidedly mixed editorial stance: some articles are very pro-China, and align with / support central government position. Other articles are (if not pro-US), aligned with US-policy positions and norms, and critical of China and the central government.
I expected SCMP would quickly become way more pro-China, supportive of central government on every issue after purchase by Ma, but while that has happened to some extent, it was very gradual.
Ma has stated that he wanted the paper to represent China to the outside world from more angles and perspectives.
Personally I find the mixed editorial stance annoying. I wish it would be more decisively one-side like most Western outlets I'm used to. But it really is mixed and has something for everyone, and it's true that you can find perspectives from "both sides" or "multiple sides" there, so I think it is achieving its objective of representing China in a fair way to readers.
For those reasons I think SCMP is a very reliable source for news on the region if you cannot read Chinese / even if you can. If you combine perspective across SCMP, a Western outlet, and a Chinese outlet (like: http://en.people.cn/) you get a much more faithful idea about China just reading one.
I suspect this is a promoted post in the sense that someone with an agenda is gaming the system. The same article right now is on Reddit as a promoted post.
So when I disagree with the Authoritarian left in 2020 I will be called a racist misogynist Nazi Chinese Bot instead of a racist misogynist Nazi Russian Bot? Or will I be a Russian Chinese Bot?
In reality every nation attempts to meddle and influence every other nations elections to get leaders in those nations that are favorable to them. This has happened since the dawn of civilization to believe it is a new or modern activity simply because we have Facebook now is to ignore History.
the US is one of the most prolific influencers of elections on the world stage having "peacefully" toppled more governments than any other nation in world history.
This modern commentary on Russian bots, and now Chinese Bots is primary away for the Extreme ends of the political spectrum to rationalize away why their idea are unpopular and their arguments fall flat at convincing people
Does Russia and China attempt to influence the elections... yes... as does every other nation.
Should we care? Maybe, and we should be aware of it and monitor it but personally I am more concerned with Internal meddling by our own institutions than i am about Foreign Influence
There is math model Prisoners dilemma that says that both sides is better of cooperating. So unless Chinas industrial subsidies was a defeat move and the Us trade tariffs is an answer move everyone both Us and China will be worse off after the customs tariffs.
There is chance that the tarrifs will lead to higher consumer prices as economic production will not be optimally allocated. Inflation will follow higher consumer prices. Central banks have already used zero interest policy to stimulate the economy so we cannot use that as a tool. Something better will emerge after this but it might be a rough ride until it’s sorted.
Trade isn't a Prisoner's Dilemma though. Moving from Tariffs to No Tariffs increases your country's utility even when your opponent is playing Tariffs.
So the Nash equilibrium is free trade, even though cooperation actually isn't the equilibrium in the Prisoner's Dilemma.
Can you explain how that applies here? Are you saying that in the situation where China has tariffs it's optimal for the US to also have tariffs?
That's just not true. If the US government doesn't set tariffs then all the gains from trade on the US side go to the US traders. Since these people also set the price they will set it so as to maximise gains to (themselves and therefore) the US. So a US tariff can only hurt the US as a whole. This argument applies whether or not China has tariffs.
If we imagine both governments are controlled by special interests, specifically the producers of the goods whose foreign competition is to be tariffed, then it's prisoner's dilemma for those that are making decisions. (The domestic buyers of the tariffed goods suffer, but I guess we don't care about them.) I'm not entirely sure if this is what the others in this thread mean, though.
>The domestic buyers of the tariffed goods suffer, but I guess we don't care about them.
Only if we consider the first order effects -- and only if we consider them simplistically as mere consumers.
Because the wider view is that those "consumers", are also workers, and the "race to the bottom" effect of modern global trade with the developing world hurts their bottom line, and leaves them without money to be consumers anyway.
The US, and other western countries, have used tariffs to great effect throughout their capitalistic development.
this is a bit late, but hope this helps:
1 there is a standard argument for free trade, which states it is optimal for all countries to have zero tariffs (given usual conditions for such arguments).
2 there are arguments that, in certain, very special conditions, optimal for a single country to have no tariffs even if others do
3 more generally one cannot say - this is called argument of second best - and adding a tariff may make situation better not worse
The thing is, even before the tariffs were even talked about, things were already not looking good on the outlook of the global economy ("L" shaped recovery) and even in how the markets are trading on what volumes compared to the avg (at least looking at long ETFs, short/inverse etfs seem to be increasing their volumes over avg and notional outstanding).
I'm unsure if we'll see things change that much even after we see a correction (and back to higher trading volumes), unless I start seeing other modes of resource allocation successfully obsoleting presently entrenched modes.
>There is math model Prisoners dilemma that says that both sides is better of cooperating.
Prisoners dilemma is a contrived example though, within a contrived scenario. There are not just 2 parties but 100s of parties (countries) they can cooperate or not with, and lots of leeway and secondary factors, not just some binary prisoner's style dilemma.
The Tragedy of the Commons has the same payoff matrix as the Prisoner's Dilemma. Its Nash equilibrium is also defecting (otherwise it wouldn't be a tragedy).
But when it cones to Trade, the Nash equilibrium for the people of the countries really is cooperation. The problem is just that the incentives of the decision makers aren't aligned with what's best for their countries.
Game theory applies to all scenaria that fit its simplistic model and few parameters and leeway, regardless to whether the people involved are rational or not.
The problem is that complex real world behavior doesn't reduce well to game-theoretical approaches.
One of the basic conclusions of game theory about non-cooperative games is that the ability to make yourself irrational is useful. For example, if the expected outcome of me fighting you is a moderate negative to both of us (let's say roughly 50% chance of getting injured, 50% chance of feeling pleased to win the fight), then it's never rational for me to seek you out and fight you. However, if I can manage to convince you that, if you take my stuff, then I will seek you out and fight you, then this might succeed in convincing you not to take my stuff. The difficulty is in making this threat credible—it's never in my interest to carry it out. So if I give my brain the propensity to feel angry at offenses like that, and demonstrate on other occasions that I do go fight people when they make me angry, then this is a way to make the threat credible. The more irrationally angry I am known to get, the stronger the threat becomes. This can be useful as a negotiating tactic, though obviously it can be risky if someone calls your bluff or acts "more irrational".
There's a nice Star Trek episode, "Chain of Command", in which acting captain Jellico raises his voice with some Cardassians he's negotiating with, and I think throws them out of the conference room, at which point he immediately starts speaking calmly to his officers. As I recall, he tells them to wait ten minutes and then go out to the Cardassians, saying that Jellico's a "loose cannon" and they've managed to calm him down and he's ready to resume the meeting but the Cardassians will have to be ready to concede some items. It's a negotiating tactic, and in the episode it works.
Since someone mentioned Trump: it might be to his advantage to encourage a reputation for being dangerously excitable and willing to pull the trigger. (I just hope no one calls his bluff.)
Game theory is not a tool to describe economy, and moreover a war.
Time and time again, wars of mutual annihilation were fought and lost by both sides. Modern economists are simply wrong on this point, plainly and simple.
It will be interesting to see how this plays out. Approx 70% of American bonds are owned by Chinese companies. So if America puts the squeeze on the Chinese, they may cash in their bonds....since Mr. Trump feels he needs to upset Asia (making friends with North Korea) and feels the need to upset the EU, i doubt anyone will be plugging that gap
Second, China needs that debt to be able to manage it's own currency. And though the Fed is not supposed play games like international currency war ... it will. The Fed and the USD are well poised to soak up any problems that China tries to play with USD.
It's also a game of confidence: do USD holders worldwide think that China can sink the USD with a little bit of war? Or is the global petrodollar resilient? Given the numbers and ratios ... it's clear that China probably won't win, cred remains in the USD etc.. So - it would have to be a coordinated shock - if there were both economic problems in the US, and dollar problems, and shocks in some other way and then China started playing games ... well that's something else.
i never said China would win, my point was the ripple effect it will have. These games could have major impact for the smaller mom&pop companies in both China and America. So in an effort to re-vitalize businesses it may in fact cause a lot of them to fold (as even medium businesses rely on the smaller one to provide a service)
That debt is the reason the US has a trade deficit with China. China has no economic interest in holding US debt with the exception of funding purchases of its own goods. This is also in line with the twin deficits hypothesis.
The way the Chinese roughshod foreign companies is blatantly anti-WTO and anti-trade.
I witnessed this while working at a large Canadian company.
China has one leader and they speak with one voice - and they have divided and conquered the West, which speaks with a thousand voices i.e. politicians, businesspeople, academics to the point wherein if anyone tries to say anything against China, they are shut down.
Remember when 'Tibet' was all the rage in Hollywood at the turn of the Millennium? Well they shut up pretty quick, didn't they? This has happened everywhere. You just don't find a lot of critical voices about China because someone is always applying pressure (i.e. advertisers etc.)
China is acting in rational self interest, and the number of people being brought out of abject poverty there (and elsewhere) is a very good thing, but because they've been able to do this since the dawn of the new era i.e. 1980's, things like IP theft, and direct governmental support of competitive entities is 'normative'.
I personally loathe Trump, but trade issue with China have to be resolved, and it's really sad that he's the only leader in the world it seems that is in a situation to do at least something about it.
The West has to work together to end particularly the IP rip-off scenarios, or it's not going to work.
I actually think China, during this current period of transition would be better off in a more level playing field, one suited for their participation in the world economy, as opposed to the current setup, which is suited to them being a 'developing economy' of previous decades.
There should definitely be a tit-for-tat tax on goods from China given some practices there, I very well understand the ostensible damage from tariffs, but as soon as you have to 'internalize' all those things that are externalized in China, many tariffs make sense.
The great risk is that China could actually be truly damaged (likely worse for regular folks than for the elite), worse, go into a recession, which would burst the fragile 'rest of the world' situation and we'd have a global problem.
In the grand scheme of things, it's better that China 'blinks' in this game, and uses the opportunity to institute some reforms that simply have to happen if they want to play on the global stage. You see this happening more formally with currency; because currency issues are more directly measurable, China has no choice but to reform of they want the RMB to be used in certain ways globally. But on trade ... it's more grey.
Now that Trump has fired a volley, it's possible that the EU may find a way to do the same thing, in a more politically nice kind of way - funny enough even though the US is in a 'trade war' with Canada, Europe, UK etc., behind the scenes, they are all already working with Trump on the China file, it's just not highly publicized for obvious reasons.
I agree that China has not been a good actor trade-wise, and pressure should be applied, but I'm utterly unconvinced that Trump understands the situation well enough to get them to actually do anything. He put tarrifs on Canadian steel ffs, I'm not sure how he can succeed in China when he fucks up relations with our allies like this.
Trump made the claim that we must introduce these tariffs on national security grounds, because that is the authority he is using to impose these tariffs, which is an additional slap in the face to our allies.
Trump is probably lying about this, but I've heard the same national security rhetoric used with a straight face by commentators in Australia as a reason to put tariffs on imports, and it's a bad path to go down. Our allies already see us as unreliable now - Germany is considering whether they need nukes now that they can no longer trust us.
And lying about the reasons is basically negotiating in bad faith.
Counterpoint: I was just traveling and stuck on 2G data for a few days. The only things on the web that were usable were HN, Tildes.net, and AMP pages. I have spoken ill of AMP in the past, but no more. Google is actually doing something about site bloat.
I recently heard an argument in favor of more tariffs, its basis was that tariffs 'force' (through incentives, obviously) nations to produce goods locally. This is generally better from an environmental standpoint since goods which could be produced locally but are made thousands of miles away don't have to be transported over vast distances.
The "opposite is true" or the opposite has been argued by papers and gets grants because it fits some dominant ideological models and interests?
Because tariffs have been tried in the past for centuries, including by the US, and have helped in creating a stable internal economy, and the resulting meteoric rise.
Not to mention that politics and global power does not begin and end with what makes more profit or produces cheaper goods.
Besides the environmental impact, local production also means more decentralized. That lower coupling is important for stability when there's a downturn, war or catastrophe.
The west is running massively expansive monetary and fiscal policy. The only reason that is not causing extreme inflation is that we import deflation from China. Were we to stop that prices and interest rates would jump and asset prices would collapse.