Inflation is raging because globalisation is fading (user search)
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  Inflation is raging because globalisation is fading (search mode)
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Author Topic: Inflation is raging because globalisation is fading  (Read 877 times)
Benjamin Frank
Frank
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« on: August 06, 2022, 03:30:59 AM »

Well it's no coincidence that the era of low inflation was the era of globalization, and the same was true for the first era of low inflation (or deflation) during what we now know of as the Victorian and Edwardian periods. One thing that has become apparent in recent years is that economic logic and political logic do not go together. Economics in the aggregate is a rational discipline, and the best economics integrates the world because that is the most efficient way to produce more at a lower cost. Politics on the other hand is full of human emotions, particularly the bad ones, and include pride, fear, anger, disgust, tribalism, and all the rest, and is the opposite of rational. Therefore in some ways, politics and economics are opposites.

Then, when the stars align and good economics is supported by the politicians and the public, greed often gets in the way and messes everything up.
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Benjamin Frank
Frank
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Posts: 4,307


« Reply #1 on: August 06, 2022, 07:59:49 PM »

There is a question that you have to ask that is often overlooked in these discussions, "how sustainable is it really to maintain the kind of global environment where this can occur"?

Countries are going to make decisions that are in line with the interests of them and their people. To think otherwise is rather idealistic view of the world and one in which you are apt to be disappointed or forced to make a set of terrible choices.

There are some assumptions at the heart of free trade that I have became rather dubious about in recent times. One of them is that the presumption that the default state of the world is peace and security and history shows that the opposite is true. Therefore the maintenance of such peace, security and "open sea lanes" can only be sustained through military intervention.

There is also the presumption that the world is a "fair" place and thus free trade allows for "more efficiency" to be reamed out of the global economy as a whole. However, the world is not a free place, most comparative advantage is the result of choices made save obviously for resources and climate sensitive crops (to say otherwise almost reaks of cultural racism. Education, infrastructure, etc can be built and thus any comparative advantage anyone has was obtained through development via asserted actions).

The world is not a fair place, most superpowers obtained their economic dominance through protectionism and developmental intervention first and once such power was obtained, they "embraced free trade" and then often sought to use their economic leverage to bend the world to their wishes. You then have to make another choice between "freedom of the market" and "political freedom", unless you are that sole dominate power that is.

This is why, against the backdrop of a British dominated world, US isolationism and protectionism went hand in hand as essential to the geopolitical aim of preserving the victory in the American Revolution. To remain free and independent politically, it was necessary to avoid being economic dependent on the country that could leverage their power to reduce the former.

There is no way in which a world where PRC China is the number one economic power or a co-super power, that there is not going to be a political reaction in all of the countries whose systems are at odds with theirs. China has and will continue to leverage its economic power to achieve its aims and bend other county's to their will.

To blame "those other countries" for not wanting the tentacles of a totalitarian regime reaching into and violating their own sovereignty because it deviates from the worship of complete and slavish devotion to the alter of economic efficiency demonstrates a rather idealistic view of the world that has been gnashed about on the rocks of reality. This is not irrational or "dumb rubes acting against their economic interest", it is putting political freedom over "economic freedom".

America was right to resist the influence of the British Empire in the 19th century just like it did the Soviet influence of the 20th century. However, when it comes to resisting the influence of the PRC, for those who grew up in an era of a free market world, led by the US, facing off against the anti-market Soviet Union, it is not unreasonable that they would be disappointed at the direction of global geopolitics now as this is something much similar to that of the 19th century than that of the contest with the USSR.

I find it interesting that you have a better understanding of economics than me but that you're anti free trade.
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