[boelboel]

Huawei, Foreign gambling sites were banned on dubious reasons in 2006 (in reality American companies weren't as competitive and las Vegas needed to be protected), Japanese electronic tariffs in the 80s/90s ...

US never exactly believe in full on 'free trade'.

[smallmancontrov]

The US believed in free trade precisely when the politically connected needed labor arbitrage, and protectionism exactly when the politically connected needed protection. The pretense of underlying ideals was never more than a political tool - political economy was always political.

[coffeemug]

It depends on whether you believe US action is overdetermined, but I think if Trump didn’t get elected we would have continued on the path of free trade. His election wasn’t predestined. He had just the right mix of features to win at the time, but if this basket of features didn’t exist it’s not hard to imagine the country going down a very different path.

[smallmancontrov]

If we had continued on the path of free trade without "dealing in" those displaced by free trade, the pressure would have continued to grow. It certainly could have exploded in a different direction, at a different time, with a different champion, but so long as it was repressed instead of addressed it was always destined to explode.

[coffeemug]

Another plausible future is AI reshuffling the economic hierarchy. In a technological civilization the pressure valve need not be political.

As an aside, you made me curious if Trump made this constituency materially better off. Here's what Claude thinks (tl;dr: it's a wash): https://claude.ai/share/36233694-3729-4758-b2e6-c2058791ab1a

[smallmancontrov]

Explosions are rarely productive. Populists are notorious for delivering lots of chaos and few results.

It's easier for everyone to just deal in the economic losers, but we didn't do that, and now they are burning the house down. This will not get them what they want, but they will continue doing it anyway.

Globalization was the test, AI is the final exam.

[eru]

> Globalization was the test, AI is the final exam.

I'm not sure history will end so soon.

[hollerith]

George Friedman disagrees with you: he's been saying for years that US trade policy towards China had to change no matter who won the 2016 election (because an economy cannot rely on a trade partner it might go to war with, among other reasons).

When last year the Trump admin started interdicting oil shipments out of Venezuela, it left shipments heading to China intact. Then during Trump's visit to China, the two parties made a lot of progress on trade and other issues (in part because Beijing's attitude improved because the first Trump administration's restrictions on trade underlined to Beijing how dependent China is on trade with the US).

[boelboel]

Biden wasn't a free trader at all, more alike to Trump in trade than many would like to admit.

[tehjoker]

"Kicking Away the Ladder: Development Strategy in Historical Perspective by Ha-Joon Chang"

"How did the rich countries really become rich? In this provocative study, Ha-Joon Chang examines the great pressure on developing countries from the developed world to adopt certain 'good policies' and 'good institutions', seen today as necessary for economic development. His conclusions are compelling and disturbing: that developed countries are attempting to 'kick away the ladder' with which they have climbed to the top, thereby preventing developing countries from adopting policies and institutions that they themselves have used."

https://www.amazon.com/Kicking-Away-Ladder-Development-Persp...

[wwalexander]

> Japanese electronic tariffs in the 80s

Also motorcycles. https://en.wikipedia.org/wiki/1983_motorcycle_tariff

[doublerabbit]

Taking that political scenario as an example. Was the decline caused simply because Harley kept to the same working formula refusing to innovate for competition? As to the likes of Honda and Co?

Manufacturing is cheaper if you have access to resources and such. Japan may of had abundant of but in this case I don't feel it's was all about manufacturing costs.

Was it a cash cow situation, where their one formula was working but as well as where Harley were reluctant to invest in a different avenue, to innovate causing cow to dry up. And that is when they called in the government to settle? That is always the impression I seem to receive.

Excluding manufacturing costs was it because they were scared of an innovation being a failure?

The same cash cow formula can be seen with the likes of Disney Pixar and Toy Story 5, a pointless movie plot at this point where if money was invested, a new creation could be born.

[smallmancontrov]

A current account deficit is a capital account surplus, assets and exports compete in the balance of payments, an asset windfall kills exports by increasing the currency hurdle and embedded asset price.

What you are seeing is "the bar" for a successful manufacturing business increasing until only the most profitable are left -- things like chips, things like shell companies that exist to monetize a brand. "New growth" isn't highly profitable so it never has a chance to get started (unless a recipient of an asset windfall is willing to finance it all the way to "the bar" -- see: Elon Musk).

[doublerabbit]

Ah. I get it now. A established economic model is provable and that in five years you can forecast that if you follow X guide you'll end up on top with Y.

If competition is on the scene then how can you assure me that myself taking the risk of investing will return me the sum I wish for in return.

Production has already been established but the threat is in that an another forecastable model exists and that to catch up to their market will require more investment and expenditure which could lead in less chance of a return. And even if the model is copyable; as like the trope of Chinese knockoffs to of Japanese products, you're still at a lower advantage.

It's not they don't want to innovate but the risk to gamble on innovation is high enough that you could stifle competition cheaper via governmental means.

This slows their forecast and where you can then strategise to overcome the competition rather than risking expenditure via innovation. Crafty, cheers.

[smallmancontrov]

It's worth tracing this through every level in order to get the causality correct.

Triffin's Dilemma says that in the case of the modern USA, assets will be pumped. Macroeconomics says asset pump = export dump.

The way that economics dumps exports is by raising the bar (strong currency = poor customers, expensive assets = expensive houses = expensive labor, costs go up, price goes down, profitability is squeezed). Eventually the bar became impossible to hop without a cheat code like "good brand and no R+D" or "software level profitability".

At the individual level, manufacturing pay went in the shitter as the jobs dried up while house prices and stock prices went through the roof... so everyone who could became real estate agents, or doctors overcharging real estate agents, or sellers of investment scams to venture capitalists.

What's wild is that this happened to the Spanish, the Dutch, the English, and by the 1960s Triffin could see that it would happen to the US as well.

If you want details from an economist who does his homework, "Trade Wars are Class Wars" by Klein and Pettis.

[eru]

> A current account deficit is a capital account surplus,

That's true.

> assets and exports compete in the balance of payments, an asset windfall kills exports by increasing the currency hurdle and embedded asset price.

They don't really have to compete with each other. It depends on what the central bank does (or doesn't do) about the exchange rate, for example.

[smallmancontrov]

Weakening the dollar would make the export sector happy, but if you did enough of it to make the US export sector strong you would make assets unhappy. In fact, we have front row seats to this very lesson which appears to be even stronger in reality than it is in theory: we are already seeing yields rise despite a dollar that is still strong enough to crush exports.

Assets have had such a stranglehold over US politics for the last 50 years that if we ever actually run pro-export policy it won't be due to doomed self-promotion by exports (we even have a term for the pattern where this fails on first contact with tradeoffs: TACO) it will be because assets self-sabotage, implode, and exports fill the vacuum.

[eru]

The exchange rate is a nominal phenomenon. Inflation adjusted interest rates and inflation adjusted asset values are a real phenomenon. They don't necessarily have much to do with each other.

Germany and Singapore are two prominent historic examples of countries that export just fine despite a strong currency.

Weakening your domestic currency has barely any impact on the real price of traded goods and commodities: they just price at the world market rate. The impact is felt for goods with sticky prices, chiefly labour. Weakening your currency is mostly a way to try and give everyone a wage cut. That can make your exports more competitive for a while. But it's not the only way to cut workers' wages. (And in general, later you seem to agree that giving ordinary people more real income is kind of the point of economics. So giving everyone a real wage cut seems a bit of a curious way to get there.)

> we are already seeing yields rise despite a dollar that is still strong enough to crush exports.

Rising yields fairly mechanically leads to a stronger dollar.

Btw, you might like https://en.wikipedia.org/wiki/Lerner_symmetry_theorem

The Lerner Symmetry Theorem suggests roughly that import tariffs are equivalent to export taxes; and export subsidies are equivalent to import subsidies.

And the US is actually doing pretty well in exports, if you take into account that they are exporting not just goods but also services; and if you squint a bit, you can also see that Americans love to found new start-ups and new world beating companies and sell shares in them to the world. That's also a kind of export, but it shows up on the other side of the ledger for accounting reasons.

Similarly, if you build an office building in Seattle and sell it to a foreigner, that also doesn't show up as an export for accounting reasons.

[oblio]

The entire US auto industry is predicated on protectionism. Without it the Japanese would have wiped out GM/Ford/Chrysler in the 1980s, and now the Chinese in the 2020s-2030s.

[hollerith]

Also, radar technology has been under export controls of various kinds by Washington continuously since WWII.

[thesmtsolver2]

US never championed free trade if by free trade you mean "anything goes."

Really strange that rest of the world can tariff and put up barriers, but once the US does that, all free-trade warriors step out of the wood work.