Irresponsible Adults In The Room

Donald Trump has imposed tariffs on certain goods from the EU, China, Mexico and Canada. This will make it more expensive for these goods from these places to enter the US, and that’ll get passed through to US consumers, and it’s predictable that the US standard of living will drop. And it will effect the rest of the world.

Because jobs, or something. I don’t even think Trump knows what he’s doing.

Right-wingers like to depict themselves as the responsible adults in the room, and their fans play along. “Say what you want about (Thatcher/Regan/Bush/Trump/Farage), but they’re a hard-headed realist. China are stealing our jobs. Immigrants are stealing our jobs. Freedom of movement is stealing our jobs. I’m not a racist for saying immigrants are taking our jobs. You’re a racist for calling me a racist. I’d like to live in your snowflake world where everyone has a pony, but this is just business.”

No. It’s not business. It’s ideology.

Here’s the way I understand it. Think about international trade in terms of real things. When your country exports, you take your nation’s capacity (time, labour, materials) to create things, and then instead of your country’s people getting to benefit from it, by using what you made, you send it overseas. That actually represents a loss to your country in terms of real things. When a country exports to you, the reverse is happening. They’re using up their stuff, and instead of getting the benefit of what they made, they send it to you. Thanks! That’s our benefit, their cost.

To paraphrase economist Warren Mosler: Your nation’s real wealth is your pile of stuff. Everything you can produce at home (hopefully at full employment), plus everything the rest of the world wants to send to you, minus what you have to send to the rest of the world to get the imports.

They tell you that the purpose of the UK exporting is to create jobs, but they’ve got it backwards. In real terms, the purpose of sending stuff to other countries is because you want something from them. The purpose of exports is to get imports. The trick to master in international relations is to optimise real terms of trade. That means getting the most imports (real things) for the least exports.

The way Mosler puts it: “Every year, the Germans send the Swiss a certain number of Mercedes-Benzes, and the Swiss send back a certain amount of cheese. The game for the Swiss is to get the most Mercedes for the least cheese.” Then he jokes: “If you can get the same number of Mercedes, but you can put holes in the cheese, and nobody notices, you’re up on the deal. The Swiss have been doing it for years…”

When imports (or automation) “cost” your nation jobs, it’s supposed to be a good thing. That’s something you didn’t have to use *your* resources to get. But it’s only a good thing if you haven’t got ideological nut-jobs in charge of your economy. Like a government which, not only won’t employ the people unemployed by the imports, but they’ll run the other way – actually add to unemployment with austerity policies. We’re letting this real resource go to waste, daily. That’s a cost. A massive one.

The UK government could easily reverse this, by spending on things we all agree we need (NHS, schools, libraries, infrastructure), because as the issuer of its own currency, it can never run out of money.

This is far superior to keeping people involuntarily unemployed, or using tariffs to “bring jobs back”. If you want to bring jobs back, why not outlaw the use of computers? We can all go back to using paper and pens, and abacuses, and maybe we could also outlaw combine harvesters and we can go back to tilling the land with beasts of burden… Sure, it’s a less productive economy, but jobs, jobs, jobs!

Why am I bringing this up? Because when the results of this Trump-instigated trade war get added to the already catastrophically mismanaged unemployment situations on both sides of the Atlantic, resulting in recession or depression, and workers get more insecure, and the world lurches to the right *again* – Trump will blame Mexicans and China, and depending on who’s at the helm over here, it’ll be the fault of Brexit (which as everyone knows is Jeremy Corbyn’s fault), or if Jeremy Corbyn is prime minister, it’ll be Jeremy Corbyn’s fault, and if he goes back to just being the MP for Islington North, it’ll be Jeremy Corbyn’s fault.

Yep. Instead of blaming the culprits (neoliberal capitalists and actual Nazis) it’ll be immigrants, Brexit, and Corbyn.

Or maybe, let’s entertain a crazy idea: That right-wing ideologues – on top of being a racist, sexist, constantly bailed out, top-down class war plague of locusts – are actually bad at business.

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