I have always thought that John Redwood was better than he is generally presented by the liberal media. He has seemed - to me - more sensible than the hard core of boneheaded right-wingers who have made the prime ministerial careers of John Major and Theresa May unnecessarily difficult. There was, of course, the extreme embarrassment of him being filmed [as Secretary of State for Wales] trying to move his lower jaw in time to the Welsh National Anthem: and failing utterly. But in general I saw him as a 'trier' who was honest and not lacking in intelligence.
Then I saw a bit of his performance in the House of Commons yesterday: oh dear!
The issue was Brexit. His face was distorted with extreme, vitriolic anger. He was fed up, he declared, with the people who do this country down. The remainers and the soft Brexiteers - from his perspective - belittle this great country. Of course we can stand alone in the world, and triumph economically [with the implication that this task is trivial compared to the glorious achievement of solitary Britain in 1940-42].
It was painful and tragic to see him reduced to such a stupid and irrational argument. In descending to this lack of serious content his speech was about the best argument against his side of the issue that I have yet encountered.
The hard Brexiteers ignore the realities of the economic situation in the world. WTO Rules do not offer a safe basis on which the UK can instantly build a pattern of close trade deals with countries outside the European Economic Area, as has so often been stressed in this blog. Tariffs are not the key issue: regulations and quid-pro-quo deals that get round WTO standards dominate in world trade agreements, and the UK does not have the intellectual resources of trained manpower that would be needed to get even tentative interim deals in place by March 2019; or, indeed, by December 2021.
By declining to vote in the Commons yesterday, on the motion to publish the dossiers on 52 sectors of the economy and the potential impact on them of leaving the EEA, the Conservative Party again displayed that it has lost control of the House. It is almost certain that when these dossiers are released, they will provide a massive stock of ammunition for the remainers and will seriously undermine the sanguine daydreams of the hard Brexiteers.
The resignation on the same day of the highly-regarded Defence Secretary, on grounds that most men [and many women] of his age and origin would think to be spectacularly trivial, indicates to me that Sir Michael Fallon welcomed an excuse to get out from under the bonfire that is being built in the Tory party.
Redwood is - in political terms - dead wood, tinder dry; ready to support a conflagration that could end the two centuries of Conservatism as the dominant political organisation in the United Kingdom. The arch-Brexiteers would [apparently] force the collapse of the May government if their diabolical mission to undermine the economy is defeated. An election before Christmas has become a strong possibility; thought not yet probable.
Corbyn has always regarded the EU as a capitalist club: so he has been against it, even though Labour under his leadership notionally supported the remainers in the 2016 referendum: where millions of old-Labour voters went the other way. I doubt if the Labour leader has a clear view of what the European Economic Area is: and it is problematic whether Keir Starmer can bring him to a sensible stance on that matter. This is the one factor that could loose a December [or February] election for Labour. Politics have suddenly become much more interesting: and more frightening!
Showing posts with label tariffs. Show all posts
Showing posts with label tariffs. Show all posts
Thursday, 2 November 2017
Sunday, 29 October 2017
Brexit Buffoons and the WTO
Nobody who voted, either way, can claim to have understood the full implications of a 'Remain' or of a 'Leave' vote in the 2016 Referendum on Britain's place in the European Union.
It is almost certain that the great proponents of Remain - Cameron, Clegg and scaremaster Osborne - had no idea in advance how they would interpret, then implement, the Leave vote that occurred. Cameron ran away from responsibility:and even a gold-plated palace would not be a sufficient environment in which to write the exculpatory memoirs from which he hopes to make a pile of pennies. The fact that he has bought a sort of gypsy caravan, reminiscent of certain dead children's writers, for the purpose displays his ability to compound folly with ever-deeper illusion. Since the guilty men and their followers [and their mentors] had put the question to the nation, they should at the very least have had transparent contingent plans. They evidently did not. Nor did the civil service have anything like an adequate plan for what would happen after Cameron ran away, Clegg went into obscurity with his party, and Osborne's toxicity with the electorate was recognised by the new prime minister [of whose judgement and capabilities Osborne had been a vigorous critic when they had sat together in cabinet]. Evening Standard editor Osborne has been intermittently sensible in his comments on the Brexit situation, but he remains so much in the public mind as the author of the twin disasters of the Cameron era - austerity, and 'operation fear' in the Brexit campaign - that his political resuscitation is most improbable.
The prominent 'leavers' - who were far fewer than the high-profile 'remainers' - appear to have undertaken even less preparation than the remainers to meet the contingency that their side would actually win. The clownish assertion - written on their battle bus - that the net amount someone had calculated on a chewing-gum packet as the net annual payment made by the UK to Brussels would instantly be available to allocate to the National Health Service, resonated with a population that was all too aware that osbornian austerity was depriving family and friends of treatment that could be available. Whether the sum was in any way valid as an arithmetical calculation or an allocable fund did not count with those who used it. It was merely one of a few desperate claims that they made to align themselves with a population that was disgusted by the failed political class and utterly unconvinced by the econocratic arguments that underpinned austerity. Boris Johnson became a more popular buffoon, becoming recognised outside greater London. Michael Gove surprised people with his articulateness: only to earn buffoon status for himself by his last-minute, half-cock, ill-considered decision to stand for the party leadership after Cameron scuttled away [thereby sparing the party from the embarrassment of having Johnson as their leader].
Mrs May began her period as prime minister well, with conciliatory speeches and the dismissal of Osborne; since which she has got everything wrong that was within her power to influence. She called an election unnecessarily then threw it away. She activated the withdrawal procedure with the EU before she had any clear plan. But from the start she made clear her utter incomprehension what she was dealing with, when she said 'Brexit means brexit': while everybody knows that the word itself is totally meaningless. While she has struggled, with a group of spectacularly inadequate ministers, to define what Brexit might mean the country has drifted towards the disaster of leaving the EU with no interim deal that will keep the UK effectively [under deep make-up] within the European Economic Area.
This has created a field day for the couple of dozen Tory MPs who appear really to believe - in their enfeebled minds - that the World Trade Organisation [WTO's] tariff regime will enable Britain to survive as 'the fifth-largest economy in the world'. The whole point is, that it is NOT tariffs but REGULATIONS that are used by all countries and economic communities to keep out unwelcome competition. Inside the European carapace the UK necessarily conform to the rules, and thus its trade with other EU members states can move freely. To loose that benefit, with the block that sends and receives about half of Britain's imports and exports, would be irreplaceable. The assumption that German motor manufacturers and French wine growers will 'see us right' is infantile. Professor Minford's calculations of the 'benefit' for Britain of trading on WTO terms with the global community - including the EU - are agonisingly bereft of any allowance for the predominant pattern of restrictions on trade, that would be tightened against an innovative economy such as the UK if we were adrift in the world and thus are extremely dangerous. But those are the argument to which the headbangers adhere: because they have nothing else. Yet they hold the government in awe; and are increasing their power to ruin the country. I will have to return to this topic in the coming days, as the argument gets more fraught approaching the deadline for the next meeting of EU heads of government.
It is almost certain that the great proponents of Remain - Cameron, Clegg and scaremaster Osborne - had no idea in advance how they would interpret, then implement, the Leave vote that occurred. Cameron ran away from responsibility:and even a gold-plated palace would not be a sufficient environment in which to write the exculpatory memoirs from which he hopes to make a pile of pennies. The fact that he has bought a sort of gypsy caravan, reminiscent of certain dead children's writers, for the purpose displays his ability to compound folly with ever-deeper illusion. Since the guilty men and their followers [and their mentors] had put the question to the nation, they should at the very least have had transparent contingent plans. They evidently did not. Nor did the civil service have anything like an adequate plan for what would happen after Cameron ran away, Clegg went into obscurity with his party, and Osborne's toxicity with the electorate was recognised by the new prime minister [of whose judgement and capabilities Osborne had been a vigorous critic when they had sat together in cabinet]. Evening Standard editor Osborne has been intermittently sensible in his comments on the Brexit situation, but he remains so much in the public mind as the author of the twin disasters of the Cameron era - austerity, and 'operation fear' in the Brexit campaign - that his political resuscitation is most improbable.
The prominent 'leavers' - who were far fewer than the high-profile 'remainers' - appear to have undertaken even less preparation than the remainers to meet the contingency that their side would actually win. The clownish assertion - written on their battle bus - that the net amount someone had calculated on a chewing-gum packet as the net annual payment made by the UK to Brussels would instantly be available to allocate to the National Health Service, resonated with a population that was all too aware that osbornian austerity was depriving family and friends of treatment that could be available. Whether the sum was in any way valid as an arithmetical calculation or an allocable fund did not count with those who used it. It was merely one of a few desperate claims that they made to align themselves with a population that was disgusted by the failed political class and utterly unconvinced by the econocratic arguments that underpinned austerity. Boris Johnson became a more popular buffoon, becoming recognised outside greater London. Michael Gove surprised people with his articulateness: only to earn buffoon status for himself by his last-minute, half-cock, ill-considered decision to stand for the party leadership after Cameron scuttled away [thereby sparing the party from the embarrassment of having Johnson as their leader].
Mrs May began her period as prime minister well, with conciliatory speeches and the dismissal of Osborne; since which she has got everything wrong that was within her power to influence. She called an election unnecessarily then threw it away. She activated the withdrawal procedure with the EU before she had any clear plan. But from the start she made clear her utter incomprehension what she was dealing with, when she said 'Brexit means brexit': while everybody knows that the word itself is totally meaningless. While she has struggled, with a group of spectacularly inadequate ministers, to define what Brexit might mean the country has drifted towards the disaster of leaving the EU with no interim deal that will keep the UK effectively [under deep make-up] within the European Economic Area.
This has created a field day for the couple of dozen Tory MPs who appear really to believe - in their enfeebled minds - that the World Trade Organisation [WTO's] tariff regime will enable Britain to survive as 'the fifth-largest economy in the world'. The whole point is, that it is NOT tariffs but REGULATIONS that are used by all countries and economic communities to keep out unwelcome competition. Inside the European carapace the UK necessarily conform to the rules, and thus its trade with other EU members states can move freely. To loose that benefit, with the block that sends and receives about half of Britain's imports and exports, would be irreplaceable. The assumption that German motor manufacturers and French wine growers will 'see us right' is infantile. Professor Minford's calculations of the 'benefit' for Britain of trading on WTO terms with the global community - including the EU - are agonisingly bereft of any allowance for the predominant pattern of restrictions on trade, that would be tightened against an innovative economy such as the UK if we were adrift in the world and thus are extremely dangerous. But those are the argument to which the headbangers adhere: because they have nothing else. Yet they hold the government in awe; and are increasing their power to ruin the country. I will have to return to this topic in the coming days, as the argument gets more fraught approaching the deadline for the next meeting of EU heads of government.
Saturday, 30 September 2017
Brexit Buffoons, Regulations and Point Protectionism
Boris Johnson has sounded-off again, this time to the Sun, with his demands about Brexit. The transition must be absolutely no more than two years, and the UK should not accept new EU regulations in that period. This keeps him in front of the 'hard Brexiteers' in the Conservative Party, ahead of what is certain to be a very painful party conference for the Prime Minister who decided to hold an election, then ran it the way her close advisers suggested, and so lost her parliamentary majority. Members of the party from all factions know that the Corbyn-McDonnell chances of winning a general election [in England, Wales, and - just possibly - the lost Labour heartlands of Scotland] are astonishingly high. Thus the Tories dare not topple the leader, simply because there is no obvious alternative who could surely prevent the party from disintegrating sufficiently to force a general election.
Thus the Conservatives have to negotiate Brexit: with an increasing majority of the party daily becoming more aware [as are Labour MPs] that the complete separation of the UK from the European Economic Area would put the livelihoods of all sixty million people who depend on the UK economy in grave jeopardy. The Minority of fervent Brexiteers, together with the ambitious chancers who have joined them, assert that the UK can open up huge vistas of trade all over the world, by making trade agreements with a whole raft of countries under WTO Rules.
The World Trade Organisation had its origins in GATT - the General Agreement on Tariffs and Trade - which was set up alongside the International Bank for Reconstruction and Development [normally called the World Bank] and the International Monetary Fund [IMF] by the victorious allies at the end of the Second World War in the belief that the two devastating wars of the twentieth century were largely economic in origin. The USSR was wholly, dogmatically convinced that the First World War was the result of expansionist imperialist competition between the European powers; and they ascribed the second to a re-run of the same conflict between a resurgent Germany and the 'Anglo-Saxon' states that had succeeded in 1918 and then dissipated the fruits of victory in the Depression of the 'thirties. The USA and the UK shared the view that the competitive inefficiencies of capitalism had exacerbated the economic problems of the late 'twenties and early 'thirties. The idea behind the new system was to provide transparent means by which each economy could grow as part of a successful international community.
The USSR soon withdrew from active participation in the institutions, and compelled its satellites to leave as well. Then the international organisations served the 'capitalist' world, in an uneasy relationship with the 'third world' of notionally 'non-aligned' countries [which asserted their independence of both the USSR-led and US-led pattern of alliances that maintained the cold war from 1949 to 1992]. During that period the GATT became the WTO, and had to accommodate itself to a global reality where the rhetoric of free trade was greatly modified by each country building up defensive mounds of regulations that kept out many imports that other countries could offer them in greater quantity and of more sophisticated design than their own factories could produce; without imposing tariffs that openly breached WTO rules. When such rules failed, and a government wanted to exclude some import, they could - and did - simply impose 'extraordinary' tariffs, usually 'temporarily' to keep out the unwelcome export. That is what I have called point protectionism in this blog. The recent spat engineered in the USA by Boeing is merely one of thousands of examples.
If Boris Johnson and Liam Fox are such starry-eyed innocents that they believe that WTO Rules will be enough to ensure that the UK can make a safe transit into a post-EU trading world, they are profoundly dangerous.
Thus the Conservatives have to negotiate Brexit: with an increasing majority of the party daily becoming more aware [as are Labour MPs] that the complete separation of the UK from the European Economic Area would put the livelihoods of all sixty million people who depend on the UK economy in grave jeopardy. The Minority of fervent Brexiteers, together with the ambitious chancers who have joined them, assert that the UK can open up huge vistas of trade all over the world, by making trade agreements with a whole raft of countries under WTO Rules.
The World Trade Organisation had its origins in GATT - the General Agreement on Tariffs and Trade - which was set up alongside the International Bank for Reconstruction and Development [normally called the World Bank] and the International Monetary Fund [IMF] by the victorious allies at the end of the Second World War in the belief that the two devastating wars of the twentieth century were largely economic in origin. The USSR was wholly, dogmatically convinced that the First World War was the result of expansionist imperialist competition between the European powers; and they ascribed the second to a re-run of the same conflict between a resurgent Germany and the 'Anglo-Saxon' states that had succeeded in 1918 and then dissipated the fruits of victory in the Depression of the 'thirties. The USA and the UK shared the view that the competitive inefficiencies of capitalism had exacerbated the economic problems of the late 'twenties and early 'thirties. The idea behind the new system was to provide transparent means by which each economy could grow as part of a successful international community.
The USSR soon withdrew from active participation in the institutions, and compelled its satellites to leave as well. Then the international organisations served the 'capitalist' world, in an uneasy relationship with the 'third world' of notionally 'non-aligned' countries [which asserted their independence of both the USSR-led and US-led pattern of alliances that maintained the cold war from 1949 to 1992]. During that period the GATT became the WTO, and had to accommodate itself to a global reality where the rhetoric of free trade was greatly modified by each country building up defensive mounds of regulations that kept out many imports that other countries could offer them in greater quantity and of more sophisticated design than their own factories could produce; without imposing tariffs that openly breached WTO rules. When such rules failed, and a government wanted to exclude some import, they could - and did - simply impose 'extraordinary' tariffs, usually 'temporarily' to keep out the unwelcome export. That is what I have called point protectionism in this blog. The recent spat engineered in the USA by Boeing is merely one of thousands of examples.
If Boris Johnson and Liam Fox are such starry-eyed innocents that they believe that WTO Rules will be enough to ensure that the UK can make a safe transit into a post-EU trading world, they are profoundly dangerous.
Sunday, 16 July 2017
Economics - Again
A few days ago, I had a brief discussion with a student of History about my views on Economics and the Econocracy, referring him to the website of the Post Crash Economics Society where I first saw the very apposite term, Econocracy. On our next encounter [in the pub where he earns a crust as a part-time barman] he told me that he had mentioned my stance to a friend who is studying Economics; and the friend had vehemently disagreed with me. Perhaps we will be able to have a face-to-face discussion some time. In the mean time, I will post here today the briefest summary of my views.
I had the great good luck to go up to university when classes were small - my year in Politics and Economics comprised just 12 students - but teachers were good and libraries well resourced. The era of electronic access to data had not yet arisen, so we had to read: and we read voraciously.
At that time what we now call neo-Keyesianism was in the ascendancy, and models of the entire economy had been constructed in the National Institute for Economic and Social Research [NIESR], in the Treasury and in various universities. Given the state of development of computers at that time the models were crude and simplistic, and they could only be manipulated laboriously. Nevertheless, estimates could be made of the impact on the modeled economy of the policy options that were available to governments. These options came in two categories, monetary policy and fiscal policy. Monetary policy involved the creation of money; implicitly by the Bank of England on behalf of and with the authority of the government that owned the Bank. Banning the creation of money was a means of limiting the rate of growth of the economy; and encouraging the Bank to create money to lend to the trading institutions in the economy was a way of stimulating the growth of the money supply more generally. It was taken as a sign to the commercial banks that they could risk making more loans of their own money [deposited by their customers] whenever the Bank of England was stimulating the money supply; thus the amount by which spending could increase was very much greater than the amount by which the Bank increased the supply. Any commercial bank could borrow money from the Bank of England at a 'bank rate' [later called the 'base rate'] which was publicly announced; and lending by commercial banks was made at rates higher than the bank rate. The banks charged their customers rates of interest that varied according to the perceived riskiness of the loan. When the Bank of England had the nod from the government, it lowered bank rate; which was a clear indication to all the banks that they could drop the rates they charged to their customers, and perhaps risk extending the range. Thus a drop in bank rate, accompanied by an increase in the Bank of England's willingness to lend, signaled that banks and their customers should invest to expand the economy; thus expanding trade generally and stimulating economic growth and job opportunities in many sectors of the system could be increased.
However, at that time there were major constraints on the expansion of credit extended by banks. Their customers were required to pay cash deposits on durable consumer goods, and were only allowed to borrow a set percentage of the purchase price. Thus the spread of TV sets, washing machines and other desirable consumer goods was slowed down by the legal requirement for would-be buyers to save up for the deposit before they could enter into a hire-purchase agreement under which [having paid the deposit] they could pay off their borrowing while they had the use of the device. The firms that made the television sets were protected from foreign competition by import tariffs and controls on the amount of foreign currency that businesses could buy: so the system of monetary policy operated within a physically controlled system of protection. The present situation, where consumers can borrow huge amounts of credit and thus create the 'consumer demand' that 'drives' the economy was unthinkable. The world in which neo-Keynesiansim appeared to thrive was utterly different from the world in which we live now; and over the next few days I will outline how that change happened.
I try to keep my blogs at a modest length, and hope that anyone who becomes interested in my ideas will word-search through the archive.
I had the great good luck to go up to university when classes were small - my year in Politics and Economics comprised just 12 students - but teachers were good and libraries well resourced. The era of electronic access to data had not yet arisen, so we had to read: and we read voraciously.
At that time what we now call neo-Keyesianism was in the ascendancy, and models of the entire economy had been constructed in the National Institute for Economic and Social Research [NIESR], in the Treasury and in various universities. Given the state of development of computers at that time the models were crude and simplistic, and they could only be manipulated laboriously. Nevertheless, estimates could be made of the impact on the modeled economy of the policy options that were available to governments. These options came in two categories, monetary policy and fiscal policy. Monetary policy involved the creation of money; implicitly by the Bank of England on behalf of and with the authority of the government that owned the Bank. Banning the creation of money was a means of limiting the rate of growth of the economy; and encouraging the Bank to create money to lend to the trading institutions in the economy was a way of stimulating the growth of the money supply more generally. It was taken as a sign to the commercial banks that they could risk making more loans of their own money [deposited by their customers] whenever the Bank of England was stimulating the money supply; thus the amount by which spending could increase was very much greater than the amount by which the Bank increased the supply. Any commercial bank could borrow money from the Bank of England at a 'bank rate' [later called the 'base rate'] which was publicly announced; and lending by commercial banks was made at rates higher than the bank rate. The banks charged their customers rates of interest that varied according to the perceived riskiness of the loan. When the Bank of England had the nod from the government, it lowered bank rate; which was a clear indication to all the banks that they could drop the rates they charged to their customers, and perhaps risk extending the range. Thus a drop in bank rate, accompanied by an increase in the Bank of England's willingness to lend, signaled that banks and their customers should invest to expand the economy; thus expanding trade generally and stimulating economic growth and job opportunities in many sectors of the system could be increased.
However, at that time there were major constraints on the expansion of credit extended by banks. Their customers were required to pay cash deposits on durable consumer goods, and were only allowed to borrow a set percentage of the purchase price. Thus the spread of TV sets, washing machines and other desirable consumer goods was slowed down by the legal requirement for would-be buyers to save up for the deposit before they could enter into a hire-purchase agreement under which [having paid the deposit] they could pay off their borrowing while they had the use of the device. The firms that made the television sets were protected from foreign competition by import tariffs and controls on the amount of foreign currency that businesses could buy: so the system of monetary policy operated within a physically controlled system of protection. The present situation, where consumers can borrow huge amounts of credit and thus create the 'consumer demand' that 'drives' the economy was unthinkable. The world in which neo-Keynesiansim appeared to thrive was utterly different from the world in which we live now; and over the next few days I will outline how that change happened.
I try to keep my blogs at a modest length, and hope that anyone who becomes interested in my ideas will word-search through the archive.
Friday, 26 May 2017
Trump and Stalin
President Donald J Trump believes, with a measure of justification, that he has a mandate from the US Electoral College [though not by a majority of the popular vote] to pursue a very different economic policy from that adopted by successive Administrations since the Second World War. He is determined to use political power to 'return' jobs to the USA. Various commentators have pointed out that there is no possibility of firms investing in the coalmines, blast furnaces and smokestack industries whose extinction has caused the 'rustbelt' that disfigures areas of the central continental USA; so it is literally impossible to recreate the self-same pattern of employment and thus return the former skilled men to their former situation and lifestyle.
Trump's intention is to impel US-based firms, and to encourage foreign-based firms, to open up their new generation plant, laboratories and other facilities in the US rather than in emergent countries where wages and welfare standards are lower. This is an opportune time for such a policy to be rolled out. Labour in China is becoming much more costly, as living standards there increase with mounting prosperity; and while China has now ahead of most other emerging economies in this direction others are close behind. Thus the advantage in cost of labour that newly-emergent countries have offered over recent decades has diminished dramatically. By offering tax concessions to installations in the USA, and threatening tariffs on imports to the US, Trump's Administration will be able to bring jobs into the US: and several announcements to that effect have been made already. If the already-huge US public sector sticks more rigorously to a policy of 'buy American', and if massive infrastructure schemes are authorised also with a 'buy American' tag on the inputs, government spending will also help to make firms that invest in the USA more profitable.
This whole policy thrust runs contrary to the dogma that is taught in the universities by the Econocracy. They argue that the maximisation of production and trade right across the world, with the minimum of government interference, will produce an optimisation of wealth: which they take as equivalent to overall human welfare: this is the essential theory that underlies globalisation and the professors are aghast to find that there is now a huge tide of public opinion opposed to the idea and its effects. If firms are able to maximise their profits from global activity, investing in new plant on virgin land with cheap labour and moving on at will, leaving rustbelts and unemployment [and often industrial diseases] behind them, they can be hugely successful in terms of making profits and paying their owners and executives well. Such firms make great contributions to net global product and to recorded economic growth: but the social and environmental cost can be massive: and it often falls to local communities and their governments to address the damage.
Trump's emphasis on employment and infrastructure can well be successful, if he is able to retain the presidency. If he does not remain in post, he has already in his brief tenure set changes in motion that are likely to adopted [probably with adaptations] under the next president: who would also retain most of the Trump team. He has changed the global economy.
How is this comparable with Stalin? When he consolidated his power over the Soviet union in the nineteen twenties, following the disability and death of Lenin, his principal appeal was to the concept of building ''socialism in one country'. During and after the Russian revolution, Lenin believed [and relied on] Marx's prediction that the advanced industrial countries would be the first to go through a revolution and adopt communism. Through the First World War Lenin believed that the masses would rise up against the rulers who had led them into the disastrous carnage [and waste of material resources], so in 1917 he just thought it was a historical accident that primitive Russia was the first domino to fall: Germany, France, Britain and Italy would follow soon. After the war, though there were attempts at revolution, especially in the defeated countries, they did not fall to communism. Thus Lenin and his gang, soon to be led by Stalin, had to invent a completely new script for their sort of socialism. Its limitations were obvious from the start, and the human price that it extracted quickly became apparent; but it seemed to those who were inclined to want it to succeed that it was succeeding. 'Fellow travelers' emerged in most countries, and some remained pro-soviet until 1990.
Some people will want Trump to succeed because he cuts across the grain of economic dogma. He might have very considerable success: whatever the consensus of the Econocracy may say against him.
Trump's intention is to impel US-based firms, and to encourage foreign-based firms, to open up their new generation plant, laboratories and other facilities in the US rather than in emergent countries where wages and welfare standards are lower. This is an opportune time for such a policy to be rolled out. Labour in China is becoming much more costly, as living standards there increase with mounting prosperity; and while China has now ahead of most other emerging economies in this direction others are close behind. Thus the advantage in cost of labour that newly-emergent countries have offered over recent decades has diminished dramatically. By offering tax concessions to installations in the USA, and threatening tariffs on imports to the US, Trump's Administration will be able to bring jobs into the US: and several announcements to that effect have been made already. If the already-huge US public sector sticks more rigorously to a policy of 'buy American', and if massive infrastructure schemes are authorised also with a 'buy American' tag on the inputs, government spending will also help to make firms that invest in the USA more profitable.
This whole policy thrust runs contrary to the dogma that is taught in the universities by the Econocracy. They argue that the maximisation of production and trade right across the world, with the minimum of government interference, will produce an optimisation of wealth: which they take as equivalent to overall human welfare: this is the essential theory that underlies globalisation and the professors are aghast to find that there is now a huge tide of public opinion opposed to the idea and its effects. If firms are able to maximise their profits from global activity, investing in new plant on virgin land with cheap labour and moving on at will, leaving rustbelts and unemployment [and often industrial diseases] behind them, they can be hugely successful in terms of making profits and paying their owners and executives well. Such firms make great contributions to net global product and to recorded economic growth: but the social and environmental cost can be massive: and it often falls to local communities and their governments to address the damage.
Trump's emphasis on employment and infrastructure can well be successful, if he is able to retain the presidency. If he does not remain in post, he has already in his brief tenure set changes in motion that are likely to adopted [probably with adaptations] under the next president: who would also retain most of the Trump team. He has changed the global economy.
How is this comparable with Stalin? When he consolidated his power over the Soviet union in the nineteen twenties, following the disability and death of Lenin, his principal appeal was to the concept of building ''socialism in one country'. During and after the Russian revolution, Lenin believed [and relied on] Marx's prediction that the advanced industrial countries would be the first to go through a revolution and adopt communism. Through the First World War Lenin believed that the masses would rise up against the rulers who had led them into the disastrous carnage [and waste of material resources], so in 1917 he just thought it was a historical accident that primitive Russia was the first domino to fall: Germany, France, Britain and Italy would follow soon. After the war, though there were attempts at revolution, especially in the defeated countries, they did not fall to communism. Thus Lenin and his gang, soon to be led by Stalin, had to invent a completely new script for their sort of socialism. Its limitations were obvious from the start, and the human price that it extracted quickly became apparent; but it seemed to those who were inclined to want it to succeed that it was succeeding. 'Fellow travelers' emerged in most countries, and some remained pro-soviet until 1990.
Some people will want Trump to succeed because he cuts across the grain of economic dogma. He might have very considerable success: whatever the consensus of the Econocracy may say against him.
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