From: 00vmszopa@leo.bsuvc.bsu.edu
Newsgroups: talk.politics.theory
Subject: Re: What happens when the Trade War starts?
Date: 12 Nov 92 19:26:40 GMT
Organization: Ball State University, Muncie, In - Univ. Computing Svc's

In article <37593@uflorida.cis.ufl.edu>, jfh@beach.cis.ufl.edu (James F. Hranicky) writes:
> In article <92311.104035U57567@uicvm.uic.edu> U57567@uicvm.uic.edu (Myself!!!) writes:
>>
>>   I have been keeping an ear on the talk about the "Trade War" that is
>>brewing with France, and probably the rest of the E.C.  They are talking
>>about 200% tariffs on French wine, I think prompted by their refusal to go
>>along with us on some sort of seed oil talks.  The implications SOUND huge:
>>The complete collapse of the GAT talks, which have been in trouble for a
>>while; all sorts of very hostile trade barriers and tarrifs going up all
>>over the place; the USA, the E.C., and possibly Japan, involved in the
>>economic equivelent of the military war.  Instead of Superpowers involved
>>in Global Thermonuclear War, we will/could have Supereconomies involved in
>>Global "Themotarrific" War.
>>
>>My questions are:
>>
>>1.  Is it a real danger?  Can it happen?
> 
> It is a danger, more for the long run than for the short run, I think.
> Trade wars merely stir up bad feelings for both sides.

But remember: anyone with something to sell, and anyone with exclusive control
of a given resource, MUST SELL IT eventually.  What would be the point in never
selling, say Iraqi oil to the rest of the world? How would Saddam Hussein have
ANY power if he refused to sell forever? 

> 
>>2.  How bad could it be?  Will we all be hording imported goods because
>>    of the price increases?  Will it be impossible to get imported goods?
> 
> The hoarding has already started with regards to wine. It might eventually
> be very difficult to obtain foreign goods.
> 
>>3.  The world economies are much more tightly linked - could this cause a
>>    new Depression/government collapse/really bad things/etc?
> 
> The hardest hit in an all out trade war will be those countries who import
> food, probably followed by oil importers. It could be very bad, if the
> trade war escallates past wine...I don't know what will come of it though.
> 
> 
>>4.  Could it escalate into millitary conflicts anywhere?  If you have severe
>>    economic hardships, I could see someone using it as an excuse to beat up
>>    someone.  If for no other reason than to divert attention from your
>>    inability to "do something".
> 
> This is a very disturbing possiblity. If the nations of the world would
> merely allow capitalism to flourish, it would mean eventual prosperity for
> all. I think people are too short-sighted though.
> 

I don't know if I accept capitalistic economic theory as a panacea, but I do
believe that trade conflicts do not necessarily lead to military ones.  I can't
think of any example that supports that hypothesis (but I would love to hear 
one).  If someone refuses to sell you something vital (pointless, because they
will make tremendous profits and encourage your dependency by selling), THEN
you might be willing to take it.  The idea of Saddam "sitting on the world's
oil supply" or the French "gripping the vine tightly" for very long is absurd.

And retaliation in kind (new tariffs on other goods) will simply cancel each 
other out eventually.

> What kills me is the fact that the US wants to start this trade war
> because the French government gives subsidies to the wine growers. What
> complete hypocracy! The US government gives all kinds of farmers here in the
> US subsidies. Amazing.

Yes, I agree this is ironic.  Every country is convinced that their trading 
practices are level and fair, while the rest of the world is cheating.

> 
> I heard a report from France saying that the French farmers feel they
> could not stay in business without the subsidies...I wonder about this...
> If the wines are truly in high demand, they would still be bought regardless
> of a lack of government subsidies. If the farmers need the subsidies to stay
> in business, then the true demand for these wines isn't terribly high,
> and the funds used to subsidize these farmers are taxed from people who would
> rather spend their money on something else, which in effect is removing
> capital from those businesses which are in a higher demand.

Maybe we should let every industry and producer stand on their own legs (this 
would include Chrysler Corporation in the U.S., who owe their life to a massive
government-backed loan in the early '80s) but I doubt that everyone would
do this at once.  Everybody wants the other side to "play fair" before they have
too.

> 
> The best thing for the governments of the world to do would be to end
> all import and export tarrifs...this would provide the best goods and 
> services for consumers (best=cheapest, highest quality, etc.), while
> not permitting marginal producers of goods to stay in business...
> 
> These marginal producers would better serve the consumer in other areas
> of production, as they need special priveleges to stay in business now.

Maybe. But unless it's truly fair competition for everyone, there will be
those who manipulate markets by dumping, etc. and destroy rivals.

> 
> Jim Hranicky (jfh@reef.cis.ufl.edu)
-- 

-------------------------------------------------------------------
00vmszopa@leo.bsuvc.bsu.edu                            Vinney Szopa
Ball State University		Muncie, IN			USA
Practice random kindness and senseless acts of beauty
"When I find myself in times of trouble
 an IR missile usually does the job."   --Wing Commander graffiti
Newsgroups: talk.politics.theory