From: jfh@beach.cis.ufl.edu (James F. Hranicky)
Newsgroups: talk.politics.theory
Subject: Re: What happens when the Trade War starts?
Date: 11 Nov 92 21:12:55 GMT
Organization: Univ. of Florida CIS Dept.

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.

>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.

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.

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.

>These all seem like good seeds for a discussion.  I hope to prompt some.  I am
>NOT an expert in these areas, but look forward to hearing from some people
>that ARE (or think they are! :^)  :^) )
>
>
>
>Al  - "inquiring minds want to know!"
>
>P.S.  Please excuse spelling errors, I can't spell worth a damn, and this
>      system doesn't have a spell checker (that I know about).

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.

Jim Hranicky (jfh@reef.cis.ufl.edu)
Newsgroups: talk.politics.theory