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Epoch Times
04-05-2025
- Politics
- Epoch Times
The Trouble With Compulsory Globalism
Commentary For years, I've resisted deploying the word globalism with approbation because international cooperation is a good thing. Travel is glorious and so is the freedom to trade and migrate. How did the practice of freedom as it extends over national juridical lines come to be so widely loathed and disparaged? There is a complicated story here that speaks to entanglements between states, industry, finance, multinational government structures, and the control of a people over regimes. The COVID experience revealed all. The response was notably global, nearly all nations locking down in the same way at roughly the same time, enforcing the same protocols and issuing the same remedies (more or less). The World Health Organization seemed to be calling the shots, with national public health agencies deferring on point after point. The virus itself seems to have emerged from within the structure of multilateral research on both pathogens and possible pharmaceutical countermeasures. In addition, central banks all over the world cooperated to fund the extreme policy response, printing money like never before to stop full economic collapse under forced closures. Nations like Sweden and Nicaragua that went their own way were demonized by media all over the world in the exact same way. Related Stories 4/23/2025 4/23/2025 National legislatures had no role in the initial lockdowns. They were excluded from decision-making. This means that the people who elected them were disenfranchised too. No one voted for six feet of distance, business closures, and shot mandates. They were imposed by administrative edicts, and nowhere did judicial systems stop them. Democracy as an idea, plus the rule of law, died in those months and years, deferring always to the global institutions and financial systems that assumed de facto control of the planet. It was the most astonishing show of universal power on the historical record. Given the results, it is hardly a shock to see the backlash, which has centered on a reassertion of the rights of nations and the citizens thereof. Many defenders of human liberty (right and left) are often uncomfortable with the ethos of the backlash and wonder whether and to what extent there is good historical precedent for reclaiming sovereignty in the name of freedom. I'm here to say that such a precedent exists, with some discussion of a historical episode that is almost wholly forgotten. It is well known that the Bretton Woods Agreement of 1944 included portions that dealt with international monetary settlement (the gold-exchange standard) as well as finance and banking (the International Monetary Fund and the World Bank). Many people are also aware of the General Agreement on Tariffs and Trade (1948) What is not known is that GATT was a fallback position. The original draft of Bretton Woods included an International Trade Organization (ITO) that was to be empowered to manage all global trade flows. It was drafted in 1944 and codified in the Havana Charter of 1948. There was a tremendous push at the time on the part of major governments and corporations to ratify this agreement as a treaty. The ITO was to rule the world, with oligarchs seizing control in the name of globalization. It was defeated, and why? It was not because of opposition from protectionists and mercantilists. The main opponents of the ITO were in fact free traders and economic libertarians. The campaign to trash the treaty was led by French-American economist Philip Cortney and his barnburner book called 'The ITO Charter is a monument to wishful thinking,' he wrote, 'a bureaucratic dream that ignores the hard realities of national economies. It promises free trade but delivers shackles, binding nations to rules that cannot bend with the storms of inflation or scarcity.' He and others in his orbit could detect the hand not of freedom in this charter but rather central planning, corporatism, inflationism, fiscal planning, industrial policy, and managed trade—in short, what today is called globalism. He was dead set against it, precisely because he believed it would set back the legitimate cause of free trade and submerge national sovereignty into a bureaucratic morass. The objections he had were many, but among them were those centered on issues of monetary settlement. Nations would be locked into a tariff regime with no flexibility to adjust currency values based on trade flows. There was a genuine danger under the ITO, he believed, that nations would lack the ability to adapt based on changes in exchange rates or other specifics of time and place. Even though the charter seemed to push free trade, Cortney believed it would ultimately undermine it. He further believed that if nations were to open up their economies to international competition from all corners of the world, it should be done in a way that was consistent with democratic governance and national plebiscites. An iron-handed global government imposing such a regime would contradict the whole history of the structure against mercantilism, and would likely be abused by the largest firms in industry and finance to game their system in a way that benefited themselves. What's striking about the argument is that it came from a liberal/libertarian point of view that favored traditional methods of obtaining free trade, while opposing what today would be called globalist means of getting there. Indeed, Ludwig von Mises It was Cortney, alongside his ideological compatriots in business and editorial writing, who ultimately torpedoed the Havana Charter and sent the International Trade Organization into the dustbin of history. To be clear, the rejection of the ITO was not a result of activism by reactionaries, socialists, protectionists, or even economic nationalists. It was rejected by strong proponents of economic liberalism, free trade, and commercial business interests dominated by small- and medium-sized firms that feared being swallowed up by the globalist morass. These people distrusted bureaucracy in general and global bureaucracy especially. This was a principled generation and they were by then very aware of how something can sound fantastic in rhetoric but be awful in reality. They simply did not trust the gang in charge in those days to hammer out a sustainable trade arrangement for the world. The rejection of the ITO is how and why we ended up with the General Agreement of Tariffs and Trade. It was General, meaning not firm law. It was rooted in Agreement, meaning that no nation would be compelled against its interests. It was about tariffs but did not attempt some grand strategy to equalize all currency valuations. It was informal and not formal, decentralized not centralized. GATT prevailed until 1995, when the World Trade Organization was shoved through under tremendous media and corporate pressure. It was a revival of the old ITO. By this time, the free-market crowd had lost its sophistication and went all in for the new global agency. As if to confirm Cortney's prediction, the WTO has now been rendered mostly obsolete, scapegoated for economic stagnation, deindustrialization, currency mismatches, and unsettled foreign accounts backed by foreign holdings of US dollar assets. Now we face a backlash in the form of crude mercantilist policies arriving with fury. America has been the destination for vast products from China, now being blocked by high tariffs. In extraordinary irony, the New York Times is Imagine that! The balance between national sovereignty and freedom itself is a delicate one. Generations of intellectuals once knew that and were careful never to overthrow one to back the other. To permanently detach governing structures from citizen control, even if only through a periodic plebiscite, courts disaster even on topics like trade, to say nothing of infectious disease and virus research. Thus has the revolt arrived, exactly as Philip Cortney would have predicted. From the Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
Jordan News
30-04-2025
- Business
- Jordan News
100 Days of Chaos Threaten Trump's Second Term - Jordan News
Second presidential terms rarely see clear successes — and Donald Trump appears to be no exception. The first 100 days of his second term have been disappointing. اضافة اعلان According to The Wall Street Journal, Trump urgently needs a "full reset" to salvage what remains of his presidency amid self-inflicted economic shocks and foreign policy turmoil. The paper notes that Trump is active on several fronts. He's made real progress in expanding domestic energy production, swiftly ended the border crisis, and rolled back some federal interventions. He was elected, the Journal argues, to counter the excesses of the left on climate, culture, and censorship — and he's acting on that. Limited Delivery on Big Promises However, in many other areas, Trump's actions haven't lived up to his promises. His 'Government Efficiency Act' has been rushed and yields unclear outcomes. He's claimed only symbolic victories on several fronts, with no substantive change. University Crisis Trump's administration is also faltering in public-facing issues. A high-profile university controversy has sparked widespread debate. While elite institutions like Harvard arguably need reform, imposing curricula or interfering in faculty hiring undermines free speech and could trigger legal defeats for the administration. Similarly, although deporting criminals is vital, bypassing legal procedures and manipulating the courts could backfire. The Major Crisis: Tariffs Perhaps the most dangerous misstep is Trump's tariff policy, which could end his presidency. He was re-elected to control inflation and boost real income — yet tariffs do the opposite: they raise consumer prices and threaten supply chains. Job opportunities in the U.S. plummeted in March, although low layoff rates suggest the labor market remains resilient — for now. Still, these tariffs are considered the biggest economic shock since Nixon's withdrawal from the Bretton Woods Agreement in 1971, which unleashed a wave of inflation and doomed Nixon's second term. America's Reliability at Stake Tariffs are also damaging America's international credibility. Trump's erratic approach to both allies and rivals has undermined global confidence in the U.S. Republican donor and investor Ken Griffin described this as a "self-inflicted wound" to America's global brand, accusing the U.S. of "unnecessarily surrendering its economic leadership." A Gift to China Meanwhile, China is filling the vacuum, strengthening ties with U.S. allies and portraying itself as a more stable partner. This could undermine efforts to build a trade coalition to counter China's economic practices. The Journal described Trump's tariffs as a 'real gift' to Chinese President Xi Jinping. However, signs show Trump is starting to realize the risks — he has spoken about up to 200 new trade deals and hinted at cutting his steep 145% tariffs on Chinese imports. Trump's Foreign Policy: Mixed Signals Trump is trying to reshape foreign policy too — regaining control over sea routes and reimposing 'maximum pressure' on Iran over its nuclear program — both seen as positive moves. But his unilateral push for peace in Ukraine is raising alarms. He has so far refused to criticize Vladimir Putin, while pressuring Kyiv to make concessions that could invite further aggression. Top U.S. universities have formed a bloc to counter Trump's crackdown on academic freedom and research funding, according to insiders. The Economist warns that while Biden's Afghanistan withdrawal shattered U.S. deterrence, any collapse in Ukraine would do the same for Trump — with serious consequences regarding Iran, North Korea, and China's ambitions in the Pacific. The outlet cautioned: don't be surprised if China moves to seize Taiwan or impose a blockade. Trump's typical response — tariffs — would likely prove ineffective. 'Running the U.S. — and the World' On Monday, President Trump remarked that he's running not only the U.S. but the world, hinting that seeking re-election again might be too much after just 100 days back in office. Final Verdict Voters re-elected Trump partly out of nostalgia for the economic boom during his first term — driven by traditional GOP policies like tax reform and deregulation. Today, however, Trump is led more by instinct than policy, and the results have been mostly negative. He will fail unless he starts listening to warnings — from the market, from allies, and from his own party.
Yomiuri Shimbun
25-04-2025
- Business
- Yomiuri Shimbun
Japan-U.S. Talks May Foreshadow Global Economic Future; Trump's Views on Tariffs, Trade Seem Stuck in Past
The Yomiuri Shimbun Economic revitalization minister Ryosei Akazawa speaks to media at Haneda Airport on April 18 after returning from the United States. U.S. President Donald Trump is significantly trying to rewrite the rules of postwar international trade and the international order, similar to the 'Nixon Shock' of 1971, when then President Richard Nixon suspended the dollar's convertibility into gold. In both cases, the United States sought to reduce what it considered its excessive burden in maintaining the international order. The key difference lies in the context: Nixon faced a struggling and stagnant U.S. economy burdened by the massive costs of the Vietnam War, while Trump stands at the helm of the sole superpower in the global economy. As the United States attempts to reset the postwar international order for the second time, Japan's position too is very different from what it once was. Japan will need to grasp these changes and forge a new strategy. The 1944 Bretton Woods Agreement, which fixed exchange rates among countries and established the dollar as the reserve currency through its convertibility into gold, stabilized the post-World War II global economy. However, the U.S. economy was exhausted by the costs of the Vietnam War, and as Western Europe and Japan caught up, the United States lost its overwhelming advantage by the 1960s. U.S. gold reserves declined rapidly, the dollar fell, and the United States fell into a dollar crisis. As a result, on Aug. 15, 1971, Nixon announced the suspension of the dollar's convertibility into gold, which was known as the Nixon Shock. The Nixon Shock marked the collapse of the Bretton Woods system. The U.S. State Department released historical documents on the economic diplomacy of the Nixon administration in 2009. The documents from 1972 and 1973 are particularly interesting. The Group of 10 countries, including the United States, Japan and several European nations, signed the Smithsonian Agreement in December 1971. This agreement sought to stabilize the exchange rates. However, the dollar crisis did not subside. Countries began transitioning to a floating exchange rate system in February and March of 1973. The diplomatic documents record Nixon's words during his discussions with Treasury Secretary George Shultz, Under Secretary of the Treasury for Monetary Affairs Paul Volcker and others on March 3, 1973. Nixon's true feelings of irritation toward Europe are interesting. 'Now, the problem with Europe is that Europe today — and we've got to look at their psychology; leave out the economics — the Europeans are frustrated because the Germans can't have an international policy; they can only look outward because they have no power. The French are parochial; after they were kicked out of Algeria and Vietnam, they have nothing,' Nixon said. Shortly after that, he went on: 'I judge the European politicians, except for [U.K. Prime Minister Edward] Heath, every one is a parochial; every damn one. I mean, [West German Chancellor Willy] Brandt doesn't understand anything. He's a nice, pleasant face and all that sort of thing, but he's a dullard. In terms, except just through Berlin and the rest, he doesn't understand the world and never will.' Nixon's relentless criticism of Europe calls to mind Trump's dislike of the European Union. Nixon also took a tough negotiating stance toward Japan. In a diplomatic document dated Feb. 6, 1973, Nixon engaged in tough discussions about how to approach Japan, demanding that it raise the value of its currency and dismissing Japan's views with the remark: 'The Japanese sensitivities — to hell with them. Let's go right ahead.' On Feb. 14, 1973, Japan switched from a fixed exchange rate system to a floating exchange rate system, in which rates are determined by the market. The Nixon Shock did not destroy the international order so much as pave the way for a new international order. What kind of new international order is Trump aiming for? Frequently cited in answer to that question is the 2024 paper 'A User's Guide to Restructuring the Global Trading System' by Stephen Miran, who is now the chairman of Trump's Council of Economic Advisers. According to the paper, the dollar is valued at a higher level than it would otherwise be because most countries hold it as their primary reserve currency. A strong dollar negatively impacts the competitiveness of U.S. exports, leading to the decline of manufacturing and contributing to the trade deficit. The paper argues that other countries should compensate for the U.S. burdens of providing defense and serving as a reserve currency. To address this, the United States may seek international policy coordination, of the kind that produced the 1985 Plaza Accord, to correct the strong dollar. Under the hypothetical 'Mar-a-Lago Accord,' a 2.0 version of the Plaza Accord, the United States would have other countries purchase 100-year U.S. Treasury bonds to transfer interest rate risks. However, it is unlikely that a multilateral framework that imposes disadvantages on China and Europe would be a realistic policy. Instead, the United States may target Japan directly to implement measures to correct the strong dollar because the U.S. nuclear umbrella protects Japan. The Japan-U.S. tariff negotiations will be an acid test of Trump's intention to shape the future international order. On April 16, Trump met with Ryosei Akazawa, Japan's economic revitalization minister, who was visiting the United States, and expressed his dissatisfaction, saying that there were no American cars running on Japanese roads. Upon hearing this remark, I remembered an essay written over 30 years ago by Haruki Murakami. In the early 1990s, Murakami was a visiting scholar at Princeton University. Japan-U.S. trade friction was intense at the time, and anti-Japanese sentiment was strong. At the time, a U.S. columnist wrote that the U.S. government should provide subsidies to U.S. automakers. If it were to do so, the Japanese would park 'two American cars in every Japanese driveway.' Murakami noted the term 'driveway.' He had been struggling with translating it, as there is no equivalent space in Japan's urban areas, and most houses in Japan could not park two large American cars. Murakami reflected that it was unfortunate that Americans did not understand the reality of Japan. Trump's image of Japan is deeply rooted in such an atmosphere. But today's Japan is not the same as in the past. Based on this, we must consider future negotiations between Japan and the United States. I want to point out four things. First and foremost, the economic relationship between Japan and the United States is now vastly different from what it once was. Japan's share of the U.S. trade deficit was high in the 1970s and 1980s, reaching approximately 60% in 1991. Now, it is less than 10%. Among countries with which the United States has trade deficits, Japan ranks only seventh. Instead, China has become the United States' largest trade deficit country, accounting for a quarter of the total. Second, Japan and the United States once engaged in fierce competition in industrial products such as automobiles, but they have successfully established a mutually complementary relationship. Japan still maintains strong competitiveness in industrial products, but the United States is strong in IT, finance, energy, food and pharmaceuticals. There are fewer areas of direct competition. Third, the United States views China as its sole competitor. China constantly combines economic, diplomatic, military and technological power to challenge the international order. From a geopolitical perspective in East Asia, strengthening its alliance with Japan is the best way for the United States to confront China. Fourth, while considering the importance of the Japan-U.S. relationship, it is essential to explore ways to align Trump's political agenda with the national interests of both countries. The gap between the reality of Japan-U.S. relations and Trump's outdated image of Japan could make negotiations between the two countries difficult for Japan. 'The Japanese sensitivities — to hell with them.' If Trump is truly a dealmaker who values practical benefits, he will not kick over the negotiating table with such a dismissive remark. I want to be able to bet on a Trump like that. Political Pulse appears every Saturday. Akihiro Okada Akihiro Okada is a vice chairman of the editorial board for The Yomiuri Shimbun.
Yahoo
23-04-2025
- Business
- Yahoo
Bessent says IMF and World Bank 'falling short' as he calls for rebalancing of international financial system
Treasury Secretary Scott Bessent said Wednesday that the International Monetary Fund and the World Bank are "falling short" of their original missions and guilty of "mission creep" as he asked them to refocus efforts on helping the US restore balance to the international economic system. The US helped create both institutions near the end of World War II as part of a Bretton Woods Agreement that set a framework for a new international monetary system in the decades that followed. Bessent argued in his speech that the purpose of the IMF and the World Bank was to "better align national interests with international order, thereby bringing stability to an unstable world. In short, their purpose was to restore and preserve balance." "Yet everywhere we look across the international economic system today," he added, "we see imbalance." He did not say that the US intends to withdraw from either organization, noting that "America first does need mean America alone." Instead he said the US wants to retain its leadership role and offered suggestions for changing how the organizations approach global trade. "The IMF and World Bank serve critical roles in the international system," he said. "And the Trump Administration is eager to work with them — so long as they can stay true to their missions.' Bessent stressed that "mission creep has knocked these institutions off course. We must enact key reforms to ensure the Bretton Woods institutions are serving their stakeholders — not the other way around." The IMF, he said, is devoting a disproportionate amount of time and resources to work on climate change, gender, and social issues. "The IMF's focus in these areas is crowding out its work on critical macroeconomic issues,' he said. 'We must make the IMF the IMF again." And the World Bank, he added, "should no longer expect blank checks for vapid, buzzword-centric marketing accompanied by half-hearted commitments to reform." Click here for in-depth analysis of the latest stock market news and events moving stock prices Sign in to access your portfolio
Forbes
23-04-2025
- Business
- Forbes
Tariffs Done Wrong
Economic Nationalism, done right, could work very well for the United States in coming decades. The most glorious period for US business, before 1913, was a time of high tariffs and controlled immigration. But, it was also a time when there was no Income Tax; and, in this pre-Federal Reserve era, the money was fixed to gold. The result was very good. The United States, at first a promising 'emerging market,' ended up a global superpower. WASHINGTON, DC - APRIL 02: U.S. President Donald Trump speaks during a 'Make America Wealthy Again' ... More trade announcement event in the Rose Garden at the White House on April 2, 2025 in Washington, DC. Touting the event as 'Liberation Day', Trump announced additional tariffs targeting goods imported to the U.S. (Photo by) The present era of Globalism dates from Bretton Woods Agreement of 1944, passes landmarks such as the North American Free Trade Agreement of 1994, but reached its full expression with the inclusion of China into the World Trade Organization in 2001. This was paralleled by a range of technological developments, empowered by the new Internet, which made long-distance supply chains possible. Although this Globalist trend arguably did benefit the world as a whole, it is not clear at all that it benefited American citizens. Many industries were 'hollowed out,' with unemployment, underemployment and depressed wages the first consequence. A weak domestic economy did little to pick up the slack. Supply-chain dependency proved incompatible with a trend toward a more 'multipolar' world, where China or Russia's growing regional authority combined with American exhaustion with its post-WWII role as global policeman. Within this framework, certain Economic Nationalists (such as Pat Buchanan) have argued in favor of an across-the-board flat rate tariff, avoiding the aggravating complexity of different rates for different products from different countries. It is basically the tariff equivalent of a flat-rate retail sales tax, and might be in the range of 10% to 20%. To this might be added some country-specific (but still flat-rate) tariffs, depending on the situation, perhaps 5%-20%. For some reason, we feel that Free Trade with Canada or Germany is far less problematic than Free Trade with China or Mexico. Why is that? There are many answers to this question, most of them good answers, which goes to show that general economic principles supposedly for all times and all places are not useful here. These things take place in a historical and geographic context. Tariffs are taxes; and all taxes tend to have negative economic consequences. Part of the United States' brilliant nineteenth-century strategy was also its superlative domestic economic policy, combining Low Taxes with a very business-friendly regulatory framework. The Trump Administration has been talking about eliminating the Capital Gains Tax, which the Supply Side economists of the 1980s long argued was the most economically harmful tax, compared to its modest revenue. Eliminating the tax would be a certain moneymaker – the economic health that followed would result in higher revenues from all other taxes. Unfortunately, this reasonable attempt to balance higher tariffs with lower domestic taxes has been running into trouble, both with the difficulty of continuing the lower tax rates introduced in the 2017 Tax Cuts and Jobs Act, and also some hints towards higher income taxes. Higher tariffs and higher domestic taxes combined is not going to result in a healthier economy. It also won't result in more tax revenue. Unfortunately, the Trump Administration, in its tariff policy, has embraced a framework that is basically fallacious and certain to lead to destructive policy that benefits nobody, including Americans. It was expressed in a recent paper by Stephen Miran called 'A User's Guide to Restructuring the Global Trading System.' Miran was later appointed as the Chairman of the Council of Economic Advisors. This paper focuses on 'trade imbalances' (basically current account deficits), which are supposedly to be remedied with tariffs and also changes in foreign exchange rates. But, lest we put too much blame on Miran, this line of thinking goes back at least into the 1950s, and historically far earlier, into the Mercantilist era of the eighteenth century. Variants are found in common economic textbooks today. I would reject this entirely. It is tempting, to some people, to find such a body of widely-embraced pre-existing economic dogma that seems to support a Nationalist agenda that was arrived at largely from real-world experience. But most of its claims are false. The whole idea that 'trade imbalances' need to be resolved with changes in exchange rates is bizarre. The fact of the matter is, the different States of the United States, or the different countries of the Eurozone, also have 'trade imbalances' with each other, even while sharing the same currency! This arises from the basic fact that 'trade imbalances' don't exist. All trade is always balanced. The primary reason for 'trade imbalances' (US current account deficits) is the low rate of domestic capital creation. The US domestic savings rate is low. Nearly all of this savings, in recent years, has been exhausted in financing Federal deficits, leaving almost nothing for net domestic investment. This has resulted in a reliance on foreign capital even for today's low levels of domestic investment, which shows up statistically as a positive financial account and negative current account, or 'trade imbalance.' The solution is a higher rate of domestic capital creation (getting rid of the capital gains tax would help), combined with smaller Federal deficits. Let's take note here that this solution, perfectly sensible as it is, is also completely contrary to postwar Keynesian doctrine, which says that recessions or underperforming economies are caused by too much saving; and that more spending and larger Federal deficits are the answer. Postwar Keynesian dogma should follow postwar Mercantilist dogma onto the scrap heap of history. Net Savings (domestic savings minus government deficits) has been very low. The domestic need for ... More capital has been met with foreign capital, producing a "trade imbalance." During the high-tariff Nineteenth Century, the dollar's value was securely fixed to gold. Although the US also ran a Current Account Deficit throughout the nineteenth century (basically due to European capital flowing to where it was treated best), this was never a problem, and nobody tried to solve this nonexistent problem with currency devaluations. The result was that the US became an economic superpower. Nevertheless, if the US dollar is 'strong,' but other currencies are weak and decline in value, the resulting swings in foreign exchange rates will introduce serious issues in foreign trade. That's why the economist Robert Mundell argued that free trade and floating exchange rates are inherently incompatible – one justification for the creation of the Eurozone. Probably this would be a good situation to put to use that country-specific flat-rate tariff mentioned earlier, which would provide some cushioning against the effects of foreign exchange swings. But, I would abandon all claims that various countries are 'currency manipulators" – a claim that bizarrely includes even those countries that fix their currencies to the dollar! Already the more practical members of the Trump Administration have come to the conclusion that the recent tariff strategy does more harm than good, even to Americans. The whole framework of 'fixing trade imbalances' via tariffs and foreign exchange movements (detailed in Stephen Miran's paper) should be abandoned immediately. There is still a place for a policy of Economic Nationalism, that could include substantial tariffs. These are best as flat-rate tariffs. For good results, such as strategy should be combined with good domestic policy, including Low Taxes and Stable Money – or what I've called 'the Magic Formula.' It worked for the United States in the nineteenth century, and it could work again today.
