The one lesson the Econometric elucidation of Global Economic History imparts is that, absent massive coercion, factor mobility and combinability are independent of regime type or ideology. Mimetics matters. Geography matters. Gulags and Gestapos matter- or rather the return on coercion matters. But Political Economy does not. The Rule Set does not matter save in terms of cost of enforcement. No magic ideological wand exists.
This was not always obvious. However, we can see that if particular sets of productive forces can, absent coercion, combine and thrive for wholly geographical reasons, then it will do so even under the appearance of unchanged political regime or 'relations of production'. This is because, at the margin, it can 'pay for itself'- i.e. generate side-payments.
On the other hand, type of regime and ideology can affect expectations- but only in the short to middle term. Ultimately, factor mobility
is exogenous though its local reproduction rate may have endogenous features. Short run, Capital may look more mobile than Labour, though the reverse may also appear to be the case. What matters, medium to long term, is the mobility of the factor which combines the other factors and whose reward is for taking on Risk.
Reducing Knightian Uncertainty is important in this context. But Entrepreneurship can be wholly divorced from Ownership. Coase's theorem applies. But, this means, as we have learnt, that network effects predominate at the high value adding end of things. Economic theory has a solution- Tiebout sorting- i.e. regions should have their own fiscal mix and concentrate on things in which they have a comparative advantage. That way they survive by adapting to structural changes. Hirschman saw that Trade & Growth theory had been fundamentally misleading. Any sort of Stolper Samuelson magical thinking is bound to fail. Economic Growth is idiographic, not nomothetic. Political Economy is an oxymoron. One may as well speak of Theological Operations Research.
Sadly, this type of thinking does not seem to have filtered down to Econ 101 courses. This has damaged the Left. The gerontocrats are being replaced by young people who may as well have studied at Hogwarts or spent their entire time preparing to battle, with light sabers, the Sith Orders in the Star Wars Universe.
As a case in point, Aeon has just published an essay titled ' The ungoverned globe
' with the sub-heading -The end of the liberal order would unleash chaos; its continuance means unconstrained economic suffering. What to do?
The author is a young Academic named Benjamin Studebaker. I imagine we will be hearing more from him because he appears to be driven by conviction not careerism.
However, every single sentence he has written is false, mischievous or both false and mischievous. This is sad. This young man does not strike me as either a mischief-maker or a lazy, facile, liar. Blame must go, if such indeed has been the outcome, to the Academo-Journalistic availability cascades of the last thirty years ago. There is a supposed hadith- 'the sins of the savants are the darkness of the age'. Longer life-expectancy and the end of compulsory retirement for tenured Professors, on the grounds of 'ageism', has contributed to this epistemic catastrophe.
Consider the following sentence-
In the aftermath of the Second World War, the administrations of presidents Franklin D Roosevelt and then Harry S Truman in the United States led in the construction of the liberal order – a set of international institutions agreed upon by nation-states.
When I was in College, few Professors would have endorsed it. Why? They had lived through the period. Franco's Spain, Salazar's Portugal, were part of Truman's and Eisenhower's 'free world'. So was Apartheid South Africa. The US supported Dictatorships. There was no 'liberal order' anywhere. The CIA spent money like water to keep the Commies from coming to power in France, Italy, Greece, Iran and everywhere else. The Korean War happened because the corrupt regime in South Korea was actually more crap and more homicidal than Kim the First.
What of the notion that there were a 'set of international institutions agreed upon by nation-states'? Suppose I had stood up and said that in a Class Room at the LSE back in the Seventies or early Eighties. What would have happened? People would have literally shat themselves laughing. The notion that the IMF or the Security Council or anything else had been set up with the informed consent or rational agreement of 'nation-states' was entirely risible.
True, some welcome changes had occurred. The Republic of China, representing a fifth of humanity, had got Taiwan's seat- thanks to Nixon. McNamara's World Bank had begun to help Deng's China's extraordinary ascent. After the fall of the Berlin Wall, America could get rid of Apartheid. Yes, in the Nineties, there was a moment of triumphalism- Fukuyama's Kojevian 'End of History- and Soros and so forth could speak of a Liberal, 'Rules based World order'. But, that 'ordoliberalism' became a word of hate after the financial crash of 2007-8. Obama and Merkel did nothing to change that. Thus the best we can say of the 'Liberal world order' was that it represented a brief 'Tulip Mania' of the intellectuals at a time when it was not obvious that 'sub prime' condos and sheepskins did not impoverish those foolish enough to acquire them. Studebaker got his first degree- that too from Warwick- in 2013. By then the mood had changed. But narratives had got stupider and for a dozen years young activists have wasted their own and everybody else's time. Maybe Studebaker is Social Media savvy and can make a living for himself. But what of his students? They are going to believe shite like this-
The goal was to sustain peace and prosperity in the decades after the devastation of the war, and in doing so prevent both communism and fascism from spreading.
Fuck off! Everyone had the same goal. Economic Reconstruction, massive investment in Defence related R&D and wars of attrition in distant parts of the globe so the greater portion of the costs of reconstruction fall upon thin, brown, people.
Fascism was well entrenched in Franco's Spain. Fuck did anybody do to stop Falangism spreading its tentacles deeper and deeper into recently conquered soil such that Franco became more, not less, secure? He restored the fucking Monarchy! That well and truly buried Spanish Republicanism.
Who protected Salazar's Empire? Who overthrew Mossadegh and put in a Shah whose Dad had been exiled by the Brits because he was pro-Axis? Who was behind the Greek Colonels? Who toppled Australia's Gough Whitlam? Where in the world could you find 'the Liberal world order' opposing any sort of anti-Communism, or, indeed, anti-Americanism?
Studebaker lives- as young people may choose to do, if they want to remain ineffectual- in a parallel reality. He thinks something happened in 1970- presumably, Nixon's election, or the rest of the World's rebellion against 'Bretton Woods'- which turned everything to shit. The problem with this view is that it took fifteen years for Bretton Woods to get formalized. What went before was more like ad hoc bilateralism. But Bretton Woods started to fail almost immediately. It was barely limping along. As for Nixon- the fact is he could have become President in 1960. Kennedy's 'Missile Gap' may have given him the edge. But, as Galbraith noted, Kennedy wasn't really Keynesian. Nixon was. He tried a Prices & Incomes Policy briefly. He had well and truly lost the plot. That was an excellent reason for him to go.
Studebaker, who wasn't alive during most of the period, writes-
But over the last 30 years of the 20th century, the liberal order changed.
Things did change in the mid Sixties. Blacks and Gays and Women and so forth escaped statutory
discrimination and injustice in the U.S. Europe too began to move in this direction. This was a good thing but it had no international ramifications. Maybe it contributed to a 'Silent Majority' backlash.
It is no longer primarily about protecting the West from communism and fascism by pushing up wages, creating large social programmes, and building strong safety nets.
America would protect its sphere of influence from Communism. Fascism was fine. However, during the 1950's all countries saw increased wages and better social services. It was by no means certain that Krushchev's boast that the Eastern block would end up with higher living standards would prove farcically incorrect. Interestingly, at one time Franco's Spain was growing fastest while Communist Poland appeared to be ahead in terms of improving living standards. It would be foolish to say that America faced any internal Communist threat- McCarthy did his job too well. Fascism had no appeal in that country because there were no Commies who needed beating in the streets. Italy and France did have large Communist parties but their flourishing was independent of rising real wages. Some Warsaw pact countries did see rising living standards and perhaps this blunted the fanaticism of their leadership. Yugoslavia was quoted as an example of Tinbergen's 'convergence thesis'. Albania, which remained poor, turned to Maoism, even breaking with China after the fall of the gang of 4.
There was no connection between the post-War drive for Reconstruction and higher real wages and the fear of Communism or Fascism. What existed was fear of another Great Recession and a foolish obsession with Unemployment. However, as inflation rose- for both monetary and 'cost-push' reasons- two dramatic reversals occurred at the end of the Sixties
1) The working class lost its taste for 'redistribution'. Labour's share of factor income peaked and started to fall. This was perfectly logical. Only 'economic rent' can be redistributed. But factor supply becomes elastic in the medium to long term- thus economic rent ceases to be available for redistribution. Thus the burden of fiscal transfers falls on the working class. Even in Scandinavia they repudiated 'solidarity wages'. The 'Labour Aristocracy' wasn't going to share productivity gains with the unskilled lumpen element.
2) The natural rate of unemployment rose or, rather, even the Army realized that a good tenth of the population was unemployable- they had negative marginal product. Programs targeted at breaking 'the cycle of deprivation' failed because drugs were getting better and promiscuity had become the norm.
The stagflation of the Seventies was a time of disillusionment. Liberalism seemed to have dug its own grave. Reagan and Thatcher showed that the upper working class would tolerate long and persistent unemployment. This meant only the supply side mattered.
The unexpected demise of Communism did give an opening for a sort of Liberal triumphalism but there was no New World Order because the West was still cautious in interventions. Sadly, that was to change leading to a blowback millenials are familiar with. But we commonly fix the blame on the neo-cons, not 'Neoliberalism' for this outcome.
Instead, it has become an engine for globalisation, economically integrating the whole world into a singular system.
The world has always been integrated. Stalin's Russia was very comfortably in bed with big American Corporations in the Thirties. China did keep exporting under Mao- it just didn't get very much in return. Deng's big idea was to emulate countries like Singapore. But Singapore was scarcely Liberal. Even now, the punishment for chewing gum in Singapore is either a 50,000 dollar fine or penal incarceration for 2 years. Why speak of 'the liberal order' when the Chinese Communists, in the Eighties, insisted that they were following Marx's dictum 'from each according to his ability, to each according to his contribution'. Markets and property rights only disappear after scarcity disappears. Thus the Chinese were pursuing a Marxist, not a Liberal, course- but this was not obvious to Western commentators.
The liberal order has transformed from a means of defending liberalism into a means of exporting it everywhere.
We may speak of Victorian England, or Teddy Roosevelt, exporting the liberal order and supporting Liberal political movements overseas. But all that stopped when it became obvious that World Wars wiped out wealth. They put an end to Liberal shibboleths- e.g. a volunteer, not conscript, Army. It was only after the threat of World War receded, after the collapse of the Soviet Union, that, for about a decade, Liberal triumphalism could bask in the Sun. Still it was the ex-Trotskyite neo-cons who took the next step- invading Iraq and putting an end to the 'New World Order'.
The contemporary liberal order does this by making two things mobile: capital and labour.
Both capital and labour have always been mobile. In the 1930's, an Indian working for Dow Chemicals moved to the Soviet Union as part of a trade deal. Plenty of Indian Communists got shot by Stalin, but this Indian chemist lived high on the hog married to a nice Russian girl. This is an example of both labour and capital mobility. The Indian preferred Russia because he was well paid and not subjected to racial harassment. It would have been illegal for him to marry a White girl in many American States at that time.
Capital mobility enables assets and businesses to move to different locations where different sets of economic rules exist.
Capital moves because rules sets don't matter. Contract enforcement does. If Deals are non-coercive and self-enforcing then Capital is as mobile as Information. But, something like this has always happened. Isolationist Empires still have their cosmopolitan crony capitalists.
When capital is mobile, capital controls don’t prevent individuals and firms from moving their assets out of a particular economy, and trade barriers enable businesses to operate offshore without facing imposing tariffs.
'Capital controls' only work in the short run. They are soon subverted. Even preventing people from crossing borders by shooting them did not work. The efficiency gains of mobility are such that the incentive to prevent it quickly dries up.
Labour mobility is about moving workers from place to place, in pursuit of the jobs that are relocated through capital mobility.
No. Labour mobility is driven by life-chances which in turn depend on Social, not Financial, Capital and Network effects.
The liberal order enables rapid flows of investment and people from place to place.
No. Imperialism had that quality. The liberal order does not. Why? Liberalism requires migration controls to preserve National ethos.
These flows facilitate economic growth and reduce the cost of consumer goods, but they also produce instability.
Economic growth reduces instability. Why? Because it creates a market for arbitrage and risk pooling. A stagnant economy has more instability- not less. But it also features Exit of higher marginal product factors. This means it goes into secular decline.
Moving too much money too quickly into any particular part of the world generates bubbles.
Stupidity causes bubbles even in poor, stagnant, economies. 'Hot money' flows can be sterilized. F.D.I does not necessarily cause bubbles. This is an idiographic matter.
Taking too much money out too quickly produces credit crunches.
No. A 'Credit Crunch' means Expectations have suffered an exogenous shock. Financial flows are irrelevant. Only Expectations matter.
Adding too many people to a region too quickly strains its public services and potentially pushes down wages.
Actually, if the thing is done quickly, the problem is solved quickly because the shorter the time you have been in a place the quicker you can relocate.
Taking too many people out of a region too quickly produces brain drain, starving the region of the skills it needs to thrive.
Who 'takes people'? Slavers? The Emperor of Assyria? The truth is people may indeed flee a place with great expedition. But, that's because it has no future.
The order keeps capital and labour mobile, and maintains the flows.
No. Both money and men go where they can get a better return. This has always happened. Liberal countries may be able to afford to put up barriers to migration but, over time, migration will happen anyway.
But it doesn’t govern them, and that means the flows can get out of hand and cause trouble.
An 'order' which does not 'govern' is not an order. The Order of the Teutonic Knights once ruled territory. The Order of the Knights of Malta does not rule anything at all. It is purely ceremonial. This 'Liberal Order' of Studebaker appears to be even less substantial than the Knights of Malta. It is like the 'Order of the Exalted Servants of the Dawn' which keeps the Sun mobile and thus ensures Night will end. But the Order doesn't govern the Sun and that means the Sun can get out of hand and cause trouble. This explains Global Warming- right?
The liberal order exists on three levels: the global, the regional and the national.
Just like the Order of the Exalted Servants of the Dawn. The Global level ensures that the Sun is available for our planet to circle around. The Regional level ensures Dawn occurs when it should for our Time Zone. The National level coordinates the Regional levels and liaises with the Global level. Thus if Dawn failed to occur in California, the Regional level reports to the National level which then asks the Global level to very kindly persuade the Sun to rise over California.
At the global level, the order consists of large international organisations that mainly focus on the regulation of trade, borrowing and investment, such as the International Monetary Fund (IMF) and the World Bank.
But both are irrelevant save with respect to failed or failing states.
At the regional level, the liberal order creates tighter trade relationships, through agreements such as the North American Free Trade Agreement (NAFTA) – now the United States-Mexico-Canada Agreement (USMCA) – and block organisations such as the European Union (EU). In the case of the EU, the regional institutions also provide free movement of people, a currency union, and a common set of fiscal rules and regulations.
But similar agreements exist where there is no Liberalism. Economic cooperation occurs if it is mutually advantageous regardless of the type of regime. The Sun rises with or without an Exalted Order of the Servants of the Dawn.
At the national level, the liberal order is embodied by the political parties that are committed to defending and maintaining it, including most of the traditional centre-Right, centrist and centre-Left parties.
China is a one-party State. It seems to have no difficulty doing a lot of trade and investment and so on. On the other hand, it has banned the Exalted Order of the Servants of the Dawn. This means it is in perpetual Darkness.
To put it another way, the liberal order consists of a lot of economic integration,
All human societies- even neolithic ones- displayed a lot of economic integration including exchanges of brides.
but this economic integration still depends on the continued commitment and participation of nation-states.
No. Economic integration depends on the possibilities for and potential gains from Comparative Advantage based Trade. Nation-states can cease to exist. Economic integration persists. In many ways, the Common Market was harking back to pre 1914 Economic integration.
The institutions that exist at the global and regional level don’t have direct connections to voters. They rely on the ability of the national parties that support the order to remain politically competitive on their home turfs. As the liberal parties weaken, the order weakens.
The opposite is the case. If global and regional institutions create problems, not opportunities, for voters then the status-quo supporting politicians, irrespective of their political party, get the order of the boot. We have just seen that happen in the U.K.
In the 12 years since the global economic crisis of 2008, the liberal order has been besieged from all sides.
As has the Exalted Order of the Servants of the Dawn.
On the Left, traditional social democratic parties have been weakened, displaced or captured by radical insurgents. Bernie Sanders disturbed the Democratic Party’s equilibrium in the US.
But he lost first to Hilary and then to Biden. What disturbed the 'equilibrium' of the Democratic Party was no-drama Obama's not appearing to have accomplished anything at all save pad the pockets of the rich.
Jeremy Corbyn did the same for the Labour Party in the UK.
And will go down in history as the man who caused the 'Red Wall' to crumble. More low income people voted for BoJo than for him. That is a remarkable accomplishment.
The truth is the Left is crap because it was nurtured on Campuses with crap Professors of worthless subjects.
In France, the Socialist Party has been displaced by the more radical La France Insoumise.
Which has sunk without trace. Its leader is 68.
Greece’s traditional centre-Left party, PASOK, was overtaken by the more radical SYRIZA.
Which was even more crap- though not as corrupt. God alone knows what the next incarnation of Left imbecility will be called.
On the Right, Donald Trump staged a hostile takeover of the Republican Party in the US. In the UK, the Conservative Party took the country out of the EU. The Republicans in France have been challenged by Marine Le Pen’s National Rally (previously the National Front). And in Germany, the Right-wing Alternative für Deutschland is now the largest opposition party. In Italy, the centre-Left Democratic Party and the Five Star Movement joined together to form a Right-wing coalition government. All of these parties and movements are interested in revising, exiting or performatively ignoring the liberal order. Russia cheerleads the order’s decay, while China has begun constructing alternative institutions of its very own. Vultures circle.
So, there is no 'liberal order'. There was an availability cascade but nothing in reality corresponded to it. Vultures may circle a dying man. But there is no carcass here for them to feast on.
When I was young, there were some elderly racists who would bemoan the good old days when Whiskey was cheap and women liked getting black-eyes and niggers knew their place. The 'order' they were lamenting had never existed. Women didn't like getting beaten. Black people knew their proper place was wherever their own talent and hard work put them.
Still, everyone can agree that the first step to the return of whichever order we idealize is cheaper whiskey. I'd feel a lot more liberal and charitable towards whoever it is who screwed up the Economy and rotted the brains of Academia if I were able to get drunk for a quid.
This is not to say that the order is defenceless. Global and regional institutions do have the ability to inflict economic hardship on voting populations.
In which case they are disintermediated. They get defunded and have to go back to Academia or the NGO circuit.
The EU, IMF and World Bank can deny states access to needed funds, threatening them with economic crisis if they fail to toe the line.
They can only do this to countries which have screwed up their finances. But, equally, until the unscrew their finances, nobody can really help them.
Governments know they won’t survive the next election if these organisations visit financial chaos upon them.
Governments know that screwing up the finances of the Nation will hurt them at the polls but some of them just go ahead and do it anyway. That's how Stupidity works.
In 2015, for instance, Greece attempted to resist the EU’s austerity demands, threatening to leave the eurozone’s monetary union if the EU refused to offer more financial support. But leaving the euro would badly damage Greece’s economy in the near-term, and Brussels knew it. The EU called Greece’s bluff, and Greece retreated.
SYRIZA came to power by claiming it could get a better deal for Greece. It failed spectacularly. The country was a lot worse off. So the Greeks turfed it out of office.
Last summer, SYRIZA was trounced by New Democracy, Greece’s traditional centre-Right party.
This creates a difficult situation for political parties.
No. It is bleeding obvious that screwing up your country's finances will boomerang on you. It is not difficult at all to spot that a Varoufakis is a clown. Don't listen to him.
The liberal order has brought about economic integration, and that integration has often been politically disadvantageous.
No. Economic forces brought about economic integration by paying power wielders to let it happen overtly rather than covertly. Voters went along with this when the going was good. But profligate Governments could still screw up the Nation's finances. Moreover, there was corruption and 'Agency Capture' such that Regulatory regimes catalysed the catastrophes they were meant to prevent. Elites grew complacent. They pretended they belonged to the Exalted Order of the Servants of the Dawn. Without their pi-jaw, the Sun would cease to rise. All would be Darkness.
In the post-2008 era, global and regional institutions have pushed many states to cut public spending, eliminating social programmes and weakening public services and infrastructure.
Because these things were unaffordable.
In many countries, living standards for the ordinary voter have stagnated or even backslid.
Because previous gains were based on fraud. Madoff's clients thought they were very well off. Then they discovered they had been conned.
Capital mobility makes it easy for billionaires and corporations to rapidly move their assets all over the world,
This is like saying 'physical mobility makes it easy for people to move about'. Global Corporations had branches in Stalin's Russia back in the Thirties. Money has moved around the globe since there was money and a method to get around the globe.
and that means they have a lot of leverage over national governments.
When has this not been the case? True, a Corporation can no longer get a Government to topple a regime in some far off country if it nationalizes their assets. But then, regime change no longer seems a swell idea.
If a government raises taxes to support public services, the people and firms it attempts to tax might simply move away, depriving the country of both the tax revenue and the jobs and investment that those people and firms once supplied. The ensuing recession could swiftly cost that government the next election. To attract investment, governments are forced to compete with one another for the favour of oligarchs and transnational corporations. That means keeping taxes and wages low, and regulations and labour laws weak.
The same is true of individuals. If you demand to be paid a million dollars an hour with a blow-job thrown in every 15 minutes, you may find yourself unemployed. You may feel deeply aggrieved that you are forced to compete with others for the favour of employers but how else could this story pan out?
Some political parties talk about trying to trap investment before it can escape, with capital controls and trade barriers.
But the physical capital would have been financed by a local bank. You end up picking your own pocket.
A few talk about funding social spending with monetary sorcery, using quantitative easing to support flagging social programmes and fabulous new infrastructure. But even the prospect of a party of this type winning power is enough to encourage corporations to take their custom elsewhere.
But it is also the case that a guy who talks of using magic to do his job won't get hired. As a devout Wiccan, one may feel that this shows a lamentable prejudice on the part of employers. But, seriously, how else could this story end?
Throwing up trade barriers quickly breaks supply chains, without giving the economy an opportunity to gradually reorganise the affected sectors. The shock of a sudden severance would be severe, sending the cost of goods and services soaring until new arrangements can be made. During that time, inflation would be elevated even without radical monetary policy. Adding it on would just make things worse.
Trade barriers create rents. They are not necessarily inflationary. But there is a 'deadweight' welfare loss.
Governments aren’t willing to take the risk of capital flight. The anticipated economic consequences are too severe, and economic consequences mean electoral consequences. How, then, do they placate their voters?
Why not tell the truth?
The voters remember a time, not so long ago, when public services were strong and their lives were getting better.
But then 'Baumol cost-disease' set in'- why not explain this? Voters aren't utterly stupid. They understand that there's a lot of stuff which one could afford twenty years ago but which is now out of reach. But there are other things which have got cheaper. One must adjust one's life-style and tighten one's belt if necessary.
While they wish for the economic malaise to end, for things to return to the way they once were, their governments cannot deliver it. If states can’t make voters happy, they have to find a way to direct voter resentment elsewhere.
Voters aren't sheep. Their resentments may be entirely rational. It is up to politicians to identify mechanisms to undo the causes of resentment.
So instead of directly challenging the liberal order,
How would one do so? Send around your seconds with a challenge to a duel? But what is the address of the liberal order? The Order of the Knights of Malta has an address. The Exalted Order of the Servants of Dawn can be reached at my humble abode. But this 'liberal order' is wholly fictitious.
national governments point the finger at the order, while largely continuing to align with it economically.
Nobody has said 'naughty liberal order! Boo to you!'. Why? This 'liberal order' has no existence in anyone's imagination outside some shite University Department.
Trump is very good at this bait and switch. He abandoned Barack Obama’s Trans-Pacific Partnership (TPP) in favour of tariffs, but the purpose of the tariffs is to achieve with a stick what Obama sought to get with a carrot – the moving of firms and investment out of China and into the economies of the Pacific allies of the US. Trump frames the tariffs as an attempt to challenge the liberal order and force jobs to return to the US, but the tariffs don’t actually achieve this – instead, they push businesses to move to neighbouring states, such as Vietnam.
But with the US Corporations doing the high value added stuff and reaping the rewards. This means high paid jobs in the US. There would also be some manufacturing jobs and more money to pay for them from 'Optimal tariff theory' which was all the rage when Trump was at Wharton.
This is their true purpose: redirecting investment away from China toward US allies. It is the same purpose that animated TPP but, while TPP appears to further grow the liberal order, the tariffs appear to defy it.
TPP was silly. It created a multi-dimensional policy space with all sorts of criteria like Human Rights, Environmental sustainability etc. It represented Obamaism at its most cretinous.
Trump gets away with continuing to support the liberal order by opposing it in public while continuing to maintain the economic relationships that are its foundation.
In other words, Trump transacts business in a business like way. But that's how all business is transacted. Some Professors of Poli Sci may gas on about Liberal orders but nobody listens to them. As the Chinese say 'Science Students look down on Arts students. Arts students look down on Poli Sci students. Poli Sci students look down on their teachers'.
Trump didn’t simply suspend trade with China, because his purpose is not to end US dependence on cheap foreign imports.
Suspend trade with China? Is this guy crazy?
Instead, he wishes to perform strength for the home audience. By vilifying China and gradually discouraging US firms from doing business there, Trump can appear to stand up to the liberal order while simply exchanging one set of East Asian trading partners for another.
With the crucial difference that the high value added stuff gets done in America, not China.
In this way, he gets the political credit for appearing hostile to the order, without taking action that would substantially raise the cost of goods and services in the near-term.
This guy does not get that America exported a lot of high value added stuff to China while it did the low value added grunt work. Now the Chinese want to do the high value adding and are themselves offshoring to South East Asia. But Trump wants to hamstring their high value adding sectors so as to preserve America's higher real wages. This is perfectly sensible.
Trump performed a similar dance with NAFTA. Initially, he declared his intention to leave the agreement, only to proceed to ‘renegotiate’ it. The renegotiated trade agreement, USMCA, is broadly similar to NAFTA but, because it contains minor cosmetic concessions to the US trade position, Trump appears to have meaningfully challenged the liberal order without really doing anything at all. The Mexican government becomes a convenient bogeyman, but trade relations with it go on much as before.
If this guy liked TPP, he should like USMCA which Democrats have turned into a stick to force Unionization on the Mexicans. It is a dog's breakfast, true enough.
Voters want the catharsis of antiestablishment rhetoric, but they don’t want to pay the price for antiestablishment policy. Trump – who has always been a good showman – is happy to oblige. He walks a tightrope, appearing to fight the liberal order without actually fighting it.
Because it doesn't exist.
This balancing act is difficult to maintain. If a government pushes it too far against the liberal order, the order will call its bluff, exposing its lack of willingness to pay the price for genuinely opposing the order. This is what happened to the Left-wing SYRIZA and its leader Alexis Tsipras in Greece.
Does this cretin really think the USA is similar to Greece?
Its confrontation with the EU was too direct for the EU to tolerate, and the EU forced Greece to either accept the economic consequences of withdrawal from the order or acknowledge its lack of willingness to follow through. Once Tsipras’s bluff was exposed, his party was discredited.
A previous Greek Government had got a big bailout by threatening to hold a referendum at a time when contagion risk existed. Tsipras, misled by Varoufakis, held a referendum when there was no contagion risk. Moreover, Varoufakis had made an utter fool of himself at the Finance Minister's Conference. But this was stupidity, not bluff.
At the same time, if a government avoids bombastic rhetoric and tries to manage down expectations, it might not even appear to be a threat to the liberal order in the first place. This is what happened to Theresa May in the UK. As prime minister, May’s rhetorical style wasn’t very aggressive, and the Brexit deal she proposed didn’t make large changes to the UK’s trading arrangements with the EU. This caused the more antiestablishment wing of her Conservative Party to rebel, replacing her with Boris Johnson. Johnson immediately scored an electoral victory running a much more openly antiestablishment campaign, with far more bellicose anti-European rhetoric. Once Johnson won, he implemented a Brexit deal that was nearly indistinguishable from May’s, and the UK’s trading relations with Europe continue largely unchanged for now.
Cameron and May both gambled on strengthening their hand by going to the voters. Both miscalculated and had to go. BoJo got in because Corbyn shat the bed. That's it. That's the whole story. We don't know what the final deal will be. That depends on purely economic considerations. It has nothing to do with any supposed 'Liberal Order'.
Investors know that the relationship is secure for the time being, and Brexit hasn’t yet brought about any major increase in the cost of goods and services. The performance is what matters.
Economic performance depends on stuff Economists study. This Poli Sci guy with his talk of some imaginary 'Liberal Order' is muddying the waters.
From the point of view of the liberal order, this strategy is suboptimal, and it works only from the premise that the liberal order doesn’t enjoy much legitimacy. It’s a defensive strategy, aimed at maintaining an international order that no longer inspires people of its own accord. The order would prefer to restore its legitimacy and get populations enthusiastic about further integration. By maintaining itself through allowing national governments to performatively mock it, the legitimacy of the liberal order is further corroded. It becomes even less credible and even less inspiring. This means that governments have to go further and further with their performances of defiance to continue to please ever more grouchy voting populations.
Bollocks! There may have been some politicians who thought the EU and the WTO and so forth were a bulwark against beggar my neighbor protections. But those politicians are gone. They were stupid and fucked up and are now forgotten.
In time, this could produce a government that’s not just performing defiance, but actually defiant.
Like Venezuela or Zimbabwe. Defiance just means screwing up your country's finances. If you don't do this then economic forces will ensure that everything works out. The only story here is 'look after the economy and the politics will look after itself'. Defying the Sith Order with light-sabers is not required.
If that government comes to power in a nation-state that is strong and has a lot of power, the order could struggle to contain its rebellion.
Which is why it must make an alliance with Voldemort.
It’s one thing to threaten Greece with economic oblivion. It’s another thing to threaten Germany or the US.
Greece screwed up all by itself. Germany could screw up all by itself if it elects Green nutters. The US could screw up all by itself if Police forces are defunded all over the place. There is no need for the Sith Order or the Liberal Order or the Order of the Exalted Servants of Dawn to threaten anybody.
If Trump was more than a performer, if he really believed the nationalist narrative he sells, all this would suddenly become deadly serious.
No. If Trump hadn't turned out to be a shrewd businessman rather than a loony toons, then the anti-Trump hysteria would have been justified.
The risk is that, by performing defiance today, Trump clears the way for a US administration that’s genuinely defiant five or 10 years down the line.
Just as no-drama Obamas not performing defiance cleared the way for Trump who may have cleared the way for the even older Biden.
Very often one generation’s electoral strategy becomes the next generation’s deeply felt beliefs.
No. A successful program affects expectations. If something has worked well, people believe more of it may work even better.
Trump won’t rip the liberal order apart, but he creates space for the person who will. To prevent this from happening, the liberal order needs governments to find a better, more sustainable electoral strategy that doesn’t undermine the ability of the order to restore confidence and legitimacy.
So, the liberal order needs Governments not to attack it. Thus, it is dependent on Governments. But, that means, from the point of view of Political Science, it has no independent existence. It is merely a metaphor for a common orientation amongst a set of Governments. But that common orientation was based on a particular understanding of the economy. When that understanding failed, the common orientation disappeared. So the real story here is that there was no 'liberal order' there was only a sort of complacency and inertia which has sunk the political careers of those who subscribed to it.
Democratic theorists have lately turned to radical democratic reforms as a means of restoring a sense of sovereignty or autonomy. While the nationalists mock the liberal order, directing resentment further up the chain, radical democracy tries to make citizens feel involved in decision-making by moving more decisions downstream, to the local level. Importantly, this doesn’t take back control from the liberal order. The liberal order still handles economic integration, maintaining the flows of capital and labour. Instead, the nation-state takes the powers that remain in its possession and decentralises them, enabling local communities to feel more involved without giving them control of anything that meaningfully threatens the liberal order.
What does this rigmarole actually mean? Democratic theorists are stupid and childish. Some silly people in every town can be persuaded to prance around talking of citizen's democracy and the need to raise awareness of the difficulties facing neighborhood cats with issues re. sexuality and gender identity. This sort of silliness aint going to change anything at all. So relax and let the nutters have at it.
This decentralisation can take many forms. Nation-states such as the UK, France and Spain might devolve more and more powers to their regional and local institutions. Some of these regions might become politically independent. In the US, the federal government might push more responsibilities on to state governments, and those states might in turn push more responsibilities on to municipalities. More radically, governments might begin making use of ballot initiatives, referenda, citizens’ juries and public assemblies to make ordinary people feel more involved in the process while at the same time divesting the national government of its own responsibility and culpability for decisions.
This results in Tiebout sorting and can be a very good thing. On the other hand, if you are too set in your ways to move to a place which caters to your brand of crazy then get prepared for long discussions about cats with gender identity issues or some other such nonsense.
In this way, the radical democracy strategy becomes an inversion of the nationalist strategy.
No. There is no strategy here. There is only Stupidity.
Both the radical democrats and the nationalists would create a situation in which the nation-state cannot meaningfully be blamed for the consequences of the liberal order.
Because what's really important is not having a good life but blaming someone of the other for the naughtiness of the Sith Order or the Liberal Order or the Exalted Order of the Servants of Dawn.
The nationalists accomplish this by blaming the order, performing subversion while continuing to obey.
Nonsense! Nationalists blame the Jews and the Gays in the Media and the Wall Street bankers and the men in black helicopters for everything.
The radical democrats accomplish this by creating new institutions that make the people themselves feel responsible for their own situations. They attempt to ‘responsibilise’ ordinary voters.
It's your fault your neighbor's cat is having to struggle with gender-identity issues. You shouldn't have called it 'pussykins'. That was a totally Fascist action, Mummy. Fuck off and die you old whore.'
The nationalist strategy’s weakness is that it maintains the liberal order by condemning it, undermining the very thing it maintains.
People used to write shite like this in the Sixties. Who reads Sartre now? Studebaker's strategy's weakness is that it maintains the very strategy whose weakness it is, yet, ironically, does not maintain its own maintenance as weakness if only in a strategic manner even though this leads to complex gender-identity issues amongst the neighborhood cats- which is like totally Fascist, dude, and so not cool.
The radical democrats completely divert attention from the order by making politics about the local level – about you. You become the one responsible for the order, for the flows, and for any instability those flows bring to your community.
Meanwhile cats are subject to complex gender-identity issues because you are all a bunch of fucking Fascists!
These local institutions, however, cannot actually alter the flows. This responsibility is built on lies and misdirection. It functions as an elaborate way of forcing the citizens to internalise the political system’s failures as their own.
Very true. But Netflix does the same. It greets you by name and has suggestions for your viewing pleasure. But this is just an elaborate way of forcing you to internalise the failings of the Werewolves or Vampires in the show you are watching as your own. This is why so many cats have complex gender-identity issues.
Radical democrats would give citizens the appearance of direct power without the fact of it, obscuring where the real power lies – with the liberal order.
Not the Sith Order as Disney would have you think. Incidentally, the series 'The Mandalorian' is totally a rip-off of R.K Narayan's Malgudi days. Also the correctt title is 'Mangalorean'. That said, the series is an accurate reflection of life in a sleepy South Indian town in the Nineteen Seventies.
That would suit the order just fine. But radical democracy wouldn’t deal with the substance of the grievances that have led so many voters to grow frustrated. It would enable the order to continue disappointing people by convincing them that they are the ones disappointing themselves.
The truth is radical democracy will cause the local economy to collapse. If lots of local economies collapse, National and then International economies collapse. So steer clear of that brand of Stupidity unless it is pure 'Tiebout Sorting'.
Opponents of the liberal order have substantive grievances.
Like how come their tin-foil hats aren't working so good any more.
Rapid, ungoverned flows of capital and labour destabilise their lives.
Whereas they want to destroy, not just destabilize, their lives by governing not just capital flows but also utterly Fascist behaviour- like calling a cat 'pussykins' and thus causing it to experience complex gender identity issues.
The nation-state cannot take back control of the flows, and radical democracy provides only an illusion of control. To truly govern the flows, the liberal order itself must be made directly responsible to the people whose lives it affects.
Moreover, the Sun must be democratically elected and should commit itself to inclusive dialogue with the neighbor's cat on complex issues of gender-identity.
As long as the liberal order is organised through global and regional institutions that have no direct links to voting populations, it will be mediated through networks of nation-states.
In other words, so long as there is no World Government we won't, as a planet, be able to hold the Sun accountable for its actions. The Exalted Order of the servants of the Dawn will be able to continue their oligarchic rule over the Solar System.
As economic integration increases, those nation-states lose the ability to meaningfully represent their populations in the order’s institutions. The more economic power the liberal order has, the more vestigial the nation-states become. The nation-states attempt to obscure this reality with nationalism and radical democratic reforms, and in doing so they enable themselves and the order to go on, but at a cost of completely stripping the public of any meaningful say. The nation-state continues, but only as a shell of itself, unable to represent anything. The liberal order continues, but with no legitimacy, at best surviving by pitting individuals and groups against each other in local fights with no practical stakes.
The Sun is even worse. It has lit up battle-fields since time immemorial. Also, it once watched me pee on the neighbor's cat. That's just perverted.
Alternatively, we could decide that the only way to govern a global economy is to have global political institutions. The radical democrats scale down, situating politics far beneath the level where the crucial decisions are taken. The nationalists pretend politics still exists at the level of the nation-state, cathartically denying a reality that they themselves implicitly recognise. The other option is to scale up and make a genuine effort to build some kind of global polity.
So, this silly man who couldn't get elected rat catcher wants to build a 'global polity'. Good luck to him.
The trouble is that there are few people who want to do this. Part of what makes both nationalism and radical democracy appealing is that these strategies emphasise our national, individual or group distinctiveness. Global political institutions collapse distinctions, making singular decisions for the whole world. We don’t want a one-size-fits-all model. But unfortunately for us, the liberal order has already given us one. In the liberal order’s one-size-fits-all model, we must all accept ungoverned flows of capital and labour and, if we try to resist those flows, economic devastation is visited upon us. We have no say in the model, because the nation-states that are meant to represent us are increasingly moribund.
Why not emigrate to Venezuela?
So we are faced with a terrible choice. We can continue to embrace the nationalist strategy of keeping the liberal order alive by creating the conditions under which it will die.
A good Nationalist strategy is one which raises productivity within the Nation. This attracts trade on the basis of comparative advantage. Factor mobility is not essential but certainly helps. That's it. That's the whole story. Economic forces will bring about Economic integration while Poli Sci figures out how to deal with cats with complex gender identity issues.
That will end in the dissolution of the order, collapsing economic growth, with massive increases in the costs of goods and services.
No it won't. During the Great Depression, discretionary tariffs caused only ten percent of the decrease in trade. It was the monetary shock and liquidity crunch which did the major damage. But we now have far more sophisticated markets and arbitrage mechanisms.
Our living standards will be dramatically reduced. The nation-state will make a comeback, but at the cost of the prosperity that we have been building since the Second World War.
Nonsense! The collapse of all
Trade agreements would have about as much impact as the COVID crisis. It would be a supply shock without much hysteresis effect. Fairy stories about the Great Depression have long been exploded by Econometric research.
Or we can embrace radical democratic reforms, and attempt to convince ourselves that they will empower us, or at least give us the satisfying feeling of empowerment. We can retreat into localism, even as the critical decisions are taken far away from us. We can build a realm of illusions, where the institutions we participate in are not the ones that shape our lives.
For people teaching Poli Sci, it is certainly true that they inhabit a jerrybuilt realm of illusion. So what? We are grateful if they don't masturbate in public. More should not be asked of them.
Finally, we could try to salvage the order by constructing institutions that enable us to meaningfully govern it. But to do that, we’d have learn to do politics with people who are different from us. Can that be done? Probably not. And that means either the nation-states will kill the liberal order, or they will find a way to disguise it in democratic daydreams. The liberal order might not last much longer.
There was no 'liberal order'. There was an academic availability cascade based on ignorance and complacency but that was back in the days when people thought getting a degree in Poli Sci would enable them to get a decent job. Meanwhile, people continue to economize. If they find a smarter way to do so, then they garner 'gains from trade'. Economic forces will continue to connect and coordinate Economic activities. Meanwhile a few Poli Sci pundits will earn an exiguous living provided they don't masturbate in public and discourage their students from so doing. The fact is, there is a global market for stupid shite. It is small. It is not well regarded. But, it exists. I wish young Studebaker luck in his finding a niche within it.