In the United States, when both parties publicly align, it is generally over a war. The sad fact is that in 2018, neither of the major parties in the US are anti-war and there are only a few anti-war voices among the ranks of Congress, Rand Paul and Bernie Sanders being notable exceptions that prove the rule. This logic apparently works as much in a trade war as a direct military operation as the leader of the Democrats on Capitol Hill, Senator Charles Schumer has come out in favour of Trump’s anti-Chinese trade war.
Schumer has said,
“China is not helpful to the United States. They are happy to see us in trouble. And the way to get at them — what is the mother lode for China — is their trade with us. They take advantage of American workers, American wealth, American companies regularly. I called them rapacious”.
The bellicose rhetoric that Schumer has spewed at China is in as pugnacious if not more so than that which Donald Trump customarily offers. It is a sign that when it comes to listening to the World Trade Organisation which has not found China to be at fault in respect of its relations to the US, or listening to the US Chamber of Commerce, the biggest such federation in the world, both the Republican and Democratic leadership are equally inept.
Both parties fail to understand that it is not China that has made American workers poorer, it is not China that has made US goods less attractive on the open market than they were decades ago and it is not China that is damaging US productivity, all of these problems were created domestically and it will only be through domestic solutions, rather than regressive trade war, that they can be solved.
It seems that the likes of Trump and Schumer cannot understand that the problem with the US economy is due to a perfect storm of under investment from the public sector, over regulation of the private sector by the public sector and an attitude among both US labor unions and management that is adversarial rather the diplomatic and problem solving in nature.
When it comes to reviving the US economy, what is needed is a more harmonious relationship between domestic producers in the private sector, government and workers organisations. In the US, there is a kind of phobia of government investment into companies and when such things do happen, it is usually to bail out a company on its last legs, rather than to rejuvenate a company in need of modernisation. Likewise, among US labor unions, there is a kind of allergic reaction to the kinds of quality control that exists in Germany. This is one of the reasons that German cars remain the most sought after in the world, while US cars continue to languish in consumer opinion polls.
Ironically, there is one industry in the US that does run effectively on a model where government, management and the work force coexist on generally good terms. This is the defence industry. Here, government funds many research and development programmes, fulfils many orders and promotes products abroad, while the workforce is well paid, highly trained and due to the sensitive nature of the defence industry, has to go through special clearances in order to demonstrate both company and national loyalty.
There is no reason why the US automotive, computing, electronics or textile industries could not work on the exact same model, minus the security clearances. If there was a US Senate Automotive Services Committee that suggested General Motors (GM) produce a certain kind of cutting edge, high quality care and invest in its development, and if GM had this incentive to find a domestic workforce that was incredibly skilled, hard working and well paid, all of the sudden one would see a US consumer product that would be attractive in both domestic and international markets. Imagine if all the seriousness devoted to Capitol Hill hearings on national defence, instead defined Congressional hearings on getting the US to make cars that people want to drive and audio/visual equipment people want to listen to and watch? It would represent a pivot from hostile practices in the name of war, to constructive practices in the name of prosperity.
While it is true that in the defence industries, Russia and China sell their weapons for lower prices than the US, this has not stopped the US from selling many weapons abroad. Likewise, the cost of a Mercedes-Benz has not prohibited Mercedes vehicles from being purchased in high quantities throughout the world.
As China’s workers begin earning even better pay and as automation takes over factories throughout the world, there is likewise no reason why the US could not enter into profit sharing agreements between the management of automated factories and American workers facing lay-offs due to automation. This way one would still be saving production costs due to automation, but one could ameliorate the problem of industrial unemployment by giving former workers a combination of shares in the company as well as a regular living wage that is related to the profits of said factory.
The US might never be able to match China in terms of overall output and with China becoming a leader not only in quantity but also quality, China is without a doubt going to be the industrial king of the 21st century. Yet, this has not made Japan, South Korea, Germany or other major producers give up entirely. It is ironically in the US, a nation whose pop culture invented “the power of positive thinking”, that when it comes to industrial innovation and embracing hybrid economic models, deep pessimism sets in.
At the end of the day, any product that is somewhat reasonably/competitively priced and is of high quality or unique in nature, will sell. There will always be a market for quality and unique goods and in an age where global purchasing power is diversifying in geographical terms.
The US could and should accept geopolitical decline while embracing economic renewal. To the ordinary person, they would have more money in their pocket, domestically produced products that the world actually covets and enjoys and moreover they would be able to enjoy these goods in a more peaceful world.
This is the primary reason that the US has grown weary of free trade. Even though the US economy depends on the easy access to imports from places like China, South Korea and Japan, many, including seemingly Donald Trump are scratching their heads at the fact that American industry has fallen behind East Asia. The reason for this is not free trade, but instead it is due to the fact that the US has failed to properly invest in modernising its industrial base, failed to overhaul its overall industrial business model and workplace practices and finally, while Americans grow ever more work-shy, East Asians work hard and it does not look as though this is going to change any time soon.
Until the US realises that its problems are ‘Made in the USA’ and not ‘Made in China’, productivity will continue to fall while a trade war will only result in higher prices for US consumers, a rise in unemployment as many US businesses require Chinese goods to remain competitive and an overall stagnation of a US economy that requires Chinese market socialist solutions for a uniquely neo-liberal problem.