[CATEGORIES: Literature, Lapham’s Quarterly, Reading, Book Review]
[Click HERE to see my previous posts referencing Lapham’s Quarterly.]
[Some of LQ’s contents are available free.]
[L.Q. cover, quotes, and images from Lapham’s Quarterly Spring 2019: Trade, except where noted otherwise.]
[New to Lapham’s Quarterly? See the standard notes at the end of this review. After 40+ LQ reviews I jump right in.]
This is a READING section, for those who may stumble in browsing recent photography. There are pictures at which to look. You might even read. I don’t say this disparagingly. I spend as much time as anyone staring into the abyss, though lately I’ve been looking at photography, that penchant we created to gratify the desire to capture what we see, admire ourselves, and show to others. Venture further if you like. You’ve been warned. This is a continuation of Lapham’s Quarterly Spring 2019: Trade, Pt. 1.
L.Q. often seems prescient in its content. This issue was published two months ago and likely was many months in preparations. This week (05/13/2019///13/05/19) Der Supreme Leader here in the Ooo.Ess.Ah. is roiling China and the global markets with TARIFFS!
The whole Supreme mess has even prompted me to dig out my copies of Free To Choose by Milton Friedman and Economics In One Lesson by Henry Hazlitt, for additional enlightenment.
The 3 sections this month are:
Negotiations and Deals [Arrgh!]
Routes and Outposts
Markets and Rackets
The very first extract in N & D is bits of testimony “from public hearings held by the Office of the U.S. Trade Representative on Section 301 tariffs” in 2018. It is noteworthy in the underlying favoritism either sought or complained about.
Wikipedia, as usual, is a bit easier to understand:
“Tariffs are meant to reduce pressure from foreign competition and thus reduce the trade deficit. They have historically been used to protect infant industries and to allow import substitution industrialization. Tariffs may also be used to rectify artificially low prices for certain imported goods, due to ‘dumping’, export subsidies or currency manipulation.
On the other hand, tariffs lead to misallocation of resources, as inputs in both the home country and the foreign country are used in a way that may lead to lower output, and therefore lower income, for the residents of both countries. And, since tariffs drive up the prices paid by domestic consumers on the targeted items, consumers’ purchasing power is diminished. For these reasons, most economists oppose most tariffs.”
Chapter Two of Free To Choose, The Tyranny of Controls, is informative also. Your library may have a copy.
As I understand it (or likely not), less or no tariffs all around would be better. If we have to temporarily increase them in order to get leverage for reductions, that is unfortunate. In the meantime we consumers will pay higher prices.
Today’s New York Times (05/16/2019):
The Global Economy Was Improving. Then the Fighting Resumed.
LONDON — In ordinary times, worries about the health of the global economy tend to prompt leaders of the largest countries to join forces in pursuit of safety.
These are not ordinary times.
The biggest threat to global fortunes has become the intensifying conflict between the two largest economies on earth, the United States and China. As their leaders openly contemplate how to inflict pain on each other, the rest of the world now frets about becoming collateral damage in an escalating trade war.
Only a week ago, China and the United States appeared to be moving toward cooling their hostilities, while global economic prospects were improving. Worries about a worldwide slowdown were giving way to burnished hopes for expansion.
Fears about the weakening of China’s economy were easing as President Trump advertised a soon-to-be-signed trade deal. That lifted the outlook for Asian economies dependent on global commerce like Japan, South Korea and Taiwan. Europe, a perpetual source of concern, was flashing signs of renewal. Defying skeptics, the American economy remained on a tear.
But late last week, as Mr. Trump sharply increased tariffs on $200 billion worth of Chinese goods, the world found itself grappling with the likelihood that the trade war would be painful and expensive. The concern mounted on Monday as Beijing retaliated and the Trump administration detailed plans to slap 25 percent tariffs on virtually all goods that China sends to the United States.
For businesses and consumers alike, it all raised the prospect that they would soon be paying higher prices for goods, a reality that discourages commerce.
“An escalation scenario would be terrible all around,” said Gabriel Sterne, head of global macro research at Oxford Economics in London. “A negative impact on trade flow is going to be bad for global growth for several years. It’s bad news for almost everybody.”
If both sides follow through on their threatened tariffs, China’s annual economic output will be reduced by 0.8 percent while the United States will see its annual growth reduced by 0.3 percent, according to Oxford Economics.
Those numbers are small in the grand scheme of things, but the damage could be felt acutely within industries that are especially exposed to the trade war, such as American agriculture and Chinese electronics manufacturers. The weakness was underscored on Wednesday by the latest indications that China’s economy is slowing and by lower-than-expected figures for retail sales and factory orders in the United States.
The harm could be especially severe for countries that are most dependent on trade, including Singapore, Malaysia, Mexico and Japan.
The production line at Huawei’s production campus in Dongguan, near Shenzhen, China.Kevin Frayer/Getty Images
At the center of trouble sits China, the world’s most populous country. Its breakneck development over recent decades has added hundreds of millions of consumers to the global marketplace while supplying a vast assemblage of low-cost goods.
Given that China is the source of roughly one-third of the world’s economic growth, any disruption to its trade amounts to a global event.
Mr. Trump has designed his tariffs to wound China as he seeks to pressure its leaders to agree to cease subsidizing state-owned companies, stop demanding intellectual property from American businesses and open its markets to foreign competitors. Until last week, the president was insisting that a trade deal with China was imminent. Then, he abruptly accused China of reneging on its commitments and opted to increase tariffs.
The sharp escalation comes at an especially fraught time for the world economy, jeopardizing what had seemed to be a stabilizing, if gradually slowing, Chinese economy.
Volumes of freight imported by China surged in April, according to an analysis of data by UBS, the global investment bank. Worldwide, airfreight was up in March compared with a year earlier, according to the International Air Transport Association.
But these trends are fragile. Airfreight has declined nearly 4 percent since its peak in 2017. Outside China, manufacturing in Asia has been slowing for much of the last two years. A trade war between the United States and China — two countries that collectively account for roughly 40 percent of world economic output — would almost certainly aggravate the situation.
Exports to China from Japan, Taiwan, South Korea, Thailand and Vietnam have plunged by about 14 percent over the past year, or about $6.3 billion, according to analysis from Oxford Economics.
Those same countries have lifted their exports to the United States by a similar percentage. But the United States is a less important trading partner, and the increase amounts to less than $2 billion.
In Europe, the trade war presents another unwanted source of concern at a time of tenuous progress.
Concerns that Britain’s unruly departure from the European Union would damage trade across the Continent had abated — at least in the immediate term — as London and Brussels agreed to extend their fractious divorce proceedings until the end of October.
Germany, the Continent’s largest economy, had been moderating fears of weakness, with data showing an increase in factory orders and exports. Germany’s exports to China were up by more than 5 percent in March compared with a year earlier.
But much of what Germany sends China amounts to the piece parts of China’s industrial apparatus — car parts, engines, electrical machinery and other gear folded into factory operations. If Chinese factory operations slow in the face of American tariffs, China’s appetite for German goods will probably wane.
Shares were mostly lower in Asia on Monday after trade talks between the United States and China ended Friday without an agreement.Andy Wong/Associated Press
In Italy and France, industrial activity has been weakening in recent months.
“For Europe, it’s happening at a very delicate point in time,” said Kjersti Haugland, chief economist at DNB Markets, an investment bank in Norway. “You have growth being very feeble again.”
The trade war has already spooked global stock markets, prompting plunges in share prices in recent days.
If investor fear deepens, money will almost certainly flow into the ultimate safe haven, the American dollar. That would probably be accompanied by money leaving so-called emerging markets, exacerbating crises in Argentina and Turkey, while bringing down the value of currencies more broadly, from Brazil to South Africa to India.
Falling currencies make imported goods more expensive in those countries, forcing poor people to pay more for food, fuel and transportation.
After rising early this year, currencies and stock prices across emerging markets have dipped precipitously in recent weeks.
The key question now is how long trade hostilities will endure.
It is a question with no clear answer.
Mr. Trump appears to be taking resolve from a strong American economy as he declares a willingness to absorb the strains of a drawn-out battle with China. The unemployment rate sits at 3.6 percent, its lowest level in half a century. The economy expanded at a 3.2 percent annual clip during the first three months of the year.
Mr. Trump has declared that the United States can win a trade war if it stays the course. Yet he has also used Twitter to complain that the Federal Reserve is not cutting interest rates while China’s leaders stimulate their economy with injections of credit.
Perhaps that represents his lobbying for lower rates. It can also be read as an admission that Mr. Trump lacks — and covets — tools possessed by his adversaries in Beijing, who enjoy domination of the levers of policy.
Mr. Trump’s strategy appears to be stoking nationalist anger in China, where the Communist Party government leans heavily on such sentiments for propaganda purposes. That could harden China’s willingness to hold its position, as its leaders fear the consequences of gratifying an attack from the American leader.
It is not a recipe for expanded global trade, which grew by about 4 percent in 2017, then slowed to 2 percent last year and may contract this year.
“Once growth in trade volumes turns negative, it makes us all have to take a closer look at some sort of recession scenario,” said Marie Owens Thomsen, global chief economist at Indosuez Wealth Management in Geneva. “Things are looking more disconcerting for sure. The downside risks are increasing.”
A version of this article appears in print on , on Page B1 of the New York edition with the headline: Trade Rivals Risk Pulling Rest of World Over Brink.
The Table of Contents of L.Q. Trade, with some access links, is reproduced below, or can be found online via https://www.laphamsquarterly.org/roundtable/opening-trade.
To be continued…
If you are a REALLY good browser, you can get ahead of my reading via LaphamsQuarterly.Org.
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The standard notes:
1. Since L.Q.’s inception with the Winter 2008 issue its size is always 7″ x 10″ x 1/2-17/32″. It is white-covered, printed on high quality paper throughout, with richly printed reproductions of fine art from time immemorial, and 221 pages up to a page or two of addenda at the back.
2. Each issue contains extracts about the title topic from great authors and thinkers spanning all recorded history. It begins with an eloquent, to a fault, preamble/introduction by editor Lewis Lapham. The main body is called Voices In Time and contains 3 or 4 subcategories of the topic with about 25 extracts per section. Noteworthy sidebars, side quotes, and depictions of appropriate art from the ages are liberally distributed throughout. Several extended contemporary essays bring up the rear. There are several other small sections every issue (Among the Contributors, Conversations, Miscellany, ‘The Graphic’).
3. Per the L.Q. website:
“Lapham’s Quarterly embodies the belief that history is the root of all education, scientific and literary as well as political and economic. Each issue addresses a topic of current interest and concern—war, religion, money, medicine, nature, crime—by bringing up to the microphone of the present the advice and counsel of the past.”
4. I encourage all to subscribe to this fine publication. It is a rich supplement to anyone’s reading.
TRADE Table Of Contents:
VOICES IN TIME
Negotiations & Deals
2018: Washington, DC | Hearings on Section 301 Tariffs
c. 1520: Vijayanagar | Krishnadevaraya
c. 1100: Damascus | Abu al-Fadl Jafar ibn Ali al-Dimashqi
1527: London | Hilary Mantel
1970: Montevideo | Eduardo Galeano
1776: Kirkcaldy | Adam Smith
1957: New York City | Ayn Rand
1636: Quebec | Paul le Jeune
1934: Washington, DC | Franklin Delano Roosevelt
1552: Atlantic Ocean | François Rabelais
1892: Brusa | Gertrude Bell
2008: Azeroth | Scott Rettberg
1799: Dejima | David Mitchell
1898: Boston | Charlotte Perkins Gilman
c. 1190 bc: Troy | William Shakespeare
1904: Sulaco | Joseph Conrad
1791: Philadelphia | Alexander Hamilton
c. 1806: Bratslav | Nachman of Bratslav
1455: Lisbon | Antoniotto Usodimare
c. 1940: Bombay | Salman Rushdie
1904: Heidelberg | Max Weber
1688: Amsterdam | Joseph Penso de la Vega
1804: Jamaica | Maria Edgeworth
1842: London | Anti-Corn Law League
c. 1900: Tanganyika | Abdulrazak Gurnah
1919: Boston | Major League Baseball
Routes & Outposts
2011: Baltimore | Joshuah Bearman
1902: London | John Masefield
c. 150: China | Ma Duanlin
c. 1504: Atlas Mountains | Amin Maalouf
c. 1573: Augsburg | Fugger Newsletters
1838: Hugli River | Amitav Ghosh
1635: Edo | Sakoku Edict
1969: Toronto | Jane Jacobs
1949: Paris | Fernand Braudel
1854: Marea | Ferdinand de Lesseps
c. 300: Niya | Shanshan Tablet
1793: Beijing | Qianlong
1846: Fort Laramie | Francis Parkman
c. 1849: Platte River | Curly Chief
c. 50: Red Sea | Periplus of the Erythraean Sea
1788: Plymouth | William Elford
c. 1915: Trobriand Islands | Marcel Mauss
c. 1690: London | Dudley North
c. 1728: England | Voltaire
1937: Dalmatia | Rebecca West
66 bc: Rome | Cicero
1544: Junquinilau | Fernão Mendes Pinto
1382: Florence | Iris Origo
1979: New York City | June Nash
c. 120: Rome | Juvenal
Markets & Rackets
c. 2006: Hong Kong | Ling Ma
1711: London | Joseph Addison
1903: Chicago | Frank Norris
1817: Gloucestershire | David Ricardo
c. 1670: Hamburg | Glückel of Hameln
2009: London | David Graeber
c. 1940: Paris | Walter Benjamin
1494: Florence | Luca Pacioli
c. 1915: Bahia | Jorge Amado
c. 77: Misenum | Pliny the Elder
1842: Russia | Nikolai Gogol
1968: Lawrence, KS | Robert F. Kennedy
1405: France | Christine de Pisan
1914: Nigeria | Northcote W. Thomas
c. 330 bc: Athens | Aristotle
c. 1800: New York City | Luc Sante
c. 1800: Bermuda | Mary Prince
c. 1870: San Francisco | Herbert Asbury
1859: Edo | Fukuzawa Yukichi
1945: Germany | Richard A. Radford
47: Tebtunis | Association of Salt Merchants
1873: Paris | Émile Zola
1519: Tenochtitlán | Bernal Díaz del Castillo
1888: London | Friedrich Engels
c. 330 bc: Teng | Mencius