Scott Sumner  

Fifty years ago

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Fifty years ago, the Red Guards were rampaging through the streets of Beijing. Chairman Mao issued weird, over-the-top statements about the evils of American capitalism. Free markets were seen as exploitation, as a sort of winner-take-all. Meanwhile, the US was trying to promote the ideology of open markets, emphasizing that trade is mutually beneficial.

So how about today? The FT quotes one of Trump's top advisors:

Steve Bannon, the brains behind Donald Trump's nationalist economic agenda, added to tensions roiling the White House by pouring scorn on his colleagues, rubbishing US policy on North Korea and pressing for the administration to be "maniacally focused" on "economic war with China". . . .

Mr Bannon said US defence and security officials were "wetting themselves" as they urged a softer line on China in order to secure its help in curbing Pyongyang's nuclear missile programme. North Korea was a "sideshow" in the context of a winner-takes-all competition between the world's two largest economies. . . .

Mr Bannon claimed he was working to place anti-China hawks in key positions at the defence and state departments.

"We're at economic war with China," Mr Bannon said. "One of us is going to be a hegemon in 25 or 30 years and it's gonna be them if we go down this path.


And here's how the Chinese responded:

China's foreign ministry responded by saying that the China-US economic relationship was "mutually beneficial" and there could be "no winner from a trade war". It added: "We hope that people will not use 19th- and 20th-century perspectives and measures to address 21st-century problems."

PS. In his later years, Mao became somewhat mentally unstable. His pragmatic advisors tried to moderate his policies, but his instincts were with the radical advice he was getting from the "Gang of Four".

PPS. This post is about rhetoric, not policy.


Comments and Sharing






COMMENTS (15 to date)
Don Boudreaux writes:

On this very topic (and please forgive my self-promotion here).

Philo writes:

Although over the years it has ceded a lot of power to the President, surely Congress will still be able to prevent a trade war with China--thank heaven! So yes, the rhetoric is bad, but we have some grounds to expect the policy outcome to be less bad.

Scott Sumner writes:

Don, Good point.

Philo, I am pretty sure he has the power to start a trade war, but I don't think it will actually happen.

Tim Worstall writes:

Spooky, the last thing I did just before reading this was post pretty much h same quotes - from The Times version of the article - making much the same point.

TMC writes:

Tim, I enjoy your writing. Where do you post?

Don, good (Palmer)quote about not killing your customers.

Tim Worstall writes:

Forbes, been running a thing there for years.

Rich Berger writes:

[Comment removed. Please consult our comment policies and check your email for explanation.--Econlib Ed.]

Eugine Nier writes:

Well, the people currently engaged in Maoist type violence and monument destruction, aren't the people Trump is supporting.

godfree Roberts writes:
Mao issued weird, over-the-top statements about the evils of American capitalism. Free markets were seen as exploitation, as a sort of winner-take-all.
Mao was right, obviously. The Chinese version of capitalism, on the other hand, has delivered immense benefits to the entire population, including 95% home ownership for even poor people and lower inequality than the US.
Mao became somewhat mentally unstable.
Blaoney. They old boy remained lucid to the end.
Thaomas writes:

If one is concerned about the fall in the US/China GDP ratio or some such measure of economic power in a "economic war" with China, why would one not want to ramp up immigration?

Lorenzo from Oz writes:

Scott, as someone interested in Chinese history, you might like this:
https://mobile.twitter.com/tombschrader/status/898372486798204928/photo/1

Scott Sumner writes:

Tim, Great minds . . .

Thaomas, Especially immigration from China!

Vivian Darkbloom writes:

Is this China's idea of 21st century trade? Apparently, the free exchange of ideas is not "mutually beneficial". And, who is the winner from this?

http://www.reuters.com/article/us-china-censorship-journal-idUSKCN1B103J

PS. This is about rhetoric *and* policy.

AlecFahrin writes:

Ideas are not trade.
Maybe to the Communist Party.
No one.

Why do some people think that completely unrelated social issues are somehow relevant to an economic discussion?

AlecFahrin writes:

Ideas are not trade.
Maybe to the Communist Party.
No one.

Why do some people think that completely unrelated social issues are somehow relevant to an economic discussion?

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