{"id":50839,"date":"2020-01-24T12:41:46","date_gmt":"2020-01-24T20:41:46","guid":{"rendered":"https:\/\/world.edu\/?p=50839"},"modified":"2020-01-24T12:41:46","modified_gmt":"2020-01-24T20:41:46","slug":"slow-minded-and-bewildered-donald-trump-builds-barriers-to-peace-and-prosperity","status":"publish","type":"post","link":"https:\/\/world.edu\/slow-minded-and-bewildered-donald-trump-builds-barriers-to-peace-and-prosperity\/","title":{"rendered":"\u2018Slow-minded and bewildered\u2019: Donald Trump builds barriers to peace and prosperity"},"content":{"rendered":"

\"\"<\/p>\n

The US president \u201chad no plan, no scheme, no constructive ideas whatever\u201d, according to one of the world\u2019s most influential economists.<\/p>\n

He was \u201cin many respects, perhaps inevitably, ill-informed\u201d. He was \u201cslow-minded and bewildered\u201d, and failed to remedy these defects by seeking advice. He gathered around him businessmen, \u201cinexperienced in public affairs\u201d and \u201conly called in irregularly\u201d.<\/p>\n

This assessment was written a century ago, in 1919, by the up-and-coming economist John Maynard Keynes.<\/p>\n

The president was Woodrow Wilson, whom Keynes criticised for his inability to influence Europe\u2019s post-first world war settlement in a way more likely to lead to peace and prosperity.<\/p>\n

A century later the United States has another president out of his depth in global affairs. Wilson, at least, was a \u201cgenerously intentioned\u201d man. What would Keynes make of Donald Trump, whose policies are driven by a sense of entitlement and fear of being played for a sucker?<\/p>\n

This week, at the World Economic Forum in Davos, Trump flagged new fronts in his dangerous campaign of economic nationalism. He reaffirmed his intention to reshape the World Trade Organization, which\u00a0he said<\/a>\u00a0been \u201cvery unfair to the United States for many, many years\u201d.<\/p>\n

He fretted about the \u201ctremendous advantages\u201d given to China and India. He threatened tariffs on European cars if the European Union didn\u2019t agree to a \u201cfair\u201d free-trade deal.<\/p>\n

The barrier-besotted president is pretty much everything Keynes warned against as ruinous to the prospects of a lasting peace.<\/p>\n

A tale of two presidents<\/strong><\/h4>\n

Keynes had observed Wilson\u00a0at the talks in Paris<\/a>\u00a0to conclude the Treaty of Versailles, which set out the detail of terms and conditions following Germany\u2019s surrender (on November 11 1918) to end the war.<\/p>\n

Wilson had proposed 14 points for a \u201cjust and stable peace\u201d but proved completely ineffectual at the talks. The result was a treaty with terms so punitive for Germany they arguably created the conditions for Adolf Hitler to come to power, and thus led to the second world war.<\/p>\n

Keynes\u2019s disquiet with the treaty led him to write the book\u00a0The Economic Consequences of the Peace<\/a>.<\/p>\n

Wilson\u2019s great failure was his inability to prevent punitive action. Trump\u2019s is his love of punitive action. If his default stance in international diplomacy was to be summed up in a three-word slogan, it would be \u201cMake Them Pay\u201d.<\/p>\n

In the longer term his administration\u2019s intransigence on climate change may well prove Trump\u2019s worst policy legacy to the world. But right now he is doing most damage through bringing back tariffs, particularly in the trade war started with China.<\/p>\n

Trump has claimed (more than a hundred times in 2019,\u00a0by one count<\/a>) that he has made China pay by imposing tariffs on Chinese exports to the US. The truth, of course, is that US import tariffs \u201cwere almost completely passed through into US domestic prices<\/a>\u201d. China pays through its goods being less competitive.<\/p>\n

Trade war costs<\/strong><\/h4>\n

Trump has bragged just as loudly about winning the peace. A week ago he declared a \u201cphase one<\/a>\u201d trade deal as \u201cthe biggest deal anybody has ever seen<\/a>\u201d.<\/p>\n

But really all this agreement does is reverse some of the harmful actions the US has taken. It has been aptly called a \u201cpartial and defective<\/a>\u201d truce.<\/p>\n

This week the International Monetary Fund (IMF) updated\u00a0modelling first published in October 2019<\/a>\u00a0estimating the damage the US-China trade war will do in 2020.<\/p>\n

Its initial modelling estimated the tit-for-tat tariffs would reduce the level of global GDP in 2020 by 0.8 percentage points. Trump\u2019s \u201cbiggest deal anybody has ever seen\u201d will\u00a0reduce that harm, but by just 0.3 percentage points<\/a>, meaning world growth will be 3.3%, rather than 3.8% in 2020. And that\u2019s only, says IMF chief economist Gita Gopinath, if the deal proves durable.<\/p>\n

The IMF\u2019s October 2019 modelling included a breakdown of how much various economies would suffer in 2020 from the trade war. It estimated China\u2019s real GDP would be 2 percentage points lower than otherwise, with the US down 0.6 percentage points. Europe and Japan would lose about 0.5 percentage points.<\/p>\n

\"\"<\/p>\n

China\u2019s economy is growing at three times the rate of the US \u2013 an estimated\u00a06% compared with 2%<\/a>\u00a0\u2013 so the hit is almost equal. In terms of lost GDP per capita \u2013 a proxy measure for how much the tariffs cost individuals on average \u2013 the cost is about US$400 a year for both US and Chinese citizens.<\/p>\n

Given China\u2019s median income is well below that of the US, that forgone extra income hurts more in China \u2013 something fitting the Trumpian narrative that the trade war is making China pay more.<\/p>\n

But the lesson of history is that punitive actions come back to bite. As Keynes so eloquently\u00a0wrote<\/a>\u00a0a century ago, \u201cthe prosperity and happiness of one country promotes that of others\u201d.<\/p>\n

Crucial to peace and prosperity, Keynes said, was free trade, which he hoped could mitigate the adverse \u201cnew political frontiers now created between greedy, jealous, immature, and economically incomplete nationalist States\u201d.<\/p>\n

Wilson aspired but failed to replace a world order based on conflict between great powers with one based on rules and reason. Trump, by contrast, seems to prefer conflict over rules and reason.<\/p>\n

A punitive approach to international economic relations failed a century ago. We have good reason to fear it now.<\/p>\n

Author Bio: <\/strong>John Hawkins is an Assistant Professor, School of Politics, Economics and Society at the University of Canberra<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

The US president \u201chad no plan, no scheme, no constructive ideas whatever\u201d, according to one of the world\u2019s most influential economists. He was \u201cin many respects, perhaps inevitably, ill-informed\u201d. He was \u201cslow-minded and bewildered\u201d, and failed to remedy these defects by seeking advice. He gathered around him businessmen, \u201cinexperienced in public affairs\u201d and \u201conly called […]\n… learn more→<\/a><\/p>","protected":false},"author":33,"featured_media":50840,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[3],"tags":[8188],"coauthors":[],"class_list":["post-50839","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-politics","tag-economics-3"],"acf":[],"yoast_head":"\n\u2018Slow-minded and bewildered\u2019: Donald Trump builds barriers to peace and prosperity - World leading higher education information and services<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/world.edu\/slow-minded-and-bewildered-donald-trump-builds-barriers-to-peace-and-prosperity\/\" class=\"yoast-seo-meta-tag\" \/>\n<meta property=\"og:locale\" content=\"en_US\" class=\"yoast-seo-meta-tag\" \/>\n<meta property=\"og:type\" content=\"article\" class=\"yoast-seo-meta-tag\" \/>\n<meta property=\"og:title\" content=\"\u2018Slow-minded and bewildered\u2019: Donald Trump builds barriers to peace and prosperity - World leading higher education information and services\" class=\"yoast-seo-meta-tag\" \/>\n<meta property=\"og:description\" content=\"The US president \u201chad no plan, no scheme, no constructive ideas whatever\u201d, according to one of the world\u2019s most influential economists. 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