Jack Ma: 'When trade stops, sometimes the war starts'.

[touchring]

I've warned about this for many years. Now from the horse's mouth.

The autocratic capitalist system is inherently unstable. Unlike a democratic capitalist system, there is no possibility of a peaceful change over in political system, so in the event of an economic downturn, to prevent country from breaking apart, the only way is to create a conflict to divert the attention of the population and as an excuse to impose even greater controls. We've seen this happen with Russia, followed by Turkey.

Jack Ma sees this coming so he is packing up.

Alibaba founder Jack Ma has warned that President Donald Trump’s trade war with China could lead to military conflict.


“When trade stops, sometimes the war starts. So trade is the way to stop wars,” the Chinese billionaire entrepreneur warned Tuesday during the opening panel discussion at the World Trade Organization Public Forum in Geneva, South China Morning Post reported. “Trade is the way to build up trust,” he continued. “Trade is not the weapon to fight against each other.”


Ma, whose company became the second in Asia to be valued at more than $500 billion, suggested that Beijing and Washington should move toward cooperation instead of escalating the trade dispute.

https://www.newsweek.com/trump-trade...-warns-1149288

[thriftyandboringinohio]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

Mr. Ma is correct and we should take his advice seriously. But we are a long way from that point right now.

There is little chance China will lose much export trade. For some items like high value electronics or industrial electric motors the american people will just pay the new taxes and buy the Chinese goods anyway.
For others like more fungible bulk goods China will just sell the same amount to other countries and the global supply networks will adjust flows so every customer worldwide buys the same amount at the end of the day. Instead of the US buying Chinese bulk cotton directly it will instead buy cotton from India. Those customers who bought Indian cotton last year will instead buy the Chinese cotton next year. The net effect is zero.

We live in a globalized economy with overcapacity for most goods. Targeted tariffs just don't work very well under these circumstances.

[dcarrigg]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

Mr. Ma is correct and we should take his advice seriously. But we are a long way from that point right now.

There is little chance China will lose much export trade. For some items like high value electronics or industrial electric motors the american people will just pay the new taxes and buy the Chinese goods anyway.
For others like more fungible bulk goods China will just sell the same amount to other countries and the global supply networks will adjust flows so every customer worldwide buys the same amount at the end of the day. Instead of the US buying Chinese bulk cotton directly it will instead buy cotton from India. Those customers who bought Indian cotton last year will instead buy the Chinese cotton next year. The net effect is zero.

We live in a globalized economy with overcapacity for most goods. Targeted tariffs just don't work very well under these circumstances.

Maybe Uzbekistan as well as India. They punch way above their weight in cotton production. I figure odds are I'm the only nerd here who reads the fed register on the regular. But this one caught my eye a few months back.

[vt]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

It would help if the Chinese didn't try to steal technology:

https://www.bloomberg.com/news/featu...s?srnd=premium

China today is the perfect example of autocratic capitalism. The U.S. is democratic free markets. Elections still work.

[dcarrigg]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

It would help if the Chinese didn't try to steal technology:

https://www.bloomberg.com/news/featu...s?srnd=premium

China today is the perfect example of autocratic capitalism. The U.S. is democratic free markets. Elections still work.

The two are intertwined. A huge part of China's rise was US firms offshoring labor costs. The bosses didn't want to pay American wages. Now nearly all supply chains run through China.

I mean, imagine there's a country X. X is ruled by a single communist party. The X government owns 100% of all the finance, insurance, real estate, utilities, mining, energy, telecom, defense, transportation, heavy construction and heavy industry companies in the country. But X decides to let a few private retailers like KFCs open up and allow foreign light commercial goods manufacturers to set up plants. X uses its state industries to build out the supply chains to sustain them. Do the retail stores and commercial manufacturing plants make X a capitalist country? Do you think the leaders of X value property rights the same way leaders in capitalist countries do? Do you think X is not going dominate supply chain chokepoints? Do you think X is not going to use its banking power to manipulate currencies and any other markets it sees fit? Do you think X is not going to steal technology? Do you think X is not going to manufacture knock-offs and use that expertise to build competing national brands? Do you think X is not going to implant little spy ICs in commercial boards it manufactures for big capitalist national competitors?

X is China. It's all pretty obvious. But it's all totally enabled by "free markets" here at home. From that article:

One country in particular has an advantage executing this kind of attack: China, which by some estimates makes 75 percent of the world’s mobile phones and 90 percent of its PCs.

There you go. US can't build a commercial computers with nationally sourced parts in the next few years any more than it can send a man to the moon. Totally dismantled the capability at home. Like with tanks after WWI. Lots of other things too. All to make a fast buck. Helped them park an extra trillion or so into some shady Irish or Cayman Islands subsidiary. Hope it was worth it. I really do. Because I get the sinking feeling we're just scratching the surface. I'd honestly rather just have the Fed print a trillion and give it to them like Trump did with this tax deal if it would mean rebuilding national supply lines and employing Americans at higher wages. But instead we sold out a good chunk of security to hand them a trillion, then handed them another US-debt-financed trillion on top of it with no strings attached.

The lesson people took from WWII was that trade stopped before it, and war broke out. But I've been thinking more about WWI lately. It's true, trade slowed markedly going into WWII. But world trade reached a peak going into WWI that wouldn't be reached again until the mid 1970s. When trade peaks, sometimes the war starts too.

[touchring]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

China today is the perfect example of autocratic capitalism. The U.S. is democratic free markets. Elections still work.

Of course elections work. Just look at the example of Malaysia and Indonesia where there are elections, though not totally free, but they still worked.

[jk]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

i think the "trade war" is not about "fairer" trade. it's about disentangling supply chains, and creating new supply chains for u.s. multinationals, supply chains which do not flow, at all, through china. it's intended to promote the balkanization of the global economy.

[dcarrigg]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

i think the "trade war" is not about "fairer" trade. it's about disentangling supply chains, and creating new supply chains for u.s. multinationals, supply chains which do not flow, at all, through china. it's intended to promote the balkanization of the global economy.

I think the "trade war" is not about fairer trade nor about supply chains. I think it's more likely to be about moving Wilbur Ross higher on the Forbes list of the wealthiest men in America relative to his competition.

[touchring]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

I think the "trade war" is not about fairer trade nor about supply chains. I think it's more likely to be about moving Wilbur Ross higher on the Forbes list of the wealthiest men in America relative to his competition.

After seeing this new report - https://www.bloomberg.com/news/featu...-top-companies, I think the "trade war" phase is almost over.

What Trump or Wibur Ross does won't matter any more.

[jk]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

i think one of the most interesting aspects of that hardware hack is that it was amazon's due diligence that discovered it. apparently amazon looks into its equipment more thoroughly than the security and intelligence agencies.

[thriftyandboringinohio]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

After seeing this new report - https://www.bloomberg.com/news/featu...-top-companies, I think the "trade war" phase is almost over.

What Trump or Wibur Ross does won't matter any more.

I hope you are wrong. The last world war killed 90 million human beings. The next will be far worse, because weapons are far better.

[touchring]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

I hope you are wrong. The last world war killed 90 million human beings. The next will be far worse, because weapons are far better.

Don't think it will be a world war, as the US is still by far the strongest military power. Of course, if the US loses strength, then anything can happen.

My opinon is that the key to world peace is the US must remain economically and militarily powerful as the alternative "new world order" will be much worst - I think almost anyone will be able to see this.

[thriftyandboringinohio]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

Don't think it will be a world war, as the US is still by far the strongest military power. Of course, if the US loses strength, then anything can happen.

My opinon is that the key to world peace is the US must remain economically and militarily powerful as the alternative "new world order" will be much worst - I think almost anyone will be able to see this.

I see why you say this, touchring. But this state of affairs is not sustainable in the long term.
The USA is less than 5% of the total world population.
The other 95% percent of people need to learn how to work things out without the US yelling and knocking heads to keep things sorted.

[dcarrigg]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

Don't think it will be a world war, as the US is still by far the strongest military power.

I agree. Didn't intend to sound histrionic before. Just wanted to point out that the relationship between trade and war isn't always historically decreasing trade preceding the outbreak of war.

More likely we'll see some supply chain shuffling and a bit of ratcheting up of spy games and economic competition. China's a real intelligence player now. Beijing will soon overtake San Francisco in terms of raw venture capital. The US' dominance of the tech sector is eroding at a remarkable rate.

This all ties together with what I was saying earlier about losing young students and talent too. But it's more of a medium/long term thing. By 2030, it's quite likely that the US will be a net exporter of students and a second-tier VC hub. This doesn't speak much to economic matters between now and then. It's only to say that as far as rent, education, and healthcare costs rise, and as far as US capital stays mercenary and high-skilled immigration is made more difficult, we're actively choking off the talent development and attraction pipeline, and there's no border wall keeping capital flows from leaving. The increasing monopolization of the sector doesn't help. May need to simply invent a whole new capital and talent development system whole-cloth outside the existing venture system. Some sort of local equity bootstrapping movement in lower-cost localities around public universities might provide US tech a shot in the arm. But they'd have to find some sort of mechanism to maintain control, and the siren song of buyouts may be simply too strong to let anything grown that way mature. My local observation is that nascent firms born here can grow so far, but they either get strangled in the cradle or kidnapped by Californians before they hit middle school.

Why would any brilliant, hard-working, exceptional young person who can live anywhere want to live in a country in which nobel prize winners have to sell their prize to pay medical bills, unless it offers unparalleled access to capital? What happens when it can no longer offer that unparalleled access?

[touchring]

Re: Jack Ma: 'When trade stops, sometimes the war starts'.

I see why you say this, touchring. But this state of affairs is not sustainable in the long term.
The USA is less than 5% of the total world population.
The other 95% percent of people need to learn how to work things out without the US yelling and knocking heads to keep things sorted.

I don't mean the US should continue yelling and knocking heads, otherwise Clinton will be a better option - just look at what she and Obama did in the Middle East and Ukraine, spreading chaos wherever they go.

Rather, the US should maintain strategic and military dominance by playing each power against another in a "multi-polar" world.

Another reason why the US should remain powerful is because a declining US is in itself a major threat, not just to world peace but to American citizens.

An important point I wish to add is that when I say the US, I don't always mean the United States as a country alone but rather the coalition of countries bounded by similar heritage and history, and somewhat similar political system and ideology (although not always the case).

For obvious reasons, languages with similar common languages and heritage include Canada, Australia, New Zealand, the Philippines, Singapore, Malaysia, India, and the UK, 'vestiges' of the British empire, basically commonwealth states inherited by the US after the UK collapsed.

Even if they now hate each other, e.g. Trump vs Trudeau, but in time of chaos (not saying it will happen in the near future), all these countries will inevitably unite again because of history and geography.