Globalism and resulting populism leading to disaster?

[touchring]

It is said that trade will prevent wars, but in the long run, the opposite may in fact be true.

Unlike what MSM likes to portends, globalism increases inequality in both exporter and importer countries. Yes, "importer countries".

As populism rises, importer countries impose trade tariffs and sanctions. Exporter countries become what I term "capitalistic autocracy" or worst, military dictatorship, also the result of populism. Extrapolate the trends and the result will be unthinkable.

The current world order is unworkable and broken.

[dcarrigg]

Re: Globalism and resulting populism leading to disaster?

I agree with you completely. Trade prevented wars after WWII. Trade caused WWI. I don't think the correlation between trade and war holds up. But I do think war tends to be more likely just after a peak or valley on the trade graph.

[dcarrigg]

Re: Globalism and resulting populism leading to disaster?

I guess what I'd add is that zeniths and nadirs in trade tend to correspond with the end of a long period of relative gains for one major upstart player, and relative losses for the incumbent hegemon. It corresponds with the rise and fall of empires. But also with the end of unstable peace states during transitions. Trade tells a story. But it doesn't always have a happy ending.

[touchring]

Re: Globalism and resulting populism leading to disaster?

I agree with you completely. Trade prevented wars after WWII. Trade caused WWI. I don't think the correlation between trade and war holds up. But I do think war tends to be more likely just after a peak or valley on the trade graph.

I fear we have reached the stage of no turning back once military dictatorships are formed in countries with powerful military. Just like the military dictator cannot turn back and retire - in the best case scenario, the only retirement is in a prison.

Can Hitler retire?

[dcarrigg]

Re: Globalism and resulting populism leading to disaster?

No. He can't. Franco can. Or at least he can die in old age. But it's the exception, not the rule. The far right is rising worldwide simultaneously with Communist China. And the President of the USA is busy trying to rekindle the civil war from 150 years ago. And most of her citizens are content with a temporary stock market bump off a massive fiscal stimulus via tax cut near a market top. Something wicked this way comes...I said it before, but I really believe it. I'm no EJ at timing. Lord knows and so do all of you. But I've rarely been wrong on general trends. There's still time to change the road we're on. But not much.

Then again, the last time Republicans had this much power in the US was 1928. But FDR was more of a happy accident than a foregone conclusion. Interest rates are going up. All assets are at record levels. Net worth of people under 40 is at an inflation adjusted record low. These are not the kind of demographics that portent stability.

[touchring]

Re: Globalism and resulting populism leading to disaster?

These are not the kind of demographics that portent stability.

AI and automation is going to be a massive disruptor moving forward. The middle class is going to be deciminated. This is going to be a major problem for countries that depend on a happy middle class for stability.

[thriftyandboringinohio]

Re: Globalism and resulting populism leading to disaster?

AI and automation is going to be a massive disruptor moving forward. The middle class is going to be deciminated. This is going to be a major problem for countries that depend on a happy middle class for stability.

I resist thinking in these gloomy ways.
There is enough productive capacity in the world today to give everyone access to decent food, shelter, clothing and medical care.
No nation needs to drive its middle class into abject poverty and suffer the resulting anger and violence, death and destruction.

This isn't a crisis to overwhelm us; it's a problem that needs to be managed.

The smartest two percent of people in the world today is an army of more than 150 million extraordinarily intelligent people.
That's about a million fiercely smart people for every single nation on earth
If they work the problem it can be solved.

[dcarrigg]

Re: Globalism and resulting populism leading to disaster?

AI and automation is going to be a massive disruptor moving forward. The middle class is going to be deciminated. This is going to be a major problem for countries that depend on a happy middle class for stability.

I'm less worried about that, to be honest. AI is meaningless to me, just another buzz word like "the cloud." Things that could be cheaply computerized generally already have been. Robots still suck at almost everything. "Self-driving" is mostly an overly-expensive luxury gimmick. LIDAR will not get cheap like transistors.

The massive disruption I'd worry more about is everyone waking up tomorrow and realizing the emperor has no clothes and Uber's not worth a trillion dollars, or much of anything, really, and no kids under 25 use facebook anymore, and Amazon's retail market share's still smaller than Walmart's even with whole foods, and the stock market run-up just has all of them wasting incredible amounts of money chasing nonsense ideas and buzzwords rather than bringing real tangible products to market on real commercial timescales. Theranos was only the canary.

[jk]

Re: Globalism and resulting populism leading to disaster?

---

half of all so-called investment grade paper is one step above junk. let the economy slow down and you're going to see a debacle in the corporate bond market as pensions and mutual funds mandated to hold only investment grade bonds are forced to sell, skyrocketing rates for entities trying to roll over their debt. you're going to see a lot of corporate bankruptcies as servicing the debt becomes unsustainable for many borrowers.

[dcarrigg]

Re: Globalism and resulting populism leading to disaster?

half of all so-called investment grade paper is one step above junk. let the economy slow down and you're going to see a debacle in the corporate bond market, and you're going to see a lot of corporate bankruptcies as servicing the debt becomes unsustainable for many borrowers.

Yup...totally predictable disaster everyone looking has seen coming for the last 5 years or so. Unclear when. But it has been set up to fall for a while now. Gross leverage is at record levels. And here was the picture from last summer. Autumn hasn't changed it too much. We saw Turkey & other EMs pop a bit due to currency risk with dollar-denominated non-financial corporate debt. And it seems that EMs may have substantial off-the-books debts to China with unknown terms and conditions. Money's still flowing into the US and profits are doing pretty well. But money's not getting cheaper. 10-year treasures are already only yielding maybe 0.75% or so less than corporates. If the Fed hikes a couple more times, I suspect it can't mean good things for that market.

[bpr]

Re: Globalism and resulting populism leading to disaster?

I resist thinking in these gloomy ways.
There is enough productive capacity in the world today to give everyone access to decent food, shelter, clothing and medical care.
No nation needs to drive its middle class into abject poverty and suffer the resulting anger and violence, death and destruction.

This isn't a crisis to overwhelm us; it's a problem that needs to be managed.

The smartest two percent of people in the world today is an army of more than 150 million extraordinarily intelligent people.
That's about a million fiercely smart people for every single nation on earth
If they work the problem it can be solved.

I wish we could all have this attitude.

There is enough productive capacity in the world today to give everyone access to decent food, shelter, clothing and medical care.
No nation needs to drive its middle class into abject poverty and suffer the resulting anger and violence, death and destruction.

I agree 100%, but it's not a question of capacity or needs... it's a matter of will. Looking around, I don't see the will. All I see is angry people who think that all the other angry people are stealing from them, and rewarding the politicians that exploit their fear.

[thriftyandboringinohio]

Re: Globalism and resulting populism leading to disaster?

...All I see is angry people who think that all the other angry people are stealing from them, and rewarding the politicians that exploit their fear.

Bingo.
Anger comes from fear. Human beings, like all successful animals, are hardwired to be "wary" - easily frightened.
Our amygdala response burns negative associations into our memory about things that frighten us.
Long after we've forgotten the facts and details we retain bad feelings toward the object of the fear.

A whole industry of radio hosts has discovered that scaring people keeps them coming back and makes them rich.
Politicians have come to understand we respond most strongly when their ads frighten us.
Industries have realized they can increase profits by using fear to get their preferred policies and make more money.

A paraphrase of Voltaire has him warning us:

"Those who can make you believe absurdities, can make you commit atrocities".

The easiest way to make people believe an absurdity is through fear. I hope scoundrels don't frighten our societies into destroying the middle class just to make a quick personal profit. If they try hard enough to to do it they might well succeed.

[touchring]

Re: Globalism and resulting populism leading to disaster?

I resist thinking in these gloomy ways.
There is enough productive capacity in the world today to give everyone access to decent food, shelter, clothing and medical care.
No nation needs to drive its middle class into abject poverty and suffer the resulting anger and violence, death and destruction.

There is not enough capacity. Perhaps living in the US with all the excesses, you would think there is enough capacity but in reality, there isn't enough resources for everyone in the world to even achieve a Greek standard of living.

You could own the printing press, but if there isn't enough resources, it will lead to inflation.

China is presently either the largest or second largest producers of almost every metal - https://en.wikipedia.org/wiki/Lists_...ral_production

This got to end eventually because mining is very damaging to the environment so when the day comes, with demand rising at the same time as supply tapers off, prices will sky rocket. Inflation is guaranteed. And since inflation will eventually be inevitable, why not just make it happen now, and at the same time make a bit of money from tariffs?

Fact 1: China is not going to sell cheaply to the US forever, as soon as China has obtained the technology and the consumer economy they want, they can refuse to sell to the US.

Fact 2: China is not going to continue mining and selling metals cheaply, without regards to the environment and health costs.

Whether you like it or not, inflation and scarcity is coming.

[thriftyandboringinohio]

Re: Globalism and resulting populism leading to disaster?

There is not enough capacity. Perhaps living in the US with all the excesses, you would think there is enough capacity but in reality, there isn't enough resources for everyone in the world to even achieve a Greek standard of living.

You could own the printing press, but if there isn't enough resources, it will lead to inflation.

China is presently either the largest or second largest producers of almost every metal - https://en.wikipedia.org/wiki/Lists_...ral_production

This got to end eventually because mining is very damaging to the environment so when the day comes, with demand rising at the same time as supply tapers off, prices will sky rocket. Inflation is guaranteed. And since inflation will eventually be inevitable, why not just make it happen now, and at the same time make a bit of money from tariffs?

Fact 1: China is not going to sell cheaply to the US forever, as soon as China has obtained the technology and the consumer economy they want, they can refuse to sell to the US.

Fact 2: China is not going to continue mining and selling metals cheaply, without regards to the environment and health costs.

Whether you like it or not, inflation and scarcity is coming.

Thanks touchring, that's a pretty lucid and compelling reply.

[dcarrigg]

Re: Globalism and resulting populism leading to disaster?

The other fact is Healthy China 2020 in the 13th 5-year-plan requires a lot of health expenditure. They're going for universal 80% cost coverage by the end of the year. Plan is to increase the number of public hospital beds by 50% to 6 in 1k and triple the number of private hospital beds to 1.5 in 1k by 2020. That would put them in line with France or Australia and significantly ahead of the USA. Then they're planning on re-doing all the nurse and doctor ranks to make the training more rigorous. They're also planning on making a single national health database with universal expanded state insurance coverage by the end of 2020. It's going to cost a pretty penny. To the state will start realizing a lot more of the costs of the environmental externalities in the form of health bills pretty soon if they don't do something about it.

No disagreement, just an obvious fact of the plan.