Will Today's Global Trade Wars Lead to World War III?

[Thailandnotes]

Interesting history/current events
https://reason.com/2019/04/04/will-t...al-trade-wars/

[vt]

Re: Will Today's Global Trade Wars Lead to World War III?

The plan all along had been for Japan devalue first, then Europe. China would do whatever it wanted,

The U.S. was supposed to follow Europe. Then the "7 Directors" threw out the script.

War? Any nation with a economic crisis has to find a villain. The leader has to or there will not a job or a life in most countries.

EJ said all this 5 years ago or so. This script has not changed.

[Mega]

Re: Will Today's Global Trade Wars Lead to World War III?

................but no inflation?
Deflation because of man power shortage?
Mike

[vt]

Re: Will Today's Global Trade Wars Lead to World War III?

Deflation because of technology and global demographics, including China in a few years.

[dcarrigg]

Re: Will Today's Global Trade Wars Lead to World War III?

Interesting history/current events
https://reason.com/2019/04/04/will-t...al-trade-wars/

Thanks for the article. It was good. Drezner is smart. Has me seriously wondering about the technology aspect of the grand narrative there. The internet buildout worldwide more or less is as complete as it's likely to get. Here was the picture from 5 years ago.




Given that diffusion has reached near the limit of economic capacity, and the pace of technological improvement has slowed markedly over this last decade compared to the decade before, one has to wonder about the parallels to the railroad or telephone build-out. Once you're pretty much at the end of the line, and it's about as good as it's going to get, then what?

I never put much faith into that whole 'democratic peace' or 'commercial peace' end of history stuff. One thing that always occurs to me is that maybe the direction of change in trade vectors is more relevant to security policy than the magnitude. The literature loves talking about 'levels of trade.' And world trade as a percentage of world product did peak in 1913 before plunging. But it's less discussed that the previous peak before the run-up from 1902 to 1913 was 1881.

So think about that: Trade accelerated through the long depression. Two decades of increased trade coupled with stagnation. Sound familiar?

So the First Boer War marks the end of global trade growth for 20 years or so, and it doesn't pick up again until after the Second Boer War. One would think the Suez would have made all that irrelevant, but no. Ditto with the Panama Canal opening in 1914.

Trade levels stayed below 1913 levels until 1974. 60 years of world trade being a smaller share of output than in the 19th century. What kicked it off? Loads say the Nixon Shock. But probably it had more to do with ISO standard intermodal containers coming out in 1970 and safety standards from the IMCO being established by 1972. Suddenly the world has standard shipping containers, and moving things gets easier and cheaper. Add in the proliferation of highways worldwide, and suddenly we've got a combo of rigs, cargo trains, and shipping that's interoperable with way less labor.

So this booms until 1981. Trade's share of output shrinks again through the 80s. By 1993, world trade was still below 1981 levels by share of output. Then China comes into play. Trade's share of economic output doubles in 15 years between 1993 and 2008. But the internet also enables a lot of this. The Great Recession follows. Trade plunges again. For the next decade, there's fluctuation, but the 2008 levels still haven't been reached. It has been bouncing around with low points in 2009 and 2016. But 2008 was the high point. And we're a decade on now.

One thing to note is that, like lots of markets, the falls tend to be faster than the run-ups. Might take 15 years to double, but 5 to cut in half. That happens between 1839 and 1842, 1860 and 1862, 1914 and 1922, & 1929 and 1935.

The slower run-ups are between 1842 and 1860, 1862 and 1914, and 1993 and 2008.

There were 2 fast run-ups between 1945 and 1951 and 1972 and 1980.

Other periods are stagnation.

The fast run-ups seem to be a combination of post-war rebound and container standards.

The fast-downturns seem to revolve around wars. The First Opium Wars? US Civil War, French-Mexican War, Italian Independence? WWI? WWII? Timing's pretty close.

The long, slow run-ups seem to be Victorian British Empire or China entering the world trade scene on the post-Soviet stage.

And the rest is stagnation.

I mean, when I break it down, there's not quite a world peace story written in the history of trade. At least not a clear one I can suss out. There seem to be war nadirs and post-war rebounds. And there's a couple technological stories to be told. But largely it looks like the ebb and flow of the rise and fall of empires.

[Mega]

Re: Will Today's Global Trade Wars Lead to World War III?

............so what happens next?

(12 months)

Oh Gold just hit $1500

[dcarrigg]

Re: Will Today's Global Trade Wars Lead to World War III?

I figure world trade has to drop as a % of output for 2019 once the figures come in. Probably as bad as 2016 but not as bad as 2009. More stagnation for the 2020s, I guess. We stumble into a recession in the next 12 months, which now I figure is fairly likely, and that drop gets exacerbated. The big, fast declines seem to mostly come around wars, so could be years of trade stagnation before something major that disrupts trade. I could see some major Asia-Pacific conflict chopping it down fast. I don't see any major new tech or empire on the horizon right now that could cause a boom. I guess maybe if you really believe in belt and road that's an outside possibility. But we're talking 30 years before it's complete. Always an off chance US makes major inroads in some new place in the world. But there's about to be some serious domestic demographic and economic reckonings by 2030 that I reckon will cause attention to turn inward. How the domestic issues are dealt with probably will dictate to a large extent whether there's another trade boom and period of US prosperity or a sharp downturn. There's still a lot of potential upside. But there's much that must be overcome to unleash it.

[Mega]

Re: Will Today's Global Trade Wars Lead to World War III?

Mean time

Pakistan v India

USA V China/Turkey/Iran etc

.........the Limey scum will be up to something as well