I'm certain you've heard that customs policy of Donald Trump It's a disaster. Almost all economists agree that if Trump announced and temporarily suspended duties entered into force, they would not only lead to an increase in prices for US consumers but endanger to recession.
But the more interesting question is: why is this kind of fight against free-market globalisation — and this is, after all, any opposition to this globalisation — disastrous?
From a free marketplace point of view, the answer is simple. Trump opposes 1 of the basic ideas behind the free movement of goods and services. And here are the results! However, things are more complicated from the left. After all, the left has raised a fewer objections to the globalisation we have faced in the past fewer decades.
Why, then, from a left-wing point of view is Trump’s cure even worse than the disease? And what, then, would be the sensible consequence to the shortcomings of free marketplace globalisation?
As usual, American imperialism
Left-wing economists have repeatedly written about customs policy and the benefits that can flow from it. So they should appear to applaud Trump – as Rafał Woś or Remigius Okraska did recently, who see into his policy of leaving neoliberal globalisation. However, it is adequate to go beyond general slogans to see how much what Trump is doing is different from what these economists recommended.
One of the harshest attacks on neoliberal globalisation was launched by Korean economist Ha-Joon Chang in the book The Evil Samaritans.
Chang argues that the richest countries in the planet act like hypocrites. erstwhile they modernised their economies and started their way to wealth, they applied "a mixture of customs protection, subsidies and regulations". erstwhile they were successful, however, they began imposing a policy of deregulation and abolishing duties on another countries due to the fact that specified solutions were beneficial to large companies in these rich countries. And they did this mainly through the global Monetary Fund and the planet Bank – that is, the institutions they had control over.
Joseph Stiglitz, an American economist who worked for the planet Bank, uses a akin argument. In the book Globalisation He ironed that both the planet Bank and the IMF had become "new missionary institutions" that shaped the economy of mediocre countries so as to respond to rich countries.
The work abolition order was part of this missionary activity. Note, however, that neither Chang nor Stiglitz make a simple thesis "customs – good, no duties – bad". Their argument is more nuanced. In particular, Chang emphasises that tariffs can be a good solution for economies that are just developing and request to defend their companies and markets from much stronger competition from rich countries. And that is not a universal advice – everything depends on which sector of the economy we are talking about.
When the world's richest country imposes duties on everything and everyone, it has small to do with Chang and Stiglitz's recommendations. And that is the situation we are dealing with in the case of the United States under Trump. In a sense Trump continues the globalization trend described by both economists. The large imperial power one more time imposes on the remainder of the world, including much poorer countries, its playing conditions. Without consultation, without even trying to keep the appearance of partnership.
Positive side effect?
All right, Trump's not gonna aid the world, but possibly in the long run, the U.S. citizens will benefit? Because, for example, tariffs will lead to reindustrialisation? In addition, they will have a affirmative side effect, due to the fact that they will force a akin approach on many another countries, even if that is not Trump's motivation.
Even with specified explanation there are serious problems. Again, as many economists point out, including Chang in 1 recent interviews, just throwing duties to the right and left will not change much. A broader plan is needed, for example public investment in the construction of factories and supply chains, and that is missing in Trump's policy.
Most importantly, from the left-wing perspective, Trump does not address the root of the problem at all. Good Rune Møller Stahl put it, Copenhagen Business School economist: "For the left, the key problem in trade policy is not the movement of goods across borders but the unlimited mobility of capital".
The problem is not globalisation as such, but how uneven the benefits of globalisation are. besides much money flows towards a fistful of billionaires and the largest companies. This is not so much due to the deficiency of duties as to the anticipation Tax havens for profit. large corporations and the wealthiest citizens avoid paying taxes where they actually make their income. alternatively of feeding local budgets and supporting social development, money leaks beyond borders, frequently to places where taxation is symbolic.
Two more phenomena can be added to this. The first is the weakening position of trade unions and a clear decrease in the bargaining power of employees. This means that even if any part of the manufacture returns to the country, it will not automatically translate into higher wages or better working conditions.
The second negative phenomenon is the systematic dismantling of public services through their privatisation and outsourcing. alternatively of developing and strengthening publically available health, education and infrastructure systems, the state is increasingly giving these tasks to private operators. As a result, society loses control of key areas of life, and access to many services becomes increasingly dependent on portfolio wealth.
Left-wing alternatives
What, then, could the Left offer as an alternate to Trump's duties? There are any suggestions on the table.
The closest effective implementation is to establish global standards for minimum taxation. A fewer years ago, Biden's administration proposed Minimum corporate taxto reduce taxation avoidance by large companies. The point is that in no country this taxation is little than 15%. Many countries (including The full European Union) signed the agreement, but the problem proved to be... United States. Trump, after taking over the presidency, announced that his country was withdrawing from the agreement.
But the thought itself is good. Or rather, like emphasises Joseph Stiglitz, for example, is simply a tiny step in the right direction. due to the fact that the rate of 15% is inactive besides low. If it becomes a global standard, it will lose poorer countries, which trust more on corporate taxes than rich countries.
On a akin basis, a global minimum taxation on billionaire assets is discussed. The subject was discussed, among another things, at the G20 gathering in Rio de Janeiro.
There are besides more creative ideas of taxing large capital. 1 of the most interesting was late presented by French economist Gabriel Zucman. He calls his thought "interposition protectionism". The name isn't kidnapping, but the thought itself is interesting.
The point is that the countries where global corporations sale products can impose their own taxes on abroad companies and their owners if they pay you for low taxes in their countries.
Here. example of Zucman himself:
"Let us imagine that Tesla does not pay income taxation or coal taxation in the US, but 5% of its sales are achieved in France. The French taxation office would then calculate how much Tesla should pay in the U.S. if French taxation law was in force there – all the data needed for this calculation are available – and would charge 5% of this amount. Similarly, France would impose a taxation on Elon Musk in proportion to that part of his property which comes from France (which, since his luck is mainly based on Tesla's shares, can be estimated at about 5%)".
This approach is "extratorial" – the country imposes any of its rules on abroad entities in exchange for access to its market. Zucman believes that specified a policy could effectively reduce unfair taxation competition, expanding inequality and climate damage, as countries would no longer have reason to attract companies with low taxes. alternatively of a "race to the bottom", a "race to the top" would appear.
The advantage of Zucman's thought is that even a single country with a large adequate marketplace can start applying specified solutions without waiting for the full European Union.
Criticism is not enough.
Zucman's proposal can be discussed in detail, but he's right about 1 thing. Left can't be limited to just criticizing Trump. This part of the occupation is successfully done by liberals.
Trump's chaotic moves, which, on average, all fewer days announce and cancel fresh duties, dramatically change the global economy. Even if the current globalisation model works – and in many ways it does not – it will inactive be hard to return to it after fresh US actions.
Italian economist Mariana Mazzucato rightly notes that progressive energy to change the planet economy frequently flows from confederate countries specified as Brazil. If the United States failed as an ally, then should the European Union look for opportunities to build alliances and make a fresh order?
A common taxation policy against American corporate giants, in the kind proposed by Zucman, would be a good first step. The French economist did not accidentally take the example of Musk and Tesla. He knows that most countries see an American billionaire as an example of pathologies produced by excessive concentration of wealth.
Probably haven't been this good a climate to hit billions and corporations. The left should usage it.
