Trade Wars, Currency Wars, Greatest Depression

Unlike the 2008 global financial crisis, which was mostly a large negative aggregate demand shock, the next recession is likely to be caused by permanent negative supply shocks from the Sino-American trade and technology war. And trying to undo the damage through never-ending monetary and fiscal stimulus will not be an option. said professor Roubini in a recent article . Recovery from the current US dilemma requires a sound Industrial Policy. Patriotic business leaders are pointing to it: a policy that supports all stakeholders in the US domestic economy - corporate shareholders, workers, consumers and American society. US multinationals invest US capital and US technology in Chinese operations and employ Chinese workers, leaving American workers bereft and the US government without sufficient tax revenues. All the above problems need to be resolved through a sound/enforceable US Industrial Policy. But this is capitalism in a liberal democracy. Businesses only consider maximizing shareholder value. This means lowering the cost as much as possible, and if outsourcing to Chinese factories makes the most sense, it must be the correct decision. Businesses have no social conscience. They do not consider social consequences in the aggregate. This is the model that the "American Values" as espoused by the Republican party identifies with. Anything else is called socialism, which needs to be eradicated like an epidemic. This is the ideological difference between America and China. One of Trump's biggest grievances is the state directed economy in China. State owned businesses must consider social consequences when making their business decisions. This is anathema to American values. Trump believes this gives Chinese businesses an unfair advantage. America can also adopt such policies too if they think it is advantageous, but instead, they want China to adopt the American values, which would soon lead to social instability. thank you ...

















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