Economics

لعبة التجارة العالمية

Apr 6, 2018 Mohamed A. El-Erian

كمبريدج ــ تشهد المواجهة التجارية بين الولايات المتحدة والصين تصعيدا واضحا. فبعد إطلاق دُفعة افتتاحية من التعريفات الباهظة على الصلب والألومنيوم، أصدرت الإدارة الأميركية خطة لفرض تعريفة جمركية بنسبة 25% على 1333 بندا من الواردات الصينية ــ بقيمة بلغت نحو 50 مليار دولار العام الماضي ــ لمعاقبة الصين على ما تعتبره عقودا من الزمن من سرقة الملكية الفكرية. وما كان من الصين إلا أن ردت بخطة تقضي بفرض رسوم بنسبة 25% على مجموعة من السلع الأميركية، والتي تعادل قيمتها نحو 50 مليار دولار أيضا. وفي الرد على ما أسماه "الانتقام غير العادل"، يُقال إن الرئيس الأميركي دونالد ترمب يدرس الآن مجموعة أخرى من التعريفات تغطي ما قيمته 100 مليار دولار أخرى من الواردات من الصين. والآن يندفع خبراء الاقتصاد ومحللو السوق في محاولة لتصور ما قد يأتي لاحقا.

قد يستسلم المرء لإغراء الاعتماد على التجربة التاريخية. ولكن نظرا للظروف الاقتصادية والسياسية والاجتماعية الغالبة اليوم فمن المرجح أن يكون التاريخ دليلا هزيلا. وتأتي رؤى أكثر نفعا من نظرية الألعاب، والتي قد تساعدنا في تحديد ما إذا كان هذا التبادل للتعريفات الجمركية ليرقى في نهاية المطاف إلى مواقف استراتيجية قد تُفضي إلى "لعبة أكثر تعاونية" (التجارة الأكثر حرية وعدالة)، أو يتطور إلى "لعبة غير تعاونية" أعرض نطاقا (حرب تجارية صريحة). الواقع أن الإجابة على هذا التساؤل سوف تخلف عواقب كبيرة على الآفاق الاقتصادية والسياسية وتوقعات السوق.

أدى التوسع السريع الذي شهدته التجارة في العقود الأخيرة إلى ظهور شبكة من أشكال الاعتماد المتبادل عبر الحدود في مجالات الإنتاج والاستهلاك. فالآن أصبح من الممكن أن تشمل سلاسل الإمداد عددا من الروابط الدولية المهمة لا يقل عن عدد الروابط المحلية، وتُلبى حصة كبيرة من الطلب الداخلي بالاستعانة بمنتجات يجري إنتاجها جزئيا أو كليا في الخارج. وبينما يعمل الإبداع التكنولوجي على تقليص الحواجز التي تحول دون دخول كل من المنتجين والمستهلكين، يُصبِح تكاثر هذه الروابط أكثر سهولة، مما يؤدي إلى تضخيم ما يشكل في الأساس بالفعل خليطا متشابكا من العلاقات وأشكال الاعتماد المتبادل العابرة للحدود.

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0 Comments on this paragraph, 31 Comments on this article

John Andrews Apr 13, 2018

We've never really experienced full global trade so the outcomes are really unknown. Logistics changes will create new kinds of outcomes with goods being produced much closer to where they are consumed, especially durables. It will be interesting to see how this plays out.
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Kent Jones Apr 8, 2018

Mr. El-Erian's game theory approach is appealing, but a darker outcome is possible, and based on recent Trump behavior, more likely. Just as Trump got a quick resolution to the steel issue with the Republic of Korea by concluding a voluntary export restraint agreement, this is a likely outcome with the US-China trade dispute. China will not cave in to Trump's bullying on "reciprocal tariffs," so a more "cooperative" solution will be sought. The quickest way for both sides to save face is for China and the US to negotiate "voluntary" export restraints to the US. The WTO outlawed export restraint twenty years ago, for the obvious reason that it allowed a "cooperative" resolution to trade disputes, but at the cost of restricted trade, value escalation in trade content, and cartel-like practices. US import-competing industries and Chinese exporters would all benefit, with a double-shafting of US consumers. Since Trump's protectionist assault on the world economy is likely to continue, look out for VER redux, and an undermining of open global trade.
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Barry Rosenfeld Apr 8, 2018

As usual, El-Erian provides thoughtful and stimulating ideas. However, whereas history provides examples of how people act, game theory provides examples of how they should act. Give me history lessons anytime.

Each and every action by China is aimed at providing for Chinese hegemony over as wide an area as possible; to paraphrase a much derided quote, "today China, tomorrow the world." The post-WWII period can be seen both as US and Soviet attempts to impose the same sort of framework on history, and the 21st century merely has substituted China for the Soviet Union.

Most of the comments below on the benefit and cost of trade miss the mark: the powerful devise the game and make the rules by which they are certain to win. For starters, capital is far more mobile than labour; globalization has ensured that restrictions on the international movement of capital have been removed, but those on the movement of labour are enforced. Why is capital welcome, but people are not? Cui bono?
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Chongnan Gao Apr 7, 2018

How to fix US? Do Trump Administration commit to free trade policy and collaboration?
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Michael Harrington Apr 6, 2018

This is well-argued while most of the counter-arguments seem to target the assumptions. "Socially responsible activities" seems to suggest some kind of welfare transfers, like UBI, but I would argue that the problem is one of the distributions of risk and reward. A global market economy rationalizes costs in order to grow, thus international labor costs are compressed to yield more profit in a competitive environment. Citizens must participate more on the profit-risk taking side of the production equation in order to receive an equitable share of the benefits of trade. This is a bit outside the box, but I don't see any other way without turning the next century into feudalism redux.
- stephan Edwards Apr 6, 2018
  
  An hourly worker making 10 - 15 dollars an hour is in a position to participate in the profit risk taking how? Thanks that is probably funniest statement I have read in the last year, I needed the laugh.
  - Michael Harrington Apr 6, 2018
    
    Brilliant. Humor always aids in imparting of wisdom to ignorance.
    
    First, let's not try to fit square pegs into round holes. Equity participation is ubiquitous in a capitalist economy, especially in the finance and tech sectors, though far from the dominant form of ownership and control. Wage labor, however, is the entry point into a capitalist economy, not it's endpoint. Most startup entrepreneurs work for sweat equity, so their wage is $0/hr. I hope you're not working for $10-15/hr., but given the comment above, let's assume that's your point of reference.
    
    Wage earners who make $15/hr. incur payroll taxes - deducted from their checks and also paid by their employers. That means with different tax policies we could transfer roughly 40-50% of their income to equity without reducing incomes. Second, employers earn profits off their employees or they wouldn't be hired. That's another 10-30% to work with? The problem is that workers under loss aversion often sign unfavorable labor contracts in order to shift risk. Nobody said you can earn more reward without taking more risk - so profit-sharing and equity pooling also assume risk-sharing of profit variability. (That risk associated with labor contracts is not eliminated, merely shifted to owners and marginal workers who get laid off.)
    
    I assume you're smart enough to know capitalism does not reward hard work, it rewards successful risk-taking. Unless you're at the table sharing risk and reward, you're on the menu. Now there are considerable structural challenges, the major one being the "heads we win, tails you lose" structure of modern finance and government. But that's another subject for another day.
    
    If you want to respond intelligently, go for it, but insults? Better give your reflection a break...;-)
    - stephan Edwards Apr 6, 2018
      
      Umm! You honestly believe there is one chance in what 100,000 that tax policies are going change. Isn't going to happen we both know this. The winners like things just the way the are. As for employers, well to coin a phrase Fintech is just a way to cheat. Profit in major corporations will happen right after Politicians give up Black Money in elections. Profits aren't shared they don't have to. Having been on the receiving end of a contract negotiation that went take the cut in pay or we move to Mexico we took the cut they went to Mexico anyway. Profit sharing isn't going no matter how bad a contract labor signs. The only way any of what you propose could is if the Government changes the rules. Guess what the Big Political Donors like the current rules just fine thus the rules won't change.
      - Michael Harrington Apr 6, 2018
        
        Anything solution is achievable if we understand the problem. Try to get an engineer in Silicon Valley to work without an equity kicker. It's a matter of conceptualization and a learning curve.
        
        The problem to be addressed is understanding how capitalist markets work and the role risk plays in determining distributive results. The political parties won't do this for us nor will WS. Power is used to transfer risks to the weak, but the weak must understand the futility of laborism and the false promises of social transfers.
        
        Any negotiation for equity and risk sharing involves the transfer of assets. If all workers got shares of stock in that deal plus the voting power of those shares, any profitability through outsourcing would be shared. Risk and return are assigned to asset ownership in our legal system. Labor needs to understand that. Labor leaders may not understand or have the incentives to care.
        
        stephan Edwards Apr 6, 2018
        
        Except Labor has NO leverage and capital is not interested in or willing to share under any terms. They DON'T have to. They write the rules and that isn't likely to change. It would take rewriting the rules or Labor making investment it isn't in a position to make.
        
        Unfortunately Mr. Harrington with respect the engineer in Silicon Valley has leverage over his employer. The man assembling Air Conditioners for Trane in Indiana does not, The former Coal Miner in West Virginia has even less and labor for the most part labor settles for crumbs for the average laborer it's all they are ever going to get. With all respect workers are easily replaceable and have NO NONE ZERO leverage in approximately 90% of all private sector jobs. And without Leverage Management doesn't have to concede shares, Profit sharing, or much of anything. The fact wages for the Blue Collar have been stagnant for nearly 40 years so tell you how much leverage labor has. And it isn't going to change. Unions are very very dead and management offers an individual even less then they offer a union.
        
        We may live in the same Country Mr. Harrington but we don't live in the same world. To compare Silicon Valley engineers with people working a Blue collar job in Akron Ohio or Indianapolis Indiana..... Well did I say different worlds?
        
        Michael Harrington Apr 6, 2018
        
        You're still framing this in terms of capitalists offering something out of the goodness of their hearts. Equity sharing comes with risk sharing and capitalists are always interested in sharing risks. The reason that equity plays such a big role in Silicon Valley or WS is that risks are high and capitalists and business owners need/want to share it. Debt leverage for start-ups is too onerous. And small business - the engine of job creation - is always interested in sharing risk. (Risk sharing is also appropriate for old-line mfg cos. - look at the UAW and GM. The problem is when these cos. turn into risk-averse enterprises.)
        
        So labor can't negotiate for profit sharing unless it assumes the risks of equity ownership - if the ship goes down we all go with it, or if it just springs a leak we all get a little wet but survive. But if we succeed, we all benefit as residual claimants. Because of how our legal system works, those risks must be embodied in ownership of financial or real assets and a rigorous defense of those ownership rights.
        
        In other words, we have to own enterprise equity in the global economy if we expect to share the benefits of capitalism's success. Wages are logically competed down in a global market with excess labor.
        
        stephan Edwards Apr 7, 2018
        
        Umm just a question what is labor supposed to offer? Money ? Labor don't got it, Working for less? Labor can't undercut China or Mexico? Labor has NO WAY of buying equity your talking about. Work for zero ? And tell my kids to eat what ? Has I said you and I are in the same country not the same world, Labor has NOTHING TO BARGAIN WITH that capital can't get else where cheaper. Your optimistic NOT realistic.
        
        Michael Harrington Apr 7, 2018
        
        Good question, simple answer: risk bearing, with a way to get paid for it. Under wage contracts they already bear the risk of a firm failure, they're just not compensated for it and have no way to claiming compensation after the fact. All other investors have claimancy over residual assets.
        
        If you put your future cash flow at risk today, you get paid for it. That's a simple law of finance. Capitalists know this. Workers put their faith in mgmt but under the wage contract they can take business risks that put workers at risk and yet, if successful, they capture the lion's share of the payoff.
        
        I didn't make this up - it works rather well in many cases - the confusion arises when people equate it with worker-owned and managed firms. In that case, workers violate the need for diversification of income. The ultimate purpose of equity participation is to accumulate a diversified portfolio of assets - like a 401k. That protects workers from specific risk associated with their skill set.
        
        We don't live in different worlds, we think about the problem differently. It's really all about risk management.
        
        stephan Edwards Apr 7, 2018
        
        Except Management isn't going to put it on on the table they don't have to and they don't want to. And Labor, Labor is for the most part not in a position to defer wages most are barely ends meet now. And has tax law isn't going to be written, companies won't cut profits and Labor isn't in position to take less money, What exactly is labor supposed to put on the table for Equity because at 12 - 15 dollars an hour the Bluecollars Globalization has sodomized aren't in a position to take less wages, They don't have any money to buy equity. So please Explain since I am SO STUPID, I can't figure it out. WHAT DOES LABOR PAY FOR THIS EQUITY WITH???, They can't take less money,. They can't make ends meet now, They can't buy it outright no money. So how do they pay for this equity you speak of?
        
        Michael Harrington Apr 7, 2018
        
        I already explained how labor creates far more value above what they are paid. They trade that value for equity ...and it’s put at risk.
        
        The mechanisms aren’t there in all cases, but with ESOP conversions employees borrow to buy equity and then pay it back from future profits. You have to start thinking outside the box of your own experience.
        
        stephan Edwards Apr 7, 2018
        
        Again you and I don't live in the same world. Employee stock ownership program an amusing if utterly irrelevant to current circumstances thought. There are less then 7000 in the entire country and that number is shrinking not growing. https://www.nceo.org/articles/statistical-profile-employee-ownership
        Secondly NO bank in recorded history is going to loan a blu collar earning 12-20 dollars to buy stock. Banks don't work that way it isn't profitable enough. And companies aren't going to subsidize it why should they its not in their interests. The mechanisms aren't there in almost every case. According to the US Census bureau in 2010 there were 27.9 MILLION corporations in the US. Of that 27.9 Million in 2010 7,138 offered ESOP plans. I would say that that was a pretty conclusive argument that calling for employee stock ownership is going nowhere. And since Blue collars don't have voting rights to their ESOP stock or 401K stock Management sodomizes them anyway. Because the employees are completely and Utterly irrelevant to 99.5% of all management and probably even less relevant to any company that is classed as a multinational. No labor has little stake in the system and that isn't likely to change. After all the winners write the rules and they like current circumstances just fine.
        
        Michael Harrington Apr 8, 2018
        
        Well, the problem here is that you are using empirical evidence to try to disprove theory that's already been proven. Of course, if science progressed that way we'd still be living in caves.
        
        For example, if one ESOP in history was successful, then all conceivable ESOPs are potentially successful. With the proper risk incentives provided by tax policy, lenders are more than willing to lend to employees as a group to buy equity.
        
        But let's not get lost in the weeds. What's more curious is why you persist in rejecting every possible solution to the class divide and accepting the inevitable degeneration to a feudal society? In an agricultural society, free people need to own and control land; in a capitalist society free people need to own and control capital; in an information society, free people need to own and control their data. We either find ways to do that or surrender our fates to the powers that do. I learned this at my father's knee and have accumulated capital ever since. Don't tell me it's not possible because I started with nothing except the idea.
        
        On the other hand, do you really believe governments of the world are going to fairly compensate labor, ever?
        
        stephan Edwards Apr 8, 2018
        
        Sure Its "Theoretically" possible Mr. Harrington in reality not gonna happen. Rewrite Tax Policyu what world are you living in? It isn't same one I do. When was the last time either party rewrote tax law to benefit anyone but capital? Any number of things are possible Mr. Harrington but I find it more ,likely little Green aliens will land on the capital mall then the politicians will rewrite the tax code as you describe. Has a man who lived through the breaking of the Unions an Labor. I can tell you that One. Both Government and Capital supported the breaking of Labor. Two. In order for your I admit "Theoretically" possible plan to be carried out the winners would have to support it. They like the current setup just fine. So they are NOT going to.
        Not everyone is in a position to accumulate capital Mr. Harrington. Many of us have trouble just making ends meet. Theories Mr. Harrington but a man who is living check to check deals in empirical reality or he finds himself on the street. Tax changes to do a single solitary thing for Labor aren't going to happen. You know it I know it. So your theory is merely pie in the sky and has no bearing on the world in which a hourly worker must survive.
        
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d clark Apr 6, 2018

"companies and others that benefit disproportionately from trade should intensify their pursuit of socially responsible activities." What is a disproportionate benefit from trade for companies and for others? What are the socially responsible activities that companies and others should intensify their pursuit of? Who are the “others”?
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d clark Apr 6, 2018

"companies and others that benefit disproportionately from trade should intensify their pursuit of socially responsible activities."
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stephan Edwards Apr 6, 2018

"Each participant commits to free and fair trade." Did you say this with a straight face because that statement ignores how many years experience? More than I can remember and I voted for Jimmy Carter. And do you honestly believe the winners and others that benefit disproportionately from trade, will do a single thing for the losers? Because if you or anyone else does I have a bridge to sell you great view of Brooklyn. Your blowing smoke in the losers eyes again. We have been hearing how the winners of Globalization will help the losers for 50 years every time the want sell a new "Free Trade" Treaty. You know what IT NEVER HAPPENS. All talk of the winners helping the losers of Free Trade and Globalization is so much Bovine Fecal Matter. I got news for the winners the losers NO Longer Believe and would rather burn down the house with us in it then have have the winners grind our faces in the mud anymore. If it destroys your (the Winners) World Economy who cares we don't have much of a stake anyway.

This article is just blowing even more smoke up the losers a-- eyes so they will shut up laet the rich keep getting richer.
- Paul Friesen Apr 6, 2018
  
  But why take it out on Chinese workers? They still make a lot less than workers in the west. They cannot be described as "winners" as long as that is the case. They are just not losing as badly as before. But the world economic system still massively favours the established industrialized countries.
  
  Why not take it out on the people you should really be blaming - the elites who hog so much of the wealth for themselves? No western country lacks the resources to provide a decent living standard for all its citizens. Most just don't do it because the rich control so much of the media and have us brainwashed into believing that it is impossible because tax cuts are the only thing that matter. But there are some that do, at least, a better job than others. Take a look at the Scandinavian countries.
  
  Western countries need to take care of their own problems, not blame them on people who are worse off than they are and more the victims of an admittedly badly broken economic system.
  - stephan Edwards Apr 6, 2018
    
    I don't notice anything in my statement blaming the Chinese workers for anything. But neither do I believe that the the government elected to represent It's citizens interests has any business putting the good of Chinese workers over the good of it's own people. Free trade and Globalization has been a DISASTER for the working class in the developed world. And if looking after our own people is a negative for Chinese I'm sorry but guess whose interests our more important to me.
    - Paul Friesen Apr 6, 2018
      
      But my point is that you could look after your own people a whole lot better if you distributed the wealth you have more fairly. That would be good for you and not hurt Chinese workers. You should be blaming your own elites for your problems, not the Chinese. Plus would be far more likely to succeed.
      - stephan Edwards Apr 6, 2018
        
        If you honestly believe there is any chance of any wealth redistribution in the US, You are possibly the only one. Which is why the losers are trying to bring down the system whether through Brexit or Trump. Shipping US jobs to China has been disastrous for the working class PERIOD. And since China rather consistently cheats whether through extorting intellectual property or illegally subsidizing industries or blocking foreign investment that is neither FREE nor Fair Trade so don't expect my heart to bleed for China. My concern is heading off the violence that appears on the horizon in the US and the other developed countries. All the losers have gotten out of Globalization is tough...sh....luck and don't let the door knob hit you on the way out. And the losers hate both the Elites and the people the view has having taken their jobs. And I can't blame them. Why shouldn't they? Because it has been a wonderful deal for China? Nice deal for China but it doesn't pay my rent or buy my groceries. So if comes down to it despite the hallucinations of the economist the economy is NOT and infinite pie and there are only so many decent sized pieces out there. So, while I have no animosity to the Chinese, I place getting my small piece over their getting my small piece.
        
        Redistribution of the winnings can't happen in the US Mr. Friesen. The winners own the government in fee simple. Neither has any interest what so ever in doing anything for the losers. The winners helping the losers of Globalization is always promised and never happens, NO ONE believes in it anymore it is just has much a fairy tale as Santa Claus orm the Easter Bunny. It isn't going to happen.
        
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anik gupta Apr 6, 2018

From the outset it looked like Mr. Trump would indulge himself in a trade war, after all he is a businessman at the core. So China was the least surprised when it mattered. Trump's bellicose rhetoric against North Korea was a preemptive action against Beijing. There was a prevalent sense in Washington that USA's loss has been china's gain. It's half truth. Last few decades China has overhauled it's infrastructure and its massive workforce is always diligent and a boon. China's rapid growth caught Washington for surprise when it was busy with middle east mess and a misconceived 'war against terror'. USA lost money and precious time during the decade (Bush's era). Now what Mr. Trump is trying, is to please his base, for it might indeed turn out to be too little too late. In addition to this, USA has been loosing its technological advantages over other nations. All these are not great omen for Trump.
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george jonisch Apr 6, 2018

Why does power make us comfortand then blind? As a devoted and impressed follower I read your articles with geat anticipation. This one however leaves me scratching my grey haired head. I quote a most interesting paragraph:
''The first assumption was that the benefits of trade would naturally be shared by most of the population, either directly or because of appropriate redistribution policies implemented in the now-faster growing economies. Second, it was assumed that the major participants in global trade – including the emerging economies that joined this process and, later, its anchoring institutions, such as the World Trade Organization – would eventually embrace the basic principles of reciprocity, continuing gradually to reduce both tariff and non-tariff barriers. ''
Is it not possible to layout a more fundamental assumption that as per Adam Smith an efficient marknet routes business to the most efficient? How can this basic need for efficiency take place when mercantilism authoritarian state actors intervene and subsidize (not to mention intimidate and blackmail by restrictions and worse) ?
Yes globalization has created new jobs and wealth but is it not blindness not to see the losses created, not by competitive efficiency but subsidizing whole industries on only one side of the equation?
Only those without doormen, chauffeurs and administrative assistants should be the judges of these realities.
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