The World Is Unfair - Part 2

In my last commentary I began by noting that in his video speech to the assembled bigwigs at the World Economic Forum, President Trump complained that America was being treated very unfairly. I then digressed into a discussion of all the problems associated with the concept of fairness. But it is important to understand why fairness has problems because fairness, or at least perceived fairness, is extremely important to President Trump. One might even say he was obsessed with being treated fairly but that might imply some type of personality disorder. But President Trump clearly believes that America has been treated unfairly by other countries around the world.

A textile worker in Dacca working long hours in a dim factory for very low wages and living in a shabby apartment filled with siblings and cousins might scratch her head and wonder how she is treating the powerful leader of the richest most powerful nation in the world unfairly. Or you could ask subsistence farmers in the Sahel or artisanal miners in Katanga or call center workers in Bangalore and get the same look of incomprehension.

But President Trump believes that trade deficits are losing and trade surpluses are winning and the US has the biggest trade deficit of any country in the world so we must be losing big time. And that’s not fair. Back in the heyday of mercantilism in the eighteenth and nineteenth centuries, mercantilist powers maintained colonial empires to provide raw materials and consumers for the manufactured goods of the powers. Under mercantilism exports were encouraged and imports discouraged. Higher value exports from great powers to its colonies concentrated wealth in the mother countries and kept the colonies poor. Mercantilism assumes the economy is a zero sum game made up of winners and losers.

Mercantilism did not make America great. The American Revolution was a rebellion against the mercantilist British Empire that colonials felt was extracting wealth from the Americas to finance Britain’s wars against other great powers. The Boston Massacre was due to a reaction against the Townsend Acts that imposed tariffs on the colonists. The Boston Tea Party was a protest against the unjust importation of tea by the East India Company chartered by Queen Elizabeth in 1601. The first conflict after the Revolution was when President Jefferson sent the US Navy to the Barbary Coast to fight the pirates that were interfering with American trading ships. A free trade economy made America great, not mercantilism.

But as the American led rules-based order that helped the entire world to prosper appears to be crumbling, powerful countries are creating a new world order that closely resembles the mercantilist empires of the past, which fought amongst each other to preserve and expand their empires and spheres of influence. A resurgence of colonial empires seems unlikely now but powerful countries like Russia and China demand that other countries respect their spheres of interest. Russia is clearly seeking to reestablish its “near abroad” sphere of influence which includes not only Ukraine but also the Baltic countries, along with Finland and Poland. Donald Trump has declared that the western hemisphere is within the American spere of influence declaring interest in acquiring Greenland, incorporating Canada into the United States and demanding control over the Panama Canal. China’s recent domination of trade with Latin America, long a lucrative market for US exports, is likely to be challenged.

Just as Vladimir Putin viewed Ukraine’s move to align with Western Europe as an unfair action against Russia’s historic sphere of influence justifying his invasion of that country, President Trump believes that he is justified in using American power to make sure that the United States is treated fairly.

President Trump doesn’t view tariffs solely as economic tools, he views them as economic weapons. When the Columbian president did not allow planes full of Columbian citizens deported from the US to land in Columbia Mr. Trump threatened the country with punitive tariffs and other economic sanctions. Columbia submitted to this threat and now allows the deportation flights to land. And while Columbia has an obligation to receive its deported citizens the use of economic weapons to intimidate other countries is little different than sending a fleet of warships to the Columbian coast. These are the acts of a bully.

Mr. Trump does not believe in the Western enlightenment values that inspired the American Revolution and that held the American led rules-based order together. He does not envision America as a bright city on the hill that everyone looks to for hope but an armed fortress overlooking its domain where everyone is a subject whose loyalty must be pledged to the sovereign, the Leviathan. Donald Trump is not the 21st century reincarnation of George Washington. He is the 21st century reincarnation of King George III.

Leadership requires sacrifice and America’s global leadership has come at a cost. But the global prosperity derived from our Western values has greatly benefitted America as well as the rest of the world. I believe that the next four years will give us a preview of what kind of world great power competition and mercantilist economic policies will give us. If we survive maybe we can begin start acting like Americans again.

Update: While preparing this commentary, President Trump announced that he was going to impose 25% tariffs on Canada and Mexico as a penalty for not stopping the flow of illegal drugs and undocumented immigrants into the United States. Canada and Mexico immediately announced retaliatory tariffs on US exports. I hesitate to comment on these events as things change quickly in Trump 2.0 but it appears a trade war has begun. Perhaps these tariffs are negotiating tactics and the problem will be resolved. But the resentment will remain. And if this is how Mr. Trump treats countries that have been friends and neighbors for generations, why would any other country want to be a friend of the United States? The dark preview of the next four years discussed in my commentary is rapidly becoming reality.