Friday , November 24 2017
Home / EconLog Library / Fifty years ago

Fifty years ago

Summary:
Fifty years ago, the Red Guards were rampaging through the streets of Beijing. Chairman Mao issued weird, over-the-top statements about the evils of American capitalism. Free markets were seen as exploitation, as a sort of winner-take-all. Meanwhile, the US was trying to promote the ideology of open markets, emphasizing that trade is mutually beneficial. So how about today? The FT quotes one of Trump's top advisors: Steve Bannon, the brains behind Donald Trump's nationalist economic agenda, added to tensions roiling the White House by pouring scorn on his colleagues, rubbishing US policy on North Korea and pressing for the administration to be "maniacally focused" on "economic war with China". . . .

Topics:
Scott Sumner considers the following as important:

This could be interesting, too:

Contributing Guest writes Taking Comparative Advantage Seriously

Tyler Durden writes TPP Moving Ahead Without US As Trump Fooled By “Warm” Welcome In Asia

Scott Sumner writes David Beckworth interviews Doug Irwin

Mark Perry writes Why should America complain about an ‘unlevel playing field’ for international trade when it’s tilted in our favor? – Publications – AEI

Fifty years ago, the Red Guards were rampaging through the streets of Beijing. Chairman Mao issued weird, over-the-top statements about the evils of American capitalism. Free markets were seen as exploitation, as a sort of winner-take-all. Meanwhile, the US was trying to promote the ideology of open markets, emphasizing that trade is mutually beneficial.

So how about today? The FT quotes one of Trump's top advisors:

Steve Bannon, the brains behind Donald Trump's nationalist economic agenda, added to tensions roiling the White House by pouring scorn on his colleagues, rubbishing US policy on North Korea and pressing for the administration to be "maniacally focused" on "economic war with China". . . .

Mr Bannon said US defence and security officials were "wetting themselves" as they urged a softer line on China in order to secure its help in curbing Pyongyang's nuclear missile programme. North Korea was a "sideshow" in the context of a winner-takes-all competition between the world's two largest economies. . . .

Mr Bannon claimed he was working to place anti-China hawks in key positions at the defence and state departments.

"We're at economic war with China," Mr Bannon said. "One of us is going to be a hegemon in 25 or 30 years and it's gonna be them if we go down this path.


And here's how the Chinese responded:
China's foreign ministry responded by saying that the China-US economic relationship was "mutually beneficial" and there could be "no winner from a trade war". It added: "We hope that people will not use 19th- and 20th-century perspectives and measures to address 21st-century problems."

PS. In his later years, Mao became somewhat mentally unstable. His pragmatic advisors tried to moderate his policies, but his instincts were with the radical advice he was getting from the "Gang of Four".

PPS. This post is about rhetoric, not policy.



Scott Sumner

Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better “induce the correct level of business investment”. In May 2012, Chicago Fed President Charles L. Evans became the first sitting member of the Federal Open Market Committee (FOMC) to endorse the idea.

Leave a Reply

Your email address will not be published. Required fields are marked *