Trump plays silly buggers with trade.

It’s hard not to think of Trump as either silly or cynical.  His economic nationalism is skating on very thin ice and is impossible given the current state of capitalist industry and finance in the world today. Trump should know that capital has long considered national borders as an inconvenience, an opportunity to make more capital, but certainly not as impenetrable walls. His own campaign material was printed in China. His ‘Make America Great Again’ hats were made in China. What the hell is he thinking? It may be that he doesn’t care a wit about any of this because nationalism and flag waving are big sellers in the US. If enough Americans buy into his strategy, if in fact he has one, he can safely ignore his anti-globalist stance in practice and get on with making more money for himself and his cronies. He promised Appalachia that coal would return. It won’t. Empty promises don’t matter, it seems. China and Canada are mean and unfair to poor little USA. ‘Yes! That’s right!’ shout his acolytes. Blame others, that’s it. The people will lap it up. As long as people believe him, Trump feels safe. That would make him the consummate cynic. Do you buy into the idea that Trump knows exactly what he’s doing? His popularity is slowly waning however so he had better watch his ass. Now that I’ve got that off my chest, I want to repeat here what I’ve written before, at least in its essence, elsewhere in this blog (among other places). Yes, I will be repetitious in this post, but only because sometimes repeating a message over and over again is the only way to get through to some people. Of course the people I would like to convince to look more deeply into Trump’s politics are not likely to read this blog. Research, science and thoughtful criticism are not where they turn to for ideas on current political affairs. Belief is enough for them, heart and feeling trump brain. Because Trump is so high on America First, I want to outline some ideas that have been kicking around for centuries about the relationship between countries and capital. Where do American corporations fit into Trump’s world of international trade? Where do international industrial practices, just in time production, export processing zones and globalist production, distribution and consumption fit in Trump’s world? Who knows? However, I don’t think it matters much because capital is bigger than Trump and bigger than the American political system. Capital will eventually eclipse all politics and we’ll be left with who knows what. That may be the end of our tenure on this planet. I have no idea. The problem is that we are such a species full of contradictions. We can do amazingly wonderful things then in the blink of an eye turn into murderous butchers. But back to my point. There is a ton of books that have been published in the 19th, 20th and now in the 21st century about the relationship between countries and capital, but they haven’t seemed to have convinced most people that countries are no longer the repositories of capital and haven’t been for a couple of centuries. Most of the books and scholarly articles I’ve read, and I’ve read dozens on this subject, are clear that capital has long since eclipsed countries as the seat of political economic power. Barnet and Muller in their book Global Reach: The Power of Multinational Corporations from 1976, the year I entered graduate school, argue that of the 100 most powerful economic entities on the planet, 49 of them were multinational corporations (MNCs). I’m sure that ratio is now even more skewed towards MNCs than it was then. I suggested earlier in this post that I was about to write about capital, so what am I doing writing about multinational corporations? Well, MNCs are the seat of capital, the embodiment of what capital means and stands for. They are the crystallization of capital, the vehicles for the generation, circulation and consumption of capital and ultimately its concentration. It might be informative at this stage to define what I mean by capital. I’m not going to do that except to say that capital is the means of creating and re-creating wealth although people commonly equate capital with money. Actually, Marx defined capital in the 1860s with his book, Capital. If you want to understand capital, read Marx, then read some more. A recent book by Thomas Piketty (2017) called Capital in the Twenty-First Century, takes up Marx’s challenge and does a fair job of it. His argument carries on where Marx left off. He clearly documents how capital has become increasingly concentrated in the hands of just a few corporations and individuals (the 1%) over the past three centuries. It’s been a slow but inexorable process. I’ve already argued in this blog on several posts that countries were a creation of capital to start with. ‘Modern’ capital was initially dominated by merchant capital, think Christopher Columbus, (starting in the 11th Century and even before), was replaced eventually in the mid 18th Century by industrial capital, think Wedgwood, then in the late 19th Century by finance capital, now, of course, think Rothschild and Goldman Sachs. That doesn’t mean that all forms of capital haven’t survived, it just means that the dominant form of capital has changed over the decades. In the face of the persistent and overwhelming power of capital, countries went from being somewhat independent political entities with more or less functioning economies to essentially servants of capital and managers of the working class. It didn’t happen overnight. It’s a process not an event. As Harold Innis (1894-1952), a political economist and professor at the University of Toronto, wrote in the 1940s, politicians rely on national statistics to support their power. The Canadian government collects national statistics and ostensibly relies on them to make political decisions. Stephen Harper did not like Statistics Canada because it often reported in ways he did not approve of. Innis knew that national statistics were often a sham and he said so. Think of this possible scenario: General Motors sends a car it assembled in Oshawa to Michigan. Stats Can considers this a transaction that needs to be reported under the heading: international trade. Or this: Canada’s petrochemical industry is overwhelmingly owned by American companies. They ship their product along their pipelines from Canada (Alberta) to the US for refining. That is international trade. It strikes me that if we want to get a grip on how ‘our’ economy works we need to abandon our traditional way of collecting statistics or we must at least map out how large multinational corporations do business across borders. William Carroll at the University of Victoria studies international supply chains. His work is illuminating, but the situation is changing so rapidly it’s hard to keep up. According to the Office of the United States Trade Representative:
  • U.S. goods imports from China totaled $505.5 billion in 2017, up 9.3% ($42.9 billion) from 2016, and up 57.3% from 2007. U.S. imports from are up 394% from 2001 (pre-WTO accession). U.S. imports from China account for 21.6% of overall U.S. imports in 2017.
These are impressive statistics, but what real story do they tell? Well, for one, when the Trade Representative notes that ‘imports from China account for 21.6% of overall U.S. imports in 2017, does he include iPhones in that calculation? Apple assembles iPhones in China via a contractor called Foxconn. Foxconn has plants all over the place, not just China and parts for iPhones may very well come from Thailand or the Check Republic. Is an iPhone a Chinese product considered an import from China? China has established social processing zones also known as export processing zones (EPZs) where foreign corporations like Apple can come and set up shop without paying all those annoying local taxes while, in many instances, ignoring health and safety regulations and paying very low wages. Some of these EPZs are huge encompassing whole cities and surrounding areas. EPZs exist in many parts of the world we used to call the ‘Third World.” They are where our toys, clothes, and a myriad of other products are made and/or assembled. All of these products are ‘made’ by American or Canadian manufacturers, who now maybe should be called importers, but they still call the shots in every way. The automobile industry assembles cars here and there but the parts come from all over the globe. Engines can arrive at an assembly plant in Québec or Michigan ready to be dropped into a car, so are all drive train parts. Body parts can be pressed in Mexico and batteries can also come from there. There is no such thing as a “Canadian” car. Trump either knows this and doesn’t care or has it in for the  auto sector for some reason. I wonder if Trump has done the political economic calculus on his tariff plans for the ‘Canadian’ auto industry or if he just wanders off flying by the seat of his pants making decisions that are clearly arbitrary. It’s been well established that putting tariffs on ‘Canadian’ cars will put a significant dent in the profits of American car companies. Trump doesn’t seem to mind. Maybe he thinks it’s fake news. Some people have argued that Trump is just trying to force American corporations to manufacture their products on American soil. The fact is, that horse has already left the barn and there’s no way of getting it back, even if plants could retool. It used to be that the Ford plant in Dearborn, Michigan imported from around the US and abroad all the raw materials required to build a car, manufacture the parts and assemble the cars on site. That is no longer the case and hasn’t been since the creation of shipping containers and the need to acquire parts more cheaply than possible from American sources only. ‘American’ cars are manufactured all over the world. Capital, like the weather, ignores borders. We live in a global world with a global economy. The existence of nation-states or countries is still a fact because taxes need to be collected and passed on to the corporations and workers need to be managed. So far, it seems better to do that locally than globally. That may very well change and there are signs that it is. Trump’s Americans are not happy about the decline of their precious country, but their world is not contained within their borders and the sooner they realize that the better.