Monday, January 16, 2017

The demagogue's Indira Gandhi act!

I grew up in an India that was highly suspicious of goods that were manufactured elsewhere.  Import-substituting industrialization morphed into a regime that tightly controlled what could be imported (and exported.)  Imports were taxed at high rates, in order to discourage consumption of those goods.  All these policies, in turn, led to a highly profitable smuggling industry and, of course, a highly corrupt political system as well.

In such an environment,  when the father of a classmate of mine returned from an official trip abroad, my classmate brought to school a pen that was an advertisement for Pepsi-Cola.  I thought that was a fake product--after all, the only cola that I had known about was Coca-Cola, which had been kicked out of India.

The India that I left behind thirty years ago was such an India.  Which is why the first sip of Coca-Cola, as an adult, was so delicious to me.  As conditions worsened, India was forced to rethink its closed economy.

Now, it seems like any good that is on the shelves in stores here in the US is also available in India.  From dried prunes to iPhones!  During the recent trip, when I noticed a gadget at my cousin's home, I assumed it was from the US.  "No, we now get everything here," she laughed.

I am not even a far-right, pro-market guy, and even I can see the benefits of open-borders and free trade.  Which is why I am shocked that Republicans, who are typically rah-rah cheerleaders for the market, elected to the Oval Office a demagogue who promises to end trade as we know it, with pronouncements like this:
Trump threatened to impose a 35 percent tariff — he called it a “tax” — on every car that BMW imported to the United States.
Seriously, did the anti-abortion White Christian voters hate, hate, hate Obama and Clinton that much to lick this demagogue's golden boots?

Furthermore, automobiles are not "manufactured"--they are assembled from components that are manufactured all over the world:
A tough stance on autos from Mr. Trump may not have the same impact as that of President Reagan. Since the 1980s, automakers have made fewer of their own parts, buying them instead from hundreds of parts suppliers based all over the globe. That means an American car assembled in the United States could still have large chunks that are manufactured abroad.
Chinese manufacturers dominate the market for replacement parts in the United States, often undercutting prices for parts from the automakers by half or more. Tariffs on Chinese parts would end up being paid by Americans who took their cars in for repairs.
The world--not merely India--has changed over the last thirty years!  BMW, like practically every corporation that serves the global market, is hoping that Congress will check the demagogue:
“We take the comments seriously, but it remains to be seen if and how the announcements will be implemented by the U.S. administration,” Matthias Wissmann, president of German auto industry association VDA, said in an e-mailed statement. The U.S. Congress will probably show “substantial resistance” against the duty proposals, he said.
More than anybody else, the Germans ought to know how easily demagogues become authoritarians.  They expect Republicans in Congress to stop this madman? Not these unprincipled bastards!


Ramesh said...

His nonsense on trade is just bombast and buffoonery. If he does anything like this, the US will be kicked out of WTO. If that happens, global trade will shrink as the US is the leader of world trade. A full blown recession will happen and the people who will be most hurt are the Americans.

Sriram Khé said...

People who will be most hurt at the working class whites who voted for him!
China is on full alert, as I understand from news reports, getting ready for various economic and geopolitical craziness that the American Kim Jong Trump might unleash :(

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