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Post #10 (October 20, 2016) UK's Economy Compared to U.S.

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Post #10 (October 20, 2016) UK's Economy Compared to U.S.

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The UK is forecasted to be the best performing economy based by the IMF after leaving the EU Union. There has been a rebound in manufacturing and strong retail sales. The U.S. is not doing as well. It's been projected that Protectionist policies could cause major drawbacks for global trade.

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Another blow for Project Fear! IMF rows back on dire warnings about Brexit to predict the UK will be fastest growing major economy this year

IMF previously warned of immediate dramatic hit from vote to leave EU

But has now upgraded its forecasts after effects not as bad as thought

Says UK plc will grow 1.8 per cent this year, faster than rest of G7

The IMF has rowed back on dire warnings about the impact of Brexit to name the UK as the fastest growing major economy this year.

The International Monetary Fund said confidence in the economy had been maintained by swift action from the Bank of England.

The body has revised up its forecast for growth in 2016 from 1.7 per cent at the time of its last estimate in July, to 1.8 per cent.

That would make Britain the best performing economy in the G7. By contrast, the US has had its prospects downgraded by 0.6 per cent to 1.6 per cent in the latest World Economic Outlook report.

The upward revision - which was hailed by Prime Minister Theresa May - came amid a rebound in manufacturing activity and strong retail sales in the months following the EU referendum vote.

The IMF repeated its warning that Brexit was likely to drag on long term growth as it cut its forecast for growth in 2017 to 1.1 per cent, from a forecast of 1.3 per cent in July and 2.2 per cent in April.

The fund warned that 'as greater impediments to trade, migration, and capital flows are expected to erode growth potential'.

It suggested the process of cutting ties with the EU would widen the deficit in Britain's public finances, saying the books were unlikely to be balanced until at least 2022.

The IMF said: 'In the United Kingdom slower growth is expected since the referendum, as uncertainty in the aftermath of the Brexit vote weighs on firms' investment and hiring decisions and consumers' purchases of durable goods and housing.'

The US growth forecast was slashed by a huge 0.6 per cent to 1.6 per cent this year, and by 0.3 per cent to 2.2 per cent for 2017.

It comes after the US delivered weaker-than-expected growth figures in the second quarter, as labour productivity declined, business investment weakened, and a strong dollar dragged on exports.

The IMF added that potential protectionist policies could have major consequences for global trade flows.

'Uncertainty about the evolution of these trends may lead firms to defer investment and hiring decisions, thus slowing near-term activity, while an inward-looking policy shift could also stoke further cross-border political discord,' it warned.

One scenario put forward by the IMF shows how a unilateral increase in trade tariffs by one government could spark retaliation by another, and ultimately hurt gross domestic product (GDP) growth, consumption and investment across both countries.

Another scenario illustrates how a general increase in protectionism across the world, with governments increasing both import taxes and non-tariff trade barriers, would affect the global economy.

'The result is not just a collapse in trade flows, but also a sharp decline in global output.

'The negative repercussions for the global economy could be even larger because the disruption in international economic linkages drive a more generalised decline in cross-border co-operation,' the report said.

Earlier this summer, the IMF shaved 0.1 per cent off gobal growth forecasts for both 2016 and 2017.

It is now expected to slow to 3.1 per cent this year before recovering to 3.4 per cent over the following 12 months.

That downward revision was chalked up to weaker-than-expected US growth and uncertainty regarding Brexit.

The report acknowledged that financial markets' reaction to the Brexit vote was relatively 'contained'.

The IMF is not expecting a quick turnaround for Brexit negotiations, saying the 'long-term shape of relations' between Britain and Europe may only become clear 'after several years'.

In a round of interviews at the Tory conference in Birmingham, Mrs May pointed to the IMF's prediction as evidence the UK could weather turbulence.

'The IMF themselves have upgraded their forecast for growth in the UK economy for this year,' she said.

'They've said that the response to the Brexit vote was more orderly than people had expected it to be.

'Yes, the IMF and others have said that they are forecasting a slowdown in the economy next year. What the Government needs to do is to ensure that we are taking the right approach and that in terms of the process of Brexit, we are making that as smooth as possible.

'We have the Chancellor's Autumn Statement in November, when he will be able to set out a trajectory for the Government's response over the next year.'

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James Tapsfield, Political Editor For Mailonline

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IMF crowns UK as fastest growing major economy in the world this year

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IMF previously warned of immediate dramatic hit from vote to leave EU But has now upgraded its forecasts after effects not as bad as thought Says UK plc will grow 1.8 per cent this year, faster than rest of G7 The IMF has rowed back on dire warnings about the impact of Brexit to name the UK as the fastest growing major economy this year.

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Post #9 (October 20, 2016)- Britain Leaving EU 

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Post #9 (October 20, 2016)- Britain Leaving EU 

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Britain has left the EU customs union.  There are speculations that this could knock 4.5% GDP and that trade flows and foreign investment will also be hit hard as well. There is alarm because foreign investment tends to improve productivity and their decline is alarming economists.

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Labour MPs are to press the chancellor on the risks of Britain leaving the EU customs union, after the Guardian revealed Whitehall estimates showing it could knock 4.5% off GDP.

Philip Hammond, who sees it as part of his role to warn his cabinet colleagues about the risks of Brexit, is to appear before the cross-party Treasury select committee on Wednesday afternoon.

Labour MP Helen Goodman, who sits on the committee, said: "It's very important that the government has a clear-sighted analysis of the benefits of the customs union, as opposed to treaties with third countries, before deciding on its negotiating strategy. I hope the chancellor will be able to share his thinking with us."

Trade flows and foreign investment would also be hit hard by leaving the customs union, according to figures calculated for the Guardian on the same basis as those prepared by civil servants for the government's Brexit committee.

The pro-EU thinktank Open Britain used the same studies - by the National Institute for Economic and Social Research, the Treasury and the London School of Economics - to suggest trade could decline by almost 12% and foreign investment by 10%, or more than £4bn, if Britain left the customs union.

Foreign investment tends to improve productivity - a key target for government policy - so a decline alarms economists. Ministers were also warned at the Brexit committee that if leaving the customs union meant enhanced border checks, it could clog up Britain's ports.

Many Brexiters assume leaving the customs union is an inevitable result of leaving the EU. But the paper, which the Guardian understands was prepared jointly by the Treasury, International Trade and Brexit departments, points out that it would have significant economic costs, even if Britain pursued a Norway-style agreement which would allow it to stay in the European Economic Area.

Joe Carberry, of Open Britain, said: "The government's own figures show that even under the best case scenario there would be a hit to GDP, trade and investment."

He added: "If pre-referendum analysis is going to be dismissed, post-referendum analysis should be conducted and published for scrutiny."

Labour also questioned the suggestion made at the Brexirt committee meeting by the secretary for international trade, Liam Fox: that third countries might be willing to continue trading with Britain on existing terms, while new deals were being drawn up.

Barry Gardiner, the shadow international trade secretary, said: "Policy decisions cannot be based upon private 'gentleman's agreements' made off the record by foreign politicians who may or may not still be in office when we need to call them in.

"People need to know their jobs are being protected and businesses need clarity about the basis of future trade. This government is offering neither."

The paper on the customs union warned ministers that to stand still in trade terms after a withdrawal from the bloc, the UK would need to grow trade with its 10 largest partners outside the EU by 37% by 2030.

Fergus McReynolds, EU director of manufacturers' group the EEF, said: "Whilst the UK is a member of the customs union, manufacturers in the UK have traded with EU partners without experiencing the delays and burden of comprehensive customs controls. In considering the UK future relationship with the EU, the potentially damaging cost implications of delays at these cross-border controls and additional administrative burdens must be fully considered."

Topics

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Philip Hammond to be pressed on risks of UK leaving EU customs union

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Labour MPs are to press the chancellor on the risks of Britain leaving the EU customs union, after the Guardian revealed Whitehall estimates showing it could knock 4.5% off GDP. Philip Hammond, who sees it as part of his role to warn his cabinet colleagues about the risks of Brexit, is to appear before the cross-party Treasury select committee on Wednesday afternoon.

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Post #8 (November 17, 2016)- Trump and Trade

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Post #8 (November 17, 2016)- Trump and Trade

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The hope overseas is that Trump will be more "moderate" than he was while campaigning because of the fear that international trade will be negatively affected.  Aside from the issue of trade, one major topic on Presidential elect Donald Trump's lips is bringing America to its former glory in the 50's. Meaning less globalization through free trade. That would affect the developing countries who so strongly benefit from globalization.  The article also speaks about our trade partnership with China in relation to what Trump has said.  The author states that no matter if Trump wants to tear up NAFTA or not it will heavily affect business in America that use Canada and Mexico as their main trade partners and therefore it isn't in his interest to get rid of NAFTA.

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This is an archived article that was published on sltrib.com in 2016, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Lima, Peru * Donald Trump will be on the minds of world leaders as they gather for an Asia-Pacific trade summit.

The president-elect has made it clear that he is hostile to the kind of free trade deals that tend to be the focus of the annual Asia Pacific Economic Cooperation forum, taking place this year in Peru's capital.

He's also singled out group members China and Mexico in a populist campaign standing up for displaced American workers.

That has likely changed the tone and the agenda of a meeting that was expected to be part of a valedictory tour for U.S. President Barack Obama. It will be his last international summit before he leaves office Jan. 20 and those in attendance are to include Chinese President Xi Jinping, Russian President Vladimir Putin and Japanese Prime Minister Shinzo Abe.

Instead of promoting a now all-but dead trade deal known as the Trans-Pacific Partnership, economic experts expect Obama will field uncomfortable questions about Trump's pledges to overhaul U.S. trade policy, crack down on illegal immigration from Mexico and withdraw from a global agreement to fight climate change.

"World leaders like everyone else are hoping he will be more moderate in office than he was on the campaign trail," Fred Bergsten, a senior fellow the Peterson Institute for International Economics in Washington. "But they are going to be worried."

APEC's 21 member-nations comprise more than a third of the world's population and half of global trade. It was established three decades ago to accelerate economic growth by removing trade barriers and helping integrate global supply chains.

The group's annual summits also deal with current international challenges such as security following the terrorist attacks on Sept. 11, 2001, or in Paris last year or the global economic crisis of 2008. This year, the big issue is Trump.

"As you can imagine, the issue of the day will consume a lot of the energy," said Scott Miller, a senior adviser to the Center for Strategic and International Studies who previously advised the U.S. on APEC matters.

Manufacturing has been declining in the U.S. since the 1950s and today represents less than 10 percent of employment. Despite Trump's promises to revive industry, those jobs are unlikely to return in large enough numbers, said APEC executive director Alan Bollard. At the same time, developing nations — the biggest beneficiaries of globalization — are more upbeat about free trade.

"The pessimism about trade does seem to be more of a developed, affluent country phenomenon," Bollard said in an interview.

Bollard, a former central banker in New Zealand, said world leaders haven't done a good enough job selling the benefits of globalization and cited studies that credit trade for helping lift half a billion people out of poverty in the APEC region.

He said there has also been an overriding focus on manufacturing, what Bollard called the "old wave" of globalization, instead of helping companies in the services industry navigate complex, cross-border regulations.

"With the advantages of electronic commerce, it's possible for small, remote businesses to be world traders in a way they never could before," he said.

While Trump has threatened a trade war with China, vowing higher tariffs and declaring it a currency manipulator, the Asian giant has emerged as an unlikely champion of borderless buying and selling. The leaders gathering in Peru will be presented with a joint U.S.-China study ordered up in 2014 about the feasibility of a vast free trade area including all APEC members.

Beijing is also promoting a regional trade partnership grouping it with 10 southeast Asian economies as well as Japan, India, South Korea, Australia and New Zealand. That proposed pact has become more relevant with Trump's victory all but killing the 12-nation Trans-Pacific Partnership, which excludes China and was widely seen as an attempt by the Obama administration to keep Asian trading partners in the U.S. orbit.

When it comes to U.S. trade, said Miller, Trump's actions as president seem unlikely to be as dramatic as he sounded on the campaign trail. He said 48 of the 50 states have either Canada or Mexico as their leading trade partner, which means disruptions to business from tearing up NAFTA could be politically as well as economically devastating.

"He's a skeptic of trade agreements, and he's held that position for a long time as a private citizen," Miller said of Trump. "What he has not been in a position to do is consider and then represent the broader interests of the American people. That's usually how presidents become free traders."

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Trump's role looms over Asia-Pacific summit

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This is an archived article that was published on sltrib.com in 2016, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted. Lima, Peru * Donald Trump will be on the minds of world leaders as they gather for an Asia-Pacific trade summit.

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Post #7 (November 17, 2016) – Trump Can't Cure Our Country

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Post #7 (November 17, 2016) – Trump Can't Cure Our Country

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This article is focusing on the affect our election may have on globalization and whether we should be concerned. With the world production of goods and services rising, the trade to gross domestic product has been lowering. To put it simply, it says that protectionism in trade is more than likely to occur and that free trade will be cut off.  As a result of trade falling, investment spending is following a similar downward trend. The author isn't sure if Trump will be able to cure our countries economic condition under Trump's policies.

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Does Donald Trump's election as US president mean that globalisation is dead, or are reports of the process' demise greatly exaggerated? If globalisation is only partly incapacitated, not terminally ill, should we worry? How much will slower trade growth, now in the offing, matter for the global economy?

World trade growth would be slowing down, even without Trump in office. Its growth was already flat in the first quarter of 2016, and it fell by nearly 1% in the second quarter. This continues a prior trend: since 2010, global trade has grown at an annual rate of barely 2%. Together with the fact that worldwide production of goods and services has been rising by more than 3%, this means that the trade-to-GDP ratio has been falling, in contrast to its steady upward march in earlier years.

This disturbing trajectory, argue the mavens of globalisation, reflects the resurgent protectionism manifest in popular opposition to the Trans-Pacific Partnership (TPP) and the Transatlantic Trade and Investment Partnership (TTIP), and now in Trump's electoral victory. It means that the benefits of openness and specialisation are being squandered.

Causality in economics may be elusive, but in this case it is clear. So far, slower trade growth has been the result of slower GDP growth, not the other way around.

This is particularly evident in the case of investment spending, which has fallen sharply since the global financial crisis. Investment spending is trade-intensive, because countries rely disproportionately on a relatively small handful of producers, like Germany, for technologically sophisticated capital goods.

In addition, slower trade growth reflects China's economic deceleration. Until 2011 China was growing at double-digit rates, and Chinese exports and imports were growing even faster. China's growth has now slowed by a third, leading to slower growth of Chinese trade.

China's growth miracle, benefiting a fifth of the Earth's population, is the most important economic event of the last quarter-century. But it can happen only once. And now that the phase of catch-up growth is over for China, this engine of global trade will slow.

The other engine of world trade has been global supply chains. Trade in parts and components has benefited from falling transport costs, reflecting containerisation and related advances in logistics. But efficiency in shipping is unlikely to continue to improve faster than efficiency in the production of what is being shipped. Already, motor vehicle manufacturers ship an automotive transmission back and forth across the US-Mexican border several times in the course of production. At some point, unpacking that production process still further will reach the point of diminishing returns.

So should we worry that trade is growing more slowly? Yes, but only in the sense that a doctor worries when a patient runs a fever. Fever is rarely life threatening; rather, it is a symptom of an underlying condition. In this case, the condition is slow economic growth, also known as secular stagnation, caused by depressed investment, which in turn reflects financial problems and policy uncertainty.

This, then, is the underlying condition. Trade agreements such as TPP and TTIP address it only obliquely. Increased spending on infrastructure by governments, to boost investment and growth directly, is more to the point.

But whether the Trump administration and the new US Congress can design and implement a programme of productive infrastructure spending remains to be seen.

More generally, a political consensus is needed on growth-promoting policies, so that investment is not held hostage to political infighting. Whether this will be possible under Trump's administration is another open question.

The story for cross-border flows of financial capital is even more dramatic. Gross capital flows - the sum of inflows and outflows - are not just growing more slowly; they are down significantly in absolute terms from 2009 levels.

But dramatic is not the same as alarming. In fact, it is mainly cross-border bank lending and borrowing that have fallen. Foreign direct investment - financial flows to build foreign factories and acquire foreign companies - remains at pre-crisis levels. So do cross-border borrowing and lending through stock and bond markets.

This difference reflects regulation. Having concluded, rightly, that cross-border bank lending is especially risky, regulators clamped down on banks' international operations. In response, many banks curtailed their cross-border business. But, rather than alarming anyone, this should be seen as reassuring, because the riskiest forms of international finance have been curtailed without disrupting more stable and productive forms of foreign investment.

We now face the prospect of the US government revoking the Dodd-Frank Act and rolling back the financial reforms of recent years. Less stringent financial regulation may make for the recovery of international capital flows. But we should be careful what we wish for.
* Barry Eichengreen is professor of economics at the University of California, Berkeley; Pitt Professor of American History and Institutions at the University of Cambridge; and a former senior policy adviser at the IMF. © Project Syndicate Topics

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Does Trump's election spell globalisation's end?

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Does Donald Trump's election as US president mean that globalisation is dead, or are reports of the process' demise greatly exaggerated? If globalisation is only partly incapacitated, not terminally ill, should we worry? How much will slower trade growth, now in the offing, matter for the global economy?

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Post #6 (November 17, 2016) – Trump Has Been Elected: Will the Tides of Trade Changing?

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Post #6 (November 17, 2016) – Trump Has Been Elected: Will the Tides of Trade Changing?

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In this article, the author addresses the concerns and thoughts that have been proposed around the globe as a result of Trump winning the Presidential election. During his campaign, Trump flamboyantly stated that he was not in support of the trade agreements we currently have in place with various countries. Specifically, this article addresses the relationship we have with China and what could happen if Trump were to require heavy tariffs on Chinese imports.

Trade plays a key role in globalization. It brings countries together that may not have ever interacted if it were not for the fact that they each have products and services that the other needs to be successful and productive in the world economy.

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SHANGHAI - As a candidate, Donald J. Trump aimed some of his most blistering words at China, declaring that " we already have a trade war" and suggesting ominously that "we have the power over China, economic power."

As president of the United States, Mr. Trump can use trade - a cornerstone of his populist rise - as a weapon, with the potential to drastically reshape the world's two largest economies, as well as the companies, industries and workers who depend on their hundreds of billions of dollars in closely linked goods. But neither side may win.

Cutting off trade will not bring back the bulk of American manufacturing jobs lost to China in previous decades as it became the world's factory floor. Already, some industries that left the United States years ago, such as garment making and some light manufacturing, are now leaving China for even cheaper places. An aggressive stance with China also risks antagonizing an authoritarian government with its own brand of economic nationalism.

Yet the unsettling reality for Beijing is that Mr. Trump has a variety of ways to get back at China for trade practices that he, his supporters or people in the affected industries view as unfair. China sells a large array of goods to the United States that he can aim at for higher tariffs.

The opportunities for China to retaliate would be more limited. In the most basic terms, China buys less from the United States.

But China could make some strategic strikes at targets like Boeing, American automakers and American farmers. Beijing exerts tight control over China's airlines, for example, and sometimes steers contracts to Airbus, Boeing's European rival, when officials feel that Washington is uncooperative.

"Boeing complains, 'We have been pretty good friends with China. Why are we always a target?'" said He Weiwen, a former Chinese commerce ministry official who is now the co-director of the China-U.S.-E.U. Study Center at the influential China Association of International Trade in Beijing.

Or China could wreak havoc on the vast yet delicate supply chain behind a wide range of products like iPhones and auto parts. Six years ago, Chinese restrictions on exports of obscure yet vital minerals led to a global outcry by manufacturers.

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The night shift at a shoe factory that employs about 15,000 workers in Guangdong Province in southern China. Exports to the United States represent about 4 percent of the Chinese economy. Credit Greg Baker/Agence France-Presse - Getty Images

Early indications are that trade could take a more prominent place on the White House's China agenda, which under President Obama was dominated by Beijing's territorial claims in East Asia and its influence over North Korea.

In a strong signal, Mr. Trump has turned to Dan DiMicco, a longtime steel executive and trade critic, to oversee trade issues during his administration's transition. Mr. DiMicco writes a personal blog, liberally sprinkled with exclamation points, that blames America's industrial decline on cheating by trade partners, particularly China.

"Hillary Clinton has claimed Trump's trade policies will start a 'Trade War' but what she fails to recognize is we are already in one," he wrote on his blog last summer. "Trump clearly sees it and he will work to put an end to China's 'Mercantilist Trade War'! A war it has been waging against us for nearly 2 decades!"

China over the last two days has emphasized that a healthy relationship would benefit both sides. On Thursday, Lu Kang, a spokesman for China's Foreign Ministry, said, "It is in the common interests of both countries to develop a long-term, stable and prosperous trading relationship, and any American politician would take a policy in the interest of his country and the American people."

Mr. Trump's views veer widely from the free-trade positions of the Republican Party in recent years and signal a return to the more hawkish positions of the Reagan administration, which repeatedly went after Japan on trade issues. Since President Ronald Reagan, Republican and Democratic administrations have been reluctant to confront countries that may be subsidizing or dumping exports, either because the evidence is unclear or because of a risk of damaging diplomatic or strategic relations.

"This is the kind of stuff you learn in law school, and in the early days of your law career," said Alan H. Price, a longtime lawyer for the American steel and aluminum industries at Wiley Rein.

When used, the measures were sometimes deemed ineffective.

In one rare example, President Obama used his powers to impose tariffs of up to 35 percent on imports of Chinese tires soon after he took office. The tariffs prompted China to impose steep tariffs on American chicken meat and automotive products. Both countries complained to the World Trade Organization, which mostly sided with the United States.

The case resulted in the United States producing more tires, but imports from other countries rose even faster. And the Obama administration later became more cautious about challenging China with trade restrictions.

Any trade actions by Mr. Trump would face limits.

This year, he mentioned imposing a tariff of 45 percent on all imports from China. But he later avoided specifics - and he has limited power to do so anyway. The law allows him to impose tariffs of no more than 15 percent, and for as long as 150 days, on all imports, unless a national emergency is declared. Other laws allow him to impose tariffs on targeted goods.

Should Mr. Trump want to signal an aggressive stance quickly, he could move against imports of steel and aluminum from China. The Obama administration has been preparing to file a World Trade Organization case against China over claims that it subsidized aluminum exports. And the United States, Japan and the European Union already complain that Chinese government subsidies have produced a bloated domestic steel industry that they say dumps millions of tons of excess goods on world markets each year.

Donald J. Trump at a campaign event last week in Hershey, Pa. He has said, "We have the power over China, economic power." Credit Damon Winter/The New York Times

China is more vulnerable given the sheer amount of stuff it sells to America. For more than a decade, China has consistently exported about $4 worth of goods to the United States for each $1 of goods that it imports. Exports to the United States represent about 4 percent of the Chinese economy; American exports to China are only about two-thirds of 1 percent of the United States economy.

"We don't have many things in the toolbox for retaliation, because we export more than we import," said Mr. He, the former Chinese commerce ministry official.

Still, China could inflict pain on sensitive areas that provide American jobs, like Boeing's jetliners.

Boeing declined to comment except to say, "We congratulate President-elect Trump and newly elected members of Congress and look forward to working with them to make sure we continue to grow the global economy and protect our people."

General Motors and Ford Motor consider China a big contributor to sales. They mostly manufacture in China to supply the domestic market. But much of the design and engineering work is still done in the United States. China could hurt the automakers by adopting domestic policies that help their big European rivals, notably Volkswagen and Mercedes-Benz.

Other American companies may be less opposed to trade limits than in the past. Some American companies have been struggling to sell in China. Beijing has steered contracts to Chinese telecommunications companies after Edward Snowden's revelations about American intelligence gathering in China. And Chinese state-owned enterprises have shifted much of their investment banking business from Wall Street to homegrown rivals.

American farmers have welcomed Chinese purchases, but it is unclear how badly they could be hurt by any trade action. Chicken meat, soybeans, corn and other foodstuffs are commodities traded in world markets, and farmers are often able to sell elsewhere.

Chinese goods have long helped keep prices down for Americans. But Chinese exports play a shrinking role in holding down prices as labor costs rise in China and as rivals like Indonesia, Vietnam and India expand manufacturing.

China's biggest potential weapon is to disrupt the supply chains of multinationals by halting exports of crucial materials or components. But that could damage China's reputation as a reliable supplier.

"I don't think we will go that far at the moment, because there is a lot of room to negotiate," Mr. He said. "If we are forced too much, nothing can be excluded."

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In China-U.S. Trade War, Trump Would Have Weapons

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SHANGHAI - As a candidate, Donald J. Trump aimed some of his most blistering words at China, declaring that " we already have a trade war" and suggesting ominously that "we have the power over China, economic power."

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Post #5 (10/15)-   Trump and Globalization

With the election coming closer, it comes to no surprise that a point on globalization has been made by one of the candidates. This article is describing Trump's view on trade with his protectionist policies. The author states the he believes that America will not thrive without high tariffs and taxes on foreign production and our competitors.  However, several politicians and economists alike say that his policies would have very severe repercussions for America's workers and globalization.

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Opinion | Global Trade War, Trump Edition

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Robert Reich, an economist at Berkeley, former secretary of labor under Bill Clinton and a leading supporter of Bernie Sanders during the primaries, agrees. Trump's trade proposals, Reich argues, assume the U.S. can't compete and must erect trade barriers lest other countries flood America with better and cheaper products.

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Post #4 (10/15)- Globalization Lacking Support

In the article, the author explained the timeline of support of globalization.  She explained how Keynes influenced the world with a system known as the Brettonwood System.  She claimed this to be a time of "reglobalization" and expressed many of the ideas we have learned in class about the pre-70's Keynesian "30 Glorious Years".

The point of her article was the change in economics lead to also a change in support for globalization.  Yes, Keynes ideas did help economies boom and living standards better, but we see in data we have collected 70's to the present that shows an increase in inequality due to globalization.

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Globalization is clearly under attack, whether we look at trade flows or foreign direct investment. Part of the backlash against free-market policies that followed the 2008 financial crisis, protectionism has been on the rise:

The irony is that the very forces that are now attacking globalization were historically its fiercest advocates. And the early pioneers of free trade would never have seen the conflict with social justice that today's opponents claim exists.

The free-trade movement was born some two centuries ago in the very parts of Britain that voted Brexit -- areas such as the cotton-mill towns surrounding Manchester. In those days, the working classes helped lead the way to openness. Protectionism was seen as something that benefited established elites, such as rich landowners, and restricted opportunities for new businesses and their employees. From the consumer's viewpoint, protectionism meant higher prices for basics such as food and clothing.

Not only were the working classes and new industrial business leaders in favor of international openness, so too were left-leaning economists such as John Maynard Keynes. While Keynes provided a powerful attack on free-market thinking in his General Theory, published in the decade after the Great Depression, and with calls for greater state intervention, he simultaneously spoke up for international openness. Writing in the Manchester Guardian in 1922, Keynes argued that "peace, freedom of trade and intercourse, and economic wealth," the tenets of what was then called liberalism, were far superior to the pursuit of "power, prestige, national or personal glory."

Alongside the American Harry Dexter White, Keynes worked hard to devise international institutions that could place globalization on a sounder footing. The result was the Bretton Woods system, which provided the backdrop for a golden age of growth in the years that followed World War II.

This was a period of re-globalization, and it was a period that successfully combined a degree of state intervention (creating the modern welfare state, for example), alongside an outward-looking vision that facilitated growing trade between nations. The two worked in tandem: Intervention allowed economies to mitigate the adverse distributional consequences of globalization, while globalization served to keep a check on the state and prevent intervention undermining productivity performance. Trade growth boomed, as did living standards.

After the fall of Bretton Woods in the early 1970s, globalization became associated with laissez-faire economics and was no longer championed by economists on the left. Nor did they oppose it very strongly; while free market policies helped reduce unemployment and inflation in the 1980s and 1990s, the premise that globalization brought growth went unchallenged. That ended with the financial crisis. Left-leaning economists from Joseph Stiglitz to Ha-Joon Chang now see globalization as part of a basket of policies that fuel inequality.

The same logic that compelled the early globalization movement holds today, even if the much accelerated pace of innovation and the speed at which capital moves around the globe means that markets also create more disruption and can widen inequality. But the same formula that the early adopters championed can work to counterbalance those effects. It's important that they do. From a historical perspective, global trade levels, international capital movements and migrant flows remain high, as the chart below shows. But the fact that they collapsed so spectacularly and quickly following the first big wave of globalization in the late 19th century shows that it can easily happen again:

In her Conservative Party speech on Wednesday, U.K. Prime Minister Theresa May declared that she wanted a return to fairness, "supporting free markets but stepping in to repair them when they aren't working as they should."

That is an admirable goal and an achievable one. Restricting free trade and other freedoms will only make it harder.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Victoria Bateman at vb295@cam.ac.uk

To contact the editor responsible for this story:
Therese Raphael at traphael4@bloomberg.net

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Free Trade's Critics Were Once Its Champions

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Globalization is clearly under attack, whether we look at trade flows or foreign direct investment. Part of the backlash against free-market policies that followed the 2008 financial crisis, protectionism has been on the rise: The irony is that the very forces that are now attacking globalization were historically its fiercest advocates.

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Post #3 (10/05)- Plugging Asia and the Pacific

The article presented the idea of the "Internet of Thing" and how helpful the expansion of technological connection between underdeveloped countries, like in Asia and the Pacific,  and developed would be helpful for their growth and sustainability.  The Internet of Things refers to the ability to connect several billion devices and appliances together to gather data and information.  This information would be important for underdeveloped countries so they can better monitor machines and therefore increase efficiency or the weather to be able to prevent natural disasters from occurring.

This article reminded me of the "Flat World" article.  Despite the fact that a growing number of underdeveloped countries being more connected, many still are not "up to speed" with the rest of the world and struggle with basic levels of technology we have mastered.

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Closing the Broadband Divide to Connect People in Asia and the Pacific - Global Issues

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BANGKOK, Oct 05 (IPS) - Advances in Information and Communication Technology (ICT) have been instrumental in shaping and leading socioeconomic transformations across Asia and the Pacific. One key to this transformation is the technology bundled around the "Internet of Things" (IoT), which enables billions of devices and appliances to connect over the Internet for more accurate, real time data collection and analysis in an unparalleled scale.

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Post #2 (9/23)- 'Merica is in Mecca Y'all

In this article , the author is explaining the effects globalization are having on one of the 2 holy cities, Mecca.  He explains how the number of American stores and restaurants are like an invasive species taking over Mecca and causing a lot of internal struggle for the Muslims that live there. The problem is that the land is holy but there are no laws in place to insure that their religious practices and beliefs are respected.  These American companies come in buying up the land because they have more money than the locals and bring all the consumeristic qualities there products come with.

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The holy land of Hejaz, home to the two holy cities of Mecca and Medina, is a strictly Muslims-only area as non-Muslims are not issued visas to that region. One would assume that Mecca is a city of religious purity and traditionalism. However, a visit to the holy city a couple of years ago led me to the astonishing realization that the troops of globalization have reached not only the Saudi Kingdom, but the cradle of Islam as well.
Being a good "Custodian of the Two Holy Mosques" has been and remains a source of pride and legitimacy for the Saudi rulers. Starting from the 1970s, booming oil prices unleashed a wave of infrastructural modernization programs and enabled generous efforts to accommodate those making the great pilgrimage (Hajj) or small pilgrimage (Umra). Today, Mecca has the necessary infrastructure to welcome more than twelve million pilgrims a year, a number expected to rise to 17 million by 2025. Rapid modernization resulted in the drastic revamping of the image of the holy city. However, pilgrims (Hajjis) who wish to walk the path of the Prophet Muhammad, or to visit sites where famous events of early Islam took place, will be definitely disappointed. Today's Mecca has more in common with the flamboyance of Dubai than with a romantic place of pilgrimage.

According to the rules of the Meccan real estate market, the closer a property to the Grand Mosque (al-Haram), the more expensive it is. Therefore, old buildings are wiped out from the area of Mecca's old town. The sites of historical events can only be located approximately. The house where the Prophet Muhammad was born is now a library, while other important sites are lost in the shade of skyscrapers. The Western-style towers obscuring the sky around the Haram have little to do either with Arabic, or with Islamic architecture. Some Muslim scholars see them as a sign of the Day of Judgement and quote a hadith of the Prophet Muhammed that predicts that the last day will come when the guardians of Mecca compete in building tall structures around al-Haram. Judging from the 600 meter tall high Royal Mecca Clock Tower - the world's largest clock face and second tallest skyscraper - that looms over the Grand Mosque from the south, the Day of Judgement is frightfully close.

Walking on the streets of Mecca, Hajjis experience a hybrid mix of Wahhabi puritanism and Western consumer culture. Even though the advertisements do not feature human figures, the sheer number of sellout signs evokes Paris in the days before Christmas. Of course, prices are usually up during the days of Hajj. Pilgrims spend more than 5 billion riyals (1.33 billion USD) each year to buy souvenirs for friends and relatives back home. Even before the appearance of the Prophet Muhammad, Mecca had been a commercial hub where caravans from Syria met their peers from Yemen. The members of the Quraysh tribe ruling the city in the early 7th century were powerful merchants who gained profit from trading. Muhammad also recognized the importance of trade and Mecca thus remained a call of port for goods even after the capital of the Islamic empire moved from Hejaz to Syria and, later, to Iraq. However, the Wall Street style boutiques surrounding the Mecca Clock Tower are more like Western luxury malls than traditional souks. Wealthy pilgrims can do their shopping at Mango, Ralph Lauren and a spate of other Western luxury boutiques in extravagant plazas, while poorer Hajjis can purchase cheaper clothing and Made in China miniature models of the Kaaba from street vendors.

When it comes to eating in Mecca, forget traditional Saudi dates and lamb. The main fare and the most readily available dish is American junk food. Leaving the Haram Mosque through the King Fahd Gate, the first sign a pilgrim sees is a KFC advertisement offering "Hajj ad Umra Meals" containing rolls, fries and halal drumsticks for 15 riyals (4 USD). As the box does not include drinks, thirsty pilgrims have to buy their own. Unfortunately, there are few alternatives to Pepsi products, bottled in the western region of Saudi Arabia. Coca Cola, boycotted by some Muslims for the company's alleged support of Israel, is still available in McDonald's restaurants on al-Houjoon Street, less than two miles away from the Haram.

There are many places where one can eat and drink around the Grand Mosque. On the first floor of the neighboring plaza, a Starbucks Coffee offers real Americanos, and Pizza Hut and Burger King too offer their fare. The most tragicomic sight I personally experienced was a Nigerian Hajj praying outside the Haram who used a torn Pizza Hut box for a carpet, placing his forehead right on the logo while bowing.

Mecca can accommodate up to three million people during Hajj season. Of course, the price of hotel rooms often goes up tenfold during those days. The wealthiest pilgrims can stay in the Mecca Hilton, part of the Hilton chain, which will soon be inherited by scandal-star Paris Hilton. The 30-storey luxury hotel offers rooms with view of the Kaaba for a price starting from around 200 USD per person per night.

While the globalization of Mecca might disturb Muslims, it does not legally conflict with Islamic law. At the same time, several other phenomena are hardly compatible with Sharia law. For example, taking photos inside the Haram is strictly forbidden as Salafis hold that taking pictures of live creatures is an act forbidden by God. This regulation, easily imposed in the age of normal cameras, is now unenforceable. I saw iPhones, BlackBerrys, and Samsung Galaxys and other smartphones merrily clicking away around the Kaaba and the powerless security guards watching it. The list of controversies does not end here. Just a stone's throw away from al-Haram, there are branches of the Riyad Bank and other financial institutions that owe a fair share of their profit to applying interest (known as Riba in Arabic), a practice strictly forbidden by Islamic law. The Saudi British Bank, the Saudi Hollandi Bank and the Banque Saudi Fransi are also proud to have branches in the Holy City.

"Why can a mosque can be built in Europe and America, and why can't a church be erected in Saudi Arabia?" is one of the questions asked by opponents of Islamic expansion. The heart of the Muslim world is not as closed to foreign impacts as one might assume.

Globalized Western values are spread not only by missionaries, but also through the promotion of a lifestyle and a society based on the consumption of goods, which is at least as incompatible with puritan Islamic values as is Sharia law with liberal Western ideas. Having a McDonald's, a Hilton and Western-style banks in Mecca is no less controversial than having a grand mosque in the centre of Rome, hearing the call of the muezzin echoing through the Swiss Alps, or, let's say, having a mosque a block away from Ground Zero.

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How Globalization Reached The Cradle Of Islam

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The holy land of Hejaz, home to the two holy cities of Mecca and Medina, is a strictly Muslims-only area as non-Muslims are not issued visas to that region. One would assume that Mecca is a city of religious purity and traditionalism.

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Post #1 (9/23)- Globalization: Not All Countries Saving Grace

In this article, the author is describing how globalization while beneficial in some ways, is not the end all be all to fix broken economies and underdeveloped countries.  In fact, as we have learned in class, globalization leads to further issues and does not work for every country.

The author argues we need to, "...reassess the balance between national autonomy and economic globalization." He believes “global governance” should promote democracy, not globalization. The social strain that occurs when globalization becomes "hyperized" he says could be reduced if democratic policies were forced on globalization.

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A Chinese student once described his country's globalization strategy to me. China, he said, opened a window to the world economy, but placed a screen on it. The country got the fresh air it needed - nearly 700 million people have been lifted from extreme poverty since the early 1980s - but kept mosquitoes out.

China benefited from the flourishing of trade and investment across national borders. For many, this was the magic of globalization.

But it's not the whole story. Look closely at the economies that converged with richer counterparts - Japan, South Korea, China - and you see that each engaged globally in a selective, strategic manner. China pushed exports, but it also placed barriers on imports to protect employment in state enterprises and required foreign investors to transfer know-how to domestic companies.

Other countries that relied on globalization as their growth engine but failed to put in place a domestic strategy became disillusioned. For example, few countries tried as hard as Mexico to integrate with the world economy, through Nafta and liberal trade and financial policies. Yet the country's economic growth in recent decades has been sluggish, even by the modest standards of Latin America.

The bigger worry today is that unmanaged globalization is undermining democracy. Democratic politics remain tethered to nation-states, while institutions that make the rules for global markets are either weak or seem too distant, especially to middle- and lower-class voters.

Globalization has deepened the economic and cultural divisions between those who can take advantage of the global economy and those who don't have the resources and skills to do so. Nativist politicians like Donald J. Trump have channeled the resulting discontent as hostility to outsiders: Mexican or Polish immigrants, Chinese exporters, minorities.

We need to rescue globalization not just from populists, but also from its cheerleaders. Globalization evangelists have done great damage to their cause not just by underplaying the real fears and concerns on which the Trumps of this world thrive, but by overlooking the benefits of a more moderate form of globalization.

We must reassess the balance between national autonomy and economic globalization. Simply put, we have pushed economic globalization too far - toward an impractical version that we might call "hyperglobalization."

The transition to hyperglobalization is associated with two events in particular: the Organization for Economic Cooperation and Development's decision in 1989 to remove all restrictions on cross-border financial flows, and the establishment in 1995, after almost a decade of negotiations, of the World Trade Organization, with wide-ranging implications for domestic health and safety rules, subsidies and industrial policies.

The new model of globalization stood priorities on their head, effectively putting democracy to work for the global economy, instead of the other way around. The elimination of barriers to trade and finance became an end in itself, rather than a means toward more fundamental economic and social goals. Societies were asked to subject domestic economies to the whims of global financial markets; sign investment treaties that created special rights for foreign companies; and reduce corporate and top income taxes to attract footloose corporations.

Some simple principles would reorient us in the right direction. First, there is no single way to prosperity. Countries make their own choices about the institutions that suit them best. Some, like Britain, may tolerate, say, greater inequality and financial instability in return for higher growth and more financial innovation. They will opt for lower taxes on capital and more freewheeling financial systems. Others, like Continental European nations, will go for greater equity and financial conservatism. International firms will complain that differences in rules and regulations raise the costs of doing business across borders, but their claims must be traded off against the benefits of diversity.

Second, countries have the right to protect their institutional arrangements and safeguard the integrity of their regulations. Financial regulations or labor protections can be circumvented and undermined by moving operations to foreign countries with considerably lower standards. Countries should be able to prevent such "regulatory arbitrage" by placing restrictions on cross-border transactions - just as they can keep out toys or agricultural products that do not meet domestic health standards.

For example, imports from countries that are gross violators of labor rights, such as Pakistan or Vietnam, may face restrictions when those imports demonstrably threaten to damage labor standards at home. Otherwise, national institutional diversity would be meaningless. Emphasizing the primacy of norms and social bargains embedded in our domestic regulations would ensure that global commerce was not used to override them. It would also shield us from misguided protectionism in the great majority of cases where trade poses no danger.

Third, the purpose of international economic negotiations should be to increase domestic policy autonomy, while being mindful of the possible harm to trade partners. The world's trade regime is driven by a mercantilist logic: You lower your barriers in return for my lowering mine. But lack of openness is no longer the binding constraint on the world economy; lack of democratic legitimacy is.

It is time to embrace a different logic, emphasizing the value of policy autonomy. Poor and rich countries alike need greater space for pursuing their objectives. The former need to restructure their economies and promote new industries, and the latter must address domestic concerns over inequality and distributive justice. Both objectives require placing some sand in the cogs of globalization. For example, developing nations may be allowed to subsidize some industries in return for rich nations being allowed to use tariffs against countries "dumping" goods produced under substandard labor or environmental standards.

Fourth, global governance should focus on enhancing democracy, not globalization. Global governance cannot overcome major problems like inequality, social exclusion or low growth, but it can help by devising norms that improve domestic policy making, like requirements on transparency, public deliberation, broad representation, accountability and use of scientific or economic evidence in domestic proceedings. To some extent, the World Trade Organization already advocates these disciplines. They deserve greater priority over trade liberalization and regulatory harmonization.

And finally, nondemocratic countries like Russia, China and Saudi Arabia - where the rule of law is routinely flouted and civil liberties are not protected - should not be able to count on the same rights and privileges in the international system as democracies can. When a nation is not democratic, we can no longer presume that its institutional arrangements reflect the preferences of its citizens. Therefore it lacks a prima facie argument for shielding its market rules from international scrutiny. It would be appropriate for democracies to consider less permissive rules for them - for example, by requiring a higher burden of proof from non-democracies when they file a trade complaint against democracies.

When I present these ideas to globalization advocates, they say the consequence would be a dangerous slide toward protectionism. But today the risks on the other side are greater, namely that the social strains of hyperglobalization will drive a populist backlash that undermines both globalization and democracy. Basing globalization on defensible democratic principles is its best defense.

Globalization, within limits, has been good economics. Globalization, within limits, can be good for our democracies, too.

Dani Rodrik, a professor at the John F. Kennedy School of Government at Harvard, is the author of "Economic Rules: The Rights and Wrongs of the Dismal Science" and "The Globalization Paradox: Democracy and the Future of the World Economy."

A version of this article appears in print on , on Page SR4 of the New York edition with the headline: Put Globalization to Work for Democracies. Order Reprints | Today's Paper | Subscribe

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Opinion | Put Globalization to Work for Democracies

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A Chinese student once described his country's globalization strategy to me. China, he said, opened a window to the world economy, but placed a screen on it. The country got the fresh air it needed - nearly 700 million people have been lifted from extreme poverty since the early 1980s - but kept mosquitoes out.