The main problem with Economics as a field is that it is about myth-making. If only we could have a free-market, think about how wonderful things would be. If only we could have pure free trade...etc.
The real world is shaped by political concerns, and different national and regional factions jockeying for power.
An economic analysis fails to grasp the reasoning and significance behind the recent tire tariffs against China. There are frets about Smoot-Hawley and union influence. Unions are always a good bogeyman for the neo-liberal economist and his dream of 'free markets'.
Political economy looks at other factors, and places the tariffs in the context of US-China geopolitical struggles. A large one at the moment being Iran. China has been the most reluctant national power to endorse sanctions against Iran, due to business ties, and a policy of non-interference. Any Western blockade of gasoline imports to Iran would be diminished by the fact that Iran imports about a third of that product from China.
U.S. tariffs on products made in China could be legally applied to a wide sweep of industries. And they would be pleasing to countries such as Mexico, Vietnam, Korea and the like.
They can best be understood as a direct threat to China - stand out of the way of American interests in Iran.
1 "Obama: Iran's secret nuke facility 'inconsistent with a peaceful program'" - USA Today
2 "China Firms Selling Fuel to Iran as U.S. Sanctions Loom" - NYT
3 "US "confident" tires action on China WTO legal-aide" - Reuters
4 "Is Iran gas ban a step toward war?" - Asia Times
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