/leftypol/ - Leftist Politically Incorrect

Stagflation at home. Deflation abroad. If Trump *actually* doubles down on his tariff policy in the long run, the collapse of the American empire is inevitable.

Before we get into any of this, we need to understand the role that the American consumer market plays in the global trade system. Capitalist systems are plagued with the structural contradiction of overproduction relative to aggregate demand, and the declining rate of profit fueled by labor saving technological progress accelerates this problem. America exists to provide the living resolution to this crisis of overproduction, in all its glorious gluttony. Every aspect of American society is developed in the most consumptive, inefficient, gluttonously suburban way to maximize its ability to soak up the trade surplus from the export oriented industrial economies of the world. The reserve status of the dollar is a sponge for the baubles and refuse of the world's export oriented development. Fat, hungry Americans are the keystone that brings jobs and dollars to the rest of the world, keeping them safely away from deflationary recession.

Trump is taking this exhorbitant American privilege and shooting it in the head. His reasons are completely retarded and are actively destroying the American economy, but it's what happens to the rest of the world that becomes interesting. Pointing tariffs directly at America's trade deficit effectively launches a nuclear bomb at the global demand for the dollar and the ability for America's gluttony to absorb the excess capacity of the rest of the world.

If Trump doesn't cuck out, the tariffs will sever these American trade networks and they won't even bring back domestic production, at least not for decades. If domestic production does come back, it won't bring consumer-oriented manufacturing jobs with it. You can't crawl back down the value chain to more labor intensive industries. It doesn't work like that. The only way to make it happen (besides deficit stimulus) is to completely destroy your status and technological superiority, emptying the educated service sector into the factories like Pol Pot emptying Cambodia's urban working class into the countryside. The purchasing power of the dollar will fall. Unemployment will rise. It's the worst possible kind of textbook stagflation. No monetary policy can fix this: you're just picking between flavors of recession. The only thing that can fix this is to go back on the tariffs and to stimulate consumer demand.

If Trump does keep the tariffs, they create a gaping demand void where the gluttonous United States once gobbled up the overcapacity of global export industries. This excess capacity on the part of the global powerhouses of production (China, Vietnam) needs to be channeled somewhere, and someone needs to replace the United States as the world's premiere consumption economy. There needs to be a currency that can replace the dollar. It could be Europe, perhaps in combination with Japan, as the Yen and the Euro are quite valuable and those economies already have strong consumer markets. This promises to flood the leftover fraction of the imperial core with dirt cheap Chinese goods, forcing a rapid appreciation of their currencies to replace the dollar. However, these places are still export oriented economies who would hate to see their domestic industries wiped out in a Chinese flood. The transition into America 2 would be extremely disruptive and there would be an overwhelming temptation to throw up protectionist tariffs in order to avoid a recession enforced by rapid currency appreciation and deflation. Now there's an even bigger void of aggregate demand to soak up the world's overproduction. It needs to go somewhere.

China (and other Asian social dirigiste economies) will be reluctant to slow down production in spite of this and have a protective charm they can employ against economic collapse: an interventionist vanguard party. They can nationalize failing industries quite easily and can juice aggregate demand. The Chinese, however, will be deeply reluctant to revalue the Yuan, outsource their industrial might, and become another America. Their economic strategy in the modern age is preserving an aggressively export-oriented economy even when "normal" conditions would transform them into the West, turning to domestic automation as an alternative to outsourcing labor intensive industries. Revaluing the Yuan brings them to a deflationary crisis and risks the loss of their industrial power.

So this troublesome Accursed Share of excess could now get dumped onto the rest of the developing world at large instead. In contrast to the stagflation underway in the US (and maybe other parts of the Imperial Core depending on their policy choices), this creates a global deflationary shock that forces the rapid appreciation of all the devalued shitcoins they use as money across emerging markets. Dogshit third-world currency will suddenly be able to afford cheap Chinese consumer goods originally developed to service American markets. The problem is that their local labor intensive industries will get wiped out by the competition. Either they climb the value chain, lean hard into comparative advantage, and stimulate consumer economic demand with keynesian welfare policies or they get crushed by a global depression. If everyone does tariffs, they won't help. The only way out of the hole is the same way as in the last Great Depression, when America was in modern China's position: stimulate demand. There's the Soviet approach, the Keynesian approach, and the fascist approach.

The fascist approach, unlike the other two approaches which stimulate consumer demand, pours deficit spending into the military industrial complex as an outlet to keep industry alive without giving the ungrateful workers any benefits. World War II eventually resolved this quandry to preserve capitalism by destroying global industries with total war and the annihilation of the industrial machinery of the world with the exception of America, the last standing intact productive engine. The Americans leveraged this advantage to create a global empire, outsourcing their consumer industries to Europe and Japan (and later China) and juicing their military industries to create the consumerist superpower that we know and love today, exporting management of the global economy at gunpoint (what else is the dollar?) and importing the riches of the world. The contradiction to this is that by outsourcing the productive forces of the world outside of your grasp you run the risk that an entire nation could now go on strike, if they have sufficient political organization. Even more worryingly, communists like the ones you fought in China and Vietnam seem to be the only ones actually good enough at building their productive forces enough to become your chief suppliers. You sold the rope factory to the goddamn reds, and there's no way to get it back without financial suicide.

This brings us back to the crisis at hand. The tariffs will kill the dollar, no matter how much America's desperately insane national bourgeois believe it won't. They will kill it dead and with it America's silent grip on the political and economic systems of the world will wither away. America is like the British Empire, employing protectionism as it grew, free trade at its height, and suicidal protectionism at the bitter end. With the loss of the dollar and programs like USAID the financial incentive of developing nations to remain within the American system evaporates. There is only political allegiance and vibes. The easiest path is to defect to the East, which has been preparing your economies to absorb this shift for decades with Belt and Road development initiatives. America will not take this lightly and its devastated economy will need an industry. The most logical output is war. Direct war against nuclear armed states in these conditions is impossible. The only release valves avaliable are proxy conflicts. I would not be surprised to see American invasions sweeping Latin America as the soft Monroe Doctrine stops working and devalued American dollars become unable to pay for CIA coups against Chinese aligned social democratic states there. It's likely that these wars will turn into drawn out proxy conflicts against entrenched guerillas funded from abroad. The geographical proximity of the domestic United States to these conflicts will lead to spillover across the border into the unstable, likely openly fascist US, and in either case the capacity of the American empire will exhaust itself trying desperately to hold itself together. The endgame is probably the equivalent of a Carnation Revolution by drafted Americans exhausted by the ceaseless conflict.

I can't predict the future, but if this tariff policy is maintained something along these lines might happen, potentially a mixture of different overlapping possibilities. But it will get really ugly, and probably very quickly.