Global Goods

The Suez Canal is a 19th century marvel of engineering, but the idea was not new. Ever since antiquity, the people who have ruled Egypt have sought to ease the transport of goods between the Mediterranean and Red Seas. Why wouldn't they? The annoying bit of desert that separates them is the most trade-restricting piece of land in the world, blocking the passage of ships from one end of the Old World to the other. At times, Egypt’s various rulers succeeded — the Pharaohs, Persians and Greeks all dug successful canals from the Red Sea to the Nile. The Romans did it too, naturally.

The Emperor Trajan poured mountains of imperial gold into digging out the silted-up Canal of the Pharaohs, and allowed mountains more to be spent purchasing from the ships that came. Perfumes from Yemen, silks from China, pepper from India, all moved west as Roman gold flowed in the other direction. Tariffs and trade deficits be damned! Romans were the first citizens of the world — if they wanted the luxuries of the East, they got them.

Here's the thing: Trump has a point. He is wrong about everything — the lenses he looks through and the already broken (and historically disastrous) solutions he chooses — but Trump has a point. The global economy, which is more or less the American economy writ large, has degraded to the point that many ordinary Americans don't have enough purchasing power to cover basic needs, let alone buy foreign luxuries.

This is evidenced by poor people forgoing healthcare, 14% of households being food insecure, a further 9% being under severe financial strain and the minimum wage being just $7.25. Biden's campaign assertion that America had the best economy in the world was only ever true in the aggregate “America” and completely false for the ordinary “American”. On the other side of the coin, Trump's assertion that America's economic woes are due to other countries — seemingly all of them — taking it for a ride begs the question 'where are those countries hiding the cash?'

Ordinary folk in practically every country on the Trump tariff list are suffering in the same fundamental way as ordinary Americans are. Money isn't flowing to them. Granted, we're all suffering in various shades. Few Europeans, for instance, have to worry much about healthcare, but almost all of us have virtually stagnant wages, rising costs of living and a crushingly difficult housing market for young families. Worst of all, for a collection of capitalist economies, talent no longer pays like it used to — in Britain, skilled professionals are paid about two-thirds what our American counterparts are. Whoever Trump blames for unfairly hording American money, it certainly isn't me or any other ordinary Brit, European, Canadian, or Heard Island penguin.

And it is trivial to see where everyone's money is actually going — an increasingly small, global elite are accumulating it. Since the 2008 financial crisis (which should be so rare that I don't have to stipulate “2008”) the richest 1% globally have increased their share of wealth from about 40% to around 50%. That's a giant increase relative to the rest of us, and 40% was unforgivable to begin with.

Now, please don't think I'm not a bleeding-heart socialist. I'm not. The world has always had some people dying of obesity while others die of starvation, but for several decades, the global capitalist order created a surplus of resources that put more people in the fat camp, and that was good (or at least better). Yes, the distribution of the surplus was horrifically unequal from the get-go, but there was a surplus, and we could have done something fairer with it.

We chose not to. There was never anything to keep capitalism in its golden-age Bretton Woods form, but perhaps we should have tried harder. Instead, like all systems, capitalism adjusted and morphed and became so unrecognizable that citizens of the richest countries now expect to be poorer than their parents. And in the richest country of all, people worry about the price of eggs. None of us are Romans.

Tariffs won't put us in togas. They're pretty easy to understand — if I sell English wool to a Japanese fashion house at £1 per kilo, then my Japanese customer pays £1 per kilo and I receive £1 per kilo (ignoring other costs and exchange rates). If the Japanese government puts up a 20% tariff, then my Japanese customer pays £1.20 per kilo, the Japanese treasury gets £0.2 per kilo, and I still receive £1 per kilo. I don't have to pay Japan's tariffs — the Japanese do, as tax.

And tariffs, despite being specific to imported goods, have virtually nothing to do with influencing foreign suppliers. Instead, tariffs influence domestic consumption by steering a nation's purchasing towards goods produced within it. That may sound fairly innocuous — why shouldn't citizens support their own economy's production, Americans buying American, Brits buying British, and so on? But from another vantage point, tariffs ring-fence citizens as a captive market for a nation's companies. That can be fantastic if you own a company since you can make an inferior product, inflate the price and smile at the millions of people will have little other option than to buy it. This is clearly a terrible deal for consumers.

Global trade is the reason my high-spec, Chinese-made smartphone runs on the best Taiwanese chip technology, itself made with the most precise Dutch machinery, to let the finest American operating system serve a British app that allows me to manage my healthcare with a fingertip. If it all had to be made in Britain — or any one country — that kind of technology would be generations away.

Global trade is good.

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