Do
you want to know what difference there is between (1) thinking things up before
you make your moves or thinking as you make them? and (2) trying to fix things
after you've made your moves only to discover that something has gone wrong? If
this kind of subject interests you, here is a case study you'll find
interesting.
Some
of us have been warning of problems waiting to affect the nations that have
become too promiscuous in their pursuit of free trade opportunities with other
nations in this era of globalization. Egypt and America were the two nations
mentioned in particular, given that they have large populations and diverse
economies which allow them to be self-sufficient both in the capacity to
produce the goods and services that their populations need, and consume most of
what they produce.
Unlike
the smaller nations that need to specialize in the production of a small number
of items and produce them in quantities large enough to be economical –– so as
to trade with other nations for what they need that they do not produce
themselves –– large population countries such as Egypt and America can do well
economically without relying on trade with other nations.
Unfortunately,
neither country paid attention to the warnings issued to them. America
continued to sell products it made at home, and continued to buy products made
abroad, much of which produced by American companies tied in a joint venture
with foreign companies. As to Egypt, it was lucky in that the volume of trade
it was doing with other countries had not yet caught up with the large number
of agreements it had signed with those countries. The result has been that
America learned its lesson from a bitter experience, whereas Egypt learned from
having walked up to the precipice but stopping before falling down.
Had
America not waited for COVID-19 to happen before rethinking its free trade
practices, there would not have been a need for an article such as the one
written by Sanjai Bhagat. It came under the title: “Outsourcing manufacturing
to China endangers US security and public health,” and the subtitle: “High-tech
manufacturing and manufacture related to public health and defense must be kept
in the United States.” It was published on April 13, 2020 in The Washington
Times.
Even
though Sanjai Bhagat directs his criticism at America's trade with China, what
he says would apply equally if the country were other than China. Thus, the
article should be read without regard to the claim that China is the culprit,
but thought about in terms of blaming foreign trade for the bad results. When
you do that, here is how Bhagat's prologue would sound like: “The ongoing
COVID-19 pandemic in the United States has brought into sharp focus the critical
downside of too much foreign trade during the past three decades, and the
outsourcing of manufacturing to foreign countries”.
Much
of what Bhagat says after that opening, concerns the statistical realities that
describe the current situation in actual numbers. And that's where you clearly
see how precarious America's position in the world has become. In fact, someone
else has noticed that precariousness as well, and here is how Bhagat has
described that actuality: “US policymakers are concerned that China might
weaponize medical exports to the United States. How did we get to be so
vulnerable?”
But
the fact that China did not weaponize medical exports to the United States any
more than it did the rare earths, some of which it owns at the exclusion of
everyone else, says a great deal about the maturity of the Chinese system of
governance, especially when you contrast China's behavior with America's
trigger happy disposition to shoot with the gun of economic sanctions at anyone
that defies it.
In
fact, having shown this level of maturity, China does not deserve being
described the way that Sanjai Bhagat did, as shown in the collection of
passages that follow:
“In
the US-China trade relation, China subverted the US advantage by requiring US firms
to transfer their technologies to China for market access. Another problem with
the all-trade-is-good position is [China's] impact on US national security. As
their economy has strengthened, China has become more aggressive toward the US
armed forces. With China's entry into the WTO, a cartel of Chinese companies
colluded on price. They sold these antibiotics and hospital supplies much
below-cost and drove all US makers out of business, after which they increased
the price several-fold”.