The US-China Trade War 5 – How to Prevent Future Trade Wars

Sacrificing for the Future

By using Eliot Spitzer and other scandals as an example, I’m trying to show that Western democracy has a way of bringing down great politicians. Our democratic system doesn’t understand the concept of sacrificing for the future that we all have to follow in our personal lives to be successful. When people vote they’re not thinking 20 or 30 years into the future. They’re only thinking short term and mainly about emotional issues such as abortion, affairs, and gun control that have nothing to do with economics or actually governing a country. In fact, people could probably be manipulated into voting for economic policies they wouldn’t otherwise vote for because all they’re thinking about are the emotional issues hand-crafted by election campaigns. Social media and YouTube easily take emotional issues viral while boring economic policy statements remain hidden.

Politicians need to stand up and do what’s unpopular just because it’s the right thing to do, even it costs certain groups a lot of money. If powerful groups that are being negatively affected can’t wait a few years until the next election, they’ll find some moral scandal to attack with – Monica Lewinsky, Ashley Dupré, Stormy Daniels, etc., and try to remove the unpopular but effective politician. It almost seems like the Democrats are using a page out of the Republican playbook from 20 years ago with Stormy Daniels.

At the same time, any normal and rational person doesn’t want to go into office because their past history is going to be examined under a microscope, even if that past history has absolutely nothing to do with their job in public office.

The Democracy Time Frame Problem

Another part of the problem is the short time frame that Western democratic governments are in power for. One or two terms of four years are nowhere near long enough to shape the long-term economic policies and vision of a country. Many democracies nowadays, such as the US, UK, and even Thailand, are evenly split 50-50 between two completely opposite political philosophies. As a result, the political paradigm of a country is completely changed every four years or so as soon as one party is voted out and the other one takes over. This seesawing back and forth creates a form of whiplash for the economy which leads to inefficiencies and instability.

The inefficiencies are easy to see in government. The opposition party always disagrees with everything the party in power tries to do, just for the sake of disagreeing. For example, a few years ago under Obama, the Republicans were threatening to shut down the government because they didn’t agree with a new spending bill that focused on social programs. Now that the Republicans are in power they passed a tax bill that will increase the national debt by trillions!

Obviously, there’s a difference in spending philosophies where one side believes in improving life by funding social services, and the other side believes reducing the tax and regulatory burden on corporations will have a trickle-down effect to individual workers. But, if the party in power is democratically elected and therefore chosen by the people, shouldn’t the opposition concede and allow the government to continue operating even if they don’t fully agree with the way money is being spent?

The Brexit Effect

A perfect example of voting with emotions is the Brexit vote. A lot of people from the UK who voted to stay in the EU said the people who voted to leave didn’t fully understand the issues. One argument is the general population is incapable of analyzing the complex issues involved and therefore not able to form an educated opinion. That’s what the experts in government are paid to do. 

Since when have democratic elections been based on facts and policy and not emotional issues? 

The time frame problem and not sacrificing for the future can also be added to Brexit. David Cameron was thinking short-term and only doing what his powerful globalization supporters asked of him regardless of the consequences. And the population voted with their emotions on immigration. Combine that with the complex issues surrounding international free trade and it’s no wonder the losing side is crying foul. I have a feeling that his government had internal warnings about trade imbalances they didn’t act on, just like Obama did.

Is the average voter in a democratic system intellectually capable and motivated enough to understand the complex issues of governing a country in order to form an educated opinion to cast a rational and impartial vote based purely on facts rather than emotions? 

Apparently not, according to the ‘stay’ voters.

Thai Democracy

The Brexit voter intelligence argument sounds similar to what we’ve heard before in Thailand. The yellow shirts were arguing Isaan farmers are not educated enough to vote and therefore the red shirts should never be in power. I have a feeling that almost every Brexit ‘stay’ voter is against the Military Junta here and would like to see a return to democracy in Thailand, even if Thai farmers are smart enough to vote while their own citizens are not. I don’t want to go off topic for too long since this is a blog about FIRE in Thailand and not Thai politics, so I’ll end this section here.

The Impossible Solution

At this point, if you can take away the greed and human rights abuses, dictatorship is looking pretty good.

Actually, what about a benevolent dictator? An authoritarian leader who serves for a long period of time and does so for the benefit of the whole population. Sounds like a good idea right?

Unfortunately, benevolent dictators are extremely rare in human history. Only a few dozen appear in thousands of years of records. I’m sure some dictators start out with good intentions, but eventually, almost all of them will fall prey to enough greed and nepotism to be overthrown by a revolution, military coup, or by US bombs.

At the moment, the current regime in Singapore comes close to this ideal. In power since 1965 through ‘elections’, the Singapore government is seen from an international point of view as competently managing the economy and mostly free of corruption. Most citizens are well-off, educated, healthy, and safe. That seems impossible with current Western governments!

When a single political party has proven they will do what’s best for a country over nearly 60 years, the general population can put their faith in the system and they don’t have to concern themselves with getting educated enough about the real issues to vote. At the same time, the opposing political parties don’t have to try to manipulate voters with emotional issues or try to remove the ruling party with some moral scandal of the day. Sounds like a good system to me.

The Verdict

Throughout this 5-part series, we showed that problems inherent in democracy are partly responsible for long-term trade inequality. Western consumers who are unwilling to take a stand against Asia for labor and intellectual property abuses for fear of higher prices are also responsible. Voters only think short-time, and any time a politician tries to do what’s necessary, but also painful, the system is often successful at having them removed from office because of an irrelevant ‘scandal.’ The short-term solution to the trade war is going to be painful, and politicians need more security and voter understanding to do what’s right. The current government system needs to be improved, but at the same time it’s impossible to have Singapore-like governments in every country – there aren’t enough honest politicians in the world to go around.

Maybe it will take a revolution and paradigm change of our entire democratic government system to get at the root cause and truly fix the problems, but with human nature being what it is, let’s hope that new system is better than the current one.

Thailand and the US-China Trade War – 5 Part Series

1. Will Thailand Survive?
2. The Real Truth Behind Trump’s Tariffs
3. The Race to the Bottom
4. Democracy, Sex Scandals, and Tariffs
5. How to Prevent Future Trade Wars