So, now we have the battle lines drawn for this year. Global reflation on the one hand; protectionism on the other. One boosts growth; the other reduces it. And within each growth scenario, each country could have wildly different outcomes for their economy.
Meanwhile the policies that will lead to more emphasis on one or the other are now being thrashed out very loudly and very publicly. In fact, trade deals by their nature require a very public kind of negotiation. They say, Hey, we want to be friends with you, because we’ve got something you want, and we’ve got something you want. It’s a game of poker, and if you want to raise the stakes, you can use something very specific to bluff: the one true power of a politician, which is the support of their electorate. Hence the need to signal effectively through the media, and the need to stoke up noisy support from time to time.
That’s how we end up with the US President and the Mexican President indulging in what appears to be a schoolyard huff. “You pay”, “No, YOU pay”, “Fine, don’t turn up”, “Fine, I WON’T THEN”. This unedifying display seems to feed into the “liberal elite” perspective that Trump and populist politics has ushered in a dreadfully uncouth and therefore useless political era. No, No, No, as Maggie once said (there will be much more reference to Maggie before the Trump term is out!). Remember the 1980s? Remember the 70s or 60s, even. Times when politicians could argue. Times when there were big topics to fight about. Communism v Capitalism. Nuclear power v Opening borders. Etc. We needed the big loud debate because there were big debates to be had.
Oh but then the Berlin Wall fell, all the communist countries embraced capitalism, and capitalism won! Then inflation was conquered and the business cycle was won! Hurrah, and indeed huzzah for it was the end of history. But it turns out that the period of the late 90s through to the collapse of Lehman was the outlier. The loud shouting between our leaders is only going to grow. And what is so wrong with that? Why not question the benefits of immigration or free trade? Maybe the war was never won. Just a battle. And as Maggie said, you may have to fight a battle more than once to win it.