This morning a reader tagged in a Tweet for a Bloomberg story which finds that the farmer bailouts – the aid packages the Trump administration and Congress have deployed as a way to cushion the economic harm caused by the trade war with China – are now larger in terms of dollars than the Detroit bailouts.
— HP (@HP10303442) September 23, 2019
This news will spark a lot of pie-throwing between Team Trump and Team Resist which will be obnoxious given that most of those people have probably switched sides on bailouts since the Obama era.
I’m not sure the two situations are really comparable, though. The farmers are taking it on the chin because our federal government is trying to use trade as a way to bring China in line. The farmers are collateral damage in foreign policy which really doesn’t have all that much to do with the marketplace, or how the agriculture industry has conducted itself.
The automakers found themselves in hot water circa 2009 primarily due to their own mismanagement and poor judgment. To the extent the government was involved, it was an unholy alliance between big government economic policies and the various corporate behemoths in the housing and lending sectors which lobbied for those policies. They created a bubble, the bubble popped, and a lot of people got hurt.
Whether or not the government should have intervened to prop up various industries, like the banks and the automakers, after the bubble popped is beyond the scope of this post. Suffice it to say the situations weren’t similar.
Earlier this month I argued that we’re spending too much time looking at the trade war with China only through an economic lens.
I wish the Trump administration would start talking about China the way Reagan spoke about the Soviet Union.
China is a threat to our national security and the security of our global neighbors. They have a horrendous human rights track record. They are an abusive, authoritarian regime which millions in Hong Kong are fighting to resist even as I type these words.
We tend to see China as a massive market for American goods, and a source for cheaper products which drive down the cost of living. Those things are real, and a lot of Americans have benefited from trade with China, but lost in that is the reality that our trade with that country has made the regime which runs it very wealthy and very powerful.
Our trade with China over the past decades has fueled a monster.
If we can use trade policy to de-fang that monster, I’m all for it, and if it means we have to bail out some farmers along the way, I’m for that too.
By the way, while it’s hard to discern reality from the economic propaganda China disseminates, there is some evidence that the trade war is working.