Trump’s Trade Confusion

Trump himself has already undercut his national-security claim by exempting most major exporters of steel to the US. Canada, for example, is exempted on the condition of a successful renegotiation of the North American Free Trade Agreement,

.. effectively threatening the country unless it gives into US demands.

But there are a host of issues in contention, involving, for example, lumber, milk, and cars. Is Trump really suggesting that the US would sacrifice national security for a better agreement on these minor irritants in US-Canadian trade? Or perhaps the national-security claim is fundamentally bogus, as Trump’s secretary of defense has suggested, and Trump, as muddled as he is on most issues, realizes this.

.. As is often the case, Trump seems to be fixated on a bygone problem.

  • .. Recall that, by the time Trump began talking about his border wall, immigration from Mexico had already dwindled to near zero.
  • And by the time he started complaining about China depressing its currency’s exchange rate, the Chinese government was in fact propping up the renminbi.
  • .. Likewise, Trump is introducing his steel tariffs after the price of steel has already increased by about 130% from its trough, owing partly to China’s own efforts to reduce its excess capacity.

.. But Trump is not just addressing a non-issue. He is also inflaming passions and taxing US relationships with key allies. Worst of all, his actions are motivated by pure politics. He is eager to seem strong and confrontational in the eyes of his electoral base.

.. what matters is the multilateral trade deficit, not bilateral trade deficits with any one country.

.. Reducing imports from China will not create jobs in the US. Rather, it will  for ordinary Americans and create jobs in Bangladesh, Vietnam, or any other country that steps in to replace the imports that previously came from China.

.. In the few instances where manufacturing does return to the US, it will probably not create jobs in the old Rust Belt. Instead, the goods are likely to be produced by robots, which are as likely to be located in high-tech centers as elsewhere.

.. the Republican Party, standing in solidarity with Trump, seems suddenly to have forgotten its longstanding commitment to free trade, much like a few months ago, when it forgot its longstanding commitment to fiscal prudence.

.. while Trump claims to be looking out for US industrial workers, the real winner from “successful” negotiations – which would spur China to open its markets further to insurance and other financial activities – is likely to be Wall Street.

.. The EU, for its part, seems highly concerned with protecting data privacy, whereas China does not. Unfortunately, that could give China a large advantage in developing AI.

.. In the years ahead, we are going to have to figure out how to create a “fair” global trading regime among countries with fundamentally different economic systems, histories, cultures, and societal preferences.

The danger of the Trump era is that while the world watches the US president’s Twitter feed and tries not to be pushed off one cliff or another, such real and difficult challenges are going unaddressed.

Will China Really Supplant US Economic Hegemony?

As artificial intelligence reshapes the global economy, economists who once argued that China’s massive population would propel it to superpower status should rethink that assumption. In fact, as the global economy reaches higher stages of development, China’s labor advantage today could become a handicap tomorrow.

.. Many economists, including many of the same experts who see China’s huge labor force as a decisive advantage, also worry that robots and artificial intelligence will eventually take away most jobs, leaving most humans to while away their time engaged in leisure activities.

Which is it? Over the next 100 years, who takes over, Chinese workers or the robots? If robots and AI are the dominant drivers of production in the coming century, perhaps having too large a population to care for – especially one that needs to be controlled through limits on Internet and information access – will turn out to be more of a hindrance for China. The rapid aging of China’s population exacerbates the challenge.

.. China’s gains still come largely from adoption of Western technology, and in some cases, appropriation of intellectual property.

.. In the economy of the twenty-first century, other factors, including rule of law, as well as access to energy, arable land, and clean water may also become increasingly important.

.. Yes, the US faces vast challenges as well. For example, it must devise a way to retain dynamic technological growth while preventing excessive concentration of wealth and power.

Non-tech businesses are beginning to use artificial intelligence at scale

Artificial intelligence is spreading beyond the technology sector, with big consequences for companies, workers and consumers, says Alexandra Suich Bass

Sundar Pichai, Google’s boss, has said that AI will have a “more profound” impact than electricity or fire.

.. Bosses of non-tech companies in a broad range of industries are starting to worry that AI could scorch or even incinerate them, and have been buying up promising young tech firms to ensure they do not fall behind. In 2017 firms worldwide spent around $21.8bn on mergers and acquisitions related to AI

.. Around 85% of companies think AI will offer a competitive advantage, but only one in 20 is “extensively” employing it today

..  Chinese firms have an early edge, not least because the government keeps a vast database of faces that can help train facial-recognition algorithms; and privacy is less of a concern than in the West.

..  If they invest huge sums in AI early on, they run the risk of overcommitting themselves or paying large amounts for worthless startups, as many did in the early days of the internet. But if they wait too long, they may leave themselves open to disruption from upstarts, as well as from rivals that were quicker to harness technology.

.. Gurdeep Singh of Microsoft speaks of AI systems as “idiots savants”; they can easily do jobs that humans find mind-boggling, such as detecting tiny flaws in manufactured goods or quickly categorising millions of photos of faces, but have trouble with things that people find easy, such as basic reasoning.

.. In the near future AI will reshape traditional business functions such as finance, HR and customer service

.. But over time it will also disrupt whole industries, for example by powering the rise of autonomous vehicles or the discovery of entirely new drug combinations.

.. many bosses are more interested in the potential cost and labour savings than in the broader opportunities AI might bring

.. Some companies may not actually eliminate existing jobs but use technology to avoid creating new ones.

.. And workers who keep their jobs are more likely to feel spied on by their employers.

.. A longer-term concern is the way AI creates a virtuous circle or “flywheel” effect, allowing companies that embrace it to operate more efficiently, generate more data, improve their services, attract more customers and offer lower prices. That sounds like a good thing, but it could also lead to more corporate concentration and monopoly power—as has already happened in the technology sector.