Saturday, July 4, 2015

Independence, by definition, is the answer to world peace...

Every now and again---while discussing the importance of global trade---a client will push back with concerns over China and its relationships with other communist nations.

While I often succeed in overcoming the understandable, yet profoundly pernicious, instinct that buying only American somehow helps America* (see below), folks have a tougher time with the notion that reducing trade barriers is the key to making the world safer.  Somehow, despite the fact that China sells us $hundreds of billions worth of goods (and buys over a $hundred billion worth from us) each year, given the opportunity, it would team with other communist nations to do us harm---seems to be the thinking.

Well, no! While I get that there are deeply entrenched ideologies at play, there's nothing more powerful than people in search of better lives. The Chinese consumer is rising, there's no question. And it's international commercial relationships that are making it happen. And, I assure you, there's no turning back.

Here's from a July 2 Bloomberg article:

China is wary of expanding energy investments in Russia because closer ties with the Kremlin could harm its relations with the U.S., according to a former researcher at China’s biggest offshore explorer.The government in Beijing isn’t prepared to jeopardize economic links with the U.S., said Chen Wei Dong, who resigned as chief researcher for China National Offshore Oil Corp.’s Energy Economics Institute in May. The U.S. is viewed as a “global” partner while Russian ties are regional, he said.Russia is turning to Asian markets after President Vladimir Putin’s annexation of Crimea led the U.S. and Europe to impose sanctions, including oil and banking restrictions. Russia’s biggest energy exporters are targeting China, the world’s largest consumer, yet progress on supply deals has stalled after crude and gas prices declined.“If Russia has bad relations with the U.S., this may make it more difficult for China to build better relationships with Russia,” Chen said in an interview in Moscow last week. “China is looking for a balance.”The East Asian nation needs to safeguard its relationship with the U.S. because, while the two don’t trade oil or gas, they are key economic partners. U.S. trade with China reached $590.4 billion last year, according to the U.S. Census Bureau, while Russia-China trade was $95.3 billion, Chinese customs data show.

18th Century economist Frederic Bastiat on the secret to global peace:
Where goods don't cross borders, soldiers will.

*While there are multiple angles from which to disabuse open-minded folks of the faulty notion that a true patriot would only buy American, the light turns on when I ask them to imagine how local service providers would fare should everyone agree to pay substantially more than the global market price for the goods they desire. I.e., it's that discretionary income that affords you the concert and football tickets, the parking pass, the dinners out, the golf club membership, the private schooling and swim lessons for your grandkids, the birthday party bounce houses and pony rides, and on and on and on---all provided by hard-working American business folk.

The fact that buying from abroad pushes U.S. dollars into the outside world that have to find their way back to U.S. exporters---and securities/assets---seems to resonate as well.

Beyond national security and trade, if we are to live true to the founding principles of our great nation, we must demand the freedom, the independence!, to do business with whomever we desire, regardless of their domicile. And we must invite and embrace all who would grace our shores with their passion to build better lives for themselves and their loved ones!

Meriam-Webster on independence:
freedom from outside control or support : the state of being independent


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