“In time of war, we blockade enemies. In time of peace, we do to ourselves with tariffs, what enemies do to us in time of war.” Henry George 1886
There is a lot up in the air right now for American farmers in regards to trade. For me it is concerning. The productivity and efficiency of American agriculture is unmatched in the rest of the world. We produce far beyond what the American consumer can consume.
From our relationship with main trading partners to our participation in trade deals with other countries, little appears to be certain. In writing about it, I find it such a large topic that I will break it up over a couple of blog posts. In the first, I’ll try and hit on a few of the larger issues I think about. In the second I will try to talk about how it may impact me, a beef producer.
Dominating the headlines lately is the trade dispute with China. Some are concerned the first may escalate into a trade war. Our administration has threatened tariffs against China for China’s unfair trade advantages. China has responded in kind by threatening retaliatory tariffs directed to U.S. agriculture.
On one side in agriculture is a group who maintains that most of what the President is doing represents mere posturing in order to negotiate a better trade deal with the Chinese. They give him the benefit of the doubt on using these protectionist trade policies to do so. I know many who have this view. In fact, some I respect.
Alongside them, living in the same place and generally sharing the same politics, is another side who continues to support what they have historically supported, free trade. They are steadfastly against the concept of tariffs. This happens to be the camp I am in.
Of those in the first group are some more queasy about it than others, and at the other end of the spectrum are some, in full-throated confidence, urging the POTUS, “to bring it on,” and telling the rest of us “to shut the hell up and support the president.” In fact, that latter was exactly with the Iowa Cattlemen’s Association’s CEO Matt Deppe heard on a recent appearance on the Simon Conway Show.
Some of them criticize those of us in the second group as simply being “anxious.”
I happen to be interested in how anxiety impacts the decisions we make in life. I devote a considerable amount of time to learning about it, and I could offer my own testament on the counter-productivity of letting our anxiety rule the day. The fact is, though, sometimes anxious is the proper state of mind.
As humans we certainly have the ability to get worked up to a point where anxiety overshadows our thinking, but we are also capable of not letting it properly inform our thinking at all. Researchers would call this the “normalcy bias.” Our minds can view any situation as normal, whether it is or not.
Let’s say we are in a high-rise apartment building. A moderate fire has broke out below us. Some of us, at the first whiff of smoke, are going to be consumed with the desire to “get out,” and they are going to begin to make their way down the stairs to try and find a way. Others will pacify themselves with the thought that “there is no need to worry” and opt to stay in place. They may be correct, but have they been in a high-rise fire before? What do they know of the fire below them?
With one in every three rows of Iowa soybeans going to China, with the export market putting $300 a head on cattle prices, I’d argue a little anxiety is the proper state of mind concerning China and our trade agreements.
As I think about them, I try to keep if focused on a few ideas and principles to help guide my thinking. One of the first is: should the prior administration had found itself in the exact same situation the Trump administration is in, what would the agricultural conversation sound like? I keep arriving at one answer: much differently.
Second, I belong to two, policy-based agricultural groups. Between those two, and the assortment of others that are out there for varying commodities, there has been historically strong support for open markets, greater trade access, and lower tariffs. All of these policies were arrived at by these groups beginning with a basic question, “What’s best for our members and their families?” Then they ask politicians to support the policies that are in their members’ best interest.
As members we are not the groups themselves. We do the groups a service by telling our individual stories, by debating varying opinions, and by becoming informed on them. Where would we be if we asked what our politicians or President supported first, and then try to get our members to support it? I’d argue we are doing ourselves a disservice.
There are those that argue we should wait and see how things play out. If that is to mean our policy organizations should wait and see if what they oppose goes into effect before they offer opposition, when have we ever proceeded like that?
Third, in my involvement with policy-based agricultural groups, I’ve wrote countless letters to and had countless conversations with my legislators. From WOTUS to the estate tax and beyond, one well I consistently draw on is the detrimental effect of legislation that creates uncertainty for agricultural producers. Is it in our best interest to court uncertainty now in our trade policy, and light a fire in the high-rise in which we dwell?
Finally, it concerns me that in our current debate where are those holding up an example of when protectionist trade policies worked out? Where are those arguing that this is the only option we have to address our concerns?
I’ve heard the statement countless times that “all you really need to do is read the Art of the Deal to understand what it is the President is doing.” I should read it, I guess, but I haven’t. What I’ve been able to gather, though, is that the book seems to make the case for the power of escalating anxiety in negotiations.
I don’t dispute there are times where that might be a tactic we employ, but when it comes to relationships we are in it for the long haul with, is that really in anyone’s best interest? Tonight, while you are at home, escalate anxiety with your spouse during whatever it is you find yourself in negotiations over. Let me know how that works out for you. Tell me if whatever short term gain it secured was worth it.
Doesn’t the very idea that we should bring escalating anxiety into trade negotiations go against how our trade policy has been geared for decades? Hasn’t it been geared towards deescalating the anxiety of an unstable world in order to create a more stable one in its place? Hasn’t the United States reaped the advantages of being the dependable partner the world can count on in this regard? What will happen if we change sides?
In World War I and World War II, we entered the global stage and only asked for enough ground to bury our dead in the aftermath. In fact, after the second we worked to actively protect our adversaries in Germany and Japan. Perhaps the President would say, “We got screwed.” Perhaps we knew the value of peace. Maybe that is why that generation was so great.
“We are reminding our trading partners that preserving individual freedom and restoring prosperity also requires free and fair trade in the marketplace. The United States took the lead after World War II in creating an international trading and financial system that limited governments’ ability to disrupt free trade across borders. We did this because history had taught us an important lesson: Free trade serves the cause of economic progress, and it serves the cause of world peace.
When governments get too involved in trade, economic costs increase and political disputes multiply. Peace is threatened. In the 1930’s, the world experienced an ugly specter—protectionism and trade wars and, eventually, real wars and unprecedented suffering and loss of life.
There are some who seem to believe that we should run up the American flag in defense of our markets. They would embrace protectionism again and insulate our markets from world competition. Well, the last time the United States tried that, there was enormous economic distress in the world. World trade fell by 60 percent, and young Americans soon followed the American flag into World War II.
I’m old enough and, hopefully, wise enough not to forget the lessons of those unhappy years. The world must never live through such a nightmare again. We’re in the same boat with our trading partners. If one partner shoots a hole in the boat, does it make sense for the other one to shoot another hole in the boat? Some say, yes, and call that getting tough. Well, I call it stupid. We shouldn’t be shooting holes; we should be working together to plug them up. We must strengthen the boat of free markets and fair trade so it can lead the world to economic recovery and greater political stability.”