Two heads ... better than one?

Narendra Modi (India) with Xi Jinping (China)

The Law of Untended Consequence (see my 10 April 2025 blog entry for details) seems to have played merry hell with Trump’s trade policies. Today Mercedes, BMW and Audi - three German auto midgets (?) - issued a joint announcement to the effect that they would no longer sell their cars in the US. Cue for immediate excitement on the part of General Motors (GM) and Ford. In a spirit of prom bonoi I'll now do some work for them. 

Ford’s bigger seller in the US is its ‘F’ series of trucks and utes, ranging from the light F-150 SUV to the heavy F-450 ute. The F-450 sells new for anything from US$72,280 to $109.,850. So it will soon cost anything from $80,000 ($72,280 plus 10%) to $143,000 ($109,850 plus 30%), depending on the number of components ‘foreign made’ and after Trump's tariffs have been added. These are emphatically non-trivial increases and will damage sales. Meanwhile Ford and GM have announced that they will move US assembly plants to Canada or Mexico to avoid the Trump tariffs. So much for keeping US manufacturing jobs in the US.

Yesterday Apple, once the world’s largest corporation on whose iMac this blog entry is being typed, announced it was shifting operations from China to India. This puts me in mind of a moment, at least 20 years ago when I was watching TV in New Delhi’s Imperial Hotel.. An Indian economist was holding forth. “Don't iignore India,” he warned.  “China may be outgrowing India at the moment. But remember, India is a democracy and its population is young and educated, In the long term, democracies always beat autocracies.”  That moment has stayed with me ever since. Trump please note about democracies.

Even my Australian stockbroker, the aptly-named John Doughty, once averred: ‘If you’re looking to manufacture something cheaply, go to China. If you need a service performed cheaply, go to India.” Well Tim Cook, CEO of Apple may have inverted John’s advice, but the idea remains sound. India will eventually outrun China despite China’s main asset, namely over a billion Chinese.

Here's another thought. I'd always imagined China would deal with a US tantrum as follows: At the ngotating stage a Ghinese negotiator would say: "You rermermber all that money we lent you to buy our stuff. From memory it was about US$1 trillion. Right?"

US negotiator: "Right!"

China: "Well, and I'm sorry to spring this on you, but we'd lilke it back, please."

US: "When do we pay?"

China: "Tomorrow."

US: "Sorry, but the bloke who handles stuff like this is away on indefinite leave and won't be back until next year at the earliest."

China: "I fear that explnation might not be accepted by journalists at Reuters, UPI, AP, AAP and AFP. We sent them all a press release an hour ago including your cellphone numbers. Good luck handling them."

Meanwhile my new hero, the economist Professor Richard Wolff, continues to warn on

YouTube of the imminent collapse of the US empire. After all, it happened to the Greeks, Romans, Ottomans, Austro-Hungarians and lately the British, so why not the US? Each of the aforementioned had in its heyday not only the strongest economy in the world but also the strongest army. See the comparison?

Once again I’m put in mind of something I remember from TV.  Rachel Johnson is Boris Johnson’s sister, though she wisely never traded on this. She regularly appeared on UK TV. Before that she worked in the Foreign Office, where she was briefed that her principal task was ‘managing decline’. So at least the FO was with Professor Wolff at the time.

While I don’t back off from my hero worship of Professor Wolff, he is often described as a Marxist. I’m happy to be called left-wing. But Marxist? No, not me. In my time I’ve visited four communist countries (see my 16 October 2022 blog entry for my second time in Cuba) and those four places cured me of any childish delusions about Marxist governments.

So where do the learned professor and I disagree? It took me me an age to find out. However when he explained Marxism, I spotted the flaw.. In Marx’s view the entire population fell into two groups, masters and servants, or, in modern times, employers and the employed. Employers trousered profits and perks, leaving it to the employed to create both. The message was that in a Marxist economy there would be no need for bosses.

During the Spanish Civil War, according to legend, troops voted on whether or not to charge the enemy. As a military plan this didn’t work. Nor did I see any evidence of an absence of bosses in Poland, Russia, Vietnam or Cuba. It’s true that in George Orwell’s superb satire on Russian communism Animal Farm the pigs proclaimed: “All pigs are equal, but some are more equal than others.” But that was just a joke. Wasn’t it?