US, China, Milky Way, Andromeda

This so-called US-China trade war I compare to the future projected collision between the Milky Way and the Andromeda galaxies. This clash is political. At some level, it was inevitable. It had to happen. And there is no going back. We will end up at some new equilibrium. Both powers will change in the process. The world itself will change. I think the primary casualty will be the nation-state itself. There will be no Milky Way left. There will be no Andromeda left. Something new will form.

The WTO is only as strong as its two largest trading partners will let it be. And there the train has already left the station. This tussle necessarily asks for fundamental reform of the WTO. But the US will not be the sole power shaping that new form. This tussle creates an opportunity for many powers who are represented in the G20 grouping to flex their muscle and wake up to the fact that they do have a seat at the table.

The elephant in the room, though, is technology. The US demands Huawei deliver on issues where the US technology giants themselves have a poor record. Privacy and security issues plague the tech sector like plastic waste in the Pacific. Here I propose the creation of a T100, a grouping of the top 100 technology firms of the world measured by market cap that meet on the sidelines of G20 and take the lead on issues of privacy and security. Trump asking Huawei to offer ironclad guarantees on security is like that emperor who demanded a flooded river to stop, just stop. Huawei alone can't do it any more than Google and Facebook have been able to. The CIA has got to be the top stealth organization when it comes to cyber snooping. I would not be surprised if the Chinese are a close second. They both take advantage of the security flaws in hardware and software that are extremely hard to patch.

5G is way more monumental than any road, or bridge, or port, or rail China can build with its Belt And Road Initiative. 5G is that infrastructure that will finally level the playing field for the Global South. Trump cannot be allowed to stand in the way of 5G deployment. On the other hand, take stock of all the privacy and security issues the world has had to encounter over the past 25 years and multiply that by 100. Much faster internet, much more ubiquitous internet will mean greater challenges for privacy and security. Here the T100 needs to take the lead. There are technological solutions. There are common standards to agree on. There is also room for law enforcement. But no nation state is at the center of this debate.

There is no way out for China from this trade war than through some major structural reforms which, by the way, would be good for the Chinese economy. Some of the structural reforms that are being demanded will make sure state funds do not go to state-owned enterprises that are losing money on massive scales. Such moves will make China more efficient and more competitive.

The US will also see structural changes. The 2020 election will see the rise of the Social Democrat. The US will likely go for Medicare For All. The US will become more like China on education and health.

And there's the all-important Clean Energy. On that, the two powers must fully cooperate. The problem is too big for any one of them to go solo.

In the clash of the two powers, that at some level was inevitable, both will fundamentally change and will become more like each other. But when the dust settles both will have become unrecognizable from their current vantage points.

US, China, Milky Way, Andromeda https://t.co/nNaXXAey6u @SenWarren @KamalaHarris @aoc @BernieSanders @narendramodi @justicedems @sunrisemvmt

— Paramendra Kumar Bhagat (@paramendra) June 28, 2019

The WTO And The Regional Trading Blocs

The WTO has ushered in a new era of prosperity for the planet with a record number of people climbing out of poverty. That part has worked. The WTO has to be treated as a floor on which regional groups of countries can hope to build deeper trade relationships. Countries in the west Pacific are doing exactly that. The continent of Africa has been moving towards a free trade zone of its own. All these add to the WTO.

What makes Trump's tactics different is that they take away from the WTO. He wants to deal with countries one at a time. He thinks he can mete out unequal treatment in the process.

The problem with that approach is you are putting political whim above sound economic theory. The economic theory behind trade is sound. Trade does lead to rises in productivity.

But the WTO has not been designed to narrow income inequality. But that is like saying the Department of Education does not seem to be doing anything about health. Well, it has been designed for education, not health. That is no argument against health.

Trump is trying to go backward in time. He wants to take America and the world to an era without the WTO. That was not a good era. Instead of thinking what the next stage in America's economic growth is, he wants to go back to an era when America's trade with China was minuscule.

The tragedy is, there are plenty of smart people in America who have been thinking about what the next stage of economic growth for America is. But Trump is utterly uncurious.