Poppies and economics - Bill Bonner's Diary

Kilkenny Ireland St. Canice's Cathedral - Dubay photo

This interesting perspective is from Ireland, linking creative correlations between "real wars" and economic "trade wars". There's intelligent thoughts brought together in Bill Bonner's Diary.  Very well written....

I'll have to follow some of the other blogs by Bill Bonner, Chairman, Bonner & Partners

YOUGHAL, IRELAND – The muffled bells began tolling at precisely 11 o’clock on the 11th day of the 11th month of the year. And then, the poppies began to fall.

St. Canice’s Cathedral in Kilkenny was marking the end of the Great War by dropping red, paper poppy flowers, inscribed with the names of local soldiers, from the bell tower down into the nave.

For the next two hours, the poppies fell, one for every one of Ireland’s young men who died in the war… 35,000 in all.

They were shot, gassed, or blown to bits. Brothers, husbands, and sons – and fathers, too. About 25,000 Irish children never saw their fathers again.

Kilkenomics Festival - Irish economist David McWilliams invited participants to the “Kilkenomics Festival.” 

We wrote much about “Trump’s Trade War,” David must have thought we knew something about it. So we were asked to join a panel discussion.

“We’re talking about two different things here,” we clarified, for the sake of the audience.

“There’s a trade war, which is largely fake. And there’s the threat of a real war, which a trade war might cause.”

We explained our point of view. Donald Trump has the most to lose from a trade war with China. His reputation for creating a strong economy… his reputation for forceful and successful deal-making… the fortunes of his major backers, as well as his own personal fortune – all depend on cutting a deal with the Chinese.

He could bring China to its knees, we explained, by blocking Chinese imports to the U.S. But he would enjoy his triumph for only about 10 seconds – the time it would take to notice that the U.S. stock market was crashing.

Trump may be a blowhard and a dumbbell about a lot of things, but not about which side his bread is buttered on. He will want to come back from his meeting with China’s Mr. Xi at the G20 summit in Argentina at the end of this month with a victory announcement… not with a double obituary – one for “his” economy and the other for his career. But wait… It’s not that simple.

Thucydides Trap- When one great power threatens to displace another, war is almost always the result -- but it doesn’t have to be. “Trump is, above all, a showman. But shows sometimes veer off in unexpected and unwelcome directions", we said.

“And while POTUS may only be posturing for his admirers, China may see its future and its livelihood being threatened. Indeed, China,may not have gotten the memo: that this is just showbiz. It may be unwilling to read from the script or play its role for the Trump fanbase. Something could go very wrong.”

The other panelists were ahead of us. They thought things had already gone wrong.

“This trade war has already gone way beyond trade,” said Neil Howe, who developed the theory of a generational cycle in American politics. “It’s now about intellectual property theft and technology transfers. It’s now about geopolitics and China’s rise as a great power. America feels threatened. It feels like it is losing its place in the world.”

Howe cited Graham Allison’s “Thucydides Trap.” The idea is that as great powers are challenged by rising powers, it leads to war.

According to Greek historian Thucydides, it was the Spartans’ desire to keep Athens from getting too big for its britches that caused the Peloponnesian war.

And many think it was Germany’s rise as a great power in the early 20th century that caused France and England to rush into World War I… and to punish Germany so harshly after the war.

Yesterday marked the hundredth anniversary of the end of World War I. For 100 years, historians have been trying to find a plausible explanation for the deaths of 37 million people. Thucydides was probably not far off.

Two Impulses

Germany never surrendered. She only signed onto an Armistice.

But then, with her ports blockaded, her people starving, and her resources exhausted, she was forced to accept the “war guilt,” though Germany was arguably no more guilty than any of the other participants of the war.

Germany was also saddled with “reparations,” which crippled her economy. And in 1921, when she was unable to make a reparations payment – in gold, of course – the French and Belgian troops invaded and occupied the Ruhr Valley.

As we have been exploring, there are two main impulses in human transactions: win-win and win-lose. You either do voluntary deals, in the hope of both parties coming out ahead. Or you force someone else to lose so that you can “win.”

Most of private life is win-win (though there are always some people trying to get ahead by making others lose).

Public life, on the other hand, is dominated by government, which is an us-versus-them, win-lose enterprise.

And in war, win-lose finds its most dramatic expression. You can’t win a war without making someone else lose. And in the case of World War I, the above-referenced 37 million corpses were the big losers.

Win-win deals often lead participants to want to win again… that is, to do more deals (business, consumption, sex… whatever).

But win-lose deals leave participants looking for revenge. So the 37 million losers from World War I ended up as simply the downpayment on the total win-lose tally for the 20th century.

Adolf Hitler was on the case. By 1921, he was the chief of the National Socialist German Workers’ Party – or Nazi Party – and he was already peddling his us-versus-them, win-lose claptrap. “We were stabbed in the back,” he claimed. By 1945, another 60 million people had been added to the losers’ list.

The church service in Kilkenny ended with a bugler performing “The Last Post”… which was played at the end of the killing…

Then, the last poppy drifted down and came to rest on the floor… like the last soldier falling into the mud of the trenches.

The church grew quiet.

And after a minute or two of silence, a baby began to cry.

Regards,

Bill