“Matthew Klein and Michael Pettis have successfully woven a grand narrative linking income inequality, geopolitics, trade, finance and even environmental issues.”—Maximilian Kärnfelt. I just finished a new book titled “Trade Wars are Class Wars”. Michael Roberts continues his review of this interesting book. This explains the “class war” in the book’s title, Trade Wars Are Class Wars. Dean Baker is a Senior Economist at the Center for Economic and Policy Research (CEPR) Cross-posted from Dean’s Beat the Press Blog The big winner of the U.S.-China trade war has been Wall Street, Feingold says. Klein and Pettis offer an essential analysis of how domestic inequality and international conflict are interlinked, and provide an answer to the crisis of globalization. He previously wrote for the Financial Times, Bloomberg, and The Economist, and was once an investment associate at Bridgewater Associates. Not only does it argue its thesis well, you'll also learn a lot about the history and present of international trade and finance. Klein and Pettis trace the origins of today’s trade wars to decisions made by politicians and business leaders in China, Europe, and the United States over the past thirty years. What that means is that when we think of trade conflicts, the default presumption of many of us is that we think about them as being … This might be true, but it is also true that at the same time, the small percent of the very wealthy are learning ways in which they can secure more and more of the common person's wealth, and policies are helping the wealthy succeed. It is easy for an antidemocratic authoritarian regime to suppress workers’ rights and shift spending power from consumers to large companies. The pair think the real battle is … I just finished a new book titled “Trade Wars are Class Wars”. The main thesis is that the functional distribution of income determines savings rates, which determine the current account balance, and that political economic forces which have redistributed income away from workers, have been the major drivers of recent patterns of global imbalances. I place this book at the front of a line of new economic theories that look to rethink what money means and its workings at the international level. As an author, professor, and psychologist,... To see what your friends thought of this book, Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace, This book deserves a mass-market push that it seems to not be getting. First, countries in which capital owners reap more of the rewards of productivity improvements than workers end up with excess savings (because the rich save a bigger chunk of their income). Refresh and try again. Up until I started the very last chapter, I was firmly convinced no to go any higher than three at all. The first, the simplistic econ 101 view, is that trade is always good because it allows countries to specialize and, through comparative advantage, grow the pie for all. Life seems to be getting better for everyone, right? Previously he wrote for the Financial Times, Bloomberg View, and the Economist. Book review - Economics - The TLS | Trade Wars are Class Wars by Matthew C. Klein and Michael Pettis, reviewed by Ann Pettifor But China’s myriad institutional constraints, which we will discuss in more detail later in the chapter, meant that consumption could not have grown quickly enough except through a surge in household borrowing. Trade wars are really a conflict between different socio-economic classes within countries. This book was a real eye-opener. Really enjoyed the mix of history, policy, politics, economics, and finance that this book was able to pack in without being overly long or dense. It's a global crisis. This book deserves a mass-market push that it seems to not be getting. Trade Wars Are Class Wars. “The innovation of the high-savings development strategy is that consumption is squeezed to pay for productive investment in infrastructure and capital goods, rather than to pay for elaborate monuments and the military. Unproductive investments have failed to pay for themselves.2 The danger is that the Chinese government, having reached the limits of its ability to generate rapid growth through debt-funded investment, will once again attempt to shift the costs of its economic model to the rest of the world through trade surpluses and financial outflows. Please ensure you're using that browser before attempting to purchase. Now more than ever, prediction is a mug’s game. Good for the top 1% (or 0.1%) and Wall Street, not for the common men and women, many of whom wear red hats!!! Klein and Pettis offer an essential analysis of how domestic inequality and international conflict are interlinked, and provide an answer to the crisis of globalization." Klein and Pettis offer an essential analysis of how domestic inequality and international conflict are interlinked, and provide an answer to the crisis of globalization. Unsurprisingly, given what the Chinese leadership had just seen occur in the United States, there was no interest in a similar experience. “The authors weave a complex tapestry of monetary, fiscal and social policies through history and offer opinions about what went right and what went wrong . Disappointing in its execution of a well-reasoned and argued premise. Trade wars are really a conflict between different socio-economic classes within countries. My lasting impression from this book is another plea for governments to stop treating national finances as anything comparable to household/business finances and to turn the common belief around that in many cases it is not indebted countries which are to blame but those forcing their surplus reserves (often at the expense of their own population) o. I place this book at the front of a line of new economic theories that look to rethink what money means and its workings at the international level. In a more fragmented world, these trade wars would be more likely to intensify and spill over, as capitalists are set against one another. Wolf says that “ This is a very important book. I still don’t know if I agree with or understand all of the underlying assumptions of this perspective (e.g., that there is a discernible limit on a nation’s productive investment capacity, which is determined by its legal and political institutions; or that nations with central planning have a lower productive investment capacity than nation’s with a market system for allocating credit; or that the sustainable level of a nation’s debt after 1971 is determined by its share of global GDP rather than, say, its military power) but it has been very fruitful to grapple with it. Leans a bit technical for mass appeal -- the analysis is couched very much in the standard economese of current account surpluses and deficits-- but the conclusions are nothing if not radical. In this thought-provoking challenge to mainstream views, the authors provide a cohesive narrative that shows how the class wars of rising inequality are a threat to the global economy and international peaceâ – and what we can do about it. In-depth conversations with experts on topics that matter. "Trade Wars are Class Wars is a must-read from two of the most astute commentators on the global economy. The wars stemmed from the unresolved disputes associated with the French Revolution and its resultant conflict. Worth reading for their insights into the history of trade and finance.”—George Melloan, "[O]ffers a deeper argument about the source of the trouble”—. Think of it as the international complement to Piketty's Capital. also bad, i think the title is a little click-baity, there is some relationship to inequality (wealth hoarded by business owners leads to less salary for workers and less consumption and thus trade surpluses --> which mean deficits for others), but not as strong as i would've liked, This is an extraordinary book. First, countries in which capital owners reap more of the rewards of productivity improvements than workers end up with excess savings (because the rich save a bigger chunk of their income). There are no discussion topics on this book yet. Policymakers must be constantly reminded of the benefits of free trade and the costs of protectionism. He has previously written for the Financial Times, Bloomberg View, and the Economist, and was once an Investment Associate at Bridgewater Associates. Policies implemented domestically, especially by countries of greater economic power in their respective spheres of influence (US, Germany, China, Japan), have subtle but resounding impacts on other countries and the daily lives of their citizens: distribution of wealth, unemployment, access to credit, healthcare and other social services, education, infrastructure. For all of the hollowing out of the capacity of the current administration in the past four years, for all of its missteps, blatant corruption, and pie in the sky plans, it shows only the dollar is still almighty if Chinese banks must comply. The same was happening in Europe, between (roughly) North and South, until austerity was forced upon southern states. It's kind of intuitive, but IMO it's hard to connect the dots all the way down to micro decisions - appears to wave away a good deal of complexity, but I guess that's just how macroeconomics works (which is why I never liked it). More in 2020. Five Takeaways: The working class bears the hurt: Working class incomes have stagnated in the U.S. and other countries, pitting worker against worker – as elites have seen their incomes and wealth increase. The “war” referenced in the title is a form of a class struggle between capital and labour (the economic elite and the less affluent) rather than a clash of conflicting national interests in the narrow area of international trade. A central idea of this book is that governments will either implement policies consistent with spending or policies consistent with saving (investment), and countries which don't provide domestic consumers with adequate capacity to consume all goods produced domestically will result in current account surpluses which must be consumed elsewhere in the world. A fresh, thought provoking analysis of the link between inequality within countries and global (trade and financial) imbalances. It offers an extremely clear and accessible description of how the modern world economy works, focusing on how conditions within countries--most notably the ongoing struggles between workers and owners--shape trade and financial flows between countries. “Trade Wars are Class Wars”, by Matthew Klein and Michael Pettis, offers a deeper argument about the source of the trouble. The basic point is that the major trade imbalances in the world over the last four decades have been driven by the suppression of wage growth, with income being redistributed from labor to capital. by Yale University Press. Instead of an examination of trade wars and a detailed analysis of the class wars existing in the societies discussed by the authors, the book focuses on international economic/financial history and national accounts of economic policymaking decisions of the 20th and 21st century. Very readable and not longer than it needs to be. Alarmingly, the trend in which we see workers handing over their hard earned money to the wealthy elite, is far from a national crisis. China was able to sustain growth even as its current account surplus fell at the cost of a nearly unprecedented surge in Chinese indebtedness. Get Free Trade Wars Are Class Wars Textbook and unlimited access to our library by created an account. Good book, interesting thesis - basically trade deficits are a result of internal political decisions - if you muck around with markets and create inequalities, your local demand drops, and you export. Naturally this. My lasting impression from this book is another plea for governments to stop treating national finances as anything comparable to household/business finances and to turn the common belief around that in many cases it is not indebted countries which are to blame but those forcing their surplus reserves (often at the expense of their own population) onto these countries. Matthew Klein is the Economics Commentator at Barron's and the co-author of "Trade Wars Are Class Wars: How Rising Inequality Distorts the Global Economy and Threatens International Peace."