As a hobby, over the years, and to further enlighten myself, I've often looked for the origins of the countless sayings and strange traditions of men (like why people 'clink' glasses before they drink).
In a recent search for the origins of yet another saying, I came across a history gem:
In the late 18th and early 19th centuries, China had many goods that Europeans craved.
This caused a huge drain on the silver reserves of Great Britain and a huge pile of silver for China.
This drug infestation had the opposite effect, as addicted Chinese went from the casual wealthy user to 90% of males under 40 and they became less productive and more interested in getting stoned, China saw a net outflow of silver, while the trade monopoly enjoyed by the East India Company netted them huge profits.
Thus, I found the answer to my question; where did the saying "All the tea in China" come from?:
So, China engaged in a "protectionist" trade policy that netted them a staggering trade imbalance with Great Britain, draining GB of its silver. They refused to acquiesce to GB's "Fair Trade" BS because they were well aware of its affect on Malaysia, India, Turkey, The Philippines and other neighboring nations. They didn't have to import western goods because they were a self sustaining economy that built stuff the rest of the world wanted.
The British plague cornered the market on opium and reversed the trade imbalance with China by drug trafficking.
The Chinese made opium trafficking illegal.
The Brits smuggled and bribed the drugs into China.
China cracked down on the illegal trafficking.
The King sent in the Marines.
The Nanking Treaty netted GB ports, Hong Kong and Most Favored Nation status and reparations for the confiscated opium.
GB's main export, opium, poured into China.
Sounds like Utopia, that Fair Trade stuff.
China lost control of it's sovereignty through the Nanking Treaty for a century. Then, after the US defeat in Vietnam, during which the VC were supplied with weapons by China, and a history of the most brutal government in history, Reagan lobbies for and Congress bestows upon China Most Favored Nation status, and the very best of the very best version of MFN at that.
The US adopts the same one-way street Fair Trade policy of GB, calling it Free Trade while moving the steel, textiles and other industries to China en-masse. China is routinely allowed to place taxes, duties, bans and other similar planks of the trade barrier wall on imports while they face none of the above with their highest tier MFN status, steal intellectual property, dump against competitors who chose to remain in the US and other really cool Free Trade stuff. For this Utopian arrangement, better known as "The Chinese Miracle", China only has to agree to set aside a percentage of their resulting mammoth trade surplus to... buy US debt, allowing the Federal Reserve's giant debt Ponzi Scheme to continue for a while longer.
It's my opinion that, now that the rats have jumped ship and moved their enterprises to China of Oz, thus exposing who they are, slam up the tariffs and other trade barriers and let them suck the other end of the pipe.
Tariffs with reciprocity is free trade. All of the above is a Rothschild-fiat currency-fueled BS story that makes Al Capone look like an alter boy, and anyone who buys the Free Trade slogan is an idiot who never invented or manufactured anything in his life and who prefers the pot metal and plastic version of the real McCoy.
I wouldn't endorse the acid trip of Free Trade for All The Tea In China.
Bosso
This is just a grotesque misrepresentation of the economic events of the time
At the time, most of Britain & most of Europe had been leaping ahead of all the other countries including China due to Industrial Revolution which'd caused them have much higher level of prosperity than China so China was in a pretty similar position that it is today in the sense that it'd huge land & labor to produce things & export them, tea & silk were their main exports to Europe which meant that goods were going out of China & silver (money) was coming in.
Now, it is important to understand how "commodity-standard" (in this case "silver-standard") works. When country C exports to country E, goods go out & silver (money) comes in while silver (money) goes out of country E & goods come in. Because there'd been a gap in the living standards of Europe & China, China for a fair number of years had been exporting to Europe which caused Chinese silver-reserves to increase & lowered European silver-reserves BUT what does it mean? It means that China's "money-supply" (or "silver-supply" if you will) increased while Europe's silver-supply decreased which meant that an ounce of silver in China had LOWER purchasing-power while an ounce of silver in Europe had HIGHER purchasing-power.
Now, under normal circumstances, if free markets are allowed work, it'd just mean that Chinese will find cheaper European goods attractive & Europeans will find Chinese costlier goods less attractive which means European imports into China will increase & silver will go back into Europe as a result & this is how the markets keep moving back & forth towards equilibrium.
But as has been said, Chinese were protectionist because, like some people on this forum, they thought money (ie silver) was wealth but the fact is, goods/services are the REAL WEALTH so they didn't allow the markets to move towards equilibrium due to their protectionism & caused what an increase in money-supply causes ie inflation & prices rose, production fell & people started becoming poorer & they started indulging in drugs too as has been mentioned.
Now, because there was a high demand for opium in China & Chinese government wouldn't allow it, smuggling was inevitable & Chinese war-against-drugs failed just as badly as America's war-against-drugs is failing.
Now, it wasn't like Britain intended to destroy China or anything, they were NOT FORCING Chinese people to take drugs, Chinese people had the choice NOT to use them but obviously Chinese people wanted them, that's why there was a huge demand for it & British merely saw it as an opportunity to make profits & to reverse silver-supply so that they could buy more Chineses products.
But obviously Chinese government was intent on protectionism & they started seizing opium supplies being smuggled in from Britain which caused tensions to escalate & a war ensued.
Now, I'm NOT saying British were saints, NO, but blaming the war on free trade is extremely unfair because it was NOT free trade that caused the war, it was PROTECTIONISM that caused the war.
If China had NOT been protectionist & after their money-supply (ie silver-supply) had increased, had they adopted free trade & let Chinese people buy European goods which they'd've found cheaper then the silver-supply would've been reversed & market moved towards equilibrium so Chinese people would've'd more goods & higher living standards while giving silver in return would mean Chinese silver-supply would've decreased & their inflation would've been sucked out while Europe's money-supply would've increased & they would've bought more Chinese goods which they obviously wanted to which'd've created demand for Chinese goods & thereby cause chinese businesses to envision profits & thereby create jobs & goods/services.
This is what happens in a free market; countries as a whole & their people benefit as they get to buy cheapest & more goods/services than they otherwise could.
CURRENT AMERICA-CHINA SITUATION
Generally, people find it easier to understand the link between import-export, currencies, free trade & prosperity when we look at how these things work under a "commodity-standard" so I'll try to explain these things in the context of current America-China situation. When we're on a paper-money-standard, NOTHING amongst these variables & how they lead to prosperity changes but understanding the underlying relationship may get difficult to understand due to added factors like government manipulation of currency but the underlying effects do NOT change.
Now, under a paper-currency, WITHOUT any manipulation, when US keeps buying alot of Chinese goods, it'd cause Yuan to rise against dollar & over time, Chinese would find US products cheaper & US would find Chinese products costlier & then market equilibrium will go back & forth like that.
But in real life, China either buys dollars or devalues their currency in order to NOT allow it to rise against the dollar. But this does NOT have any negative effect on US. WHY? Well, when US buys from China, it gets cheap goods which enhance Americans' living standards while it gets US dollars in return. Of course, it doesn't allow its currency to rise but that only hurts the purchasing-power of Chinese people BUT those dollars get reinvested in US one way or another which helps create jobs & goods/services in US & the additional income that is generated out of it is what allows Americans to buy more Chinese goods so it's essentially a win-win situation for BOTH countries (except the Chinese people, of course but they too benefit to a degree anyway) so they're essentially keeping their people poor through tariffs & currency-manipulation to provide US with cheaper goods, not a bad situation to be in for the US.
Now, what'll happen if we adopt protectionism & put up tariffs? Well, it'll obviously mean an end to cheaper goods as well as MORE of our capital will be used up for LESS goods because our workers will've to be paid much higher wages because of minium-wage laws & everything so MORE of our capital will be engaged in production of LESS goods which obviously means much higher prices AND it also means that that ADDITIONAL CAPITAL that'll be needed will be sucked out from other areas of the economy which means you'll've MORE job-losses & drop in production & higher prices in those areas.
Now, interventionists mostly see the economy as a static model & that's why they think that they can meddle in one area of the economy & not affect others but that's not how the real-world economies work; in fact, they're very dynamic so every time you meddle in one area, it causes all others to re-adjust accordingly & that's why central-planning is so difficult to engage in because of the dynamic nature of economies.
So because of economy's dynamic nature, even if prices increase in one area, it causes all the other prices to re-adjust according their new supply/demand factors. Because as prices initially rise even in an area of the economy, people bearing those high prices demand higher incomes to ensure their prosperity & higher-skilled people have the most bargaining power because their skills are in shorter supply than lower-skilled people & in order to free up more capital to accommodate higher incomes of higher-skilled people, businesses have to lay off more lower-skilled people which causes more unemployment among the poor low-skilled workers, decrease in production of goods/services AND higher prices of goods/services that the business is producing & so on & so on it causes a "domino effect" throughout the economy. Therefore, prices & unemployment throughout the economy keep having upward pressure, the production keeps having downward pressure
UNTIL the market is put back in charge; if not then the economy keeps eating itself. This is how socialism destroys economies & countries, the more socialist the country, the faster it degenerates.
So again, when one raises questions over US unemployment & drop in living standards (reduction in REAL WEALTH ie goods/services) then one must realize that
40% of the US economy is being sucked out every year, plus, there are minimum-wage laws, over-regulation, etc etc & obviously Fed's boom-bust & inflation cycles don't help the economy & unemployment either which are further choking enterpreneurship in the US & that is why US is suffering so unless these resolved or at least significantly ameliorated, US & its economy is likely to continue to spiral downwards, in terms of prosperity, for some time to come. Putting tariffs to "save jobs" is like treating the symptom rather than treating the underlying diseases which is over-regulation, over-taxation, Fed, etc; tariffs WON'T help, they'll cause EVEN MORE unemployment as they'll displace capital & workers in other areas of the economy & cause a "domino effect" of lower goods/services & higher prices & higher unemployment.
The bottomline is that NOBODY can circumvent the markets & in the long-run, it always causes more harm than good.
TRADE DEFICIT MYTH
