Polish Gnome Army Invades Germany, Implications For EU, Free Trade?

Gnome War

Amen, Brother, Amen.

There are several ways Germany might handle this. One, counterattack with large pink lawn flamingos. Those will peck the eyes right out of the gnomes.

Two, blitzkrieg the Danzig Corridor.

Three, have a serious trade battle over gnomes?

What has gone wrong in international trade recently? Is it just the political season in the US, or are the gnomes running things?

If you think this is new, or that it is unusually farcical in the world of trade and anti-dumping just with respect to Poland, you should search for the infamous 1970s Polish golf carts story.

Waitaminnit! I thought it was the Gnomes of Zürich who were manipulating world trade. Have I been misled?

F-16s, to be exact.

“Lawn flamingos” in the OP means “compete,” in case that wasn’t clear. Why can’t the Germans think of something else, with more “kitsch,” if they can’t undercut the price of the gnomes? Aren’t gnomes fungible with other lawn ornaments?

The Germans quoted in the article actually seemed pissed. Competition is the natural result of a growing economy, here in Poland. That benefits everyone. The “rising tide lifts all boats” theory is time-tested. It may involve moving, getting more training, learning another language, or simply being screwed for some people. That’s the nature of competition. Guaranteeing non-competitive jobs is the quickest way to economic ruin.

The opposite effect, the US Depression going global being one example, is true also. When the tide goes down, nobody is a genius in the stock market except the short-sellers. Everyone hates short-sellers.

When another’s success affects you personally, it’s a sure sign of the apocalypse – based on recent campaign rhetoric and dire predictions from amateur economists. Moving some IT jobs to India, big threat. Terrorism, “overrated.” – John Kerry. Bullshit. Jobs in India are beneficial, and not just to India.

One, moving some IT jobs to India reduces costs. That might actually allow employers to hire more people domestically.

Second, what happened to the New Economy? Indians will buy stuff with their money. Long term, a successful developing world (excluding China, for one, with their booming nuke and conventional arms programs all aimed at Taiwan or the United States) will help the United States.

Third, It is very common for a half dozen nations to participate in making one simple item for sale in a Target, or whatever. The New Economy does exist, it just didn’t get rid of the cyclical economic rules in place, as some politicians and stock brokers claimed.

Fourth, John Kerry, George Bush, EU, Smoot Hawley: learn it, know it, but don’t live it.

Fifth, critical for understanding employment trends in the US the insanity of the late 1990s caused valuations of corporations to go all out of balance to any tangible measure of worth. This was great for a while, unless you watched CNBC. If you did, you knew the bubble was built on low profits (if any) and debt. pop

This is relevant because many corporations did their hiring based on pie-in-the-sky projections of revenue streams, valuation, good will of the business, constant interest rates, and some DaDa* accounting.

In a nutshell, many companies overhired a great deal in the 1990s, based on paper projections that were bound to be proven wrong, and soon. Other corporations were openly lying about their projections do drive up stock prices. In all the insanity, a loss was not acceptable.

OTOH, Alan Greenspan really stuck a harpoon in all that growth with his many interest rate hikes. Many Net companies were killed off much earlier than they probably should have been by the increases in financing their debt. As I’ve mentioned before, I think Greenspan overkilled inflation last time.

My point on Danzig was sort of an answer to that Great Debates topic “Why Do Nations Have Armies” (maybe “all” nations?, close anyway). Wars have been associated with trade disputes throughout history. Most wars require multiple rationales, careful analysis, and some provocation. Trade has been used both as analysis and provocation.

In the very modern world governments have lessened this effect somewhat through international treaties, bilateral or otherwise, and learning from the wars of the past.

Of course, Hitler took the Danzig Corridor to reclaim “Greater Germany.”

But, the questions I really can’t answer are what happens to free trade, the EU, and the world for that matter.

When I first joined the SDMB I learned a great deal about “economic imperialism” as applied to the United States. Of course, this philosophy is a dangerous one if actually believed as more than a slogan and applied consistently. “Business is war” is a great way to start real wars. Then, the differences becomes clear. Many Europeans have bought into this philosophy as applied to the US, but what happens when it backfires into internal trade disputes?

Also, the enormous EU bureaucracy that is being created to handle these things is going to have one hell of a job. There will still be sovereign states proud of centuries of history and independence (mostly). Many of these states already have giant self-interested bureaucracies of their own. This scenario suggests that interstate trade disputes in the EU will make ones in the United States look like thumb wars. Bureaucracy versus free enterprise, everyone but bureaucracy loses, especially the consumer.

I see a power shift in the EU already, more towards a moderating Germany, the UK, and the upstart Eastern nations that still know what a command economy can do for production, screw it up. I see Chirac’s influence waning, along with the French economy.

The main friction within the new EU will come – IMO – if any efforts are made to increase European productivity in the heavily unionized and bureaucratized states, mostly from the enormous unionized civil service that eats up such a huge percentage of European GDP. They are going to prove a “need” to micromanage every aspect of this stuff, probably to death.

We’re not lying in a bed of roses, bureaucracy wise, either. Our (the US) biggest union is government employees. That’s a dangerous shift from government “by the people,” towards government being “bigger than the people.”

Once a bureaucracy becomes politically entrenched, the economic system of the nation is in for a long spiral downwards. Or, a short one. Government employees, for the most part, are a drain on GDP. The taxes necessary and the borrowing necessary to support such a bureaucracy will kill the economic base, increase inflation, and drain available capital from the private sector (where the productive jobs are produced). [explanation] When the government sells bonds, they compete in the capital market directly with private enterprise. This makes it harder for businesses to raise money through bond issues, without eating more costs.

*More about Europe from the most accused of being anti-European doper that actually likes Europe based on experience. “DaDa” is very appropriate in this situation. Interesting art, bad accounting.

The potential for trade disputes between EU countries are fairly limited, as the EU can order trade restrictions to be lifted. Eg

France was forced to lift its ban on British Beef under threat of £100,000 a day fines.

So while German firms may be worried about competition from Polish firms, there’s not much they can do about it, except try to compete. Your long diatribe on the benefits of free trade was unneeded - the EU knows this, and exists primarily to ensure that free trade occurs between EU countries.

I do agree with you though that the EU has too much bureaucracy, although i think it is a little alarmist to say the least to suggest this will lead to a “long spiral downwards”.

I’m not sure what the decision of the Polish government to order F16 jets has to do with it though. EU trade rules don’t mean you have to buy EU goods.