Economics: The Less Politics, The Better The Economy .- Lessons From The Trade War

 (Drivebycuriosity) - There is a lot talk about capitalism. Many politicians, journalists & economists call for a stronger influence of politics & politicians. They want to give governments more power and curb the power of the companies. I believe governments are already too strong and giving them even more power as they already have would be a huge mistake. The economy is a fine clockwork and works best if nobody pours sand into the gear.

The global economy is already suffering from too much politics. US President Trump`s ongoing trade war against China shows how politicians can harm the economy. Trump`s tariffs on Chinese goods - and some Chinese retaliation - are irritating investors and the stock market which already slowed down investing. Trump`s tariffs hiked prices of imported goods, curbed US exports and disrupted supply chains & production processes. The trade reduced company earnings and discouraged investing & hiring.

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Trump declared in one of this ubiquitous tweets that his tariffs earned America already $100 billion. He is wrong. The tariffs were paid by the US consumers who had to pay more for imported goods. Trump´s trade war is based on ignorance, economic illiteracy & abuse of power. Apparently the USA does not have a system of checks & balances which should define a democracy. Trump`s trade war is another example how ego trips by politicians and too strong governments can harm the economy.

To make matters worse the global economy is suffering another headwind caused by politics. Trump´s sanctions against the Iran hiked the price of oil and is curbing consumer spending and raising production costs. There is an immanent risk that trade war & oil price hikes could escalate and lead to a recession.

The less power the politicians have, the better the economy.