World War 1

Will Today's Global Trade Wars Lead to World War III?

The splintering of international economic interdependence is a worrying sign for peace through trade.


You might not know about a minor trade skirmish in the Balkans that started late last year. But you should, because it signals a worrying shift in how national security considerations are altering the fabric of globalization in ways eerily similar to how they did at the dawn of the 20th century. That first shift helped start World War I, so in case you're wondering, yes, I'm going there: The current rise in protectionism could be the precursor to World War III.

The story starts in 2008, when the small southeast European nation of Kosovo unilaterally declared independence from Serbia after nearly a century of being bound to its larger neighbor, followed by a war for secession that ended only after NATO intervened. The Serbian government refused to recognize the breakaway province and, as part of this diplomatic position, late last year successfully pressured members of Interpol to not admit its former territory as a member.

In response, Kosovo decided to impose a 10 percent tariff on Serbian imports. As the dispute escalated, it raised the tariff rate to 100 percent, even though Serbia is the country's most important trading partner. Both the United States and the European Union pressed Kosovo to drop the tariffs and negotiate a reduction in tensions. Instead, its government widened the levies to include Bosnia and Herzegovina, since that country also does not recognize Kosovo's independence.

Kosovo's actions clearly violate the Central European Free Trade Agreement, which includes all three countries. Despite this, and despite the obvious costs of the tariffs, Kosovo has refused to back down, triggering a near-total collapse in trade between the countries that used to be part of Yugoslavia. Even if this particular trade dispute is resolved, a larger challenge remains: The Kosovar government's explicit aim is to reduce its economic dependence on its former occupier. So far, it's been successful; imports fell by 99 percent from a year earlier.

This is the kind of kerfuffle that causes world-weary observers of international affairs to shrug their shoulders and say, "the Balkans" with a knowing smile. That would be fair enough if not for the déjà vu it inspires among attentive students of economic history.

In the first decade of the 1900s, it was the newly independent Serbia taking actions to try to reduce its economic dependence on the Austro-Hungarian empire. The country increased its imports from France and signed a customs union with Bulgaria. In 1906, Austria-Hungary responded by slapping high tariffs on Serbia's chief export: pork. The "Pig War" lasted another five years, during which time Serbia painfully weaned itself from economic dependence on the Habsburg empire. Austria-Hungary's share of Serbian trade fell from 90 percent to 30 percent.

The Pig War prompted Austria-Hungary to annex Bosnia and Herzegovina, a move that escalated tensions with Russia—and sowed the seeds for the assassination of Archduke Franz Ferdinand in June 1914 by a Bosnian Serb.

Economic closure in the Balkans did not ignite the First World War. It did make the kindling that much easier to spark, however.

Is this more than just a casual historical parallel? I am beginning to worry it is. To be clear, I'm not saying that (another) war to end all wars is imminent. But it's important to understand the role that economic interdependence played in the run-up to that conflict.

Before the First World War started, powers great and small took a variety of steps to thwart the globalization of the 19th century. Each of these steps made it easier for the key combatants to conceive of a general war.

We are beginning to see a similar approach to the globalization of the 21st century. One by one, the economic constraints on military aggression are eroding. And too many have forgotten—or never knew—how this played out a century ago.

The Capitalist Peace

A central tenet of the liberal approach to international relations is that economic interdependence reduces the likelihood of war. While the "democratic peace" is more widely known, the last 30 years have seen an explosion of research into what's come to be known as the "capitalist peace" or "commercial peace."

Proponents of this hypothesis offer multiple reasons commercial activity fosters harmony. For some, the development of free markets reduces the profit motive for territorial expansion. For others, it's that exposure to global capital markets forces states to act in a less bellicose manner because they worry about a cross-border exodus of money and investors.

A third camp says high degrees of economic interdependence increase the incentive to reduce conflict through nonviolent means. And some researchers think, "Why choose?" and argue that all of these factors are interlocking. Some scholars of the capitalist peace go so far as to claim that the pacifying power of markets is what actually explains the democratic peace. These propositions are debatable, but there is an awful lot of evidence that something is going on.

No international relations theory is perfect, and the Achilles heel of the commercial peace hypothesis has long been the outbreak of the First World War. The stylized facts are well-known: Economic globalization seemed to be at its peak in 1914, with trade levels having surged across Europe in the previous half-century. Great Britain and Germany were each other's largest trading partners. After the war, John Maynard Keynes wrote nostalgically about how "the inhabitant of London could order by telephone, sipping his morning tea in bed, the various products of the whole earth, in such quantity as he might see fit, and reasonably expect their early delivery upon his doorstep."

Norman Angell in 1909 wrote a bestseller, The Great Illusion, in which he declared that globalization had rendered territorial conquest unprofitable: "Since trade depends upon the existence of natural wealth and a population capable of working it, an invader cannot 'utterly destroy it' except by destroying the population, which is not practicable." Angell concluded that war for profit was inconceivable to any rational human being. The absence of a prolonged war between two or more great powers in the previous 60 years seemed to confirm that supposition. Even as tensions mounted before the Great War, many observers believed that policy makers in Berlin, Paris, and London would not risk their economic well-being over some minor dispute in the Balkans.

We know how history played out. Skeptics of the capitalist peace always invoke the start of World War I as the biggest empirical challenge to the argument. Even many proponents of economic interdependence usually acknowledge that this data point is "challenging" to their thesis. Angell's contention is often mentioned in the same breath as Francis Fukuyama's claims about the "end of history" in the 1990s: as optimistic arguments dashed by reality.

As the historian Margaret MacMillan wrote just a few years ago, "What Angell and others failed to see was the downside of interdependence." She argues that economic connectedness generates frictions rather than resolving conflicts.

Is she right?

Globalization Succeeds—Too Well

The truth is a bit more complex. The potted history of 1914 as the peak of prewar globalization obscures some underlying trends. Namely, most of the "great power" governments had been rebelling against the doctrine of free trade for decades.

In many ways, 19th century globalization was a victim of its own success. Reduced tariffs and transport costs flooded Europe with inexpensive grains from Russia and the United States. The incomes of landowners in these countries suffered a serious hit, and the Long Depression that ran from 1873 until 1896 generated pressure on European governments to protect against cheap imports.

Unsurprisingly, agrarian sectors in Great Britain, France, and Germany lobbied furiously for protection. They succeeded on the continent, setting off a series of ripple effects.

In 1879, German chancellor Otto von Bismarck assembled his "iron and rye" coalition and began to increase tariffs. France responded in kind in the 1880s. By 1887, German tariffs on rye had reached 47 percent, and French tariffs on wheat were at 22 percent. Many middle powers in Europe, such as Italy, Spain, and Sweden, responded with higher tariffs of their own.

Economic closure in the Balkans did not ignite the First World War. It did make the kindling that much easier to spark, however.

If these countries were raising tariffs so much, why is the pre-1914 period thought of as a halcyon age of globalization? One reason is that the United Kingdom, the leading economy of the day, resisted protectionism.

But the bigger reason is that technological change swamped the effect of tariffs. In 1870, the U.K. alone had more rail track than Latin America, Canada, Australia, Russia, South Africa, and India combined. By 1913, those regions had 10 times as much as the United Kingdom. The diffusion of railroads and steamships meant that transport costs fell faster than tariff rates increased, thereby increasing trade flows even as most countries raised protectionist barriers. Indeed, world trade more than doubled between 1896 and 1913.

While globalization still seemed robust in 1914, the restrictions on trade and investment affected the patterns of economic interdependence, particularly in Eastern Europe. Austria-Hungary and Serbia became locked in their trade war, and similar economic conflicts proliferated across the continent. The Habsburgs had a trade skirmish with Romania between 1886 and 1893. France and Italy had one between 1886 and 1895. Germany had one with Spain around that time and followed it up with multiple commercial conflicts with Russia over the next few decades.

In some cases, these tariff disputes were resolved and trade returned to normal. In other cases, however, there were lasting and debilitating effects. Serbian-Austrian trade never recovered from the Pig War. German tariffs on rye successfully reduced its dependence on imports from Russia, and by 1912, despite booming global trade, Russian rye exports were only 30 percent of their 1902 levels.

The result was a European economy in which the western half was still largely interconnected, but trade in the eastern half was segmented by security blocs. Scholars of the capitalist peace argue that this explains why pre-1914 disputes in Western Europe were largely resolved nonmilitarily, whereas Eastern Europe was the scene of multiple smaller conflicts in the two decades before the assassination of Archduke Ferdinand.

It also explains why, in the summer of 1914, the commercial peace broke down. As countries in Eastern Europe began to mobilize their militaries for war after the assassination, Austria-Hungary was not particularly worried about disrupting trade with either Serbia or Russia, since it was barely trading with both. And Russia had raised tariffs on German wheat imports in the month before Ferdinand was shot.

Other mechanisms of interdependence also broke down in the years prior to World War I. Whereas most 19th century trade treaties were bilateral, the gold standard—a monetary system in which all major currencies were convertible into gold (and each other) at a fixed rate—was a more multilateral arrangement, with most of the key central banks assisting each other during times of financial distress. Between 1889 and 1907, national banks in Germany, England, France, and Russia helped each other stay solvent. Despite rising geopolitical tensions, the central bankers of the world were still cooperating. Their economies relied on each other.

That cooperation came to an end in 1911 with the Agadir crisis, which drew its name from a Moroccan port where Germany dispatched warships as a challenge to French pre-eminence in the region. Just as Germany was fomenting conflict overseas, it faced a financial panic at home. Its stock market plunged 30 percent in a single day, and German citizens began converting their paper currency into gold.

Unaided by other central banks, the Reichsbank came perilously close to having to suspend the gold standard. Germany eventually backed down in Morocco—but Kaiser Wilhelm II told his bankers to be prepared to fund a general war as quickly as possible. In the next few years, the Reichsbank more than doubled its holdings in gold, and German banks began restricting loans to foreigners. By the time the First World War started, German gold reserves were more than twice as large as the Bank of England's.

The primary lesson to draw from the years before 1914 is not that economic interdependence was a weak constraint on military conflict. It is that, even in a globalized economy, governments can take protectionist actions to reduce their interdependence in anticipation of future wars.

In retrospect, the 30 years of tariff hikes, trade wars, and currency conflicts that preceded 1914 were harbingers of the devastation to come. European governments did not necessarily want to ignite a war among the great powers. By reducing their interdependence, however, they made that option conceivable.

Is Globalization Imploding Again?

Fast forward to 2019. Are we seeing a replay of this slow-motion implosion of globalization?

Let's start with the obvious historical parallels. In both cases, there has been an absence, lasting decades, of great power war. As in John Maynard Keynes' day, one can order the various products of the whole earth using one's phone and expect their speedy delivery. And if there is a modern successor to Norman Angell, surely it is Steven Pinker. His 2011 book The Better Angels of Our Nature offered a detailed account of the verifiable long-term secular decline in international violence. Pinker credited many factors, but commerce was important among them. In the book, he acknowledged that, as he developed his argument, "more than one concerned colleague took me aside to educate me about Norman Angell," but Pinker said "Angell deserves the last laugh."

In the years since he published that book, however, violence has trended back upward. The 2018 Global Peace Index reported that "the world is less peaceful today than at any time in the last decade."

In the pre-1914 era, agricultural price shocks and the Long Depression stoked the fires of protectionism on the European continent. In the current era, the China shock hit import-competing regions of the U.S. manufacturing sector hard. It is not a coincidence that U.S. public attitudes turned against free trade in the years after China was admitted to the World Trade Organization. That country's entry into the global economy was a net gain, but it had severe distributional effects.

It did not help that Beijing adeptly gamed the liberal economic order. When Chinese President Xi Jinping praised free trade at Davos in early 2017, it was not hard to identify the massive hypocrisies contained in his speech. China's subsidies to its state-owned enterprises, refusal to respect intellectual property rights, and insistence on keeping its currency undervalued in the first decade of this century helped to increase public skepticism toward the liberal international order. If they're not going to follow the rules, many began to wonder, why should we?

The 2008 financial crisis also triggered predictable calls for more trade protectionism in the West. Most great power governments resisted those calls in the immediate aftermath of the crisis, but populist nationalism ushered in a new wave of leaders who were eager to scapegoat foreigners. Between 2012 and 2018, the stock of G20 nontariff barriers, such as the anti-dumping measures the Obama administration imposed on Chinese steel imports, more than tripled. And those numbers do not include other steps toward deglobalization, such as Brexit and the American withdrawal from the Trans-Pacific Partnership (TPP).

All this transpired before Donald Trump tweeted in March 2018 that "trade wars are good, and easy to win"—and then acted on those beliefs. Invoking a little-used national security provision in the 1962 Trade Act, the administration slapped across-the-board tariffs on steel and aluminum.

Despite assurances from Trump administration officials that countries would not retaliate against the United States for these moves, the backlash was swift: The E.U. imposed retaliatory measures on U.S. exports, from bourbon to textiles to Harley-Davidson motorcycles. Other trading partners ranging from Japan to India to Mexico have applied their own countermeasures. The administration then pivoted to China, imposing tariffs on $250 billion worth of Chinese imports, with threats to impose them on another $267 billion unless a deal was quickly reached. China reciprocated, imposing tariffs on more than $60 billion worth of U.S. exports, including a 25 percent tariff on American soybeans and automobiles.

Trump's trade wars can appear to be scattershot, but China is the primary focus of the administration's enmity. Trump officials have stated repeatedly that economic openness with China was a policy failure because the country did not fully liberalize.

This is certainly the belief of U.S. Trade Representative Robert Lighthizer and Peter Navarro, director of the White House National Trade Council. Nearly every profile of either man points to a preoccupation with China and belief that the Sino-American economic relationship is a zero-sum game. For example, one of the elements Lighthizer included in the renegotiated North American Free Trade Agreement—now the United States-Mexico-Canada Agreement (USMCA)—was a provision making it more difficult for any member to sign a trade deal with a "non-market country" such as China. This matches how Trump reportedly thinks about trade.

In another echo of the pre-1914 era, the combined effect of protectionism has not actually dented the overall level of economic interconnectedness much. The Swiss Economic Institute's Globalization Index shows that a growth of financial globalization and cross-border data flows have compensated for the stalling out of trade liberalization. Similarly, the McKinsey Global Institute finds that the massive growth of trade in services and digital products counteracts the effect of manufacturing becoming less trade-intensive in recent years. And the DHL Global Connectedness Index released in February 2019 reached a record high.

The Trump administration ostensibly launched its trade wars to improve the balance of trade—that is, to increase U.S. exports vis-à-vis imports—but by December 2018, America's trade deficit had surged to its highest level since the 2008 financial crisis. Even as Trump-based trade deals like the USMCA face an uncertain future in Congress, the TPP went into effect and the European Union inked bilateral deals with Japan and Canada.

This does not mean that the recent uptick in protectionism had no effect on the global economy. Economists at Princeton, Columbia, and the New York Fed estimate that the trade wars exacted a deadweight loss of approximately $7 billion in the United States during the first 11 months of 2018—and the monthly costs are rising over time. An industry-funded study suggests that in 2019, the tariffs will cost American households an average of $2,400 from higher consumer prices.

China's entry into the World Trade Organization was a net gain, but it had severe distributional effects.

More significantly, the trade war might disrupt the global supply chains that have increasingly integrated the two economies over the past two decades. The economists who calculated the $7 billion in deadweight loss further estimated that the 2018 trade wars had redirected roughly $165 billion in global trade flows. According to a UBS survey of 200 exporters based in China, 37 percent of businesses have already shifted production outside the country, and another 33 percent are planning to do so in 2019. Chinese investment into Europe and the United States plummeted by 73 percent last year. The Baltic Dry Index, which is a good proxy for expectations of cross-border trade by sea, has fallen by 47 percent since the middle of 2018.

The result, The Wall Street Journal's Greg Ip recently wrote, has been a bifurcated world trading system. Between the United States and its allies, the overall effect of trade hostility has been modest. Between the United States and China, however, the disruption has been far more severe, because "the Trump administration regards economic policy and national security as inseparable when it comes to Beijing."

A final weakening link has come from the Trump administration's assault on global economic governance. The United States has announced its planned withdrawal from high-profile agreements (the Paris climate change accords) and low-profile agreements (the Universal Postal Union) alike. And two additional steps have angered both allies and rivals.

First, the White House has, ostensibly to increase U.S bargaining power in trade disputes, refused to approve appellate judges to the World Trade Organization's dispute settlement mechanism. As of this past October, the body lacks the judges necessary to adjudicate all the trade disputes in its docket. Because the rule of law is a linchpin of the WTO system, a weakened dispute resolution capability seriously undermines it.

Second, Trump has tried to exploit the U.S. dollar's privileged role in global capital markets by ratcheting up the country's use of financial sanctions against other governments. Prior administrations were aggressive in their use of financial statecraft, but this administration has taken their unilateral use to a new level. For example, it successfully pressured SWIFT, the private-sector messaging system that facilitates cross-border financial transactions, to comply with unilateral U.S. sanctions against Iran after Trump withdrew from the Iranian nuclear deal. In response, the European Union, China, and Russia created INSTEX, an alternative payment system to bypass SWIFT.

In the short term, this means little. In the longer term, it is significant that E.U. leaders can conceive of financial channels outside U.S. capital markets. The dollar isn't going anywhere for now, but this kind of hedging begins to echo German behavior after the Agadir crisis.

The Rhyme of History

Five years ago, the centennial of the Great War's start spawned a cottage industry of warnings about the rhyme of history. The possibility of a replay of the First World War was a popular one to make. These predictions of doom did not come to pass. The success of Peter Jackson's astonishing World War I documentary They Shall Not Grow Old notwithstanding, it would be easy to reject the analogy in 2019.

But most of these efforts missed or mischaracterized the economic dimension of what happened in the run-up to the guns of August. Even though the global economy seemed highly interconnected, in actuality, statesmen had been trying to segment the system for several decades. By 1914, protectionist measures and geopolitical tensions ensured that key actors did not think of themselves as too interdependent to launch an aggressive war.

Analogies are imperfect means of understanding the world. There are several ways in which the early 21st century does not resemble the early 20th century. Other checks on a great power war exist, such as nuclear deterrence. Despite the wave of populism, "there is broad support for key economic features of globalization," according to the Pew Research Center. Trump might get so spooked by stock market gyrations that he will back down on the trade wars. Pinker was correct when he observed that the martial valor of war is less prized now. And if nothing else, current leaders have the lessons of 1914 to digest. Another major war is not inevitable.

Nonetheless, the backlash to globalization that preceded the Great War seems to be reprised in the current moment. Indeed, there are ways in which the current moment is scarier than the pre-1914 era. Back then, the world's hegemon, the United Kingdom, acted as a brake on economic closure. In 2019, the United States is the protectionist with its foot on the accelerator. The constraints of Sino-American interdependence—what economist Larry Summers once called "the financial balance of terror"—no longer look so binding. And there are far too many hot spots—the Korean peninsula, the South China Sea, Taiwan—where the kindling seems awfully dry.

After World War I, Keynes wrote that the conventional wisdom in the summer of 1914 had taken peace for granted: "The projects and politics of militarism and imperialism, of racial and cultural rivalries, of monopolies, restrictions, and exclusion, which were to play the serpent to this paradise, were little more than the amusements of [the average person's] daily newspaper, and appeared to exercise almost no influence at all on the ordinary course of social and economic life, the internationalization of which was nearly complete in practice." Five years later, at least 15 million people had died, another 23 million were wounded, and a quarter-century of hyperinflation, depression, fascism, and war was about to descend upon the world.

Leaders benefit from the lessons of history only if they are aware of what actually transpired. It would be nice if today's world leaders knew more about the eerie parallels between now and the pre-1914 era. Otherwise, the curdling of interdependence will continue—and the capitalist peace that we have all become so accustomed to may not survive.

NEXT: Brickbat: This Won't Help

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  1. The global Jewish boycott of Germany in 1933, successfully crippled the German economy.

    Germany had a choice, capitulate to Jewish demands or go to war.

    Here influential Jews are talking about starting WW2. Germany didn’t want war, as admitted below. These quotes clearly indicate that Jewish leaders wanted to and eventually succeeded in bringing a world war upon Germany beginning in 1932.

    These quotes have never been seen in any media since WW2. They are not intended for the brainwashed masses.

    “Judea Declares War on Germany” was the headline in the daily Express in London for 24 March 1933
    “For months now the struggle against Germany is waged by each Jewish community, at each conference, in all our syndicates and by each Jew all over the world. There is reason to believe that our part in this has value. We will trigger a spiritual and material war of all the world against Germany’s ambitions to become once again a great nation,to recover lost territories and colonies. But our Jewish interests demand the complete destruction of Germany. Collectively and individually, the German nation is a threat to us Jews” Vladimir Jabotinsky Founder of Jewish terrorist group Irgun Zvai Leumi, in Mascha Rjestsch January 1934

    “Hitler will have no war (does not want one) but we will force it on him, not this year but soon” Emil Ludwig Cohn in Les Annales, June 1934.

    “We Jews are going to bring a war on Germany” David A Brown national Chairman, United Jewish Campaign, 1934

    1. When we don’t learn from history, it repeats.

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      2. You forgot your “Heil Hitler” salute at the end of your tirade.
        Now you will not be able to wear your jackboots and brown shirt for 30 days.
        Serves you right.

        1. When presented with facts, you respond with scripted rhetoric like a cartoon.

          You can’t bear to recognize the facts because it would burst the delusion you live in.

          You cowardly took the blue pill. When you don’t value truth, you’re a waste of skin.

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    2. So the Jews DID start WWII!

      I thought that was a sinister lie that only Daily Stormer Nazis spouted.

      1. The Jews crippled the German economy in 1933. Everyone knows the German economy was all wine and roses during the Weimar years.

        How do people believe this stuff?

        1. Ah, but Jews were responsible for Germany’s defeat in WW1, and thus responsible for the Weimar Republic

          Some guy wrote a whole book about his struggle during this Jew-controlled period in Germany

          1. The allies were losing WW1. They had no answer for uboats. Britain was loading munitions secretly on passenger liners and hospital ships at the same time trying to restrict Germany’s use of submarines. The French were mutinying and Russia was beginning to negotiate peace with Germany.

            The US president Woodrow Wilson was elected on an anti war platform.

            Suddenly things changed. The leader of the American Zionist organization was controversially nominated to the Supreme Court and became Wilson’s special counsel to WW1. The first department of propaganda was established by Wilson demonizing Germany.

            In 1936 Samuel Landman, who was the Secretary and Solicitor for the British Zionist organization in 1917, published a paper clearly stating that the Balfour Declaration was a contract between the British government and global Jews to bring the US into the war in exchange for Palestine, winning the war with dead American bodies,

              1. Sigh! In 1917 the western allies were far from losing the war. The U-Boat was about to be defeated by the convoy system. The tactics that would be used in 1918 to defeat the Germany army were tested and were only defeated by the exceptionally bad weather experienced at Passchendaele. Eight months later they would be used to repeatedly smash the front line and bring about the complete collapse of German army morale.

                Allied production of munitions had reach an all time high. The problems with the rapid economic expansion of 1915 and 1916 were largely under control.

                It was Germany that was suffering from a lack of food, a lack of natural resources, a lack of coal for the railroads and steel production, an increasing lack of manpower and an inability to win in the west. Not to mention economic plans that didn’t come even vaguely close to realistic.

                1. When the US was duped into the war in 1917 with fake news as I’ve shown by Jews who were promised Palestine, that alone cost Germany the war.

                  Convoys never worked without additional US resources and the sheer numbers of American dead bodies on the battlefield changed the entire dynamic of the war.

                  Americans duped dead for Israel.

    3. Rob Misek|4.4.19 @ 6:49AM|#
      “The global Jewish boycott of Germany in 1933, successfully crippled the German economy.”

      Fuck off, you pathetic piece of shit.

      1. Up voting Sevo here. Where do these retrograde bigots crawl out from?

    4. Jesus christ. here we thought it was the treaty of Versailles, the unstable Weimar government, and the ensuing hyperinflation that crippled the economy.

    5. The crippling of Germany’s economy took place at the same time as the global Jewish boycotts as can be seen by their trade imports and exports.…..-anti-nazi

      This is exactly what Jewish leaders were claiming they would do in their many public statements at the time.

      1. The anti-german boycott was in direct response to the nazi’s anti-jewish boycott you insufferable dumbfuck.

      2. The anti-german boycott was in direct response to the nazi’s anti-jewish boycott you insufferable dumbfuck.

        1. The Jewish boycott of Germany was in response to Hitler becoming chancellor.

          After WW1 all Germans knew how Jews betrayed Germany, and correctly recognized them as the cause of their suffering at the hands of the Weimar and Versailles treaty.

          It’s little wonder Hitler got 39% of the vote in 1932.

          Long before the craziest dipshit believes the holocaust occurred.

      3. Sigh, the crippling of Germany’s economy took place because a certain mustachio’d syphilitic cretin decided to spend a very large chunk of it on Panzers and Stuka’s. If it wasn’t for the looting of the Austrian and Czechoslovakian treasuries then they would have had an economic collapse long before 1939.

        As it was they were on the verge of one yet again before being saved by looting the French, Dutch, Belgian and Norwegian economies plus the willingness of Stalin to gift the Germans enough rope to hang 27 million of his own people.

        Even the bloated cross-dressing morphine-addicted head of the Luftwaffe recognised that they were destroying the German economy.

        1. You couldn’t be more wrong. The rearmament of Germany began in 1935 and revitalized the German economy.

          “Historical event:
          16. March 1935
          The engagement of German industry in weapons production largely pulled the country out of an economic crisis that had lasted from 1929. Almost full employment was achieved. At the same time, the Germans regained their national self-confidence.”


          1. No I couldn’t be more right. Rearmament damaged Germany’s economy severely. Do yourself a favour and look up the issue of MEFO credits. These were bonds issued by the Reichsbank for the purpose of funding rearmament – against the express wishes of the head of the Reichsbank who recognised that this is about the dumbest use possible of bond funds.

            There were billions of Reichsmarks of them falling due in late 1939 and early 1940 with not the slightest change of the government being able to repay them. The German economy was on the verge of yet another entirely self inflicted crash.

            Your Keynesian bollox about rearmament pulling the economy out of depression doesn’t even come close to matching reality.

            1. The US debt today is 22 trillion increasing annually by 140 billion.

              There isn’t the slightest chance it will ever be repaid.

    6. In 1933 Germany had been bribed by Herbert Hoover into signing anti-opiates agreements which hobbled her dope exports. The bait was the Moratorium on Brains whereby The Accursed Hun was “temporarily” exempted from paying war reparations. Hoover’s subsequent resort to asset-forfeiture pressure by allowing States to examine federal tax returns caused money to flee into hiding at a rate that closed every bank in These States BEFORE Inauguration Day in March 1933. These Banking Panics–ongoing since 1931–were what motivated the 20th Amendment to kick lame duck Republicans out before they could finish wrecking the economy.

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  4. Good article. Trade wars will probably be one causative factor for World War III. “[T]he kindling seems awfully dry”, indeed, and there’s plenty of fuelwood to pile on. 8-(

  5. “The story starts in 2008, when the small southeast European nation of Kosovo unilaterally declared independence from Serbia after nearly a century of being bound to its larger neighbor”

    The key word here is “bound”; The union was never voluntary in the first place.

  6. No.
    What made the numbered wars ‘world’ wars was the participation of all the major military powers. At this time there are only three left. Two of them are already totalitarian, and the third will never again actually declare war and fight on a global scale; the political will is no longer there. In the end, individual freedom will be eliminated without the need for a shooting war.

    1. Three world powers is a stretch. I’m assuming you’re including Russia, who is actually 4th on the iist, currently.

      You could potentially argue the US and China are the 2 remaining powers. A war between these two nations would likely never happen unless the trade between these two countries declines severely. Our economies are so intertwined now, which I think is the point of the article. The current trade war, as draconian as it is, isn’t even close to the point of concern I’m imagining is required. I’m thinking 1950s levels of US-China relations are required.

      Assume even that the worst happened and North Korea attacked us or an ally. I can’t see China fighting a protracted war to save a tin-pot dictator from annihilation and alienating itself economically from the west. It would mean hard times for an already repressed populace of 1.5B.

      1. If trade between nations stopped wars, there would not have been a war in Europe since at least Napoleon.

        1. +100

        2. Prior to the EU, there was actually very little ‘free’ trade among the European nations.

      2. “I’m thinking 1950s levels of US-China relations are required.”

        We also don’t have the same level of public desperation. US residents under 40 (my demographic) have never needed a smallpox vaccine. Most have never met anyone with post-polio (I’ve only known one) or watched a non-elderly relative die of pneumonia. (I’ve never watched anyone die of it despite being an end-of-life caregiver for several older relatives.)

        When I tell people close to my age (+/- 10 years) that an influenza outbreak killed 600,000 Americans in 1918-19, they think I’m shitting them. But that was a recent memory when Germany annexed Austria.

        We also produce a lot more food and fewer babies, work shorter days, have lower rates of violent crime and higher living standards (climate control, better clothing, more R&R).

        Granted you don’t necessarily need public discontent to start a war, but the level of destruction that would result from a great-power war would make conquest pretty unprofitable.

    2. There are always many factors to war but Europe has always had wars start primarily because of old beefs.

      When one asks why the shooting of the Archduke Ferdinand by a Serbian tool used by a Serbian Nationalist group, then Germany jumps into the war so easily. Its almost like these nations were itching to settle old scores and rearrange the political landscape.

  7. Economists at Princeton, Columbia, and the New York Fed estimate that the trade wars exacted a deadweight loss of approximately $7 billion in the United States during the first 11 months of 2018

    Let’s see: the US (federal) government spends $10 billion daily. $7 billion in 11 months comes to some $21.2 million daily, which is like 0.2% of the federal govt.’s spending.

    While I agree with the thesis of the essay, I wanted to point out that single digit billions are minuscule amounts compared to the whole of the US economy.

  8. That first shift helped start World War I, so in case you’re wondering, yes, I’m going there: The current rise in protectionism could be the precursor to World War III.

    So, Trump using tariffs to get protectionist EU, Canada, and China to LOWER their current trade restrictions is EXACTLY like before WWI?

    You are an idiot, Drezner.

    1. It could be a precursor, which means in the hack speak that Drezner writes in that it isn’t a precursor but Drezner wants it to be.

    2. just because trump thinks raising our own tariffs will somehow magically convince our partners to lower their tariffs…..

  9. I would argue that the obsession with international trade and the economics of Danial Ricardo in particular was the root cause of World War I. Why did Germany, the country with the best army and most advanced economy in Europe convince itself that it was doomed if it didn’t start a war and defeat France and Russia? Becuase all of Europe was convinced that colonies and the trade with them was the key to power and economic wealth and security. Germany had no colonies and England and France did (Russia had Siberia which was like a giant colony). What did Germany hope to gain by the war? If it had won the war, Germany planned to create a German dominated European economic zone guaranteeing free trade for itself in Europe pretty similar to what the EU is today.

    “If goods don’t cross borders, armies will” is actually true but not in the way the people who point to that phrase usually think it is. It is true only in the sense that the obsession with international trade and open markets had all too often caused armies to cross borders to ensure that good do.

    1. Actually, Imperial Germany did have colonies.

      Marshall Islands, Palau, Samoa, Solomon Islands, areas in West Africa, East Africa and South America, etc

      German imperial colonies

      Germany was deemed a threat once it united in 1871 and Germany always felt surrounded by enemies.

    2. Did you mean David Ricardo? He was not pro colonialism – that’s a form of mercantilism, which Ricardo opposed. Free trade doesn’t require colonies.

      “It is true only in the sense that the obsession with international trade and open markets had all too often caused armies to cross borders to ensure that good do.”

      – one of the stupider things i’ve read today. I’m sure you think just by asserting it, you’ve made a valid argument.

      1. I just gave evidence of it. Germany went to World War I because it felt it was being left out of the international trade system because it didn’t have colonies. World War I is a case of armies crossing boarders in large measure to ensure goods would do so. Think about it, the enite 17th, 18th and 19th Century saw wars between great powers over colonies which was just access to markets. If those countries had not felt international trade and access to foreign markets was essential to becoming a great power, they wouldn’t have cared to have colonies much less go to war over them.

        I am sure you think that statement is stupid. That is becuase you a vapid moron who emotes talking points rather than thinking. Don’t come here and waste my time with your primitive knowledge of history and economics.

        1. “I just gave evidence of it. Germany went to World War I because it felt it was being left out of the international trade system because it didn’t have colonies…..”

          – [citations missing] Simply asserting heterodox claims isn’t evidence. They’re fallacious arguments by assertion. Germany had colonies before WWI. Additionally, not having colonies doesn’t prevent your country from accessing the colonial markets, because of this thing called international trade. Now, many countries were using the “extract resources from the natives” model of colonialism, i.e. theft. But wanting to have colonies to extract their resources from the rightful owners isn’t free trade, it’s mercantilism and colonialism.

          “I am sure you think that statement is stupid. That is becuase you a vapid moron who emotes talking points rather than thinking. Don’t come here and waste my time with your primitive knowledge of history and economics.”

          – Aww, cute. twashley is getting angwy. Speaking of knowledge of economics: didn’t you just incorrectly reference a Danial Ricardo as a supporter of Mercantlism? Where’d you get your GED?

        2. Germany **did** have colonies. It’s just that they were highly unpopular at home – hence the general lack of migration to them by the German populace. Unlike the UK colonies (in many of the same areas of the world) or the French ones like Algeria.

          The German society for the encouragement of colonization was poorly supported and funded, despite the Kaiser’s enthusiasm for the idea. The Reichstag was about as interested in funding them as they were in funding a vast Army and Navy (i.e. they largely weren’t).

    3. WTF, John? The only commonality between mercantilism and free trade is trade, except it isn’t laissez faire in the former case.

      This is beyond idiotic, even for you. Next time just STFU in advance, thanks.

  10. The People’s Republic of China has troops on Filipino soil.
    Russia has ground troops in Venezuela.
    America has troops in Afghanistan.
    Peace on earth has to be the biggest joke ever produced.

  11. gonna go ahead and say this is overall a bad comparison. The world is a different place 105 years later. We don’t have a continent full of dying empires interconnected by a web of insane mutual protection treaties.

  12. Serbs aren’t good for anything except kebab removal.

    1. i bet you wonder why people call you racist, too, trashley.

    2. I am a fan of numerous instances of Serbian culture (music, food, etc.).

      On the other hand, “kebab removal” was, in addition to having been self-defeating, a moral black mark on the entire nation, and will be for the foreseeable future.

      I’m sure you can find more commonality on the Daily Stormer.

  13. If you dispute a Biblical world view, consider the Jew. Numbering never more than about 15 million they were dispersed from the middle east and scattered to some level of persecution everywhere they went. Reduced by about half by the Nazis they were further decimated. Replacement Theology has it that the new Christians replaced the Jew as the “favored” people, and it made sense from about Constantine, due to their meager numbers. Increasingly secularized worldwide, without the Temple, it made perfect sense that they would eventually be assimilated into many cultures. Made sense until 1949, when they appear once again, back in the mideast. Interesting too that whenever the Jew isn’t controlling Palestine the place is nearly uninhabitable. When Samuel Clemens visited Jerusalem at the turn of the century he described the area as a wasteland inhabited by scattered bedouins. Today it’s a first world country,tiny, surrounded by Muslim shitholes all wanting to destroy it. They fare little better, by group or individual, in whatever country they reside. Why is the Jew easily the most hated person on earth?

    1. People always find out who the liars are.

      The review of evidence won’t always be a crime.

    2. Why is the Jew easily the most hated person on earth?

      Apparently, in Indonesia it is the Chinese who are the Jews.

      1. Yeah

        There is no point in arguing with an antisemite or racist. Unfortunately one crawls out from under the rock from time to time and stinks up an otherwise interesting thread.

        Mostly I ignore them.

  14. “the tariffs will cost American households an average of $2,400 from higher consumer prices”

    Oh, what terrible hardship. I guess they’ll just have to do without and live in penury.

    Americans spend an average of $1800 on snacks and candy, $1,200 on fast food, $1,100 on coffee, $850 on soda, $325 on lottery tickets and waste $529 worth of food annually.

    1. Since $2400 is of so little value to you, I expect a transfer in this amount from you personally, immediately.

      Fuck off, slaver. You have no right to interfere in my economic activity, nor to question how I value my property, you fucking communist.

      1. Why would I give you money without you earning it? I’m not the government.

        Besides, I’ve got fast food, coffee, soda and lottery tickets to buy. And some food to toss.

  15. I recharged my crystal ball and it said : No

  16. Mr Drezner joins historians of the looter persuasion in ignoring entirely Serbian production of high-morphine-content opium for processing in Austro-Hungary, Germany and Prussia for medicinal use in Europe–and possibly just a little illicit leakage into China. But China–under new management since 1911–was successfully blocking the dumping of refined opiates there even as the guilt-ridden T. Roosevelt and sympathetic Taft Administrations were pushing a Hague Convention to block dumping of opiates in Asia. Bigwigs were assassinated routinely by communist anarchists. But Franz Ferdinand was shot just in time for war to provide the pretext for blocking ratification of the Hague Antiopium Convention. The elision is customary, convenient, but perhaps–to some–a bit like conniving to obfuscate inconvenient causal connections, wot?

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  18. “Muh corporate profits”

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  20. Two of them are already totalitarian, and the third will never again actually declare war and fight on a global scale; the political will is no longer there.

  21. “Will Today’s Global Trade Wars Lead to World War III?”

    Not as long as the good guys stay strong and stay good.

    “The splintering of international economic interdependence is a worrying sign for peace through trade.”

    Not really. The real worrying sign was for liberty and self-government, and it was the increasing “international economic interdependence” i.e. increasing rule of supranational governing bodies toward a one-world government.

  22. Globalization have the paradoxical effect of fostering intense localism and nativism, frightening people into taking refuge in the comfort of small, like-minded groups. One of the unexpected results of the Internet, for example, is how it can narrow horizons so that users seek out only those whose views echo their own and avoid websites that might challenge their assumptions.

    1. Our entire social media hardware, software technology and environment has developed into spying on us to know us better than we know ourselves to have power over us.

      Our individual actions are anticipated and manipulated with propaganda. From the fast food you crave to the news you see.

      More and more websites, like this one, manipulate their pages to show individual readers what they want to see and censor them from seeing what someone doesn’t want them to without the reader ever knowing.

      This is the new social media propaganda machine.

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