.
Links between states and organizations can cause a lot of trouble.
One example is an alliance with a trouble-making state, another example are links between states and organizations like Iran-Hezbollah.
Troubles can also arise from economic links, as we observed when the global economic crisis had an epidemic expansion through economic links in many states of the world.
Links are not bad in themselves; states should merely avoid to add too much systemic risks on themselves.
I'd like to criticize one type of link especially much; unbalanced trade relations.
Much has been written about raw material (energy) dependency links, and it's certainly a good idea to diversify the raw material supply. That's not the only example, though.
Imbalanced trade balances are a general and very powerful problem as well. States with a strongly positive trade balance are in danger of connecting their economy too much to unhealthy economies (economies with negative trade balance). A strong trade surplus is usually being considered as a sign of an especially healthy' economy - but that's wrong in my opinion. Healthy is balanced - a strong surplus is an indicator of strong links to unhealthy economies. This means that a strong export country like PR China, Germany, Japan, Saudi Arabia, Russia, Switzerland or Norway is strongly linked to 'unhealthy' economies like USA, Spain, UK, Australia, Italy or Greece (which have strong trade balance deficits) - with the expectation of running in trouble if the latter finally (almost unavoidably) run into trouble.
This isn't the only problem of a strongly positive trade balance - many problems surround this topic (long term considerations, macroeconomic investment rate, retirement savings/demographic development) - the bottom line is that a (near-)balanced trade balance is simply favorable.
Sadly, we've got a terrible national custom in Germany; we cheer trade balance surpluses.
We have actually a law that urges our government to strive for a balanced trade balance (StabG, 1967), but that requirement is in some conflict with others of the same law, that reduces its effectiveness.
We should care more about systemic risks in alliances and economic relations than to just discuss energy source dependencies.
Foreign economic troubles can affect our own economies only as much as we are linked to them.
Foreign aggressive governments and their conflicts with others won't become our conflicts if we don't side/ally with them.
Sven Ortmann
Links between states and organizations can cause a lot of trouble.
One example is an alliance with a trouble-making state, another example are links between states and organizations like Iran-Hezbollah.
Troubles can also arise from economic links, as we observed when the global economic crisis had an epidemic expansion through economic links in many states of the world.
Links are not bad in themselves; states should merely avoid to add too much systemic risks on themselves.
I'd like to criticize one type of link especially much; unbalanced trade relations.
Much has been written about raw material (energy) dependency links, and it's certainly a good idea to diversify the raw material supply. That's not the only example, though.
Imbalanced trade balances are a general and very powerful problem as well. States with a strongly positive trade balance are in danger of connecting their economy too much to unhealthy economies (economies with negative trade balance). A strong trade surplus is usually being considered as a sign of an especially healthy' economy - but that's wrong in my opinion. Healthy is balanced - a strong surplus is an indicator of strong links to unhealthy economies. This means that a strong export country like PR China, Germany, Japan, Saudi Arabia, Russia, Switzerland or Norway is strongly linked to 'unhealthy' economies like USA, Spain, UK, Australia, Italy or Greece (which have strong trade balance deficits) - with the expectation of running in trouble if the latter finally (almost unavoidably) run into trouble.
This isn't the only problem of a strongly positive trade balance - many problems surround this topic (long term considerations, macroeconomic investment rate, retirement savings/demographic development) - the bottom line is that a (near-)balanced trade balance is simply favorable.
Sadly, we've got a terrible national custom in Germany; we cheer trade balance surpluses.
We have actually a law that urges our government to strive for a balanced trade balance (StabG, 1967), but that requirement is in some conflict with others of the same law, that reduces its effectiveness.
We should care more about systemic risks in alliances and economic relations than to just discuss energy source dependencies.
Foreign economic troubles can affect our own economies only as much as we are linked to them.
Foreign aggressive governments and their conflicts with others won't become our conflicts if we don't side/ally with them.
Sven Ortmann
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