Go Lean Commentary
Here’s the challenge:
You have 1.3 billion people; you must facilitate economic growth to provide them with jobs, basic needs and the pursuit of happiness. Where do you go? What do you do?
Answer: Trade, trade, trade …
This is what the experts say.
The experts? Economists …
These economists say the best practice to grow an economy is to double-down on trade and market-based economics.
Voluntary Trade Creates Wealth: People specialize in the production of certain goods and services because they expect to gain from it. People trade what they produce with other people when they think they can gain something from the exchange. Some benefits of voluntary trade include higher standards of living and broader choices of goods and services.
This urging was proclaimed in the book Go Lean…Caribbean which presents the strategies, tactics, implementations and advocacies for growing the Caribbean economy. The book serves as a roadmap for the introduction and implementation of the technocratic Caribbean Union Trade Federation (CU). Yes, the emphasis is on trade . The CU will serve as an integrated entity to shepherd progress and optimization among the region’s societal engines for economics, security and governance.
This best practice for societal growth is a lesson learned from the study of other communities – ancient and modern – that have done “this” successfully. The book presents the role models of the Great Britain, United States, Germany, Japan, Asian Tigers (Singapore, Hong Kong. South Korea and Taiwan).
So China doubling-down on trade is just another iteration of the accepted best practice of market-based economics. In fact in a previous blog-commentary about China’s motive – their end game – for Caribbean investments, the following points were detailed:
If this Golden Rule is true: “he who has the gold makes the rules”, then we will be held to account to stakeholders in China, as their many state-own companies are definitely “bringing gold” to the table. This was vividly communicated in a previous (2014) China-Caribbean Trade/Business Summit:
“Latin America has much to gain from deepening its relationship with China, just as China has much to gain from our region,” said Luis Alberto Moreno, president of the Inter-American Development Bank (IDB). “For our governments, this is a strategic priority. But much of the day-to-day building of those links will fall on the private sector.”
China joined the IDB as a shareholder in 2009, and is now the top trade partner for several countries in the region, including Brazil and Chile.
Trade between Latin America and the Caribbean and China is expected to double in the next decade. … Source: http://caribjournal.com/2014/09/15/china-holds-business-summit-with-latin-america-caribbean/
This is the same playbook of the United States of America in building the world’s largest Single Market economy. (Remember, with the Army Corp of Engineers, the US built the Panama Canal, but with more strings attached). China is simply following the same American script – minus the cronyism and militarism – of promoting trade of their products, services and capital.
Capital? Yes, many of the projects highlighted … are being financed by China’s state-owned banks and lending institutions. They are “putting their money, where their mouth is”. These are economic battles only!
This commentary is the first of a 5-part series from the movement behind the Go Lean book in consideration of the subject “In Defense of Trade“. The focus here is that Trade must be prioritized in the Caribbean region if we want a new economic regime. The other commentaries in the series are cataloged as follows:
- In Defense of Trade: China Realities
- In Defense of Trade: Macy’s Thanksgiving Parade Model – ENCORE
- In Defense of Trade: India BPO’s
- In Defense of Trade: Bilateral Tariffs – No one wins
- In Defense of Trade: Currency Assassins – Real Threat
No doubt, there is the need to grow the Caribbean economy; we need jobs, entrepreneurial opportunities, better educational and healthcare options, a safer homeland and more efficient governmental services. Since trade policies (chattel goods and intellectual property) affect all of these deliveries, we need to pay more than the usual attention to these discussions. Trade has also been prominent in the news as of late, with the current American Federal government’s (under President Donald Trump) new penchant for tariffs and the UK negotiating a new trade deal as they leave the European Union (Brexit).
So there is the need for a 360 degree view of trade: the good; the bad; and the ugly. The Caribbean status quo is ugly, in terms of trade, there is the need to reform and transform, so as to reboot our society. But we are not the first, (and will not be the last). Let’s see the lessons we can learn from the trade strategies, tactics and implementations of others. We can all benefit!
Let’s start with China; there are parallels to consider. They need to provide for 1.3 Billion people, and so they are embracing market-based economics. In the Caribbean we only need to provide for 42 million, but we are like a fish in the pond; it does not matter how big the ocean is, we are limited to our pond. This is the definition of scope; our time, talents and treasuries must be designed to impact just these 30 island-nations and coastal states. Despite the size, there is the need for efficiency and effectiveness with market-based economic concepts. This is defined in the Go Lean book as technocratic/technocracy:
The term technocracy was originally used to designate the application of the scientific method to solving social & economic problems, in counter distinction to the traditional political or philosophic approaches. – Go Lean book Page 64.
The CU seeks to optimize the region’s economic systems – to make more efficient and effective – to better deliver on the prime directives of the Go Lean roadmap. The prime directives are pronounced as the following statements:
- Optimization of the economic engines in order to grow the regional economy to $800 Billion & create 2.2 million new jobs.
- Establishment of a security apparatus to protect the resultant economic engines and mitigate challenges/threats to ensure public safety for the region’s stakeholders.
- Improvement of Caribbean governance, including a separation-of-powers with member-states, to support these economic/security engines.
So the CU Trade Federation vision is to provide the stewardship for the region’s economic engines, to optimize trade (chattel goods and intellectual property), so as to succeed in the goals of the roadmap. The focus on trade is intra-region so as to minimize the expenditure of foreign reserves and also extra-regional so as to grow the economy. This vision was pronounced at the outset of the book in the opening Declaration of Interdependence (Page 13):
vi. Whereas the finite nature of the landmass of our lands limits the populations and markets of commerce, by extending the bonds of brotherhood to our geographic neighbors allows for extended opportunities and better execution of the kinetics of our economies through trade. This regional focus must foster and promote diverse economic stimuli.
xxiv. Whereas a free market economy can be induced and spurred for continuous progress, the Federation must install the controls to better manage aspects of the economy: jobs, inflation, savings rate, investments and other economic principles. Thereby attracting direct foreign investment because of the stability and vibrancy of our economy.
According to the following article-commentary from Canada, expanding trade with China – a willing partner – is a good strategy for improving the economic engines of a community – trade is that important:
Title: We need a China trade strategy, so let’s get it right
By: Edward Greenspon and Kevin Lynch
With exports over 30 per cent of GDP, Canada’s economy would be much smaller and its citizens considerably poorer if not for trade and investment with other countries. That three-quarters of that trade relies on ready access to the increasingly self-absorbed, aggressive and fickle United States is cause for serious deliberation, beyond indignation.
Canada’s special relationship with the United States has served us both well. It is always a risky proposition to have so many eggs in a single basket, but those risks were mitigated by Canada’s embrace of predictable rules to govern both bilateral trade, beginning with the Auto Pact, which morphed into the Canada-U.S. free-trade agreement (FTA) and NAFTA, and the international-trading system through the General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO).
Even in the best of times, there were breakdowns, such as the repeated U.S. attacks over softwood lumber or former president Barack Obama’s rejection of the Keystone pipeline. Unfortunately, we’ve now entered a world where it’s softwood lumber all the time. So, what are we to do?
Some answers are clear enough. The long-held and oft-ignored objective of diversifying our trade relations must be pursued with urgency and vigour. Canada has done well by its recent agreements with the European Union and with Japan and others in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Business leaders must now put commercial meat on the bones of these agreements.
Secondly, if a trading country such as Canada wants to grow, by definition it needs to trade with countries with both fast growth and with sufficient scale to make an appreciable difference to our export volumes. By and large, these are Asian – and you can’t speak of Asia without including China in the conversation. China’s annual growth is roughly two to three times that of Canada and the United States – off a base of 1.3 billion people. Any government seeking to represent the national interests of Canadians in the time of Donald Trump must be in possession of a long-term strategy that includes China, and not, as for more than a decade, a hodgepodge of inconsistent and reactive decisions.
Canadians don’t seem troubled by the proposition of an Asian diversification strategy with China at its core. Despite concerns about Chinese authoritarianism, human-rights violations and the perceived behaviour of some state-owned enterprises, polling shows support for a free-trade agreement trending up over the past few years. Qualtrics places the number at about 70 per cent and the Asia-Pacific Foundation about 10 points lower. No poll puts it below 50 per cent.
This shift in Canadian attitudes began even before Mr. Trump’s immodest arrival on the scene. His words and deeds have merely added impetus. Canadians get that American economic and geopolitical power is declining in relative terms and that China is an emerging force to reckon with. In the Asia Pacific Foundation’s recent annual survey, 59 per cent of respondents believe trade with Asia, led by China, will outweigh trade with the United States in the future. Canadians essentially are asking: “How can we not have a clear engagement strategy with a country that within the next 10 years will be the world’s biggest economy, largest exporter of capital, goods and services, largest emitter of [greenhouse gases] GHGs, a technology superpower and the world’s largest source of tourists and expatriate students?”
As co-chairs of the Public Policy Forum’s Consultative Forum on China, we have spent the past 14 months consulting on what a made-in-Canada strategy for future Canada-China relations should look like. Our blueprint will be released in the fall.
It is strikingly clear from our discussions that more value-added trade in sectors such as agri-food, forestry, resources, educational services, tourism and clean-tech is unambiguously beneficial for Canadians. Selling lobsters and lumber raise no national security flags, real or imagined, but they do create lots of jobs all across Canada. A case in point today is the 180 fishing fleet jobs and 304 processing plant positions in Atlantic Canada directly flowing from Clearwater Foods’ seafood exports to China.
Interestingly, both Canada and China have diversification agendas – we seek greater security of demand for our exports while China wants greater security of supply through trade arrangements with a broader range of exporting countries. Canada appeals because it is a highly developed, rule-of-law based, G7 country that poses few geopolitical risks, unlike many other global exporters.
Meanwhile, China, having raised hundreds of millions from poverty to middle-class status since it embraced a market-based economy, is now learning this middle class comes with expanding expectations for a better life – starting with livable cities, healthy food, safe workplaces, reliable pensions and available eldercare. Beyond traditional exports, China knows it can benefit from Canada’s long experience designing policies and services for the middle class.
China elicits a wide spectrum of passionately held views, of that there is no doubt. Whatever one may think, however, the question is whether a balanced engagement strategy with an economically dynamic China serves our national interests at a time when the President of the United States is pursuing a beggar-thy-neighbour policy. Risk management and prudent diversification certainly suggest yes. Time to decide how best.
Edward Greenspon is president and CEO of the Public Policy Forum. Kevin Lynch is co-chair of PPF’s Consultative Forum on China.
Source: The Globe & Mail – Toronto, Canada’s Largest Daily – Posted June 18, 2018; retrieved November 21, 2018 from: https://www.theglobeandmail.com/business/commentary/article-we-need-a-china-trade-strategy-so-lets-get-it-right/
This article stresses how important it is for Canada to trade with China, with this quotation:
… if a trading country such as Canada wants to grow, by definition it needs to trade with countries with both fast growth and with sufficient scale to make an appreciable difference to our export volumes …
We want this kind of growth right here in the Caribbean. Therefore we must also want market-based trade with China.
The underlying motivation of the Go Lean book is to reform and transform the Caribbean member-states. Therefore we need to embrace market-based economics, the way China has. They only shifted to a market-based economy since the 1970’s, and now they have the 2nd largest single market economy … in the world – it works that fast. While America – the champion of market-based economies – is the largest trading partner for Caribbean member-states, we cannot just be parasites; no, we must be protégées.
The CU roadmap seeks to drive change among the economic, security and governing engines. The Go Lean book – within its 370 pages – describes how and when a new Caribbean can emerge using market-based economic principles. These solutions are as new community ethos, strategies, tactics, implementations and advocates designed to grow the regional economy to $800 Billion. Consider how and when in the specific plans, excerpts and headlines from the book on Page 67 entitled:
$800 Billion Economy – How and When? – 10 Reasons and Tactics
|Quotation: The whole is worth more than the sum of its parts.
The CU is a confederation treaty to unify the region of 30 countries and 42 million people into a single market, an integrated economy with a GDP of $800 Billion, even though the sum of its parts amount to $378 Billion, (per 2010 World Bank ratings).
Why and how will this number grow to $800 Billion? For the 10 reasons and tactics provided below; this includes samples and examples of hyper growth scenarios in specific times and places from around the world, from the past to the present. When will the meter reach $800B? Not at first, but steadily over a 5 year period. This harmonizes with the economic “Catchup” principle of “convergence”. This establishes that emerging economies experience hyper-growth (7 to 20%) for a limited period, and then normalizes into standard growth patterns of 2 – 3% . This has been the documented cases of the BRIC countries (Brazil, Russia, India & China) and the Caribbean Union Trade Federation (CU) asserts that this Trade Federation will experience the same. This growth rate, from $378 Billion, would experience compounded GDP growth as follows:
|1||Louisiana Purchase – US Experience|
|2||California Gold Rush to the Gilded Age|
|3||Post WW II Germany – Marshall Plan / Free Market|
|4||Post WW II Japan – No Marshall Plan|
|5||Convergence of East Asian Tigers|
|6||Economic Bubbles – $11 Trillion Burst / $13.5 Trillion Recovery|
|7||New High Multiplier Industries|
|8||Trade and Globalization|
The foregoing article details how beneficial trade with China could be, and how Canadians are not afraid of Chinese interactions:
Despite concerns about Chinese authoritarianism, human-rights violations and the perceived behaviour of some state-owned enterprises, polling shows support for a free-trade agreement trending up over the past few years.
See the related news VIDEO in the Appendix below.
The growth that China has shown is remarkable … and repeatable. We can model their successes here in our Caribbean region; the foregoing article conveyed their growth:
China, having raised hundreds of millions from poverty to middle-class status since it embraced a market-based economy.
The Caribbean is arguably the best address on the planet, but there are many deficiencies, as in jobs and economic empowerments. With the previous North & West (American) focus we have suffered. Our deficiencies has led to societal abandonment so bad that the region has lost a large share of our human capital, one estimate of 70% of the college-educated population to the brain-drain.
Yes, the Caribbean region needs the type of growth than can come from a progressive trade policy and market-based economics. We need to embrace Trade; this is the panacea for what ails our societal engines. Yes, we can improve with trade among ourselves and trade with foreigners. We cannot only look to the North & West – that strategy has worn thin – we must now look East and South; like China.
Mastering trade and globalization is how we must compete in today’s trade wars. This is the Go Lean roadmap.
Everyone in the Caribbean is urged to lean-in to this roadmap to make the Caribbean a better place to live, work and play. 🙂
Sign the petition to lean-in for this roadmap for the Caribbean Union Trade Federation.
Appendix VIDEO – Trudeau outlines new Canada-China trade deals – https://youtu.be/-OTb6JqXGLw
Published on Sep 22, 2016 – Prime Minister Justin Trudeau outlines the results of trade discussions with Chinese Premier Li Keqiang which include a new deal on canola. To read more: http://cbc.ca/1.3773699
- Category: News & Politics