"The Strong are strongest alone"

US Congress enraged the Canadian government this week by adding a clause that any bailout money (in the trillions now) must be spent on American firms only. We've been NAFTA partners for 20 years, and they still treat us like an unwelcome houseguest. Is this the start of another 1971-style trade war between Washington and Ottawa? Considering they import 20% of their oil from us compared to less than 5% in 1971, plus a lot of their electricity and raw materials, that might not be a good idea.

Either way, this halfhearted protectionism seems so puny compared to the scale of the problem. The US has an $800 billion per year trade deficit; they can't produce enough to satisfy themselves, and no-one wants to buy their shoddy goods. They've been coasting for decades, using their military dominance to rewrite the international rulebook in their favour and letting their civilian and industrial infrastructure decay. They can't fix that just by giving mad cash to the largest corporations--there needs to be real investment and real restructuring to become productive and self-sufficient again.


When the news becomes too depressing, I sometimes play a little game I call "stupid or evil?" For instance, Hurricane Katrina killed thousands and wiped most of New Orleans off the map before help arrived days later. President Bush said afterwards that no-one could have predicted that the New Orleans levees would break, yet the week before he was explicitly told that that was a major risk.

Despite his reputation, I think that is a clear case of "evil" not "stupid". Why did the US Justice Department allow torture and suspend habeas corpus and Geneva Convention rights? Why did Clinton force single mothers to get a job and pay for childcare to get welfare benefits? Why did Reagan "not recall" the Iran-Contra affair? The list goes on.

Likewise, it seems obvious that these trillions of dollars of bailouts will only make economic collapse worse if and when it does come by inflating the debt bubble and exacerbating financial inequality. So either (a) the White House and Congress have terrible economic advisors or are ignoring good advice or (b) senior decision-makers will personally benefit from their decisions. (Or (c) their decisions are right and I'm wrong.) There is no way to be sure unless there is transparency and investigation.

Update: the White House weighed in and modified the "buy American" clause to specify that it would abide by NAFTA and WTO rules. So no trade war for now.