My wife, Teresa, and I just returned from a three week vacation in Europe. We spent most of the time visiting family, but we did manage to get in a “tulips and windmills” riverboat cruise.
One recurring theme of the trip was that other countries seem to consider a longer term perspective than Americans do. This first became apparent when we visited the huge mechanical dikes in the Dutch province of Zeeland.
About 40 percent of the Netherlands is below sea level and has been reclaimed from the ocean through an elaborate system of dams and dikes. We have all heard the infamous tall tale about the boy who put his finger in the dike to prevent a flood.
The reality is that the dikes are incredibly elaborate and sophisticated. After a severe weather related breach that flooded a province in 1953, the Dutch spent thirty years building an incredibly large mechanical wall to protect them from the ocean.
The Dutch realize that this wall will have to be fortified over the next 80 years because of rising sea levels and the sinking of the tectonic plate on which the Netherlands is located. The Dutch are prepared to spend billions of euros in this endeavor so that the events of 1953 will not be repeated during the next century.
The tour guide told us that her husband is one of the senior engineers on this project. Apparently, he was called to New Orleans after Hurricane Katrina and to New York after Hurricane Sandy. She lamented how unprepared America is for the inevitable weather related flooding of those cities.
America has not learned from the Dutch experience that it is more cost effective to build the requisite prophylactic infrastructure than to endure a serious flood.
The next day, we sailed to Antwerp where there was a tour called “Chocolate, Waffles & Beer.” The ship’s cruise director told us that Belgians commonly consume beer with breakfast. (Since my cardiologist reads The Signal, I want to assure him that I did not go on that tour.)
Later that evening we dined on board the ship with an apparently successful Hong Kong businessman named Peter and his wife, Amy. We spent the evening discussing the emergence of China as a dominant economic power.
In Peter’s view, unlike America, China is forward looking and is concerned about its long term future. Chinese President Xi Jinping is moving away from a democracy to “toughen up” the Chinese people, so they will sacrifice for the longer term.
Peter said that President Trump is playing right into the Chinese hands. Although withdrawing from the Trans-Pacific Partnership (“TPP”) sounds appealing to many Americans, from the Chinese perspective, such action was a gift to the Chinese. While the TPP certainly did not maximize American profits in the short term, it afforded America a large measure of control over Asian trade in markets that China wants to dominate. China is now on an equal footing with America inasmuch both countries must negotiate unilateral trade agreements with each nation. China may use the TPP as a framework for its own multilateral trade agreement that would exclude the US.
Furthermore, Peter went on to say that by imposing tariffs and raising the specter of trade wars, America is annoying the nations it needs to team up with to contain China economically. It will prove tough to contain China when you can’t build the team needed to do so.
Speaking of trade wars, Peter believes that the Chinese are better prepared to deal with the collateral damage of such wars than Americans are.
Peter and Amy went on the Chocolate, Waffles & Beer tour that day and Peter commented, “Perhaps your President Trump eats breakfast with the Belgians and is buzzed all day by the beer he drinks with breakfast.”
I have no idea what the President consumes for breakfast, but Peter’s sarcastic comment clearly underscores our apparent inability to adequately consider the long term perspective of global matters and the eventual future consequences of our current actions.
Since we dined with Peter and Amy, Treasury Secretary Mnuchin led a delegation to China to discuss trade with the Chinese government. The Financial Times described the meeting as a demand by the United States for China to unilaterally disarm ahead of a trade war. The Chinese have better alternatives than engaging in serious negotiations on those terms.
Clearly the Trump Administration has been dealt a difficult hand in dealing with the Chinese who are the most formidable economic rival we have faced in over a century and we cannot treat them with kid gloves. On the other hand, if we are going to be successful, we have to form a multilateral alliance with a long term goal in mind.
I always enjoy traveling overseas to see the perspectives of others who are not subjected to our daily dose of media frenzy. But I still refuse to have beer with my breakfast.
Jim de Bree is a retired CPA who resides in Valencia.