The Group of 20 finance ministers met in the United States this month to discuss a startling phenomenon: when one country makes stuff and sells it to other countries, the other countries sometimes make less of that stuff themselves. Revolutionary thinking.
China's consumer spending remains weak. Chinese manufacturers keep producing goods anyway. Those goods go somewhere. They go everywhere. They flood markets in Europe, North America, and anywhere else people buy things they could theoretically make themselves but won't because it costs more.
The debate has now been elevated. That's the word CNBC used. Elevated. As if seventeen finance ministers sitting in a conference room pointing at pie charts constitutes intellectual progress. They're discussing whether Chinese exports cost people their jobs. The answer is yes. It did. It does. It will continue to do so. This meeting will change nothing.
Here's what actually happened: China built factories. Those factories made products cheaper than anyone else could. Other countries bought those products. Workers in those other countries lost jobs making those products. Politicians in those other countries acted surprised. They called meetings. They elevated debates. They went home. The factories kept running.
Retail traders are currently Googling "how to profit from G20 meeting" and finding seventeen YouTube videos with titles like "G20 CHINA TRADE WAR STOCKS TO BUY NOW." They will buy those stocks. Those stocks will go down. The Chinese factories will continue operating regardless of what happens to some guy in Michigan's Robinhood account.
The G20 meets multiple times per year to discuss problems everyone already knows exist. They release statements. Markets ignore the statements. Nothing changes except the location of the next meeting. This is not analysis. This is what happens every single time.
But sure, let's elevate the debate about whether production and employment are connected economic concepts.
Photo by Joseph Chan on Unsplash
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