The Economics of Bullying

How to read the IMF’s 2nd Quarter World Economic Outlook in a world according to Donald Trump.

  • The IMF’s World Economic Outlook July Update sketches a listless picture for the world economy. “Still Sluggish” in the title says it all!
  • Trade conflicts lower world trade volumes and hurt the emerging economies most. Risks are predominantly on the downside.
  • On the geo-political scene, aggressive shouting matches and bullying seem to have replaced international diplomacy.
  • Not that there are major differences in ideologies or beliefs. Compared to the 20th century Cold War (democracy/market economy versus Soviet central planning), all major powers adhere today to the principles of market economics.
  • However, current populists blame globalisation as the root cause of inequality and discontent.
  • The Economics of Bullying urgently needs attention to better understand the causes and consequences of bullying tactics.
  • Economic theory helps to understand the impact of bullying with lessons from Adam Smith and David Ricardo, via Milton Friedman and AW Phillips, to Douglass North and Paul Samuelson and recent insights from Gary Gereffi’s study on global value chains. Very relevant today!
  • The Economics of Bullying prove that trade conflicts will negatively impact on world economic growth and break-up value chains creating new inefficiencies.
  • Influencing monetary policy and undermining central banks independence could lead to further inequalities and financial market volatility.
  • Withdrawing support for multi-lateral cooperation fragilizes world peace and withdrawing from international treaties such as on Climate Change threatens the planet and future generations.
  • Mobilising against bullies is vital for victims but also for bystanders (who may otherwise be the victims of tomorrow).

For the complete article by Bart Le Blanc, please see the attachment.

Disclaimer:
All opinions and estimates expressed in this document are subject to change without notice. This document does not purport to be impartial research and has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and is as such not subject to any prohibition. Andreas Capital S.A. does not accept any liability whatsoever for any direct or consequential loss arising from the use of this document. This document is for information purposes only and is not, and should not be construed as, an offer to buy or sell any securities or related derivatives, invest in any funds, or enter into any transaction with Andreas Capital S.A or any of its affiliates. The information contained in this document has been compiled from sources believed to be reliable, and is published for the assistance of the recipient, but is not to be relied upon as authoritative or taken in substitution for the exercise of judgement by the recipient. This report is marketing communication, and not investment research, and is intended for professional and eligible counterparties only.

Download the attachment here Back to News