There are wildly divergent views of Kennedy family patriarch Joseph P. Kennedy, but few would seriously contend that he didn’t know business. He knew it well, as a family fortune that endures to this day attests. While still alive, Fortune estimated his net worth at somewhere between $200 and $400 million.
On the matter of war, Kennedy was blunt that it’s “bad for business.” In a letter sent to an old Harvard classmate about World War II, Kennedy wrote sadly of “businesses shot to pieces" and of seeing young friends of his daughters “going off to war and some of them already killed." War in his estimation was to be avoided at all costs. His great wealth had him particularly attuned to how expensive war is, and it should be made clear that the latter compliments his legacy.
About his stance, history hasn’t always treated it well. Particularly his time as U.S. Ambassador to England. So while foreign policy types can debate the good or bad of his desire to keep the U.S. out of World War II, what can’t be debated was Kennedy’s correct point-of-view that war is “bad for business.”.
Kennedy’s stance came to mind while reading about Vivek Ramaswamy’s recent big announcement. The entrepreneur, investor and writer is running for president, and for that we should be glad. Ramaswamy will bring relatively youthful vigor to a Republican Party that very much needs it.
On the policy front he brings some great ideas, some not-so-good ones, and then a rather dangerous one about trade. Ramaswamy promises a total decoupling from China. For those who fear China, it should worry them that someone who aspires to the White House would pursue a policy so inimical to the prosperity and safety of every American. To see why, consider Kennedy’s disdain for war as anti-capitalist, read on, or do both.
Up front, the good news is that Ramaswamy couldn’t decouple the U.S. from China even if he wanted to. The U.S. is thankfully not a dictatorship, at which point a President Ramaswamy would lack the power to do what he claims to want to do.
From there, simple economics gets in the way of the yearnings of would-be protectionists. Put another way, there’s no accounting for the final destination of any good. A little over 100 years ago the U.S. imposed a trade embargo of sorts on Germany, only for U.S. exports into Scandinavian countries to surge. Yes, Americans continued to trade with the Germans via countries near Germany.
Fast forward to the 1970s, non-Arab OPEC countries embargoed the U.S. It was of no consequence. Americans still consumed OPEC oil as though it had bubbled up in West Texas. The only difference was that the “OPEC oil” was imported from countries the non-Arab members were selling to.
Assuming a President Ramaswamy were to succeed in convincing Congress to legislate a China decoupling, profit-motivated individuals in the U.S. and China would continue to work alongside each other given the truth about interventionist governments lacking the capability to decree the final destination of goods. Still, at what cost to economic growth and prosperity would the productive be forced to evade a decree that smacks of central planning? It’s hard to know.
Of course, what is known now is that absent its existing freedom to produce with and alongside the Chinese, Apple, the world’s most valuable company, would be a fraction of its present abundant self. Stated more bluntly, absent China Apple would not be Apple. And it’s not just Apple. More realistically, every good and service on earth is a consequence of global cooperation among producers. Much of this production takes place in China. To “decouple” from so much essential economic activity would prove disastrous for American economic health. Don’t worry, the story gets worse.
While we hear all the time about how much the Chinese export to us, we’re not told nearly enough that exporting is an expression of a desire to import. Applied to the Chinese, their export of enormous plenty to the U.S. has rendered them a size buyer of American plenty: 1/5th of iPhones are sold in China, 40% of Teslas are sold there, more GM autos are sold in China than in North America, not to mention the extraordinary ubiquity of McDonald’s, Burger Kings and Starbucks (to name a few) in China. It all raises a question of why Ramaswamy would want to decouple from a country populated with people who are presently conducting a passionate love affair with all things American. How self-defeating, how anti-growth, and by extension, how expensive.
All of which requires a pivot back to Joseph P. Kennedy. He knew war was “bad for business” probably because he had common sense, but most of all because he did a lot of business. War is incredibly costly for those who do a lot of business simply because war is all about destroying wealth, killing the people with whom work can be divided, and killing potential customers.
Which is why those who do a lot of business don’t want war. Hopefully Ramaswamy and others keep this in mind vis-à-vis China. Trade with people in other countries not only enriches us, it also crucially raises the cost of going to war. Decoupling from China would impoverish us, only to reduce the cost of a war with China that would surely devastate us.