Has President Trump Lost His Grip on Reality?

The further President Donald Trump's term has progressed, the more obvious it seems that he has lost his grip on reality. The latest sign of this was his demand that Europe should retroactively pay compensation to the USA for not being able to produce goods competitive on the European market (example).

It is clear that European countries will not agree to such extortion. Nor will they stop exporting goods to the U.S. if Americans wish to buy them.

In this respect, it will be particularly interesting to see how much Trump manages to reduce the sales of European products in the United States. One would assume that price increases of even tens of percentage points—caused by tariffs—would significantly reduce their sales. However, it is also true that, in a similar way, the sale of American products to Europe will become more difficult due to countertariffs.

Lately, I have begun to suspect that Trump does not genuinely understand this. And therefore, he does not realize he should stop before irreversible damage is done to European-American trade relations.

And that is why I believe he has lost his grip on reality.

Previous thoughts on the same topic:
Economic Decline Awaits Americans as Trump Imposes Tariffs
Donald Trump’s Reliability as an Ally Has Proven to Be Questionable
The Real Problem with American Cars: Poor Market Fit

History of Finland VII: The dictator of the era of Enlightenment promoted capitalist economy

This is the seventh part of a blog post series where I go through the most significant periods in the history of Finland. In the sixth post, I described how the military state of the Swedish kingdom, which had fallen into a shortage of men and an economic crisis, led to liberal economic reforms that resulted in a long-term growth trend in the state's economy and the standard of living of its people.

During this period, the state was characterized by a democracy of Estates, where lower-class people had more power than ever since the Middle Ages. However, Sweden faced an unexpected turn when King Gustav III, who had adopted the ideas of the Enlightenment, seized power in 1772 with the support of the officer corps, France, and the high aristocracy.

However, the coup d'état did not stop the growth of wealth among the lower classes and the resulting increase in political influence. Therefore, the king faced difficulties with the lower nobility, clergy, and peasants.

To solve this, Gustav III resorted to an ancient method by initiating a war of aggression first against Russia and later against Denmark. The latter resulted in a clear victory, which gave Gustav the momentum to push a new constitution through.

As a result, the king's support base changed from the nobility to the bourgeoisie and the peasants. This was because although the king gained a lot of power, the imposition of new taxes was still subject to the approval of the Assembly of the Estates, and the lower two estates also had the opportunity to influence it.

At the same time, the people's, i.e. the peasants', ownership of their land was strengthened, and even the children of the Crown's tenant farmers were able to become legal inheritors of their farms, which increased the purchasing of inherited estates. This way, the people became even more committed to their land and, as their ownership rights were reinforced, also to promoting their own economy. The entire kingdom benefited from this economic activity.

The legal system also progressed with the establishment of the Supreme Court, the banning of torture, and the mitigation of sentences. The development of the justice system, along with the crucial economic reform of allowing factory privileges for ordinary people, promoted the capitalist economic system and created unprecedented prosperity in the kingdom.

On the other hand, the growth of new tax-exempt noble lands was completely prohibited. The abolishment of the Council of State, a symbol of the old rulers' defeat, was another change, although the highest positions were still reserved for the nobility. However, they too were required to have education for their duties.

At this stage, Sweden's rule in Finland also ended when Russia took control of the eastern part of the state as a side-show of the Napoleonic Wars. However, this did not change the fact that Finland was rapidly moving towards a society based on competence and economic activity, where the significance of birth and special privileges was disappearing.

The original blog post in Finnish: Valistusajan diktaattori edisti kapitalistista taloutta

All the blog posts in this series:
History of Finland I: How did Finland become culturally part of the West?
History of Finland II: From a hinterland of the Union into a modern state
History of Finland III: The legal and economic weakening of the position of the people
History of Finland IV: The bleakest time in Finnish history
History of Finland V: The pursuit of economic profit saved the country
History of Finland VI: Age of freedom and utility
History of Finland VII: The dictator of the era of Enlightenment promoted capitalist economy
History of Finland VIII: Joining of Finland to Russia led to an increase in crime
History of Finland IX: Enlightended dictator initiated economic growth
History of Finland X: The birth of Finnish identity
History of Finland XI: Finnish democracy and gender equality for women
History of Finland XII: Bloody civil war
History of Finland XIII: The far-right's rebellion
History of Finland XIV: The end of the first Finnish Republic
History of Finland XV: Paasikivi-Kekkonen doctrine
History of Finland XVI: Through rise and fall to a new kind of future

Does China prove the superiority of market economy?

The economy and standard of living in China was ruined by the Great Proletarian Cultural Revolution ordered by the Chairman Mao in 1960´s. After the death of the Chairman, the economic direction was changed in China towards the current system, where communistic dictatorship is combined with a market economy. 

That has led to great progress in the most populous country of the world. And now the statistics tell the Gross National Income of China is soon going to reach a level of $12 000 per capita. 

That means Chinese people are reaching the level of citizens of Costa Rica or Venezuela and has already passed over e.g. Russians, Malaysians, Bulgarians or Turkish. And even the standard of living in countries like Chile, Uruguay or Hungary will be reached in the next ten years - provided that the growth rate of China corresponds to the development of the last twenty years.

At the same time, China has become the second biggest economy in the world - and the difference to USA is narrowing quickly. The difference in GDI per capita between the two is, however, about sixfold - and therefore it very clear that the difference in the welfare of the two biggest economies of the world will be huge for decades. 

Taken the facts above, it is very clear that even a communistic rule may produce economic welfare despite the horrific examples provided by the Soviet Union or - more recently - Venezuela. The key to that is, however, to give up on the economic principles of Karl Marx and Friedrich Engels - and definitely avoiding Leninism as a means to apply their ideas. 

Instead it might be worth noting that the example provided by Xi Jinpin´s China seems to prove the superiority of market economy over socialism. And it drives me to consider, if more strict market economy should be preferred over the milder versions of socialism - such as Nordic social democracy? 

After all, considering other aspects usually thought to advance economy are excellent in the Nordic countries. The freedom of speech is among the best in the world, democracy is challenged in no ways and people are highly educated. Despite those facts, their economies have become more or less stagnated (Finland, Sweden, Denmark, Norway) during the last decade or so, according to GNI.

For me, these notions will be of extreme interest in the becoming years. And therefore I intend to follow future developments in the Chinese economy - and make conclusions about the contributions of market economy and social democracy by comparing future developments in China and the Nordic countries. 

Previous thought on the same topic:
The main consequence of Putin´s attack to Ukraine
Once upon a time in China and Taiwan
Could China take advantage on the weakness of Putin´s Russia?