How Fragile is the WTO

We are about to find out. The U.S. is proposing modest tariffs on steel and aluminum, but economists are worried it could spiral into a trade war.

If it can easily spiral into trade war, then the WTO is fragile and doomed just like XIV. If a system can't take a small amount of stress without a negative feedback loop taking off, then it cannot survive.

Ideas such as social mood, behavioral economics, Socionomics, realpolitik and stress testing should be taken into consideration when designing a system. If countries haven't planned for a bad outcome of a key player in global trade deciding to temporarily or permanently defect, then it's a bad system. It's precisely the times when countries want to defect from global trade that you need a system. You don't really need a system to induce countries to behave in their own economic interest. And if people choose not to act in their economic interest, but instead in their national or sovereign interest, there's nothing that can be done with respect to that one country, since retaliation only escalates tensions.

My expectation is the global trading system will fail as it failed roughly 100 years ago. The second great age of globalism is coming to an end.

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