Garth Rattray | America’s insularism will backfire – Part 2

The international ramifications of America’s current insularism are potentially very serious. Remittance is the action of sending money as payment or as a gift. Many Jamaicans in the diaspora send remittances as their contribution to their families back home.

When remittances are restricted, it can lead to destabilisation in the target country/nation. In Jamaica remittances represent about 15 per cent of the GDP. It is our second highest foreign exchange earner. In 2023, remittances brought in approximately US$2.92 billion.

About 28 per cent of Jamaican households receive remittances on a regular basis. The monies received are used to meet day-to-day needs, pay school fees, purchase clothing, pay for medical services and for medication. Although remittances are often used to fulfil immediate needs, some households are able to use that money as start-up for entrepreneurial pursuits. These businesses provide employment and [direct and indirect] tax revenue. Therefore, primarily and secondarily, remittances greatly contribute to Jamaica’s economy.

This situation pertains to the economies of many other developing countries across the globe. In all these countries, the lack of remittances will lead to decreased household income, poverty, loss of disposable income, job loss, a reduction in living standards, reduced productivity, and a national shortfall in social safety nets. The resultant financial instability will cause an inability for those countries to meet their external obligations (debt servicing and the importation of goods).

Whenever a country’s economy is in decline, there is an inevitable increase in local crime, which contributes to international crime. A sector of society will resort to illicit activities like the drug trade, increased gang activities, and scamming. International (cross border) criminal activities will impact the American society negatively.

TROUBLING

This administration’s sudden concern about tariffs is troubling. These tariffs did not spring up overnight. Therefore, adjusting them for fairness and equity on all sides should be approached slowly, carefully, and methodically. There is a vast difference between evolution and revolution. The current tariff conundrum is nothing short of a revolutionary approach to the problem.

The pursuit of economic nationalism is dangerous. Those companies that are outsourcing products and labour are doing so for good reason. The reduced labour costs and reduced operating costs in some overseas territories make their products very competitive. Repatriating all that equipment, acquiring, and training suitable labour is going to be very difficult. Additionally, many of those assembly jobs are unsuitable for Americans.

America’s [unilateral] use of tariffs as leverage, to threaten and intimidate other countries will encourage them to retaliate. Because this situation is disruptive and leads to instability in global trade, it causes affected countries to forge new trading partnerships outside the orbit of America. With new trading partnerships come new cultural friendships, cultural ties, and lasting bonds that exclude America. Various nations will believe that they have a common adversary in America and band together.

America should remain vested in international institutions like the US Agency for International Development (USAID), the United Nations, the World Health Organisation, and The Paris Climate Agreement. These organisations provide much more than their stated function; they enable the kind of international cooperation and camaraderie that nothing else could offer. They straddle nations and merge cultures and politics. They facilitate global cooperation and unity. Without them, some nations would seek their own interests to the overall detriment of the planet.

This “America First” policy not only causes insularity, it fosters distrust in America. Traditional allies feel abandoned and even repelled. They are already forming new economic and cultural alliances. European countries are no longer convinced that America will have their back. These doubts will become concretised, no matter what policy any future administration undertakes. Once broken, those fences will be impossible to mend.

In an effort to achieve economic independence from the American dollar, countries have been seeking ways to get around it. Brazil, China, Egypt, Ethiopia, India, Indonesia, Iran, Russia, South Africa, and the United Arab Emirates (BRICS) are growing in power and cohesiveness in an effort to work around and perhaps even supersede the US dollar and the Euro. Not too long ago, their cooperation was unheard of. But their need to lower transaction costs, promote economic growth, and enhance the ease of doing business provided the strong incentive to come together.

In today’s world, there are bilateral currency swap agreements, barter trade between nations, alternative payment systems, and regional currency use going on between several countries. Other, once insignificant currencies are gaining popularity and strength in certain countries and regions of the world. It won’t be long before the once great American dollar, the universal currency for global trade, is sidelined and therefore diminished in value.

This is the wrong time in history for America to cease embracing other nations and begin pulling herself away with insularism. By not inserting herself into less developed states and assisting with their most basic needs, she opened the door to powerful competition. China has positioned herself in African nations, Caribbean, Central and South American states.

China has invested heavily, both economically and culturally, in many countries without demanding or seeking to exert socio-political allegiance. Now, Jamaica owes China more than just and economic debt. In the event of a vote at some international forum, Jamaica will likely abstain rather than vote against China in any matter.

This same scenario is being played out in both hemispheres. Ironically, America is succeeding in isolating herself and therefore losing her economic and influential dominance in the world. Her much desired ‘greatness’ is fading rapidly.

Garth Rattray is a medical doctor with a family practice, and author of ‘The Long and Short of Thick and Thin’. Send feedback to columns@gleanerjm.com and garthrattray@gmail.com