World Blog by humble servant.Report: The Geopolitical Hijacking of Global Economics Date: May 3, 2026 Subject: The Erosion of Rules-Based Trade in Favor of Hegemonic Competition
Report: The Geopolitical Hijacking of Global Economics
Date: May 3, 2026
Subject: The Erosion of Rules-Based Trade in Favor of Hegemonic Competition
Executive Summary
As we mark the 250th anniversary of Adam Smith’s The Wealth of Nations, the global economic landscape is undergoing a radical and destructive transformation. The foundational principle of modern economics—that open trade is a non-zero-sum game providing mutual benefit—is being discarded. In its place, a doctrine of "Economic Security" and "Great Power Competition" has emerged, primarily driven by the United States' efforts to preserve global hegemony in the face of China’s rise. This shift represents a transition from a pursuit of universal prosperity to a zero-sum struggle for power. To bridge the gap between Adam Smith’s humanism and today's "Securitized Economy," here is a tactical roadmap for how we can begin to remake the case for trade:
1. Challenge the "Security" Monopoly
Right now, the "National Security Exception" is a black box. If a politician says a trade barrier is for "security," the conversation ends. We must demand that economic security be redefined to include economic resilience.
The Argument: A nation that cannot afford basic goods, faces 10% annual inflation on tech, and has a 34% approval rating because of a falling standard of living is not secure. * The Action: Push for "Economic Impact Statements" to accompany any new national security trade restriction. If an export control on chips costs the US economy $50 billion and yields only a marginal military delay for a rival, we must frame that as a net loss to national strength.
2. Expose the "Mercantilist Myth"
Today’s strategists are essentially neo-mercantilists—they believe wealth is a fixed pie and the goal is to have the biggest slice.
The Argument: Remind the public that mercantilism was the doctrine that led to the very "absurd wars" Smith sought to end.
The Action: Use the 250th anniversary to highlight that innovation is not a zero-sum game. If China develops a better green energy battery, it isn't just a "loss" for the US; it’s a tool the whole world uses to fight climate change. We must stop treating global progress as a domestic defeat.
3. Restore the "Middle Ground" (Plurilateralism)
Since the WTO is currently "hollowed out," we cannot wait for a global consensus that may never come.
The Action: Support Plurilateral Agreements—smaller groups of like-minded nations (e.g., the "Digital Economy Partnership") that agree to open trade even if the superpowers are at loggerheads.
This keeps the "scaffolding" of growth alive in the rest of the world, preventing a total collapse into two isolated, warring economic blocs.
4. Direct Appeal to the "Disgusted" Public
The public is disgusted because they are paying the bill for a "hegemony" they don't feel.
The Argument: Connect the dots between geopolitics and the grocery bill. * The Action: Frame the removal of tariffs not as "being nice to China," but as a tax cut for the American and European worker. By lowering the costs of imports, we directly combat the "plummeting living standards" that are driving political instability.
5. Weaponize the "Invisible Hand" of Diplomacy
Smith’s greatest insight was that people don't trade because they are kind; they trade because they are self-interested.
The Action: We must move from a "Zero-Sum" mindset to a "Mixed-Motives" mindset.
We can compete on military technology while cooperating on trade that feeds and clothes our populations. Diplomacy should be treated as a "market mechanism" to lower the cost of friction, not as a sign of weakness. Here is how those three elements are currently manifesting in the "extraordinarily destructive way" you described: 1. Isolationism (The "Gated Community" Mindset)
In the past, isolationism was about staying out of foreign entanglements. Today, it’s a "securitized" isolationism. We aren't retreating from the world physically; we are retreating from the global marketplace of ideas and goods.
The "Small Yard, High Fence": By trying to keep technology (like Nvidia chips) in a "gated community," the US is effectively isolating its own industry from the fastest-growing markets.
The Result: This doesn't stop others from innovating; it just ensures that when they do, the US won't be part of the standard-setting process. It is a slow-motion withdrawal from the "expanding world market" Adam Smith celebrated.
2. Lack of Courage (Fear-Based Policy)
The "loss of nerve" you mentioned is fundamentally a lack of courage. A courageous nation believes its workers, its ideas, and its systems can compete on a level playing field.
Reactive vs. Proactive: Current policies are defined by fear of China’s rise rather than confidence in American renewal. * The "Zero-Sum" Trap: It takes no courage to hide behind a tariff wall of 145%. It takes immense courage to keep markets open, engage with rivals, and trust that innovation—not suppression—is the key to staying relevant. By choosing suppression, leaders signal they no longer believe the US can "win" through merit.
3. Imposition (The Bully’s Veto)
When a country loses its economic edge but retains its military and financial "hammers," it turns to imposition. Since the US can no longer naturally dominate the share of world output through sheer productivity, it uses "instruments of economic warfare" to force the world to comply.
Sanctions as Command: Instead of persuading countries to join a beneficial trade bloc, the current strategy uses the threat of exclusion from the dollar system or tech supply chains to impose American will.
The Economic Ignorance: As you noted, this is mind-bogglingly ignorant because it assumes the rest of the world will simply accept the imposition. Instead, it creates the "disgust" we see in Europe and the Global South, driving them to create their own "scaffolding" (like the BRICS+ expansion or alternative payment systems) that bypasses the US entirely.
The Convergence: A "Mind-Boggling" Self-Sabotage
When these three meet, you get the current state of affairs:
Isolationism keeps us from the benefits of global growth.
Lack of Courage prevents us from fixing our own internal productivity.
Imposition alienates our allies and turns the world against the "rules-based order."
The result is exactly what you see in the polls: a 34% approval rating. The public feels the weight of these impositions through inflation and a declining standard of living, while the "strategists" at places like Harvard or in Washington remain obsessed with the "map" of power rather than the "reality" of the dinner table.
By abandoning Smith’s humanism for Sullivan’s "Power Politics," the US is essentially imposing a tax on its own future to buy a few more years of a dominance that is already slipping away.
The Bottom Line: We change this by refusing to let "National Security" be the only metric of a successful country. As Smith taught us, a state’s true power comes from its productive capacity and the well-being of its people—both of which are currently being sacrificed on the altar of a 20th-century view of dominance.
1. The Death of Mutual Benefit: From Smith to Sullivan
Classical economics, beginning with Adam Smith in 1776, argued that an expanding world market benefits all participants. Smith’s humanistic view suggested that even colonized nations would eventually gain strength through the flow of ideas and trade, leading to a natural rebalancing of global equity.
However, recent discourse—symbolized by National Security Advisor Jake Sullivan’s influential essays in Foreign Affairs—signals a departure from this "liberal" order. The new "Washington Consensus" views economics through a military and geopolitical lens:
The National Security Exception: Once a 15-minute "aside" in trade law, it has now become the "scaffolding" of US policy.
Technological Containment: Trade is no longer about efficiency; it is about "small yards and high fences," specifically targeting China's access to high-end semiconductors (e.g., Nvidia) and AI development.
Hegemony vs. Well-being: The strategic objective has shifted from maximizing American living standards to minimizing the relative gains of competitors.
2. The "Loss of Nerve" and Economic Warfare
The United States' current trajectory is a reaction to a perceived decline in its share of world GDP. Rather than viewing China’s development—lifting 1.4 billion people out of poverty—as a market success, US strategists increasingly view it as an existential threat to American dominance.
| Factor | Historical "Liberal" View | Modern "Security" View |
| China's Rise | A benefit to global innovation and supply chains. | A threat to American technological hegemony. |
| Globalization | A successful driver of emerging market growth. | A "failed" experiment that hollowed out the US base. |
| Trade Policy | Managed by rules (WTO) and comparative advantage. | Managed by executive discretion and sanctions. |
This "economic warfare" is not merely rhetorical. Under both the Biden and second Trump administrations, tariffs have reached historic highs (some as high as 145% on Chinese goods), leading to a forecast 0.2% loss in global merchandise trade and persistent inflationary pressure in the domestic market.
3. Domestic and Global Consequences
The reorientation of the economy for power rather than prosperity is yielding significant social and political costs:
The Cost of "Absurd Wars": Beyond trade, the geopolitical climate has fueled active conflicts. The ongoing war in Iran is increasingly viewed as a tragic and avoidable consequence of a "reckless" foreign policy that ignores diplomatic process for the sake of impulsive strength-projection.
Plummeting Approval: Public dissatisfaction is widespread. Current polling shows leadership approval ratings hitting record lows:
United States: Presidential approval has dipped to 34%, with a 62% disapproval rating.
Europe: Across major EU nations (UK, Netherlands, Belgium), elected leaders are seeing double-digit declines, with many hovering in the 27%–35% range as living standards decline due to energy costs and trade disruptions.
4. Conclusion
The "basic scaffolding" of the global economy is being dismantled. By treating trade as a weapon rather than a tool for growth, the current strategy risks a permanent structural shift. As predicted by the classical tradition, the rejection of mutual benefit does not result in the preservation of power, but in a collective decline in well-being—a reality now being reflected in the "disgust" of the global public.
Note: The data suggests that while "strategies" aim to head off China's rise, the primary victims are the American and European consumers now facing a "higher price level thereafter" than would have existed without the current trade hostilities.
1. Reclaiming "The Wealth of Nations" as a Humanist Project
The current "national security" crowd treats economics as a toolkit for state power. Smith, however, argued that the wealth of a nation is measured by the well-being of its citizens, not the size of its treasury or the dominance of its military.
The Counter-Argument: If policies aimed at "containing" a rival result in a 34% approval rating and declining living standards at home, then by Smith’s own definition, the nation is becoming less wealthy, regardless of its geopolitical standing.
2. Highlighting the "Invisible Hand" vs. the "Heavy Hand"
Smith was famously skeptical of "statesmen and councils" who think they can direct the industry of private people toward their own political ends.
The Reframing: Today's export controls and "Nvidia-gate" are modern versions of the Mercantilism Smith fought against. We should point out that when the state tries to "order" economics for power, it creates massive inefficiencies, stifles innovation, and ultimately weakens the very "scaffolding" that allowed the West to prosper in the first place.
3. Mutual Benefit as a Security Strategy
The current mindset sees China’s rise as a threat to be managed. Smith’s perspective—shared by the great humanists of the Enlightenment—was that commerce is the ultimate antidote to war.
The Argument: A world where China and the US are deeply integrated is a world where the "cost" of war is too high for either side to pay. By dismantling trade links (de-coupling or "de-risking"), we aren't making the world safer; we are removing the economic guardrails that prevent physical conflict.
A "New Wealth of Nations" Report Card
To make this practical, we could evaluate current policies using a "Smithian" rubric:
Policy Action Does it increase the "Annual Produce"? Does it promote peaceful cooperation? Smith's Likely Verdict High Tariffs No (Increases prices) No (Causes friction) Mercantilist Folly Tech Sanctions No (Slows global R&D) No (Weaponizes trade) Distortion of Industry Open Markets Yes (Lower costs) Yes (Interdependence) The Natural Order 4. Focusing on "The Theory of Moral Sentiments"
We often forget Smith's other book, which dealt with empathy (what he called "sympathy"). A 250th-anniversary reframe should emphasize that the 1.4 billion people in China rising out of poverty is a moral victory for humanity, not just a data point for a Pentagon strategist. Recognizing the "humanity" of the global market might be the only way to lower the temperature of the current "absurd wars."
The Summary: A Mindset-Driven Demise
The current crisis is not a result of "failed" globalization, but of a "Loss of Nerve" within American and Western leadership. This psychological shift has fostered a self-reinforcing cycle of decline that is now becoming irreversible due to three terminal mindsets:
1. The "Wartime Footing" as a Permanent State
Economy is no longer viewed as a means to prosperity, but as a theater of war. By placing the US on a "techno-economic-trade wartime footing" (as seen in the 2026 ITIF and USCC reports), leaders have effectively dismantled the "scaffolding" of mutual benefit.
The Result: Innovation is being stifled by "distillation attacks" and bypasses, while global trade growth is projected to slow to a mere 2.2% this year.
The mindset that we must "win" the economy has ensured that everyone is losing. 2. Dominance Over Legitimacy
There is a profound shift from leading by example to leading by imposition.
The US is increasingly viewed not as a stabilizing force, but as a "predatory rogue actor" that uses its financial hammers to maintain a share of world GDP that has naturally fallen from 21.6% (1980) to a projected 13.9% (2030).
The Demise: This lack of "moral authority" and "political trust" means that even when the US imposes its will, the world is actively "unwinding the order" it once constructed, moving toward a multipolar reality where the US is just one of many regional powers.
3. The Paralysis of Pernicious Polarization
Internal "dysfunction and pernicious polarization" have rendered the US unable to fix its own foundation.
While strategists focus on keeping Nvidia chips out of China, domestic debt is hitting 125% of GDP, and public approval has plummeted to 34%.
The Finality: The mindset of the elite is "mind-bogglingly ignorant" of basic economics, prioritizing hegemony over well-being. Because the leadership is obsessed with the relative decline of power rather than the absolute growth of its people, they are unable to course-correct.
Conclusion: The "No Hope" Inflection Point
The consensus for 2026 is that we have reached a geopolitical inflection point. The "mindset that fostered the demise" is one of fear, impulsivity, and a total absence of the humanist process that Adam Smith envisioned.
By treating the rise of others as an existential threat rather than a global gain, the current leadership has not preserved American power—it has merely accelerated its isolation. As you noted, the "disgust" of the public is the final symptom: they are being asked to pay the price for a "hegemony" that no longer provides them with a better life.
We cannot "come back" to the old world because the trust and the structures that held it together have been traded away for the instruments of economic warfare.
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