The Economics of Gremlins
International trade and deindustrialisation
Seasons Greetings! Just a quick post today as I’ve managed to catch Covid and so I’m resting up with some Lemsip.
A few weeks ago I wrote about the economics of ‘The Holiday’. This was part of my tradition of over analysing/sucking the joy out of Christmas classics such as ‘Elf’ and other festive favourites.
Today I want to talk about the 1984 film, ‘Gremlins’. It has long been one of my absolute favourites as it’s refreshingly dark and offers a change from a lot of the shmaltz around at this time of year. It is also a film about international trade and deindustrialisation.
I wrote a piece at the start of this year on ‘The Phantom Menace’ and how that reflected anxieties over the impending entry of China into the WTO. ‘Gremlins’, released in 1984 and is actually all about fears over trade with Japan and the impact on American workers and society.
The first clue that I’m correct and not just delirious from fever is the location of the film. It is set in the town of Kingston Falls in the state of Pennsylvania. This matters as this is part of America’s Rust Belt of areas which suffered from desindustrialisation. The makers of the film could have set it anywhere, but the fact they chose a town in the Rust Belt is quite telling.
Then there are the residents of the town. There are frequent references to the fact that many of the residents have lost their jobs. These are characters who fit the stereotype of blue collar workers with their baseball caps, plaid shirts, and pickup trucks. Sadly, rather than working they are reduced to drowning their sorrows in the local bar.
There is also a focus on manufactured goods. The protagonist, Billy, drives an imported German car which repeatedly malfunctions. There is also a racist remark made to one product which suggests that it’s of Japanese origin.
In fact, the whole film is about making stuff. Billy’s dad is portrayed as a nice American man, struggling to get by. He is an enthusiastic inventor, but all of his products are poorly made and so frequently malfunction. The scene set at an invention expo is revealing as he’s impressed but intimidated by all the better inventions on display and he realises that he can’t compete.
There is a focus on electronic equipment as well. The Gremlins bring death and destruction to the town as they interfere with electrical products which are obviously a major Japanese export.
It is also impossible to ignore that the original gremlin is called Mogwai and is originally owned by a man in stereotypical East Asian dress.
Ultimately, the gremlins are defeated by the plucky Americans. Thanks in part because they are distracted by a major US export, the film industry.
We know that fears were persisting over the growing dominance of Japanese exports in the 80s. President Reagan – who is often championed as a free market hero – levied incredibly high tariffs on Japanese electronics and introduced stringent quotas on Japanese cars due to these anxieties. Interestingly, Peter Navarro (yes, that one) lambasted Reagan for this and accused him of being too protectionist.
We see these fears wax and wane over the decades. The early 90s gave us NAFTA and trade liberalisation around the world. Unfortunately protectionism is on the rise once more with President Biden showing no intention of reversing Trump’s policies on trade as he too is concerned once again about deindustrialisation and the need to protect American jobs.
Bidenomics
Last week I wrote an article for CapX on Labour’s trade policy. There is certainly some good stuff in there such as an independent Board of Trade but it would be a mistake for the UK to try and emulate Bidenomics. You can read it here.
The Bank of England
Last week I also wrote two articles (one for the Evening Standard and one for CityAM) on why the Bank of England needs to start cutting interest rates. They essentially followed on from my post back in early November where I argued that the Bank was being too optimistic about the prospects for economic growth and too pessimistic about inflation returning to target. There is now a real danger that the Bank will overshoot its target so that inflation will fall to below target while also plunging us into a recession.
On that cheery note, all that is left for me to do is to wish you a Merry Christmas if you’re celebrating it and hope you have a relaxing time off.
Ben