Trump's Potential Fatal Errors: Not for Him, But the Country. Pt. 1
Is he stupid or pretending to be?
To this day, I have been needled by a suspicion that Donald Trump is actually a shill for the sleazy, Clinton wing of the Democratic party. I've said many times, including when he was just hitting the political scene, and in my book. I had a hard time coming to grips with his immaturity, impetuousness and utterly disorganized style.
How, as I have often asked, here and elsewhere, can his clearly erratic behavior be actual stupidity and not just political shtick? Is he really trying? Or is he putting a four-year monkey wrench in the GOP, damaging their brand for the next decade?
Don't get me wrong. When he seems to have at least gotten a basic concept right, I have been happy to say so. But he still gets so much wrong. And so many people seem to have it in their heads that Trump is a genius and worse, they think he is a conservative.
He is neither.
I'll give you an example The President gets endless praise for his tax cut. But, with just a little ass kissing by congressional leadership, he owned a pathetically watered down version of a cut, without the valuable reform he had promised. If you were paying attention and not just celebrating this fig leaf legislation, you came away thinking what a sucker this guy is. With the slightest stroking of his ego, Trump will sign off on anything.
Continuing the same example, with little preparation and in complete ignorance of history, Trump spiked the entire economic uptick the tax cuts did provide with the monumentally stupid tariff announcements and implementations.
I will go into greater detail about this in my next book.
The costs of the Trump ego
Tariffs are wrong on too many levels to fully catalog here. But a few aspects do leap out in this case.
1) First, as is ALWAYS true, tariffs help the bottom lines of the protected companies ONLY and, without exception, hurt the wider economy. The very people who are singing the praises of the administration’s get-tough trade policies are the ones being hurt by it, along with the entire world’s economy.
2) If you follow the news cycles from Trump’s election, through the tax cuts and through the tariff announcements, you can plainly see that our economy was expanding beautifully. This was the direct result of someone - anyone - other than BHO going to the White House and that someone was talking about free market concepts.
As a result (and because we are still the world’s largest consumer economy) the world’s economies were expanding apace. Even the PIGS (Portugal, Italy, Greece and Spain) were suddenly healthy again.
But along with the rest of the world, our markets were thrown into turmoil and volatility because of this very stupid tariff idea. The PIGS are now talking about defaulting again.
As ridiculous as the idea of tariffs already is, the way Trump rolled them out (i.e., with no forethought) we have this untenable situation as a result!
3) On top of the damage EVERYONE but the cronies who own the political whores feel, tariffs don’t work. They never have and they never will[1]. This how it will all play out: We will place tariffs on whatever. Other countries will respond in kind (or maybe not because they already skim money from us on a huge scale.) There will be “negotiations”. In the end, when we’ve all had a bellyful of this stupid idea, all parties will declare victory and we will go back to where we all were before, relative to the economies of each country involved.
4) As was the case in the Travel Ban and the Zero Tolerance border policies[2], rolled out by executive order early in the Trump Administration, tariff actions were announced and launched impetuously and without any adult supervision.
The result? Peter Morici, a respected economist, points out correctly that we now have barriers to raw materials for, say, bicycle parts and metal tubes, but no barriers against foreign bicycles. As a result, American bike makers have to pay more for their raw materials, giving foreign makers a market advantage. MEANWHILE, YOU NOW PAY MORE FOR A BIKE BECAUSE NO MANUFACTURER, FOREIGN OR DOMESTIC, IS IN THE BUSINESS AS AN ACT OF CHARITY!
5) In order to do what only Congress is permitted to do (introduce tariffs) by executive order, DJT declared our trade deficit vs the rest of the world is a national security issue. Am I the only person who see how perfectly insane this position is?
For more about the roots of this tariff debacle, and my earlier warning, read this.
Give me fair trade or I'll kill you
Was the rest of the world going to attack the United States because we made it too easy for them to sell their goods here? Were we on the verge of nuking Canada because of their unfair treatment of American dairy farmers? I’m going to go way out on a limb here and say neither was about to happen?
I would submit, and history does insist, that the placing of tariffs, especially by a stronger nation, are more likely to be the catalyst of unrest and even war.
Look at Germany immediately before and then after the clearly discredited Smoot/Hawley tariffs were rolled out. Germany was struggling mightily to recover from World War II. As they were beginning to turn the corner, people like Hitler were looked upon as weird opportunists, trying to advantage of Germany’s weakened, but improving, state of affairs. Our market collapse in 1929 sent shock waves through the world economy. But the suffering was well distributed. Countries like Germany were continuing to work their way into world markets albeit at a slower pace.
Then along comes the Smoot/Hawley debacle. Immediately, what was left of Germany’s chances of recovery were put off by at least a decade. Already weak, the German economy had the chair kicked out from underneath it. Suddenly, the blame-the-rest-of-the-world activists, including Hitler and the Communists, were seen as visionary. When you are dangling over the edge of the cliff, you’ll grasp at anything.
Germany, circa 1930 - 31 would be similar to our PIGS now. Their politics and economics are in ever increasing disarray. The tariffs aren't helping them or the US in any way.
The cliché is: “When goods stop crossing borders armies soon will”. It’s a cliché because it is true. So the talk of needing tariffs for national security reasons was undiluted bullshit from day one.
But, boys and girls, if I may be permitted the microaggression of noting the difference, we are now facing a far greater threat from Trump than any harm this tariff lunacy might do to us.
In an upcoming post I will outline the greater threat and the stupidity (not just Trump's stupidity, this is widespread ignorance) behind it. In a separate post I will define the clear solution to our trade deficit. I will give you a hint about the latter: We are SUPPOSED to have trade deficits with just about every other country because we are stronger and richer than they are.
[1] Read Economics in One Lesson by Henry Hazlitt. It is a college education in one easy-to-read book. You can read it free here.
[2] The author supports both concepts, generally
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