What economic thinking went into the Trump tariffs announced last week? None at all. In fact, the economists (“economists”?) who currently have his ear seem to regard their job as being to confirm the wisdom of whatever he decides to do. Peter Navarro:
My function, really, as an economist is to try to provide the underlying analytics that confirm his intuition. And his intuition is always right in these matters.
.. Sometimes, however, rates were negative: if you put a tariff on parts but not on cars, you were actually discouraging auto assembly.
.. But still, the key point is that even while embracing protectionism, Trump is imposing negative protection on a lot of manufacturing. That’s hardly the story he wants people to hear – and he’s almost surely doing it by accident, out of sheer ignorance (because his “advisers” aren’t in the business of, you know, giving advice).
And this is how we risk a trade war?
Oh, What a Trumpy Trade War!
After all, trade (like racism) is an issue on which Trump has been utterly consistent over the years.
.. his views are based on zero understanding of the issues or even of basic facts, well, Trumpism is all about belligerent ignorance, across the board.
.. The real goal, instead, is to protect us from ourselves: to limit the special-interest politics and outright corruption that used to reign in trade policy.
Trumpocrats, however, don’t see corruption and rule by special interests as problems. You could say that the world trading system is, in large part, specifically designed to prevent people like Trump from having too much influence. Of course he wants to wreck it.
.. a trade war against the European Union would make America as a whole poorer, even if the E.U. didn’t retaliate (which it would). It would, however, benefit some industries that happen to face stiff European competition.
.. The small groups that benefit from protectionism often have more political influence than the much larger groups that are hurt.
.. the infamous Smoot-Hawley Tariff Act of 1930: Enough members of Congress were bought off, one way or another, to enact legislation that almost everyone knew was bad for the nation as a whole.
.. Tariff policy, which used to be one of the dirtiest, most corrupt aspects of politics both in the U.S. and elsewhere, has become remarkably (though not perfectly) clean.
.. the steel and aluminum tariffs, justified with an obviously bogus appeal to national security, clearly don’t pass the test.
.. But that won’t bother Trump. After all, we now basically have an
- Environmental Protection Agency run on behalf of polluters, an
- Interior Department run by people who want to loot federal land, an
- Education Department run by the for-profit schools industry, and so on.
Why should trade policy be different?
Comments:
Remember, when the Republicans blamed Obama for leading from behind. Is Trump’s leadership what they call leading from in front? Isolationism is leading from in front? Is that what Republicans call leadership?
.. I remember a time when republicans disliked Russia and loved free trade. That was so last election cycle. Now it is the opposite. What changed?
.. Until my late 20s
(in the 1970s) the United States had what is called a “regulated capitalism“. This resulted in a more or less balanced arrangement of economic outcomes for the majority of people. All quintiles rose when the GDP rose. They were two sides of the same coin: when the economy prospered, the American people prospered. This is no longer true.
The Force of Decency Awakens
A funny thing is happening on the American scene: a powerful upwelling of decency.
.. You can see the abrupt turn toward decency in the rise of the #MeToo movement; in a matter of months ground that had seemed immovable shifted, and powerful sexual predators started facing career-ending consequences.
.. You can see it in the reactions to the Parkland school massacre.
.. Even the huge anti-Trump demonstrations just after Inauguration Day didn’t seem to move the conventional wisdom. But those pink pussy hats may have represented the beginning of real social and political change.
.. Political scientists have a term and a theory for what we’re seeing on #MeToo, guns and perhaps more: “regime change cascades.”
.. When people see the status quo as immovable, they tend to be passive even if they are themselves dissatisfied. Indeed, they may be unwilling to reveal their discontent, or to fully admit it to themselves. But once they see others visibly taking a stand, they both gain more confidence in their dissent and become more willing to act on it — and by their actions they may induce the same response in others, causing a kind of chain reaction.
.. Examples include
- the revolutions that swept Europe in 1848,
- the sudden collapse of communism in 1989 and
- the Arab Spring of 2011.
.. nothing says that such cascades have to be positive either in their motivations or in their results. The period 2016-17 clearly represented a sort of Alt-Right Spring — springtime for fascists? — in which white supremacists and anti-Semites were emboldened
- not just by Donald Trump’s election but by the
- evidence that there were more like-minded people than anyone realized, both in the U.S. and Europe.
.. historians have described 1848 as a turning point where history somehow failed to turn: At the end of the day the old, corrupt regimes were still standing.
.. far too much power rests in the hands of men who are simply bad people.
.. his growing backlash is not just its vileness, but its lameness.
.. Trump’s response to Parkland — let’s arm teachers! — wasn’t just stupid, it was cowardly, an attempt to duck the issue
.. Missouri G.O.P. has responded to the indictment of Gov. Eric Greitens, accused of trying to blackmail his lover with nude photos: by blaming … George Soros
.. They’ve pretty much given up on making any substantive case for their ideas in favor of rants about socialists trying to take away your freedom.
.. it’s also kind of whiny; it’s what people sound like when they know they’re losing the argument.
.. the U.S. electoral system is in effect rigged in favor of Republicans
.. Democrats will need to win the popular vote by something like seven percentage points to take the House.
Paroling the Spanish Prisoner (Wonkish)
one of the issues that came up was the recovery in Europe, which is real and in some ways a bigger story for the world economy than the continuation of the Obama expansion here. An obvious question, which Anil raised, was whether this recovery calls for a reconsideration by Euroskeptics like myself.
.. we underestimated the political cohesion of the single currency, the willingness of political elites to suffer enormous economic pain in order to stay in the monetary union.
.. During the good years money poured into Spain, fueling a huge housing bubble. This fed inflation that made Spanish industry uncompetitive, leading to a huge trade deficit.
.. over the period 2008-2018 Spain suffered an enormous cumulative loss of output it could have produced: 33 percent of potential GDP. That’s as if the U.S. were forced to pay a price of more than $6 trillion to, say, remain on the gold standard.
.. the politics of the euro have been far more robust than us Anglo-Americans could have imagined.