Basta La Vista, Baby

For Trump defenders, it requires incredible effort to keep yourself convinced that he’s the man you want him to be rather than the man he actually is. Orwell was right when he said, “To see what is in front of one’s nose needs a constant struggle.” But the opposite is often true as well. It is incandescently obvious that Donald Trump is not the world’s best negotiator or an honest person, among other glaring truths. But for people either emotionally or professionally invested in Trump, any admission that the Trumpian eminence front is a put-on is a threat of one kind or another. Maintaining the fiction that the emperor’s new clothes are glorious and resplendent takes a lot of effort, too. (For instance, imagine the energy it takes even to attempt to argue that Trump’s accidental “covfefe” tweet was a “genius move that is a very powerful demonstration of his ability to persuade”).

I’m convinced that one of the things that causes Trump disciples to get so angry at conservative Trump critics is that we make it so much harder to sustain the fiction. Of course, Trump makes it much harder than we do, but Trump gets a pass because he is the object of the adulation, while we’re supposed to be in the pews yelling, “Amen.”

.. George Will, William F. Buckley, and numerous writers at National Review were personally fond of, or close to, Reagan, and usually supported him. But when the situation required it, they could be quite blistering in their criticisms. And yet, no one — or no one serious — claimed that Will and Buckley weren’t conservatives.

What changed? Well, lots of things. But one of them has been the populist takeover of the conservative movement. (I have an essay on this in the latest issue of NR.) Populist movements can vary in ideological content but they all share the same psychological passions. Independent thought, naysaying, and insufficient ardor are seen as a kind of disloyalty. Better and earlier than most, Matt Continetti recognized the crisis of the conservative intellectual this takeover represents.

The Different Ends of NeverTrump

But an important group of NeverTrumpers identified with the right on a very specific set of issues — support for the 1990s-era free trade consensus, Wilsonian hawkishness, democracy promotion — that are unlikely to animate conservatism again any time soon no matter how the Trump presidency ends. These intellectuals and strategists aren’t particularly culturally conservative, they’re allergic to populism, they don’t have any reason to identify with a conservatism that’s wary of nation-building and globalization — and soon enough, they won’t.

.. Along with Rubin I’m thinking here of Max Boot, her fellow Post columnist and the author of a new book denouncing the Trump-era right, who self-defined as a conservative mostly because he favored a democratic imperialism of the kind that George W. Bush unsuccessfully promoted. I’m thinking of Evan McMullin, the third-party presidential candidate turned full-time anti-Trump activist, and certain Republican strategists from the Bush-McCain-Romney party, whose Twitter feeds suggest that they never much cared for the voters who supported their candidates anyway.

.. But observers trying to imagine what a decent right might look like after Trump should look elsewhere — to thinkers and writers who basically accept the populist turn, and whose goal is to supply coherence and intellectual ballast, to purge populism of its bigotries and inject good policy instead.

For an account of policy people working toward this goal, read Sam Tanenhaus in the latest Time Magazine, talking to conservatives on Capitol Hill who are trying to forge a Trumpism-after-Trump that genuinely serves working-class families instead of just starting racially charged feuds.

.. I don’t know if any of these efforts can pull the post-Trump right away from anti-intellectualism and chauvinism. But their project is the one that matters to what conservatism is right now, not what it might have been had John McCain been elected president, or had the Iraq War been something other than a misbegotten mess, or had the 2000-era opening to China gone the way free traders hoped.

Road Runner Populism

But, of course, it is only a question of when, not if, the economic reckoning will come. Populism is not only about promises to give more to more people; but, without those promises, all of the cultural elements of populism would look merely outdated and reactionary. And even reactionaries do not like reactionary politics if it hurts them in their wallets.

.. In the United States, the midterm congressional elections in November will be decided by whether enthusiasm about the state of the economy is strong enough to compensate for the widespread disapproval of Trump’s personal style and divisive, sexist, and racist rhetoric. Yet it is precisely on this issue that the conventional wisdom breaks down.

.. Classical economic liberalism assumes that bad policies will be punished immediately by bad outcomes. Over the past 25 years, bond-market vigilantes have argued that all-seeing, forward-looking financial markets will always anticipate the future consequences of populist policies and impose risk premia.

According to this logic, as borrowing costs rise, populist governments will not be able to deliver on their rash promises, and sanity and orthodoxy will eventually return.

Economists who study populism generally draw lessons , where past episodes of nationalist over-promising have quickly led to massive fiscal deficits that could not be financed. In these cases, populist economics always produced cycles of inflation, currency depreciation, and instability, because global financial markets and other outsiders were skeptical from the start.

The problem is that the Latin American experience is not universal. Bond markets are not as predictable as many seem to believe; nor can they be relied on as an ultimate source of discipline. Like markets generally, bond markets can be captured by a popular narrative (or what might euphemistically be called the management of expectations) that overstates the prospects of a certain outcome.

.. The most extreme response to the Depression came from Hitler’s Germany. The Nazis did not miss an opportunity to boast about how quickly their programs had wiped out unemployment and built new infrastructure. With the German government keeping inflation in check through extensive price and wage controls, there was much talk about an economic miracle.

The Nazis’ apparent success in defying economic orthodoxy looked to many conventionally minded analysts like an illusion. Critics outside Germany saw only a deeply immoral polity pursuing a project that was doomed to fail. They were right about the immorality, of course; but they were wrong about the imminence of the project’s economic collapse.

In 1939, the Cambridge University economist Claude Guillebaud published The Economic Recovery of Germany, which argued that the German economy was quite robust and would not collapse from overstrain or overheating in the event of a military conflict. Guillebaud was widely vilified. The Economist, that bastion of classical liberalism, pilloried him in an unprecedented two-page review, concluding that not even the chief Nazi propagandist Joseph Goebbels could have improved on his interpretation. His work, the editors lamented, was emblematic of a “dangerous tendency among democratic economists to play the Nazis’ game.”

.. Guillebaud was also excoriated by other academics who were far more famous than him, such as the British economist Dennis Robertson. And yet Guillebaud was fundamentally right: Nazi Germany was not an economy on the brink of collapse, and the Western powers would have done well to start mobilizing a proper defense.

.. today’s populists have benefited from a general recovery that began before they arrived on the scene. When the next downturn comes, they will quickly find that their own reckless policies have severely constrained their ability to respond. At that point, Orbán, Kaczyński, and other Central European populists may decide to pursue more aggressive options.

.. If populism had an avatar, it would be the immortal cartoon character Wile E. Coyote, who, in his futile pursuit of the Road Runner, routinely sprints over cliff edges and continues to move forward, suspended by the logic of his own belief. Eventually, he realizes that there is no ground beneath his feet, and he falls. But that never happens immediately.

In the 1990s, when Russia was feeling the pinch of economic reforms, the Russian political provocateur Vladimir Zhirinovsky asked, “Why should we inflict suffering on ourselves? Let’s make others suffer.” The ultimate danger of nationalist populism always reveals itself during a setback. When things start to go wrong, the only way forward is at the expense of others.

As in the past, when the illusion of today’s painless economic expansion ends, politics will return to the fore, and trade wars may lead to troop deployments.

Is Trumponomics working? Not really.

So is Trumponomics working? With one significant caveat, the answer is no. For one thing, Trump’s trade policy is turning out to be worse than expected. For another, the growth surge mostly reflects a temporary sugar high from last December’s tax cut. Economists are already penciling in a recession for 2020.

.. At a time of toxic inequality and declining intergenerational mobility, inheritance taxes ought to be increased, but Trump cut them. However, the reduction in the corporate tax rate, coupled with incentives for businesses to invest more, has boosted spending on R&D, information technology and other machinery. Extra investment should make workers more productive. It might even shift U.S. growth to a higher trajectory.

.. you can’t rule out the possibility that the Trump investment incentives are hitting the economy just as a new wave of IT innovations is ripe for deployment.

.. The question is whether the expected productivity boost will outweigh the drag from the tax cut’s other consequence: a huge rise in federal debt.

.. The extra $1 trillion or so of federal debt will have to be serviced: Today’s sugary tax cuts imply tax hikes in the future. Likewise, the corporate investment incentives are temporary: They may simply bring investment forward, depriving tomorrow’s economy of its tech caffeine jolt.

.. many Wall Streeters expect a recession once the sugar high dissipates. The Tax Policy Center estimates that gross domestic product in 2027 will be the same as it would have been without the tax cut.

.. There will be no growth to compensate for extra inequality and debt.

.. And that is without considering the harm from Trump’s trade wars. In Europe, Trump has browbeaten U.S. allies and reserves the right to beat them up further; the only “gain” is a discussion of a new trade deal that was on offer anyway before Trump’s election. In the Americas, Trump has arm-twisted Mexico into accepting a new version of NAFTA that is worse than the old one, and demands that Canada sign on.

.. But the greatest damage stems from Trump’s trade war with China. His opening demand — that China abandon its subsidies for strategic high-tech industries — was never going to be met by a nationalistic dictatorship committed to industrial policy.

.. His bet that tariffs will drive companies to shift production to the United States is equally forlorn. If manufacturers pull out of China, they are more likely to go elsewhere in Asia.

And even if some manufacturing does come to the United States, this gain will be outweighed by the job losses stemming from Trump’s tariffs, which raise costs for industries that use Chinese inputs.

.. In short, Trump isn’t helping the American workers he claims to speak for. Instead, he is battering the rules-based international system that offers the best chance of constraining China.

.. do not be surprised if the populists are temporarily popular: Popularity is what they crave most, after all. But recall that, everywhere and throughout history, the populists’ folly is unmasked in the end.