Republicans are bedeviled by the spawn of Trump and Democrats are enthralled by neo-Marxism in their combination of rank socialism and malignant identity pandering. While Democrats engage in a headlong rush into college-campus extremism, many Republicans seem intent on adopting the philosophy of Smoot-Hawley, ignoring Adam Smith’s lessons on the inherent foolishness of politicians managing trade or the general economy, shunting Hayek’s knowledge problem to the corner, and an emulation of Soviet Gosplan (central planning) only with them in the catbird seat. As a Republican in the Buckley-Reagan tradition, it’s galling. Trump is responsible for unloading this hash of blustery claptrap on the sole remaining party that should know better.
The steamy love affair with government by some of today’s Republicans shouldn’t catch anyone by surprise. Every politician loves to bring home the bacon, so politics can make hypocrites of us all. Yet, this is different. An orthodoxy developed around Trump’s buffoonery. Suddenly, Republicans and others on the Right started walking around proclaiming the evils of the free market.
It’s not surprising that Trump should be their spiritual leader. Here’s a man who made fame and fortune in real estate, the economic sector most debased by politics and government at every level. Government can help you make millions, indeed billions. Government is a partner for a big developer who needs local potentates to eliminate competitors, get approvals, and steamroll recalcitrant homeowners. Trump happened to have a career in an industry that found government not necessarily an obstacle but just another factor of production. The transition from Big Government Developer to Big Government Republican is easy in that matrix. Add a little 60’s Queens street tuff to the public persona and you too can have people walk over broken glass to attend your rallies.
The Republican slide into incoherence came to the fore at the conservative Intercollegiate Studies Institute’s American Economic Forum on July 29. Billed as the antidote to Davos’s left-leaning World Economic Forum, it interestingly emulated Davos. Both confabs provided ample grist for government control of the economy. The only difference is the targeted beneficiaries.
A defensible role for government as referee against brute force and monopoly in the market is one thing. It’s quite another to play Karl Marx in distorting economic activity to the advantage of one class. For Rick Santorum, it’s blue-collar workers – not much different from Marx’s Cinderella class of the proletariat. Subsidies, the tax code, and regulatory powers should be geared to cementing the working class to the GOP in Santorum’s grand design – admirable as a political goal, but lousy economic advice. Did it ever grace his mind that blue-collar workers need blue-collar industries? And blue-collar industries need investment, i.e., capital, i.e., Wall Street. The economy is a synergistic whole. The only answer from Santorum and company is to grease the skids for manufacturing, mindless of the effect on the rest of the economic web.
It doesn’t work. Thomas Sowell’s famous dictum cannot be repealed: “There are no solutions. There are only trade-offs.” The reality is that some manufacturers get favored treatment over others. Some get the resources that are sucked away from others.
And what of those labor unions who turned themselves into the false champions of those blue collars? Remember, the same unions that drove two of the big three automakers into the arms of a government bailout in 2008-9 are manifestations of the one currently aggravating the supply-chain crisis at west coast ports, the featherbedding International Longshoreman and Warehouse Union. Anchored cargo ships are visible over the horizon. A blue-collar organization meant to benefit blue-collars does so at the expense of every other facet of economic life, and other workers. Government has a congenital habit of only turning its gaze to the squeaky wheel and to heck with the other three. Try driving a car with three flat tires. Trade-offs anyone, aggravated by government winner-picking?
How do tariffs fit into Santorum’s quest for the blue-collar vote? Good question, but another participant at the talkfest, Trump’s trade czar Robert Lighthizer, is a fanboy of them. He is a practitioner of economic snake oil, just like his patron, Donald J. Trump. With “balanced trade” as code for tariffs, he proclaimed that they wrought “astonishing results”. Really? I hear “post hoc, ergo propter hoc fallacy” (two events happening chronologically with the earliest one mistakenly assumed to be the cause) in the bombast. So many reforms were swirling around in 2017-2018, thanks to a Republican Congress, to overwhelm the impact of the tariff silliness.
Thus, attributing the so-called “Trump economy”, pre-COVID, to the orange man’s tariffs is demagogic self-puffery. Take the “Trump” tax cuts. They were really the Paul Ryan/Republican-caucus tax cuts, a distillation of ideas running around Republican policy circles since at least the 1990’s. Trump just happened to be in office to put his signature to something that was mostly the work of others. The business tax reductions were testosterone for economic muscle growth. And it showed according to AEI’s James Pethokoukis. Let’s just call the “Trump” tax cuts what they really were: the “Paul Ryan/Republican” tax cuts.
Oftentimes, cutting regulations can act like tax cuts. Remember the Congressional Review Act (CRA) of 1996? It codified a Congressional veto power over the administrative state’s rule-making juggernaut. Keep in mind that the Democrats love the administrative state going back to Woodrow Wilson so don’t expect them to exploit the power. Thus, Congress’s successful use of the CRA is dependent on the vagaries of presidential elections. A repeal requires a president’s signature like any bill. From 1996 to 2001, a repeal succeeded only once when a Republican, George W. Bush, was in the Oval Office. We’d have to wait another 16 years for a Republican-controlled Congress to remind itself of its power. Paul Ryan and Mitch McConnell in 2017 jumped at the chance and sent to Trump’s desk 14 veto resolutions bringing to heel the federal eco-agencies, FCC, Department of Labor, SEC, the Ed Department, etc., of our community-organizer-in-chief, Barack Obama. Trump simply put his signature to a political impetus that began elsewhere by other people.
For Lighthizer to bully his way to the podium at the American Economic Forum to take credit brings braggadocio to new heights, like his mentor, the prince of Mar-a-Lago.
The tax cuts, reining-in the pit bulls of the Left’s administrative state, and unleashing American energy production have long been Republican talking points and planks in the party platform, and not the lab creatures of Trump, Robert Lighthizer, or Peter Navarro (by the way, a former SoCal Dem no-growther). The GOP has long been a booster of opening up ANWAR, fracking, horizontal drilling, pipelines, refineries, offshore platforms, things that would incite conniptions in Silicon Valley lunchrooms. Trump just happened to be the sympathetic warm body to not stand in the way of affordable energy.
As for Trump’s beloved tariffs, they are sand tossed into the economy’s gears. They are a drag since tariffs are taxes. Surprise! Impose them and you just increased the burden on consumers and businesses. The Trump 25% tariff on imported steel slabs is a case in point. American steel producers remanufacture these slabs into sheet metal for fenders and appliance housings among other American-made desirables. Well, guess what? Since March 2020, the price of steel ballooned by 215%. While Biden’s eco-craziness and socialism has a role, Trump’s contribution to our current travails is his mindless worship at the altar of “balanced trade”, i.e., tariffs. If business tax cuts are testosterone, then tariffs are a flesh-eating virus. Give ‘em a little time before we end up in intensive care. The Republican Smoot-Hawley Tariff of 1930 showed the way.
Not only that, tariffs needlessly make enemies, especially at a time when you need allies, unless, of course, you want America First to be America Alone. Red China has discovered its inner hegemon. Many Pacific countries are fearful of entering the maw of the CCP and are turning to the US as the only counterforce. The relationship between trade ties and military ones is well known. Just as we were about to draw much of the Pacific rim into a closer cooperation with us, 2016, a presidential election year, came upon us. The Dems practiced their usual fealty to the AFL-CIO and Hillary trashed the Trans-Pacific Partnership (TPP), something negotiated across multiple administrations. Not to be outdone, Trump in his usual bombast blasted the deal as “a continuing rape of our country”.
Well, what is this “rape”? The pact would slash tariffs all around the Pacific rim from the US to Brunei to Chile. For an America First/Alone enthusiast like Trump, the TPP is the perfect whipping boy. He torpedoed the deal and then boasted about it, repeatedly. But he made it harder to begin a “pivot to Asia” by initiating a trade war with our natural allies. His economic advisors must have been aghast and suggested their own pivot from “rape” to “bilateral”. The rhetorical gimmick was to disparage the adjective “multilateral” (TPP) and substitute “bilateral” in agreements. So, Trump’s people scrambled around the region to cement a smorgasbord of individual pacts to substitute for the omnibus one, all to save face from admitting to the slander.
One way to prevent the much-hated “forever wars” and bankruptcy of the US treasury is to have many allies. Their contributions may be small but together think of them as forcing upon Red China a weakening by a thousand cuts. We provide the biggest military piece but it’s better than having to pay for the whole piece which would be the consequence of the America Aloners.
The Aloner evangelists such as Tucker Carlson or Tulsi Gabbard, or even the conservative Tom McClintock (R, Ca.), stray into the logical dead end of more-allies-means-more-wars. Actually, that is only one possibility, and the least likely one. More allies mean more deterrence. A worse buzzsaw cannot be imagined for Putin’s Russia and Xi’s CCP for them to venture into an attempted reconstitution of the USSR and a Red Chinese-led Greater East Asia Co-Prosperity Sphere. The addition of Sweden and Finland to NATO intensify deterrence on Russia and trade pacts with miliary cooperation in the Pacific rim makes Xi’s Middle Kingdom dream seem more like a nightmare.
Coups are frequently associated with costly adventurism by despots. Everyone does cost-benefit analysis, unless they’re crazy. Even then, deterrence raises the costs to prohibitive levels for any compadres-of-convenience in the regime to continue to follow the lunatics. Still, anyway, if the crazy should practice a Nigh of the Long Knives (Hitler’s 1934 elimination of his rivals), you’ll definitely need those allies more than ever.
Foreign relations and a nation’s economy are intricately connected. Our national prosperity cannot survive a world with the renminbi as the world’s reserve currency, the World Bank headquartered in Beijing, the world’s shipping lanes policed by the PLA Navy, a NATO decaying in its nearly vacant Brussels headquarters, and a new USSR bullying its way westward and southward. Then we will be really alone. And it begins when we start to mangle economics and our recent history to fit the ambitions of narcissists and the hucksters of economic nostrums. I am worried that we are seeing too many of both among the people who should know better.
Specifically, the golden years, pre-COVID, from 2017 to early 2020 should not be referred to as the Trump economy. It was the Republican economy, all of it emanating from the Republican “establishment”. Anyone but Tucker Carlson fanboys should realize it.
RogerG
Sources:
*“Did the Trump Tax Cuts Work? The Answer May Not Be What You Think”, James Pethokoukis, American Enterprise Institute, at https://www.aei.org/economics/did-the-trump-tax-cuts-work-the-answer-may-not-be-what-you-think/
*” Trump’s Steel Tariffs Still Harming Producers and Consumers”, Bob Luddy, Brownstone Institute, at https://brownstone.org/articles/trumps-steel-tariffs-still-harming-producers-and-consumers/
*”Congressional Review Act”, Ballotpedia, at https://ballotpedia.org/Congressional_Review_Act
*”Where Hillary Clinton and Donald Trump stand on Obama’s legacy trade deal”, Business Insider, at https://www.businessinsider.com/what-is-tpp-2016-9
*” Central Planning with Conservative Characteristics”, Dominic Pino, National Review Online, at https://www.nationalreview.com/2022/08/central-planning-with-conservative-characteristics/
*Tom McClintock’s vote against support for adding Finland and Sweden to NATO in “One California congressman voted against Finland and Sweden joining NATO. Here’s why”, in the Sacramento Bee, at https://www.sacbee.com/news/politics-government/capitol-alert/article263626043.html