Originally posted at Forbes, January 2017
In its long history, economics has entertained many schools of thought. They include Mercantilism, bimetallism, Marxism, Keynesian economics, socialism, communism, monetarism, rational expectations and neoclassical economics. None was perfect and each was superseded by some different perspective.
But none was outright stupid. With his withdrawal from (rather than modification as needed of) TPP, his attacks on NAFTA, his threats of high tariffs on imports from China and other trading partners, his interference in the business decisions of individual U.S. companies, his constant insulting of Mexico (leading to Mexico’s president canceling the second state visit of a foreign leader in Trump’s presidency) and China, his unfounded accusations that China is manipulating its currency, his decision to undermine (via an executive order) Obamacare before providing a reasonable replacement, his decision to abandon the Paris Accord, his delusion that climate change is a “Chinese hoax,” his muzzling of government climate scientists, his revival of the Keystone XL and Dakota pipelines (in the absence of a uniform carbon emissions tax), his criticism of the House tax plan’s boarder adjustments as too complex (although every developed country uses them), and his decision to ban refugees (many of whom have risked their lives to help our country) from Iraq, Syria and other Muslim countries, President Trump has started his new school of economics — Stupid Economics.
No thoughtful person would denounce TPP when leading trade economists says it’s, on balance, a terrific deal for the U.S. (OK, it needs some tweaks here and there, but you don’t scrap something that is strongly in our country’s interest. What we’ve learned from Trump is that he is good to his economic delusions. If left to his own devices, Trump could leave our country with few or no trading partners and, in the process, endanger 40 million U.S. jobs. No reasonable person would attack NAFTA without overwhelming economic evidence (of which there is none) that it has harmed our country more than it has helped.
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No one with a high IQ would place our country’s international trade with Mexico (which accounts for 6 million U.S. jobs according to the U.S. Chamber of Commerce) and China in jeopardy and suggest implementing tariffs that could effectively destroy the World Trade Organization.
If you want to understand the importance of trade and the dangers of trade wars, consider how we’d fare if Trump not only stopped trade between the U.S. and all other countries, but also banned trade between American states and then between American cities (after all, Menlow Park, CA is surely stealing jobs from Cambridge, MA) and then between American neighborhoods and then between neighbors. We’d quickly end up back in the 5th Century, B.C.E.
Economists from Adam Smith to David Ricardo to Alfred Marshall to John Maynard Keynes to Milton Friedman to Paul Samuelson have all done their part to explain the marvelous gains from specialization, comparative advantage, and diversification — all arising from unencumbered trade. This used to be a bedrock principle of the Republican Party. It remains to be seen if today’s Republicans in Congress are actually Republicans or politicians simply dressed in red.
No one who is “brilliant” would ignore, without consulting true experts, the potential damage from man-made climate change to ourselves, our children and every other living creature who now inhabits or will inhabit our fragile planet.
No one who understands the economic importance of open scientific exchange would muzzle government scientists.
No one who understands tax policy would make such ridiculous statements about the House tax plan. No one who understands our leadership role in the world and the economic benefits connected to that role would insult the global Muslim community by selectively banning refugees from Muslim countries as opposed to uniformly screening refugees from all countries.
By my count, Trump has now succeeded in insulting China, Mexico, every Muslim country, Germany and all other members of NATO, and his presidency has just begun. We now, thanks to “I Alone,” have a full fledged diplomatic crisis with Mexico. Each of these countries surely is now silently seething and looking for payback, which they will extract at a price to ordinary Americans.
Some 40 million U.S. jobs — almost 30 percent of all U.S. jobs — depend on foreign trade. If Trump continues to pursue Stupid Economics, he will produce an economic disaster that will make the Great Recession seem tame. Since Trump’s judgement on these matters is, to put it mildly, in doubt, it is incumbent on the part of Congress to pass a resolution assuring our trading partners that our country will not a) modify NAFTA nor b) impose tariffs on imports or implement direct import controls that go outside of practices justified under World Trade Organization rules. Congress should also hold hearings on TPP and bring it up for a vote if enough members of Congress support its passage. Trump needs a sharp reminder from Congress that he has not been elected as national autocrat and that our country expects its president to treat our trading partners, allies, and peoples of all religions, races, and ethnicities with respect.