"I'll Bring Prices Down on Day One"
I’m not an economist. I’m not even close to an economist. The closest I ever am to an economist is when I have dinner with my friend Myles Berkowitz, who got a degree in economics from Wharton.
(And even there I have a problem since, as I periodically remind him, that’s where Trump went, as well. Though Myles always tries his best to clarify that that was for grad school, whereas Myles went undergraduate. Putting aside that I respond that that means Trump knows more about economics than Myles, the reality is that I trust Myles on economics worlds more than I do than Trump. In part, that’s because Myles understands and remembers what he was taught, and in part because Myles is not insane. Nor does he have dementia. Though he does have other quirks, which are endearing. To some.)
Anyway, though I’m not an economist, I do have a grasp of how to live from day to day. And not only is it obvious to me, even as a non-economist, that Trump did not bring prices down on Day One, nor will they be coming down any time in the forseeable fture, there are also some incredibly basic things missing from the Trump/MAGOP efforts that are crashing the U.S. economy.
And to be clear, when I say these are the Trump/MAGOP tariffs, not merely Trump’s alone, I mean that. Because there is a very easy process whereby Congress could block all these tariffs, which Democrats keep bringing up. But MAGOPs, almost unanimously, keep blocking it. And have chosen to enact the tariffs, and make them their own. And have chosen to, themselves, keep missing the incredibly basic things that are missing from their ace analysis as the U.S. economy heads towards the cliff.
For starters, the mantra that Trump and his team of loyalist supporters keep repeating is that although there will be short term pain, in the long run this is all going to work out. Which brings to mind the famous expression by renowned economist John Maynard Keynes, who said, “In the long run, we are all dead.”
Keynes, you might have guessed, was an advocate of dealing with short-term economic issues, and not long-term government involvement.
All of which brings to mind a basic concept that shouldn’t be hard to grasp: if you’re going to cause short-term pain for long-term benefits, it would be a really good idea to start planning first before you cause the short-term pain so that the pain is as short as possible.
In other words, if Trump and his Merry Band keep saying how American will build auto factories to pick up the new business his tariffs will supposedly be creating, perhaps they should have passed incentives for business to begin building those factories, and made sure that that construction was well-underway so that they’d be ready much sooner than a decade from now. This assumes that businesses and governments and humans can even ever see 10 years in the future what the economy (and world) will be.
But even this misses something pretty basic.
Trump and his Acolytes keep pointing to the auto industry and their new factories (ten years in the future). And that would be cool – maybe – if there were tariffs only on automobiles. But Trump put tariffs on everything. As in…everything.
So, that means, we’ll need brand new factories years in the future for all the amazing markets that will supposedly be expanding, as well. Like clothing manufacturing and furniture and electronics and housewares and medical equipment and kitchen appliances and technology. Much of which, or in some cases most of which is produced outside the U.S. All of those industries – and more – will need new factories for this mythical expansion that will be created by the Trump/MAGOP tariffs on everything. All of them. All. Otherwise, they will be left behind in the dust, crushed by higher prices on American consumers caused by the tariffs.
But even this misses something pretty basic.
Because just having spanking-new factories doesn’t mean you’ll have the employees to do the jobs. And that doesn’t just mean if you’ll have the numbers of people to fill the jobs. It also means that not everyone who’s been put out of work in their service industry employment or sales or white collar positions or whatever their job is will be anxious or physically able to work an assembly line or other factory job in these “new manufacturing plants,” let alone make a living wage at the level they’re at now.
But even this misses something pretty basic.
Because all this assumes that every job, every industries impacted by the Trump/MAGOP tariff disaster can grow “in the future” simply by building new factories. The problem is that that’s not how every industry works. Grocery prices are going to skyrocket, and you can’t fix that by building more factories. You can’t even build more farms. The home housing industry doesn’t expand by having more factories. A movie studio can’t expand its business by building additional studios. A TV network/streaming channel doesn’t grow by having new factories – and even adding channels only shifts “eyeballs” from one venue to another. In the banking industry, a financial institution won’t grow by building more factories. They, like any business, can put up new outlets, but that doesn’t grow an expanding market in the industry, it’s just taking business away from its competition.
UPDATE: In the original version of this article I forgot to mention the following: But even this misses something basic. When you add tariffs, it pushes your trading partners to look for other countries to trade with, most especially with agriculture. So, a country that gets, for example, soybeans from the U.S. will likely now look elsewhere, and find a new trading partner for that. And not only does this mean U.S. farmers are now stuck with produce they have no one to sell it to, but worse -- those partnerships risk never coming back.
So, the concept of “Oh, sure, there will be short term pain, but in the long run this is all going to work out” seems to miss a whole lot of points that seem tremendously basic and unimaginably hard to miss. Even for people who aren’t economists.
Though for those who are economists, they always have John Maynard Keynes to fall back on --
“In the long run, we are all dead.” But there’s really no need for Trump to rush things.
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