Pardon me as I take a diversion from my normal 18th Century personae. I frequently tire of being the “… army [ramming] the ramparts, [taking] over the airports, [doing] everything it had to do, and at Fort McHenry, under the rockets’ red glare, it had nothing but victory.”1[i] To discuss a little economics.
Yes, I am going to talk about the “idiot in chief,” the man so stupid he can’t even keep his mouth shut long enough to allow his opponents to answer for their gaffs. George Bush may have been “born with a silver foot in his mouth,”[ii] but like most Presidents, his gaffs were trifles, little babbles that have no impact and are quickly forgotten. Not so with Atomic Don.
Donald Trump targets his raves for maximum destruction and the economy often receives the brunt of the collateral damage (generally when the real target is unscathed). It is clear from the actions of the last four years that Donald Trump HATES America, our most sacred ideals, and especially CAPITALISM. He has made great effort to destroy the free market, destroy America’s image with our international partners (and adversaries), undermine sustainable economic growth, and basically ensure that, like his other businesses, the United States will be left in financial shambles when he leaves.
As a student of the 18th Century, I marvel at how anyone could have gotten it all so wrong. Economics really begins with Adam Smith (1723-1790), a Scottish philosopher and economist who is best known as the author of An Inquiry into the Nature and Causes of the Wealth of Nations (1776).[iii] Smith is the source for most discussions on RATIONAL economics. He didn’t get everything right and he does suffer from the prejudices of his time but there are certain truths that anyone who does business in a Capitalist country should know (assuming they are smarter than a fifth grader…) and Atomic Don. Yet he is extorting us to believe he is an economic genius.
The first of Smiths “laws” of economics is simple. Countries should boost exports and resist imports in order to maximize this wealth. The way to maximize it, he argued, was not to restrict the nation’s productive capacity, but to set it free. So why hamstring the economy with arbitrary restrictions on trade, especially with Mexico, Europe, and Canada. Trump’s USMCA really just embosses his name on the old NAFTA with a host of measures ultimately resulting in less trade and consequently less wealth.
Smith’s second “law” simply states that like tradesmen, countries tend to specialize in their expertise of production. There is no point trying to grow grapes in Scotland, when they grow so plentifully in France. Countries should do what they are best at, and trade their products. Restrictions on international trade inevitably make both sides poorer. We exported our dirty inefficient technologies and production to places like China decades ago. The reasoning is that those industries are in decline and we should focus on growth industries like biotechnology, information technology, and trade. No so with the orange super genius, he would have us mining coal and making textiles like good 19th Century slaves.
A further theme of The Wealth of Nations is that a country’s future income depends upon this capital accumulation. The more that is invested in the means of production rather than squandered in profits, the better productive processes will become ensuring that more wealth will be created in the future. The countries that prosper are those that grow their capital, manage it well, and protect it. that competition and free exchange are under threat from the monopolies, tax preferences, controls, and other privileges that producers extract from the government authorities. In other words, if you pander to your financial cronies, you can expect a slow and steady decline. In other words, don’t use the tax laws to punish your rivals and reward your friends.
Finally, of course we take a lesson from Isaac Newton. Smith argues that economics behaves as an automatic system. Where things are scarce, people must pay more for them: there is more profit in supplying them, so producers invest more capital to produce them. Where there is a glut, prices and profits are low, producers switch their capital and enterprise elsewhere. Industry thus remains focused on the nation’s most important needs, without the need for central direction. This is the catastrophe we are facing. Eventually, all these moronic blunders will catch up with us and we must all pay for them. Not Atomic Don, of course, he will declare bankruptcy and protect himself from harm, leaving us with the bill.
They say ‘Those who do not learn history are doomed to repeat it.’[iv] The last four years were not particularly pleasant. Let 2021 be a good year.
I realize this has been a rant and I thank you for your tolerance of my need to vent. Its either the pen or the sword. Let’s hope our republic can remain intact.
[i] Donald Trump speech at National Mall, July 5, 2019
[ii] Ann Richards, former governor of Texas, at 1988 Democratic National Convention
[iii] Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, (W. Strahan and T. Cadell: London), 1776
[iv] George Santayana