I wanted to post on Friday, but somehow I thought I ought to give supporters of Mr. Trump at least a day to enjoy his inauguration before critiquing him as our new president. So, here we are on Monday morning and we’re now in the brave new world of Trump. His inauguration speech was nationalist to its core, and from an economic perspective, it couldn’t be more wrong-headed. Mr. Trump is getting increasingly explicit over the ways he wants to conduct trade, with specifics and philosophy that likely would have led to a different result had he made these in the primaries a year ago. Emblematic of the troubling inauguration speech is this:
Every decision on trade, on taxes, on immigration, on foreign affairs, will be made to benefit American workers and American families. We must protect our borders from the ravages of other countries making our products, stealing our companies, and destroying our jobs. Protection will lead to great prosperity and strength.
Rich Lowry over at National Review has it right–just add three letters to the last sentence:
Protection(ism) will lead to great prosperity and strength.
Of course, the exact opposite is true. History is clear that the gains from trade and associated division of labor are precisely the driving factors that have led to the tremendous economic growth of the last few hundred years.* When I was a younger boy, my late father would always have country music playing. I was similarly a music aficionado, although my taste was more the mild rock of the late 70s and early 80s, but I nevertheless could appreciate and like some of my father’s country music. As I hear Mr. Trump calling people losers, and insisting we’re going to be winners again, I can’t help but recall one of those country songs from my youth: The Winner, by Bobby Bare. And thanks to the wonders of YouTube, available to us all. Rather long at over 5 minutes, its still humorous and worth listening to once. Hey, if Mark Caleb Smith can give movie reviews here, I’m going to recommend a song every now and then!
When Mr. Trump insists we’re going to win at trade with China, and slap 35% Tariff’s on German car manufacturers that don’t build in the U.S., and we’re going to build a wall to stop Mexican imports, I can’t help but think that we’re going to end up being winners like the protagonist in Bobby Bare’s song.
For those that didn’t bother listening to the song, the main character is an old bar room brawler that had never been beat; he was a winner even though all his “victories” were Pyrrhic–they came at great cost, with broken limbs and bones and loss of teeth. When he describes the woman he stole from another man, he says “she gets uglier and she gets meaner every day. But I got her boy, that’s what makes me a winner!” That’s a great description of protectionism–it’s going to get uglier and meaner every day. If Mr. Trump somehow wins at trade, we’re all going to be losers.
*Happy to elaborate on the benefits of trade and perils of protectionism in the comments if you have questions.