Foreign People or Foreign Governments?

The most valid criticisms of Trump involve his views of trade. Specifically, the notions that a trade “imbalance” is necessarily a bad thing, or that protectionism helps anyone other than a discrete set of special interests at the expense of the public at large. The first is nonsensical and the second is just wrong.

Still, even on those fronts, I think sometimes Trump’s best critics get carried away. For example, Don Boudreaux at Cafe Hayek, takes issues with Trump’s “absurd suggestion that foreigners who peacefully offer to sell to us attractive products at low prices are akin to invading armies and terrorists intent on violent destruction and murder.”  To support his claim, Boudreaux quotes Trump’s inaugural pronouncement that “We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs.

Perhaps I’m splitting hairs, but to my eyes, Trump referred to “countries” and not “foreigners.” That is, one way to interpret Trump on trade is a desire for reciprocity and not simply protectionism. He’s got no problem with foreigners, or foreign-made goods. He’s got a problem with foreign governments behaving in anti-competitive ways at the expense of U.S. manufacturers, etc. Trump’s fight is mano y mano, government to government: you pick on my guys, so I’m gonna pick on yours.

I’m not a WTO or international trade expert, but my sense is that it’s really hard for private entities to drag foreign governments into court. Counter-tariffs, therefore, can be seen as a kind of remedy. It’s a remedy that all citizens pay for, but at least there’s some justice to it. Taking a step further, if e.g. they lead Chinese manufactures to persuade their own government to stop discriminating against U.S. manufacturers, then it’s even fair to call them pro-competitive. That’s right. Pro-competitive tariffs.

Now, I admit that not everything Trump says is entirely consistent with that theory, and he certainly does not spell it out in so many words (which is consistent with his 140 character style). For example, Trump does seem to take issue with illegal foreign labor, which does seem a lot closer to rote protectionism (although of a wildly popular sort). Even that, however, has other components, including law and order, political economy and reciprocity.

Similarly, Trump’s mini-crusades against outsourcing–and his commitment to”Buy American”–also suggest the same kind of impotent foot-stomping popular in the labor-activist crowd. Ford, BMW and the like are under no obligation to capitulate to a labor-cartel shakedown, and the public at large is made demonstrably better off by their relentless pursuit of cheaper production. Capital mobility and the greater good are two peas in a pod, which even the Democratic Party accepted 20 years ago under Clinton, so Bernie Trumping reflects a significant step backwards. Still, to the extent Trump is simply asking U.S. firms to wait for a moment while he lowers domestic dead weight costs, like taxes and regulation, that inelegant saber-rattling is defensible. [1/23/17 Update: WaPo suggests that I may be on to something.]

Trump’s no dummy, and for the most part, he’s surrounded himself with non-dummy advisers. He understands concepts like marginal costs, and how those costs get passed on to consumers. I suspect he’s susceptible to certain every-man-on-the-street economic ideas, but (a) so are most people, including every member of the Democratic Party; and (b) he’s capable of changing his mind upon further reflection and advice.

It’s also possible that Trump’s every-man economics do not reflect his actual views, but rather his excellent political intuition for what sells. Trump may understand that Paul Ryan is right, but also understands that Paul Ryan has the charisma of a doorknob and that “trust me, competition is better for you in the long run even if you lose your job” isn’t a winning slogan. In general, political economy favors the interventionists, even if the evidence does not. So Trump solves that problem by ginning up some highly publicized and salient “victories” (which are in fact the worst kind of crony-capitalist losses) while he secretly saves millions of jobs through principled small government reforms (which would otherwise be pilloried as “handouts to the wealthy”).

Trump out-maneuvers Democratic populists by beating them to the punch: he gives the people just enough of the crony-capitalism that they want, so that he can do the real work behind the scenes. It’s not actually far-fetched if you think of Trump as a skilled salesman, instead of an evil tyrant. Again, it’s very hard to win elections with the slogan “I promise to do absolutely nothing except undo all the crap that was done before” even if that’s unequivocally the best policy. Free lunch is just too tempting an alternative for the electorate.

As with most things Trump, it’s a mistake to presume pure rhetorical or conceptual coherence. He’s got a notion of how things ought to be, but he shoots from the hip and doesn’t always express himself clearly or consistently. Again, he also reconsiders his prior statements (e.g. on torture and on libel) when smart people persuade him otherwise–which he knows he might do anyway, so he’s got no problem shooting from the hip. The details are always worked out after the fact–that’s what the lawyers are for–it’s the gestalt that’s important. It’s also what makes him so susceptible to multiple (and hostile) interpretations because, while the gestalt of his message is actually not that hard to discern, it’s easy to lose the forest for the trees, especially if that’s what you intend to do.

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