Stop Looking for Methods in the Madness

Sad to say, Thomas... you were the only person to Comment on my recent multi-article post. Those require time and effort, so I'll just go back to (fewer) single seeds?

There are links in the seed.

S E E D E D   C O N T E N T

From Apocalypse Now :

Willard: They told me that you had gone totally insane, and that your methods were unsound.

Kurtz: Are my methods unsound?

Willard: I don't see any method at all, sir.

Today, according to Trump and co., is Liberation Day — the day Trump will announce big new tariffs on top of the substantial tariffs he's already slapped on steel, aluminum and autos.

Nobody knows much about the details, which don't appear to have been settled until the last minute, and Trump won't hold his press conference until 4 PM. For now, Goldman Sachs thinks the average tariff rate will rise to 15 percent, which means that the historical timeline will look like this:

Source: USITC

That bump at the left of the chart is the infamous Smoot-Hawley tariff. So if the reality is anything like this, it will be a much bigger shock to the economy than Smoot-Hawley, especially because imports as a share of the economy are three times what they were in the 1920s:

This chart also tells you that you should ignore anyone citing the relatively mild effects of Trump's 2017-18 tariffs as a reason not to be worried. Trump's actions then were minor trade skirmishes, while this is all-out trade war.

As I said, I don't know exactly what will be announced later today. One safe prediction, however, is that over the next few days we'll see many news analyses purporting to explain the thinking behind this radical change in U.S. policy.

Such analyses will be a waste of time, because there's nothing to explain. I'm not saying that the Trump team's thinking is unsound. I don't see any thinking at all.

I don't know how many people realize that the administration's case for tariffs is completely incoherent, that it has not one but two major internal contradictions.

Here's the story: Trumpers are claiming that tariffs

1. Won't increase prices, because foreign producers will absorb the cost

2. Will cause a large shift in U.S. demand away from imports to domestic production

3. Will raise huge amounts of revenue

If you think about it for a minute, you realize that (1) is inconsistent with (2): If prices of imports don't rise, why would consumers switch to domestically produced goods? At the same time, (2) is inconsistent with (3): If imports drop a lot, tariffs won't raise a lot of money, because there won't be much to tax.

So the public story about tariffs doesn't make any sense. And Trump's rants about tariffs go beyond nonsense. Here's one of the latest:

Does he really believe that Canada is a major source of fentanyl? Worse, does he believe that fentanyl smugglers pay tariffs?

But is it all a cover for the real , probably sinister agenda of Trump's tariff push?

No. There isn't any secret agenda, devised by people who know that the public story is nonsense. How do I know that? Because who, exactly, do you think is devising this secret agenda?

If you follow policy debates at all closely, you soon realize that there is a big difference between the parties in how they get and use policy advice.

Politicians from both parties tend to recruit people who tell them what they want to hear. Democrats, however, usually want their policy advisors to have some reputation — warranted or not — for genuine professional expertise. This means putting up with people who sometimes don't tell politicians what they want to hear, because they have external reputations to defend. For example, many economists with close ties to Democratic politicians argued that Biden's stimulus plan was too big.

Republicans, however, have long preferred "experts" who are pure hacks, who can be counted on to support whatever the party says. I often feel sorry for genuinely conservative but serious economists who aren't pure hacks — there are actually many of them — who never achieve the kind of access to power they seem to expect.

The sad truth is that in the modern G.O.P., actually knowing what you're talking about disqualifies you from being part of the inner circle, because people who know something and have reputations to protect might not be loyal cheerleaders. And this is especially true now that Trump is in charge: The only way to survive as an adviser is to be a lackey willing to support whatever the Leader says on any given day.

That is, you have to be like Trump's trade czar Peter Navarro, who, according to Vanity Fair, was cold-called by Jared Kushner because he had co-authored a book called Death by China .

Some people were surprised that this time around Trump didn't offer a job to Robert Lighthizer, possibly the most prominent protectionist intellectual in America. After all, Lighthizer is widely respected for his trade policy expertise even among people who think his advice is all wrong. But actually knowing something and having an independent reputation are disqualifying in this administration and the G.O.P. more generally. This is why we have a Fox News host running the Pentagon. It's why Mike Johnson, the speaker of the House, asked to defend the tariff plans, replied, "You have to trust the President's instincts."

Which brings me back to my original point: There can't be any secret agenda behind the Trump tariffs, because there's nobody around Trump with the knowledge or independence to devise such an agenda. This is all about Trump's gut feelings. A White House official told Politico that he likes the "shock and awe," and that

Each country needs to panic and call. … Trump wants to hear you grovel and say you'll cut a deal.

Since most of our trading partners aren't in a groveling mood, trade war seems inevitable.

You might imagine that Trump will back off if his tariff gambit goes as badly as seems likely. But I don't think he will, because his team of sycophants will tell him things are going great.

I love the smell of napalm burning economies in the morning [/Marlon Brando].