Mined from the notebooks, Friday June 1, 2018. Posted Saturday morning, June 9.
“Port de mer au soleil couchant”: A French seaport at the height of mercantilism. 1639. Claude Lorrian. Courtesy of the National Gallery, London, via Wikipedia.
Political journalists have to stop doing this, covering Trump as if there’s serious presidenting going on, or even something like it.
President Trump often seems as though he’s stuck in the ’80s. But maybe the better comparison is to the 1680s, not the Reagan era.
Consider his announcement Thursday of new tariffs on steel and aluminum imported from the European Union, Canada and Mexico. These countries not only supply about half of our imports of these metals; they are also among our closest allies.
Astonishingly, the White House claims that alienating these important military allies is necessary “to protect America’s national security.”
These trade policies, and the supposed rationale behind them, bear an uncanny resemblance to classical mercantilism.
What is mercantilism, exactly? As you may remember from some long-ago high school class, it’s an economic philosophy that was prevalent in the 17th and 18th centuries. In a nutshell, mercantilists believed a country should try to maximize exports and minimize imports.
The logic was this: Military power comes from wealth; wealth comes from accumulating gold and silver; and the way you accumulate gold and silver is through trade surpluses. Your merchant ships should go out loaded with attractive goods and came back overflowing with shiny specie.
Does sound like Trump, doesn’t it? And maybe this is what he is in effect. And maybe it’s what he’d be if understood or cared a lick about economics, trade, global politics, and international relations. A mercantilist. It’s not what he is by conscious intention. He’s not a thinker. He’s hardly a policy wonk. He’s definitely not a stable business genius. All he is is a sharper on the make, determined to keep the suckers happy and on the hook. Whatever passes for policy making with him, in whatever area of presidenting---foreign or domestic, economic, military, social, or political---is part of the con, a continuation of the scam he’s been running his entire adult life with one goal: self-enrichment and self-aggrandizement on a Pharoachic scale, pursued without regard for law, ethics, morality, basic decency, or, when it comes down to it, his own long-term self-interest. The object has always been to make money today. Let the day’s own trouble be sufficient for today. Tomorrow is another scheme.
Trump knows his base of yahoos don’t understand or care about the intricacies of economics, trade, global politics, and international relations. All they “know” is all their troubles, worries, and fears are caused by THEM, Those others who basically include everybody in the world who isn’t themselves. They’d be happy if there were no other countries in the world beside the United States and no other people in the United States beside themselves. Trump seems determined to give them what they want, a uniformly white, English-speaking, church-going---churches being literally churches and of the kind without crucifixes, stained glass windows, and and ministers who point out that Jesus was a social justice warrior---anthem-standing, flag-waving, law abiding---that is supporters of cops enforcing the law as it’s intended, which is to keep them, those others in line and in their place---born Americans. He can’t make that happen, economics and history and the the sheer and growing numbers of people in the world who aren’t born Americans will see to that. But he can make his voters feel as if he can, mainly by saying over and over again and every which way, Fuck you, assholes, to the entire world.
That’s what Make America Great Again means, among, all the other stupid, selfish, and hateful things it means.
And, looked at in one way, that’s what mercantilism is. An economic “philosophy” of furthering national self-interest while saying fuck you, assholes, to the rest of the world.
Mercantilism isn’t really an economic philosophy. It’s a description of the economic, political, and historical results of nations and the merchant class that was growing to control them pursued their goals of self-enrichment and self-aggrandizement at the expense of everything else including their own long-term economic self-interest. Mercantilism leads to no good, and everybody was better off when Adam Smith came along a persuaded people that the wealth of nations increased when they cooperated and they pursued their enlightened and mutual self-interests, as Rampell explains.
There basically was no such thing as modern-day trade diplomacy; tariffs were high, and no one would have trusted anyone to stick to trade agreements anyway, since everyone was trying to maintain trade surpluses at once. Which is fundamentally impossible.
It was a zero-sum view of the world. Nothing was win-win, everything was win-lose, and everyone was suspicious of everyone else.
As you also may remember from high school history, then a dude name Adam Smith waltzed onto the scene.
He (and subsequently other classical economists, such as David Ricardo) turned much of this thinking on its head. Smith showed that real national wealth doesn’t come from amassing piles of gold, which are transitory. Wealth comes from increasing productivity — that is, by figuring out how to make stuff more efficiently, which permanently increases living standards.
How do you increase productivity? By specializing in what you do well and honing your skills in that area. Then you trade with other people who do other stuff well. Through these transactions, over time, everyone gets richer.
In other words: Trade is not zero-sum; it’s positive-sum.
What’s more, Rampell points out, Trump is as lousy as mercantilism as he is at everything else.
Even 18th-century mercantilists knew that if you were trying to use tariffs to boost your trade surplus, you wanted to tax imports of finished goods, not the inputs that your domestic industry needs to make those high-value, finished-good exports.
Trump still hasn’t figured this out. In protecting U.S. steel and aluminum, he is threatening the much larger manufacturing industries that purchase these materials to make, and then sell, high-value exports such as cars and appliances.
And steel and aluminum are hardly alone in this respect. In April, after Trump announced a list of 1,333 Chinese products that could be subject to tariffs, Peterson Institute for International Economics senior fellow Chad Bown found that about 85 percent of them were intermediate inputs and capital equipment.
The thing is, as it almost always is with Trump, the issue is more one of character than of politics. Rampell’s description of Trump’s mercantilist approach to international relations is a summation of some of his fundamental character flaws:
Like an 18th-century mercantilist, Trump perceives no mutual gains from trade. In any transaction, he sees only a winner and a loser. And the winner is determined by who has the trade surplus.
Since there’s no way everyone could come out ahead, there’s no point in trying to create a system of rules oriented toward that outcome. Plus, he seems to believe everyone’s going to cheat anyway — including, and perhaps especially, our supposed friends.
This is how his base sees life too, as a zero-sum game in which anyone else’s gain is their loss, even if they’re gaining the same thing themselves. They believe that anything THEY, Those Others achieve is achieved at their expense. That whatever THEY get comes out of their pockets and amounts to picking their pockets. That makes anyone and everyone their enemy. And it’s not just about money. Their enemies include anyone who makes them doubt their self-worth and importance just by not being exactly like thim. That would include snooty nations like Canada, France, Germany, and even Great Britain. Trump knows this. He encourages it. His base loves whatever he does in the name of sticking it to their enemies. They see him as a weapon of revenge and love him for it. Which, by the way, is why the Evangelicals see him as a hero. He’s the Lord’s flaming sword of justice, and justice in their minds is synonymous with vengeance. Vengeance is mine, says the Lord, but they own the Lord. And this is fine with Trump.
Besides his mob’s love and adoration being what’s keeping him president at the moment---Congressional and “Heartland” Republicans are never going to quit him until his base does---and apparently what’s keeping him from crawling under his bed at Mar-a-Lago to hide, vengeance is what he lives for. That’s the art of the deal in his mind.
If you’d like to read Rampell’s whole column---and you should---follow the link to Trump’s trade policy is stuck in the ’80s — the 1680s at the Washington Post.