One of the multiple failures of the not-very-bright people who are currently running/ruining our government is their inability to connect the dots, to understand that when they set out to undermine X, the consequences of that assault aren’t just limited to X. We live in a complex and interrelated world, and failure to understand those complexities can lead to unanticipated damage.
The Trump administration consistently displays enormous ignorance of the way the world actually works. That ignorance–that disdain for pesky things like expertise and evidence–is particularly evident in Trump’s approach to economic policy. It isn’t just his insane belief in tariffs (a belief shared by no economist, conservative or liberal). It isn’t just his echoing of longstanding Republican insistence that tax cuts for “job creators” will grow the economy–despite ample evidence to the contrary. (Of course, even if those tax cuts don’t lead to economic growth, they do lead to the growth of generous political contributions…)
It isn’t even the GOP’s failure to understand the dire economic and civic consequences of further impoverishing citizens who are already struggling in order to fatten the wallets of the already wealthy, a failure once again demonstrated by Trump’s “Big Beautiful Bill.”
The most dangerous failure to connect the dots is the less-noted but even more consequential failure to understand the economic importance of the rule of law, or to recognize how Trump’s assaults on the law will dramatically and inevitably undermine the nation’s economy.
I’ve previously explained why widespread obedience to the rule of law is an essential underpinning of liberty and civic equality–why it is at the very basis of what I call “the American Idea.” But it is equally important to understand why the nation’s economic health is absolutely dependent upon a government that respects the rule of law.
Trump’s autocratic attacks on–and utter disregard for– the rule of law are a direct threat to the willingness of foreign investors to buy and hold American stocks and bonds. When those investors see Trump and his administration unilaterally defaulting on contracts, arbitrarily withholding funds that have been properly and legally appropriated, ignoring court decisions and attacking judges, deporting people without even the pretense of due process–while at the same time providing special treatment for donors, favored companies, and White immigrants– those investors re-think the safety of their investments.
Why should we care?
Among other things, foreign investors inject capital for increased production and economic expansion. They create new employment opportunities and facilitate technology transfer. Foreign investors often bring in advanced technologies and expertise, fostering innovation and boosting productivity in local industries. When foreign businesses generate profits, they contribute to U.S. tax revenues, providing American government with resources to fund public services.
That investment is at risk. As one economist put it,
The erosion of the rule of law under Trump can have enormous economic significance for a foreign government, investor, or company with stakes in our economy. They now know that the U.S. government may ignore its contracts with them or decide not to enforce their agreements with others when it serves the political or personal interests of the president. That’s the way the world works in the kleptocratic dictatorships in Russia and Venezuela, and virtually no one invests in their stocks and bonds.
By following their lead, Trump and his apprentices risk devastating capital flight that could leave many of our leading financial institutions insolvent. In addition to his deeply destructive tariffs, Trump’s sweeping campaign against the rule of law in the United States has raised the economic stakes from a rocky business cycle to a potential financial and economic meltdown with terrible consequences.
America’s respect for the rule of law is the reason foreign investors have felt safe parking their money here, and all Americans have benefitted from our role as a safe place in the global economy.
Anyone who has taken Economics 101 understands that the rule of law is fundamental to business and investment. It creates the predictable, stable, and fair environment that economic activity depends upon. Without predictability and stability,
businesses and investors are unable to make long-term plans and commitments. Unless laws governing commerce are clear and consistently enforced– and not subject to arbitrary changes– companies can’t assess risks and returns.
You would think the Republicans who fancy themselves protectors of private property and capital would understand that it is the rule of law that protects that private property from seizure or infringement, and that investors–foreign or domestic– are highly unlikely to put money into an economy where assets can be seized or destroyed without due process.
When the GOP was a party, and not a cult, it understood that.
This mess is not going to end well
So much for those big beautiful brains! If you got to tell other folks about it, it’s probably more like a big beautiful bowl of beans!
I thought in physics, every action has an equal and opposite reaction. I know it’s not physics, but, It does work as an allegory!
theres hardly a conversation of the total money locked up by the billion/millionaires thats not in circulation. or the money locked away in stocks and off shore banks. away from government knowlege,mmm.. as we find the so call ceiling of the govs expense list for every year is marked by this game of how much, until now its was where it went. now we have the rich demanding they keep stashing away their wealth with impunity. looking at chase commercials glorifying being in debt is so much fun for kids now,just tap and be granted to be followed and scammed into a banking world thats demanding your money be tracked,and journaled and taxed. except for the rich. they get to invest in this scam and sooner or later, every cent we have will be tracked,taxed and spent by who/whatever cryptos,invests,or finds their cause to use your money. how much is locked away from a living wage economy? past economic reads said 1.78 trillion would give every working person a living wage every year. now throw in some price control for any goods, (seriously,look at wall street numbers,were being choked delibertly to death) and you could stabilize and regenerate the main street economy. there is no conversation in todays media/social trend about how much is hoarded by the rich,that should keep your main street above wall street,and thats the point. look at blackrocks ideal world of you must work to generate for us,at any cost. ask the question,how much is hoarded and doing nothing but being turned over and over and sat on,and not taxed? shareholders are now,at this time demanding max profits with no regard for the generators of said profits getting any of the pie,just the crumbs and a dirty pan to clean when they are done. the doge deal is a direct slap in the face to every American whos worked to keep our posture of a working class above all other nations to be stripped in public by the billionaires in public with our government ignoring it. and how much does a political party hold to the billionaire class? capital is power,and our system has become a no win for anyone but the billionire politcal party system. seems the fact is congress,all of it is benifitting from the billionaires wealth. trumps crime family inc.LLC.. maybe we should talk about trumps demon seeds also.
The international community was already shifting before Trump took office, due to our enormous debt, our wars, our sanctions, our meddling in elections, our oligarchs stripping natural resources, etc., etc.
Trump has made it worse because, as Sheila points out, they are ignorant. I’m not sure who the economist was who named Venezuela a kleptocracy, but I would disagree on that one. It’s too socialist for our oligarchy, and that’s why we meddle in their elections and name other presidents who haven’t been elected.
Anyway, laws have never meant anything to this country except for those imposed upon the masses. Our ruling class, which includes puppet politicians, has always been above the law. How many US and international child molestors and rapists are there who have gone unpunished?
The oligarchy has used its influence and wealth to bend laws to its favor. The masses don’t have that luxury. The police and judges comprising the criminal justice system are to keep the masses “civilized” and to load the jails with black and brown people so the prison industry can make a fortune. In the South, they use prisoners for free labor. You can guess who comprises the free labor…
The US has abused its power from the agreements made post-WW2, and the world is seeking alternatives, which spells trouble for our massive debt. The major RED FLAG is the investor community seeking out hard assets like gold and silver. China, Russia, and Japan are all liquidating their holdings of US Treasuries and accumulating gold.
Despite that public shift, Pete Hegseth just warned Asian countries to increase their military spending to prepare for the “imminent threat from China.” Really? LOL
Our missteps in foreign affairs have brought Japan and China much closer. China’s influence in Europe is increasing dramatically. China and South America are much closer now as well. China invests in infrastructure and technology, while we invest in our military. Who do you think the military benefits?
Certainly not the masses!
I could go on and on, but there is so much coming our way under Trump, or should I say “TACO MAN.” LOL
p.s. Iowa politician, Joni Ernst, just told us what the political class thinks of the masses…”We all die eventually.” It’s what guides their policymaking. If you don’t think they all think the same thing about the masses, you’re not paying attention.
T*ump’s policies work…for him and a few billionaires and oligarch’s who are playing him like a cheap fiddle. He does not care that those policies are doing untold long-term damage to the economy or the rest of the people in America, even those who support him with their deluded opinions and votes. In private he speaks of us with contempt. I have heard that he tests higher on the sociopath/psycho scale than Hitler and Mussolini.
The one good thing that might come of this period in history is that the rest of the free world will learn to not rely on American for economic or social stability. We are an unreliable ally. Other nations that realize this fact might learn to become more self-sufficient, and we will dwindle in significance. Not so good for the US, but maybe an overall positive outcome for world stability.
The world is shifting. I wonder how it is going to be in the future.
“Anyone who has taken Economics 101 understands that the rule of law is fundamental to business and investment.”
Perhaps along with Civics we should be teaching Economics 101.
As long as We don’t struggle resisting in many ways- the damage will build. The hatred of “the other’s “ persists- the professors Not under personal attack now need to stand up not only for those directly under attack- we need our young folks to lead us old fogies- individually and collectively we need to Stop Waiting and Watching and do our full potential now.1
All Trump sees in the economy, the stock market, the banking system, the bond market, the international trade system, retirement plans or any other financial system, is a collection of other people’s piggy banks to be looted for his own short term gain. And he doesn’t see ‘investors”, he sees an endless succession of marks to be conned.
Yes, this should affect confidence in markets.
“The Trump administration consistently displays enormous ignorance of the way the world actually works. That ignorance–that disdain for pesky things like expertise and evidence–is particularly evident in Trump’s approach to economic policy.”
“We” need to seriously consider our part in his successfully reaching this level of power; Rule of Law has always been there but we didn’t use it to slow his ascent using illegal, if not at least questionable, tactics to maintain his “Stop the Steal”. “We” must have had evidence of our fact vs. his fictional methods which increased the strength of his red hatted “MAGAs” to their now ruling our Legislative, Executive and Judicial branches of government which has served us for almost 250 years. Trump and Musk and their MAGA foundation is founded on threats, lies and money; members of their own party cower in fear of retribution of being considered their enemy if they speak out. I now understand how so many nations around the globe resorted to military coups to take over their governments to put dictators in leadership positions. But can we trust our own military at this time? Hitler, Stalin, Putin, Idi Amin come to mind; Trump must be listed among them, ignoring Trump’s past “love affair” with dictator Kim Jong Un and his amassed nuclear weapons is a mistake; we have no idea what goes on when the cameras are turned off. Trump has aged drastically since his 2024 election win; if his Type A personality traits should suddenly end with a major stroke, will MAGA, et al, be as strongly behind Vance or Johnson in the Oval Office? Will the Billionaire Trifecta continue their donor support or seek a stronger economic foundation to support? Will they return to democracy, Rule of Law and support of the Constitution, IF they previously supported it?
“You would think the Republicans who fancy themselves protectors of private property and capital would understand that it is the rule of law that protects that private property from seizure or infringement, and that investors–foreign or domestic– are highly unlikely to put money into an economy where assets can be seized or destroyed without due process.
When the GOP was a party, and not a cult, it understood that.”
It appears to me that removing the GOP cult is relying on the GOP party, represented by only Liz Cheney and Adam Kinzenger. They appear to be the only Republican members who understand President Obama’s “Audacity of Hope” and they are reaching out to “us” to regain the U.S.
“… to fund public services.” He has no interest in these! The public, oh, you must mean those “scum.”
When he might have been enrolled in Eco. 101, he was probably too concerned with his bone spurs to pay attention.
Felix nails it.
Money, as we knew it growing up, is passe now. What replaced it are computer bits and bytes including bitcoins.
There are two kinds of wealth, that produced by work resulting in goods and services for sale in markets that cause the flow, circulation, of trade, and bits and bytes caught up in the backwaters of surplus and debt which hang on through time.
Trump uses power to move the wealth from work into the backwaters of excess with his family name on it. As he succeeds at that he leaves to us more debt shown by the data collecting magic called accounting.
Like aristocracy is literally defined by, we get income from work neutered by public and private debt, the despicable Trumps get surplus wealth by not working.
And the band on the sinking deck of the Titanic plays on.,
We all agree that what is happening is obvious and harmful to those of us who are not wealthy enough to afford our own lobbyists. What worries me as much as the actions of the Trump administration and its players is the total acceptance of those actions by the legacy media outlets, who I assume are themselves benefitting from the destruction of the rule of law/constitution.
The independent news outlets can’t reach and influence enough consumers to be impactful. The legacy outlets can make business decisions to not cover protests, town hall meetings and leave their consumers with an impression that the Trump administration is not so bad.
CBS, NBC news will not do anything to risk the stockholders equity or the executive bonuses. They all need the money for politics.
I don’t believe that DJT even really cares when the judges rule against him. It shows him how far he can go. It also gives him an opportunity to rant to his base who eat up his lies about activist judges.
Daleb, fortunately or unfortunately we have to rely on some source to report on goings on in DC in order to know friends and foes there and what exactly is going on.
Very generally we choose between main- and back-stream sources and I choose mainstream as the most reliable of the two.
Who do you choose?
Pete: I’m a PBS viewe for however that lasts. I also read on line posts. I’m a Mother Jones subscriber.
The disregard for law and corruption stemming from trumps oval office definitely is having negative effects on business and most citizens. Who would risk their capital to an obvious con man? Yet, he’s doing a lot of business with dark money. selling crypto, citizenships and pardons manipulating the stock market and extortion from foreign leaders. When a foreign country wants to get tariff relief and deal with trump where does that money go? Look how Viet Nam gave land for trump buildings and golf courses.
The lawlessness and corruption have to be dealt with. Maga Congress is complicit and need to be exposed and held accountable. Their crime boss in the oval office is an evil disaster and is leading the entire US over the cliff.
Weekend fantasy –
Democrats assume power in 2028
First they confiscate all wealth from Trump, his family, and Musk and deport them to South Sudan
Second they fix the courts – the courts rule first step illegal
Third they bring back the Trumps, but send Musk back to South Africa – they repay all confiscated wealth in Meme and Cryto
Fourth they heavily regulate crypto, making it worthless
I want a happy weekend – fantasies are so nice
I don’t want to think about how Trump only cares about accumulating as much wealth and fake adulation as he can before the end of the world (or at least his lifetime)
Happy Weekend everyone.
Rule of Law? Like protecting our borders!
Like allowing Chinese CCP to buy up our property?