Tag Archives: consequences

Unintended Consequences?

One of the dangers of even thoughtful policymaking is the possibility of unintended consequences; as I used to tell my students, even the best-intended legislative efforts can create unforeseen “spinoffs” that range from unfortunate to truly damaging. That’s why careful attention to policy details, consultation with people having expertise on the subject, and thorough review of available evidence are all so important.

So what happens when people in positions of authority are incapable of thoughtful policymaking and dismissive of evidence and expertise? We are about to face the consequences of policymaking by ignorant egomaniacs, and Paul Krugman has identified some of the most obvious.

Krugman notes that the new PM of Canada has ordered a review of that country’s plan to buy a substantial number of U.S.-made F-35 fighter jets, joining European nations that are similarly reconsidering their dependence on U.S. weapons.

This turn away from military dependence on the U.S. is understandable. America is no longer a reliable ally to the world’s democracies; indeed, between Trump’s turn toward Putin and his talk of annexing Canada and Greenland, we don’t look like an ally at all. Rumors that U.S. jets have a “kill switch” that would allow Trump to disable them at will are probably false, but sophisticated military equipment requires a lot of technical support, so you don’t want to buy it from a country you don’t trust.

He then considered several other emerging responses to the chaos being caused by our mad kings, pointing out that a nation “that can’t be trusted to honor agreements or follow the rule of law has to have monetary as well as political and diplomatic consequences.”

Several of those monetary consequences will be very damaging. Krugman says he’s been exploring the available data, and “U.S. exposure to foreign revulsion looks quite large.”

Military hardware isn’t the only export likely to suffer from our new rogue nation status. Our trade deficit in goods is partly offset by a surplus in services trade, but several of our major service exports will definitely be hurt by America’s turn to the dark side.

One of these is education. Many foreigners come to America to study, attracted by the quality of our colleges and universities. In 2023, the most recent year for which data are available, they spent more than $50 billion. But if you were a foreigner considering study in the U.S. next year, wouldn’t you be worried that you might find yourself arrested and deported for expressing what the current administration considers anti-American views? I would. So we can expect a hit to higher education, which, although we rarely think of it this way, is a major U.S. export.

Personal travel — basically tourism — was even bigger, more than $100 billion. But you can be sure that we’ll be seeing a lot fewer Canadians this year and next. And it won’t just be Canadians reconsidering their plans.

Media is already reporting cratering European tourism.

Krugman admits that he’s much more worried about Trump’s threat to our democracy than his bad economic policies. He also notes that– even in purely economic terms–the self-inflicted damage from tariffs and deportations is likely to outweigh the costs caused by other countries’ loss of trust in the United States. That said, those costs are real.

One way to think about this is to say that Trump is doing to America what Elon Musk is doing to Tesla, destroying a valuable brand through erratic behavior and repulsive ideology. Did I mention that Tesla sales in Europe appear to be cratering?

True, there are differences between a private business and a nation-state. I don’t think people visiting Tesla showrooms are subject to random arrest, or that Musk will kill your car if you say something he doesn’t like (although to be honest I’m not entirely sure on either count, especially since Musk seems to be running much of the government.) On the other hand, Tesla depends a lot more on buyer goodwill than the United States as a whole does.

Still, Trump’s belief that America holds all the cards, that the rest of the world needs access to our markets but we don’t need them, is all wrong. We are rapidly losing the world’s trust, and part of the cost will be financial.

I think it’s unlikely that either of our mad megalomaniacs considers the probable or improbable consequences of their actions. The hard core of MAGA cultists will refuse to acknowledge even the outcomes that negatively affect them (and the data suggests that Red states will likely bear the brunt).

We can only hope that a sufficient number of “softer” Trump supporters will realize that the costs of voting their racism have become too high.

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Trump’s Economic Ignorance

One of the reasons I was a Republican back when that party actually existed was my belief in markets. I certainly understood that there are areas of the economy where markets don’t work–health care, for example–and I also understood the need for an “umpire”–regulations to ensure that competition occurs on that all-important level playing field. But with those caveats, I was–and remain– decidedly pro-market.

So was the GOP that used to be.

Last Thursday, Trump announced that he intends to impose tariffs on imported steel and aluminum; he evidently thinks that such tariffs fulfill his half-baked “America First” approach to trade.

Speaking at the White House, the president said he had decided to levy tariffs of 25 percent on foreign-made steel and 10 percent on aluminum.

The move prompted an immediate slide in the stock market, uniform condemnation by economists (you know, the people who actually understand how these things work–or more accurately–don’t), and threats of retaliation from the EU and Canada, among others.

The Washington Post reported that Trump had ignored warnings from members of his administration:

The president went ahead with the unexpected announcement even after Gary Cohn, his top economic adviser, reportedly threatened to resign. Treasury Secretary Steven Mnuchin told Trump that the stock market gains he loves to boast about would reverse themselves. Defense Secretary James Mattis, who he’s normally inclined to defer to, warned that this would hurt U.S. relationships with allies.

Companies that use steel and aluminum, including automakers, account for vastly more jobs than producers of the metals, and they argued that as many as 200,000 jobs were lost when George W. Bush imposed steel tariffs in 2002 that were later ruled to be illegal by the World Trade Organization.

Trump’s move, under a little-used national security provision of U.S. trade law, is expected to trigger legal challenges by China, the European Union and Brazil at the World Trade Organization. It also prompted predictions that it will backfire on American farmers and other exporters.

“It’s pretty much our worst fears,” said Rufus Yerxa, president of the National Foreign Trade Council, which represents multinationals such as Microsoft and Caterpillar. “This is a pretty clear indication that the Trump administration cares more about the old economy than it does the new economy.”

This wasn’t Trump’s first effort at protectionism; the announcement follows an earlier round of tariffs on solar panels and washing machines. Economic history tells us that all of these moves will lead to higher prices for consumers.  The recent ones will raise costs for manufacturers who use steel and aluminum (automobiles and beer in cans come to mind), and they will pass those increased costs to consumers.

The tariffs will also cost American jobs; the earlier ones have already caused at least one U.S. company that imports solar panels to announce layoffs.

Trump’s anti-competitive moves aren’t the only reason columnist Catherine Rampell now dismisses the GOP’s long-professed support for markets.

Republicans say they favor free markets. They’re not like those pinko-commie Democrats, who prefer “picking winners and losers.”

Oh, come off it already.

Republicans love picking winners and losers, too. They just choose different winners and different losers than Democrats do. In the case of today’s Republican officials, the winners are mostly donors, incumbents, culture-war favorites and cheats.

Rampell points to Trump’s efforts to prop up the coal industry, and the “carve-outs” and other favorable treatment given to donors and Republican governors. And she is especially scathing in her criticism of the Georgia legislature.

Republican officials there vowed to punish Delta Air Lines, one of the state’s largest employers, for canceling discounted prices for National Rifle Association members.

Lt. Gov. Casey Cagle, who is running for governor, gave Delta an ultimatum: restore the NRA discount, or forget the $50 million sales-tax exemption on jet fuel that Republican lawmakers had been considering. In other words, restore our special discount, or we won’t give you your own special discount. Delta didn’t budge, so lawmakers axed the tax break Thursday afternoon.

It takes a funny formulation of free markets to punish a private company for not giving your favored political group a good price.

It is also a perversion of market economics–not to mention a blatant violation of the rule of law–to tip off your advisor and good friend Carl Icahn about your intentions, so that he can unload nearly $31.3 million in a steel-related stock company before the news hits.

The GOP to which I once belonged no longer exists. What goes under that name today is an unholy merger between a cult and the mafia.

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It’s Not Just Planned Parenthood….

Planned Parenthood. San Bernardino.

America averages one mass shooting every day.  We seem unable to address the paralysis on guns that allows any crank, psychopath or terrorist to acquire instruments of death and destruction, so we discuss every other issue involved, from policing to mental health systems. In the wake of the attack on Planned Parenthood, we’ve focused upon the effects of vitriol, propaganda and reckless accusations.

So let’s “go there.” Does rhetoric really matter?

When we were children, most of us chanted that “sticks and stones may break my bones, but words will never hurt me!” Even in childhood, we knew that wasn’t true; the wounds that leave the most long-lasting scars are frequently caused by insulting or hurtful words. Not infrequently, bodies heal faster than psyches.

There are obvious consequences to toxic and uncivil discourse: when we substitute epithets for reasoned argument, we neither convince nor converse in any meaningful sense. The question we need to confront–the issue that people like Carly Fiorina and Donald Trump dismiss as “liberal bias”–is whether a constant drumbeat of nastiness, prevarication and incitement leads less-than-stable folks to “act out.”

The recent attack on Planned Parenthood is the latest in a string of assaults on that agency that have been encouraged, if not caused, by incessant dishonest and inflammatory rhetoric. A recent attack on a Muslim taxicab driver is another horrifying example.

The passenger began asking the driver about his background, and whether he was a ‘Pakistani guy.’” He also asked the driver “about the terror group ISIS” and mocked the prophet Muhammad.

The driver, who moved to Pittsburgh from Morocco five years ago, told the Post-Gazette that he is three months away from becoming a U.S. citizen. His plan is to bring his wife to the United States and start a family in the country he considers home.

I’m a free speech purist. Both the Constitution and common sense tell me that reducing the level of public bile is not something we can achieve by passing a law.

As difficult as it is, we need to challenge the culture that encourages expressions of bigotry and hate. We need to remind people that it is possible to express a point of view without becoming part of the problem; that it is possible to disagree without lying, slandering or justifying horrific behaviors.

In a more reasonable culture, we might even be able to do something about our ridiculously easy access to guns….

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