The now integrated world economy approaches its impending Wiley E. Coyote moment. Rich countries are insolvent, having borrowed more than can be repaid to conduct military adventures and to bribe voters. Most of the rest are also bankrupt from even greater corruption and the economic cornucopias that once sustained the whole have been smothered by the various governments that have used political goals to replace economic decisions.
President Trump promises to reverse much of this by job creation and barriers to cheap imports. Students of history know that simply repeats the sales pitch of Presidents Hoover and Roosevelt during the Great Depression. Governments can create bureaucrats but they cannot create productive jobs and taxing imports simply reduces their quantity while raising their prices. Domestic consumers must either do without or pay more. Neither alternative does much for the standard of living.
President Trump further channels Roosevelt’s New Deal by pursuing spending on domestic infrastructure and military expansion, rather blithely avoiding mention of the regrettable reality that any money used to buy such things must first be extracted from the already underfunded economy via taxes or borrowing. This has been called “spending yourself rich.” Economically, it pretends to provide something for nothing,
We are not here to criticize the new President; he must play the hand he has been dealt by his predecessors. As with all politicians, his actions will matter more than his intentions. And while he seems ready to stampede on occasion, he also refreshingly seems ready to admit error and retrench. That’s as impressive as it is rare in politicians. Nevertheless, current Trumpian economics appear to us as warmed-over 1930s failed New Deal. Then, the President faces a difficulty: Nothing else any politician could pull off today will work either. We have cheered leaders as they have taken us too far. Farther than we could afford. That is our and President Trump’s inheritance.