I can certainly understand why you would not like his style. But his content is outstanding, if you look beyond the "attitude". Look, the world is increasingly full of stupidity. Anyone calling others out on the problem will be labeled smug.
For years, commenters have been telling me how awful the elite is, and how we need populist policies. But when you turn policymaking over to idiots, you may not like the results.
Maybe I should give Hanania more of a break. He's a young man. Intelligent young men, especially when they are in a minority, can be smug and arrogant. I know I was too often arrogant when it came to economics, politics, and religion in my 20s. Now I'm in my 60s, I'm much less arrogant and oppositional even though I've learned a lot over that time. Still, I find it hard to get over his style.
I have found that knowing more than others can create a trap. You assume because you know more you are right when sometimes you are wrong. The problem is compounded because when one has been the only one in a room who understands an issue, one can become willing to stand out and tell everyone else they are wrong. You can come out looking really foolish, and everyone else really enjoys piling on.
I've learned it the hard way but have not figured out a solution but I have also learned that it easy to miss or not be aware of facts that would in fact change one's position.
One positive thing that comes from it is, I will not back down before someone who is brighter than me unless, of course, they can fire me. I probe for additional facts and sometimes making someone angry on purpose causes them to fully explain their reasoning and sometimes it is totally convincing.
I think Noah Smith is in that trap. Don't know about Hanania.
You make a good point about the knowledge trap. It may be compounded if you have been right most of the time. Of course, you may think you have been right more often than you have because of biased memory. Libertarians seem to have something of a reputation for being obnoxious. Perhaps that's partly due to being correct so often.
Personally I like his style but then I'm not a fan of populism. The only thing I can't understand is how a guy who writes like this voted for Trump just a few months ago-did he discover all this the last 3+ months?
"The world is increasingly full of stupidity. Anyone calling others out on the problem will be labeled smug".
That statement summarizes the state of academy today. This is the typical academic response: anyone who disagrees with me is a low I.Q. buffoon, I am misunderstood genius....people just don't get....if only they were smarter they would see that I'm right....etc, etc.
There is NOTHING intellectual about that. Real intellectuals like Richard Feynman and Carl Sagan would have said, "Hold on, let's go back to first principles. Let's revisit the logic. People are telling me they are not better off than they were 60 years ago. Is free trade the culprit? Let's go back to Ricardo. Was he correct? Mathematically it's elegant, but mathematical elegance doesn't mean something is correct. String theory is mathematically elegant, but there is no proof whatosever. Did Ricardo miss an imporant variable. Could we be mistaken." Sagan and Feynman would have analyzed endlessly.
That's an intellectual response. A non intellectual response is: 'stupidity is everywhere, everyone is dumb, I'm smart, I'm amazing, if only they could grasp my logic".....
Academy is in a rotten state, and it's no wonder people have stopped listening to you.
Why wouldn't he be smug, when smart and influential people like Scott and Tyler say his blog is "the very best place" to understand American politics and society?
To be clear, I don't always agree with Hanania; he's more conservative than I am. I linked to a specific post that I would highly recommended to others. I doubt you disagree with his claim that Trump is a kakistocracy.
As a man of the people I'm fine using more commonplace terms: the 47 regime is a theocratic imperialist regime. And there are arguably no people more qualified to impose a theocratic empire than the ones currently in government. Which is why they are there and Vivek is not.
What Hanania claims is a mistake is not a mistake, it is the purpose. Trump didn't stop listening to his advisors, his advisors planned this event. They are not trying to deliver competent management of the system, they are trying to destroy the system, so evaluating them using normal metrics is a category error. It's a non sequitur.
There's a commonplace term for Hanania, too: useful idiot. He signed up for the racism, didn't think it would cost him anything. Oops.
If we assume the tariffs will eventually be walked back, then we’re still living in a rational policy universe — one where bad ideas get course-corrected once the costs become clear. But what if that assumption itself is obsolete? What if we’re not at the peak of irrationality, but somewhere around the midpoint of a system that’s actively shedding its immune response to incoherence?
The real damage isn’t just the misallocated imports or higher consumer prices — it's that we’re normalizing randomness as economic doctrine. We’re building a trade regime that operates on vibes and vendettas, not strategy or theory. In that world, investment freezes not because of any specific tariff, but because the map keeps shifting beneath your feet. You can’t hedge against chaos when chaos is the point.
Meanwhile, we're saddling households with stealth tax hikes and calling it patriotism, while gutting the very institutions — from trade alliances to internal checks — that could buffer us from policy whiplash. The irony is that we’re doing this in the name of strength, when the net result is to make the American economy more brittle, more isolated, and more easily gamed by others.
My question is: If uncertainty itself is now the governing tool — if volatility is no longer a byproduct but a feature — how do markets, institutions, or even voters meaningfully adapt? Is there a stabilizing force left that isn't also being hollowed out in real time?
The market is telling us that there is a at least a bit of truth in your concern. It may be walked back, but Trump's incompetence is exposed for all to see.
If you think Trump is bad, wait until Vance becomes president. He dislikes "big business" while supporting all the bad things Trump favors. I doubt he would be doing anything to deregulate or shrink government if Musk were not there.
As a silver linings person, I am hopeful that the nonsense will polarize the Democratic party, and those who are variously called global elites, EHC, globo-Americans, and the managerial classes, against tariffs in the long term. If the current negative sentiments towards tariffs become entrenched, perhaps one day we will really look back on April 2nd as liberation day.
What does "neoliberalism" mean? And according to whom? I find it's mostly used as a term of insult. When I try to figure out how it's being used, I come to widely varying conclusions. It doesn't help that "liberal" means different things to different generations and to people on the other side of the Atlantic. The clearest that I can get is that it tends to mean something like "mostly free markets with a significant degree of state intervention, mostly free trade, and openness to giving up national sovereignty in favor of international organizations and bodies.
Neoliberalism is a term used to describe the new world order starting after 1948. It's quite simply a belief that centralizing power into the hands of suparnationals could, in theory, lead to global harmony and peace, and therefore it was a departure from classical liberalism which advocated for decentralization.
One can write incoherent papers about the 1980s, but neoliberalism clearly goes back to the establishment of supranationals. Anyone well-read understands that.
Unfortunately, it did more harm than good. Wars are longer now than ever before because money can be printed endlessly. In the old days, one had to ask the people to kindly fork over some gold or buy your IOU's, which shortened wars. Suparnationals have led to cold war allied partnerships like NATO which caused millions to die in Vietnam, and was the catalyst for bombings of South America, latin America, Iraq, LIbya, Bosnia, I mean, my goodness, the list is so long one wonders how we can call ourselves the "good guys". NATO is not peaceful and it's members have this bizarre desire to expand it which bothers not just Russia, but the middleeast and China as well. Nobody wants to be surrounded by bomb happy neocons who impose themselves on everyone else.
I would be amazed - and certainly pleasantly surprised - if democrats even nominated another Joe Biden in 2028. As it stands, I don’t know a single left of center person under 40 who’s not decidedly anti-capitalist. I think it’s more likely that the socialist wing of the party benefits from the upcoming recession.
That’s why this is such a perfect storm. The classes of people whose temperament and interests are most consonant with supporting or at least tolerating free markets are irrationally beholden to the GOP which is itself beholden to Trump. Tens of millions of free market liberals arent going to crawl out of the woodwork. These are the bad times.
I don't share your assessment. Ezra Klein, plausibly the most prominent left-wing journalist in America, just released a book of which the thesis is that we should stop regulation from strangling housing markets. The left-of-center names I recognize among the top US politics substacks are Matt Yglesias, Medhi Hasan, Robert Reich, Nate Silver, and Paul Krugman. Three of those are explicitly pro-market, one against, while Hasan's substack seems to be just about Gaza.
On my Twitter, the chattering classes seem united in their opposition to the tariffs. No Bernie Bros coming out of the woodwork to rejoice at the new rents accruing to unionized labor. It's only the anon rightoids defending this stuff.
Obviously we all live in different bubbles, but in my experience, young educated left-of-center people are not as cooked as you say they are.
The one common theme that explains all of DT's actions is the need to grab the attention of all media on a daily basis. He must be the center of attention every single day. Announcing tariffs, making deals to lower tariffs, these are opportunities to be in the spotlight. AND, in his second term, he has no chief of staff of substance, no economic advisor to challenge him, no press secretary to calm him - he is just winging it on a daily basis with executive orders and tariffs and outlandish takes to feed that need to be at the center. DT is quoted today saying "everything is going fine" - meaning the tariff announcement is being talked about by everyone around the world.
That's fine. I'm not saying it is the same, but I hope that your government does not feel the need for a "Futile and Stupid Gesture" in response to Trump due to the negative ramifications.
I dont think a big response is necessary, we just sit back, relax, and enjoy the view. The US customers have nowhere to go since tariffs are imposed on ALL goods simultaneously. Trump should have unveiled tariffs on countries one by one (perhaps a few countries per week..) to allow for bargain/extortion. His is senile and by skipping this step he lost the negotiation power. Now it is everybody against America. I just sit back and relax. I took a vacation day today, the sun is shining and will take a bicycle for a ride. I understand that in the US the concept of a paid vacation is unknown.
Perhaps; it was a very high-risk move. Will say that Canadians and Mexicans do not take more vacation than the US although I could not tell you all of the rules. All I know is Mexicans and Canadians sure do take American jobs in US when they are made available.
I think the Americas are his fallback position. China and Russia can run wild in such an environment, and that's the primary risk Europe and Asian allies would be taking.
I don't think Mexico and Canada will go along, but as with most things, I do not know. I do not know how long Trump will hold on, but the US Congress can't do much. I am confident of the last point, but they can make a lot of noise.
Oh, I agree it is extortion, and I was willing to continue subsidizing the rest of the world, but the American people decided they don't want to carry the burden anymore. Maybe the threat from China is real; I do not know with certainty but I'm pretty confident the threat from Russia is real.
Scott, I slept on it and decided to ask ChatGPT for arguments against the position that the US subsidizes others via defense spending. It agreed that this was the typical view, although it said it was nuanced and depended on how you define "subsidy."
Here are the arguments:
1) U.S. Defense Spending Primarily Serves U.S. Interests
2) Allies Do Contribute—Just Not in U.S. Terms
3) U.S. Overspending Is Driven by Domestic Politics, Not Global Needs
4) Subsidy" Implies Others Are Passive—Many Are Not
5) Overreliance on Military Might Undermines Long-Term U.S. Interests
There were subpoints under those positions and they are not without merit. Serving US Interests was the most compelling in my view. When US imported Saudi oil, I would have completely agreed. I know that the US benefits from things like chip production.
I know that I have misconceptions in my life, and time is limited. Can you at least hint at where I might look to gain insight on the topic?
You've probably seen this by now. The reciprocal tariff rates were set equal to 1/2 the bilateral trade deficit in goods, with a floor of 10% for all countries, even those we have a trade surplus with.
I think that's exactly what the formula ends up saying! The numerator is the total trade deficit, the denominator is epsilon times phi times the total exports, and epsilon times phi seems to be somewhere between 1 and 4, depending on exactly which version of the numbers they mention in the text work out. They wanted to put it behind a formula with a lot of greek letters in it so that people would think it seems serious, but it's just some numerical fraction of the percentage of US exports to a country that is the deficit with that country.
I think you’re imputing too much strategy to Trump’s decision making. His administration likely would support something like NATO but against China (or Iran) rather than Russia if they had the organizational skills to create it. Most decision making is just based on raw mood affiliation. China bad. Russia good. Islam bad. Israel good. Very basic, visceral emotionality drives it all I think. The days of strategic foreign policy are long gone I suspect.
"The claim that these new tariffs are “reciprocal” is nonsense."
Why do you constantly lie?
Europe Tariffs are double what we charge.
Canadian tariffs are near 400%.
Chinese tariffs are even worse. Not to mention, they steal intellectual property, then after creating an identical business revoke your licenses.
You also lie about prices. prices have fallen, dollar is mostly stronger across the board...only pound has performed better. You also lie about the effect of tariffs. Tariffs only raise prices if all other variables remain constant. But Trump has floated the idea of no income tax which will increase real income and thus lower prices.
You seem to think Americans should play by a different set of rules.
You seem to be a masochist. How much more humilation and pain are you going to inflict upon yourself, and your own people before you realize you're wrong?
"You also lie about the effect of tariffs. Tariffs only raise prices if all other variables remain constant. But Trump has floated the idea of no income tax which will increase real income and thus lower prices."
I hate to tell you this, but this blog is aimed at people with at least some knowledge of economics. Consider getting a different news source.
It's just another day at the office for us. You panic sell, and we buy the dip.
FYI, it's called "leverage". The end goal is to have lower tariffs, and Trump's stategy to get lower tariffs is already working. Vietnam is agreeing to drop their tariffs for U.S. products, which would actually be "free trade".
Instead of going to school and reading textbooks until you're 40, I suggest starting a business.
Try to make a product or service.
I bet you can't. I bet you don't have the talent.
But when you fail, at least you'll learn something. At least you won't be weak and pathetic, panic selling over a market transition.
I am impressed with your ability to pretend to understand economics, finance, geopolitics, and business ownership, and being utterly unconvincing in every one of them.
I so would love to add anything intelligent here. But all I can come up with is the old HL Mencken quote, "Democracy is the theory that the common people know what they want and deserve to get it good and hard".
I take some solace in the knowledge that, say, exports to the US make up just 3% of China's GDP. So while the US certainly matters in the world, a lot, it also matters not quite as much as its leaders may think.
But to quote another writer, the Austrian satirist Karl Kraus, early 20th C. He had spent a lifetime savaging the Austro-Hungarian Empire for its failures, failures which in retrospect could be seen as quite benign compared to what the 1930s would bring. So when Hitler came to power, Karl Kraus was at a loss, due to the sheer insanity coming. In his words "Mir fällt zu Hitler nichts ein" - "As to Hitler, words are failing me". I think Trump 2.0 has a lot of this effect on many.
Just one correction: when you reference the Treasury Department, you mean the USTR. They are not part of Treasury. Please don't drag Treasury's name down due to the USTR's idiocy!
A general note on current affairs. If you wish to understand what's going on in America, the very best place to look is Richard Hanania's substack:
https://www.richardhanania.com/p/kakistocracy-as-a-natural-result
BTW, he voted for Trump in 2024---so please don't say TDS.
"BTW, he voted for Trump in 2024---so please don't say TDS."
Yes, deranged more simply.
Also annoying smug. After a few months, I unsubscribed from his blog because of it.
I can certainly understand why you would not like his style. But his content is outstanding, if you look beyond the "attitude". Look, the world is increasingly full of stupidity. Anyone calling others out on the problem will be labeled smug.
For years, commenters have been telling me how awful the elite is, and how we need populist policies. But when you turn policymaking over to idiots, you may not like the results.
Maybe I should give Hanania more of a break. He's a young man. Intelligent young men, especially when they are in a minority, can be smug and arrogant. I know I was too often arrogant when it came to economics, politics, and religion in my 20s. Now I'm in my 60s, I'm much less arrogant and oppositional even though I've learned a lot over that time. Still, I find it hard to get over his style.
I have found that knowing more than others can create a trap. You assume because you know more you are right when sometimes you are wrong. The problem is compounded because when one has been the only one in a room who understands an issue, one can become willing to stand out and tell everyone else they are wrong. You can come out looking really foolish, and everyone else really enjoys piling on.
I've learned it the hard way but have not figured out a solution but I have also learned that it easy to miss or not be aware of facts that would in fact change one's position.
One positive thing that comes from it is, I will not back down before someone who is brighter than me unless, of course, they can fire me. I probe for additional facts and sometimes making someone angry on purpose causes them to fully explain their reasoning and sometimes it is totally convincing.
I think Noah Smith is in that trap. Don't know about Hanania.
You make a good point about the knowledge trap. It may be compounded if you have been right most of the time. Of course, you may think you have been right more often than you have because of biased memory. Libertarians seem to have something of a reputation for being obnoxious. Perhaps that's partly due to being correct so often.
Personally I like his style but then I'm not a fan of populism. The only thing I can't understand is how a guy who writes like this voted for Trump just a few months ago-did he discover all this the last 3+ months?
"The world is increasingly full of stupidity. Anyone calling others out on the problem will be labeled smug".
That statement summarizes the state of academy today. This is the typical academic response: anyone who disagrees with me is a low I.Q. buffoon, I am misunderstood genius....people just don't get....if only they were smarter they would see that I'm right....etc, etc.
There is NOTHING intellectual about that. Real intellectuals like Richard Feynman and Carl Sagan would have said, "Hold on, let's go back to first principles. Let's revisit the logic. People are telling me they are not better off than they were 60 years ago. Is free trade the culprit? Let's go back to Ricardo. Was he correct? Mathematically it's elegant, but mathematical elegance doesn't mean something is correct. String theory is mathematically elegant, but there is no proof whatosever. Did Ricardo miss an imporant variable. Could we be mistaken." Sagan and Feynman would have analyzed endlessly.
That's an intellectual response. A non intellectual response is: 'stupidity is everywhere, everyone is dumb, I'm smart, I'm amazing, if only they could grasp my logic".....
Academy is in a rotten state, and it's no wonder people have stopped listening to you.
Why wouldn't he be smug, when smart and influential people like Scott and Tyler say his blog is "the very best place" to understand American politics and society?
To be clear, I don't always agree with Hanania; he's more conservative than I am. I linked to a specific post that I would highly recommended to others. I doubt you disagree with his claim that Trump is a kakistocracy.
As a man of the people I'm fine using more commonplace terms: the 47 regime is a theocratic imperialist regime. And there are arguably no people more qualified to impose a theocratic empire than the ones currently in government. Which is why they are there and Vivek is not.
What Hanania claims is a mistake is not a mistake, it is the purpose. Trump didn't stop listening to his advisors, his advisors planned this event. They are not trying to deliver competent management of the system, they are trying to destroy the system, so evaluating them using normal metrics is a category error. It's a non sequitur.
There's a commonplace term for Hanania, too: useful idiot. He signed up for the racism, didn't think it would cost him anything. Oops.
Maybe smug was too generous. Arrogant.
If we assume the tariffs will eventually be walked back, then we’re still living in a rational policy universe — one where bad ideas get course-corrected once the costs become clear. But what if that assumption itself is obsolete? What if we’re not at the peak of irrationality, but somewhere around the midpoint of a system that’s actively shedding its immune response to incoherence?
The real damage isn’t just the misallocated imports or higher consumer prices — it's that we’re normalizing randomness as economic doctrine. We’re building a trade regime that operates on vibes and vendettas, not strategy or theory. In that world, investment freezes not because of any specific tariff, but because the map keeps shifting beneath your feet. You can’t hedge against chaos when chaos is the point.
Meanwhile, we're saddling households with stealth tax hikes and calling it patriotism, while gutting the very institutions — from trade alliances to internal checks — that could buffer us from policy whiplash. The irony is that we’re doing this in the name of strength, when the net result is to make the American economy more brittle, more isolated, and more easily gamed by others.
My question is: If uncertainty itself is now the governing tool — if volatility is no longer a byproduct but a feature — how do markets, institutions, or even voters meaningfully adapt? Is there a stabilizing force left that isn't also being hollowed out in real time?
The market is telling us that there is a at least a bit of truth in your concern. It may be walked back, but Trump's incompetence is exposed for all to see.
If you think Trump is bad, wait until Vance becomes president. He dislikes "big business" while supporting all the bad things Trump favors. I doubt he would be doing anything to deregulate or shrink government if Musk were not there.
I agree with this comment.
As a silver linings person, I am hopeful that the nonsense will polarize the Democratic party, and those who are variously called global elites, EHC, globo-Americans, and the managerial classes, against tariffs in the long term. If the current negative sentiments towards tariffs become entrenched, perhaps one day we will really look back on April 2nd as liberation day.
MNGA -- Making neoliberalism great again.
What does "neoliberalism" mean? And according to whom? I find it's mostly used as a term of insult. When I try to figure out how it's being used, I come to widely varying conclusions. It doesn't help that "liberal" means different things to different generations and to people on the other side of the Atlantic. The clearest that I can get is that it tends to mean something like "mostly free markets with a significant degree of state intervention, mostly free trade, and openness to giving up national sovereignty in favor of international organizations and bodies.
"What does "neoliberalism" mean? "
This:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1629940
No. It doesn't mean that, lol.
Neoliberalism is a term used to describe the new world order starting after 1948. It's quite simply a belief that centralizing power into the hands of suparnationals could, in theory, lead to global harmony and peace, and therefore it was a departure from classical liberalism which advocated for decentralization.
One can write incoherent papers about the 1980s, but neoliberalism clearly goes back to the establishment of supranationals. Anyone well-read understands that.
Unfortunately, it did more harm than good. Wars are longer now than ever before because money can be printed endlessly. In the old days, one had to ask the people to kindly fork over some gold or buy your IOU's, which shortened wars. Suparnationals have led to cold war allied partnerships like NATO which caused millions to die in Vietnam, and was the catalyst for bombings of South America, latin America, Iraq, LIbya, Bosnia, I mean, my goodness, the list is so long one wonders how we can call ourselves the "good guys". NATO is not peaceful and it's members have this bizarre desire to expand it which bothers not just Russia, but the middleeast and China as well. Nobody wants to be surrounded by bomb happy neocons who impose themselves on everyone else.
Thanks. I'll read it. It will be interesting to see how closely it fits how other people use the term.
I would be amazed - and certainly pleasantly surprised - if democrats even nominated another Joe Biden in 2028. As it stands, I don’t know a single left of center person under 40 who’s not decidedly anti-capitalist. I think it’s more likely that the socialist wing of the party benefits from the upcoming recession.
That’s why this is such a perfect storm. The classes of people whose temperament and interests are most consonant with supporting or at least tolerating free markets are irrationally beholden to the GOP which is itself beholden to Trump. Tens of millions of free market liberals arent going to crawl out of the woodwork. These are the bad times.
I don't share your assessment. Ezra Klein, plausibly the most prominent left-wing journalist in America, just released a book of which the thesis is that we should stop regulation from strangling housing markets. The left-of-center names I recognize among the top US politics substacks are Matt Yglesias, Medhi Hasan, Robert Reich, Nate Silver, and Paul Krugman. Three of those are explicitly pro-market, one against, while Hasan's substack seems to be just about Gaza.
On my Twitter, the chattering classes seem united in their opposition to the tariffs. No Bernie Bros coming out of the woodwork to rejoice at the new rents accruing to unionized labor. It's only the anon rightoids defending this stuff.
Obviously we all live in different bubbles, but in my experience, young educated left-of-center people are not as cooked as you say they are.
The one common theme that explains all of DT's actions is the need to grab the attention of all media on a daily basis. He must be the center of attention every single day. Announcing tariffs, making deals to lower tariffs, these are opportunities to be in the spotlight. AND, in his second term, he has no chief of staff of substance, no economic advisor to challenge him, no press secretary to calm him - he is just winging it on a daily basis with executive orders and tariffs and outlandish takes to feed that need to be at the center. DT is quoted today saying "everything is going fine" - meaning the tariff announcement is being talked about by everyone around the world.
I think it's striking how Trump's methods are similar to those of Kim Jong-Un:
* Threats as a means of leverage, even if the actions also harm the home nation
* Not caring if his actions make things worse, as long as they increase his dominance
* Loyalty above all
Good analogy.
Well now, everything dies, baby, that's a fact
But maybe everything that dies someday comes back
Put your makeup on, fix your hair up pretty
And meet me tonight in Atlantic City
- Bruce Springsteen
As a person living in the EU, I will retaliate by cancelling my YouTube Premium and Disney+ subscriptions. No kidding.
I can't blame you. I plan to take a summer vacation in Canada.
That's fine. I'm not saying it is the same, but I hope that your government does not feel the need for a "Futile and Stupid Gesture" in response to Trump due to the negative ramifications.
https://www.youtube.com/watch?v=_h4DZeBleLs
I dont think a big response is necessary, we just sit back, relax, and enjoy the view. The US customers have nowhere to go since tariffs are imposed on ALL goods simultaneously. Trump should have unveiled tariffs on countries one by one (perhaps a few countries per week..) to allow for bargain/extortion. His is senile and by skipping this step he lost the negotiation power. Now it is everybody against America. I just sit back and relax. I took a vacation day today, the sun is shining and will take a bicycle for a ride. I understand that in the US the concept of a paid vacation is unknown.
Perhaps; it was a very high-risk move. Will say that Canadians and Mexicans do not take more vacation than the US although I could not tell you all of the rules. All I know is Mexicans and Canadians sure do take American jobs in US when they are made available.
I think the Americas are his fallback position. China and Russia can run wild in such an environment, and that's the primary risk Europe and Asian allies would be taking.
I don't think Mexico and Canada will go along, but as with most things, I do not know. I do not know how long Trump will hold on, but the US Congress can't do much. I am confident of the last point, but they can make a lot of noise.
Oh, I agree it is extortion, and I was willing to continue subsidizing the rest of the world, but the American people decided they don't want to carry the burden anymore. Maybe the threat from China is real; I do not know with certainty but I'm pretty confident the threat from Russia is real.
"I was willing to continue subsidizing the rest of the world"
America has not been subsidizing the rest of the world. It's this sort of misinformation that leads to nationalism.
So many misconceptions, so little time . . .
Scott, I slept on it and decided to ask ChatGPT for arguments against the position that the US subsidizes others via defense spending. It agreed that this was the typical view, although it said it was nuanced and depended on how you define "subsidy."
Here are the arguments:
1) U.S. Defense Spending Primarily Serves U.S. Interests
2) Allies Do Contribute—Just Not in U.S. Terms
3) U.S. Overspending Is Driven by Domestic Politics, Not Global Needs
4) Subsidy" Implies Others Are Passive—Many Are Not
5) Overreliance on Military Might Undermines Long-Term U.S. Interests
There were subpoints under those positions and they are not without merit. Serving US Interests was the most compelling in my view. When US imported Saudi oil, I would have completely agreed. I know that the US benefits from things like chip production.
I know that I have misconceptions in my life, and time is limited. Can you at least hint at where I might look to gain insight on the topic?
Would welcome information indicating otherwise. I think the case is open and shut, although one can argue on subsidy levels.
We may have chosen the form of the Destructor.
You've probably seen this by now. The reciprocal tariff rates were set equal to 1/2 the bilateral trade deficit in goods, with a floor of 10% for all countries, even those we have a trade surplus with.
https://x.com/JamesSurowiecki/status/1907559189234196942
Thanks. That's kindergarten level economics.
I think that's exactly what the formula ends up saying! The numerator is the total trade deficit, the denominator is epsilon times phi times the total exports, and epsilon times phi seems to be somewhere between 1 and 4, depending on exactly which version of the numbers they mention in the text work out. They wanted to put it behind a formula with a lot of greek letters in it so that people would think it seems serious, but it's just some numerical fraction of the percentage of US exports to a country that is the deficit with that country.
I think you’re imputing too much strategy to Trump’s decision making. His administration likely would support something like NATO but against China (or Iran) rather than Russia if they had the organizational skills to create it. Most decision making is just based on raw mood affiliation. China bad. Russia good. Islam bad. Israel good. Very basic, visceral emotionality drives it all I think. The days of strategic foreign policy are long gone I suspect.
No I see even less strategy than you. I don't think he'd even support a Nato against China. There's no method at all.
"The claim that these new tariffs are “reciprocal” is nonsense."
Why do you constantly lie?
Europe Tariffs are double what we charge.
Canadian tariffs are near 400%.
Chinese tariffs are even worse. Not to mention, they steal intellectual property, then after creating an identical business revoke your licenses.
You also lie about prices. prices have fallen, dollar is mostly stronger across the board...only pound has performed better. You also lie about the effect of tariffs. Tariffs only raise prices if all other variables remain constant. But Trump has floated the idea of no income tax which will increase real income and thus lower prices.
You seem to think Americans should play by a different set of rules.
You seem to be a masochist. How much more humilation and pain are you going to inflict upon yourself, and your own people before you realize you're wrong?
"Europe Tariffs are double what we charge."
"Canadian tariffs are near 400%."
"dollar is mostly stronger across the board"
Why do YOU constantly lie?
"You also lie about the effect of tariffs. Tariffs only raise prices if all other variables remain constant. But Trump has floated the idea of no income tax which will increase real income and thus lower prices."
I hate to tell you this, but this blog is aimed at people with at least some knowledge of economics. Consider getting a different news source.
Can't wait to see how John Cochrane insists this is all no big deal, or is actually the fault of the Democratic party.
You guys are such noobs.
It's funny to see the retailers panic.
It's just another day at the office for us. You panic sell, and we buy the dip.
FYI, it's called "leverage". The end goal is to have lower tariffs, and Trump's stategy to get lower tariffs is already working. Vietnam is agreeing to drop their tariffs for U.S. products, which would actually be "free trade".
Instead of going to school and reading textbooks until you're 40, I suggest starting a business.
Try to make a product or service.
I bet you can't. I bet you don't have the talent.
But when you fail, at least you'll learn something. At least you won't be weak and pathetic, panic selling over a market transition.
I am impressed with your ability to pretend to understand economics, finance, geopolitics, and business ownership, and being utterly unconvincing in every one of them.
I so would love to add anything intelligent here. But all I can come up with is the old HL Mencken quote, "Democracy is the theory that the common people know what they want and deserve to get it good and hard".
I take some solace in the knowledge that, say, exports to the US make up just 3% of China's GDP. So while the US certainly matters in the world, a lot, it also matters not quite as much as its leaders may think.
But to quote another writer, the Austrian satirist Karl Kraus, early 20th C. He had spent a lifetime savaging the Austro-Hungarian Empire for its failures, failures which in retrospect could be seen as quite benign compared to what the 1930s would bring. So when Hitler came to power, Karl Kraus was at a loss, due to the sheer insanity coming. In his words "Mir fällt zu Hitler nichts ein" - "As to Hitler, words are failing me". I think Trump 2.0 has a lot of this effect on many.
Every so often there's an event that exposes that the emperor has no clothes. Unfortunately, this occurred pretty early in a 4-year administration.
Great post as usual.
Just one correction: when you reference the Treasury Department, you mean the USTR. They are not part of Treasury. Please don't drag Treasury's name down due to the USTR's idiocy!
That was sloppy of me. I fixed it. Thanks.
I'm enjoying the movie quotes in your recent posts. Ongoing policy from the Trump regime reminds me of this exchange from Cool Hand Luke:
Boss Paul: That ditch is Boss Kean's ditch. And I told that dirt in it's your dirt. What's your dirt doin' in his ditch?
Luke: I don't know, Boss.
The only way I'm keeping my sanity is by embracing some of the absurdity. And not looking at my retirement accounts.