TRUMP: Economic Chess, Not Checkers.


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“A few lines of reasoning can change the way we see the world.”
— Steven E. Landsburg

Hello everyone. Happy Friday, once again!

First and foremost, I would like to admit, upfront, that I did not originally understand President Trump’s reasoning for wanting to bring manufacturing and other export jobs back to the United States economy. There is also the possibility this may not be his reason, but the alternatives do not make much sense. I’m all ears, though. 

I understood that it would not be a bad thing; any economic increase past the costs grows and expands the economy, creates more jobs and wealth, and enhances American economic prosperity and opportunity. And if it were not due to research and experiments I have been conducting with some of the smartest people I know, maybe I would not have found out. Moreover, as I’m sure we can all tell by now, it’s not remotely a good idea to have all of your supply chains in a country ruled by a Communist Dictatorship. That one was easy. 

Since Trump’s announcement going down his golden escalator in Trump Tower, the President has been advocating for the bringing back of American manufacturing jobs and establishing supply chains on our domestic soil. He has been ridiculed by people on both sides, mainly, I assume, because they lack a fundamental understanding of economics. 

The Wharton School of Business is the number one business school in the entire world, and it doesn’t even come close. They have produced the most billionaires who have in-turn made the world a better place. Iron Man, or his real name, Elon Musk, is among them. 

Trump has a degree in economics from Wharton, before grade inflation was a thing. It’s safe to assume he may know a thing or two about economics. And usually when people criticize his economic policies (those implemented so far have led to the greatest American economy on record, so he has a track record), regarding manufacturing jobs—they attack him, and not the argument. That’s usually a good indicator that people do not know what they’re talking about because everybody likes to be right. Doesn’t mean everyone is.

It’s a funny feeling, people will reach out to me and argue some wild strawmans or red herrings, as if they never read the article. Some of these “journalists” and Democrats probably haven’t read any books about Basic Economics. (And it shows from Biden’s plans for the economy.)

Our topic of discussion for today is to address the pros and cons of Trump’s desire to transform our economy from a heavy service export economy to more of an equilibrium in-line with exporting goods as well. 

First, for this to even be able to happen, many things must occur, there are prerequisites. One, President Donald Trump has to win re-election. The necessary economic framework to allow for such a transition would never be established by a Democratic administration, especially Jobless Joe’s (his policies are expected to lose half a million jobs. Nice start. WSJ link above). 

Two, Republicans must retain the senate, and hopefully even gain some seats.

Third, and almost most important, Republicans must take back the House. And we must win with candidates who will actually do the right thing and implement what we need. Not just false promises during an election year. 

Thus, with total control of the government, like 2017-19, we would be able to implement a sweeping platform with strong, sensible, and powerful economic legislation that gets the government out of the way of the people and lets American ingenuity create a better future for American Prosperity. We have all seen what Democrats have done with two years of power, and that’s Spend Money, Do Nothing and Pass Nothing.

Economic legislation that would allow such a transition and enable growth would involve tax incentives, not tax raises. Elimination of inefficient regulations, not the proliferation of crippling red tape. Lowering the corporate tax rate to 10%, not keeping it at 22.5% where we are still not competitive on the global stage. And if we really want to help out our allies deemed vital to national security interests, allow qualified foreign direct investment to receive tax breaks too, for a price. 

Those are a few ideas, and there’s a lot more we can also do, such as make permanent the individual tax cuts from the Tax Cuts & Jobs Act. We needed a few more votes from Democrats to make them permanent. They didn’t. How’s that make you feel? Corporate permanent reduction, a good thing, yet Democrats would not vote for permanence of personal income tax breaks. It’s not a bad thing to allow low-income and middle-income families to keep more of their hard-earned wealth. At least, we think it’s a good thing. 

Oh, and let’s abolish the federal minimum wage. It’s basic economics that price controls fail and this is price control on the price of labor. “Federal Minimum Wage” is more politically digestible than “One Government’s Absolute Control On The Price of Labor.”

When there is an artificial price floor (price cannot go below) which is above the equilibrium (market) price (essentially, the price consumers are willing to pay) of a thing, that thing will face a surplus. In the case of labor, unemployment. 

This means when government makes a law making a thing, such as labor, more expensive as an input and above market price, people will purchase less of the thing (causing a surplus), and raise prices of other things to compensate for the losses from thing 1’s artificial price increase. That’s called cost-push inflation. That’s a bad thing. It means you buy less with more. No one is better off. 

Except, maybe, the politicians who enacted it. Votes. For the reverse of this price control, it is called a price ceiling. See the Nixon Admin’s price ceiling on the price of oil in the 70’s for another type of economic problem, a shortage and… the failure of price controls. See also New York City’s rent  control, I.e. a price floor, for even more failures. The list goes on. 

It is almost as if there is a science that has these types of answers. If only. Oh wait.

It makes you wonder. I thought Democrats were the party of science? Also, Richard Nixon did say to an aide once, “I don’t give a good g*d damn what Milton Friedman said, he’s not up for re-election!”

Lovely politics.

The federal minimum wages’ negative economic ramifications are evidenced by the rising unemployment and falling labor force participation rate from minimum wage increases since its inception in 1938 under the Fair Labor Standards Act. Puerto Rico’s unemployment immediately rose to 50% unemployment.

Not so “fair” when something forcefully makes you lose your job. But hey, at least someone else is making more. (In real terms, however, cost-push inflation from these increases actually lowers real purchasing power and thus now someone is out of a job and the one who kept employment, can buy less than pre-hike income.) Yeah, Science $&$&#.

Pros & Cons

Truthfully, I don’t have much for cons because the data we have found shows, which is below, a sharp increase in net exports at the depths of the Great Recession and a steep decline in Imports. This shot us out of the recession faster than we got in it. Why?

The formula for Gross Domestic Product is: Consumption + Investment + Government Expenditures (though certain fiscal stimulus is limited in real GDP growth) + (Imports – Exports), or put differently, + Net Exports. The answer is because it immediately increased real growth in the economy. Every dollar spent on an import in excess of exports is $1 which does not contribute to growth in the economy.

So yes, there is importance in buying domestic industries and having them make competitive products foreigners want to purchase. It is also important to have an economic framework that enables the maximization of this. We don’t.

We are mainly a service economy, our services are also expensive. It’s also too expensive at this time to justify most manufacturing or even the R&D needed to make new technologies or enhance current ones to justify the risk.

Moreover, abolishing the federal minimum wage would do more good than harm. There would be NO minimum price someone could CHARGE people for their most valuable asset, which is time. Do you really think all of the people currently working for $7.25-$15+ dollars an hour are going to let their employer stop paying them that rate if the law was gone? There would be mass exodus, lawsuits, and extreme media attention. Thus, since there would be no minimum price for people’s time, people could, I don’t know, negotiate, individually or, together? Woah. Power to the people. What a crazy thought.

Lastly, and I think most obviously, is that transitioning into an economy which actually has net exports, would not be such a bad idea. Seeing as below our economy, the American economy has negative net exports. Thus, it subtracts from growth. If we want to create more jobs, a better future, and maybe, not go through another depression, we should elect people who know economics pretty well. Or else, we may not have a very fun time, which is a mild way to put it.

Let’s also be smarter than the last time, because the last administration let net exports rise, and then sort of implemented policies and regulations which descended it again. How nice would our economy have been if that segment of the economy had been allowed to prosper? Good thing we have another chance this November.

This isn’t really political. It’s Basic Economics. Just follow the data. And the facts. 

P.S. — Trump does have a political tool in hand he could use and some SCOTUS jurisprudence, and I think he should. He should use it for every industry and supply chain the Communist Party of China used its state power to steal from us through intellectual property, unlimited central bank funds, and many other violations. President Trump should invoke The Defense Production Act of 1950, 50 U.S.C. App. § 2061 et seq., which allows the president to mobilize industry to take priority on military contracts deemed vital to national security. Right now, people in crucial manufacturing states are being deprived of their rights to earn a living due to democratic dictatorships. 

And yes, right now we are in a war. It will come to be known as The Second Cold War and has been happening since the 1990s and Communist China’s rise. Including nuclear warfare, guerrilla, and conventional, it is mainly being fought with Hybrid Warfare. The main weapon being used is currency. If you destroy a country’s currency… that’s it. It’s gone. Since the enactment of the Federal Reserve Act of 1913, the United States Dollar has lost 95% of its real purchasing power. What like-product cost $1 in 1913 now costs $20–cost-push inflation. While we lay idle, China is invading India, enslaving Muslims, persecuting Christians, annexing territory in the South China Sea, and taking over, I  mean, loaning nations vast sums of money to finish it’s Belt and Road Initiative—the 21st Century Iron Curtain. It’s time to wake up. 

America is the Shining City on Top of a Hill which is a glimmering beacon of freedom, hope, and prosperity for the entire world. Freedom is only one generation away from dying; it is God-given. That doesn’t mean man has not taken it. Nor does it mean man does not still want to take it. We all know some do; some already have.

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