It appears that the very stable genius who promised to end the war in Ukraine in 24 hours, to bring down food prices on Day 1 of his administration, and cut energy prices in half within 12 months, may not actually have a well-thought out tariff strategy either. Shocking! It seems his ego demands he must win every encounter with a person or a country, and in the case of the latter the country with a trade surplus is the winner. He also senses that his low information voters want to believe that his tariffs will bring back their high wage factory jobs. Of course, Trump will benefit from tariffs, as CEO's and foreign leaders come to him with bribes to buy concessions from him. The fact that working class and middle class Americans will be hurt by higher costs, job losses and chaos doesn't bother him at all (because he is a narcissistic psychopath).
And? Isn't this consistent w/ Trump 1.0, particularly the growing chaos as his administration tried to manage a highly complex, and fast evolving Pandemic? What about Jan 6th?
Let us not forget that 4 years have passed since then and Trump et al.have had time to reorganize and regroup. It is not at all surprising that they are running the same playbook as late term Trump 1.0. They just have different people, people who see some alignment with the Trump cult.
Some are just delusional narcissistic who want to be in power. Others are corrupt and calculating they can figure out a deal. Lastly, many chiefly identify as victims of the Biden, Warren, Bernie synthesis and just want to fight against that.
If anything I've been impressed by how well Trump and team have exploited conventional and social media to frustrate the development of durable narratives and oppositional factions. Seems to just be "move fast and break things" combined with the flexibility to deal corruptly as needed. Seems stupid, but I could see them pulling this of for a year or two.
Trump is a senile moron obsessed with surrounding himself with loyalists. Look at drunk Pete Hegseth. There is only degrees of craven incredulity in his court of jesters 😂😒🐶😎😍😁😡
Unfortunately, Trump is not actually a moron, or senile, yet. There is method to his madness. He is profoundly ignorant but also Machiavellian (as well as a narcissist and a psychopath, hence fitting criteria for Dark Triad personality disorder). I am afraid he, and his collection of sociopathic loyalists, will cause much more damage to our country than a senile moron could.
Lastly this has all been done before with different variations and we shouldn't allow this to distract us from opponities. Would suck to just be an Occupy Wall Street bench warmer when one could at least Rage Against the Machine, https://music.youtube.com/watch?v=Q3dvbM6Pias&si=t2cVCiUGylRiVBwS
Noah, let me point out a few other items of note. We currently have a little under 500,000 open manufacturing jobs in the US. We all remember the "come and build submarine ads" that were on cable not too long ago.
There is zero evidence that Trump’s assertion that coal miners want to mine coal because it is in their blood. I don’t look at GenZ and think, these guys really want black lung and to be buried in a coal mine cave-in. Americans didn’t want to pick strawberries in the summer sun in Ventura CA, any more than the prospect of working a repetitive job sewing Nike shoes is appealing to Americans.
I do believe Biden's inability to build charging stations and lay cable for rural broadband is more emblematic of government ineptitude rather than a coherent industrial policy.
I believe where you and I share an industrial policy is in the moribund defense industry. CR’s that Congress has become enamored with are apparently terrible for Pentagon procurement. Here, however, is the dilemma. We once had a stockpile of Stinger missiles. After sending a bunch to Ukraine, I needed to order more, but the line that had made them had been closed for over a decade. Workers had retired, and there was no knowledge base left.
We hadn’t needed shipbuilding because we insanely believed that all our wars would be against people who lived in caves and had IEDs and AK-47s. Our shipbuilding industry has also been strangled by Congress and budgets.
I wrote more than a dozen times that we need to replace the Los Angeles class of attack submarines due to their lifecycle. You can only do so many deep dives so many times in a sub.
Congress has been allocating money slowly, as it is expensive. Building two a year is just not scaling up to meet demand. We are way behind in this replacement cycle.
Solar Panels are a commodity, which makes Trump's increased tariffs on Southeast Asian solar panels incomprehensible. Solar panels should be cheap; there is no advantage in making them here with our higher costs, which would just make adoption slower.
There is no nirvana of reindustrialization coming. We don’t have the mindset in this latest generation to work in a factory. Gen Z, when asked what they wanted to do for work, the survey came back with 57% saying they wanted to be an internet influencer.
Again, we already have half a million job openings unfilled. We don’t have enough technical training in high schools to fill the demand for technical manufacturing, where salaries might be competitive with service jobs.. Falling birth rates and less migration are going to cause a wage-price spiral for employers. Meaning higher costs to overcome.
You’re dam right, consumption is going to fall. Trump’s latest gambit of pressuring Powell to cut rates is a real loser. The bond market isn’t going to like it. The markets are roiling because of Trump and his incoherent tariff policy, which is on hold. That is causing businesses to be on hold.
We are coming closer to a collapse of the US economic system once the consumer shuts down. That prospect is a daily reality, the longer this goes on.
One of my earliest memories as a kid growing up in West Virginia is one of my classmates being pulled out of class because his dad died in a mine accident. I know a lot of people are anxious about losing their jobs, because it's such a poor state that it's reasonable for them to worry nothing will replace it and they'll need to leave their homes. But that's a fixable problem if serious people have the chance to fix it, and I for one can't wait to see coal mining end for good, and good riddance. If Trump brings it BACK, then as far as I'm concerned there's no hell hot enough for him.
How poor is West Virginia in reality? According to Wikipedia it has a GDP per capita of 60,000 plus. That's ahead of the United Kingdom, Italy, and puts it right level with the European Union as a whole. Note that I'm using PPP per capita values for the European countries.
America has a Jonesies problem. They look at other Americans and get jealous. Whereas they should be looking at the rest of the world. I see this all the time with where people choose to live and how difficult it is to save for a home because of expectations, especially historical expectations which are inaccurate.
I don’t know how per capita GDP is expected to translate into average personal wealth, but in WV at least it’s highly uneven and regional. Morgantown in particular has both the University and the big regional hospital and has a much wealthier population than the rural places where coal is mined.
Good point. I looked at median income and W. V. is ahead of almost all Euro countries on that measure. I don't know if the computation is equivalent, though. I've been to some of those countries and I've been to W.V. and it doesn't seem as wealthy as they do.
It’s a hard comparison. It’s something like 48th or 49th out of 50 in the US (thank god for Mississippi) even though on paper it’s better off than a lot of the world. The trouble is that WV doesn’t produce much of what it needs and is entirely landlocked. Even cheap imports have to travel a long way to get there. So while its people might technically be richer than many Europeans, (remembering too the income inequality) WV pays American prices for everything, and so most of its people have pretty lousy buying power.
It doesn’t tell you how expensive it is to live. That may be the difference. Plus we don’t have the social welfare programs Europeans have.
I get into this argument all the time. We kick ass in Per Capita GDP, nobody even comes close, yet there is a whole group of individuals who feel the world has screwed them and they can’t save, can’t afford squat. I know we are a wealthy country. Our poor would make the world’s poor scream with laughter over how rich our poor seem.
Having lived in Europe I can easily assert that it's much more expensive. Things that Americans take for granted as costing very little (think ibuprofen, shampoo, light bulbs) are very high there. Rents, cars, gas - all more expensive. The only item I can think of that was consistently less was French wine, of which even the cheap stuff was pretty good.
"Internet influencer" is the new fantasy job of celebrities, like rock musician, TV or film actor, astronaut, or professional athlete. As the saying goes, nice work if you can get it.
Good takedown of Oren Cass. He's never understood international economics, and he's always been a noxious influence, serving as a relatively intelligent spokesman for popular fallacies. But at some level, it seems clear that he does know better than to support Trump's idiotic tariffs, and he's being intellectually dishonest in hopes of retaining some influence with the mad king. While I'd still prefer him in power to Peter Navarro, his influence will always be a net bad in public discourse. Honest pundits need to call his bluff, take advantage of the golden opportunity to discredit him for good.
That said, while Trumpism certainly *deserves* to de-industrialize America, I'm not sure it actually will, because of AI. I think AI has huge potential to change the economics of manufacturing in complex and counter-intuitive, but very positive ways. All sorts of new consumer inventions will be brought within the realm of possibility by AI agents to explain their features. Self-driving cars will revolutionize logistics. AI agents will make it much easier to *install* robots. The advent of self-driving cars will create investment demand to build a new automotive fleet.
None of this makes Trump's tariffs any less idiotic and destructive. But it might make the US economy so resilient that it can keep moving forward even in the face of nasty policy headwinds. It's interesting that innovation didn't slow down in the 1930s; if anything, it accelerated. This sometimes even made things worse at the time: to unemployment from bad monetary policy was added technological employment from mechanization and electrification. But it's stored up a huge harvest of huge prosperity potential which was finally reaped in the 1950s when policy stopped being so destructive.
Of course AI will make manufacturing more productive, but a fully automated factory still requires raw material and input components, so if those are tariffed (as Trump has done) your AI factory will not be competitive with imports from foreign AI factories which don’t need artificially expensive inputs. And you will need to build the robots and automation for your AI factory, and those aren’t made domestically yet either.
The foreign AI factory outputs will be tariffed. But don't get me wrong, this is definitely bad. Long live free trade! I'm just suggesting that AI is an offsetting factor.
It’s possible that one of the uses of AI winds up being to find ways to make better use of constrained supply chains, to build a large supply chain out of super-fragmented ones, and to better identify substitutions. But honestly I’m wishcasting there- it would be awesome if that happens, but I’m not betting the farm on it.
While I also appreciate the takedown of the very partisan Oren Cass. What I've seen from normal run of the mill Trump supporters and MAGA is them highlighting or trying to take credit for all of the recent announcements from Chobani to Novartis of big companies who are saying that they are going to invest billions into the US over the next 4-5 years and hiring tens of thousands people.
Now, keep in mind that they weren't doing this when Joe Biden was President and companies were investing capital and infrastructure, and I imagine that even if these companies hire less than half of the people that they have announced they will in 4-5 years, MAGA will still see it as a win. (e.g. Foxxcon). Tariffs will basically hurt the small to mid sized companies the hardest, and then the big companies will still only hirer more highly specialized labor and with automation, it will still not bring back the type of jobs they think they will. But I don't think it matters, these are intellectually dishonest people who need their view of the world and policy to be right.
So far, so bad in so many ways. Once the trade deals with our largest trading partners occur (the markets are demanding them) we’ll have a better base line of how bad things really are.
Chinese excess capacity, which continues to grow, is indeed a problem. How angering our allies addresses this is unclear to us all. Whether the “deals” address this will become clearer, but not way this approach is optimal.
Lastly, your comments about the Biden package makes clear that while Trump is an unmitigated disaster the Dem’s are nevertheless ineffectual as they too get wrapped up into keeping the base happy and making their programs less effective. The further left they go in reaction to the Trump mess the worse they will get.
If you read the Blue Sky denunciations of Abundance you'll find that it's going to be very difficult for Democrats to use that to ditch bureaucratic dysfunction.
Replying to myself I should clarify that I'm aghast at some of the takedowns of abundance that I have seen on Blue Sky. One of the main ones is that the claim that the book calls for giving developers a green light to build only luxury housing. However one of the examples in the book is of Rahm Emanuel in Chicago bragging about all the public housing the city has built recently. When you do the math it turns out that the apartments built came to an average cost of over a million dollars. I'm guessing most developers could actually build luxury housing for less than a million dollars per apartment.
Exactly and for far less actually! The problem is when public funds are used, it triggers all kinds of rules that make it far more expensive to build. Even in Chicago, I guess! Its not going to be easy to Yimbyfy a system that is heavily Nimbyfied.....
In defense of the critics of Abundance, I would argue that pro-Abundance types aren't very forthright about how they expect to achieve political power and overcome the requisite NIMBY interests (local homeowners, litigious environmental groups, etc.). It's all well and good to propose reforms (I personally agree with many of the individual proposals). Still, I'm not sure as to what social base/political agent(s) they intend to mobilize to achieve their goals. I imagine fellow PMC liberal types might be amenable to this program, and maybe they have enough muscle at the state and local level to achieve political change, but if that is the case, then why haven't they already done it? YIMBYism has been a thing for quite a while now, and yet the successes achieved in dark-blue states like NY and CA are fairly limited (I think there have been more successes in less dark blue states like Colorado, but I could be wrong).
Alternatively, I don't think the Abundance types sufficiently reckon with some of the more endogenous causes of local (mis)governance. One major contributor is growing regional inequality, as certain "superstar cities" and regions have begun to suck a disproportionate amount of labor and capital away from other parts of the country. And yet the policies outlined in the book don't seem to address regional inequality at all; rather, it's just a consequence of an exogenous trend towards economic concentration in major metro areas (LA, NYC, Houston, etc.).
You've hit the *real* problems right on the head, but those are not the issues the critics, at least the ones I've seen most prominently, are worried about. They're worried a lot more about the possibility that a contractor or developer might actually make a profit delivering housing.
For what it's worth, I wouldn't take anything posted on X or BlueSkye at face value, even if it's from a nominally-reputable source. The platform medium itself has a habit of distorting people's opinions and the messages they intend to convey, and that's before getting into the deeper stuff about character limits.
That is a great point, no one should expect it to be easy but when blue cities have high homelessnesses and low housing affordability I think that it will eventually be a no-brainer. The average voter is not going to stand for this to continue.....
Well its a good thing that those people don't make up the majority of the base for Dems and at some point those people on BlueSky will have to decide whether they care about governing and winning elections or having their purity tests online. I say this as someone who is on BlueSky a couple times a week and definitely see that some people there just lack pragmatism, nuance and any imagination.
Pundits like Cass drive me nuts; they say so much that turns out to be wrong, and they're never called on it, and there are no repercussions to being horribly off the mark. So why shouldn't he go all-in MAGA?
Besides, what are his options here?
1. Trump and whoever Trump's Maduro turns out to be stay in power, and even as the economy goes to hell, they'll continue to reward and elevate people who continually praised them, and fewer people are willing to contradict Cass, who will just engage in contortions to explain why this is the best of all possible worlds and only communists don't enjoy eating rats.
2. Trumpism collapses, and his successor fixes things, and Cass says, see it all worked out fine, you just had to be patient.
3. Trumpism collapses, his successor can't fix things, and Cass says, well it would have worked if Trump were still at the reins.
No matter what happens, guys like Cass can claim they were right all along. (And no, I'm not going to dignify "Trump fixes things himself" as an option, because while I do write science fiction it has to be believable.)
Exactly. Cass is, as usual, (and as Noah described) basing his praise of the policy by omitting inconvenient facts. I listened to him on a podcast applauding Florida's e-verify hiring system as an outright success with no negative effect on the workforce without ever mentioning that the policy exempts small businesses with less than 25 workers and workers who are hired through outside contract agents. Once those exemptions are gone (which may be about to happen if the Florida legislature closes the loopholes as they are threatening to do), outcomes will be totally different.
Cherry picking facts that are only helpful to their arguments may work for these guys in theoretical papers and on podcasts. But designing policy without acknowledging reality does not.
Now we wait for the rude awakening. (And excuse making as you rightly point out.)
I will give credit where it’s due: in reading a bunch of his stuff I thought was just flat wrong, I did read an article he wrote about rethinking the benefits of private equity, and even if he doesn’t quite recognize the extent to which private equity has widely destroyed value especially through leveraged buyouts, at least he’s directionally correct on something Republicans have traditionally been wrong on.
This explanation also explains why religious people (evangelicals) also seem to flock to MAGA. No matter how bad things are, it is all part of a plan, and they can always justify why Trump is the answer.
Though "this won't lead to a lot of manufacturing jobs" was already predicted/known several years ago. Indeed the business press had a standard narrative: Up until roughly 1975, manufacturers were gradually increasing automation as the only path to increased profits. (Like agriculture had done before them.) There were periodic articles on the problem of "technological unemployment". After 1975, the fastest path to progress [correction: competitive advantage/increased profits] was moving the work to places with cheaper labor (Japan then Korea then China then Vietnam etc.), so the level of automation used did not increase.
After 2010 or 2015 or so, manufacturers had reached the limit of that strategy and started thinking about improving automation. At that point, China, Vietnam, etc. stop having such an advantage and "reshoring" started -- moving production back to the US but at a much higher level of automation. Really, something like 40 years of innovations that had never been profitable to implement were suddenly being used in new factories in the US.
This was good for US manufacturing production, but not as good for US manufacturing jobs. But inevitably, manufacturing is going to mature like agriculture: the US will do an enormous amount of it with a very small fraction of the population.
Prior to the 2024 election, Stephen Schwarzman, CEO/Chairman of Blackstone, said: “If Harris is elected, I’m selling all of my stock holdings and buying gold.” Gives you an insight into the ‘great financial minds,’ as well as offers proof the stock market is a giant Skinner Box:
I have spent my entire 30 year career working in a factory, and I can pretty much guarantee that all of the right wing “experts” proclaiming that Americans are eager to work in factories have never worked in a factory themselves.
For every Oren Cass on the right, there's a Sean Fain (UAW president) on the left, who wants to tear it all down with a kind of Old Testament vengeance and then wishfully, romantically and arrogantly emerge Moses-like with a new compact for a brave old world model of worker power.
Fain supports auto tariffs not just to bring back jobs in his industry (for which he cherry picks some recent auto company announcements and ignores announced layoffs) but to "right past wrongs" of free trade even if prices rise for working people.
For Fain, it's visceral, and tariffs are the weapon of revenge for working people: "It's infuriating that our livelihoods have been stripped from us for decades and no one's cared."
He also doesn't care if the stock market tanks because 60% of Americans don't have any retirement savings (that's a good thing?) and ignoring the impact on stock market losses on union pension funds and working families' 401ks.
I can't help thinking that is significant that the union boss you refer to is UAW in particular: if the UAW are supporting Trump's tariffs (and perhaps other Trump policies) then to me it seems to back up my belief that Trumpism is the last gasp of the Fossil Fuel Age.
What is the bigger fear for investors here — tariffs per se or the revelation of incompetence, indecision and corruption at the highest levels of government?
You can sort of sort it out. The fear of tariffs per se shows up in the indicators that are sensitive mostly to very short-term effects, and the incompetence et al. shows up in the indicators that are sensitive mostly to long-term effects. OTOH, Trump is so flighty nobody expects him to hold to even a bad course for very long, so the long-term fears morph into short-term fears as well.
Isn’t the latter how investors were consoling themselves until they began to realize that it is the very existence of Trump and his sycophants at the head of government that constitutes an ongoing threat to the health of the economy and markets? He may not hold a bad course forever but he also might not refrain from introducing new ones.
Trust is not like tariffs. You can’t just restore the status quo with the stroke of a pen.
There are two pieces here, and on the first piece I whole heartedly agree on how bad tariffs are going to be; they are turning out far worse than I imagined. I expected tariffs to hurt but not this much largely because I did not expect Trump's tariffs to completely undermine America's financial dominance. But Trump's tariffs might destroy our ability to borrow well AND destroy our credibility. It's quite shocking, and while Cass is doing his best to defend Trump's tariffs he's ignoring some basic economic lessons. Sure, if you wall America off we will have to make more: but we'll also have to make hard choices since we'll be poorer. America may want to buy as much as it does now, but if it can't afford it (and can't borrow) then we'll have to pick and choose. That's basic reality.
I will say: it took me longer to see Biden's political failure because I did not want to admit his stumbles. It's becoming clear, fast, that Biden royally fucked up the second half of his presidency. Not in terms of policy (I still think Biden's policies were better than he got credit for) but in terms of the politics. He was too stubborn to pivot until it was too late, and blind to his own frailties and lied to the voters about it. History may remember that he was right on industrial policy, and briefly shored up our geopolitical standing (and managed Ukraine well): but he threw it all away in a vain effort at a second term. Selfish, arrogant and foolhardy.
What I cannot make sense of Trump's insanity is why can't the billionaire business leaders stop him from destroying the US and possibly the world economy. Musk spoke up; what happened to the rest of them? How will they rule the world without their money?
I mostly was talking about how declines in overall asset prices ("paper wealth") would affect the super-wealthy. 10% was a rough guess as to how much the stock market went down since Trump took office and started doing dumb things; as of a few days ago, the actual decline in the S&P 500 seems to have been 14%.
I don't think it's likely that the super-wealthy will lose everything; I suspect that most people that were super-wealthy at the beginning of 1929 were still super-wealthy in 1931, and we're not very likely to see a French Revolution or Russian Revolution in contemporary America.
Excellent article as usual, Noah. Although I am starting to get weary of the "Why is Trump doing this? It doesn't make sense!" narrative.
Trump is a grifter. It is difficult to personally profit, leading a rule of law republic. OTOH it is very easy to profit as a monarch, tyrant, mafioso, or dictator. Trump is trying to change our government to one similar to Russia's system of rule by extortion. If he succeeds, it is going to end very badly.
“While news media and some investors may still be credulous enough to believe Trump’s boasts, harder-headed players will look at his U-turns and conclude that he runs away when confronted. Why would China be "very nice” now that it knows that Trump can be rolled? On the contrary, China will be even less likely than before to make concessions. And other countries will be more willing to stand up to Trump and more likely to make deals with Beijing.”
— Paul Krugman
The same can be said for Elon Musk. His TSLA and DOGE manure is thinly spread. He and his tech baby Muskovites have done significant damage, but a margin call is likely in Musk’s future.
It appears that the very stable genius who promised to end the war in Ukraine in 24 hours, to bring down food prices on Day 1 of his administration, and cut energy prices in half within 12 months, may not actually have a well-thought out tariff strategy either. Shocking! It seems his ego demands he must win every encounter with a person or a country, and in the case of the latter the country with a trade surplus is the winner. He also senses that his low information voters want to believe that his tariffs will bring back their high wage factory jobs. Of course, Trump will benefit from tariffs, as CEO's and foreign leaders come to him with bribes to buy concessions from him. The fact that working class and middle class Americans will be hurt by higher costs, job losses and chaos doesn't bother him at all (because he is a narcissistic psychopath).
And? Isn't this consistent w/ Trump 1.0, particularly the growing chaos as his administration tried to manage a highly complex, and fast evolving Pandemic? What about Jan 6th?
Let us not forget that 4 years have passed since then and Trump et al.have had time to reorganize and regroup. It is not at all surprising that they are running the same playbook as late term Trump 1.0. They just have different people, people who see some alignment with the Trump cult.
Some are just delusional narcissistic who want to be in power. Others are corrupt and calculating they can figure out a deal. Lastly, many chiefly identify as victims of the Biden, Warren, Bernie synthesis and just want to fight against that.
If anything I've been impressed by how well Trump and team have exploited conventional and social media to frustrate the development of durable narratives and oppositional factions. Seems to just be "move fast and break things" combined with the flexibility to deal corruptly as needed. Seems stupid, but I could see them pulling this of for a year or two.
Trump is a senile moron obsessed with surrounding himself with loyalists. Look at drunk Pete Hegseth. There is only degrees of craven incredulity in his court of jesters 😂😒🐶😎😍😁😡
Trump is the ultimate proof that television rots your brain.
Unfortunately, Trump is not actually a moron, or senile, yet. There is method to his madness. He is profoundly ignorant but also Machiavellian (as well as a narcissist and a psychopath, hence fitting criteria for Dark Triad personality disorder). I am afraid he, and his collection of sociopathic loyalists, will cause much more damage to our country than a senile moron could.
Lastly this has all been done before with different variations and we shouldn't allow this to distract us from opponities. Would suck to just be an Occupy Wall Street bench warmer when one could at least Rage Against the Machine, https://music.youtube.com/watch?v=Q3dvbM6Pias&si=t2cVCiUGylRiVBwS
Noah, let me point out a few other items of note. We currently have a little under 500,000 open manufacturing jobs in the US. We all remember the "come and build submarine ads" that were on cable not too long ago.
There is zero evidence that Trump’s assertion that coal miners want to mine coal because it is in their blood. I don’t look at GenZ and think, these guys really want black lung and to be buried in a coal mine cave-in. Americans didn’t want to pick strawberries in the summer sun in Ventura CA, any more than the prospect of working a repetitive job sewing Nike shoes is appealing to Americans.
I do believe Biden's inability to build charging stations and lay cable for rural broadband is more emblematic of government ineptitude rather than a coherent industrial policy.
I believe where you and I share an industrial policy is in the moribund defense industry. CR’s that Congress has become enamored with are apparently terrible for Pentagon procurement. Here, however, is the dilemma. We once had a stockpile of Stinger missiles. After sending a bunch to Ukraine, I needed to order more, but the line that had made them had been closed for over a decade. Workers had retired, and there was no knowledge base left.
We hadn’t needed shipbuilding because we insanely believed that all our wars would be against people who lived in caves and had IEDs and AK-47s. Our shipbuilding industry has also been strangled by Congress and budgets.
I wrote more than a dozen times that we need to replace the Los Angeles class of attack submarines due to their lifecycle. You can only do so many deep dives so many times in a sub.
Congress has been allocating money slowly, as it is expensive. Building two a year is just not scaling up to meet demand. We are way behind in this replacement cycle.
Solar Panels are a commodity, which makes Trump's increased tariffs on Southeast Asian solar panels incomprehensible. Solar panels should be cheap; there is no advantage in making them here with our higher costs, which would just make adoption slower.
There is no nirvana of reindustrialization coming. We don’t have the mindset in this latest generation to work in a factory. Gen Z, when asked what they wanted to do for work, the survey came back with 57% saying they wanted to be an internet influencer.
Again, we already have half a million job openings unfilled. We don’t have enough technical training in high schools to fill the demand for technical manufacturing, where salaries might be competitive with service jobs.. Falling birth rates and less migration are going to cause a wage-price spiral for employers. Meaning higher costs to overcome.
You’re dam right, consumption is going to fall. Trump’s latest gambit of pressuring Powell to cut rates is a real loser. The bond market isn’t going to like it. The markets are roiling because of Trump and his incoherent tariff policy, which is on hold. That is causing businesses to be on hold.
We are coming closer to a collapse of the US economic system once the consumer shuts down. That prospect is a daily reality, the longer this goes on.
One of my earliest memories as a kid growing up in West Virginia is one of my classmates being pulled out of class because his dad died in a mine accident. I know a lot of people are anxious about losing their jobs, because it's such a poor state that it's reasonable for them to worry nothing will replace it and they'll need to leave their homes. But that's a fixable problem if serious people have the chance to fix it, and I for one can't wait to see coal mining end for good, and good riddance. If Trump brings it BACK, then as far as I'm concerned there's no hell hot enough for him.
My exact feelings. It’s nuts. No father wants his son to continue to mine.
How poor is West Virginia in reality? According to Wikipedia it has a GDP per capita of 60,000 plus. That's ahead of the United Kingdom, Italy, and puts it right level with the European Union as a whole. Note that I'm using PPP per capita values for the European countries.
America has a Jonesies problem. They look at other Americans and get jealous. Whereas they should be looking at the rest of the world. I see this all the time with where people choose to live and how difficult it is to save for a home because of expectations, especially historical expectations which are inaccurate.
I don’t know how per capita GDP is expected to translate into average personal wealth, but in WV at least it’s highly uneven and regional. Morgantown in particular has both the University and the big regional hospital and has a much wealthier population than the rural places where coal is mined.
The other thing is that European countries often have better government services and don't pay US prices for health care.
Good point. I looked at median income and W. V. is ahead of almost all Euro countries on that measure. I don't know if the computation is equivalent, though. I've been to some of those countries and I've been to W.V. and it doesn't seem as wealthy as they do.
It’s a hard comparison. It’s something like 48th or 49th out of 50 in the US (thank god for Mississippi) even though on paper it’s better off than a lot of the world. The trouble is that WV doesn’t produce much of what it needs and is entirely landlocked. Even cheap imports have to travel a long way to get there. So while its people might technically be richer than many Europeans, (remembering too the income inequality) WV pays American prices for everything, and so most of its people have pretty lousy buying power.
It doesn’t tell you how expensive it is to live. That may be the difference. Plus we don’t have the social welfare programs Europeans have.
I get into this argument all the time. We kick ass in Per Capita GDP, nobody even comes close, yet there is a whole group of individuals who feel the world has screwed them and they can’t save, can’t afford squat. I know we are a wealthy country. Our poor would make the world’s poor scream with laughter over how rich our poor seem.
Having lived in Europe I can easily assert that it's much more expensive. Things that Americans take for granted as costing very little (think ibuprofen, shampoo, light bulbs) are very high there. Rents, cars, gas - all more expensive. The only item I can think of that was consistently less was French wine, of which even the cheap stuff was pretty good.
I believe every American and every Frenchman is saying, thank god for good wine these days
I grew up in 50s 60s West Virginia. Not in coal country (Along the Ohio River). But sure remember those days.
"Internet influencer" is the new fantasy job of celebrities, like rock musician, TV or film actor, astronaut, or professional athlete. As the saying goes, nice work if you can get it.
Good takedown of Oren Cass. He's never understood international economics, and he's always been a noxious influence, serving as a relatively intelligent spokesman for popular fallacies. But at some level, it seems clear that he does know better than to support Trump's idiotic tariffs, and he's being intellectually dishonest in hopes of retaining some influence with the mad king. While I'd still prefer him in power to Peter Navarro, his influence will always be a net bad in public discourse. Honest pundits need to call his bluff, take advantage of the golden opportunity to discredit him for good.
That said, while Trumpism certainly *deserves* to de-industrialize America, I'm not sure it actually will, because of AI. I think AI has huge potential to change the economics of manufacturing in complex and counter-intuitive, but very positive ways. All sorts of new consumer inventions will be brought within the realm of possibility by AI agents to explain their features. Self-driving cars will revolutionize logistics. AI agents will make it much easier to *install* robots. The advent of self-driving cars will create investment demand to build a new automotive fleet.
None of this makes Trump's tariffs any less idiotic and destructive. But it might make the US economy so resilient that it can keep moving forward even in the face of nasty policy headwinds. It's interesting that innovation didn't slow down in the 1930s; if anything, it accelerated. This sometimes even made things worse at the time: to unemployment from bad monetary policy was added technological employment from mechanization and electrification. But it's stored up a huge harvest of huge prosperity potential which was finally reaped in the 1950s when policy stopped being so destructive.
Of course AI will make manufacturing more productive, but a fully automated factory still requires raw material and input components, so if those are tariffed (as Trump has done) your AI factory will not be competitive with imports from foreign AI factories which don’t need artificially expensive inputs. And you will need to build the robots and automation for your AI factory, and those aren’t made domestically yet either.
The foreign AI factory outputs will be tariffed. But don't get me wrong, this is definitely bad. Long live free trade! I'm just suggesting that AI is an offsetting factor.
It’s possible that one of the uses of AI winds up being to find ways to make better use of constrained supply chains, to build a large supply chain out of super-fragmented ones, and to better identify substitutions. But honestly I’m wishcasting there- it would be awesome if that happens, but I’m not betting the farm on it.
While I also appreciate the takedown of the very partisan Oren Cass. What I've seen from normal run of the mill Trump supporters and MAGA is them highlighting or trying to take credit for all of the recent announcements from Chobani to Novartis of big companies who are saying that they are going to invest billions into the US over the next 4-5 years and hiring tens of thousands people.
Now, keep in mind that they weren't doing this when Joe Biden was President and companies were investing capital and infrastructure, and I imagine that even if these companies hire less than half of the people that they have announced they will in 4-5 years, MAGA will still see it as a win. (e.g. Foxxcon). Tariffs will basically hurt the small to mid sized companies the hardest, and then the big companies will still only hirer more highly specialized labor and with automation, it will still not bring back the type of jobs they think they will. But I don't think it matters, these are intellectually dishonest people who need their view of the world and policy to be right.
So far, so bad in so many ways. Once the trade deals with our largest trading partners occur (the markets are demanding them) we’ll have a better base line of how bad things really are.
Chinese excess capacity, which continues to grow, is indeed a problem. How angering our allies addresses this is unclear to us all. Whether the “deals” address this will become clearer, but not way this approach is optimal.
Lastly, your comments about the Biden package makes clear that while Trump is an unmitigated disaster the Dem’s are nevertheless ineffectual as they too get wrapped up into keeping the base happy and making their programs less effective. The further left they go in reaction to the Trump mess the worse they will get.
Very depressing. Happy spring.
Read the book abundance by Klein and Thompson. It’s a realistic way for the democrats to ditch beaurecratic dysfunction
If you read the Blue Sky denunciations of Abundance you'll find that it's going to be very difficult for Democrats to use that to ditch bureaucratic dysfunction.
Replying to myself I should clarify that I'm aghast at some of the takedowns of abundance that I have seen on Blue Sky. One of the main ones is that the claim that the book calls for giving developers a green light to build only luxury housing. However one of the examples in the book is of Rahm Emanuel in Chicago bragging about all the public housing the city has built recently. When you do the math it turns out that the apartments built came to an average cost of over a million dollars. I'm guessing most developers could actually build luxury housing for less than a million dollars per apartment.
Exactly and for far less actually! The problem is when public funds are used, it triggers all kinds of rules that make it far more expensive to build. Even in Chicago, I guess! Its not going to be easy to Yimbyfy a system that is heavily Nimbyfied.....
In defense of the critics of Abundance, I would argue that pro-Abundance types aren't very forthright about how they expect to achieve political power and overcome the requisite NIMBY interests (local homeowners, litigious environmental groups, etc.). It's all well and good to propose reforms (I personally agree with many of the individual proposals). Still, I'm not sure as to what social base/political agent(s) they intend to mobilize to achieve their goals. I imagine fellow PMC liberal types might be amenable to this program, and maybe they have enough muscle at the state and local level to achieve political change, but if that is the case, then why haven't they already done it? YIMBYism has been a thing for quite a while now, and yet the successes achieved in dark-blue states like NY and CA are fairly limited (I think there have been more successes in less dark blue states like Colorado, but I could be wrong).
Alternatively, I don't think the Abundance types sufficiently reckon with some of the more endogenous causes of local (mis)governance. One major contributor is growing regional inequality, as certain "superstar cities" and regions have begun to suck a disproportionate amount of labor and capital away from other parts of the country. And yet the policies outlined in the book don't seem to address regional inequality at all; rather, it's just a consequence of an exogenous trend towards economic concentration in major metro areas (LA, NYC, Houston, etc.).
You've hit the *real* problems right on the head, but those are not the issues the critics, at least the ones I've seen most prominently, are worried about. They're worried a lot more about the possibility that a contractor or developer might actually make a profit delivering housing.
For what it's worth, I wouldn't take anything posted on X or BlueSkye at face value, even if it's from a nominally-reputable source. The platform medium itself has a habit of distorting people's opinions and the messages they intend to convey, and that's before getting into the deeper stuff about character limits.
That is a great point, no one should expect it to be easy but when blue cities have high homelessnesses and low housing affordability I think that it will eventually be a no-brainer. The average voter is not going to stand for this to continue.....
Well its a good thing that those people don't make up the majority of the base for Dems and at some point those people on BlueSky will have to decide whether they care about governing and winning elections or having their purity tests online. I say this as someone who is on BlueSky a couple times a week and definitely see that some people there just lack pragmatism, nuance and any imagination.
Pundits like Cass drive me nuts; they say so much that turns out to be wrong, and they're never called on it, and there are no repercussions to being horribly off the mark. So why shouldn't he go all-in MAGA?
Besides, what are his options here?
1. Trump and whoever Trump's Maduro turns out to be stay in power, and even as the economy goes to hell, they'll continue to reward and elevate people who continually praised them, and fewer people are willing to contradict Cass, who will just engage in contortions to explain why this is the best of all possible worlds and only communists don't enjoy eating rats.
2. Trumpism collapses, and his successor fixes things, and Cass says, see it all worked out fine, you just had to be patient.
3. Trumpism collapses, his successor can't fix things, and Cass says, well it would have worked if Trump were still at the reins.
No matter what happens, guys like Cass can claim they were right all along. (And no, I'm not going to dignify "Trump fixes things himself" as an option, because while I do write science fiction it has to be believable.)
Exactly. Cass is, as usual, (and as Noah described) basing his praise of the policy by omitting inconvenient facts. I listened to him on a podcast applauding Florida's e-verify hiring system as an outright success with no negative effect on the workforce without ever mentioning that the policy exempts small businesses with less than 25 workers and workers who are hired through outside contract agents. Once those exemptions are gone (which may be about to happen if the Florida legislature closes the loopholes as they are threatening to do), outcomes will be totally different.
Cherry picking facts that are only helpful to their arguments may work for these guys in theoretical papers and on podcasts. But designing policy without acknowledging reality does not.
Now we wait for the rude awakening. (And excuse making as you rightly point out.)
I will give credit where it’s due: in reading a bunch of his stuff I thought was just flat wrong, I did read an article he wrote about rethinking the benefits of private equity, and even if he doesn’t quite recognize the extent to which private equity has widely destroyed value especially through leveraged buyouts, at least he’s directionally correct on something Republicans have traditionally been wrong on.
This explanation also explains why religious people (evangelicals) also seem to flock to MAGA. No matter how bad things are, it is all part of a plan, and they can always justify why Trump is the answer.
Though "this won't lead to a lot of manufacturing jobs" was already predicted/known several years ago. Indeed the business press had a standard narrative: Up until roughly 1975, manufacturers were gradually increasing automation as the only path to increased profits. (Like agriculture had done before them.) There were periodic articles on the problem of "technological unemployment". After 1975, the fastest path to progress [correction: competitive advantage/increased profits] was moving the work to places with cheaper labor (Japan then Korea then China then Vietnam etc.), so the level of automation used did not increase.
After 2010 or 2015 or so, manufacturers had reached the limit of that strategy and started thinking about improving automation. At that point, China, Vietnam, etc. stop having such an advantage and "reshoring" started -- moving production back to the US but at a much higher level of automation. Really, something like 40 years of innovations that had never been profitable to implement were suddenly being used in new factories in the US.
This was good for US manufacturing production, but not as good for US manufacturing jobs. But inevitably, manufacturing is going to mature like agriculture: the US will do an enormous amount of it with a very small fraction of the population.
Prior to the 2024 election, Stephen Schwarzman, CEO/Chairman of Blackstone, said: “If Harris is elected, I’m selling all of my stock holdings and buying gold.” Gives you an insight into the ‘great financial minds,’ as well as offers proof the stock market is a giant Skinner Box:
https://www.marketwatch.com/investing/future/gc00
It’s ironic that he should have done that with Trump instead
I have spent my entire 30 year career working in a factory, and I can pretty much guarantee that all of the right wing “experts” proclaiming that Americans are eager to work in factories have never worked in a factory themselves.
For every Oren Cass on the right, there's a Sean Fain (UAW president) on the left, who wants to tear it all down with a kind of Old Testament vengeance and then wishfully, romantically and arrogantly emerge Moses-like with a new compact for a brave old world model of worker power.
https://www.npr.org/2025/04/07/nx-s1-5352409/trump-auto-tariffs-uaw-shawn-fain
Fain supports auto tariffs not just to bring back jobs in his industry (for which he cherry picks some recent auto company announcements and ignores announced layoffs) but to "right past wrongs" of free trade even if prices rise for working people.
For Fain, it's visceral, and tariffs are the weapon of revenge for working people: "It's infuriating that our livelihoods have been stripped from us for decades and no one's cared."
He also doesn't care if the stock market tanks because 60% of Americans don't have any retirement savings (that's a good thing?) and ignoring the impact on stock market losses on union pension funds and working families' 401ks.
I can't help thinking that is significant that the union boss you refer to is UAW in particular: if the UAW are supporting Trump's tariffs (and perhaps other Trump policies) then to me it seems to back up my belief that Trumpism is the last gasp of the Fossil Fuel Age.
What is the bigger fear for investors here — tariffs per se or the revelation of incompetence, indecision and corruption at the highest levels of government?
I’m gonna guess the latter, although I suspect a lot of investors were expecting businesses to benefit from corruption.
You can sort of sort it out. The fear of tariffs per se shows up in the indicators that are sensitive mostly to very short-term effects, and the incompetence et al. shows up in the indicators that are sensitive mostly to long-term effects. OTOH, Trump is so flighty nobody expects him to hold to even a bad course for very long, so the long-term fears morph into short-term fears as well.
Isn’t the latter how investors were consoling themselves until they began to realize that it is the very existence of Trump and his sycophants at the head of government that constitutes an ongoing threat to the health of the economy and markets? He may not hold a bad course forever but he also might not refrain from introducing new ones.
Trust is not like tariffs. You can’t just restore the status quo with the stroke of a pen.
There are two pieces here, and on the first piece I whole heartedly agree on how bad tariffs are going to be; they are turning out far worse than I imagined. I expected tariffs to hurt but not this much largely because I did not expect Trump's tariffs to completely undermine America's financial dominance. But Trump's tariffs might destroy our ability to borrow well AND destroy our credibility. It's quite shocking, and while Cass is doing his best to defend Trump's tariffs he's ignoring some basic economic lessons. Sure, if you wall America off we will have to make more: but we'll also have to make hard choices since we'll be poorer. America may want to buy as much as it does now, but if it can't afford it (and can't borrow) then we'll have to pick and choose. That's basic reality.
I will say: it took me longer to see Biden's political failure because I did not want to admit his stumbles. It's becoming clear, fast, that Biden royally fucked up the second half of his presidency. Not in terms of policy (I still think Biden's policies were better than he got credit for) but in terms of the politics. He was too stubborn to pivot until it was too late, and blind to his own frailties and lied to the voters about it. History may remember that he was right on industrial policy, and briefly shored up our geopolitical standing (and managed Ukraine well): but he threw it all away in a vain effort at a second term. Selfish, arrogant and foolhardy.
What I cannot make sense of Trump's insanity is why can't the billionaire business leaders stop him from destroying the US and possibly the world economy. Musk spoke up; what happened to the rest of them? How will they rule the world without their money?
If everyone loses 10% of their paper wealth, nobody's relative status changes. After a certain point, money just becomes a way of keeping score.
I appreciate you answering my question.
Just to clarify what you’re saying is that if Trump’s policies go through we will only lose around 10% of our paper wealth?
Or are you referring to just the super wealthy?
I mostly was talking about how declines in overall asset prices ("paper wealth") would affect the super-wealthy. 10% was a rough guess as to how much the stock market went down since Trump took office and started doing dumb things; as of a few days ago, the actual decline in the S&P 500 seems to have been 14%.
I don't think it's likely that the super-wealthy will lose everything; I suspect that most people that were super-wealthy at the beginning of 1929 were still super-wealthy in 1931, and we're not very likely to see a French Revolution or Russian Revolution in contemporary America.
Appreciate the detailed explanation.
I took Doug's 10% figure as a "for instance" as a demonstration of the concept.
Excellent article as usual, Noah. Although I am starting to get weary of the "Why is Trump doing this? It doesn't make sense!" narrative.
Trump is a grifter. It is difficult to personally profit, leading a rule of law republic. OTOH it is very easy to profit as a monarch, tyrant, mafioso, or dictator. Trump is trying to change our government to one similar to Russia's system of rule by extortion. If he succeeds, it is going to end very badly.
Optimistic scenario: Trump tariffs will be curbed once he gets his tax cuts extended. This is an exercise in gaming the budget process.
(Likely reality: well that's *part* of what is happening, but so are lots of things including erratic executive function and incoming recession.)
“While news media and some investors may still be credulous enough to believe Trump’s boasts, harder-headed players will look at his U-turns and conclude that he runs away when confronted. Why would China be "very nice” now that it knows that Trump can be rolled? On the contrary, China will be even less likely than before to make concessions. And other countries will be more willing to stand up to Trump and more likely to make deals with Beijing.”
— Paul Krugman
The same can be said for Elon Musk. His TSLA and DOGE manure is thinly spread. He and his tech baby Muskovites have done significant damage, but a margin call is likely in Musk’s future.
The knock-down, drag-out with Cass I was looking for (mostly). Thank you! And what a graceful way to introduce the takedown.