Trump’s Bullying Is Going to Backfire

One of the most striking things about today's political right - pushed on by the ignorance embracing "conservative" Christians key to the MAGA base - is the willing rejection of science and knowledge if it runs counter to the MAGA base's religious myths and prejudices, if not out right hatred, towards anyone deemed "other" based on race, skin color, national origin and/or sexual orientation. This willful embrace of ignorance extends to the realm of economics and the reality of today's global economy.  Few, if any countries now can make complex products and equipment solely within their own borders without materials and knowledge from around the globe. This cluelessness and ignorance is embodied in the Felon's threats of tariffs and maligning of trading partners.  Either the Felon is out to deliberately blow up America's economy - perhaps on orders from Vladimir Putin - or his level of ignorance is stunning.  Surrounded by "yes men" no one seemingly can give him a much needed slap in the face and say wake up to reality.  The result may well be a weakened, poorer, and more unequal America - something that will thrill and embolden our adversaries.  A column in the New York Times looks at this dangerous situation:

The scariest thing about what President Trump is doing with his tariffs-for-all strategy, I believe, is that he has no clue what he is doing — or how the world economy operates, for that matter. He’s just making it all up as he goes along — and we are all along for the ride.

I am not against using tariffs to counter unfair trade practices. I supported Trump and President Joe Biden’s tariffs on China. And if all of this is just Trump bluffing to get other countries to give us the same access that we give them, I am OK with it. But Trump has never been clear: Some days he says his tariffs are to raise revenue, other days to force everyone to invest in America, other days to keep out fentanyl.

So, which is it?

Trump is threatening to impose tariffs on rivals and allies alike, without any satisfactory explanation of why one is being tariffed and the other not, and regardless of how such tariffs might hurt U.S. industry and consumers. It’s a total mess. As the Ford Motor chief executive Jim Farley courageously (compared to other chief executives) pointed out, “Let’s be real honest: Long term, a 25 percent tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we’ve never seen.”

So, either Trump wants to blow that hole, or he’s bluffing, or he is clueless. If it is the latter, Trump is going to get a crash course in the hard realities of the global economy as it really is — not how he imagines it.

My favorite tutor in these matters is the Oxford University economist Eric Beinhocker, who got my attention when we were talking the other day with the following simple statement: “No country in the world alone can make an iPhone.”

Think about that sentence for a moment: There is no single country or company on earth that has all the knowledge or parts or manufacturing prowess or raw materials that go into that device in your pocket called an iPhone. Apple says it assembles its iPhone and computers and watches with the help of “thousands of businesses and millions of people in more than 50 countries and regions”

The big difference between the era we are in now, as opposed to the one Trump thinks he’s living in, is that today it’s no longer “the economy, stupid.” That was the Bill Clinton era. Today, “it’s the ecosystems, stupid.”

Ecosystems? Listen a bit to Beinhocker, who is also the executive director of the Institute for New Economic Thinking at the Oxford Martin School. In the real world, he argues, “There is no such thing as the American economy anymore that you can identify in any real, tangible way. There’s just this accounting fiction that we call U.S. G.D.P.” To be sure, he says, “There are American interests in the economy. . . . . There are firms based in America. But there is no American economy in that isolated sense.”

Instead, there is a global web of commercial, manufacturing, services and trading “ecosystems,” explains Beinhocker. “There is an automobile ecosystem. There’s an A.I. ecosystem. There’s a smartphone ecosystem. There’s a drug development ecosystem. There is the chip-making ecosystem.” And the people, parts and knowledge that make up those ecosystems all move back and forth across many economies.

Trump just waves off all of this. He told reporters that the U.S. is not reliant on Canada. “We don’t need them to make our cars,” he said.

Actually, we do. And thank goodness for that. It not only enables us to make cars cheaper, but also better. All that a Model T did was get you from point to point faster than a horse, but today’s cars offer you heating and cooling and entertainment from the internet and satellites. They will navigate for you and even drive for you — and they’re much safer. When we can combine more complex knowledge and complex parts to solve complex problems, our quality of life soars.

But here’s the catch. You cannot make complex stuff alone anymore. It’s too complex.

In a 2021 essay on the website of the Yale School of Public Health, Swati Gupta, head of emerging infectious diseases at I.A.V.I., a nonprofit scientific research organization, explained how mRNA vaccines for Covid-19 were developed in record time: . . . . There was unprecedented global collaboration through coordinated partnerships among governments, industry, donor organizations, nonprofits and academia. … It’s the only way we could have achieved what has been seen in the past year, as no one group could have done this alone.”

Ditto today for the most advanced microchips. . . . . The more we push the boundaries of physics and materials science to cram more transistors onto a chip, the less any one company or country can excel at all the parts of the design and manufacturing process. You need the whole global ecosystem.

And if you are not part of these ecosystems, your country will not thrive.”

And trust is the essential ingredient that makes these ecosystems work and grow, Beinhocker adds. Trust acts as both glue and grease. It glues together bonds of cooperation, while at the same time it greases the flows of people, products, capital and ideas from one country to the next. Remove trust and the ecosystems start to collapse.

Trust, though, is built by good rules and healthy relationships, and Trump is trampling on both. The result: If he goes down this road, Trump will make America and the world poorer. Mr. President, do your homework.