Why is Trump Destroying the Economy?

Discussion in 'Economics' started by schizo, Apr 4, 2025.

  1. schizo

    schizo

    The real reason Trump is destroying the economy

    Trump is imposing ruinous tariffs because American democracy is no longer strong enough to stop him.

    https://www.vox.com/politics/407053/trump-tariff-expensive-democracy-authoritarianism-breakdown


    The Trump administration’s tariffs are, by every reasonable account, an economic catastrophe in the making. So why are they happening?

    One explanation is that this is simply democracy at work. President Donald Trump campaigned on doing more or less exactly what he’s just done, and the voting public elected him. So here we are.

    That’s at best a partial story. In fact, it’s probably more accurate to see Trump’s tariffs as a symptom of democratic decay — of America transitioning into a kind of strange hybrid system that combines both authoritarian and democratic features.

    Were America’s democracy functioning properly, Trump wouldn’t have the power to impose such broad tariffs unilaterally. Congress, not the presidency, has the constitutional authority to raise taxes — and tariffs are, of course, a tax on imports.

    Yet the basic design of the American system has broken down, allowing the president to usurp far more authority than is healthy. In many policy areas, the presidency functions less like a democratic chief executive who operates under constraint and more like an elected dictatorship.

    And historically, dictatorships — elected or otherwise — suffer from a fatal flaw: they have no ability to stop the people at the top from acting on their policy whims and, in the process, producing national disasters. This tendency is why democracy tends to produce superior policy outcomes over the long run; why America, and not Nazi Germany or the Soviet Union, won the 20th century.

    The tariffs, in short, show the true stakes of democratic decline. It’s not just a matter of abstract principle, but the difference between stability and disaster.

    America’s democratic decline caused the tariffs
    When Donald Trump and Elon Musk began laying waste to the federal government in February, the political scientist Adam Przeworski declared himself “at a loss.” Though Przeworski is one of the world’s most eminent scholars of comparative democracy, author of many defining pieces in the field, he could not find the right vocabulary to describe what was happening in the United States.

    Though “Trump was elected in fair elections,” his subsequent policy agenda amounted to “revolutionary change of the relation between the state and society” — one that attempts to replace the rules and norms that define democratic politics with something very different.

    Understanding America in this more textured sense, as a country under a new and confusing regime that is both democratic and not, helps us make better sense out of the Trump tariff debacle.

    On the one hand, an electorate that picked Trump is getting one of Trump’s signature policies. Sometimes, in democracies, demagogues win elections — a problem so old that you can find a discussion of it in Plato’s Republic.

    On the other hand, democracies rely on legal rules constraining the executive to prevent any such demagogue from becoming a dictator. In the American system, that means a complex system of constitutional checks and balances — one of which is the Constitution granting taxation powers to Congress and Congress alone. Yet instead of asking for statutory authorization to raise tariffs, Trump is exploiting broadly worded emergency legislation to do an end-run around the legislative branch.

    This is what a hybrid political system looks like in practice. The United States still has free and fair elections at all levels of government, and is in that sense democratic. But elections don’t matter in the way that they’re supposed to, because the people’s representatives in Congress are not playing their constitutionally assigned policymaking role. This is the autocratic component of the current American system, one that enables the president to sabotage the global economy if he so wishes.

    The transformation of America, from democracy to Frankensteinian amalgam, has been in the works for decades.

    The primary culprit is Congress, which has — due to a combination of partisanship and political cowardice — become both unable and unwilling to act as the supreme lawmaking body. Instead, it began delegating significant amounts of its own authority to the executive.

    Sometimes, this was intentional — authorizing the president to make policy through executive agencies, creating the “administrative state” conservatives decry. Sometimes, it was unintentional: Congress giving the president vague emergency powers that were supposed to function in narrow circumstances, but in practice allowed the president to act unilaterally in all sorts of “normal” policy debates. And sometimes, Congress simply did nothing on crucial policy issues — forcing the president to try to address them with dubiously broad interpretations of their own powers.

    The judicial branch deserves some blame too. While the Supreme Court has occasionally stepped in to address presidential overreach, it has done so in a haphazard and partisan way. Moreover, it has long deferred to the president on key issues like immigration, trade, and war.

    Observers on both the liberal left and the libertarian right warned for decades that growing executive power posed a problem for democracy and good policymaking. Obviously, they were right to do so in hindsight. Yet part of the reason that they were ignored is that there were other checks on the president that seemed to keep the executive in line.

    Some of these were internal executive branch checks. The White House relied on the Office of Legal Counsel — a group of senior executive branch attorneys — to provide independent opinions on the legality of various policy options. Internal policy shops like the Council of Economic Advisers provided informed expert opinions that would steer presidents toward more evidence-based policymaking. In dire cases, the Justice Department would probe potentially criminal activity by executive branch staff.

    Other checks were more informal. Fear of losing the war for public opinion might prevent a president from taking a particularly radical stance. The president’s own moral code, a sense that there are just certain things one shouldn’t do even if you can, also provided a kind of soft check on the abuse of power.

    But what’s clear now is that all of these internal mechanisms were voluntary. Trump has neutered executive branch checks on his authority and (clearly!) does not possess the judgment we expect from people in the highest office.

    It turns out that the rest of the political system — and especially Congress — had created the conditions for our descent into a hybrid political system. The only barriers remaining were norms about how the executive branch should work, ones that a determined president like Trump could smash through with ease.

    The tariffs show why our hybrid system is so dangerous
    Sometimes, the stakes in this kind of conversation can feel a little fuzzy. Why does it matter if we are living in a hybrid system rather than a full democracy? Sure, the president may be powerful, but if we’ve still got elections, then isn’t everything going to be fine in the end?

    The tariffs provide one of the clearest examples of why this matters for everyone: without democracy, the quality of our policymaking gets dangerously worse.

    Political scientists have long found that, on average, democracies produce better outcomes for citizens than authoritarian states. They produce higher rates of economic growth, superior technological innovation, better public health services, and are even more likely to win wars.

    One of the key reasons for democracy’s success has been its formalized policymaking process. Because laws are changed through legal and transparent processes, ones subject to public debate and legal oversight, they are more likely to both be well-informed by the best available evidence and corrected if something goes badly.

    Authoritarian and hybrid regimes ditch these constraints, which allows them to make policy changes a lot faster. But it also enables one person, or a small group of people, to make radical decisions on a whim with disastrous consequences.

    Think about Mao’s Great Leap Forward in China, a direct product of the leader’s adherence to a Communist ideology that was out of touch with reality. While Trump’s tariffs are nowhere near as evil — the Great Leap Forward killed somewhere between 18 and 32 million people — the same formal problem contributed to both mistakes.

    For a more recent example, look at Russia’s invasion of Ukraine. The disaster began with Putin’s personal obsession with the idea that Ukrainian nationhood was fake and that the territory was rightfully Russian. This notion went from Putin’s personal obsession to actual war because no one could stop him.

    Trump’s tariffs will, if fully implemented, be remembered as their own cautionary tale. While he campaigned on them, he wouldn’t have been able to implement the entire tariff package had he gone through the normal constitutionally prescribed procedure for raising taxes. The fact that America isn’t functioning like a normal democracy, with public deliberation and multiple checks on executive authority, is what allowed Trump to act on his idiosyncratic ideas in the manner of a Mao or Putin.

    Now, it’s still possible that Trump steps back from the brink. But even if he does, and the worst outcome is avoided, the lesson should be clear: the long decay of America’s democratic system means that we are all living under an axe.

    And if this isn’t the moment it falls, there will surely be another.
     
  2. NoahA

    NoahA

    I've been trying to figure this out and its honestly quite difficult. There are more than enough people on both sides of the tariff debate that I really don't know what the correct answer is. Yes, tariffs do make things more expensive for the consumer. But at the same time, if the trade deficit isn't fixed, perhaps Americans won't have any good jobs or money anymore to buy stuff anyway.

    I've also learned quite a bit about how the US is falling behind from a national security issue because it can't make much of what it needs for defence.

    If the Dems won, would they really have tackled the $2T deficits? How on earth would they deal with the fact that about $7-8T in debt has to be rolled over this year, and it can't get done at the current interest rates because it pushes the borrowing costs even higher?

    So as easy as it is to say that Trump is fucking everything up, what trajectory was the US even on to begin with? Before anyone even says how orange man is bad because he is deporting illigal aliens, can someone explain why the border had to be open so that 10 million could flood in? Perhaps the aggressive deportations didn't have to happen so quickly, but was closing the border really that bad?

    And I'd also like to hear exactly what the plan was to reduce the $2T deficit and also handle all the debt that has to be rolled over this year.

    I truly think that the system is fucked either way so it really didn't matter. But the Dems would have likely kept going full speed and not even bothered yelling "brace for impact".
     
  3. maxinger

    maxinger

    upload_2025-4-4_14-52-17.jpeg

    Economy will suffer initially.

    Then it will / will never bloom.


    Do nothing and China will overtake the US in a few months time.
     
    Real Money likes this.
  4. maxinger

    maxinger

    upload_2025-4-4_14-56-10.jpeg
     
  5. Japanese proverb... it's hard to take anything the Japanese say seriously when they lost WW2 by stepping on the toes of a giant. Now, they are America's bitch. So much for wisdom and success
     
    Last edited: Apr 4, 2025
  6. S2007S

    S2007S

     
    Sprout and Pantalaimon like this.
  7. Picaso

    Picaso

    Take away the politicos and there's no two sides.

    This is like saying "I have the flu, so it doesn't matter if I get Ebola, AIDS or cancer".

    The answer to a real problem (and like every other country, the US has some problems) is not a fake solution that makes things worse.

    One of decades of prosperity, low unemployment, high stock prices and no major war? Not perfect, but tell me in a year or two (or four) if you're better off.
     
  8. People seem to forget that Trump is a trader, and has never cared about other people.
    So he is doing anything in his power to dump the market so he can buy cheap.
    Look at his buddies, like Buffet, they are sitting on a pile of cash, ready to buy after everything goes belly up.

    You guys wanted a trader in the government, well there you have it.
     
    TheDawn and schizo like this.
  9. S2007S

    S2007S

    Did any economists and professional economic scholars sit down with this administration to really do the math and see where this actually beneficial to our future economic growth or did he just wake up and announce tarriffs ????
     
    schizo likes this.
  10. sridhga

    sridhga


    There is trade deficit in goods. But if you look at services and investments there is really no deficit. In the case of China they do not allow free flow of investments from the USA. For example they don't have Amazon, Uber etc. So deficit for China must be fixed somehow. But the rest of the world buys many American services and do have easy flows for investment. Tariffs will are not an answer for such countries. In the case of trade with those countries comparative advantage is at play. Hence tariffs cause business loss.
     
    #10     Apr 4, 2025
    billv, aja, NoahA and 2 others like this.