I'm pretty sure his trade policy is just a form of mercantilism. Having a stockpile of money is a good thing for a person, so why not for a country? Except that it's even more silly than 18th century mercantilism, because he wants to keep paper/account balances in the country rather than gold or silver. I propose the term fiat-mercantilism or neo-mercantilism.
I agree with you with regards to Trump's actual mind state, but perhaps Caplan's really more talking about "the rationalization that the rest of the upper administration tells themselves", versus Trump himself.
That was my first thought too. He talked about a strategy of bringing dollars into the US and the parallels to mercantilist goals were obvious, but instead of that, he sums it as "This is obviously Keynesianism!"
If we are missing anything, it is this: Since the whole world values Gold, mercantilism at least has the benefit of pulling in something that everyone else also wants. Of course, contra that: the US Dollar is also valuable in much of the world. *shrug*
Trump’s goal isn’t to boost aggregate demand, though. That’s just an intermediate metric he uses when it’s convenient to his true goal of autarky and domination. He views trade as a dom-sub relationship and nothing else.
Fair but practically speaking he's not wrong on that. One of the biggest economic fictions modern economist push is economics isn't zero sum between individual perr units though we all understand it really is sans some convoluted narratives and tortured usage of common words. Sure there are exceptions such as proportion rising ride, general inflation, etc but those are the exceptions, not the rule.
So when I go to the supermarket and trade $1 for a can of beans, I'm not better off with the beans than with the $1? Why then did I do it? And why did the supermarket accept the trade if they're not better off by doing so?
Either one or both parties is very very confused about their own interests, or trade is really positive sum.
Let me make my point very clear. Trades by definition are voluntary, which means both parties think they are better off. They have both gained. Positive + positive is positive. Trade is win-win, not zero sum.
And as far as I know, just about everything in economics concerns trade in one form another, such as jobs.
The exception is everything government does, which by definition is coercive, not voluntary, not trades, not win-win, and in fact negative sum.
I wish we could just discuss criticisms like this instead of arguing whether Trump is Hitler. There is lots to criticize about the man, yet any criticism seems an implicit endorsement of the "worst human being ever" view while agreeing with one aspect of what he does makes you all-in on his economic policy and all else somehow. Alas!
"In fact, America’s best-case scenario is that we can persuade the rest of the world to sell us infinite stuff in exchange for green pieces of paper that we print at near-zero cost."
Essentially turning the US into a natural resource exporter like Saudi Arabia, giving us Dutch Disease.
I think there's a very simple explanation. A thriving business has high market share. Lots of investors want to buy its stock. If an American business is doing lots of exports, it has relatively high global market share. If foreigners want to invest, that demonstrates optimism about the business. As a businessman it's natural to see things through this lens.
Replacing all of our industries with "exports" of US dollars is like getting all of your calories from Oreos. Cheap, tasty, convenient, sure. Not good for your health in the long run though.
"I really don’t know how to translate textbook econ into Trump Thought. If you’re up to the task, please help me in the comments."
Huh? You see the world sending us stuff for free like a giant Santa Claus, and conclude that it's identical to US sending the world stuff, and then derive consequences from that? That seems the opposite of the obvious conclusion. I don't get that connection at all.
It’s not “for free”. We sell assets and incur debts that theoretically have to be paid off one day.
So either one day we have to have dramatically lower consumption to pay it back or we have to go through a painful default that harms everyone.
If these debts were incurred in order build up assets with the ROI to pay them off that would be one thing. But it kind of feels like the borrowing was used to fund wasteful consumption in the form of entitlements, Eds/meds foolery, and wars.
A case could be made that the USA remains “the best of a bad bunch” for investment compared to Europe (lol) and China. We do have a tech sector that could theoretically be looted to pay some of these debts if AI pays off. And our birth rate is…better than the rest.
Here is an alternative explanation. East Asians don’t know what to do with themselves. They know how to mass produce manufactured goods to export to us, which they can improve efficiency but rarely create new categories. Out of ideas for domestic investment and most importantly *unable to fuck* and produce a new generation, they work a 9-9-6 trying to accumulate dollars that can theoretically pay for their retirements one day (good luck). It would probably be better for them to invest in having more kids than more export subsidies, but they got fucked up societies (and hey we are only better relatively).
It seems to me that this is a bad equilibrium on all sides. One societies toxic habits enabling the toxic habits of another and vice versa.
"You see the world sending us stuff for free like a giant Santa Claus, and conclude that it's identical to US sending the world stuff"
Where did I say that? I claim they're very different. Subsisting on the free stuff is like a couch potato who survives on Oreos. Sending the world stuff is like starting a new workout program.
I edited one of my sentences in the original comment to try to improve the clarity.
Imports are not “for free”. We sell assets and incur debts that theoretically have to be paid off one day.
So either one day we have to have dramatically lower consumption to pay it back or we have to go through a painful default that harms everyone.
If these debts were incurred in order build up assets with the ROI to pay them off that would be one thing. But it kind of feels like the borrowing was used to fund wasteful consumption in the form of entitlements, Eds/meds foolery, and wars.
A case could be made that the USA remains “the best of a bad bunch” for investment compared to Europe (lol) and China. We do have a tech sector that could theoretically be looted to pay some of these debts if AI pays off. And our birth rate is…better than the rest.
Here is an alternative explanation. East Asians don’t know what to do with themselves. They know how to mass produce manufactured goods to export to us, which they can improve efficiency but rarely create new categories. Out of ideas for domestic investment and most importantly *unable to fuck* and produce a new generation, they work a 9-9-6 trying to accumulate dollars that can theoretically pay for their retirements one day (good luck). It would probably be better for them to invest in having more kids than more export subsidies, but they got fucked up societies (and hey we are only better relatively).
It seems to me that this is a bad equilibrium on all sides. One societies toxic habits enabling the toxic habits of another and vice versa.
You repeated this 3 times and none of them make any sense.
Imports don't lead to debts. They require the transfer of money (assets), but you can import without going into debt. And I am not sure which debt you are talking about, Federal debt or individual debt? The Federal debt is because our government is dumb. Individual debt may or may not be due to buying imports, but it would be even worse buying more expensive local goods.
Neither debt has anything to do with imports. Overconsumption? Sure. But not particularly related to imports.
It’s not “for free”. We sell assets and incur debts that theoretically have to be paid off one day.
So either one day we have to have dramatically lower consumption to pay it back or we have to go through a painful default that harms everyone.
If these debts were incurred in order build up assets with the ROI to pay them off that would be one thing. But it kind of feels like the borrowing was used to fund wasteful consumption in the form of entitlements, Eds/meds foolery, and wars.
A case could be made that the USA remains “the best of a bad bunch” for investment compared to Europe (lol) and China. We do have a tech sector that could theoretically be looted to pay some of these debts if AI pays off. And our birth rate is…better than the rest.
Here is an alternative explanation. East Asians don’t know what to do with themselves. They know how to mass produce manufactured goods to export to us, which they can improve efficiency but rarely create new categories. Out of ideas for domestic investment and most importantly *unable to fuck* and produce a new generation, they work a 9-9-6 trying to accumulate dollars that can theoretically pay for their retirements one day (good luck). It would probably be better for them to invest in having more kids than more export subsidies, but they got fucked up societies (and hey we are only better relatively).
It seems to me that this is a bad equilibrium on all sides. One societies toxic habits enabling the toxic habits of another and vice versa.
Trump's recent comment that "we make a lot of money" from higher oil prices would seem to support this interpretation. He sees only the increase in revenue to US oil producers and none of the cost.
This reconstruction makes sense of what otherwise looks like confusion. Trump’s view isn’t a theory of trade at all; it’s a theory of cash-flow stimulus applied to a nation-state. Once you see that he’s treating the U.S. like a firm trying to maximize incoming dollars, the rest of the pattern follows.
The deeper issue is that this worldview treats “money flowing in” as a proxy for national strength, which is why the standard economist’s explanation — that imports are benefits and dollars are costless to create — doesn’t register. It’s not a disagreement about trade mechanics so much as a disagreement about what counts as winning. Translating between those two frames may be harder than translating between economic models.
When foreigners invest in the U.S., they own a part of this country. Farmland is an often mentioned example. That's a strange ideology for someone with xenophobic tendencies.
He doesn't believe foreigners are actually subject to the rule of law when they do business or are present in the US, so he views their ownership as subject to his whims.
Yes, he holds a B.S. in Economics which he received at Wharton, where one of his professors allegedly, but repeatedly, stated that Donald Trump was "the dumbest g*ddamn student I ever had".
Eh. There's a lot of social rewards to be had for exaggerating how dumb he was, or inflating how much worse he was than other mid students, all these years later.
The best way I can think of to translate econ into vernacular is to quote Donald Duck: "Money is just paper until you spend it." Trump's trade policy will end up converting the US into the global equivalent of Ebenezer Scrooge, who lived a dull and spartan lifestyle because he wouldn't spend his money on anyone, even himself!
> Trump doesn’t know and doesn’t care about the “trade deficit” as economists define it.
To be fair to Trump : modern definition would be unrecognizable to 19th century economists too.
I will refrain from calling it "retarded definition", because economics is not my trade so who am I to disagree, but gosh my heart is with classical economists.
One mustn’t confuse political speech, given on the stump, for a politician’s actual beliefs on the matter. The political speech is for political support, not policy.
I'm pretty sure his trade policy is just a form of mercantilism. Having a stockpile of money is a good thing for a person, so why not for a country? Except that it's even more silly than 18th century mercantilism, because he wants to keep paper/account balances in the country rather than gold or silver. I propose the term fiat-mercantilism or neo-mercantilism.
No, you don't understand mercantilism. A stockpile of money is not good for a country, it is good for a government who wants to spend it on war.
I agree with you with regards to Trump's actual mind state, but perhaps Caplan's really more talking about "the rationalization that the rest of the upper administration tells themselves", versus Trump himself.
That was my first thought too. He talked about a strategy of bringing dollars into the US and the parallels to mercantilist goals were obvious, but instead of that, he sums it as "This is obviously Keynesianism!"
If we are missing anything, it is this: Since the whole world values Gold, mercantilism at least has the benefit of pulling in something that everyone else also wants. Of course, contra that: the US Dollar is also valuable in much of the world. *shrug*
Trump’s goal isn’t to boost aggregate demand, though. That’s just an intermediate metric he uses when it’s convenient to his true goal of autarky and domination. He views trade as a dom-sub relationship and nothing else.
Sometimes his entire outlook on life seems to be their gain is our loss, and being the boss is all that counts.
Fair but practically speaking he's not wrong on that. One of the biggest economic fictions modern economist push is economics isn't zero sum between individual perr units though we all understand it really is sans some convoluted narratives and tortured usage of common words. Sure there are exceptions such as proportion rising ride, general inflation, etc but those are the exceptions, not the rule.
So when I go to the supermarket and trade $1 for a can of beans, I'm not better off with the beans than with the $1? Why then did I do it? And why did the supermarket accept the trade if they're not better off by doing so?
Either one or both parties is very very confused about their own interests, or trade is really positive sum.
Trade is not zero sum, and borders are irrelevant to that. How much of economics does NOT deal with trade?
Let me make my point very clear. Trades by definition are voluntary, which means both parties think they are better off. They have both gained. Positive + positive is positive. Trade is win-win, not zero sum.
And as far as I know, just about everything in economics concerns trade in one form another, such as jobs.
The exception is everything government does, which by definition is coercive, not voluntary, not trades, not win-win, and in fact negative sum.
What's a perr unit?
I wish we could just discuss criticisms like this instead of arguing whether Trump is Hitler. There is lots to criticize about the man, yet any criticism seems an implicit endorsement of the "worst human being ever" view while agreeing with one aspect of what he does makes you all-in on his economic policy and all else somehow. Alas!
"In fact, America’s best-case scenario is that we can persuade the rest of the world to sell us infinite stuff in exchange for green pieces of paper that we print at near-zero cost."
Essentially turning the US into a natural resource exporter like Saudi Arabia, giving us Dutch Disease.
I think there's a very simple explanation. A thriving business has high market share. Lots of investors want to buy its stock. If an American business is doing lots of exports, it has relatively high global market share. If foreigners want to invest, that demonstrates optimism about the business. As a businessman it's natural to see things through this lens.
Replacing all of our industries with "exports" of US dollars is like getting all of your calories from Oreos. Cheap, tasty, convenient, sure. Not good for your health in the long run though.
"I really don’t know how to translate textbook econ into Trump Thought. If you’re up to the task, please help me in the comments."
What does textbook econ say about fostering industries which can compete internationally? I found this book quite persuasive in arguing that tariffs can be helpful for this: https://www.amazon.com/Bad-Samaritans-Secret-History-Capitalism/dp/1596913991
Huh? You see the world sending us stuff for free like a giant Santa Claus, and conclude that it's identical to US sending the world stuff, and then derive consequences from that? That seems the opposite of the obvious conclusion. I don't get that connection at all.
It’s not “for free”. We sell assets and incur debts that theoretically have to be paid off one day.
So either one day we have to have dramatically lower consumption to pay it back or we have to go through a painful default that harms everyone.
If these debts were incurred in order build up assets with the ROI to pay them off that would be one thing. But it kind of feels like the borrowing was used to fund wasteful consumption in the form of entitlements, Eds/meds foolery, and wars.
A case could be made that the USA remains “the best of a bad bunch” for investment compared to Europe (lol) and China. We do have a tech sector that could theoretically be looted to pay some of these debts if AI pays off. And our birth rate is…better than the rest.
Here is an alternative explanation. East Asians don’t know what to do with themselves. They know how to mass produce manufactured goods to export to us, which they can improve efficiency but rarely create new categories. Out of ideas for domestic investment and most importantly *unable to fuck* and produce a new generation, they work a 9-9-6 trying to accumulate dollars that can theoretically pay for their retirements one day (good luck). It would probably be better for them to invest in having more kids than more export subsidies, but they got fucked up societies (and hey we are only better relatively).
It seems to me that this is a bad equilibrium on all sides. One societies toxic habits enabling the toxic habits of another and vice versa.
"You see the world sending us stuff for free like a giant Santa Claus, and conclude that it's identical to US sending the world stuff"
Where did I say that? I claim they're very different. Subsisting on the free stuff is like a couch potato who survives on Oreos. Sending the world stuff is like starting a new workout program.
I edited one of my sentences in the original comment to try to improve the clarity.
Imports are not “for free”. We sell assets and incur debts that theoretically have to be paid off one day.
So either one day we have to have dramatically lower consumption to pay it back or we have to go through a painful default that harms everyone.
If these debts were incurred in order build up assets with the ROI to pay them off that would be one thing. But it kind of feels like the borrowing was used to fund wasteful consumption in the form of entitlements, Eds/meds foolery, and wars.
A case could be made that the USA remains “the best of a bad bunch” for investment compared to Europe (lol) and China. We do have a tech sector that could theoretically be looted to pay some of these debts if AI pays off. And our birth rate is…better than the rest.
Here is an alternative explanation. East Asians don’t know what to do with themselves. They know how to mass produce manufactured goods to export to us, which they can improve efficiency but rarely create new categories. Out of ideas for domestic investment and most importantly *unable to fuck* and produce a new generation, they work a 9-9-6 trying to accumulate dollars that can theoretically pay for their retirements one day (good luck). It would probably be better for them to invest in having more kids than more export subsidies, but they got fucked up societies (and hey we are only better relatively).
It seems to me that this is a bad equilibrium on all sides. One societies toxic habits enabling the toxic habits of another and vice versa.
You repeated this 3 times and none of them make any sense.
Imports don't lead to debts. They require the transfer of money (assets), but you can import without going into debt. And I am not sure which debt you are talking about, Federal debt or individual debt? The Federal debt is because our government is dumb. Individual debt may or may not be due to buying imports, but it would be even worse buying more expensive local goods.
Neither debt has anything to do with imports. Overconsumption? Sure. But not particularly related to imports.
Other countries bust their ass to give us real stuff for the paper money that we print for free. That's the deal. We're already winning.
It’s not “for free”. We sell assets and incur debts that theoretically have to be paid off one day.
So either one day we have to have dramatically lower consumption to pay it back or we have to go through a painful default that harms everyone.
If these debts were incurred in order build up assets with the ROI to pay them off that would be one thing. But it kind of feels like the borrowing was used to fund wasteful consumption in the form of entitlements, Eds/meds foolery, and wars.
A case could be made that the USA remains “the best of a bad bunch” for investment compared to Europe (lol) and China. We do have a tech sector that could theoretically be looted to pay some of these debts if AI pays off. And our birth rate is…better than the rest.
Here is an alternative explanation. East Asians don’t know what to do with themselves. They know how to mass produce manufactured goods to export to us, which they can improve efficiency but rarely create new categories. Out of ideas for domestic investment and most importantly *unable to fuck* and produce a new generation, they work a 9-9-6 trying to accumulate dollars that can theoretically pay for their retirements one day (good luck). It would probably be better for them to invest in having more kids than more export subsidies, but they got fucked up societies (and hey we are only better relatively).
It seems to me that this is a bad equilibrium on all sides. One societies toxic habits enabling the toxic habits of another and vice versa.
You write, "If foreign dollars really poured into the U.S."
What are "foreign dollars?"
I presume dollars spent by foreigners.
Thanks. That's probably right.
Trump's recent comment that "we make a lot of money" from higher oil prices would seem to support this interpretation. He sees only the increase in revenue to US oil producers and none of the cost.
This reconstruction makes sense of what otherwise looks like confusion. Trump’s view isn’t a theory of trade at all; it’s a theory of cash-flow stimulus applied to a nation-state. Once you see that he’s treating the U.S. like a firm trying to maximize incoming dollars, the rest of the pattern follows.
The deeper issue is that this worldview treats “money flowing in” as a proxy for national strength, which is why the standard economist’s explanation — that imports are benefits and dollars are costless to create — doesn’t register. It’s not a disagreement about trade mechanics so much as a disagreement about what counts as winning. Translating between those two frames may be harder than translating between economic models.
When foreigners invest in the U.S., they own a part of this country. Farmland is an often mentioned example. That's a strange ideology for someone with xenophobic tendencies.
He doesn't believe foreigners are actually subject to the rule of law when they do business or are present in the US, so he views their ownership as subject to his whims.
Donald Trump holds a degree in economics from the Wharton School of the University of Pennsylvania.
Yes, he holds a B.S. in Economics which he received at Wharton, where one of his professors allegedly, but repeatedly, stated that Donald Trump was "the dumbest g*ddamn student I ever had".
Eh. There's a lot of social rewards to be had for exaggerating how dumb he was, or inflating how much worse he was than other mid students, all these years later.
The best way I can think of to translate econ into vernacular is to quote Donald Duck: "Money is just paper until you spend it." Trump's trade policy will end up converting the US into the global equivalent of Ebenezer Scrooge, who lived a dull and spartan lifestyle because he wouldn't spend his money on anyone, even himself!
corollary: mercantilism was proto-keynesianism. Mercantilist policies expanded the local money supply, boosting local aggregate demand?
> Trump doesn’t know and doesn’t care about the “trade deficit” as economists define it.
To be fair to Trump : modern definition would be unrecognizable to 19th century economists too.
I will refrain from calling it "retarded definition", because economics is not my trade so who am I to disagree, but gosh my heart is with classical economists.
One mustn’t confuse political speech, given on the stump, for a politician’s actual beliefs on the matter. The political speech is for political support, not policy.
Your last point (#4) seems like something that would appeal to Trump