Imagine a world where we have full employment. Everyone has a job working 30, 40 sometimes 60 hours a week. In that world you have a family and you’re bringing home a pay check every week and you’re not homeless.
But you’re not rich either. You’re not even middle class. You’re poor.
You can’t afford anything more than your mortgage, gas for your car and food on your table.
The price of a desktop computer has gone from $300 to $1000. The price of a cheap 55 inch 4K tv has gone from $350 to $800.
Why would this happen? What would cause such a reversal? Another crash in the market?
Well in this world a political party that existed, in part, on the adherence to global free trade is no more. What stands in its place is a party devoted to its leader, the President of the United States.
That President believes more in conspiracy theories than actual fact. He is a President hostile to free trade and the minimum wage, alike.
That President fills his cabinet with key advisers who are like-minded rich executives. Each are successful business people who are ignorant when it comes to economics.
The President, his party and the key advisers begin working overtime to set policy that reverses decades of free trade, free market principals.
The result is a trade war with countries like China that ship inexpensive products to this country. Through tariffs a recession ensues and the price of these goods goes through the roof.
And the America public can look in store windows but cannot buy.
What are the chances of something like this happening?
Well, Business Insider has a great write up on Peter Navarro, the man Trump has tapped to be head of the National Trade Council.
For those who don’t know, Wikipedia describes the national trade council as the:
… principal forum used by the President of the United States to advise on innovative strategies in trade negotiations, coordinate with other agencies to assess U.S. manufacturing capabilities and the defense industrial base, and help match unemployed American workers with new opportunities in the skilled manufacturing sector.
It is important to note the man helping to set trade policy has a ph. D, but it’s not in trade. His critics say, his research does not meet scientific standards.
I believe the views expressed by Trump and Navarro are in line with the views many rich people have of the economy.
Republicans like the President have, for years, talked about the trade deficit being one of the major factors in preventing growth.
Donald Trump, during the campaign, frequently chastised American politicians for allowing countries like Mexico and China to take advantage of us. In his world view, America is the victim and the only way to start “winning” it to reverse the trade deficit.
Concerns over trade deficits, much like our military, speak to a sense of national pride and American superiority.
According to Linette Lopez of BI, Navarro posted an OP ed in the Wall Street Journal over the weekend. And what an essay it was:
…Navarro argues that having a trade deficit — buying more goods than you’re selling to your trading partners — hurts growth and that the best way to grow faster is by closing this deficit. That is to say, selling more goods than you buy.
…. that means fewer cheap South Korean flat-screen TVs until we can figure out a way to sell the South Koreans more stuff.
Experts in the field, however, see things a little differently. Growth comes from providing the labor force with enough money to buy goods and services. That money then goes to businesses who then spend it on paying for more labor so that they can provide more goods and services and so forth and so on.
As Lopez points out, we only need look to the Great Depression for answers as to why the experts are right and Navarro is wrong:
…during the Great Depression, the US had a trade surplus. It didn’t matter that we were selling to the rest of the world like crazy because no one here had any purchasing power. What we import and export takes a seat way in the back compared with whether American citizens can buy things, go places, and make our economy move.
To make matters worse, as BI points out, Navarro believes the real threat is America is that we’re not building enough battleships and the country will be defenseless for it.
I think by now any forth grader will tell you the real fights of today are in cyberspace and with drone strikes.
But as Fareed Zakaria pointed out on his weekend show, no one questions America’s military might. Even military experts believe the answer to a stabilized world and peace is to create more peace makers and experts on diplomacy, not a bigger better military.
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And as Trump plans to spend more money on the military to build the ships to fight the “strategic rival” he and Navarro see as buying up our “… companies, technologies, farmland, food-supply chain — and ultimately controls much of the U.S. defense-industrial base” the country suffers.
Rising deficits, trade wars, rising price of goods and services, for what? Trump’s approach to both the military and the economy is based on fear and pride.
In the eyes of the President the country is weak and has weak leaders and we need to do everything we can to look strong.
Who says Donald Trump isn’t a conservative?