Congress should have taken the power to levy tariffs away from the President a long time ago. Using the fig leaf of "national security", Trump used a tool past Presidents used as a scalpel and wielded it like a hatchet. Biden hasn't changed anything of substance Trump did, and has actually expanded tariffs without Congressional action.
The increase in executive power, and the associated decrease in Congressional power, is bad for our country. Unfortunately, there is no real prospect for this to reverse -- each side hopes to control the Presidency and, therefore, wield the most power possible for a full four years. Once in power, the President's Party won't vote to reduce executive power, and even if the opposition party controlled both houses of Congress, the President would just veto any bill taking executive power away from the Presidency. The only still-functioning restraint on executive power is the courts, which explains much of the current vitriol directed toward the court system today.
As usual, the solution is for Congress to do its job.
Mostly all of Federal dysfunction is rooted in Congress abdicating it's authority and responsibilities as the Article 1 branch, which has forced the Executive and Judicial branches to contort themselves in bizarre and unintented ways to maintain a government that is basically functional and responsive to changes over time.
It's a hard problem to solve without any great obvious ideas as far as I can tell, but nuking the filibuster or at least returning it to a talking filibuster would go a long way. Eliminating low-cost veto points would force Congress to act - no throwing up hands and making excuses to do nothing!
I don't see how eliminating the filibuster solves the problem that congress can't reasonably engage in trade negotiations and if you need someone to do that they need the power to make good on promises and threats?
The filibuster has some other bad features and some good ones but doesn't seem like the problem here.
Your points are valid for tarriffs specifically but I'm broadening John's point around Congress abdicating its authority via inaction, and saying that eliminating veto points that encourage action is probably a necessary but not sufficient corrective to get Congress moving again.
If you mean the lack of Congress passing bills generally I agree that eliminating the filibuster could help during periods of one party control. Though that's the rare situation.
But I don't see it helping much with the tendency to assign powers to the executive. For starters, that's the only hope of ensuring your policy will be implemented in a way that responds to changing conditions after you lose control of all three branches. And lately it's really the Hastert rule that is the big stumbling block.
Indeed, I'd argue that the filibuster offers unappreciated benefits in that it creates the opportunity for senators to trade something of value without getting slammed for it by the ideologes in their party (it's harder to critisize someone for not fillibustering).
I'm not saying it's a good thing but I think it's complicated because we have a biased sample of only really seeing it when it's used to block things and not when it affects backroom deals.
Though I do support efforts to make the fillibuster more personally difficult (you gotta get up and actually speak). More generally, I support rule changes that require physical cloistering of the houses until certain bills like the budget get passed.
You’re wrong about the source of the disfunction. The source is the lack of benefit in the minds of political leaders in allowing the other side to get anything that can be spun as a “win”. Both sides play the same game. It was put forth most nakedly in my memory by Harry Reid during GW Bush’s attempt to get Social Security on a fiscally sound basis; roughly Reid said, we don’t have to propose anything.
Clearly the bs works, or it wouldn’t be the default position for both parties. Allowing a 51 vote majority will eliminate what little incentive now exists for negotiation and compromise. It is also a means of guaranteeing wild swings in policy, a sure and certain mechanism to reduce prosperity.
It would absolutely not 'guarantee wild swings in policy'. There are 160 democracies on planet Earth, and 159 of them allow their legislature to pass laws with a simple majority. They seem to be functioning fine. The US system already has an unusual amount of veto points- 2 equally powerful chambers, plus a President with a veto. Most developed countries are parliamentary, so their legislature and executive are one and the same- no presidential veto. And most of them either are unicameral, or if they're bicameral the upper house is weaker. So even without the filibuster, the US would *already* be a global outlier in terms of how hard it is to pass laws. That's before we even get into federalism, or our unusually strong system of judicial review.
Also, 49 US states do not have the filibuster (Nebraska, which is unicameral, does). Do they experience 'wild swings in policy'?
Again, every other democracy in the world, including all of the other developed ones, don't require a supermajority to pass laws and don't have 'wild swings' in policy. It's not that hard to learn how other countries function
I would also argue that actually allowing parties to pass their policies into law more easily would, in the long run, have a stabilizing effect that would reduce wild swings in policy. Right now, Republicans have spent a decade running on extreme and wildly unpopular policies in many instances (repeal Obamacare, go after abortion rights, etc. etc. etc.), but they haven't suffered horrible electoral outcomes for this because a) their base eats it up and loves it, and b) more moderate voters don't care because they know republicans won't ever actually pass any of this stuff. So the b) voters can keep voting for them as a check against Dem. excess and sleep just fine at night. But if Republicans could actually pass more laws then voters would either reward them because it would turn out great or reject them and switch votes if it's (as I predict) a disaster. Either way, having a legislature that actually DOES things is a good outcome because it allows for voters to more accurately express their preferences.
Overall it does not seem like the US function worse than other countries, in fact we are thriving! So the argument that 159 other countries do it is not very persuasive. Are all 159 noticeably better run? Seems unlikely.
1. I don't agree that the US is better run than all of the other democracies in the world. I don't think most people would agree with that, so you're on a bit of an island there if you do
2. Using the filibuster on every law proposed by the other party dates back to McConnell in 2009. So most of the US' history, rise to becoming the world superpower etc., did not feature the filibuster being used the way it is now
But the filibuster isn't the problem here. The problem is a number of issues that can't be fixed absent fundamental constitutional reform.
1) In many of these circumstances -- including tariffs -- it's necessary to engage in negotiation. Meet with other countries and offer to reduce these tariffs if you reduce those.
That kind of international relationship is supposed to be conducted by the executive who in our country is the president so they need to be given the power to follow through on deals they make.
SCOTUS has essentially ruled that it would be unconstitutional for congress to give that power to itself (eg let the speaker decide or even just one house alone). Only the president can wield the power without the need to pass a bill through both houses and get it signed so you just can't avoid it being the president.
2) Congress has the incentive to avoid being the ones blamed for bad things. Filibuster or no the easy way to do that is just to hand the power to the president and put them on the hot seat.
3) Often the best way to both get political insulation and to get the best result is to hand the decision off to technocratic experts.
Again the constitution (and reasonablish SCOTUS rulings given what it says) binds our hands by putting the president in charge of the executive branch so the agencies get to be under their control.
The filibuster, like many other problematic features of government, works fine if you think each party’s main goal is to make things better, and they just think the other party is sometimes focusing on the wrong issues, and only rates doing things to make things worse. But once partisan conflict becomes more directly zero sum, these things get used in extremely counterproductive ways.
The filibuster has existed forever, but the specific filibuster strategies in use today are new. As recently as the Bush administration, there was major legislation that wasn’t filibustered. It was only recently that the parties realized that the filibustering everything is a good strategy. It’s not possible for everyone to unlearn that.
Makes me wonder if the filibuster - along with other procedural roadblocks and constitution-based logjammery - has led to a decline in the quality of candidates we get running for house and senate. These people don’t start with the expectation of actually make things better, so they’re more and more just fame-seekers and demagogues…
Feel like the “housing theory of everything” to describe economic forces at large deserves a political corollary; “the filibuster theory of everything”.
Being tongue in cheek here (think housing/NIMBY is more impactful than the filibuster). Nonetheless I actually kind of think we underestimate the damage the filibuster imposes because of downstream effects. There is the obvious bill “X” gets defeated because senator “Y” filibusters. But I think it really affects what bills get introduced in the first place. I think we underestimate for example how much this actually leads to either maximalist rhetoric of or help the careers of those who just want to be media stars (Matt Gaetz or MTG). If bills have no chance of passing why bother focusing on policy at all OR go ahead and advocate for maximalist policy to placate your hardcore base.
But the upshot is just a structural system that means the Presidency just gets more empowered. And the shame is; I think way too many senators like it that way (read stories that with Sinema and Manchin gone, how other senate democrats are wary of nuking the filibuster. People like Manchin were proving tons of cover to other Dem senators).
Harris takes the presidency, the GOP takes back the Senate, and Dems take back the House. No substantial legislation gets done in two years, Dems take the Senate in the midterms hold the House and abolish the Filibuster.
What are the odds that happens? Seems like the likeliest rout towards fillibuster reform.
I think the filibuster is gone at the next trifecta for either party - I forget if it’s already gone for all nominees, but it will be the next time the president and senate are the same party with or without the house.
2026 Senate map might be tough to gain ground on. Democrats could pick up Maine, but have to defend Georgia. Beyond that...North Carolina? Alaska? There is always the chance the GOP could nominate more clowns and commit more own goals, of course.
The budget loop hole on the filibuster takes the wind out of those sails though. A trifecta lets you adjust taxes and determine spending, which covers most government action. But it precludes all efforts to enact reforms of any kind.
First, I agree on the filibuster. But I don't think it comes into play with respect to this topic. The incentives are pretty well laid out: If one party controls all House, Senate and Presidency, then no reason to restrict Presidential Power. If one controls Presidency but the other controls Congress, then the President will veto a bill reducing his power. No filibuster required.
The solution is for the courts to continue to rule that the expansive executive power grabs are unconstitutional, as many are (DACA, for example). Unfortunately, the wheels of justice grind very slowly.
It's true that bills explicitly aimed at "reducing the president's power" are pretty rare, but I think people in Congress can see the benefit of passing a law mandating what they want (which is hard to undo) versus having the president do it by executive action (easily undone the next time the other party gets the presidency).
I think we basically agree, and I was saying filibuster reform would probably help get Congress acting again. I think the "executive power grabs" are a partially if not largely result of Congressional inaction in situations where someone had to do something.
The Founders clearly meant for Congress to be the most powerful branch and the branch most jealous of its power which is clearly not the case. Hence bizarre Executive and Judicial distortions. I think strong Congressional leadership would go a long way towards fixing government dysfunction.
I know Matt has very different take at the state level, where he has advocated for a very strong executive and relatively weak legislatures because something around low turnout state legislative elections vs higher profile "you know what you are voting for" governor elections. I am wary of that, I think intuitively it's better to have power vested in a legislature rather than an executive.
The Founders did mean for Congress to be the most powerful branch, but they were so ambivalent about democratic process that they created an unimaginably obstructive Senate as a "check" on the exercise of almost all legislative and executive powers, then placed the Senate in the hands of the state legislatures, the hottest beds of corruption, self-dealing and parochial interest then in existence. Everything about the Senate, from the horrific Great Compromise that distorts American democracy to this day, to the impossibility of rapid change in composition given long, staggered terms, to the supermajority requirements (even without the filibuster) for impeachment, treaties, etc. is a cancer on our system.
So we ignore the persistence of legal slavery for far longer than our European cousins tolerated it, then a bloody civil war to make it illegal, then nearly 100 more years of de facto racial oppression, all brought to us courtesy of the US Senate? Or the depredations of the Gilded Age Senate, or the mass creation of fake states in 1889-90 whose co-equal status in the Senate thwarts the rational reflection of the public will in national politics to this day? Many people survive cancer or live with it as a chronic disease. That doesn't mean we shouldn't try to eradicate cancers whenever and wherever we find them.
Yes, the system was largely designed for stability, and in that I think it’s succeeded. The real problems began, IMO, when they fixed the number of House seats. The House was meant to really support relatively local interests - now that really varies a lot by state.
IMO there should be a House district per 100,000 citizens - it would make for a massive legislative body with greater diversity of interests that would be impossible to control by internal politicking. A Speaker would have less ability to hold bills from a vote, and party Whips would have less ability to keep people on the party line. I think if we had this, it would break the stranglehold of the two party system, because you’d have legislators more beholden to their constituents and they’d likely form coalitions on more specific issues.
I think you really get most of the benefits of a parliamentary system just by making the House simultaneously more in touch with the issues their voters care about, and too large for party officials to be able to get a candidate primaried for not being sufficiently ideologically pure.
3,300 or so Congressional districts would loosen the ability of parties and PACs to target enough races, because primarying, say, 10 House races, would not make much of a difference.
"The solution is for the courts to continue to rule that the expansive executive power grabs are unconstitutional, as many are (DACA, for example). Unfortunately, the wheels of justice grind very slowly."
Also, that can only happen when the president is a Democrat (Muslim (country) ban and border wall funding, for examples).
I think that the lack of competition parties have over the majority of seats (partly gerrymandering, but mostly political self sorting) and at the same time, the parties being relatively balanced is far more to blame. There are way more seats where the greater risk is the primary than the general election. And primary voters generally hate when you compromise with the other side. So if you want to get re-elected in most seats, it's safer to talk trash about the other side on major issues and only do compromise on low visibility items (secret congress).
That’s why I argue that the House needs to have enough districts so that no seat represents more than 100,000 people. This would make for a lower house that would be far more difficult for the parties to control. You can spend national party money to unseat, say, 20 House seats. But if we had a House district for each 100,000 people, the House would consist of over 3,200 congresspeople. There’s no way the national parties could use their resources to primary enough legislators who don’t toe to the party line.
This is flat out wrong. People mostly vote party for their congressional rep now, if you multiply that out to 3200 reps it would be even more so. National parties could easily fund those races as they would now have lots more people raising money. Since the only vote that would matter for most of them would be the leadership votes at the beginning of the session, individual members would have no power outside the leadership and the way to get into leadership would likely be who could raise the most money.
I also don't think you recognize how expensive that would be. Half a billion dollars in salaries, and probably a billion in pension, benefits, security. The average member has about 15 staff, are we slashing that or are we adding another 50k employees with attendant salaries, benefits and costs? If so, add another couple billion in costs there. Do they all need offices - yes, so throw some more money at that.
Right, but if you remove their staff then you make them much less capable than current members. So you have a lot of people who are less informed about legislation, less capable of drafting legislation, etc. Which will make them more dependent on the ones who make it to leadership or to lobbyists.
Safe incumbents are a long-term feature of House elections; it's nothing new.
If you look at House elections from 1974 through 1998, the average net gain for the victorious party was 17.3 seats. And for 2000 through 2022? 18.2 seats.
Turnover was only somewhat higher way back in the past, with an average of 21.4 seats switching between 1950 and 1972, and that's with basically no party turnover, with Democratic domination of the House.
Also, note that a lot of these party switches are not from defeating incumbents, but from capturing open seats as members retire or seek higher office.
1) Incumbents greatest challenge will not be from a member of the other party, but a member of their own party who says they are not conservative/progressive enough.
2) The parties are very balanced. If one party dominated, it would be easier for productive members to accomplish things and sideline the non productive members from either party. But because there is very close parity, you need the non productive members of you party to maintain control (e.g. Republican speaker problems), but when out of power, you punish members of the party who want to be productive with the party in power because you want them to fail so you can have power.
Combine those two things and you have really strong forces pushing against the desire to be productive the would negate the filibuster.
I also don't think people who want to remove the filibuster realize just how much stuff can be done by a party in power willing to push the boundaries + its easier to tear things down than build them up. Matt and others would say that a party will pay the electoral price for doing something dramatic. But there is this constant concern that Republicans are going to do something crazy - and then acting like they won't do something crazy. Will Republicans repeal the entire EPA and all the rules? If Democrats come back to power 2 or 4 years later, how long would it take to rebuild that organization and its regs?
Not to mention the permission it gives to extremist candidates to run on their most extreme platforms to appeal to their base because they know they'll never actually come up for a vote. On the flip side, voters can elect candidates that espouse certain policies they despise because they know those policies have no chance of passing.
>>Feel like the “housing theory of everything” to describe economic forces at large deserves a political corollary; “the filibuster theory of everything”.<<
I like it, but it's not radical enough for my tastes. I'd go with "the Madisonianism theory of everything." lol.
If this Supreme Court wants to be truly serious about making sure powers are properly delegated to the correct branches, it would make clear that the spending authority is kept within Congress via appropriations.
If trump wins and attempts to do this, we are really going to need either a costal port heavy state with large trade exposure, or an individual shipping group itself, to want to sue on Article I/non-delegation grounds. The problem is I don't think you become the Attorney General of California because you want to sue the president using an originalist interpretation of Article I in order to protect global multinational corporations and the free trade consensus...
The current SCOTUS has no interest in this. It is exclusively interested in aggregating power to itself by limiting Congressional prerogatives, limiting the normal and sensible application of fact-based regulatory authority in the executive, and establishing vague and unprecedented doctrines that require it alone to opine on the constitutionality of questions well beyond its expertise or interest. It is the black hole of democratic policymaking and republican governance, absorbing everything and shedding no light on anything.
I wonder what incentives drive this legislative abdication of power? The end of horse trading (pork barrel politics), the increased cost of political campaigns, the ever lengthening campaign season, the stagnant size of the House/Senate, the entrenched geographic partisanship caused in part by gerrymandering, a broken news media aiming only to tar and feather rather than inform….
I think a larger Congress lowers the political stakes of any single race. It would also give room for legislatures to form more targeted and specialized committees.
Then again we might be seeing a reaction to the complexity disease that leads to systems collapse.
>>I wonder what incentives drive this legislative abdication of power?<<
At least with respect to tariffs, I reckon there's a plausible national security justification for giving the President the power to use trade as a tool—really a weapon—of national defense. But yes, it's been abused. And the reason it hasn't been reined in is: in our Nation's Capital you need a trifecta to get anything done, but a party that possesses a trifecta doesn't want to weaken its own president.
You could allow the President to establish tariffs unilaterally for say three months but require that Congress approve them thereafter. That gives the President tactical flexibility but keeps ultimate control with Congress. But clearly Congress doesn't want control.
Worth trying, but that was the theory behind the War Powers Act to keep Presidents from unilaterally involving us in wars, and it hasn't worked the way it was intended.
Agreed but "Congress should do its job" deserves some scrutiny. Why isn't it doing its job? Lots of veto points, single member elections, wild disproportion in the Senate, primary elections, it's a long list.
Ironically, they gave the power to the executive as a tactic to reduce tariffs so that no member had to vote for it and face the wrath of their electorate.
Like all delegations of power - it cuts both ways, the power to do things you like comes with the power to do things you don't like.
Congress gave the power to the President because when Congress had the power it ground the institution to a halt in a greed-filled festival of logrolling and graft.
Logrolling and graft, for all their problems, usually lubricate the system and make it move. It was when they banned earmarks that things came more to a halt.
I think the history is that the sheer volume of goods from local producers that came under tariffs produced an exquisite and hugely time-consuming process that ground things to a halt. This is relevant history when one considers the claims (both the phony arguments invented by the SCOTUS and the approving comments by those who think this represents the “founders intent”) that Congress needs to produce all the regulations that derive from its legislation.
"The SEC is well-established and knows what it’s doing."
As opposed to its competitors, who clearly do not respect their citizenry within their domestic boundaries with their ridiculous expansions. Some belie their very geographic names! Others belie their name by just simply not knowing how to count.
Just wanted to share that I’ve been reading Matt Klein’s “Trade Wars are Class Wars” for a class and in chapter one he notes that Ricardo’s arguments about free trade assumed no free movement of capital. In Ricardo’s day that wasn’t really possible anyways but today it is. Klein also argues that containerized shipping has made it possible to spread manufacturing processes across multiple countries in a way that wasn’t possible basically anytime before the 1970s.
Enjoying the rest of the book (on chapter 3 now) but just wanted to note out that these two points don’t really pop up in a lot of the trade discourse (that I’ve seen at least) and I think that they are a point against the free trade consensus. Though not an argument for 10% or 20% tariffs on everything; more an argument for strategic tariffs on key Chinese industries like what the Biden WH has done.
Slogan I coined: “The future is going to be made in America. But if China wants to make my t-shirts they can go right ahead.”
Good point that the increase in trade has a lot more to do with costs of shipping and telecommunications than it does with trade policy (or with capital mobility; I do not agree with that part.)
BTW that increased trade reduces the relative income of the scarcer factor of production, i.e. labor in a rich country like the US, is a standard result of trade theory, "Stolper-Samuelson Theorem." Increased trade should not necessarily harm manufacturing. That result was a result of the dollar overvaluation produced by US fiscal deficits.
Ricardo’s case for the benefits of free trade is that England specializing in wool and Portugal specializing in wine is good for both because they can trade. But if capital is mobile then English industrialists would just produce both wine and wool in Portugal. Ricardo says this is impossible to do (at the time it wasn’t feasible to run a company in Portugal from England) and he assumes no English industrialists would prefer to invest abroad rather than at home for patriotic reasons. But he says that if this were to happen it would be bad for England.
What I’m saying is that the original argument for free trade is premised on capital not being particularly mobile, because labor is not very mobile either.
I’m not sure this ends up being a good argument against free trade. If capital and labor are both mobile, then both will move to where they can be more productive. If Portugal is a better place to do everything than England, then more people will move to Portugal and be happier. Isn’t that good?
Not if you think England is better than Portugal in a general sense and that the benefit of the latter at the expense of former is intrinsically undesirable.
China might have plenty of manufacturing jobs, but China is also not a country that we want to see empowered relative to the United States.
I thought the Ricardian comparative advantage argument was that even if Portugal is a better place to do everything than England, it still makes sense to do things were England has a comparative advantage (i.e., to avoid Portugal doing things it is good at, but not best at).
Even if Portuguese *people* are better at everything than English *people* it makes sense for English people to do the things that are their comparative advantage. Presumably some amount of this also holds true for the land. But if all people are more productive in Portugal, and land isn’t a significant factor of production, then the comparative advantage point might not apply.
Sure, if people could move to Portugal. But in practice it’s easier to invest your money abroad if you’re rich than to move abroad to work if you’re not.
Not saying this means we should have no free trade. But I think it’s an important point against the “neoliberal” consensus that free trade is always good.
If Portugal is good at growing sheep but better at growing wine grapes, then they are better off devoting all the farmland to grapes, and buying the wool from England, whose rocky soil and cold weather won't produce wine grapes. This is the point of comparative advantage: even though I'm better than you at two things, we're both better off if I delegate the thing to you that I'm worse at. My time is not infinite.
Yeah if it’s about the productivity of the land - the land can’t move, so it might as well do something that is its comparative advantage. But if it doesn’t need many people, then the people can mostly move to where they are most productive.
I haven’t read the book, but this talk about free movement of capital doesn’t make sense to me. Diminishing returns should always apply as capitalists decide where to invest.
Return on the marginal Portuguese investment will only be higher than English returns if Portugal is a developing country that lacks capital. In that case, yes, English/Portuguese capitalists will preferentially invest in Portugal rather than in England, but only until the return on the marginal Portuguese investment has been driven down to the same level as return on the marginal English investment and both countries are in equilibrium.
While that helps Portugal, I can’t see how it hurts England in the long term, or hurts the case for free trade.
A big part of the argument in chapter 2 of the book is that historically a lot of foreign investment has been driven by fads rather than an objective search the highest ROI in a country with a relative lack of capital.
In the 101 textbook model investors just “know” where the highest ROI is. In real life that’s a lot more fuzzy.
Matt is of course spot on about the cost of tariffs. As always, I encourage those who do so to note that part of the cost lies in shifting resources from producing exports and non-tariffed goods and services via the effect on the exchange rate. The cost to consumers is not the only cost.
At the same time, we need to recognize that the idea of restricting imports is not a brand-new idea that Trump dreamed up all by himself or with the help of Oren Cass and Peter Navarro. A generation of Progressives have bemoaned NAFTA, and the accession of China to the WTO, and successfully opposed the TPP. And if I am not mistaken, the Biden administration did not remove import restrictions except for a few surgically crafted restrictions to reduce dependence on China and China interdictable sources in case of a conflict. “Industrial policy” if it makes any sense at all should be done with production subsidies that do not give greater incentives for selling to the US market over exporting and do not reduce US demand for the output of favored activities.
It would help if Progressives got their own thinking straight in order to more correctly oppose Trump.
[Similar things could be said about Trump’s deficit increasing tax cuts, but that’s a topic for a different post.]
The saddest thing about the death of the TTP was that it was designed to make it more expensive to trade with China than a lot of our friends in Latin America and Asia.
Or Trump could leave and we could go back to the GOP being the party of intelligent economic policy. Seems easier than teaching economics to progressives.
Purely as an aside, it is very funny when someone thinks they can "gotcha" you with "such-and-such in SUBJ 101", when any expert in any interesting field knows that 101-level material is at the "lies-to-children" degree of nuance--intentional oversimplifications to make basic material accessible to the layperson.
Organic chemistry is such a horrible discipline to study. It's like economics, but for the physical sciences. You can explain everything after the fact, but there's almost no predictive power to extrapolate to a new situation.
I suppose you refer to “valence” and the Bore atom model, but that’s not the best way to move on to quantum theory or even more sophisticated classical electrochemical effects.
Feynman has a wonderful quantum explanation of how ordinary reflection works. It does not talk about little photon balls bouncing off of surfaces of course, but rather why it looks that way.
As a college writing teacher I ask my students to raise their hands if they were ever taught that you can’t start a sentence with “because.” Almost all of them do.
I sympathize with the middle and high school teachers who spread incorrect information—they're trying to give the kids simple rules they can follow to avoid the most egregious errors. The ones who make it to college are sophisticated enough to learn the truth.
I think it’s really funny that someone who made his wealth borrowing money for real estate and then screwing over the creditors is opposed to running a trade deficit with a country he hates. From my ignorant perspective running a trade deficit with China is great if you’re antagonistic towards the country (ignoring supply chain issues). The US gets real stuff (machine tools, toys, electronics, photovoltaics) and China gets an electronic IOU that the US can easily screw them on later.
Strongly disagree. The US gets stuff; China gets the ability to make stuff, decide who gets stuff, decide what other countries need to do if they want the stuff, etc.
This would be fine if China didn’t get so good at making stuff (skills, infrastructure and economies of scale), and the US so bad, that we couldn’t make the stuff instead if China decides to exploit its manufacturing monopoly power - which they definitely will!
If things get ugly, China stops getting ious. We stop getting stuff, including all the stuff we need to make stuff.
We’re also seeing how manufacturing begets innovation and industry dominance. China dominates new manufacturing-related sectors (EVs, solar, drones, etc.) The US still has advantages in some sectors (esp. aircraft and chips), but it looks like that’s just a legacy of manufacturing dominance from decades ok that is degrading over time.
I don't disagree regarding the deindustrialization. It's what I was getting at when I mentioned supply chain issues. In my opinion, "the West" (ie the United States, Canada, and Western Europe) has ended up with an economic system that is overly weighted towards services--especially net negative services like law. Actually making things is clearly important.
I also agree about the path dependency risks of EVs and drones. Both product families are complex and involve a huge supply chain with a bunch of sophisticated manufacturing. There is clearly a risk of the US and Europe ending up in China's current position regarding semiconductors. I'm less worried about photovoltaics. From my understanding the supply chain for manufacturing the panels is much shorter and easier to steal in the case that China decides to stop subsidizing the rest of the world's transition to solar. The US has sufficient expertise in the other aspects of solar (eg large scale commercial installations) because they're not as amenable to being imported.
I think China's role in this is exaggerated and makes the public ignore the other causes of deindustrialization. For example, financing capex is obscenely expensive for a lot of businesses. My uncle has ran a small food processing company for the last 15 years and his biggest barrier to scaling was being unable to secure decent financing for buying additonal processing equipment. If the least unreasonable financing option for a business that has been cashflow positive for over a decade is buying industrial equipment on a credit card and doing a series of balance transfers, it's not suprising that so many businesses are allergic to doing actual industry. His business only really took off financially when he decided to stop trying to actually scale the food processing itself and shifted towards being a middleman and marketing operation and farming out the processing to large food processing companies.
The same thing is true for siting a facility. He ended up moving states on the West Coast to buy an old factory that had enough similar equipment that he could minimize the permitting needed to expand. It was easier for him to lose most of his employees and uproot his kids than to install the equipment needed at his old site.
I'm currently living in China for a semester and it appears to be the opposite. Everything is capital-intensive to an unreasonable degree. My current favorite piece of anecdata is going to a restaurant that had a ton of complicated machinery to simplify cooking that also had 2 employees dedicated to acosting people in the street to come in and 6 waiters for a restaurant with less than 20 tables.
If the US wants to reindustrialize, we have to do a lot more than put up barriers to buying from China.
I agree with all that, though think it's inseparable from the "benefit" of us getting cheap stuff in exchange for IOUs. This is a big part of what's driven our economy to be service-heavy. China's done the opposite, including kneecapping industries that don't fit the goal.
I wish we'd do the same. I agree that law is particularly bad in that it siphons off a ton of productive capacity from the economy and is, indeed, net negative. It'd be better if we paid most of those Harvard Law grads seven figures to dig holes and fill them back in.
As stated, I have an "ignorant perspective" on how the treasury bills work in practice (as opposed to an abstraction). How difficult would it be for the US to identify the treasury bills held by China and specifically default on those while leaving the rest alone?
I don't know how easy it would be to identify the holder of Treasury securities. But even a partial default would be ruinous for the US credit rating, bond interest rates, interest on the debt...
Though if it's in the context of the United States being at war with China (even a limited war), there's probably some more flexibility there. If you call it a "sanction" all sorts of things become possible.
"We're not defaulting on our debt, we're paying it into a special account held in trust for China but which they aren't allowed to have access to right now because we are seizing their money because we're at war with them."
> He’s a mercantilist who believes that countries get rich by accumulating money, so he believes it’s good to export (foreigners give you money) and bad to import (you give foreigners money), and tariffs are a perfect tax because they raise revenue while deterring people from engaging in the bad activity of giving money to foreigners.
Matt nails it here. Never forget: Trump is a poor man's idea of a rich man. The median MAGA person looks at Trump and sees Scrooge McDuck - literally swimming in a sea of gold coins. MAGA types actually believe Trump is a billionaire in the sense that he has at least one billion dollars in cash and cash equivalents. That's why the New York verdicts offend Trump so much - it lifts the veil on his personal finances. When the Court orders Trump to pay $500 million, he can't just open his checkbook and write a check for the amount, because it would bounce from here to Neptune. Sure, he *CAN* raise the funds necessary, but it would look bad to his voters if he had to sell Trump National Doral to pay his court fines.
Eh, I think that the fines offend him because while he is a billionaire, he's not a decibillionaire or a centibillionaire and $500M is a LOT of his net worth.
Most people here seem to be fundamentally Bush Republicans in policy preference, who now oppose the Iraq War because everyone else does but have implemented zero intellectual safeguards to avoid falling for the next scare. The “better Republican Party” people want is just the 2003 GOP with evangelicalism swapped for LGBTQ.
The revived Bush Republicans would get us into another 2008, too, since they know the correct classical liberal things to _say_ about the economy, even while throwing out laissez-faire principles whenever they and their good old boys can make a buck from it or bribe swing staters with handouts like the Iowa corn ethanol crap.
No! GWB had probably the worst of the Republican tax cuts for the rich and deficits bills, more revenue lost and less reduction of business taxation, Medicare drug expansion (good) but not paid for with new taxes, so more deficit. Yes. he was less bad than Trump on trade and was positively correct, if pusillanimous, on immigration.
Subsidies? Relatively lax regulation of financial institution risk?
Yes too lax and both banks and borrowers paid for that policy mistake, but NB that was not the cause of the 2008 financial crisis and decade of under-target inflation.
Put me in the camp that it’s a crazy idea, but Trump is not actually going to do it. Just as giving all first time homebuyers $25k and forgiving student loans are stupid AF. And legislating “equity” is communistic and the worst idea ever proposed in America, and I don’t think Kamala would actually do any of that stupid stuff, even though she has either proposed or praised all of it.
A big difference is that the president can pass tariffs unilaterally, while all that other stuff has to be passed through Congress first, which of course is much more difficult.
Unless you find a provision in the law or presidential discretion that you discover now means that the president can do what they want without Congress - DACA, border wall, student loan forgiveness, etc.
Maybe Kamala can't get an abortion law through Congress, but what if the Secretary of health discovers that hospitals that don't provide abortions are violating a health reg and sues to enforce that regulation.
That's a great question. I assume that a conservative supreme court would not uphold it. But I also assumed that a conservative supreme court would strike down DACA and they didn't, so...
I think we are underestimate how much of this is just one big bribery scheme to line Trumps pockets. Impose across the board tariff and then magically see carve outs for certain Middle East dictatorships or carve outs for particular goods that are essential for stuff like, I dunno, electric cars. Trump has always seen all relationships as pure transactional. Makes sense he sees the presidency no different
Also, the mercantilist mindset is one of his few consistent beliefs. Go look up interviews from the 80s (there is one with Oprah going around). Replace Japan with China and it could be the same speech today.
The (dare I say) Russian style path to awful kleptocracy is a very real possibility
A plurality, maybe of majority of Americans, believe that all politicians are obligate liars. Therefore, they believe Harris is lying when she says she won't do radical leftwing things, and also believe that Trump is lying when he says he will do radical rightwing things.
It is a shame [Boo Warren-Sanders-AOC!] that it would occur to anyone that Democrats would do radical left-wing things that Harris would need to deny. It’s something Democrats need to work on.
Can you point to a politician that proposed "legislating equity" and say what that proposal consisted of, even at the level that Trump is describing his proposed tariff policy?
The 25k first time home buyers is actually limited to first generation home buyers, ie your parents don't own a home. And I suspect more fine print, so even if it passes it will be fairly "targeted", ie small.
The Trump proposal could be enacted without congressional approval. And the scale of the potential distortion on the economy is in no way comparable. Paired with his inevitable extension of the original Trump tax cut, assuming a Republican trifecta, it's a huge shift of taxes onto middle class.
Tell you what, let's trash the targeted first time homebuyer's subsidy in exchange for getting rid of the targeted home mortgage interest deduction and call it even then.
Talking about Trump's plan as if it's serious feels like being the guy who doesn't get the joke.
It's like writing a 10k-word carefully researched essay about why Mexico is not going to pay for the wall, or why he's not going to pay off the debt in 4 years, or why he's not a fit 210 pounds,
There is a reason that Trump's rich supporters are ignoring this. They know that if he gets elected and he brings up the topic again, they can simply distract him with something else like he's a toddler.
I love that the pro-Trump argument is that he's mentally deficient. Honestly, it's hard to disagree with, but it relies on him being mentally deficient in a just-so super convenient way, which seems like less of a good bet.
Still, although perhaps not the biggest reason not to vote for him, the fact that even his supporters have to argue that he’s either too full of shit or too unfocused to implement the primary economic idea he discusses should be disqualifying.
>> There is a reason that Trump's rich supporters are ignoring this
That reason is that they're confident they're in on the gig and will gain a net advantage from whatever gets implemented.
IMO, it's very unlikely that this is a bluff or something unserious. It's such a perfect Trumpian scheme that he won't be able to resist doing it.
It'll let him preside over a parade of heads of state and business execs streaming into the White House, slobbering all over him with flattery and offering gifts in exchange for special treatment.
There's no way he doesn't enact some version of this. The only question is what it looks like exactly and who gets special treatment.
Agree 100% that this is the thrust of the plan -- make people beg, reward friends, punish foes, blackmail for petty but public-facing "wins", a little graft on the side. It all seems so obvious and predictable.
Except that Trump has advisers, who are likely to get powerful positions within his administration, who really do believe this stuff, and really want to enact universal tarriffs.
Except of course, not "Universal", really, because there will be carve outs and exceptions for people who pay Donald Trump money. So, curiously, lots of parts needed to build Teslas (or Space X rockets) will certainly be exempt.
On the accounting identity, Stephen Gordon (an economist at the University of Laval who runs the Worthwhile Canadian Initiative blog) has a good explanation. Imports are subtracted from total consumption, investment, and government expenditure **to figure out how much of that is domestic**, because that can't be measured directly. https://x.com/stephenfgordon/status/1839822699943866725
The fact that Navarro is an econ professor who does not understand why the GDP equation works how it does (for the reasons MY outlined) used to drive me crazy. The fact that he was somehow the main economist in Trump's orbit was honestly pathetic. How often does a top ranking economics adviser get sentenced to prison?
Suppose Bernie Sanders says “I will enact single payer healthcare.” It’s easy to take this literally and spit out a parade of horribles. For there to literally be a single payer, you would have to ban private insurance and out of pocket spending. This means fee for service assisted living would be illegal, you couldn’t pay for plastic surgery, and you could only get ozempic or psycho therapy if you met the government criteria. Of course, Bernie is far more interested in guaranteeing that the government pays for necessary procedures than banning the private sale of discretionary ones. When time came to draft the bill, the plastic surgeons, assisted living facility owners and psychotherapists would all lobby and get carveouts to allow the private purchase of their services when the government won’t pay.
Trumps tariffs would be similar, but he’s not as cuddly as Bernie, so it’s tempting to be less charitable. Trump is interested in taxing finished, manufactured goods. When the time came to pass his massif tariff bill, all the manufacturing companies that need to import intermediate goods would lobby for carveouts. Moms who like buying cheap Bangladeshi clothes for their kids might get a carveout. Because Trump’s whole point is to reinvigorate American manufacturing (and it’s not clear he cares about textiles) most companies with s legitimate need to import intermediate goods would get a carveout. A huge amount of effort would go into this process and there would be graft. Yet there is also a lot of medicaid fraud and insurance fraud and we basically deal with those and don’t worry too much.
The chances the “pure form” of Trump’s tariff proposal are enacted are basically zero, so Matt is beating up a straw man. When politicians talk in sound bites, sober analysts who want to compare politicians should be somewhat charitable.
In the event he wins, Trump may or not follow through with the literal thrust of his vows on trade. But I thought the point of Matt's piece is, on International economics, Trump is saying the equivalent of "2+2=5."
He's just incredibly poorly informed on basic matters of factual information.
The only problem here is that the reason the "pure" form would be unlikely to be enacted is that Congress wouldn't go for it - that's where you get all the carveouts you described. Hence why you described it as a "tariff bill."
However, Trump certainly believes, and it's not implausible to believe, that the President has the unilateral ability to place tariffs. Trump could do it himself on day one, on a whim, if he wanted to.
Section 232 of the Trade Expansion Act of 1962 gives the president the right to levy tariffs upon the secretary of commerce’s recommendation without asking Congress (this was the source of Trump's tariffs on steel and aluminum). Section 301 of the Trade Act of 1974 gives a similar power to impose tariffs based on unfair trade practices by foreign nations on the advice of the Office of the US Trade Representative (this was the source of Trump's tariffs on China). Section 201 of the 1974 act also gives broad power to place tariffs against imports that threaten injury to domestic companies (again, Presidential discretion).
Now there would be court battles about the scope of Congressional delegation, there are always court battles, but the one thing there won't be is a bill like the one you describe here where carveouts can be fought for. So the chance is not "basically zero", it literally comes down to whether Trump personally can be talked down from the ledge when he's in office and with the unilateral power to set tariffs.
Exactly, and I was going to make the same analogy you did. The Democrats' analog to Trump's dumbed-down trade rhetoric is Democratic dumbed-down rhetoric around healthcare, specifically Medicare for All.
Both are cases of politicians responding to deeply felt sentiment among many people that there is something seriously wrong here in this area, that ordinary politicians are too craven, unimaginative, or powerless to solve.
What tariff and Medicare for All rhetoric lack in smart, careful, nuanced thinking, they makes up for in being simplistic and easy to communicate in a sound bite. Even though both are in fact very poorly thought through and would result in endless amounts of distortion, corruption, and dysfunction.
It communicates to voters that this is a problem that politicians have ignored for too long, needs to be addressed in a way that is visible and legible to voters, and this politician understands that and won't let that urgency die in a morass of making the perfect the enemy of the good.
We have single payer healthcare in the US for a wide variety of populations. That is not how it works for any of them. In fact, Sanders named his proposal after one of them: Medicare for All.
I hate the idea of Medicare for All for many reasons, but I agree that David Abbott's description of the problems with it is inaccurate. For instance, Canada has the equivalent of Medicare for All, but there is still fee-for-service plastic surgery.
Interestingly, people seem to think that Medicare for All is the norm in western democracies, but the truth is that Canada is an outlier. Most western democracies have highly regulated, subsidized non-governmental health insurance systems. Or, like the UK, they permit private insurance to exist alongside a public option.
This is a strawman. No one defines single payer healthcare the way you have defined it. Everyone knows it means “single payer for all covered services.”
"Because Trump’s whole point is to reinvigorate American manufacturing"
I was nodding along with you up to this point. Trump isn't ideological; he's narcissistic and transactional. He'll give carve outs to whoever bribes him the most or kisses his ass most passionately. Anything else is a random side effect.
Medicare for All requires a law so it requires negotiation so there would be details and tweaks.
Tariffs are an executive act he can sign personally on day 1, so there would be no details or tweaks until someone convinces him he had a bad idea after the fact.
There is a reason Bernie Sanders is not, and never really was a threat to be, the Democratic nominee for President. For all our faults, we keep our crazies corralled.
If Sanders was nominee I would believe that he would work very hard to enact his vision of single payer, and that he'd be mostly thwarted. But his single payer plan isn't what you describe, but Trump's tariffs are what Matt described, and Trump can act unilaterally in a way that President Sanders could not.
“Trump should be given all the charity on economic theory you would give to Bernie Sanders, who is famously never confused about economic matters” is quite the defense.
I think there’s lots of criticism of Bernie’s healthcare plans. Here’s just one article from 2019, when Bernie was actually running for President, that analyzed his plan and what it would
No one is giving Bernie or any Democrats “grace” on their healthcare plans. And Bernie isn’t running for President. So isn’t it possible that you don’t see the takedowns of Bernie’s MFA plan like you do for Trump’s tariffs because one of those people has 0% chance of being President and one has perhaps better than 50% chance?
The less uniform the tariff, the more damaging it is. [A perfectly uniform tariff combined with a perfectly uniform export subsidy of the same amount (assuming the Fed would allow enough inflation to take care of a one time uniform increase in prices) would produce no distortion at all.]
I appreciate this article this morning. Sometimes the obvious needs to be stated. Even from a pure mercantilist perspective, plenty of our imports are inputs (like the aforementioned steel and lumber) and therefore it's a drag on exports if we tax them.
But man, I am getting tired of "don't worry, the very stupid thing this candidate said won't actually happen" as a defense.
>"And I’m begging those on the right who want to do something to promote American manufacturing or reduce the trade deficit to start saying things that make sense rather than sanewashing Trump’s ideas, which just reflect a widely held misunderstanding and not a real policy perspective at all."
Two recent articles, one from National Review and one from The Dispatch, arguing against Trump's tariffs. But it is not like either of these two publications have any influence within the Trump Cinematic Universe, and Democrats still despise them anyway.
Dominic Pino at NR (writer of one article you linked) is a surprisingly non-hacky guy, but in general the thrust of coverage there is "yeah, Trump's not great, and his ideas are dumb, and he's blowing the race! but man, Kamala won't give interviews, her ideas from 5 years ago were loony, she's rejecting her ideas from 5 years ago so who knows where she stands, and she's a moron." The establishment Right is generally bought in on Trump and is more frustrated with his incompetence than actually concerned about any of his policies.
Question: why did gross national product fall out of favor, to the advantage of gross domestic product? A very early skim of Google and Wikipedia provided a opaque answer, with the best answer my (likely still waking up--ugh, 4:30 AM) mind sees as "because everyone else was using GDP". It strikes me that people who don't fully understand economics, as Matt lays out, overemphasize the D in GDP and just blindly assume that imports subtract from it.
Simply put, GNP and GDP used to be roughly equivalent. When companies started to spread internationally it made accounting more difficult. Furthermore, should we count the value a German worker creates in Germany but for an American company as German income or American income?
Many years ago, I was told in an econ class that GNP dropped out of favor because it less accurately reflected what economic activity was actually going inside a particular country and that was what was actually of most concern to government agencies. Whether that's accurate or not, I do not know.
The difference between GDP and GNP is whatever production is done by local labor on local land for foreign capitalists, and whatever production is done by foreign labor on foreign land for local capitalists. They decided it was better to account production with the land and labor than with the capitalists.
My (highly educated but totally uninformed on the specific question) guess would be that the switch came from the increased focus on jobs as a policy goal. Who cares if Nike is grossing a lot of product in a SE Asian factory if the American factories closed and we lost those good paying American jobs! GDP makes that distinction but GNP sees that as American production either way.
I don’t think that’s entirely crazy, but it misses some nuance. And of course jobs are a means not an end. But it’s an interesting idea to ponder. E.g., is it bad for a community if the locally owned grocery store closes but a Walmart opens and ultimately employs more people and provides more goods and services than the old store? GDP perspective says no, it’s good. But the GNP perspective recognizes that some of the profits are flowing out of the town where before they stayed local.
GDP does recognize the value of the profits staying locally, the local store will have a slightly higher contribution to GDP. It's just weird to think that the entire local value of the store hinges on its ownership.
In retrospect, a store was a particularly bad choice of example because the goods almost all come from elsewhere, and “production” in this case is finicky to measure.
But the same is true for a factory. If there's a locally owned factory in town, and it gets bought by a bigger company from elsewhere, that has a small impact on the economic situation of the town, not a huge one.
Similarly, if there's a factory in town, and it's owned by a foreign company, and then they close the factory, that's a huge hit to the economy. A measure where it doesn't change anything isn't that useful.
Oh, I agree about the economic impact being small. I'm just talking about how the different economic measures would treat the different situations. Suppose the factory has $100k of production this year.
In scenario 1, the factory is purchased by a foreign national but still produces $100k next year, then GDP wouldn't change, but GNP would go down by $100k.
In scenario 2, the factory is closed, but the owner opens a new factory in another country where it produces $100k. GDP would go down by $100k, but GNP would stay the same.
Obviously, these situations could have very different impacts on the local economy, which will be reflected by how they change different measures. If we care most about "jobs" and place, then GDP is the right measure. If we care about "building national wealth" or something, then maybe GNP is a more appealing measure to focus on. I think it's probably just easy to go wrong when you focus too much on contextless measures in the first place.
Congress should have taken the power to levy tariffs away from the President a long time ago. Using the fig leaf of "national security", Trump used a tool past Presidents used as a scalpel and wielded it like a hatchet. Biden hasn't changed anything of substance Trump did, and has actually expanded tariffs without Congressional action.
The increase in executive power, and the associated decrease in Congressional power, is bad for our country. Unfortunately, there is no real prospect for this to reverse -- each side hopes to control the Presidency and, therefore, wield the most power possible for a full four years. Once in power, the President's Party won't vote to reduce executive power, and even if the opposition party controlled both houses of Congress, the President would just veto any bill taking executive power away from the Presidency. The only still-functioning restraint on executive power is the courts, which explains much of the current vitriol directed toward the court system today.
As usual, the solution is for Congress to do its job.
Mostly all of Federal dysfunction is rooted in Congress abdicating it's authority and responsibilities as the Article 1 branch, which has forced the Executive and Judicial branches to contort themselves in bizarre and unintented ways to maintain a government that is basically functional and responsive to changes over time.
It's a hard problem to solve without any great obvious ideas as far as I can tell, but nuking the filibuster or at least returning it to a talking filibuster would go a long way. Eliminating low-cost veto points would force Congress to act - no throwing up hands and making excuses to do nothing!
Someone just break the norm and get rid of the Filibuster. It's simply the root of too much disfunction.
I don't see how eliminating the filibuster solves the problem that congress can't reasonably engage in trade negotiations and if you need someone to do that they need the power to make good on promises and threats?
The filibuster has some other bad features and some good ones but doesn't seem like the problem here.
Your points are valid for tarriffs specifically but I'm broadening John's point around Congress abdicating its authority via inaction, and saying that eliminating veto points that encourage action is probably a necessary but not sufficient corrective to get Congress moving again.
If you mean the lack of Congress passing bills generally I agree that eliminating the filibuster could help during periods of one party control. Though that's the rare situation.
But I don't see it helping much with the tendency to assign powers to the executive. For starters, that's the only hope of ensuring your policy will be implemented in a way that responds to changing conditions after you lose control of all three branches. And lately it's really the Hastert rule that is the big stumbling block.
Indeed, I'd argue that the filibuster offers unappreciated benefits in that it creates the opportunity for senators to trade something of value without getting slammed for it by the ideologes in their party (it's harder to critisize someone for not fillibustering).
I'm not saying it's a good thing but I think it's complicated because we have a biased sample of only really seeing it when it's used to block things and not when it affects backroom deals.
Though I do support efforts to make the fillibuster more personally difficult (you gotta get up and actually speak). More generally, I support rule changes that require physical cloistering of the houses until certain bills like the budget get passed.
Hastert rule is something I forget about but is a very good point.
You’re wrong about the source of the disfunction. The source is the lack of benefit in the minds of political leaders in allowing the other side to get anything that can be spun as a “win”. Both sides play the same game. It was put forth most nakedly in my memory by Harry Reid during GW Bush’s attempt to get Social Security on a fiscally sound basis; roughly Reid said, we don’t have to propose anything.
Clearly the bs works, or it wouldn’t be the default position for both parties. Allowing a 51 vote majority will eliminate what little incentive now exists for negotiation and compromise. It is also a means of guaranteeing wild swings in policy, a sure and certain mechanism to reduce prosperity.
It would absolutely not 'guarantee wild swings in policy'. There are 160 democracies on planet Earth, and 159 of them allow their legislature to pass laws with a simple majority. They seem to be functioning fine. The US system already has an unusual amount of veto points- 2 equally powerful chambers, plus a President with a veto. Most developed countries are parliamentary, so their legislature and executive are one and the same- no presidential veto. And most of them either are unicameral, or if they're bicameral the upper house is weaker. So even without the filibuster, the US would *already* be a global outlier in terms of how hard it is to pass laws. That's before we even get into federalism, or our unusually strong system of judicial review.
Also, 49 US states do not have the filibuster (Nebraska, which is unicameral, does). Do they experience 'wild swings in policy'?
Again, every other democracy in the world, including all of the other developed ones, don't require a supermajority to pass laws and don't have 'wild swings' in policy. It's not that hard to learn how other countries function
I would also argue that actually allowing parties to pass their policies into law more easily would, in the long run, have a stabilizing effect that would reduce wild swings in policy. Right now, Republicans have spent a decade running on extreme and wildly unpopular policies in many instances (repeal Obamacare, go after abortion rights, etc. etc. etc.), but they haven't suffered horrible electoral outcomes for this because a) their base eats it up and loves it, and b) more moderate voters don't care because they know republicans won't ever actually pass any of this stuff. So the b) voters can keep voting for them as a check against Dem. excess and sleep just fine at night. But if Republicans could actually pass more laws then voters would either reward them because it would turn out great or reject them and switch votes if it's (as I predict) a disaster. Either way, having a legislature that actually DOES things is a good outcome because it allows for voters to more accurately express their preferences.
Overall it does not seem like the US function worse than other countries, in fact we are thriving! So the argument that 159 other countries do it is not very persuasive. Are all 159 noticeably better run? Seems unlikely.
1. I don't agree that the US is better run than all of the other democracies in the world. I don't think most people would agree with that, so you're on a bit of an island there if you do
2. Using the filibuster on every law proposed by the other party dates back to McConnell in 2009. So most of the US' history, rise to becoming the world superpower etc., did not feature the filibuster being used the way it is now
Removing legislative veto points is a good idea.
But the filibuster isn't the problem here. The problem is a number of issues that can't be fixed absent fundamental constitutional reform.
1) In many of these circumstances -- including tariffs -- it's necessary to engage in negotiation. Meet with other countries and offer to reduce these tariffs if you reduce those.
That kind of international relationship is supposed to be conducted by the executive who in our country is the president so they need to be given the power to follow through on deals they make.
SCOTUS has essentially ruled that it would be unconstitutional for congress to give that power to itself (eg let the speaker decide or even just one house alone). Only the president can wield the power without the need to pass a bill through both houses and get it signed so you just can't avoid it being the president.
2) Congress has the incentive to avoid being the ones blamed for bad things. Filibuster or no the easy way to do that is just to hand the power to the president and put them on the hot seat.
3) Often the best way to both get political insulation and to get the best result is to hand the decision off to technocratic experts.
Again the constitution (and reasonablish SCOTUS rulings given what it says) binds our hands by putting the president in charge of the executive branch so the agencies get to be under their control.
I agree with you that the only solution I can see is ending the filibuster, but I'm skeptical that's really the answer.
The filibuster has existed nigh on forever. Congress' inability to function is a relatively new phenomenon.
I suppose that means there no one answer, but filibuster reform is the start.
The filibuster, like many other problematic features of government, works fine if you think each party’s main goal is to make things better, and they just think the other party is sometimes focusing on the wrong issues, and only rates doing things to make things worse. But once partisan conflict becomes more directly zero sum, these things get used in extremely counterproductive ways.
The filibuster has existed forever, but the specific filibuster strategies in use today are new. As recently as the Bush administration, there was major legislation that wasn’t filibustered. It was only recently that the parties realized that the filibustering everything is a good strategy. It’s not possible for everyone to unlearn that.
Makes me wonder if the filibuster - along with other procedural roadblocks and constitution-based logjammery - has led to a decline in the quality of candidates we get running for house and senate. These people don’t start with the expectation of actually make things better, so they’re more and more just fame-seekers and demagogues…
Feel like the “housing theory of everything” to describe economic forces at large deserves a political corollary; “the filibuster theory of everything”.
Being tongue in cheek here (think housing/NIMBY is more impactful than the filibuster). Nonetheless I actually kind of think we underestimate the damage the filibuster imposes because of downstream effects. There is the obvious bill “X” gets defeated because senator “Y” filibusters. But I think it really affects what bills get introduced in the first place. I think we underestimate for example how much this actually leads to either maximalist rhetoric of or help the careers of those who just want to be media stars (Matt Gaetz or MTG). If bills have no chance of passing why bother focusing on policy at all OR go ahead and advocate for maximalist policy to placate your hardcore base.
But the upshot is just a structural system that means the Presidency just gets more empowered. And the shame is; I think way too many senators like it that way (read stories that with Sinema and Manchin gone, how other senate democrats are wary of nuking the filibuster. People like Manchin were proving tons of cover to other Dem senators).
Harris takes the presidency, the GOP takes back the Senate, and Dems take back the House. No substantial legislation gets done in two years, Dems take the Senate in the midterms hold the House and abolish the Filibuster.
What are the odds that happens? Seems like the likeliest rout towards fillibuster reform.
The odds of the Dems increasing their hold on the legislature in a midterm under a President Harris are probably minuscule.
Dems gained a Senate seat in 2022. It's definitely possible.
I think the filibuster is gone at the next trifecta for either party - I forget if it’s already gone for all nominees, but it will be the next time the president and senate are the same party with or without the house.
2026 Senate map might be tough to gain ground on. Democrats could pick up Maine, but have to defend Georgia. Beyond that...North Carolina? Alaska? There is always the chance the GOP could nominate more clowns and commit more own goals, of course.
Something weird could happen in Nebraska this year.
My guess is that is a bit overplayed. It's still Nebraska, he'll lose by 5 at best
Even if not, there's no guarantee he'd caucus with Dems or support Dems goals. He could easily be another Manchin/Sinema clone.
The budget loop hole on the filibuster takes the wind out of those sails though. A trifecta lets you adjust taxes and determine spending, which covers most government action. But it precludes all efforts to enact reforms of any kind.
Could abortion or immigration reform break it?
First, I agree on the filibuster. But I don't think it comes into play with respect to this topic. The incentives are pretty well laid out: If one party controls all House, Senate and Presidency, then no reason to restrict Presidential Power. If one controls Presidency but the other controls Congress, then the President will veto a bill reducing his power. No filibuster required.
The solution is for the courts to continue to rule that the expansive executive power grabs are unconstitutional, as many are (DACA, for example). Unfortunately, the wheels of justice grind very slowly.
It's true that bills explicitly aimed at "reducing the president's power" are pretty rare, but I think people in Congress can see the benefit of passing a law mandating what they want (which is hard to undo) versus having the president do it by executive action (easily undone the next time the other party gets the presidency).
I think we basically agree, and I was saying filibuster reform would probably help get Congress acting again. I think the "executive power grabs" are a partially if not largely result of Congressional inaction in situations where someone had to do something.
The Founders clearly meant for Congress to be the most powerful branch and the branch most jealous of its power which is clearly not the case. Hence bizarre Executive and Judicial distortions. I think strong Congressional leadership would go a long way towards fixing government dysfunction.
I know Matt has very different take at the state level, where he has advocated for a very strong executive and relatively weak legislatures because something around low turnout state legislative elections vs higher profile "you know what you are voting for" governor elections. I am wary of that, I think intuitively it's better to have power vested in a legislature rather than an executive.
The Founders did mean for Congress to be the most powerful branch, but they were so ambivalent about democratic process that they created an unimaginably obstructive Senate as a "check" on the exercise of almost all legislative and executive powers, then placed the Senate in the hands of the state legislatures, the hottest beds of corruption, self-dealing and parochial interest then in existence. Everything about the Senate, from the horrific Great Compromise that distorts American democracy to this day, to the impossibility of rapid change in composition given long, staggered terms, to the supermajority requirements (even without the filibuster) for impeachment, treaties, etc. is a cancer on our system.
I don't know. The US seems to have done pretty well over almost 250 years with this "cancer" on our system. Better than most.
So we ignore the persistence of legal slavery for far longer than our European cousins tolerated it, then a bloody civil war to make it illegal, then nearly 100 more years of de facto racial oppression, all brought to us courtesy of the US Senate? Or the depredations of the Gilded Age Senate, or the mass creation of fake states in 1889-90 whose co-equal status in the Senate thwarts the rational reflection of the public will in national politics to this day? Many people survive cancer or live with it as a chronic disease. That doesn't mean we shouldn't try to eradicate cancers whenever and wherever we find them.
Yes, the system was largely designed for stability, and in that I think it’s succeeded. The real problems began, IMO, when they fixed the number of House seats. The House was meant to really support relatively local interests - now that really varies a lot by state.
IMO there should be a House district per 100,000 citizens - it would make for a massive legislative body with greater diversity of interests that would be impossible to control by internal politicking. A Speaker would have less ability to hold bills from a vote, and party Whips would have less ability to keep people on the party line. I think if we had this, it would break the stranglehold of the two party system, because you’d have legislators more beholden to their constituents and they’d likely form coalitions on more specific issues.
I think you really get most of the benefits of a parliamentary system just by making the House simultaneously more in touch with the issues their voters care about, and too large for party officials to be able to get a candidate primaried for not being sufficiently ideologically pure.
3,300 or so Congressional districts would loosen the ability of parties and PACs to target enough races, because primarying, say, 10 House races, would not make much of a difference.
Modern usage of the filibuster dates back to McConnell in 2009, it was not previously used to block literally anything the other party wanted to pass
This, 100%, it was a massive flaw in Madison's ideological views and i can't believe this isn't a more common view.
Having courts react to legislative abdication of responsibility does not resolve the incentive problem. It is at best a bandaid.
"The solution is for the courts to continue to rule that the expansive executive power grabs are unconstitutional, as many are (DACA, for example). Unfortunately, the wheels of justice grind very slowly."
Also, that can only happen when the president is a Democrat (Muslim (country) ban and border wall funding, for examples).
I think that the lack of competition parties have over the majority of seats (partly gerrymandering, but mostly political self sorting) and at the same time, the parties being relatively balanced is far more to blame. There are way more seats where the greater risk is the primary than the general election. And primary voters generally hate when you compromise with the other side. So if you want to get re-elected in most seats, it's safer to talk trash about the other side on major issues and only do compromise on low visibility items (secret congress).
That’s why I argue that the House needs to have enough districts so that no seat represents more than 100,000 people. This would make for a lower house that would be far more difficult for the parties to control. You can spend national party money to unseat, say, 20 House seats. But if we had a House district for each 100,000 people, the House would consist of over 3,200 congresspeople. There’s no way the national parties could use their resources to primary enough legislators who don’t toe to the party line.
This is flat out wrong. People mostly vote party for their congressional rep now, if you multiply that out to 3200 reps it would be even more so. National parties could easily fund those races as they would now have lots more people raising money. Since the only vote that would matter for most of them would be the leadership votes at the beginning of the session, individual members would have no power outside the leadership and the way to get into leadership would likely be who could raise the most money.
I also don't think you recognize how expensive that would be. Half a billion dollars in salaries, and probably a billion in pension, benefits, security. The average member has about 15 staff, are we slashing that or are we adding another 50k employees with attendant salaries, benefits and costs? If so, add another couple billion in costs there. Do they all need offices - yes, so throw some more money at that.
You’re assuming that 1 of 3,200 House reps would need the same staff resources as 1 of 435 House reps. I simply don’t think that’s true.
Right, but if you remove their staff then you make them much less capable than current members. So you have a lot of people who are less informed about legislation, less capable of drafting legislation, etc. Which will make them more dependent on the ones who make it to leadership or to lobbyists.
Safe incumbents are a long-term feature of House elections; it's nothing new.
If you look at House elections from 1974 through 1998, the average net gain for the victorious party was 17.3 seats. And for 2000 through 2022? 18.2 seats.
Turnover was only somewhat higher way back in the past, with an average of 21.4 seats switching between 1950 and 1972, and that's with basically no party turnover, with Democratic domination of the House.
Also, note that a lot of these party switches are not from defeating incumbents, but from capturing open seats as members retire or seek higher office.
Its not safe incumbents.
I would highlight two issues:
1) Incumbents greatest challenge will not be from a member of the other party, but a member of their own party who says they are not conservative/progressive enough.
2) The parties are very balanced. If one party dominated, it would be easier for productive members to accomplish things and sideline the non productive members from either party. But because there is very close parity, you need the non productive members of you party to maintain control (e.g. Republican speaker problems), but when out of power, you punish members of the party who want to be productive with the party in power because you want them to fail so you can have power.
Combine those two things and you have really strong forces pushing against the desire to be productive the would negate the filibuster.
I also don't think people who want to remove the filibuster realize just how much stuff can be done by a party in power willing to push the boundaries + its easier to tear things down than build them up. Matt and others would say that a party will pay the electoral price for doing something dramatic. But there is this constant concern that Republicans are going to do something crazy - and then acting like they won't do something crazy. Will Republicans repeal the entire EPA and all the rules? If Democrats come back to power 2 or 4 years later, how long would it take to rebuild that organization and its regs?
Not to mention the permission it gives to extremist candidates to run on their most extreme platforms to appeal to their base because they know they'll never actually come up for a vote. On the flip side, voters can elect candidates that espouse certain policies they despise because they know those policies have no chance of passing.
>>Feel like the “housing theory of everything” to describe economic forces at large deserves a political corollary; “the filibuster theory of everything”.<<
I like it, but it's not radical enough for my tastes. I'd go with "the Madisonianism theory of everything." lol.
Dylan Matthews wrote a good piece about this yesterday in vox: https://www.vox.com/policy/374102/trump-harris-tariffs-congress
Vox is still a thing?? Cool…
If this Supreme Court wants to be truly serious about making sure powers are properly delegated to the correct branches, it would make clear that the spending authority is kept within Congress via appropriations.
If trump wins and attempts to do this, we are really going to need either a costal port heavy state with large trade exposure, or an individual shipping group itself, to want to sue on Article I/non-delegation grounds. The problem is I don't think you become the Attorney General of California because you want to sue the president using an originalist interpretation of Article I in order to protect global multinational corporations and the free trade consensus...
The current SCOTUS has no interest in this. It is exclusively interested in aggregating power to itself by limiting Congressional prerogatives, limiting the normal and sensible application of fact-based regulatory authority in the executive, and establishing vague and unprecedented doctrines that require it alone to opine on the constitutionality of questions well beyond its expertise or interest. It is the black hole of democratic policymaking and republican governance, absorbing everything and shedding no light on anything.
I wonder what incentives drive this legislative abdication of power? The end of horse trading (pork barrel politics), the increased cost of political campaigns, the ever lengthening campaign season, the stagnant size of the House/Senate, the entrenched geographic partisanship caused in part by gerrymandering, a broken news media aiming only to tar and feather rather than inform….
I think a larger Congress lowers the political stakes of any single race. It would also give room for legislatures to form more targeted and specialized committees.
Then again we might be seeing a reaction to the complexity disease that leads to systems collapse.
>>I wonder what incentives drive this legislative abdication of power?<<
At least with respect to tariffs, I reckon there's a plausible national security justification for giving the President the power to use trade as a tool—really a weapon—of national defense. But yes, it's been abused. And the reason it hasn't been reined in is: in our Nation's Capital you need a trifecta to get anything done, but a party that possesses a trifecta doesn't want to weaken its own president.
You could allow the President to establish tariffs unilaterally for say three months but require that Congress approve them thereafter. That gives the President tactical flexibility but keeps ultimate control with Congress. But clearly Congress doesn't want control.
Worth trying, but that was the theory behind the War Powers Act to keep Presidents from unilaterally involving us in wars, and it hasn't worked the way it was intended.
Very much granted that you could see workarounds to it.
This was basically Charles Ryder's justification for giving Sebastian a few pounds to buy alcohol.
(I know it's stretched, but I just finished Brideshead Revisited and couldn't resist responding to you in some Brideshead-aware way.)
It’s just the nationalization of politics. Americans vote for the President like it’s an elected kingship.
Agreed but "Congress should do its job" deserves some scrutiny. Why isn't it doing its job? Lots of veto points, single member elections, wild disproportion in the Senate, primary elections, it's a long list.
And the power (wherever it came from) that Trump used to compensate soybean growers for the consequences of his tariffs.
Ironically, they gave the power to the executive as a tactic to reduce tariffs so that no member had to vote for it and face the wrath of their electorate.
Like all delegations of power - it cuts both ways, the power to do things you like comes with the power to do things you don't like.
Congress gave the power to the President because when Congress had the power it ground the institution to a halt in a greed-filled festival of logrolling and graft.
Logrolling and graft, for all their problems, usually lubricate the system and make it move. It was when they banned earmarks that things came more to a halt.
I think the history is that the sheer volume of goods from local producers that came under tariffs produced an exquisite and hugely time-consuming process that ground things to a halt. This is relevant history when one considers the claims (both the phony arguments invented by the SCOTUS and the approving comments by those who think this represents the “founders intent”) that Congress needs to produce all the regulations that derive from its legislation.
I think this ultimately illustrates why Presidential systems are bad:
https://www.vox.com/2015/3/2/8120063/american-democracy-doomed
"The SEC is well-established and knows what it’s doing."
As opposed to its competitors, who clearly do not respect their citizenry within their domestic boundaries with their ridiculous expansions. Some belie their very geographic names! Others belie their name by just simply not knowing how to count.
I made a similar comment. How can you take something seriously that doesn’t know the Atlantic from the Pacific?
Or going back to 2010, when 10 became 12 and 12 became 10.
Just a base change.
There are 10 to 12 people in the world, those who understand conference realignment and those who don't.
Just wanted to share that I’ve been reading Matt Klein’s “Trade Wars are Class Wars” for a class and in chapter one he notes that Ricardo’s arguments about free trade assumed no free movement of capital. In Ricardo’s day that wasn’t really possible anyways but today it is. Klein also argues that containerized shipping has made it possible to spread manufacturing processes across multiple countries in a way that wasn’t possible basically anytime before the 1970s.
Enjoying the rest of the book (on chapter 3 now) but just wanted to note out that these two points don’t really pop up in a lot of the trade discourse (that I’ve seen at least) and I think that they are a point against the free trade consensus. Though not an argument for 10% or 20% tariffs on everything; more an argument for strategic tariffs on key Chinese industries like what the Biden WH has done.
Slogan I coined: “The future is going to be made in America. But if China wants to make my t-shirts they can go right ahead.”
Good point that the increase in trade has a lot more to do with costs of shipping and telecommunications than it does with trade policy (or with capital mobility; I do not agree with that part.)
BTW that increased trade reduces the relative income of the scarcer factor of production, i.e. labor in a rich country like the US, is a standard result of trade theory, "Stolper-Samuelson Theorem." Increased trade should not necessarily harm manufacturing. That result was a result of the dollar overvaluation produced by US fiscal deficits.
Not having read that book, why would reducing the friction costs in trade be a "point against the free trade consensus"?
Ricardo’s case for the benefits of free trade is that England specializing in wool and Portugal specializing in wine is good for both because they can trade. But if capital is mobile then English industrialists would just produce both wine and wool in Portugal. Ricardo says this is impossible to do (at the time it wasn’t feasible to run a company in Portugal from England) and he assumes no English industrialists would prefer to invest abroad rather than at home for patriotic reasons. But he says that if this were to happen it would be bad for England.
What I’m saying is that the original argument for free trade is premised on capital not being particularly mobile, because labor is not very mobile either.
I’m not sure this ends up being a good argument against free trade. If capital and labor are both mobile, then both will move to where they can be more productive. If Portugal is a better place to do everything than England, then more people will move to Portugal and be happier. Isn’t that good?
Not if you think England is better than Portugal in a general sense and that the benefit of the latter at the expense of former is intrinsically undesirable.
China might have plenty of manufacturing jobs, but China is also not a country that we want to see empowered relative to the United States.
I thought the Ricardian comparative advantage argument was that even if Portugal is a better place to do everything than England, it still makes sense to do things were England has a comparative advantage (i.e., to avoid Portugal doing things it is good at, but not best at).
Even if Portuguese *people* are better at everything than English *people* it makes sense for English people to do the things that are their comparative advantage. Presumably some amount of this also holds true for the land. But if all people are more productive in Portugal, and land isn’t a significant factor of production, then the comparative advantage point might not apply.
That’s only if the English industrialist can’t move his factory to Portugal. That was Ricardo’s argument.
Sure, if people could move to Portugal. But in practice it’s easier to invest your money abroad if you’re rich than to move abroad to work if you’re not.
Not saying this means we should have no free trade. But I think it’s an important point against the “neoliberal” consensus that free trade is always good.
If Portugal is good at growing sheep but better at growing wine grapes, then they are better off devoting all the farmland to grapes, and buying the wool from England, whose rocky soil and cold weather won't produce wine grapes. This is the point of comparative advantage: even though I'm better than you at two things, we're both better off if I delegate the thing to you that I'm worse at. My time is not infinite.
Yeah if it’s about the productivity of the land - the land can’t move, so it might as well do something that is its comparative advantage. But if it doesn’t need many people, then the people can mostly move to where they are most productive.
Except that if there is limited labor they can't make the same amounts of both that they could if they both specialized.
In a world where capital and labor are both immobile there are less economic distortions than in a world where capital is much more mobile than labor.
That would be my guess.
I haven’t read the book, but this talk about free movement of capital doesn’t make sense to me. Diminishing returns should always apply as capitalists decide where to invest.
Return on the marginal Portuguese investment will only be higher than English returns if Portugal is a developing country that lacks capital. In that case, yes, English/Portuguese capitalists will preferentially invest in Portugal rather than in England, but only until the return on the marginal Portuguese investment has been driven down to the same level as return on the marginal English investment and both countries are in equilibrium.
While that helps Portugal, I can’t see how it hurts England in the long term, or hurts the case for free trade.
A big part of the argument in chapter 2 of the book is that historically a lot of foreign investment has been driven by fads rather than an objective search the highest ROI in a country with a relative lack of capital.
In the 101 textbook model investors just “know” where the highest ROI is. In real life that’s a lot more fuzzy.
T shirts are mostly Bangladesh these days anyway.
Matt is of course spot on about the cost of tariffs. As always, I encourage those who do so to note that part of the cost lies in shifting resources from producing exports and non-tariffed goods and services via the effect on the exchange rate. The cost to consumers is not the only cost.
At the same time, we need to recognize that the idea of restricting imports is not a brand-new idea that Trump dreamed up all by himself or with the help of Oren Cass and Peter Navarro. A generation of Progressives have bemoaned NAFTA, and the accession of China to the WTO, and successfully opposed the TPP. And if I am not mistaken, the Biden administration did not remove import restrictions except for a few surgically crafted restrictions to reduce dependence on China and China interdictable sources in case of a conflict. “Industrial policy” if it makes any sense at all should be done with production subsidies that do not give greater incentives for selling to the US market over exporting and do not reduce US demand for the output of favored activities.
It would help if Progressives got their own thinking straight in order to more correctly oppose Trump.
[Similar things could be said about Trump’s deficit increasing tax cuts, but that’s a topic for a different post.]
The saddest thing about the death of the TTP was that it was designed to make it more expensive to trade with China than a lot of our friends in Latin America and Asia.
Borking TPP was maybe the worst policy related own goal in decades.
And and a demonstration of H. Clinton’s poor political strategy of appealing to the base instead of the center.
Or Trump could leave and we could go back to the GOP being the party of intelligent economic policy. Seems easier than teaching economics to progressives.
Purely as an aside, it is very funny when someone thinks they can "gotcha" you with "such-and-such in SUBJ 101", when any expert in any interesting field knows that 101-level material is at the "lies-to-children" degree of nuance--intentional oversimplifications to make basic material accessible to the layperson.
I have taught Econ 101 and the whole break down of imports and exports into other components was shown in the textbook.
Not Econ 101. Demand curves slope down: allowing more houses to be built does NOT raise prices of housing.
Higher levels of chem classes just start with “that thing you learned earlier? Dumb. Wrong. Bad.”
Xenon fluorides have entered the chat.
Organic chemistry is such a horrible discipline to study. It's like economics, but for the physical sciences. You can explain everything after the fact, but there's almost no predictive power to extrapolate to a new situation.
You mean I did all that electron pushing on diagrams back in college for NOTHING?!? [collapses into chair, sobs quietly]
I suppose you refer to “valence” and the Bore atom model, but that’s not the best way to move on to quantum theory or even more sophisticated classical electrochemical effects.
Feynman has a wonderful quantum explanation of how ordinary reflection works. It does not talk about little photon balls bouncing off of surfaces of course, but rather why it looks that way.
As a college writing teacher I ask my students to raise their hands if they were ever taught that you can’t start a sentence with “because.” Almost all of them do.
Because we do a terrible job of educating the young.
I sympathize with the middle and high school teachers who spread incorrect information—they're trying to give the kids simple rules they can follow to avoid the most egregious errors. The ones who make it to college are sophisticated enough to learn the truth.
Starting sentences with "Because" and "And" is the way of the blogger.
I think this is unfair. I don’t believe cell biology or genetics 101 is “lies for children.” Simplified, sure, but you have to start somewhere.
I think it’s really funny that someone who made his wealth borrowing money for real estate and then screwing over the creditors is opposed to running a trade deficit with a country he hates. From my ignorant perspective running a trade deficit with China is great if you’re antagonistic towards the country (ignoring supply chain issues). The US gets real stuff (machine tools, toys, electronics, photovoltaics) and China gets an electronic IOU that the US can easily screw them on later.
Strongly disagree. The US gets stuff; China gets the ability to make stuff, decide who gets stuff, decide what other countries need to do if they want the stuff, etc.
This would be fine if China didn’t get so good at making stuff (skills, infrastructure and economies of scale), and the US so bad, that we couldn’t make the stuff instead if China decides to exploit its manufacturing monopoly power - which they definitely will!
If things get ugly, China stops getting ious. We stop getting stuff, including all the stuff we need to make stuff.
We’re also seeing how manufacturing begets innovation and industry dominance. China dominates new manufacturing-related sectors (EVs, solar, drones, etc.) The US still has advantages in some sectors (esp. aircraft and chips), but it looks like that’s just a legacy of manufacturing dominance from decades ok that is degrading over time.
I don't disagree regarding the deindustrialization. It's what I was getting at when I mentioned supply chain issues. In my opinion, "the West" (ie the United States, Canada, and Western Europe) has ended up with an economic system that is overly weighted towards services--especially net negative services like law. Actually making things is clearly important.
I also agree about the path dependency risks of EVs and drones. Both product families are complex and involve a huge supply chain with a bunch of sophisticated manufacturing. There is clearly a risk of the US and Europe ending up in China's current position regarding semiconductors. I'm less worried about photovoltaics. From my understanding the supply chain for manufacturing the panels is much shorter and easier to steal in the case that China decides to stop subsidizing the rest of the world's transition to solar. The US has sufficient expertise in the other aspects of solar (eg large scale commercial installations) because they're not as amenable to being imported.
I think China's role in this is exaggerated and makes the public ignore the other causes of deindustrialization. For example, financing capex is obscenely expensive for a lot of businesses. My uncle has ran a small food processing company for the last 15 years and his biggest barrier to scaling was being unable to secure decent financing for buying additonal processing equipment. If the least unreasonable financing option for a business that has been cashflow positive for over a decade is buying industrial equipment on a credit card and doing a series of balance transfers, it's not suprising that so many businesses are allergic to doing actual industry. His business only really took off financially when he decided to stop trying to actually scale the food processing itself and shifted towards being a middleman and marketing operation and farming out the processing to large food processing companies.
The same thing is true for siting a facility. He ended up moving states on the West Coast to buy an old factory that had enough similar equipment that he could minimize the permitting needed to expand. It was easier for him to lose most of his employees and uproot his kids than to install the equipment needed at his old site.
I'm currently living in China for a semester and it appears to be the opposite. Everything is capital-intensive to an unreasonable degree. My current favorite piece of anecdata is going to a restaurant that had a ton of complicated machinery to simplify cooking that also had 2 employees dedicated to acosting people in the street to come in and 6 waiters for a restaurant with less than 20 tables.
If the US wants to reindustrialize, we have to do a lot more than put up barriers to buying from China.
I agree with all that, though think it's inseparable from the "benefit" of us getting cheap stuff in exchange for IOUs. This is a big part of what's driven our economy to be service-heavy. China's done the opposite, including kneecapping industries that don't fit the goal.
I wish we'd do the same. I agree that law is particularly bad in that it siphons off a ton of productive capacity from the economy and is, indeed, net negative. It'd be better if we paid most of those Harvard Law grads seven figures to dig holes and fill them back in.
"... China gets an electronic IOU that the US can easily screw them on later."
Well, not so easily, IMO, without screwing ourselves and a lot of innocent bystanders in the process.
As stated, I have an "ignorant perspective" on how the treasury bills work in practice (as opposed to an abstraction). How difficult would it be for the US to identify the treasury bills held by China and specifically default on those while leaving the rest alone?
I don't know how easy it would be to identify the holder of Treasury securities. But even a partial default would be ruinous for the US credit rating, bond interest rates, interest on the debt...
Though if it's in the context of the United States being at war with China (even a limited war), there's probably some more flexibility there. If you call it a "sanction" all sorts of things become possible.
"We're not defaulting on our debt, we're paying it into a special account held in trust for China but which they aren't allowed to have access to right now because we are seizing their money because we're at war with them."
Right. A key part of a functional payments system is that transactions are final and irreversible.
> He’s a mercantilist who believes that countries get rich by accumulating money, so he believes it’s good to export (foreigners give you money) and bad to import (you give foreigners money), and tariffs are a perfect tax because they raise revenue while deterring people from engaging in the bad activity of giving money to foreigners.
Matt nails it here. Never forget: Trump is a poor man's idea of a rich man. The median MAGA person looks at Trump and sees Scrooge McDuck - literally swimming in a sea of gold coins. MAGA types actually believe Trump is a billionaire in the sense that he has at least one billion dollars in cash and cash equivalents. That's why the New York verdicts offend Trump so much - it lifts the veil on his personal finances. When the Court orders Trump to pay $500 million, he can't just open his checkbook and write a check for the amount, because it would bounce from here to Neptune. Sure, he *CAN* raise the funds necessary, but it would look bad to his voters if he had to sell Trump National Doral to pay his court fines.
Eh, I think that the fines offend him because while he is a billionaire, he's not a decibillionaire or a centibillionaire and $500M is a LOT of his net worth.
I REALLY hate to have to make the argument that Harris is just not nearly as bad as Trump on economics. :(
If we had a better Republican party, Democrats couldn't get away with so much!
Most people here seem to be fundamentally Bush Republicans in policy preference, who now oppose the Iraq War because everyone else does but have implemented zero intellectual safeguards to avoid falling for the next scare. The “better Republican Party” people want is just the 2003 GOP with evangelicalism swapped for LGBTQ.
The revived Bush Republicans would get us into another 2008, too, since they know the correct classical liberal things to _say_ about the economy, even while throwing out laissez-faire principles whenever they and their good old boys can make a buck from it or bribe swing staters with handouts like the Iowa corn ethanol crap.
No! GWB had probably the worst of the Republican tax cuts for the rich and deficits bills, more revenue lost and less reduction of business taxation, Medicare drug expansion (good) but not paid for with new taxes, so more deficit. Yes. he was less bad than Trump on trade and was positively correct, if pusillanimous, on immigration.
I'm willing to throw in unions and expanded CTC as well. But yeah, sounds great!
That seems kind of insane to me, given the Bush admin.'s demand-side housing subsidies, also all the general idiocy.
Subsidies? Relatively lax regulation of financial institution risk?
Yes too lax and both banks and borrowers paid for that policy mistake, but NB that was not the cause of the 2008 financial crisis and decade of under-target inflation.
100%
Put me in the camp that it’s a crazy idea, but Trump is not actually going to do it. Just as giving all first time homebuyers $25k and forgiving student loans are stupid AF. And legislating “equity” is communistic and the worst idea ever proposed in America, and I don’t think Kamala would actually do any of that stupid stuff, even though she has either proposed or praised all of it.
A big difference is that the president can pass tariffs unilaterally, while all that other stuff has to be passed through Congress first, which of course is much more difficult.
But my bothsides!!!!!
Unless you find a provision in the law or presidential discretion that you discover now means that the president can do what they want without Congress - DACA, border wall, student loan forgiveness, etc.
Maybe Kamala can't get an abortion law through Congress, but what if the Secretary of health discovers that hospitals that don't provide abortions are violating a health reg and sues to enforce that regulation.
Yeah, what if? What would ultimately happen to that lawsuit?
That's a great question. I assume that a conservative supreme court would not uphold it. But I also assumed that a conservative supreme court would strike down DACA and they didn't, so...
Student loan forgiveness at least arguably is doable by executive action.
Didn't Biden try this and the court struck it down?
I think we are underestimate how much of this is just one big bribery scheme to line Trumps pockets. Impose across the board tariff and then magically see carve outs for certain Middle East dictatorships or carve outs for particular goods that are essential for stuff like, I dunno, electric cars. Trump has always seen all relationships as pure transactional. Makes sense he sees the presidency no different
Also, the mercantilist mindset is one of his few consistent beliefs. Go look up interviews from the 80s (there is one with Oprah going around). Replace Japan with China and it could be the same speech today.
The (dare I say) Russian style path to awful kleptocracy is a very real possibility
A plurality, maybe of majority of Americans, believe that all politicians are obligate liars. Therefore, they believe Harris is lying when she says she won't do radical leftwing things, and also believe that Trump is lying when he says he will do radical rightwing things.
It is a shame [Boo Warren-Sanders-AOC!] that it would occur to anyone that Democrats would do radical left-wing things that Harris would need to deny. It’s something Democrats need to work on.
Can you point to a politician that proposed "legislating equity" and say what that proposal consisted of, even at the level that Trump is describing his proposed tariff policy?
All I can think of is the 40% target of funds for disadvantaged communities for some IRA programs. (Roughly 30% of the population.)
I think trying to allocate money more to poorer areas to the maximum extent is a good thing.
I think it was poorly thought out in some respects (public fast chargers are my pet peeve because it delays the formation of the used EV market.)
Basically the requirements have often lead to a hold up as adjudicating what meets the criteria is murky.
The 25k first time home buyers is actually limited to first generation home buyers, ie your parents don't own a home. And I suspect more fine print, so even if it passes it will be fairly "targeted", ie small.
The Trump proposal could be enacted without congressional approval. And the scale of the potential distortion on the economy is in no way comparable. Paired with his inevitable extension of the original Trump tax cut, assuming a Republican trifecta, it's a huge shift of taxes onto middle class.
A targeted very bad idea is still a very bad idea.
Tell you what, let's trash the targeted first time homebuyer's subsidy in exchange for getting rid of the targeted home mortgage interest deduction and call it even then.
All the home interest deduction does is increase the footprint of houses.
A little very bad idea is better than a huge very bad idea. That's just math.
"Legislating equity" beating out slavery and forcing Native Americans onto reservations for Worst American Idea, you hate to see it.
(You know you're really wrong when you get dunked on with cringe leftist talking points.)
Yes, you’re very impressive.
Talking about Trump's plan as if it's serious feels like being the guy who doesn't get the joke.
It's like writing a 10k-word carefully researched essay about why Mexico is not going to pay for the wall, or why he's not going to pay off the debt in 4 years, or why he's not a fit 210 pounds,
There is a reason that Trump's rich supporters are ignoring this. They know that if he gets elected and he brings up the topic again, they can simply distract him with something else like he's a toddler.
I love that the pro-Trump argument is that he's mentally deficient. Honestly, it's hard to disagree with, but it relies on him being mentally deficient in a just-so super convenient way, which seems like less of a good bet.
Still, although perhaps not the biggest reason not to vote for him, the fact that even his supporters have to argue that he’s either too full of shit or too unfocused to implement the primary economic idea he discusses should be disqualifying.
His inability to answer a yes or no question is disqualifying,
>> There is a reason that Trump's rich supporters are ignoring this
That reason is that they're confident they're in on the gig and will gain a net advantage from whatever gets implemented.
IMO, it's very unlikely that this is a bluff or something unserious. It's such a perfect Trumpian scheme that he won't be able to resist doing it.
It'll let him preside over a parade of heads of state and business execs streaming into the White House, slobbering all over him with flattery and offering gifts in exchange for special treatment.
There's no way he doesn't enact some version of this. The only question is what it looks like exactly and who gets special treatment.
Agree 100% that this is the thrust of the plan -- make people beg, reward friends, punish foes, blackmail for petty but public-facing "wins", a little graft on the side. It all seems so obvious and predictable.
Except that Trump has advisers, who are likely to get powerful positions within his administration, who really do believe this stuff, and really want to enact universal tarriffs.
Except of course, not "Universal", really, because there will be carve outs and exceptions for people who pay Donald Trump money. So, curiously, lots of parts needed to build Teslas (or Space X rockets) will certainly be exempt.
On the accounting identity, Stephen Gordon (an economist at the University of Laval who runs the Worthwhile Canadian Initiative blog) has a good explanation. Imports are subtracted from total consumption, investment, and government expenditure **to figure out how much of that is domestic**, because that can't be measured directly. https://x.com/stephenfgordon/status/1839822699943866725
The fact that Navarro is an econ professor who does not understand why the GDP equation works how it does (for the reasons MY outlined) used to drive me crazy. The fact that he was somehow the main economist in Trump's orbit was honestly pathetic. How often does a top ranking economics adviser get sentenced to prison?
Suppose Bernie Sanders says “I will enact single payer healthcare.” It’s easy to take this literally and spit out a parade of horribles. For there to literally be a single payer, you would have to ban private insurance and out of pocket spending. This means fee for service assisted living would be illegal, you couldn’t pay for plastic surgery, and you could only get ozempic or psycho therapy if you met the government criteria. Of course, Bernie is far more interested in guaranteeing that the government pays for necessary procedures than banning the private sale of discretionary ones. When time came to draft the bill, the plastic surgeons, assisted living facility owners and psychotherapists would all lobby and get carveouts to allow the private purchase of their services when the government won’t pay.
Trumps tariffs would be similar, but he’s not as cuddly as Bernie, so it’s tempting to be less charitable. Trump is interested in taxing finished, manufactured goods. When the time came to pass his massif tariff bill, all the manufacturing companies that need to import intermediate goods would lobby for carveouts. Moms who like buying cheap Bangladeshi clothes for their kids might get a carveout. Because Trump’s whole point is to reinvigorate American manufacturing (and it’s not clear he cares about textiles) most companies with s legitimate need to import intermediate goods would get a carveout. A huge amount of effort would go into this process and there would be graft. Yet there is also a lot of medicaid fraud and insurance fraud and we basically deal with those and don’t worry too much.
The chances the “pure form” of Trump’s tariff proposal are enacted are basically zero, so Matt is beating up a straw man. When politicians talk in sound bites, sober analysts who want to compare politicians should be somewhat charitable.
But given that this is Trump we're talking about here, I think you're understating "there would be graft".
In the event he wins, Trump may or not follow through with the literal thrust of his vows on trade. But I thought the point of Matt's piece is, on International economics, Trump is saying the equivalent of "2+2=5."
He's just incredibly poorly informed on basic matters of factual information.
This elides the difference of a huge congressional negotiation over a bill and the limitless powers of Presidential Fiat.
The only problem here is that the reason the "pure" form would be unlikely to be enacted is that Congress wouldn't go for it - that's where you get all the carveouts you described. Hence why you described it as a "tariff bill."
However, Trump certainly believes, and it's not implausible to believe, that the President has the unilateral ability to place tariffs. Trump could do it himself on day one, on a whim, if he wanted to.
Section 232 of the Trade Expansion Act of 1962 gives the president the right to levy tariffs upon the secretary of commerce’s recommendation without asking Congress (this was the source of Trump's tariffs on steel and aluminum). Section 301 of the Trade Act of 1974 gives a similar power to impose tariffs based on unfair trade practices by foreign nations on the advice of the Office of the US Trade Representative (this was the source of Trump's tariffs on China). Section 201 of the 1974 act also gives broad power to place tariffs against imports that threaten injury to domestic companies (again, Presidential discretion).
Now there would be court battles about the scope of Congressional delegation, there are always court battles, but the one thing there won't be is a bill like the one you describe here where carveouts can be fought for. So the chance is not "basically zero", it literally comes down to whether Trump personally can be talked down from the ledge when he's in office and with the unilateral power to set tariffs.
Exactly, and I was going to make the same analogy you did. The Democrats' analog to Trump's dumbed-down trade rhetoric is Democratic dumbed-down rhetoric around healthcare, specifically Medicare for All.
Both are cases of politicians responding to deeply felt sentiment among many people that there is something seriously wrong here in this area, that ordinary politicians are too craven, unimaginative, or powerless to solve.
What tariff and Medicare for All rhetoric lack in smart, careful, nuanced thinking, they makes up for in being simplistic and easy to communicate in a sound bite. Even though both are in fact very poorly thought through and would result in endless amounts of distortion, corruption, and dysfunction.
It communicates to voters that this is a problem that politicians have ignored for too long, needs to be addressed in a way that is visible and legible to voters, and this politician understands that and won't let that urgency die in a morass of making the perfect the enemy of the good.
We have single payer healthcare in the US for a wide variety of populations. That is not how it works for any of them. In fact, Sanders named his proposal after one of them: Medicare for All.
I hate the idea of Medicare for All for many reasons, but I agree that David Abbott's description of the problems with it is inaccurate. For instance, Canada has the equivalent of Medicare for All, but there is still fee-for-service plastic surgery.
Interestingly, people seem to think that Medicare for All is the norm in western democracies, but the truth is that Canada is an outlier. Most western democracies have highly regulated, subsidized non-governmental health insurance systems. Or, like the UK, they permit private insurance to exist alongside a public option.
This is a strawman. No one defines single payer healthcare the way you have defined it. Everyone knows it means “single payer for all covered services.”
Canada has entered the conversation...
"Because Trump’s whole point is to reinvigorate American manufacturing"
I was nodding along with you up to this point. Trump isn't ideological; he's narcissistic and transactional. He'll give carve outs to whoever bribes him the most or kisses his ass most passionately. Anything else is a random side effect.
Medicare for All requires a law so it requires negotiation so there would be details and tweaks.
Tariffs are an executive act he can sign personally on day 1, so there would be no details or tweaks until someone convinces him he had a bad idea after the fact.
There is a reason Bernie Sanders is not, and never really was a threat to be, the Democratic nominee for President. For all our faults, we keep our crazies corralled.
If Sanders was nominee I would believe that he would work very hard to enact his vision of single payer, and that he'd be mostly thwarted. But his single payer plan isn't what you describe, but Trump's tariffs are what Matt described, and Trump can act unilaterally in a way that President Sanders could not.
“Trump should be given all the charity on economic theory you would give to Bernie Sanders, who is famously never confused about economic matters” is quite the defense.
I think there’s lots of criticism of Bernie’s healthcare plans. Here’s just one article from 2019, when Bernie was actually running for President, that analyzed his plan and what it would
mean.It makes some of the points you make above.
https://www.nytimes.com/2019/03/23/health/private-health-insurance-medicare-for-all-bernie-sanders.html?smid=nytcore-ios-share&referringSource=articleShare
No one is giving Bernie or any Democrats “grace” on their healthcare plans. And Bernie isn’t running for President. So isn’t it possible that you don’t see the takedowns of Bernie’s MFA plan like you do for Trump’s tariffs because one of those people has 0% chance of being President and one has perhaps better than 50% chance?
The less uniform the tariff, the more damaging it is. [A perfectly uniform tariff combined with a perfectly uniform export subsidy of the same amount (assuming the Fed would allow enough inflation to take care of a one time uniform increase in prices) would produce no distortion at all.]
I appreciate this article this morning. Sometimes the obvious needs to be stated. Even from a pure mercantilist perspective, plenty of our imports are inputs (like the aforementioned steel and lumber) and therefore it's a drag on exports if we tax them.
But man, I am getting tired of "don't worry, the very stupid thing this candidate said won't actually happen" as a defense.
>"And I’m begging those on the right who want to do something to promote American manufacturing or reduce the trade deficit to start saying things that make sense rather than sanewashing Trump’s ideas, which just reflect a widely held misunderstanding and not a real policy perspective at all."
Two recent articles, one from National Review and one from The Dispatch, arguing against Trump's tariffs. But it is not like either of these two publications have any influence within the Trump Cinematic Universe, and Democrats still despise them anyway.
https://thedispatch.com/newsletter/capitolism/tariff-myths-debunked/
https://www.nationalreview.com/corner/economists-understand-tariffs-just-fine-oren-cass-does-not/
Dominic Pino at NR (writer of one article you linked) is a surprisingly non-hacky guy, but in general the thrust of coverage there is "yeah, Trump's not great, and his ideas are dumb, and he's blowing the race! but man, Kamala won't give interviews, her ideas from 5 years ago were loony, she's rejecting her ideas from 5 years ago so who knows where she stands, and she's a moron." The establishment Right is generally bought in on Trump and is more frustrated with his incompetence than actually concerned about any of his policies.
Which "phase" is the Trump Cinematic Universe in these days?
Whatever comes after MCU Phase 6.
Question: why did gross national product fall out of favor, to the advantage of gross domestic product? A very early skim of Google and Wikipedia provided a opaque answer, with the best answer my (likely still waking up--ugh, 4:30 AM) mind sees as "because everyone else was using GDP". It strikes me that people who don't fully understand economics, as Matt lays out, overemphasize the D in GDP and just blindly assume that imports subtract from it.
Simply put, GNP and GDP used to be roughly equivalent. When companies started to spread internationally it made accounting more difficult. Furthermore, should we count the value a German worker creates in Germany but for an American company as German income or American income?
Many years ago, I was told in an econ class that GNP dropped out of favor because it less accurately reflected what economic activity was actually going inside a particular country and that was what was actually of most concern to government agencies. Whether that's accurate or not, I do not know.
The difference between GDP and GNP is whatever production is done by local labor on local land for foreign capitalists, and whatever production is done by foreign labor on foreign land for local capitalists. They decided it was better to account production with the land and labor than with the capitalists.
The same "imports do not subtract from" applies to GNP, too.
My (highly educated but totally uninformed on the specific question) guess would be that the switch came from the increased focus on jobs as a policy goal. Who cares if Nike is grossing a lot of product in a SE Asian factory if the American factories closed and we lost those good paying American jobs! GDP makes that distinction but GNP sees that as American production either way.
I don’t think that’s entirely crazy, but it misses some nuance. And of course jobs are a means not an end. But it’s an interesting idea to ponder. E.g., is it bad for a community if the locally owned grocery store closes but a Walmart opens and ultimately employs more people and provides more goods and services than the old store? GDP perspective says no, it’s good. But the GNP perspective recognizes that some of the profits are flowing out of the town where before they stayed local.
GDP does recognize the value of the profits staying locally, the local store will have a slightly higher contribution to GDP. It's just weird to think that the entire local value of the store hinges on its ownership.
In retrospect, a store was a particularly bad choice of example because the goods almost all come from elsewhere, and “production” in this case is finicky to measure.
But the same is true for a factory. If there's a locally owned factory in town, and it gets bought by a bigger company from elsewhere, that has a small impact on the economic situation of the town, not a huge one.
Similarly, if there's a factory in town, and it's owned by a foreign company, and then they close the factory, that's a huge hit to the economy. A measure where it doesn't change anything isn't that useful.
Oh, I agree about the economic impact being small. I'm just talking about how the different economic measures would treat the different situations. Suppose the factory has $100k of production this year.
In scenario 1, the factory is purchased by a foreign national but still produces $100k next year, then GDP wouldn't change, but GNP would go down by $100k.
In scenario 2, the factory is closed, but the owner opens a new factory in another country where it produces $100k. GDP would go down by $100k, but GNP would stay the same.
Obviously, these situations could have very different impacts on the local economy, which will be reflected by how they change different measures. If we care most about "jobs" and place, then GDP is the right measure. If we care about "building national wealth" or something, then maybe GNP is a more appealing measure to focus on. I think it's probably just easy to go wrong when you focus too much on contextless measures in the first place.