Dear Donald: You’re Not Hamilton And We’re Not Living In 1791

Since the election, these pages have been awash with commentary suggesting that the incoming Trump administration is likely making a tremendous mistake by adopting an inward-looking, protectionist agenda when it comes to trade.

I’ve argued that Trump and those he’s chosen to represent US interests on the international stage are on the verge of setting not only America, but the entire world, on a path backwards in time.

In that regard, the new President’s trade policies are an extension of his stance on immigration reform. Essentially, Trump (and those like Nigel Farage in Britain, Marine Le Pen in France, and Frauke Petry in Germany who share his vision) wants to rollback globalization in a shocking rebuke of progressivism and multiculturalism.

Below, find an excerpt from a piece that ran this week in The Atlantic which argues that in fact, Trump is literally seeking to roll back the clock. What he doesn’t seem to understand is that times have changed…

Via The Atlantic:

In a way, President-elect Donald Trump sees the world the way America’s Founding Fathers did. Like Thomas Jefferson and James Madison, Trump wants to protect American manufacturers by taxing products made overseas and sold in the United States. Alexander Hamilton, the country’s first treasury secretary, wrote to Congress in 1791 in his Report on Manufactures, that “by enhancing the charges on foreign articles, they enable the national manufacturers to undersell all their foreign competitors.” Trump, taking a similar view, said he would slap a 45 percent tariff on imports from China, and a 35 percent tariff on all products that American companies make abroad and try to sell here. “Please be forewarned before making a very expensive mistake!” Trump tweeted last month at American companies considering relocating their factories abroad.

As Trump makes his final picks for positions that will shape the country’s trade policies, it’s clear that he hopes to return the United States to its protectionist past. But the thing is, of course, that the American economy today is far different from Hamilton’s America.

[…]

While Trump’s views of trade resemble those from 200 years ago, even Alexander Hamilton cautioned against raising tariffs so high that they would eliminate healthy foreign competition. His idea was to encourage domestic industry, not protect it. So while Trump shares the protectionist economic view of some Founding Fathers, his proposals are even more extreme.

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6 thoughts on “Dear Donald: You’re Not Hamilton And We’re Not Living In 1791

  1. The founding fathers were able to think about the consequences of their actions . This was due to them being well read, and aware, even though books were few.. I need not say anymore regarding the erroneous comparison.

  2. Working in commercial real estate and occasionally bumping up against folks like Donald Trump, I honestly believe that the public bombast is mostly about setting out negotiating positions. There is a lot that can be done to level the playing and trade deals that we have given away to solidify military alliances which may no longer be necessary.

    My best example is an auto deal that was struck with S Korea some years back. I live outside Detroit and so this caught my attention. The deal lowered tariffs on Imports of US cars to Korea and Korean cars to the US. The tariffs were both cut in half but the actual tariffs that Korea was allowed to charge in this “deal” were double those that the US could charge. It struck me as odd that we would agree to that. For whatever it is worth, the pact triggered days of rioting in Korea over the concern that lowered tariffs would flood their country with US imports. I was just there. It didn’t.

    I guess this means that I subscribe to the “Crazy Like a Fox” theory of Trump’s public statements. They are setting out a negotiating position and positioning us to be unpredictable in both trade and foreign policy. Obama was very predictable on both fronts. He would sell out US interests for “Global” interests. This only caused additional instability in the world as the US was seen as weak. I think that Putin is losing sleep every night knowing that his (already on the edge of ruin) economy would be destroyed by any global arms race. If you look across the world, antipathy to despots has led us to where we are as deposing them has given rise to a many headed hydra of evil beings wanting to take their place. Our nation building efforts are behind us. Realpolitik lies ahead.

    • Interesting comment and I agree that with the commercial real estate bombast – but not in complementary way to those with that personality type. Several things:

      Regarding: ” I honestly believe that the public bombast is mostly about setting out negotiating positions.” How would you compare the effectiveness and success of Trumps style of bombast (bullying) to Buffet’s low key but greater and more consistent successes without the use of “bombast” or threats – just basic well thought out economics. More over aren’t concerned about the similarities between commercial real estate acquisition and the national real estate acquisition – the imperial acquisition of nations and associate aggression out comes?

      Regarding: “They are setting out a negotiating position and positioning us to be unpredictable in both trade and foreign policy.” While that might work for enemies, it also works to make enemies out of your former allies – primarily because as humans we are very poor at determining the boundaries between “unpredictable,” and the mentally erratic and mental instabile.

      Regarding: “antipathy to despots has led us to where we are as deposing them has given rise to a many headed hydra of evil beings wanting to take their place. ” And why isn’t that what is happening in our current situation in the US?

      • There is a fundamental difference in the businesses between what the Donald does and what Buffett does. High stakes real estate is all about the deal. The right deal makes the business successful. A bad deal dooms it. We’ve been looking at some mixed use projects and there are 8 to 10 different entities that have to reach a mutually acceptable deal structure. The stakes are enormous as the biggest of these deals are in the billions or more (Hudson Yards is 15 Billion). So the negotiations go on for years. In contrast the deals that Buffett does are relatively straightforward (and as a consultant I was involved in dozens of these sorts of deals) compared to the deal making that goes on in high end real estate.

        I also don’t think that this relates that much to “National Real Estate” acquisition as the entire game is about forging multi-lateral agreements that must be mutually beneficial. Resorting to “war” is in no one’s interests, until the deal fall apart and the lawsuits begin. But that is an absolute failure if it comes to that.

        Again, I think that this is the crazy like a fox coming to the fore. All relations and all big deals are between entities that are either friends or enemies or both. The negotiation seeks to set conditions that all parties are, if not happy about, only disgruntled and not infuriated. Our allies (and us to some extent) will be uncomfortable for a time until friendships are re-affirmed. I do agree that many of our “friends” have been freeloading on our insecurity since WWII. Look at the reaction of friends in Korea over our trying to re-balance trade (and keep in mind, both parties reduced tariffs in proportion. Korea is a much more prosperous nation today than it was in the 80’s. It is fair today that they pay for us to keep troops there. We are doing them a huge favor at a huge cost. The same applies to the stationing of troops in Europe and especially in Germany. If the Germans don’t want them, Poland, Czech Republic, Lithuania, etc. would be happy to take them and contribute to their upkeep.

        In short, what makes enemies of your friends is when you start to hold them accountable to their commitments whether that is requiring them to spend more on their own defense (as required by NATO) or leveling the playing field on trade. It was originally a cold war response that led us to pay for all of those troops as our allies could not (and negotiate asymmetrical trade deals). Today, they have the wherewithal but lack the popular will.

        For many of these reasons, I believe that we will enjoy good relations with Russia, which is very important. They will respect unpredictable strength (don’t poke the bear so to speak) more that predictable weakness as will most depots. They also realize the downside of things like low oil prices and the emergence of the US as an oil powerhouse. We are an awakening giant on the world stage in a lot of ways having been diminished through successive administrations over last 20 years.

        At least that is my hope …

  3. Absolutely agree DJT is crazy like a fox, hoping he has collected enough things ie( mansions, yachts , planes) for for him self that he is going to game the system on behalf of the ordinary American worker,/ tax payer. time will tell

    • It’s called megalomania. Unfortunately, those afflicted (Trump is a classic case) can never “collect enough things” to satisfy their mental affliction and the inferiority complex that drives it.

      Do you see anything in Trump’s family, background or history that would indicate or enable him to have any empathetic conduit to understand the problems of the American middle class. How could there be Trump has never existed in middle-class America or as a middle-class worker. He just has memorized the talking points provided for him by his consultants and advisers. Trump has always been successful at creating (through lies and deception and whatever was needed) the perspective to make a deal attractive to his opponent (and trust me he sees the middle class as an opponent that he is making a deal with – his election and nothing more once its is completed) and his campaign promises were no different. The middle class deal perspective he created on the campaign trail has no basis in his demonstrated historic reality in any shape or from.

      Spend sometime looking at his family, upbringing, his past until now. Clearly, there is nothing more than wishful thinking (created by his lies) in seeing Trump as a guardian of the American middle class worker. Trump the megalomaniac has acquired (as in merger and acquisition) one more thing to his collective empire – the Presidency of the US. Like all is other acquisitions he will turn the day to day responsibilities of his new acquisition over to one of his delegated minions so that he can move to his next acquisition of status – which still won’t be enough make his terrible inferiority complex go away.

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