What follows is an extended transcript of a conversation I had with four professors about Donald Trump’s first 100 days plan. The transcript below has been edited for clarity.
Daniel Winchester: Welcome to the first ever Learn Liberty blog round table! We’re talking with four professors who represent four separate disciplines — Steve Horwitz, professor of economics at Saint Lawrence University and visiting scholar at Ball State University; Aeon Skoble, professor of philosophy at Bridgewater State University; Lauren Hall, associate professor of political science at the Rochester Institute of Technology; and Phil Magness, policy historian and academic program director at the Institute for Humane Studies. Welcome, everybody to this conversation, it’s good to have you!
This is especially exciting because I believe that you’re all friends, or at least acquaintances, so I’m hoping to have a nice, intimate, fun conversation about Donald Trump’s first-100-days plan, which is the talk of the town on all the major news networks, and at every dinner table on Thanksgiving. I want to begin by addressing some of the major points that Trump wants to hit in his first 100 days. The hope is to address these points from each discipline distinctly, if possible. Steve, you’ll talk about the plan from an economics point of view, Aeon from philosophy, Lauren from political science, and Phil from a historical point of view.
Aeon Skoble: I’m skeptical there’s going to be anything particularly philosophical about Trump’s plan…
DW: I’m sorry about that, Aeon.
So there are five or six major items that Trump wants to accomplish in his first 100 days: immigration reform, lobbying bans, withdrawing from the Trans-Pacific Partnership (or TPP), canceling some restrictions on environmental regulations, and, finally, repealing some regulations on business, including Dodd-Frank.
DW: Let’s begin with immigration. Trump told his supporters that his plan will be to end illegal immigration and suspend immigration from terror-problem regions. He also said that he would deport all criminal aliens. In his video speech outlining his first-100 -days plan, Trump said he will investigate all abuses of visa programs that undercut the American worker, and he also has called for a two year minimum mandatory federal sentence for those who illegally re-enter the US.
This is a pretty meaty topic, with applications to a variety of disciplines. I’m curious to hear first from Steve Horwitz. What are the implications of Donald Trump’s plan economically?
Steve Horwitz: Two points. One, let’s just consider for a moment the size and scope of a government agency that would be required to do this work and the expenses that it would undertake. The great expenditures and, presumably, waste that would go into giving Homeland Security or whoever it is the power to enforce all this stuff would be pretty draconian and pretty expensive. So it’s ironic to the extent that people voted for Trump because they thought they were going to get smaller government or a more efficient government. This ain’t it.
The other thing I’d say is that immigration, including illegal immigration, is an economic positive. Immigrants bring all kinds of skills, all kinds of abilities. They produce more than they consume in terms of tax dollars, and so I think the right way to think about this is how we get more immigrants here legally. If we’re concerned about illegal immigration, instead of closing the borders and throwing people in jail, how do we make it easier for people to come here and improve their lives and improve our process to do so? I think this is — economically what he’s doing here is — really problematic.
DW: Phil, can you add some historical perspective?
Phil Magness: Yeah, I can jump in there. Nativism is as old as the Republic itself. This is a theme that Trump really tapped into during the campaign, and something that’s been going on since the 1790s. We had instances in some of the very first contested elections where candidates ran on overtly nativist tickets, trying to bash immigrants. Going back to 1798, the Alien and Sedition Acts — the first ever of the Alien Acts — were all aimed at keeping immigrants mostly from Europe. They were particularly concerned with France at the time to keep the revolutionaries out of the United States.
Across US history, we’ve had multiple candidates run on this type of platform, and they’ve succeeded in ways that have been genuinely harmful to the country. They’ve generally involved heavy enforcement of these types of statutes that they’ve put in, which increases the law enforcement presence attached to them.
Something that we also know historically is that immigration restriction doesn’t seem to persist indefinitely. Often there’s a swing back in the other direction, as a reaction to an aggressive overreach on immigration, both for economic reasons — people realize that there is an economic benefit to having a positive immigration flow into the country — and political reasons.
Let’s go back to the 1790s example. That was reversed in about four years due to massive electoral backlash. There are similar instances of that in in the late 1800s, early 1900s, when they started targeting groups like Chinese laborers that were coming into California.
One of the interesting things historically is even though these types of movements are abundant and recurring, there’s often a very high incentive to either disobey them or to put political pressure in place that effectively repeals them within relatively short order.
Lauren Hall: Yeah. I find Phil’s analysis pretty hopeful, and I do hope that there’s kind of a swing effect. The major problem that he’s going to have is even just getting this plan in place. I think one of the things that Steve mentioned — in terms of running on sort of a limited government campaign and then talking about throwing millions of people potentially in prison — that is something that a lot of people are not going to support when they actually see it in action.
The other problem politically that he’s going to run into is federalism, the fact that deporting this number of people is going to require that he get the cooperation of local officials, primarily officials in large, immigrant-heavy cities. Most of the major cities that I’ve seen, a lot of the mayors of a lot of these municipalities — Chicago, LA, New York, Philadelphia — have already said that they will not participate, that they will not support immigration officials.
Very often, what happens is you have people who are in jail for some other petty offense or something, and then the city cooperates with immigration officials to pull that person out and detain them for immigration purposes. But if cities are not participating in the program at all, if they’re not cooperating with federal immigration officials, there’s very little — other than sending in large quantities of federal officials into the states and municipalities in order to enforce this — federal officials can do. You’re not going to be able to get whatever the number is — two to three million people — out. That’s simply not going to be possible.
Without local and state assistance, his ability is pretty limited to maybe some of the border areas. He’s talked about restricting federal funding for those sanctuary cities, or what are called sanctuary cities. That term doesn’t actually really have a precise meaning, but it essentially means a city that does not cooperate on a variety of levels with federal immigration enforcement. Many of those cities have said, “go ahead.” I know the mayor of Oakland has already started soliciting private donations to kind of cover some of the shortfall that they’ll face if Trump does pull federal funding from the city.
Each city is going to see a different set of obstacles, because they all use that funding — they all use federal money differently. As far as I could tell, every major city in these really immigrant-heavy areas has said that they will not participate. That throws up a huge roadblock.
It’s also politically damaging for Trump because the Republican Party has traditionally been the party of federalism and the party of states’ rights. It’s harder to argue that we’re going to send thousands and thousands of federal agents into these cities and states to enforce these immigration laws against the wishes of those other government powers. So I think he’s got some really serious political roadblocks in this plan. That doesn’t mean he can’t do an enormous amount of damage, but it does mean that there are going to be some political problems he’s going to have to get over that are both practical and principled.
DW: Aeon, what are some of the moral implications of these kinds of immigration restrictions and deportations, not to mention mass incarceration?
AS: Well, it’s all incredibly immoral: rounding up people who are here working and minding their own business and being productive members of society and saying, “Well, we’re going to take you out for no particular reason.” I’m all in favor of deporting the people who are criminals. If you are in this country from another country, you rob somebody, then they deport you, I don’t have a problem with that.
But the idea that you should be deported just because you came from someplace else is absurd. It flies in the face of the very American tradition of being immigrants. I make this point excessively, that there’s nobody here that isn’t originally descended from immigrants. Not just in the obvious sense of European settlement, but even Native Americans had to come across the Bering Strait or whatever 20,000 years ago. This entire continent is populated by immigrants.
Even in the narrower sense of what we think of as normal American society, that’s all people who immigrated in the last 200, 300 years. The idea that there’s something special and new now, as Phil pointed out, that’s just wrong. There’s only illegal immigration because you’ve got laws restricting immigration. The idea that people come here to make a better life for themselves, that’s sort of the way we’ve always done things. I’m not in favor of any sort of massive deportation scheme, for the same reason that I’m not in favor of many restrictions of immigration in the first place.
That said, there’s good news and bad news. The good news is Lauren’s mostly right that a lot of people are not going to collaborate with this. We often see on TV cop shows that the detectives who are investigating this particular robbery or homicide or whatever, they just want witnesses to lead them to the perpetrator, right? They say, “We don’t want you for immigration. We just want you to tell us who broke into the store.”
The local police officer’s incentive is not to get involved with federal deportation schemes. They just want to find who robbed the store or who killed the guy.
It’s only — if you’re the local Chicago homicide detective — you probably don’t have any other agenda besides cracking your cases. But here’s the bad news. The bad news is that there’s a lot of people whose interests do line up with this.
I heard this interview on the radio with the president of the union of the border patrol guards down in Texas, or whatever. He was 100% Trump because, he said, “Put up a bigger wall. We need more wall.” This guy was loving Trump because all of the talk about building the walls. When the NPR guy said, “you literally mean from end to end?” the guy was like, “Oh no, just like 30% more wall.” Of course those guys have an interest in having 30% more wall, but that’s not going to be something that moves people of New York or Illinois, right?
SH: One thing to add, just on Lauren’s point, the fact that the places that are most immigrant heavy are the ones that are refusing to go along with this is testimony to the economic benefits of immigration, right? Those are the people who are living with it most closely. They know the kind of economic benefits, and the damage that would be done if you really restrict and start getting in and enforcing the law. That’s interesting that they are on the front lines, as it were, and they seem to be the ones who are most skeptical.
LH: I’ll also just add to that, from Steve’s point, from a sort of political but also a kind of community perspective. I don’t think it’s just the economic benefits that people are going to be looking at. I think they’re going to be looking at the fact that you’re going to be talking about deporting your kid’s friends at school. You’re going to be talking about deporting the guy who makes shawarma. I mean these are communities, people.
These are people’s lives, and people live — especially when you’re talking about Oakland and Chicago and Philadelphia — people live and work with immigrants. And so this isn’t going to be one of those policy things that nobody pays attention to because it doesn’t hit home. It will absolutely hit home. Whether it hits home hard enough to invoke the kind of backlash that Phil was talking about I think is something we’ll have to see. I certainly don’t think it’s going to be easy to ignore.
SH: It’s interesting how that parallels the way in which gays and lesbians became normalized through that same sort of integration process, right? Why would same-sex marriage suddenly become okay? We knew we had friends and neighbors. There’s an interesting parallel here between those two processes. These are our friends and neighbors you’re talking about.
DW: Let’s talk about something that I think has been under-discussed in the news media, and that is the lobbying bans that Trump is proposing. This is interesting, because I think it touches on some issues of free speech, although it also touches on some issues of special interests, and public choice theory.
Trump has promised to “drain the swamp in Washington,” minimizing the effects of special interests on policy. One way that Trump intends to accomplish this is by prohibiting officials from becoming lobbyists for five years after leaving government. The goal here is to make sure that people aren’t using the government to enrich themselves and using their service in government to do that.
SH: A great idea, not likely to happen.
SH: I mean, Trump himself — all he’s seen the last few weeks is that he’s going to get richer by being president, right? You want to drain the swamp, start with Trump, okay? Another big problem — I think all of us would probably say the same thing — you’re treating the symptom, not the disease. As long as there’s a big old pot of gold being distributed out of Washington, people are going to find ways to lobby and do all those things. It just seems to me you’re treating the symptom. The underlying problem is as long as government gets bigger, all the things Trump wants to do to make it even bigger are going to encourage more of it.
AS: Yeah, the bad news is that a lot of the Trump support doesn’t come from small government types. These people are actually not small government people at all. They like the idea of large national programs, so there’s just going to be more and more things for lobbyists to want to get a piece of.
Yes, of course, there can’t be any laws prohibiting you from lobbying, because that would go against the first amendment, but it’s what it is that you’re lobbying for. The only way to drain the swamp, so to speak, is if there are fewer things that people want to lobby about. The only way you could possibly effectively reduce the influence of lobbyists is if there’s not as much going on in the government for people to be lobbying about.
PM: Jumping in with a little bit of a historical parallel, we’ve been through movements like this before as well. It was a big issue in the 1880s when James Garfield and Chester Arthur (two of our best known presidents, of course!) came into office. They ran on a divided ticket where Garfield was the reformer candidate that wanted to effectively clean out Washington, clean out the patronage system that was just doling out jobs from the federal government, whereas Arthur was the representative of the old crony interest that viewed political campaigns as an access route to federal money and federal employment.
There was a real divide in the Republican Party at that time. Of course, what happened next is Garfield got assassinated and it elevates Arthur, the corrupt crony interest guy, into office. But he was elevated into office basically because the assassin was a supporter of this whole corrupt spoil system. This caused a huge political backlash and made Arthur into something of a reformer, so he adopted a whole bunch of laws trying to clean out the bureaucracy, trying to clean out the crony interests of the civil service. What it ended up doing is just systematizing it.
What used to be doled out really informally through political favors was channeled into a massive and ever-growing federal bureaucratic beast that’s kind of taken off since that point. So we really trace some of the early origins of the standardization of the bureaucratic state to an attempt to clean out Washington or so called “drain the swamp” back then. I guess to echo some of Aeon’s points on this, it’s just the nature of government that attracts these sorts of things.
Reform acts, they’re nice in principle. They sound very promising. They sound like something that we ought to do to counter big government. What they end up doing is they just systematize the process through a different channel, and it never really goes away.
LH: Yeah, to add to that, I think that we overlook — or I think Trump is overlooking — how persistent that kind of influence is. Whether you’re talking about formal lobbyists or not. People are still going to have dinner with their friends. They’re still going to have a variety of ways to influence people. It’s interesting. When he first came out with this 100 day plan, one of his first things — I think it was actually number one — was that he wanted to propose term limits for members of Congress. Of course, that’s not going anywhere, right? There’s too many in the system.
One of the major criticisms of term limits for Congressional members — not from the self-serving perspective — is that the only area of institutional knowledge would be held by lobbyists. When you have a system as complex as ours, with the level of bureaucratic bloat, someone somewhere has to have the knowledge about how to run this thing. That’s going to either be elected officials who have essentially served for life, because they have incredibly high reelection rates, or it’s going to be lobbyists.
He has found it difficult to drain the swamp himself, already. The people that made it onto his transition team, the people that he’s been slating for a variety of government jobs, are swamp denizens. And that’s because the people with the requisite institutional knowledge to do the job are the people who’ve been on the ground for 10, 20 years.
I think he’s coming up against the problem of being a political outsider, and having no idea how the system actually works. You’ve either got to have congressional people who have been in power for a long period of time, or you’ve got to have lobbyists who have been around for a long time. Or both, which is what we have.
SH: Think about this in the context of his infrastructure proposal, too, right? We’re going to spend all this money on infrastructure. My God, talk about mosquitoes coming through the swamp. The lobbyists will be swarming. I think this is where our friend Mike Munger’s unicorn comes into play. Somehow, Trump seems to think we can do all this infrastructure without all the lobbying. No, throw up that infrastructure proposal and the lobbyists will come from everywhere.
Again, I think as we’re kind of all saying, if you really want to tackle the lobbying, special-interest rent-seeking problem, you’ve got to shrink the pie. That’s the only way. I’m not sure what the analogy is with the swamp. Get the people out so the mosquitoes don’t come. You’ve got to shrink what’s being given away, and that will reduce the rationale for people to spend money trying to obtain it.
Pulling Out of the Trans-Pacific Partnership
DW: Let’s talk about the TPP. It’s kind of a behemoth of a trade agreement. There are a lot of components to it, and in fact, according to the Cato Institute, some parts of this agreement are trade liberalizing, and some parts are protectionist. There really is no unanimous consensus among classical liberals or libertarians as to the benefits or the cost of the TPP, but Trump wants to withdraw the US from it.
Let’s take it piece by piece. The first part of the TPP that I think is relevant to the discussion is tariffs. The agreement as it is currently constructed would cut over 18,000 tariffs, including tariffs on all US manufactured goods, and almost all US farm products would be completely eliminated. This would be the largest agreement on free trade in US history measured by trade flow.
Considering that Trump wants to withdraw the US from this trade agreement, what are the implications of this tariff component that might be of interest to our readers?
PM: Well, Trump really likes tariffs, and he’s been unambiguous about this. If you go back to the campaign, he was threatening to put 30% car tariffs on Mexico, simply because US manufacturers were making parts down there. This has been a repeated theme of his. Basically as long as he’s been into politics, he’s been in favor of restricting trade through various channels.
SH: I would just note that, if you look at participating in the TPP and reducing the tariffs, won’t actually help many Trump voters. If you buy the story that there was a significant portion of Trump voters who were perhaps middle and lower-income and who rely a lot on imported goods, if you continue the status quo, or if you raise tariffs — even worse — you’re just harming them. One of the ironies here is that Trump made the case here — and so did Sanders by the way — in terms of workers and jobs, and no one ever talks about how those same folks are all consumers of those products. So maybe we can create a few manufacturing jobs, but all of us are harmed by the higher prices we pay for those goods. And the higher prices we pay [make us unable] to take that surplus and spend it elsewhere — it destroys job creation elsewhere.
One of the things here is that Trump’s general anti-trade stance will end up harming some of the people who voted for him, precisely for the wrong reason.
AS: A lot of the people that voted for him. The vast majority of the support.
Why? Because if it hurts everybody, then it necessarily follows that it’s going to hurt his supporters. They’re not — this is the thing — they’re not small-government people, they’re not free-trade people, they’re not laissez-faire people.
LH: I guess one of my problems with this election was how pervasive the anti-free-trade platform was. As Steve points out, Sanders made that argument, Clinton talked about her concerns about TPP, and then Trump went in on a clearly anti-free trade platform. What is it about free trade that’s so counterintuitive? Why is it that we have such a hard time demonstrating the benefits of free trade when they’re so obvious? Why is it that people aren’t persuaded by that?
It does seem to be that there’s a political psychology of an immediate short term kind of concern that outweighs the overall benefits of long term growth. I found it really fascinating that the one universal platform that everyone was running on in this campaign was an anti-free trade one. That’s what it looked like to me.
SH: That issue has always been easy to kind of demagogue. As you said, Lauren, you talk about the short term benefits and whatever’s happening now. This is Bastiat, right? If we don’t go past the seen and the first-order effects, we don’t understand the issue. The other problem is it’s hard to explain the benefits of free trade in 140 characters. We need an attention span certainly longer than Trump’s, but apparently longer than most of Trump’s fans and Clinton’s followers, too, and that’s the real challenge here.
I’ve been making these arguments for so long now, and I think one of the ways to do this is to do the reductio. If you really think free trade is bad, then let’s keep going local and local and local, and then what? You shouldn’t have a trade deficit with your local grocery story because you buy more of their products? They don’t ask me to do econ lectures in the produce aisle, right? At what point does this stop?
I think the problem with that argument is, people want to root for the home team. They say, well, if it’s Americans, it’s different. I think then, as classical liberals, we have to continue to push the idea that if you really care about human beings qua human beings isn’t it more important to help, through trade, folks who are poor in other parts of the world than worry about saving one middle-class small business owner’s possible income in the United States? That’s a hard case to make, I think, when people are rooting for the home team and certainly with Trump trying to make America great again, which, frankly, turned this election into sports or World Wrestling Entertainment.
AS: Steve, you can make that same argument even if you have sort of a home team thing. It’s the worst off here in America —
PM: The economic welfare is improving for the United States.
AS: Even if people are inclined to that kind of parochialism, the same arguments would still work. Assuming that you care about poor and working class Americans, you don’t have to make the case that we should care more about poor people in the third world than people in America. All you have to do is make the case that if you care about poor and working class Americans, then you should be in favor of trade.
PM: To echo a little bit of what Lauren was saying about some of the presence of protectionist rhetoric on both sides of the aisle in this campaign. I do see — and express fears myself of — a resurgence in kind of the mainstream protectionism that I think is somewhat new to this campaign. To use an example, the Republican Party, since the 1940s, has historically been aligned with trade liberalization — although in its pre-1940s iteration it was the protectionist party.
This is what got Herbert Hoover into office in 1928. Also, part of his response to the Great Depression was to tighten down trade internationally, pass the Smoot-Hawley tariff. He signed it into law against the advice of thousands of economists because he thought it was going to be some sort of depression relief mechanism.
This goes back to the roots of the Republican Party, of where it had been for many decades prior to the depression. This is something we haven’t seen in American politics in a while. The protectionists, they kind of lingered in the corner of the Democratic party since the World War II era, but they’ve never been at the forefront. There had been also an emerging consensus that trade is a good and desirable thing for at least the second half of the 20th century. And now we’re kind of seeing elements of both parties, including the party that won, calling for a reversal of our trajectory, where it has been moving towards trade liberalization. Now they’re kind of swinging back in the protectionist direction, even to the extent that the Republican Party reversed its own platform from where it had been just four years ago.
This I do see as a very troubling manifestation to come out of this election, and it’s something that unfortunately I think is much larger than just the Republican Party because we saw the same thing in the Bernie crowd. To the extent that that’s a troubling movement, it may be one of the more enduring problems that comes out of this electoral result.
LH: Yeah, one of the things we’ve seen is sort of a rejection of the elite altogether. I think Bernie and Trump have so much in common that was sort of appealing to working class, blue collar Americans who felt like they’d been left behind by a variety of different kind of economic and political changes. What was interesting was watching this happen in Britain in the Brexit phenomenon and then watching the exact same thing happen in the US, or something sort of similar. It does seem to demonstrate — I think this is my fear — that this isn’t just a one-off. This wasn’t just an accident. It really demonstrates some profound concerns with those liberalisms sort of broadly. It actually shows politically the disjunct between liberalism and democracy and the fact that you can have illiberal majoritarian impulses that push us in really damaging directions.
I know Jason Brennan’s work deals with it, and there’s been some growing concerns about the disjunction between democracy and liberalism. If you look at the electoral map, Clinton won cities. She won all of the areas where you have any sort of real population density. That left huge swaths of rural America to vote for Trump. What is it about these liberal ideas broadly speaking that they’re rejecting? These people are not just rejecting free trade. They’re rejecting freedom of speech. They’re rejecting a wide variety of liberal institutions. I think that’s really damaging.
When this originally happened, the goal was to wait four years and this will undo itself, right? That may not be the direction we’re going in, and I think it is something we do have to be pretty concerned about.
Intellectual Property Laws
DW: Let’s move on to a more contested part of the TPP, one that has seen economists kind of go at it. And that is the intellectual property component of the TPP. The IP section of the TPP states that parties to the agreement must grant copyrights at a length of life of the author plus 70 years, and it requires countries to set criminal penalties for violating copyright protections. The goal here is obviously to spur innovation by requiring signatories to establish strong patentability standards and adopt strong copyright protections. Some economists, including Paul Krugman and Robert Reich are worried that the TPP would allow big pharma, for example, to get advantages at the cost of consumers, and that people in developing countries would not be able to access medicines under the TPP regime.
SH: Two things. Look, none of these free trade agreements in the last 25 years have been really free trade agreements, right? They’re liberating — just as you said a little while ago, Daniel — they liberate trade in a number of ways, and then we get all these special interest things tacked on to it.
I think all of them, however, have been net positives. NAFTA was clearly a net positive despite bad things in it. It bugs me when libertarians argue that NAFTA’s terrible and we need to get rid of it. No, okay? It had flaws, but it was clearly a good thing. I think this is one of the bad pieces of the TPP. For me, I think we’re in a different institutional world right now where knowledge has to be free, and patents, they’re monopolies on knowledge. There are always incentives to innovate for advantages and these sorts of things. You don’t need patent protection to spur innovation, and you end up harming consumers with that kind of protection.
Copyrights are a little trickier, and in a world where reproduction of things is so easy, I understand the impulse. I just think the costs of enforcement are greater than the costs associated with a regime where copyrights don’t have those protections.
The last point I’ll make about this is that if we reject the TPP, regardless of the particulars of TPP, it sends the signal that we’re rejecting what looks like free trade in general. And I think that’s going to get responses from other nations. This is what happened in the great depression, right? We passed Smoot-Hawley and everyone else said, “Well, guess what we’re doing?” And we closed down global trade. And that’s part of my concern here. I think the TPP has still been a good thing, and if we reject it, we end up sending a really bad signal.
AS: You’re saying that even though it has things that are clearly bad, it’s better in the long run to go with it because it’s a net positive?
SH: Yeah, I think that’s right. It’s not a strong endorsement, but I think that’s about the best we can say.
PM: It’s often the best that we can get from policy, is something that’s just good on the net. Everything’s going to have bad components to it, and again it’s the interest-group story. Long before I took up the formal study of history, I worked a little bit in trade down on Capitol Hill for a few months, and the thing that shocked me there was just the pervasiveness of the lawyers, the lobbyists, the people that were coming in to negotiate bits and pieces. They were trying to carve out of trade deals that were rolling out at the time. That’s just the nature of the game. It’s something that we accept, and we bite our lips a little bit knowing that the larger objective of trade liberalization probably is going to in the long run outweigh some of the IP provisions that are in place, and then try to chip away at the IP provisions separately.
The big concern I have though is that someone like Trump — who is demagogic in the way that he approaches trade — is going to seize on to what are otherwise fairly legitimate grievances with some of the IP carve-outs the TPP has so he can achieve what his real objective is, which is the tariff agenda.
AS: My concern is he is demagogic about trade, but many other people are demagogic about trade, too. The reason that works is because people are susceptible to that. There’s something wrong here that people respond to those appeals in the first place. That’s why it has continuously been throughout history a successful strategy, right? You could get rid of Bernie Sanders, you could get rid of Donald Trump, but you’d still have people susceptible to the next person who comes along saying trade is bad, trade is bad. “Buy American” fits on a bumper sticker, but “Everybody gets richer through trade” also fits on a bumper sticker. So why don’t we just start printing out bumper stickers that say everybody is more prosperous when we trade? For some reason, people don’t. I don’t know why that doesn’t get as much traction.
SH: I think it goes back to Lauren’s point earlier. If you buy the Hayekian evolutionary psychology type story, our brains have a kind of default setting that says we think about the people closest to us who we know, and it’s harder for us to see how anonymous others get benefited through these larger processes. We are sort of mentally, psychologically susceptible to those arguments.
Part of that disposition is to think about the home team. If I look around, I see these manufacturing jobs have gone away, right? I see more of my stuff is being made in China. That’s the easy conclusion to draw.
LH: I think it goes even further than that though, which is it’s not necessarily just the home team preference, there’s also the fact that you look at political scientists, like Alford and Hibbing talked about what they called a wary cooperator. There’s been a ton of research in evolutionary psychology on cheater detection, and a lot of work in economics, that people are willing to actually take a hit in terms of their own personal wellbeing in order to punish people that they see as not cooperating. I think that was a big part of Trump’s anti-trade rhetoric. Free trade’s great if everybody’s playing by the rules, but China has not played by the rules, right? They’re messing with their currency. They’re doing all these kinds of things. Therefore, until we can ensure that everybody’s doing what they’re supposed to be doing, we need to pull back.
The home team stuff absolutely matters, but I think a lot of Trump’s rhetoric was about punishing people who are taking advantage of these trade agreements. And — by the way — same thing with NATO, too. The idea that people aren’t paying in what they should be, so therefore we have to pull back. I think that kind of rhetoric is enormously persuasive to people. We don’t want to be taken advantage of. We’re strong enough on our own. That’s just not true.
SH: Let’s go one level deeper here. A level deeper here is our inability to see win-win, right? Once we start thinking about this as a competitive game in which, if we win someone else has to lose — or if someone else is winning, we must be losing — that to me is the really dangerous part of a CEO in the presidency. From a CEO’s perspective, the market is not win-win. If my competition does better than me, I lose. The win is for the rest of us. Competition is good for everyone, but not for individual competitors, and Trump seems to see the world from that perspective. So does Sanders in the sense that he’s looking at unionized workers and saying that it may be true that unionized workers lose from trade. But we all win, right?
I think part of this, at the deepest level, is getting out of this mentality, this sort of sports team, football poll ranking mentality. Deirdre McCloskey has a great line at the end of her new book, something like “we’ve got to get away from thinking about the ranking of nations, and we’ve got to think about how well the average person is doing.” It’s not a football poll of nations. It’s about people, and I think that’s the hard thing for us.
Lightning Round — Energy Policy
DW: All right, let’s do a quick lightning round. We only have a couple minutes left, so I want to get some quick thoughts on energy restrictions and regulations. I’m going to keep you guys to five sentences max in your reactions to this.
AS: Good luck.
DW: I know, it’s going to be a real challenge.
One of Trump’s primary targets has been Obama’s clean power plan, which many critics see as a war on coal. It would require states to meet carbon emission reduction standards, based on their individual energy consumption, and it includes an incentive program for states to get a head start on meeting standards on early deployment of renewable energy. What are your thoughts, in five sentences or less, on the idea that we need to repeal the clean power plan in order to restore jobs in shale energy and clean coal, and just on deregulation in general?
PM: To start, I’m less concerned about restoring jobs in coal then I am about the rent seeking carve-outs that came into being when Obama enacted some of those regulations. Especially some of the subsidies he’s given to things like solar energy. There are vast interest groups that are behind these policies, and they lobbied aggressively for them because they’re getting money out of the government or they’re getting diverted economic activity out of the industries that Obama regulated as they shifted into supposedly clean energy, in ways that’s economically gainful to them.
SH: If the goal here is to find the right energy mix and to encourage the development of clean energy, we need prices and we need markets and we need the discovery process of competition to do that. Phil is quite right about the lobbying in clean energy. We saw that with Solyndra. This is a place I think where Trump has it right, maybe not always for the right reasons. But if we have energy needs and we want to produce them and we want to find ways to produce them efficiently — that’s what markets do is figure that stuff out, which is why we produce energy much more efficiently now than we did 50 or 100 years ago.
LH: I’m not an energy expert by any stretch, but I do think that part of Trump’s appeal was to voters in coal areas. I think he won West Virginia with over 60% of the vote. But coal is not coming back. There’s clean coal and there’s a variety of different technologies, but you can’t bring back the jobs that were lost. And that’s where I think Trump is going to face a political reckoning.
SH: Right, and that goes for the manufacturing jobs on the trade discussion, too. Those aren’t coming back. They’re just not coming back, and so if you’re going to stake your political future on a promise of those coming back as Lauren said, you’re going to face a reckoning at some point.