By Jonah Goldberg
Friday, April 04, 2025
I’ve seen a lot of attempts to find an analogy for the
moment we’re in. Some are pretty literal—Smoot-Hawley
and all that. Some are more figurative. A few friends have likened it to 9/11
in that it is just an epochal chapter break. Everyone I know who was an adult
back then still sees the past in terms of pre-9/11 and post-9/11. Likewise, if
Donald Trump doesn’t back off soon, or if Congress doesn’t grow a spine and
stop him, then it does seem pretty clear that we will be talking about BLD and
ALD—Before Liberation Day and After Liberation Day—for the rest of our lives.
That’s true if it’s a success or if it’s a failure.
I’m struggling to follow wise counsel and not look at my
stock portfolio or retirement account. I haven’t yet, because I know what it
will be like. In fact, Steven Spielberg did me the courtesy of visualizing my
struggle. The kid from Poltergeist is me trying not to look at the clown
show, as it were.
At least I have my I-told-you-so’s to keep me going. But
I am fascinated with how the various pro-Trump factions are processing all of
this, because I know what it feels like to be proven wrong by reality. I
remember when it was becoming impossible to deny that the U.S. military would
not in fact find the robust stockpiles of weapons of mass destruction the Bush
administration used as the primary justification for the invasion of Iraq. I
was always skeptical of emphasizing that rationale, but I also wanted it to be
vindicated because it would make everything easier. It wasn’t vindicated, then
the war itself started to go very badly.
It felt terrible for all sorts of reasons. First and
foremost, it felt terrible because it was a terrible thing for America,
American forces, our allies, and Iraqis. But being on the wrong side of
something so important that I supported felt terrible. It’s not like things
would have gone differently if I had opposed the war from the start. I spent
years fighting with people whom I believed to be wrong on the facts and in
their analysis of them. I convinced myself—sometimes correctly, sometimes
incorrectly—that they were willing villains in the morality tale of the decade.
So, to then watch as events unfolded in ways that supported their views and
contradicted mine was a pretty miserable experience. I should say that I don’t
think the other side always had the better arguments, given what we knew then,
or even now. Iraq wasn’t a “war for oil” or any of that stuff. Indeed, that’s
one of the things that made the period so excruciating. People who made bad
arguments were being politically vindicated.
I bring all of that up because I know lots of people have
convinced themselves that Donald Trump and J.D. Vance are right: that their
version of economic history is accurate and their prescriptions for how to fix
our problems are the best remedies possible. I also know a bunch of people who
have always known in their hearts that Trump’s mercantilist hornswaggle is unsound, but who
lacked the courage to say so. And, of course, plenty of people merely suspect
Trump is wrong but hope he’s right and are eager to be proven wrong. There were
people across the right—and a few on the left—who fell into similar places with
regard to George W. Bush and the Iraq war.
Anyway, that’s why I find watching the MAGA right go
through an extended Kübler-Ross “Five Stages of Grief” process so fascinating.
Many are still in denial and anger. Even more are literally and figuratively in
the bargaining phase, by which I mean they are still clinging to the idea that
Trump is doing all of this as a negotiating tactic and he’ll find some “deal”
that will have made it all worth it. The folks in the depression stage are hard
to find, because they’re the least likely to do TV interviews. I haven’t seen
much acceptance yet, though I think it’s more than a little intriguing that the
Heritage Foundation’s trade guy is already singing
a different tune than he was a
few weeks ago.
I’m glad to be on the right side of this argument. As
terrible as it feels to watch my net worth plummet and to watch my country
undergo the single most egregious deliberate act of economic self-harm perhaps
in its history, at least I’m not being proven wrong in the process. My hopes
aren’t being dashed, my views aren’t being discredited in real time the way
Vance’s are and will continue to be. That may sound smug, but the more that
offends you, the more likely it is that you’re feeling defensive about supporting
a terrible policy and even worse implementation of it.
Making the case.
Still, I keep hearing from decent people who desperately
want Donald Trump to be right about this or who think we should just give this
a shot.
These encounters, whether via email and Twitter or in
person at airports, are exhaustingly frustrating because the arguments they
bring have an air of desperation. Many people accept Trump’s baseline premises.
They believe that the economic era since NAFTA has been a disaster for America,
hollowing out the middle class and that,
therefore, something has to be done to fix it. (For what it’s worth, a
lot of that “hollowing-out” is due to the fact that a lot of middle-class
people got richer, not poorer).
From there they insist that at least Trump’s goal is
right—we should have an industrial policy of some kind that “brings back”
manufacturing. Then these folks insist the onus is on me to provide a better
strategy to achieve that goal. At least he’s trying something! All you’re
doing is criticizing! What’s your plan?
I don’t have one, largely because I don’t feel like I
need one. Trump is not alone in inventing this “crisis” (he’s just the most important and consequential author). But
it is a bogus, manufactured crisis (economically, politically, legally, and constitutionally). The
presumption that I must have my own plan to deal with a crisis I don’t think
exists is a coping mechanism. I think NAFTA was good (for many of the reasons
the Heritage Foundation laid
out in the Before Times), but I also think it wasn’t that big a deal. The
transformations to our economy that transpired after its passage would largely
have happened
anyway.
Here’s something worth keeping in mind: Back in 2018, amid Trump’s first foray
into tariffs, George Will wrote:
All this dictating and
renegotiating is supposed to protect American jobs from the menace of NAFTA,
which according to one of its ardent critics destroyed 1 million U.S. jobs in
its first 20 years (1994–2014). An academic study argues that trade with China
destroyed 2.4 million jobs between 1999 and 2011. But Don Boudreaux of George
Mason University’s Mercatus Center says this means it took NAFTA two decades to
destroy as many jobs as are erased by the normal churning of the American job
market on average every 18 days. And the so-called “China shock”
eliminated in 13 years as many jobs as are eliminated by the U.S. economy’s
process of creative destruction, on average, every 41 days. So, if there
are to be trade “wars” with China and Mexico, they will be launched to avenge
job “casualties” that are far fewer than those routinely inflicted by the
domestic processes that produce American prosperity.
If you want me to offer ideas about how we can do better
at manufacturing chips or building ships, or to contain China, I’m happy to
think about that or have that conversation. But you’re not going to get me to
agree that because we should do those things, declaring economic war on Mexico,
Canada, Japan, the EU, and the U.K. makes sense. You won’t convince me we need
to save manufacturing by making bananas and avocados more expensive. Nor will
you get me to say, “at least he’s trying.”
I’m astounded that people will repeat Trump’s talking
points back to me as if they are good faith, accurate, and often irrefutable
descriptions of reality. They insist that our friendly trading partners have
brilliantly used tariffs to prosper at our expense but can provide no examples
that hold up to scrutiny. They claim that draconian tariffs will force
corporations to bring back manufacturing to the United States. And because
everyone simply agrees to believe that “manufacturing jobs” are definitionally synonymous
with “middle class wages,” they think being opposed to more manufacturing jobs
is being opposed to more Americans being able to live in Ozzie and
Harriet-style prosperity. Nostalgia, Robert Nisbet once said, is the “rust of
memory.” These fantasies about bringing back the Rust Belt are the economics of
nostalgia.
Meanwhile, to listen to some of the more strident
populists, you’d think that rich “elites” have shipped away these good jobs to
Third World countries just so they can have cheap sneakers or inexpensive
avocado toast. It never seems to occur to them that rich elites can afford
more expensive sneakers and avocado toast. A closely related assumption is
that poor and middle-class people don’t care as much about having cheap
sneakers and avocados (also used in guacamole, by the way, at the sort of
football-watching parties that these real Americans reportedly enjoy so much).
Treasury Secretary Scott Bessent mocks
the idea that the American dream involves having access to cheap goods. Talk
about elitism.
But if you take your partisan blinders off for a
nanosecond it is obvious that Americans with more constrained incomes spend a
greater share of their disposable income on things like shoes or food than rich
people do. I’ll keep the math easy. If you make, say, $100,000 per year,
spending $1,000 a year on shoes for you and your family is 1 percent of pretax
income. If you make a million dollars per year, spending the same amount is 0.1
percent of your income. Please feel free to check my work.
In this sense, shoes are 10 times more expensive
for the middle-class person than the rich person.
In other words, the poorer you are, the more you
benefit from “cheap goods.”
Look, I’ll be honest: I’m getting tired of talking about
trade. It’s nothing like my specialty or expertise. I’d much rather be talking
about women’s prison movies. But I feel the need to explain, as plainly as I
can, why I think the people yelling at me don’t really understand the facts.
The fable of the shoes.
The late economist Murray Rothbard once offered a useful thought
experiment. What if everyone had always gotten their shoes from the
government, but then one day someone suggested that we privatize the shoe
business? How could the private sector handle all the different sizes? Who
would decide where to put the stores? Etc.
The Liberation Day crowd has a similar fable. They don’t
want to get the government into the business of making shoes, they just want
the government to make Americans buy shoes made in America because that would
be “better.” Okay, so let’s think that through.
Let’s say you run a sneaker factory in Vietnam. Let’s
just say for the sake of argument that semi-skilled workers there make $500 per
month, which seems to be a bit high but in the ballpark. That’s $6,000 per
year, working pretty long and difficult days. Looking at its website, Nike
sells shoes in the U.S. from a high of $285 (the
Alphafly 3) to a low of $55 (the Vapor
Shark 3 football cleats). I’m excluding the cheaper sandals.
(Author’s note: When I looked at their website yesterday,
the price was $47. When my editor
checked this afternoon, the price had gone up to $55. That’s a 17 percent
increase overnight.)
Now, the stated goal of the Trump administration is to
get Nike to move factories to the United States. Give those good, high-paying
jobs to Americans, dammit. Vietnam’s per capita GDP is $4,904 (that’s the
highest estimate from the International
Monetary Fund. The U.N.’s
is $4,282). So, $6,000 is nothing to sneeze at. Do you know anybody,
outside of kids with after-school jobs, who thinks $6,000 a year is a living
wage in the United States? The per capita GDP of the United States
ranges from just over $80,000 to just below $90,000.
I am totally open to looking at other metrics, like
Purchasing Power Parity per capita, or median income. The numbers change, but
for our purposes, the ratios really don’t. An American worker might be able to
live on an average Vietnamese worker’s income—in Vietnam. In the U.S.
they would struggle to do better than mere subsistence as a homeless person or
a charity case.
So, assuming it’s even possible, what happens when the
sneaker factory is moved to America? Well, the federal minimum wage is $7.25
per hour. That’s $15,080 per year or $1,256.67 per month. So, the lowest
paid American worker costs at least twice as much as a fairly well-paid
Vietnamese worker. You can tack on a few more thousand dollars per year if you
want, since these numbers reflect a 40-hour work week, and Vietnamese factory
workers often work much longer than that.
But you get the point. This isn’t the stuff of good,
middle-class American wages.
Let’s assume that Donald Trump can make Nike pay
good American wages. Depending on where you live, middle-class wages are somewhere
between $66,000 and just under $200,000 per year. So, the low end of
that—$66,000—is 11 times the Vietnamese factory worker’s salary. Even if
you hold everything else constant—access to raw materials, supply chains,
worker regulations, etc.—labor costs for sneakers would be 1,100 percent
greater in the U.S. Labor accounts for about 25 percent of the cost of a shoe
(that’s in
China, but let’s assume it’s similar for neighboring Vietnam). And it costs
Nike $28 to make a shoe that retails for $100. So now, instead of $7 of labor
per shoe, a $66,000-a-year factory worker makes that slice of the pie cost $77.
So you, sneaker factory owner, have three choices. You
can pass those costs on to the consumer, you can eat those costs and go out of
business, or you can invest in robots to make those sneakers more cheaply.
Now, I don’t know what sneaker-making-robots cost,
assuming they exist. But let’s say they do. I also assume they cost more than
what it costs to have Vietnamese workers make sneakers. Why? Because if robots
could do the job much more cost effectively than Vietnamese workers, Nike would
invest in said robots. It has not done so to date. That suggests that even if
you could acquire such robots, the costs for making sneakers would still be
greater than the cost of using Vietnamese humans. That means it would undoubtedly
be more expensive than using American humans. Which is not to say that a few
people wouldn’t make actual middle-class wages operating and maintaining the
robots.
In other words, if Trump’s Liberation Day plans are
wildly successful, American consumers will get to buy much more expensive
sneakers in exchange for a handful of good jobs running sneaker-making robots.
That sounds like a really stupid trade-off.
Oh, there’s an added expense that is more difficult to
quantify: This dynamic will apply to electronics, clothes, auto parts, and
other goods Vietnam produces. So by following through on this plan, we will
have dealt a devastating blow to Vietnam’s economy, which will make any chance
of pulling Vietnam out of China’s economic and strategic orbit infinitely more
difficult. Why should the Vietnamese believe they are better off aligning with
us, when aligning with us has led to this?
So there you have it. That’s one facet of why I think
what Trump is doing is so stupid. It’s stupid not just because it won’t work,
it’s stupid because if it did “work” we’d be worse off.
And I feel no obligation to save you from your
Kübler-Ross spiral by offering my “better plan” for doing something I don’t
think we should do.
