By Jonah Goldberg
Wednesday, January 21, 2026
I’m not sure what to call the new era we seem to be
entering. But I am sure it will make people poorer.
Let’s start with some basics. Imagine you inherit a
thriving department store chain. Rather than listen to experts on consumer
trends, supply-chain logistics, human resources, etc., you instead opt to go
with your gut. Rather than follow market research or anything like that, you
prefer to just hire your friends and do business with vendors who flatter you
or sell stuff you think is cool. Under such a “system” you might make some good
business decisions, but odds are very strong that you’ll more often make bad
ones. The rep from the Pet Rock supplier who gives you a “World’s Greatest
Businessman” award gets his products in the store window.
I chose a department store for this analogy because
that’s precisely how President Donald Trump thinks about international trade,
and the American economy in general. He sees
America like “a department store, and we set the price. I meet with the
companies, and then I set a fair price, what I consider to be a fair price.”
That’s what tariffs are in Trump’s mind, even though they are mostly paid for
by American consumers.
The problem, beyond the basic economic illiteracy
inherent in the analogy, is that Trump keeps changing the “price” based on
non-economic considerations. To name just the most recent example (of many),
the president declared over the weekend that he’ll tear up trade deals he made
with eight European allies and levy tariffs on their goods until they acquiesce
to his demands for Greenland.
Now, in almost every business, there’s a little
favoritism—giving a job or promotion to a nephew, offering a lucrative contract
to a friend. But it’s understood that these are deviations from sound business
practices. For Trump, sound business practices are the deviation from his
policy of favoritism.
I should note that there are other forms of more
explicitly ideological favoritism. For decades, many on the left have
championed policies that prioritize social or political goals over sound
economics. They’ve gone by different labels, including “social responsibility,”
which morphed into things like ESG—environmental,
social, and governance investing—and DEI. But the idea is always the same: The
government should impose standards and policies based on something other than
profit-seeking and shareholder value. This is not always wrong, either. Child
labor and worker safety laws, for example, are worth the costs they impose.
But such examples are outnumbered by countless other laws
and regulations that replace economic decision-making with political
expediency. Populism has historically been one of the main drivers of such
distortions. Hence, it should surprise no one that Trump and Sen. Elizabeth
Warren see eye to eye on capping credit card interest rates.
What differentiates Warren from Trump is that she’s a
traditional progressive populist ideologue arguing from a body of thought that
exists as much on her bookshelf as in her own head. Trump’s approach resides
entirely in his gut.
As a free market guy, I don’t trust Warren’s bookshelf or
Trump’s gut.
Which gets us to why this new era—let’s call it the
postglobalist era—will make us poorer.
Across the world, corporations large and small are making
business decisions based upon geopolitical and plain old political
calculations. Nowhere is this more obvious than in international trade. If you
think tariffs can rise at a moment’s notice because the president of the United
States woke up on the wrong side of the bed, you’re going to hedge against that
risk. Firms around the world are reorganizing their supply chains to become
less reliant on the American market. Almost by definition, these moves are not
maximally efficient. Less efficiency equals less productivity. Less
productivity equals less wealth creation and growth.
But it’s also true in other ways. If you know that the
department store’s new boss likes gold, you’re going to paint more of your Pet
Rocks gold. If the management insists on taking partial ownership of your
company—something Trump
has
done
more than any president in modern history—you’re going to make defensive
decisions aimed at not pissing them off. As The Economist reports,
everywhere you look, multinational companies are making decisions based on
geopolitical considerations. “When companies are forced to allocate capital on
geopolitical lines, they become less productive, reducing prosperity for all.”
For nearly my entire adult life, American conservatives
understood this basic point and argued against excessive political or
ideological distortions of markets. Remember all that talk about “picking
winners and losers” and “crony capitalism” in the Obama era?
But for some reason, many conservatives think it’s fine
to outsource economic decision-making to a single man. And most of us will be
poorer for it.
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