Understanding certain of today’s trade policies, while difficult, even baffling at times, is nevertheless possible once one identifies some basic assumptions and ascertains a possible approach to life. Although he didn’t write it, The Art of the Deal (1987) under President Trump’s name exemplifies an orientation which appears widespread today, as do some of his otherwise incomprehensible actions, possibly accounting for his popularity.
This paradigm is both coherent and consistent, but only if you consider that increasingly for many people, the only person who matters, in fact, the only person who truly exists, is oneself. This has resulted in many people holding any or all of three economic principles as absolute, unquestioned dogmas, with one’s own ego and self-interest as the only fixed points in the universe.
Two of these are general, but applied specifically in the third, regarding tariffs, which may be the only one President Trump holds for certain, but it is enough. In any event, whatever the cause(s) of this mindset, the principles boil down to:
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| David Ricardo |
· Oneself Contra Mundum. You are the center of the universe. Everything you do not own or control, and everyone who does not support you, is either a threat or an enemy. What you do own or control, and anyone who supports you, is a tool to be used and discarded once its, his, or her utility is over.
· The Labor or Input Theory of Value. Under the labor or input theory of value, derived from the thought of economist David Ricardo, a thing is worth what it took to produce it, not, as Adam Smith and other classical economists of his school believed, its utility to the consumer or buyer. In common with Marx and Keynes, many people accept Ricardo’s zero-sum approach, and — as revealed in today’s insistence on “deals” — firmly and irrevocably believe you gain only by taking advantage of others, not by engaging in mutually beneficial efforts in which everyone wins.
· Failure to Understand Tariffs. A tariff is a heavily regressive tax imposed by an importing country on its own taxpayers. It makes foreign goods more expensive and discourages international trade. President Trump, however, seems to believe tariffs are paid by the exporting country, and appears to view monies collected by the government of the importing country from its own taxpayers as a return of what was presumably stolen (“ripped off”) by the exporting country from the importing country through bad deals.
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| Karl Marx |
Each of these seriously flawed principles, any one of them bad, in combination are disastrous. We will look at the egocentric paradigm today, adherence to the labor or input theory of value next week, and a failure to understand tariffs the week after that. Finally, the week after that we will conclude with a comparison of the misunderstanding of tariffs and its striking similarity to agrarian socialist Henry George’s populist “single tax” which has had such a baleful influence on economic thinking in the twentieth century and continues into the twenty-first.
Oneself Contra Mundum
People who believe they are the most important (or in extreme cases the only) person in the world tend to try and rule others as autocrats instead of governing under the guidance and at the direction of parents, teachers, councilors, moral codes, etc. They thereby risk all the dangers to their power against which Machiavelli warned in The Prince (1532). As a guide for maintaining power, Machiavelli’s realpolitik is unequalled, although hardly recommended for a democratic republic or anyone claiming to be ethical or moral.
This is because the chief principle in The Prince is the end justifies the means. A ruler or anyone else in a position of power should achieve and maintain that power, even by morally questionable or brutal actions. Machiavelli therefore argued effectiveness in governing is more important than adherence to traditional moral values.
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| 'E's 'Enery th' Eighth, 'e is. |
People who focus completely on themselves, however, are usually not being effective, even if they trumpet adherence to traditional moral values as their justification. They thereby create the worst of both worlds, ineptly carrying out questionable, crudely vicious, incoherent, even cruel measures allegedly in support of traditional values which their own actions contradict, nullify, or render impossible. This is the result of misunderstanding the act of social justice, which is a topic for another day.
While they may think they are being Machiavellian, people employing such an approach are closer to that of Henry VII Tudor, “the stingiest man in Europe,” and his successor, Henry VIII. The only difference was where Henry VII viewed money and power as ends in themselves and acted accordingly, Henry VIII viewed money and power as means to indulge his gargantuan appetites and gratify his personal desires, even erratic and increasingly insane whims.
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| Sir Thomas More |
This was to the point of judicially murdering any other possible claimant to the throne of England (his own relations), effectively declaring himself to be the Vicar of Christ on Earth — or at least in England — to replace the pope, and ridding himself of Sir Thomas More, one of the greatest and most able Chancellors England ever had. As related by William Roper, More’s son-in-law, following More’s execution on trumped up charges,
So passed Sir Thomas More out of this world to God, upon the very same day in which himself had most desired.
Soon after whose death came intelligence thereof to the Emperor Charles. Whereupon he sent for Sir Thomas Elyot, our English Ambassador, and said unto him: “My Lord Ambassador, we understand that the King, your master, hath put his faithful servant and grave wise councilor, Sir Thomas More, to death.” Whereunto Sir Thomas Elyot answered that he understood nothing thereof. “Well,” said the Emperor, “it is too true. And this will we say, that if we had been master of such a servant, of whose doings our self have had these many years no small experience, we would rather have lost the best city of our dominions than have lost such a worthy councilor.” (William Roper, “The Life of Sir Thomas More, Knight,” Lives of Saint Thomas More. London: Dent, Everyman’s Library, 1963, 50.
Henry VIII believed he, in common with many of today’s ultra wealthy, was above the law. His increasingly erratic behavior, possible insanity, despotic nature, and shifts in personality may have been due to to a combination of factors. These include age, syphilis, osteomyelitis, and possibly some variety of genetic disorder such as McLeod syndrome, all of which led to his death in 1547, still claiming to be a loyal member of the church he attacked and whose adherents he martyred.
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| William Cobbett |
England recovered from the misrule and ownership and power-concentrating policies of Henry VIII — to a point. If you believe William Cobbett, however (whom G.K. Chesterton termed “the Apostle of Distributism”), the country never recovered, and pauperism and poverty became widespread. The British Empire — at least in Cobbett’s opinion — was a hollow shell and mockery of what it could have and should have been.
We don’t have to agree with Cobbett, though, to know recovering from the reign of a Henry VIII takes special effort and serious resolve. This is essential both to correct the problems such people cause and to repair institutions to prevent such problems from happening again. Naturally, we believe this can be done most effectively and efficiently by any country in the world by adopting the Economic Democracy Act, but it remains to be seen if anyone in power will be willing to assert him- or herself.
In any event, next week we will look at how one’s acceptance of the labor or input theory of value can influence economic and international political policies to everyone’s detriment, politically, economically, financially, and morally.
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