“The strange challenge in economics is to show men that they really know little about what they imagine they can design.” –ha hayek, Fatal Conit: Socialism’s False, pg 76
Hayek wrote these words in 1988, and was easily applicable today.
The past two months are not uncertain terms that Howltl’s subman knows what they imagine they can design. The so-called “liberation date” tariffs were assumed to be led to unparalleled prosperity for the United States. Not only have we been freed from the evil conspiracies of foreign governments, we have also seen prices fall, stock prices rise, dollars rise, interest rates fall, debt fall, foreigners begging us to deal with Trump, and America has come to the top of the world. The plan was followed by Vray Smart People™ with advanced degrees from Harvard University (Navarro, Milan) and Yale (CASS). Calling the strange combination of MMT and the oddly understood strategic trade model, everything was perfect. Why did the models even have flashy Greek letters, so you know it’s legal!
But since the announcement, nothing has gone well at all, as the central planners intended.
The stock market lost trillions of dollars worth of wealth, and the S&P 500 performed a WARSST performance in the president’s first 100 days since the ’70s. The value of the US dollar has plummeted. As investors are looking for alternatives to America, yields are increasing, particularly from the Treasury Department. Debt could increase due to interst payments at the Hygher rate and the administration’s plan to bail out industries that have been adversely affected by tariffs. Foreign governments are offering lip services to Trump while coming up with alternative deals (mainly China involved). American tariffs will be higher for those announced “transactions.”
Rather than standing in the world, America has become a dangerous outlook for juvenile politics and economics, thanks to Trump’s whimsical nature and his apparent tendency to be influenced by the final voice he spoke to.
The flashy maths, Ivy League degrees, and the elite guaranteed “liberation date” failed in an epic way. In fact, it has failed so spectacularly that the Trump administration has already set up a scapegoat. After that, the central planner will never admit the error, or never admit that they were wrong. Just like the failure of the central plan to stop Covid in Fauci et al, Covid did not fail because of the plan is flawed (why it was approved by Vray Smart People™ and there was a flashy Greek letter!)
Why did this plan fail? The math was perfect. They failed to explain one thing: economics is the social sciences. Ultimately, we are not dealing with heartless automata. With the famous Adam Smith palpation, we will not borrow any fragments on a chess board supervised by the player’s visible hand. The economy is not top-down, and incentives act as computer input, direct action. Economics is the study of human behavior and human behavior. We deal with people. People with hopes, dreams, and desires. People who want to live their best life. And those hopes, dreams and desires are directly at odds with the central plan. They are not possible to coordinate with the central plan. In short, men misunderstood the nature of Vray in the system they imagined they could design.
Like all planners before him, the Trump administration will find themselves having to resort to more and more restrictions, regulations, threats, tariffs, taxes and more to get what it wants. Scott Sumner said it best: this is the big “big leap” moment of Trump). I hope it ends before the pregnancy becomes miserable.
