if Donald J. Trump can believe free trade is bad for American workers despite his own White House’s announcement of record low unemployment and high trade deficits, then he can believe almost anything. And that is the problem and it’s dangerous.


News Special from Independent Mind Media
June 12, 2018

The U.S. Bureau of Economic Analysis announced that the U. S. trade deficit for April, the amount by which U.S. imports exceed exports, was $46.2 billion, the best since 2012. This was cheered by the White House in Monday’s press release, “President Donald J. Trump’s 500 Days of American Greatness”.

President Trump praised the high trade deficit:

I want to thank our great American consumers for buying cheaper imported products. Not only did Americans buy “smart”, the money saved helped make our economy grow and create jobs. I want to especially thank our trading partner China for our fabulous $30.8 billion deficit with them. Cheaper Chinese goods saved our consumers millions. Thank you, President Xi Jinping for making Donald J. Trump look good!

The White House noted that President Trump’s greatness has brought record low unemployment:

  • Nearly 3 million jobs have been created since President Trump took office.
    • 304,000 manufacturing jobs have been created since President Trump took office, and manufacturing employment stands at its highest level since December 2008.
    • 337,000 construction jobs have been created since President Trump took office, and construction employment stands at its highest level since June 2008.
  • Under President Trump, the unemployment rate has dropped to 3.8, the lowest rate since April 2000, and job openings have reached 6.6 million, the highest level recorded.

This chart released by the White House’s National Trade Council shows the positive impact of the huge trade deficit on lowering unemployment:

Economist Peter Navarro, Director of the White House National Trade Council, said that the numbers are strong evidence that trade deficits are good for the American economy. “I’ve followed trade for many years and the unemployment numbers are empirical validation that deficits are good for American workers.” Navarro is famous for the Navarro Curve, an economic law which shows a correlation between high trade deficits and low unemployment.

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Of course, Trump and Navarro see it just the opposite from the above satire. Don’t Google “Navarro Curve” because it doesn’t exist. The White House press release is real, if that gives you some comfort.

My chart, also real, is one of those damned lies and statistics things. There is no correlation between trade deficits and low unemployment. Post hoc ergo propter hoc is Latin for “A happened and then B happened, thus A caused B”, a logical fallacy. Politicians and economists make up charts to “prove” whatever they want.

President Trump, Peter Navarro, and Secretary of Commerce Wilbur Ross can say anything they want but none of their ideas about trade and tariffs are true. But the nature of politics is that people believe what they want to believe.

History is one of those things that often happen slowly, right in front of our eyes, but we don’t see it. President Trump is reversing 70 years of progress on opening up trade between nations. This is an historical event.

Through GATT/WTO/NAFTA and other policies, we’ve opened up our markets to foreign companies and they to ours. It has not been a smooth road, there are inequalities in policies from us and from our trading partners, but the pursuit of free trade has resulted in low tariffs and a more prosperous U. S. and world. Lucky us now have the whole world competing hard to serve our consumer needs.

But that is changing. Trump is starting a trade war. He has imposed tariffs on imported lumber (Canada), washing machines (Korea and China), and steel and aluminum (Mexico, Canada, China, EU). He might impose tariffs on foreign cars next. Those countries whose imports are being hit by our tariffs are reciprocating by imposing new tariffs on U. S. goods.

Trump’s Twitter blow-up with Canadian Prime Minister Justin Trudeau after last weekend’s G7 meeting in Quebec was emblematic of Trump. Trump tore into Trudeau for suggesting Canada may retaliate for Trump’s tariffs on U. S. imports of Canadian steel and aluminum. Making it worse, Administration claques, Navarro and Larry Kudlow publicly piled on. Navarro later apologized and Kudlow had a heart attack.

The fascinating thing about the White House press release, other than it’s obvious sycophancy, is that its economic optimism directly contradicts Trump’s case for tariffs on imports. He says that we are “stupid”: foreigners are taking unfair advantage of us because our companies can’t compete with cheap foreign imports and thus we need to protect American businesses and American jobs. One wonders at the ability of Trump to believe two inconsistent scenarios at the same time: record low unemployment versus “imports cause unemployment”.

But that is the nature of Donald J. Trump. He lies and he knows it. He promotes policies that almost every economist except Peter Navarro says is wrong. He spouts numbers that are wrong. He doesn’t care.

In my article, The Mind of Donald Trump, I make the point that Trump’s sole motivation is his self-aggrandizement, which is a symptom of megalomania. If you think I am exaggerating this point as mere psychobabble, this is from the Wikipedia article on megalomania (narcissistic personality disorder):

  • Self-perception of being unique, superior, and associated with high-status people and institutions;
  • [A tendency] to exaggerate their skills and accomplishments as well as their level of intimacy with people they consider to be high-status;
  • Grandiosity with expectations of superior treatment from other people;
  • Needing continual admiration from others;
  • Pompous and arrogant demeanor.
  • Intensely envious of others, and the belief that others are equally envious of them;
  • Sense of entitlement to special treatment and to obedience from others;
  • Exploitative of others to achieve personal gain;
  • Fixated on fantasies of power, success, intelligence, attractiveness, etc.;
  • Unwilling to empathize with the feelings, wishes, and needs of other people;

This describes our president pretty well. Of course, Trump and his admirers would respond with the fact that he’s a billionaire, which, as we know, justifies everything.

If Trump were a private citizen and not the president of the United States of America, we could give him a pass. As a billionaire he was highly entertaining, if not a bit comical. But as president Trump can do real harm.

One can hope that NAFTA will be saved and sanity and free trade is restored to world commerce. But Trump, true to form, seems to be marching forward. The fall out will be massive disruption of our supply chain, higher prices for American consumers, stagnating job growth, and, in an all-out trade war, worldwide recession.

This is not mere political theater; it’s history going in the wrong direction.