“Tariffs and Other Thoughts” Sydney Williams
http://www.swtotd.blogspot.com
President Trump bears responsibility for the rout in the world’s equity markets. His tariffs, if used to raise revenues, as he claims, will cause a global recession, or worse. If they are used to negotiate lower tariffs on U.S. exports, which he also claims, they will strengthen the economy and may lead to global free trade. He is right, however, in his complaint that there is much in our politics and culture that has gone wrong over the past several years. We are a country, like much of the West, with a spending problem. Federal debt, as a percent of GDP, is higher than it was in 1945 (121% in 2024 versus 112% in 1945). Both political parties are at fault for excessive spending. As well, there has been a rise in anti-Semitism, fueled, in my opinion, by dislike for Israeli Prime Minister Benjamin Netanyahu, and often masked as anti-Zionism. And, of course, our border was open throughout President Biden’s term in office.
In this age of technology, we must focus on ensuring access to needed raw materials. Over the past several years, we have let defense spending lapse, while permitting China unchallenged access to commodities and markets across Africa and South America. We have allowed unfettered (and illegal) migration into our country, and not just for those seeking political refuge from despotic governments, but for criminals and gang members, some of whom brought in fentanyl, a drug that has killed an estimated quarter of a million Americans since 2018. We have seen the Democratic Party take a sharp turn to the left, as it became increasingly patronizing in tone – do as I say, not as I do. The Party has focused on equity, not equal opportunity. In the name of diversity, it has encouraged racial division and allowed identity policies, rather than ability and diligence, to become the standard for admissions into colleges and businesses; it has let universities become beacons of “social justice,” rather than pinnacles of learning where students debate controversial subjects in a respectful and tolerant manner; it has encouraged sports venues to allow males to compete against females. Just last year, the Party knowingly nominated a man for President who was mentally unfit, and now we have a Supreme Court Justice who is unable to define a woman. In all of this, mainstream media has been complicit.
None of us want to return to the past. Each generation builds on the previous. Much of manufacturing, in the 21st Century, will be done by robots, so bringing industries back to the U.S. will not necessarily bring back jobs. Three hundred years ago, and thousands of years before that, the principal source of wealth was land, and the crops grown and the minerals mined. Wealth gaps were enormous and slaves and serfs who worked the land had little or no freedom. The Industrial Revolution, which began almost two hundred years ago, gave rise to a new group of capitalists – those who were innovative, creative, aspirant and diligent. Income and wealth gaps were still enormous; but new products, from railroads to plumbing, improved lives. And that period saw trade expand beyond borders. Industries, to stay competitive moved production facilities. After World War II, in my home state of New Hampshire, textile mills relocated to southern States, to take advantage of cheaper labor and other economic incentives. While those moves hurt New Hampshire’s economy, lower prices of finished goods benefitted consumers across the nation.
More recently, finance and technology have provided sources of wealth. Life is never fair, and there will always be those who have more than others. But definitions of poverty have been defined upwards. Capitalism has improved lives. Keep in mind, the role of government is not to redistribute wealth or equalize outcomes, but to set rules and regulations, enact and ensure adherence to laws, provide a system of equal justice, and offer access to ladders that lead to opportunities for success, recognizing that the rungs on a ladder go down as well as up. And education represents the first and most important step on that ladder. So, education should be a principal concern of government. Yet, because of the power of teachers’ unions – major supporters of the Democrat Party – education has been neglected, as test scores show.
Mr. Trump’s flaws are legion; they include an over-sized ego (a characteristic common to all politicians) and his preference to surround himself with sycophants (another characteristic common to most politicians). And just as his enemies are blinded with hatred, his acolytes are blinded by devotion. Nevertheless, tariffs, as proposed, are not the answer the Administration claims. In fact, left standing, they will cause more damage to markets and the economy. So, the question is: Will they remain as they are? I don’t know.
I want to end, however, on a positive note. The people of the United States recognize the extraordinary luck they have to live in this country. This is the only country in the world founded on the principle that men and women are born free, with certain inalienable rights, among which are life, liberty and the pursuit of happiness. And, yes, I recognize our history has not always been just, that injustice is part of our past. But I also recognize the great strides we have made over the years and the acknowledgment of those injustices by leaders in politics, education and business. Overseas, the United States must continue to practice and project the moral standards that have defined our nation for the past 250 years.
Volatility in the stock market is a concern, but it is worth repeating Benjamin Graham’s quote: …that the market, in the short term, can be seen as a “voting machine,” influenced by investor sentiment and emotions, but in the long run it acts as a “weighing machine,” reflecting the value of companies based on their fundamentals. Current volatility, while putting at risk traders with short time horizons, offers opportunity to long term investors seeking value.
As for our nation, Martin Luther King, Jr. reminded us: “The arc of the moral universe is long, but it bends toward justice.” It is true that Founders like George Washington, Thomas Jefferson and James Madison owned slaves, but it is also true that they provided the framework, in the Declaration of Independence and the Constitution, that permitted America’s moral universe to bend toward a fairer and more inclusive society. And that arc is still bending. History is a continuum.
So, stay positive and stay focused. There is good and bad in all people. We have not yet seen the final act in this play about tariffs. Applause or catcalls should wait.
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