I’ve been wrong about a lot of things over the last 8 years of writing about politics. Most recently, I wrote,
As for me, I have no idea. My guess is that Harris will win, but I have no real confidence, and, even worse, no real basis for my claim, other than my loosely held belief that polls are improperly calibrated, given what happened in the 2022 election cycle.
Ah well, nevertheless.
So what happens now? Fuck if I know (and don’t take too seriously anyone who claims to know for sure. The future is yet to be written.) But a few loosely connected observations:
We are currently witnessing some form of a coup. While markets and public opinion seem relative calm, for now, my belief is that people are woefully underestimating the risk (as we have with many things, such as climate change). It is of course possible we end up muddling through this crisis, but if things go badly, they could go very badly. Lines generally go up, but people seem to forget that they are not obligated to. The economy and, in particular, the stock market are fragile things. Small losses of confidence can quickly spiral out of control, as the first person who madly dashes to the exits inspires a stampede behind him (just witness what happened to Nvidia).
We have a set of threats to the American economy, originating from the government itself, that seem to me to be unparalleled in modern times. The government’s word is worth almost nothing. Promises for money may be kept, or not, depending on the whim of a few Trump advisors. My fiancée is currently on a trip in Egypt. This trip had been planned for 3 years, and her boss had raised funds, in part, from the State Department. At the last minute (the day before the flight), the State Department reneged on their agreement, and withdrew the $30k it had previously promised. My fiancée’s boss had to scramble to scrounge up replacement money, and will likely have to rely on the courts to be made whole.
What people don’t realize about the law, I think, is that if the judicial system has to get involved, it’s too late. (One good example, from close to home: landlords stealing tenants’ security deposits in New York.) A lawsuit only makes sense if the amounts involved are very large. Win or lose, you will waste time, money, and sanity. If lawyers are involved, much of the proceeds will go to them, not you. The law, at its best, should prevent people from stiffing you, not recoup your funds after you’ve been stiffed. We can’t have a government in which every single contractual obligation requires a lawsuit to enforce, or at least we can’t have one for very long.
It also seems challenging, to say the least, to try to run a modern economy with a government that is poorly staffed, with political appointees and tech sycophants instead of competent experts. It’s not just taxpayer-funded trips to Egypt at stake. We’re talking about air travel, defense contracting, Medicaid payments, environmental regulation, consumer protection, accurate economic and Census data, infrastructure projects, labor law, tax processing, and a whole slew of other things I’ve either forgotten or never needed to know about in the first place. (That’s the point of having a government. So you don’t need to know about these things!) I realize, of course, that the point of the modern right-wing movement is smash and grab, to prove that the Department of Education and Labor and all the rest (besides the security state) are ineffectual or outright harmful. But they’re not. People will see, sooner or later, how bad a modern society without a modern government becomes. If Elon Musk fires 80% of Twitter, we’re left with an app that still “functions”, because, fundamentally, it doesn’t require that many people to run a social media platform. (Bluesky is doing it with only 20!) The government isn’t like that. That being said, by the time people discover what has happened, it might be too late. It’s a lot slower to rebuild something than to burn it down.
Paul Krugman wrote eloquently today about the Trump tariffs. I found this part particularly insightful:
As I wrote the other day, in the three decades since NAFTA went into effect, North American manufacturing has evolved into a highly integrated system whose products — autos in particular, but manufactured goods more broadly — typically contain components from all three members of the pact, which may be shipped across the borders multiple times. Manufacturers developed this system not just because tariffs were low or zero, but because they thought they had a guarantee that tariffs would stay low.
One way of saying this is that until just the other day there was really no such thing as U.S. manufacturing, Canadian manufacturing or Mexican manufacturing, just North American manufacturing — a highly efficient, mutually beneficial system that sprawled across the three nations’ borders.
But now we have a U.S. president saying that a duly negotiated and signed trade pact isn’t worth the paper it was printed on — that he can impose high tariffs on the other signatories whenever he feels like it. And even if the tariffs go away, the private sector will know that they can always come back; the credibility of this trade agreement, or any future trade agreement, will be lost. So North American manufacturing will disintegrate — that is, dis-integrate — reverting to inefficient, fragmented national industries.
Hence my title, “The end of North America.”
And to think that many people imagined that Trump would be good for business.
It also seems difficult to imagine a high level of GDP growth, and increases to standard of living, that are compatible with wholesale corruption. Over the last week, we’ve had some of the largest and most influential corporations laundering money to Trump through legal settlements. Trump himself has launched several crypto products, and plans to launch more (in conjunction with Charles Schwab). Trump has purged the FBI and DOJ and shut down investigations into his political allies. Musk himself appears to have fired government officials he has clashed with in the past. Of course, corruption and authoritarianism can be tolerated for a long time. But Russia, for example, is a second-rate economic power, one that falls behind its former rivals with every passing year. By the time Musk forces us to get our tax refunds and Social Security payments on X (the everything app), we will be too.
I don’t mean to focus narrowly on the economy and business. There is more to the world than dollars and cents. But I imagine that it is in people’s retirement accounts, take-home pay, and grocery bills, where people will first see the impact of this wholesale destruction. (The other place, of course, is when government failure leads to illness and death. The recent airplane crash is the first example, but won’t be the last.)
More worrying, I think, will be the impact of Trump on the social fabric of America. I suppose that’s the point. Some people are already scared, and many more will be over the next weeks and months. Jackbooted thugs will invade people’s homes and drag out immigrants. Pregnant women will wonder whether they can trust their friends and colleagues to keep a secret. Trans people will be denied healthcare (even in “blue” New York, the process is already starting). U.S. citizens will be questioned about their immigration status, at least if they look a certain way. Trump’s Proud Boys and Jan 6 militia will intimidate opponents into silence. You will be required to praise America and Donald Trump or risk losing your job. And if you mess up, and you’re a minority or a woman or disabled, people will openly question whether you were qualified to work in the first place.
The institutions are failing us and many of them have already failed. The Democratic Party is beyond pathetic. I’m not even sure they realize what’s happening right now. (I tried calling my Senator and the call went straight to voicemail. It turns out he’s on recess.) They don’t quite seem to realize the inconsistency between calling someone a fascist and voting for most of his appointees, or between claiming someone represents an existential threat and becoming thrilled at the prospect of working to “find common ground” with them. It might also be nice if one of them, besides AOC, knew how to use social media, or talk to ordinary people. We seem to lack people who can make news, as opposed to respond to it. (Of course, the right-wing takeover of the media doesn’t help matters.)
I struggle to determine who the opposition is supposed to be. Most of the billionaires are either in hock with MAGA or trying to lie low. Same with the media. And same with the courts, at least at the highest level. The public seems largely clueless about what’s happening, probably because the people they rely on for information haven’t grasped the magnitude of the threat.
Sad as it is to say, the most likely defense against Trump is the stock and bond markets and inflation gauges (provided we can rely on such data to be reportedly accurately). In that sense, the news that Trump plans to proceed with tariffs against Canada, Mexico, and the Eurozone is, perversely, welcome relief. The worst case scenario is if people don’t feel the pain of the pillaging and incompetence. Tariffs will not damage the economy irreversibly, but their impact will be felt in areas highly salient to customers. (I agree with Steve Randy Waldman: “I worry about more subtle things, the gutting of state capacity from within, corrupting (and skimming from) Federal payments systems, etc. I don’t worry at all about stuff the public will feel unsubtly in prices. I’m grateful for that. when we actually experience the idiocy we’ve elevated, we’ll learn.”)
One other topic I want to mention is the natural corollary to the idea that this moment is hugely risky. If things turn badly, how much longer should we live in this country? Or, to put it differently, what is the line at which we reconsider our involvement in the American experiment? (If we don’t have a line, then we are essentially admitting that we are willing to countenance anything.)
There’s this idea, in picking stocks and other areas, that you simply have to be smarter than the marks. You can bet on something totally irrational or meaningless, and, as long you’re able to time your exit before the suckers realize what’s happening, you’ll be fine. Swimming faster than the slowest fish, I think it’s called. Living in the U.S. feels like that right now, but I’m not sure if I’m a fast fish or a slow one. I suppose I’ll find out in a few years, if not months.
