Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

21 December 2016

President Trump: the Good, the Bad and the Ugly


[For a recent popular post on the four tribes that put Trump in office, click here. For a review of Trump’s team, click here.]

Introduction
Jobs
Energy
Environment
Finance
Foreign and immigration policy
Conclusion

Introduction

The “VIX,” or “volatility index” is a measure of uncertainty and fear on financial markets. As yet, there’s no such thing for politics and government, no “Pol-VIX.” But there ought to be. If there were such a thing today, it would be at an all-time high.

According to exit polls, the millions of voters in the South and Upper Midwest who put Trump in the White House wanted to “shake things up.” Well, they sure did. Trump has said many inconsistent and contradictory things. In a few important cases, he has shouted obvious whoppers than no one (maybe including himself) believes. So the American public, our allies, and the world in general have no good idea what Trump will actually do in office.

Some might say we’re like ancient Romans in the time of Caligula or Nero, waiting to see what the crazy emperor will do.

But that’s not really a good analogy. For all its basic structural flaws, of which the Electoral College is just one, the US is still a nation of laws. Congress still makes them; the president just executes them. We have a huge government bureaucracy, whose workers our Civil-Service laws protect from political or arbitrary dismissal.

Most of all, we have business. As “Silent Cal” once told us, the business of America is business. If there’s any common thread that runs through Donald Trump’s bizarre mind, it’s that. Anyway, as I’ve noted at least twice (1 and 2), business corporations are in the process of taking over global government, supplanting nation-states. So a lot of stuff is likely to happen, or not to happen, just because of business, totally independently of Trump.

Business doesn’t run arbitrarily, let alone by the Mind of Trump. It runs by logical and predictable rules: profit and loss, supply and demand, comparative advantage, and innovation. It runs by technology and sometimes even science. It has a logic of its own, which Trump cannot change. If he thought about it, which he seldom seems to do, he might not even want to.

So when we think about what a Trump Administration means for us Yanks and for the world, it’s best not to dwell too long on what Donald Trump says and Tweets. You can go crazy doing that. The world is a big place. For all his bluster, ego and coming presidential power, Donald Trump is only part of the picture. So is his mostly inexperienced and sometimes radical team. So it’s best to consider carefully what’s possible and what’s likely.

Once you do that, you can make some predictions about what the next four years will be like, i.e., what’s likely to happen regardless of what Trump Tweets and does. You can also see how those of us who aren’t Donald Trump can best protect ourselves, our families, and our values from the worst of his craziness. Let’s get started, going from good, to bad, to worst.

Jobs

Skilled American workers who are unemployed, or who think they are underemployed, made Trump President. They got tired of losing jobs making real things that people use and having to flip burgers at McDonalds, stock shelves at Wal Mart, or learn massage therapy. They also got tired of watching their towns and communities dry up and blow away after the factories that gave them life had closed.

These workers are the new wild card of American politics. In the next decade they are likely to reshape the two-party system and determine our nation’s political future. There are several million of them, but the most angry and disaffected are in the Upper Midwest and the South.

How will these workers do under a Trump presidency? Right now, it’s looking pretty good for them, but they are going to have to be flexible. If they’re willing to move and retrain a bit, they can have good jobs. But their desiccated communities are probably not coming back.

As President, Trump will do three things for these workers. His first, most likely and most effective move will be his infrastructure-building program.

Trump is now talking about a one-trillion dollar investment. That’s a lowball figure: our American Society of Civil Engineers says we need to invest $3.6 trillion by 2020, just to make sure things keep running well. But a trillion will put a lot of people to work. Most of them will be in construction, but there will be plenty of work in medium-technology as we upgrade our air-traffic control system and our Internet backbone, and as we prepare our roads and highways for self-driving cars.

The second most probable benefit for skilled workers will be Trump’s risky tariff plan. No, it’s not the one to throw 35% tariffs on all goods from China and Mexico. That would be an absolute disaster. Trump’s good plan is much more subtle: to throw 35% tariffs on goods from American factories built abroad, after fair warning, that are imported back into the United States.

What these tariffs will do is say to American business: you want to supply our American market; you build factories here at home. Or you figure out how to make stuff abroad more than 35% more cheaply.

As we all hope about nuclear weapons, these tariffs likely will never be used. So there will be no actual “protectionism.” Instead, like a hangman’s noose, the mere threat of these tariffs will focus the minds of American plutocrats on how to keep jobs at home by making things efficiently here. In the long run, their doing so will increase their use of robots and artificial intelligence, which will reduce human employment. But the resulting drain of jobs will be a trickle compared to the last two decades’ flood of jobs to low-wage nations. Anyway, it’s worth a try.

The third way that Trump will try to keep jobs onshore is “jawboning,” as recently he did with Carrier. This will his the least effective means. Jawboning will stroke Trump’s huge ego and give him lots to brag about, but it will work only sporadically and erratically. To the extent it works, it may distort our domestic economy and generate business pushback against Trump.

If Trump really wants to reward the people who put him in office, he will work on these three things, in the order listed. If he can make substantial progress on the first two, he might even be a two-term president.

Energy

Donald Trump is in love with fossil fuels. He doesn’t use McCain’s old slogan, “Drill, baby, drill!” Perhaps that’s because he also wants to dig for coal. But he might as well.

Coal is an obsolete fuel. It’s the dirtiest fuel known to mankind, far dirtier even than the animal dung used in parts of the third world. But that’s not its worst trait. It’s also more expensive, on an energy-equivalent basis, than natural gas or oil, all by itself. When you consider the cost of remediating the environmental damage it does—acid rain, mercury pollution of bodies of water, asthma and other respiratory diseases, let alone global warming—it’s a gigantic cost loser. So when Trump says he’s bringing coal miners’ jobs back, he’s just blowing smoke, dirty coal smoke.

But natural gas and oil are different stories, as least in the short term. Our nation runs on them. Right now, and until they begin to run out, they are cost efficient. And if we Yanks can produce what we use, as we are close to doing now, we can regulate our own energy expenses and not depend on the likes of Iran, Iraq, Russia and Venezuela.

Donald Trump is hardly a long-term thinker. He’s going to be president for, at most, eight years. During that short time frame, pumping all the gas and oil we can extract from our own and Canada’s reserves is not a bad idea. If we can stay independent and keep ourselves from suffering more oil-price shocks, we might just avoid yet another energy crisis for that short time.

But there are subtleties that Trump has yet to admit. They all relate to timing.

Global warming is real, and it’s accelerating rapidly. During the next decade or two, it could reach a tipping point that could cause a climate catastrophe. Trump doesn’t care much about that, because he’ll be long out of office when and if that happens. He is, after all, a risk taker.

Trump also doesn’t seem to care much about the time scales for capital investment. But business people do. They have to make that investment. The smart ones know that two things are likely to happen within the time frame for any long-term capital investment. First, whether or not Trump himself does, our species generally is going to recognize and react to the climate threat of fossil fuels and tax or regulate their use. Second, for those and other reasons, demand for fossil fuels is going to peak and drop, even before they start to run out. And they will start to run out within approximately two generations.

So what will business do? Will it invest in yet more infrastructure that is likely to become substantially obsolete in a generation or two? Or will it divest from fossil fuels and invest in things like solar arrays, windmills and smart grids that could last a century or more?

It takes a lot of money to buy all the drills and fracking equipment, for example, to support the Bakken Shale fracking boom in North Dakota. But that’s already done; the investment is sunk. Ditto the Eagle Ford Shale in Texas. The drilling equipment is mobile, much of it mounted on trucks.

So when energy companies like Exxon Mobil think about where to invest next, what will they do? Will they buy more drilling equipment that they may not ever use? Will they invest in offshore, deep-water drilling, which is hideously expensive and risks things like the Great BP Oil Spill, with all its massive liabilities and adverse publicity? Or will they invest in things like wind and solar farms, which work fine right now, involve far less risk, and have far longer productive horizons?

What will drive a global conversion to clean energy won’t be regulation or even taxation of carbon, although both would help. What will drive it is the growing recognition, on the part of our entire species, that (1) we are heating our planet beyond our evolutionary safety zone, (2) demand for fossil fuels (especially dirty coal) is dropping, and (3) fossil fuels are getting harder and more expensive to find and eventually will run out. Not even Donald Trump can stop these three things from happening, or this recognition from growing among the worldwide business community, and especially among investors asked to risk their hard-earned cash.

The really odd thing is that Rex Tillerson knows all this, and Trump has nominated him for Secretary of State. In fact, Tillerson has known this for at least five years [subscription required]. In 2009, on behalf of Exxon Mobil, he bought a natural-gas fracking company called XTO Energy. Speaking to the financial press, he was quite honest about the reason for that purchase: oil was getting scarcer and harder and more expensive to extract, and natural gas was (and is) cheaper on an energy-equivalent basis. That was seven years ago.

So is Rex Trump’s “stealth” genius? Is he the guy to let the rest of the world—or at least our allies—know what’s really happening, while the rubes who voted for Trump here at home whoop it up in their muscle cars and big pickup trucks? Or is Rex going to scarf up the remainder of the Earth’s cheaply extractable fossil fuels for us Yanks to ease our own Yankee transition to clean energy?

Stay tuned for an answer. But doesn’t the Saudis big push to lower oil prices, plus aiming their sovereign wealth fund at clean energy long term, give us a clue? The Saudis?!?!?!

The Environment

As we move from jobs and energy to the environment and worker safety (often a related issue), we move from the good to the bad. Donald Trump is no environmentalist. Why should he be? If Manhattan gets clogged with smog, he just moves to his estate in Mar al Lago. Bad air and bad water kill people even more slowly than cigarettes, and Trump just doesn’t think most of us will notice. That goes double for his core constituency, who are more worried about good jobs than getting cancer a generation down the road.

The problem is what economists call “the tragedy of the commons.” If there are no rules to keep people from dumping manure on commonly-owned land, it will magically appear there, rather than on private property. So our commonly-owned air has become the dumping ground for sulfur dioxide, nitric oxide, harmful olefins and particulates, and, yes, carbon. The woe of water is similar; hence the lead in Flint’s.

There is no practical way to stop pollution but regulation or taxation. That’s the tragedy of the commons: we all breathe the same air, but no one owns it. So no one protects it unless government does.

Maybe Trump doesn’t understand this simple principle. Maybe he does and doesn’t care. Certainly a lot of the folks who voted for him want less regulation and more pollution, because they think pollution will bring better jobs and more wealth (especially if they are plutocrats).

There’s a lot of reason to doubt that simplistic conclusion. Jobs protecting the environment are some of the best and best paid of all, although they require a level of education that most Trump voters don’t have (a college degree).

Yet don’t despair. There is a simple basis for compromise. Where do Trump’s most avid supporters live? In the sticks. Where do the bluest of the blue live? In big cities. Why not let the folks in the sticks pollute a little more, where there’s lots of room to absorb and dissipate the pollution, while keeping strict regulation in the cities where people need clean air and water and they’re much more at risk? In other words, why not let a flexible federalism square the circle and give both rural and city people what they want?

To some extent, that’s already happening. Remember the statewide ban on fracking in New York? The Masters of the Universe from Wall Street, who control not just Manhattan but most of the state, are not going to let fracking fluids pollute their precious water and air. No, no, no!

So if “state’s rights” and a little federalistic flexibility prevail, the rich and powerful and have their clean tap water and air, while the struggling workers who made Trump president can drink and breathe their comforting myths that polluting creates jobs. Sort of poetic justice, eh?

Maybe not. In the business-is-everything regime of Donald J. Trump, the most important rule for ordinary people will be “caveat emptor”: let the buyer beware. Ordinary people are going to have to learn to take care of themselves.

How do they do that? Let’s take Flint and its lead-infected water, for example. Parents are worried that their kids’ brain development was irremediably impaired by drinking lead for eighteen months. The tragedy is how easily and cheaply they could have avoided both the fear and the risk.

Reverse-osmosis filters for drinking water cost as little as $150. You can buy 24 half-liters of purified water at Wal Mart for less than $3. At two liters a day for each person, that’s less than $7 a week for a family of four, or $364 a year. Tests for lead in water are available at Home Depots and Lowe’s hardware stores across the nation. They are also available at Amazon.com [the actual testing is extra but not exorbitant].

Is this a lot of money for a poor family? Sure. But a kid’s brain is a precious thing. It may be the most precious thing a family has. The point is that there are ways for ordinary people to protect themselves if they are well informed. Once they are well informed they can seek financial help through local politics, charities, and even crowd funding. And local small businesses can get a start by informing them and vending the filters and bottled water needed to keep their kids’ brains pristine.

Is this solution ideal? Probably not. Ideal is having local governments provide clean water and air. But as the GOP philosophy of drowning government in a bathtub prevails, there will still be opportunities for affected people to help themselves. After all, the rural people who put Trump in office are supposed to be independent and self-reliant. So if they have to protect themselves against natural contaminants, farm runoff, and industrial pollution, there is some poetic justice in that.

Finance

Donald Trump won in part by railing against Wall Street. Why not? There was and is still plenty of well-justified anger to tap. But will Trump actually do anything to curb Wall Street? To curtail banks’ ever larger and trickier fees for simple savings and checking accounts? To keep the big banks from killing the real economy with systemic risk again, perhaps by breaking them up?

Not likely. Trump has no incentive to curb even the biggest, baddest banks. They finance his businesses and the delights of his Manhattan home, Trump Tower. When the Fed and the most sophisticated business people barely understand how Wall Street has turned a useful capital-formation machine into an out-of-control financial casino, you think the average Trumpet does?

No, Trump is not going to do much, if anything, about Wall Street. He’s going to let it rip and take the risk of another financial panic on his watch. He’s going to put all his eggs in the jobs basket and let the people’s righteous wrath against Wall Street just simmer and slowly subside.

Worse yet, he’s going to collude with the GOP’s so-called “conservatives,” his erstwhile arch-enemies, to torpedo Elizabeth Warren’s baby, the Consumer Financial Protection Bureau. The little payments and fees by which banks stick it to the consumer while advertising favorable interest rates and terms will increase without limit. And with industry-favoring arbitration replacing class-action lawsuits under a right-wing Supreme Court, the law will offer the average consumer no redress.

So finance, like pollution, will be yet another field of caveat emptor. Smart consumers will move their accounts to small, local banks and credit unions. The rest will stick with the big banks and be raped slowly, by innumerable small thrusts. Consumers who want to keep their honor and their balances intact will have to be nimble and keep their accounts moving in order to be treated fairly. To the extent they do so and are well informed, new business opportunities for small and honest financial institutions will open up. All in all, the Republic will survive, but only the smart and rich will be well served financially.

Foreign and immigration policy

If our hypothetical Pol-VIX had sector indexes, the one for foreign policy would be the highest. In fact, the uncertainty in this sector is so high that it’s hard to tell whether to put this area into the category of good, bad, or ugly. It could be in any of those, depending on which of the many things Trump has promised or threatened he actually does.

Will Trump lower the international temperature by making nice with Russia, as he promised? Or will he misjudge Putin so badly as to tempt a Russian incursion into the Baltics, Ukraine or Eastern Europe, with all the risk of a general or even nuclear war? Will his hard bargaining with China, throwing Taiwan into the mix, induce less currency manipulation and more cooperation, or will it result in conflict in the South China Sea? Will China stop pressuring North Korea and leave Trump to curb Kim with a small, targetable, dial-a-yield nuke?

It’s now clear that Trump has adopted Richard Nixon’s “crazy man” posture, big time. He’s going to try to put everything on the table, which means risking a lot. The ultra-cautious, take-few-risks approach of Barack Obama will probably go flying out the window on January 20.

But we don’t even really know that for certain. Trump has purposefully given no hint of his risk threshold for action, let alone backing down. Is that good, or is it bad?

If you like certainty, it’s probably bad, very bad. The worst thing about it is that we Yanks and our foreign-policy specialists are as much in the dark as our allies and adversaries. And with prematurely-revealed secrets having put Trump in office, we’re probably going to stay that way. Trump likely will never reveal, let alone in his Tweets, his goals and strategy, except in the crudest and perhaps most deceptive way.

That can be bad: it can raise risk thresholds all around. But it can also be good: it can make our adversaries more cautious, so as to counter our apparently increased appetite for risk. A more cautious Vladimir Putin, who has now co-butchered Syria, would be a consummation devoutly to be wished. Isn’t that, after all, what playing the crazy man is all about?

Understanding Trump will require careful adherence to a simple approach: watch what he does, not what he says. The first thing that will reveal his approach will be Syria. Will he keep us out, with maybe some air strikes against IS? Will he let Russia, Iran and Assad “enjoy” the full benefits of the tragic mess they have made, including increased terrorism along the lines of the downed Egyptian airliner and the recent assassination of Russia’s ambassador to Turkey? Or will he extend our blundering invasion of Iraq in unforeseen ways?

Will Trump finally get us out of Iraq and Afghanistan, our two longest-ever forever wars? Or will he turn Obama’s creeping “advisory” mission into full-scale escalation, as in Vietnam?

These are vital questions, but no rational person can claim he or she has the answers. Trump is an utter novice in foreign affairs. His bold campaign promises will mean nothing when confronted with the reality of specific facts on the ground, or specific threats. Probably not even anyone on Trump’s transition team has a clue.

Only two things are certain. First, there will be no Wall. We already have a wall along the most-traveled 700 miles of our border with Mexico. Building a wall along the rest of the 2,000-mile border, mostly far from populated areas, would be a colossal waste of time and money. It would be easier and much quicker to send up a geostationary spy satellite with sufficient video resolution to pinpoint border-crossing trekkers from Mexico. The Wall was just a crude metaphor for Trump’s sympathy with immigrant-haters, as was his bizarre promise to get Mexico to pay for it.

As for Trump’s promise to deport all our undocumented immigrants, that’s not likely to happen, either. All those hard-working immigrants keep labor costs down for Trump’s fellow plutocrats. If they wanted to get rid of them, they could do so in a couple of months, simply by fining the employers who hire them more than they save in wages. That will happen when Sheldon Adelson starts handing out free money to gamblers at his casinos in Macau.

The most likely outcome of the immigrant wars is for Trump to deport dangerous undocumented criminals, as Obama has been doing, and declare victory. There might be a little frolic into less dangerous criminality, just to keep the fear alive and convince Trump’s red-meat voters that he’s for real. But deport eleven million peaceful, hard-working immigrants who don’t ever make trouble because they fear deportation every day? Fuggedaboudit! It’s not going to happen.

Much more serious is Trump’s apparent intention to turn fear and hatred toward Muslims into misguided policy. It’s one thing to insist on using the term “radical Islamic terrorism” to describe terrorists’ unprovoked assaults on innocent civilians throughout the Western world. That’s just a bit of verbal slight-of-hand for which GOP operatives are famous.

But actually bringing understandable popular fear, and dangerous popular hatred, to bear in registering, “interning” or excluding peaceful Muslims lawfully in our nation would be wholesale abandonment of our national values and a clear step toward an American Holocaust. Everyone in our nation who values freedom of speech and religion should fight that dragon as soon as it rears its ugly head.

Yesterday would not be soon enough. Already the intemperate statements of Trump himself while campaigning, plus the even more intemperate statements of Steve Bannon and General Flynn, provide ample reason for alarm. Good men and women should speak up, hard and soon, so that evil does not ever get a foothold in our country.

Conclusion

Donald J. Trump is a man who bears close watching. During the campaign, when no one gave a thought to his winning, watching him was just a game. The newspapers did it obsessively. They made a pile doing so.

But now the watching is deadly serious. We hope that Trump will come through for the skilled workers who elected him, and we should keep his feet to the fire. We know that a Trump Administration will not be a kind father or gentle mother; it will cast us all out on our own. “Caveat emptor” will be emblazoned on the White House, and “Equal Justice under Law” may vanish from the Supreme Court. (Surely it will unless the Senate has the spine to kick Jeff Sessions back to cracker land where he belongs.)

Even the skilled workers that Trump wants most to help will be on their own. Infrastructure projects will not come to their dessicated towns. They will have to go where the work is, living in trailers or moving their families. Ditto for new industries that Trump’s 35% tariffs may keep onshore.

People in fracking-land will be well advised not to buy homes, but to rent. Private-equity firms like Black Rock will likely swoop in. They will buy up homes with questionable water and racked with small earthquakes at rock-bottom prices (pardon the pun) and rent them to workers. Fracking country, which is mostly in sparsely populated areas (outside of New York state, which has banned fracking), will likely become a sort of no-man’s land for work only. Fortunately for workers planning self-help, the outlines of fracking country—our national shale deposits—are well mapped.

In every field, consumers and citizens will have to rely more on themselves and less on government. That will certainly be true of the 3,000 small, mostly rural communities that have higher levels of lead in their water than Flint. Small business and nongovernmental organizations will have to rise to the occasion and fill the gaps. Nonprofit organizations like the American Civil Liberties Union, the Environmental Defense Fund, Sierra Club, and the Southern Poverty Law Center will have to grow and adapt. People who can will fill their coffers with contributions.

Fortunately, we Yanks are a resilient and resourceful people. So are our many private institutions. We will survive the Trumpocalypse, just as we are surviving our grief at an unexpected loss caused in part by Russian cyber-meddling. We will have to do more on our own, more in small groups, more in non-governmental organizations, and more in business. We will have to be far more vigilant about encroachments on our liberties and protection of minorities, and far more active and forward-leaning in opposing them.

But if we do all that, four years of Trump may not be so bad. We may come out with a viable strategy for using natural gas to transition to renewable power, at least if we don’t sell too much of it abroad. Fracking country may be mostly abandoned after the gas and oil are gone. But except for New York, where fracking is banned, it’s not exactly densely populated now. And as Vladimir Lenin once dryly observed, you can’t make an omelette without breaking eggs.

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