Could Trump's plan fail in a spectacular fashion?

[spidermike007]

I posted this before, but it is an excellent essay, and one that bears repeating, especially for those who are not well versed in globalization and the inherent ecosystems. Trump should read it. He might actually learn something, for a change. 

 

It’s a total mess. As the Ford Motor chief executive Jim Farley courageously (compared to other chief executives) pointed out, “Let’s be real honest: Long term, a 25 percent tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we’ve never seen.”

 

So, either Trump wants to blow that hole, or he’s bluffing, or he is clueless. If it is the latter, Trump is going to get a crash course in the hard realities of the global economy as it really is — not how he imagines it.

 

Ecosystems? Listen a bit to Beinhocker, who is also the executive director of the Institute for New Economic Thinking at the Oxford Martin School. In the real world, he argues, “There is no such thing as the American economy anymore that you can identify in any real, tangible way. There’s just this accounting fiction that we call U.S. G.D.P.” To be sure, he says, “There are American interests in the economy. There are American workers. There are American consumers. There are firms based in America. But there is no American economy in that isolated sense.”

 

The old days, he added, “where you made wine and I made cheese, and you had everything you needed to make wine and I had everything I needed to make cheese and so we traded with each other — which made us both better off, as Adam Smith taught — those days are long gone.” Except in Trump’s head.

 

Instead, there is a global web of commercial, manufacturing, services and trading “ecosystems,” explains Beinhocker. “There is an automobile ecosystem. There’s an A.I. ecosystem. There’s a smartphone ecosystem. There’s a drug development ecosystem. There is the chip-making ecosystem.” And the people, parts and knowledge that make up those ecosystems all move back and forth across many economies.

 

As NPR noted in a recent story about the auto industry, “carmakers have built a vast, complicated supply chain that spans North America, with parts crossing back and forth across borders throughout the auto manufacturing process. … Some parts cross borders multiple times — like, say, a wire that is manufactured in the U.S., sent to Mexico to be bundled into a group of wires, and then back to the U.S. for installation into a bigger piece of a car, like a seat.”

 

Trump just waves off all of this. He told reporters that the U.S. is not reliant on Canada. “We don’t need them to make our cars,” he said.

 

Actually, we do. And thank goodness for that. It not only enables us to make cars cheaper, but also better. All that a Model T did was get you from point to point faster than a horse, but today’s cars offer you heating and cooling and entertainment from the internet and satellites. They will navigate for you and even drive for you — and they’re much safer. When we can combine more complex knowledge and complex parts to solve complex problems, our quality of life soars.

 

But here’s the catch. You cannot make complex stuff alone anymore. It’s too complex.

 

And if you are not part of these ecosystems, your country will not thrive.”

 

And trust is the essential ingredient that makes these ecosystems work and grow, Beinhocker adds. Trust acts as both glue and grease. It glues together bonds of cooperation, while at the same time it greases the flows of people, products, capital and ideas from one country to the next. Remove trust and the ecosystems start to collapse.

 

Trust, though, is built by good rules and healthy relationships, and Trump is trampling on both. The result: If he goes down this road, Trump will make America and the world poorer. Mr. President, do your homework.

 

 

[Jingthing]

I'm somewhat conflicted on this questiom.

Decent pro-democracy, anti imperialism, anti Putin, anti oligarchy/autocracy people across the world are now boycotting USA products, tariffs or no tariffs.

Should decent Americans do the same?

Should we be actively buying NOT American?

This gets into the government vs. the people.

Is Russia Putin? I think largely so.

Is the USA Trump? I think much less than Russia Putin.

Even though Trump won, I think only a tiny minority voted for such insanity as helping Russia murder Ukrainian civilians and threatening to annex Canada.

[JAG]

We are told, often with breathless admiration, that Mr Trump is a brilliant businessman.

 

Let us consider many of the Trump "businesses", casinos, airlines, steaks, vodka, university and so on. All bankrupt. His real estate assets are all mortgaged to the hilt, to the extent that last year he thrashed around for some time to find the bond money to appeal his court cases. 

 

Now he is turning his attentions to the US economy - hmm, what was it the OP said about spectacular failure?

[Harrisfan]

30 minutes ago, MalcolmB said:

I don’t like them.

Maybe they don't like you.

[Harrisfan]

6 minutes ago, JAG said:

We are told, often with breathless admiration, that Mr Trump is a brilliant businessman.

 

Let us consider many of the Trump "businesses", casinos, airlines, steaks, vodka, university and so on. All bankrupt. His real estate assets are all mortgaged to the hilt, to the extent that last year he thrashed around for some time to find the bond money to appeal his court cases. 

 

Now he is turning his attentions to the US economy - hmm, what was it the OP said about spectacular failure?

2017 to 2019 all good. Next.

[Harrisfan]

15 minutes ago, Jingthing said:

I'm somewhat conflicted on this questiom.

Decent pro-democracy, anti imperialism, anti Putin, anti oligarchy/autocracy people across the world are now boycotting USA products, tariffs or no tariffs.

Should decent Americans do the same?

Should we be actively buying NOT American?

This gets into the government vs. the people.

Is Russia Putin? I think largely so.

Is the USA Trump? I think much less than Russia Putin.

Even though Trump won, I think only a tiny minority voted for such insanity as helping Russia murder Ukrainian civilians and threatening to annex Canada.

Most buy on quality and price. Most in offline world don't think like chatroom people do.

[Patong2021]

9 minutes ago, Cameroni said:

 

Only because Americans have benefitted from social welfare, cushy government jobs and bloated corporations exploiting Asian workers, however, with Trump's courageous and necessary cuts to government spending and hopefully welfare spending economic necessity will of course motivate Americans to take unpleasant jobs that pay. Just a matter of rewards and risk.

 

Your disconnect from reality is shown by your statement.

The government jobs being eliminated are not cushy. Do you even know  what positions were eliminated?

You want to eliminate social welfare. Fine. How are you going to do that without sentencing hundreds of thousands of your fellow citizens to death?

What courageous spending cuts have their been? Elimination of  disease research programs? Elimination of air traffic controller positions? Most of the so called savings  have been shown to have been bogus or exagerated. For example,  DOGE  listed more than 940 contracts where contract obligations have already been fully delivered -- meaning that 40% of the contracts they claim to have terminated could not have saved any money. Most of the reductions have come from the suspension of foreign aid programs. 

The real cuts  needed are to protected Republican programs like keeping redundant military bases in GOP districts open or in eliminating farm subsidies in  some Republican states. That's not happening.

[Harrisfan]

3 minutes ago, Patong2021 said:

 

Your disconnect from reality is shown by your statement.

The government jobs being eliminated are not cushy. Do you even know  what positions were eliminated?

You want to eliminate social welfare. Fine. How are you going to do that without sentencing hundreds of thousands of your fellow citizens to death?

What courageous spending cuts have their been? Elimination of  disease research programs? Elimination of air traffic controller positions? Most of the so called savings  have been shown to have been bogus or exagerated. For example,  DOGE  listed more than 940 contracts where contract obligations have already been fully delivered -- meaning that 40% of the contracts they claim to have terminated could not have saved any money. Most of the reductions have come from the suspension of foreign aid programs. 

The real cuts  needed are to protected Republican programs like keeping redundant military bases in GOP districts open or in eliminating farm subsidies in  some Republican states. That's not happening.

Are you American?

[gejohesch]

1 hour ago, bubblegum said:

He has no plan

People won't buy Made in the USA

US is already hated in a lot of places around the world and this will only grow.

Grow so fast that in the end the USA will be avoided at al costs.

I agree. I'm a EU citizen. These last few years, I have avoided buying anything made in China, which I see as a bullying and arrogant nation that threatens several neighbours with its aggressive policies. Think of Taiwan, or of China building artificial islands in the South China Sea to support its very dubious claim that it all belongs to them (or nearly).

Now, I have started checking brands to make sure I do not buy anything made in the USA anymore. I buy sports and biking equipment, like 1-2,000 EUR worth a year - OK, it's not that much but believe me I'm certainly not the only one to do so.

I must say I'm sorry for all the very decent Americans, I know there are millions of them, and I have several good American friends. But the situation is clearly that we now have an insane dictatorship in place in the USA who throws <deleted> and abuse at everything that does not fit with its hyper-nationalist view of the world. It's war without declaring it, and the world is responding to it - I'm just one small representative of that reaction.

Coming to other points in this discussion - does Trump know and/or understand what he is doing? Is the USA economy going to benefit, if not in the immediate, at least in the mid to long term, so the Trump policies will be vindicated? I think the answer to all that is : NO. What I see in the Trump policies and in  the people around him,  a classic case of hubris and overreach - ie of overplaying one's hand. People all around the world will pay a heavy price for Trump's manipulations, first of all Americans themselves (apart maybe of the superrich). It is well known that markets hate chaos and uncertainty. Normal people hate that too. People who feel the threat of losing their jobs or at least losing some of their purchasing power (and there are growing echoes in that sense) will protect themselves by reducing their expenses. That will have a knock-on effect on all sorts of industries. I'm not an expert nor a prophet, so I might be wrong, but I see a severe economic crisis being in the cards.

How certain can anyone be that all that Trump stuff is going to end with a sweet, soft  and gentle landing for the USA?????

I think people are playing with fire big time here....

 

[Cameroni]

5 minutes ago, Patong2021 said:

 

Your disconnect from reality is shown by your statement.

The government jobs being eliminated are not cushy. Do you even know  what positions were eliminated?

You want to eliminate social welfare. Fine. How are you going to do that without sentencing hundreds of thousands of your fellow citizens to death?

What courageous spending cuts have their been? Elimination of  disease research programs? Elimination of air traffic controller positions? Most of the so called savings  have been shown to have been bogus or exagerated. For example,  DOGE  listed more than 940 contracts where contract obligations have already been fully delivered -- meaning that 40% of the contracts they claim to have terminated could not have saved any money. Most of the reductions have come from the suspension of foreign aid programs. 

The real cuts  needed are to protected Republican programs like keeping redundant military bases in GOP districts open or in eliminating farm subsidies in  some Republican states. That's not happening.

 

Trump is gutting the bloated, fat, useless underbelly of US government, filled to the brim with corruption, engorged on US taxpayer funds. Good! Great job president Trump, keep at it. 

 

DOGE has so far saved 4 billion USD of waste and corruption. FOUR BILLION DOLLARS. Musk anticipates 1 Trillion of savings.

 

https://www.nbcphiladelphia.com/news/business/money-report/doge-chief-musk-says-hes-running-his-businesses-with-great-difficulty-as-tesla-shares-tank/4129867/?os=bingquiz.com%2Fbing-weekly-quiz-answers%2Fy0vzmaqv&ref=app

 

Maybe eliminating social welfare is going a step too far, but you'd have to look at ways to cut it or you'll end up like Greece, Italy, Spain, Germany, France or the UK. Obviously this creates a culture of laziness.

 

 

[spidermike007]

2 minutes ago, gejohesch said:

I agree. I'm a EU citizen. These last few years, I have avoided buying anything made in China, which I see as a bullying and arrogant nation that threatens several neighbours with its aggressive policies. Think of Taiwan, or of China building artificial islands in the South China Sea to support its very dubious claim that it all belongs to them (or nearly).

Now, I have started checking brands to make sure I do not buy anything made in the USA anymore. I buy sports and biking equipment, like 1-2,000 EUR worth a year - OK, it's not that much but believe me I'm certainly not the only one to do so.

I must say I'm sorry for all the very decent Americans, I know there are millions of them, and I have several good American friends. But the situation is clearly that we now have an insane dictatorship in place in the USA who throws <deleted> and abuse at everything that does not fit with its hyper-nationalist view of the world. It's war without declaring it, and the world is responding to it - I'm just one small representative of that reaction.

Coming to other points in this discussion - does Trump know and/or understand what he is doing? Is the USA economy going to benefit, if not in the immediate, at least in the mid to long term, so the Trump policies will be vindicated? I think the answer to all that is : NO. What I see in the Trump policies and in  the people around him,  a classic case of hubris and overreach - ie of overplaying one's hand. People all around the world will pay a heavy price for Trump's manipulations, first of all Americans themselves (apart maybe of the superrich). It is well known that markets hate chaos and uncertainty. Normal people hate that too. People who feel the threat of losing their jobs or at least losing some of their purchasing power (and there are growing echoes in that sense) will protect themselves by reducing their expenses. That will have a knock-on effect on all sorts of industries. I'm not an expert nor a prophet, so I might be wrong, but I see a severe economic crisis being in the cards.

How certain can anyone be that all that Trump stuff is going to end with a sweet, soft  and gentle landing for the USA?????

I think people are playing with fire big time here....

 

As an American I'm certainly conflicted over this, but I do think that America definitely needs to be punished, and a statement must be made by nations and people around the world that this kind of ridiculousness, this kind of arrogance, this kind of stupidity simply will not be tolerated.

 

And within that statement people will also be showing America that it's influence is waning, and that it's horrific leader is at least partly the cause of that. 

 

 

[candide]

28 minutes ago, Cameroni said:

 

The US does not need to manufacture or produce most of the tariffed items. Whilst that is preferable, the beauty of this modern world is that it is a market place. With a 27 TRILLION GDP the US can obtain the tariffed items elsewhere. Yes, that may be more expensive in some instances, but when weighed up against the benefit of US market participants buying mostly US produced products it is a price worth paying for Americans. Because it secures US jobs and creates US jobs.

 

Yes of course some companies will fail, some consumer items will become more expensive for some time and some people will lose their jobs, however, this is a neccessary adjustment to ensure that in the long term the money made by US workers is spent on US produced goods. This is sound economic policy and very sensible.

 

 

 

 

 

 

It's not that simplistic.

 

To start with  let's assume that the U.S. could substitute the current imports from countries targeted by tariffs by imports from other countries. It would certainly not happen without supply chain and production disruptions and extra cost. Then is it really worth the trouble? What's the benefit, apart from satisfying Trump's childish ego?

 

The other point is that a trade war is not only about imports, but also about exports. After the implementation of tariffs on Europe, the countries under tariffs will represent more than 60 % of U.S. exports. So in case of a trade war, the U.S. will be the country with by far the highest percentage of exports subjected to tariffs by other countries. For example, while more than 60% of U.S. exports could be potentially subject to tariffs, only 20% of EU exports could be potentially affected by US tariffs.

 

Finally, another issue is the possibility of a boycott of US products and brands by consumers. There are premises of it already with Tesla, and also some U.S. products in Canada. If it happened, it would be completely out of control, as even governments willing to keep good relations with the U.S. wouldn't be able to prevent it.

[Cameroni]

10 minutes ago, gejohesch said:

Now, I have started checking brands to make sure I do not buy anything made in the USA anymore.

 

It's okay, I've in turn now made a specific effort to buy US-made products, so we cancel each other out. I just bought a US made maglite torch, it's magnificent.

 

If you want to support courageous and peacemaker President Trump, buy American!

[Cameroni]

8 minutes ago, candide said:

 

 

To start with  let's assume that the U.S. could substitute the current imports from countries targeted by tariffs by imports from other countries. It would certainly not happen without supply chain and production disruptions and extra cost. Then is it really worth the trouble? What's the benefit, apart from satisfying Trump's childish ego?

 

 

The USA can and will substitute  tarriffed imports, did you not witness how easily Germany could susbitute 96% of its Russian gas with gas sourced elsewhere? Infrastructure has to be built? GREAT! More jobs for Americans!. Yes, a little disruption and extra cost initially but the benefit you clearly fail to take into account. You have to weigh this up with the benefit of tariffs, which make foreign products more expensive and thus domestic products cheaper which means people will buy US made products. Which means saving and creating US jobs. It's very sensible from a US perspective.

 

8 minutes ago, candide said:

The other point is that a trade war is not only about imports, but also about exports. After the implementation of tariffs on Europe, the countries under tariffs will represent more than 60 % of U.S. exports. So in case of a trade war, the U.S. will be the country with by far the highest percentage of exports subjected to tariffs by other countries. For example, while more than 60% of U.S. exports could be potentially subject to tariffs, only 20% of EU exports could be potentially affected by US tariffs.

 

Unlike France, Germany, Japan, the USA is NOT an export dependent country and instead relies on its strong and deep domestic market. Exports only make up 10 percent or so of the GDP of the  USA. Even if ALL of them fell away tomorrow the USA would retain 90% of its GDP, 24 trillion USD. Of course it won't happen, people will still buy Maglites, Nike Shoes and Apple phones.

 

As for a boycott, Israel has been killing women and children for decades, how is the boycott against Israeli products going? Ok then.

[spidermike007]

51 minutes ago, Cameroni said:

The USA can and will substitute  tarriffed imports, did you not witness how easily Germany could susbitute 96% of its Russian gas with gas sourced elsewhere? Infrastructure has to be built? GREAT! More jobs for Americans!. Yes, a little disruption and extra cost initially but the benefit you clearly fail to take into account. You have to weigh this up with the benefit of tariffs, which make foreign products more expensive and thus domestic products cheaper which means people will buy US made products. Which means saving and creating US jobs. It's very sensible from a US perspective.

 

 

Unlike France, Germany, Japan, the USA is NOT an export dependent country and instead relies on its strong and deep domestic market. Exports only make up 10 percent or so of the GDP of the  USA. Even if ALL of them fell away tomorrow the USA would retain 90% of its GDP, 24 trillion USD. Of course it won't happen, people will still buy Maglites, Nike Shoes and Apple phones.

 

As for a boycott, Israel has been killing women and children for decades, how is the boycott against Israeli products going? Ok then.

If we're going to comment we should try to stick with the facts and try not to embellish the truth too much. I know you are a huge supporter of the man who refuses to embrace truth, but that's really not a viable excuse for some of the things that you post. 

 

U.S. exports of goods and services to the world also hit a record, reaching $3.2 trillion in 2024.

 

That was driven by record sales of U.S. services, like business and financial advising, as well as foreign spending on travel in the United States. But exports of goods taken on their own grew more sluggishly, as a strong U.S. dollar made it more expensive for other countries to buy American products, and the United States sold fewer cars, car parts and industrial supplies, like raw materials and machinery, to the world.

 

Competition from automakers in China and strikes in the U.S. auto industry weighed on exports of vehicles, parts and engines, which fell $10.8 billion compared with the year before.

Mark Zandi, the chief economist at Moody’s Analytics, said Chinese electric vehicle sales had taken off in 2024, in China and elsewhere, and were siphoning market share from other producers. Companies like General Motors have been under pressure in China, where more than four-fifths of the electric and plug-in hybrid cars sold are now Chinese brands.

 

“The Chinese auto industry has really come on and is very competitive in the E.V. space,” Mr. Zandi said. “And that’s a real problem for U.S. manufacturers that are producing and exporting to the rest of the world.”

 

America’s total trade deficit in goods and services, which consists of exports minus imports, grew 17 percent to $918.4 billion. U.S. oil exports surged, pushing the petroleum surplus to a record $44.9 billion.

 

https://www.nytimes.com/2025/02/05/business/economy/us-trade-deficit-2024-record.html

[candide]

54 minutes ago, Cameroni said:

The USA can and will substitute  tarriffed imports, did you not witness how easily Germany could susbitute 96% of its Russian gas with gas sourced elsewhere? Infrastructure has to be built? GREAT! More jobs for Americans!. Yes, a little disruption and extra cost initially but the benefit you clearly fail to take into account. You have to weigh this up with the benefit of tariffs, which make foreign products more expensive and thus domestic products cheaper which means people will buy US made products. Which means saving and creating US jobs. It's very sensible from a US perspective.

 

 

Unlike France, Germany, Japan, the USA is NOT an export dependent country and instead relies on its strong and deep domestic market. Exports only make up 10 percent or so of the GDP of the  USA. Even if ALL of them fell away tomorrow the USA would retain 90% of its GDP, 24 trillion USD. Of course it won't happen, people will still buy Maglites, Nike Shoes and Apple phones.

 

As for a boycott, Israel has been killing women and children for decades, how is the boycott against Israeli products going? Ok then.

There is a lack of coherence in your reasoning. If the U.S. can relatively easily substitute imports from some countries by imports from other countries, it will not bring back jobs to the U.S. So a lot of trouble for nothing!

 

You cited the example of gas, which is a single standard commodity which can easily be substituted. If you had some understanding of industrial companies, you would know that it's far from being easy to change sourcing of suppliers. There's the same issue with MAGAs and Brexiteers. They completely ignore the difficulty of finding reliable suppliers and profitable customers. Companies are struggling every day about it, and cannot change easily by magic.

 

As to the share of GDP represented by exports, it 's not so different from the EU. 11% for the U.S. and 15% for the EU. Oh, and Nikes and Apple are mainly produced in China!.

 

You cited the case of the boycott of Israel. It failed because few people were personally feeling concerned. It won't be the case with a trade war. For example, there is a growing resentment against the U.S. in Europe after the aggressive and smearing statements, as well as announced adverse decisions, by the U.S.. Add to it, if tariffs are actually implemented, seeing domestic businesses in trouble and workers being laid-off, the perspective of a boycott is not unrealistic.

[Harrisfan]

5 minutes ago, candide said:

There is a lack of coherence in your reasoning. If the U.S. can relatively easily substitute imports from some countries by imports from other countries, it will not bring back jobs to the U.S.

You cited the example of gas, which is a single standard commodity which can easily be substituted. If you had some understanding of industrial companies, you would know that it's far from being easy to change sourcing of suppliers.

 

As to the share of GDP represented by exports, it 's not so different from the EU. 11% for the U.S. and 15% for the EU. Oh, and Nikes and Apple are mainly produced in China!.

 

You cited the case of the boycott of Israel. It failed because few people were personally feeling concerned. It won't be the case with a trade war. For example, there is a growing resentment against the U.S. in Europe after the aggressive and smearing statements, as well as announced adverse decisions, by the U.S.. Add to it, if tariffs are actually implemented, seeing domestic businesses in trouble and workers being laid-off, the perspective of a boycott is not unrealistic.

EU is not a country and European countries have high unemployment.

[bubblegum]

1 hour ago, Cameroni said:

 

It's okay, I've in turn now made a specific effort to buy US-made products, so we cancel each other out. I just bought a US made maglite torch, it's magnificent.

 

If you want to support courageous and peacemaker President Trump, buy American!

In that case good luck with your new car!

[Harrisfan]

3 largest EU economies

Germany

France

Italy

 

Exports as a share of gdp

G 47%

F 33%

I 35%

 

USA 11%

 

[candide]

11 minutes ago, Harrisfan said:

EU is not a country and European countries have high unemployment.

It's not a country but there is a single market, and trade policy is a prerogative of the EU.

 

Having said that, it's true that unemployment is an additional problem for the EU. Not so  much for the US (so far).

[Harrisfan]

1 minute ago, candide said:

It's not a country but there is a single market, and trade policy is a prerogative of the EU.

 

Having said that, it's true that unemployment is an additional problem for the EU. Not so  much for the US (so far).

Well the individual numbers are not so good. Maybe the EU GDP figures are misleading because of local trade. 47% for Germany is high.

[candide]

12 minutes ago, Harrisfan said:

3 largest EU economies

Germany

France

Italy

 

Exports as a share of gdp

G 47%

F 33%

I 35%

 

USA 11%

 

You are including intra-EU trade in your %. That's irrelevant! 🙂

[Harrisfan]

Just now, candide said:

You are including intra-EU trade in your %. That's irrelevant! 🙂

Separate countries.

[candide]

4 minutes ago, Harrisfan said:

Separate countries.

Single market. You are grasping at straws. 🙂

 

Trade between EU countries is irrelevant to the issues discussed in this thread!

[Harrisfan]

2 minutes ago, candide said:

Single market. You are grasping at straws. 🙂

 

Trade between EU countries is irrelevant to the issues discussed in this thread!

Trade is trade. The EU need each other. US does not. US is a real country.

[transam]

1 minute ago, Harrisfan said:

Trade is trade. The EU need each other. US does not. US is a real country.

Whoda thought...............

[sharot724]

https://www.bbc.com/news/articles/cj0q964851po

 

Russia is NOT going to win the war.

[gejohesch]

2 hours ago, spidermike007 said:

I posted this before, but it is an excellent essay, and one that bears repeating, especially for those who are not well versed in globalization and the inherent ecosystems. Trump should read it. He might actually learn something, for a change. 

 

It’s a total mess. As the Ford Motor chief executive Jim Farley courageously (compared to other chief executives) pointed out, “Let’s be real honest: Long term, a 25 percent tariff across the Mexico and Canada borders would blow a hole in the U.S. industry that we’ve never seen.”

 

So, either Trump wants to blow that hole, or he’s bluffing, or he is clueless. If it is the latter, Trump is going to get a crash course in the hard realities of the global economy as it really is — not how he imagines it.

 

Ecosystems? Listen a bit to Beinhocker, who is also the executive director of the Institute for New Economic Thinking at the Oxford Martin School. In the real world, he argues, “There is no such thing as the American economy anymore that you can identify in any real, tangible way. There’s just this accounting fiction that we call U.S. G.D.P.” To be sure, he says, “There are American interests in the economy. There are American workers. There are American consumers. There are firms based in America. But there is no American economy in that isolated sense.”

 

The old days, he added, “where you made wine and I made cheese, and you had everything you needed to make wine and I had everything I needed to make cheese and so we traded with each other — which made us both better off, as Adam Smith taught — those days are long gone.” Except in Trump’s head.

 

Instead, there is a global web of commercial, manufacturing, services and trading “ecosystems,” explains Beinhocker. “There is an automobile ecosystem. There’s an A.I. ecosystem. There’s a smartphone ecosystem. There’s a drug development ecosystem. There is the chip-making ecosystem.” And the people, parts and knowledge that make up those ecosystems all move back and forth across many economies.

 

As NPR noted in a recent story about the auto industry, “carmakers have built a vast, complicated supply chain that spans North America, with parts crossing back and forth across borders throughout the auto manufacturing process. … Some parts cross borders multiple times — like, say, a wire that is manufactured in the U.S., sent to Mexico to be bundled into a group of wires, and then back to the U.S. for installation into a bigger piece of a car, like a seat.”

 

Trump just waves off all of this. He told reporters that the U.S. is not reliant on Canada. “We don’t need them to make our cars,” he said.

 

Actually, we do. And thank goodness for that. It not only enables us to make cars cheaper, but also better. All that a Model T did was get you from point to point faster than a horse, but today’s cars offer you heating and cooling and entertainment from the internet and satellites. They will navigate for you and even drive for you — and they’re much safer. When we can combine more complex knowledge and complex parts to solve complex problems, our quality of life soars.

 

But here’s the catch. You cannot make complex stuff alone anymore. It’s too complex.

 

And if you are not part of these ecosystems, your country will not thrive.”

 

And trust is the essential ingredient that makes these ecosystems work and grow, Beinhocker adds. Trust acts as both glue and grease. It glues together bonds of cooperation, while at the same time it greases the flows of people, products, capital and ideas from one country to the next. Remove trust and the ecosystems start to collapse.

 

Trust, though, is built by good rules and healthy relationships, and Trump is trampling on both. The result: If he goes down this road, Trump will make America and the world poorer. Mr. President, do your homework.

 

 

Thanks for these explanations. I'm not an economist but I find all that clear, and it makes a lot of sense to me.

 

One thing, in particular, catches my attention: the concept of economic ecosystems, as opposed to the old-fashioned concept of "isolated" economies which could very well function by trading "wine here for cheese there". The idea was that if 2 countries A and B can both make say cheese and wine, but A makes cheese more effectively than B and B makes wine more effectively than A, the both A and B will benefit by B buying cheese from A and A buying wine from B. That frees manpower away from less effective tasks and ends up lowering the costs.

 

Let me develop a bit on your wire and car seat story. Say the USA are better at making the start-up wires, send them to Mexico who are more effective in bunching wires together, who send the bunches of wires to Canada who are better than the USA or Mexico at fitting the bunches into some hardware and software, who then send the wire bunches + hw/sw to the USA who are better than Canada or Mexico in building all that into car seats and so on, and so on. So, in a way, these modern ecosystems, are they not like an extension of the principle that "trading is good"?

[SunnyinBangrak]

Thanks panicking liberals for driving the market down. Just picked up a load of Nasdaq etfs for much less than it would have been a few weeks ago. Now to forget about them and the short term spikes. Happy days 

[bubblegum]

Looking at the stock market, getting a free Tesla in the near future is not out of the question but..can I hook that up to my solar system and use the car as a battery? So when its dark I have electricity from the car? And charge my Chinese EV?