I wrote an article like this eight years ago about the election of President Obama. In it I talked about potentials. The good was in his potential to bring this country together and further heal our racial divide. The bad was his tendency toward instituting a larger government and to further control and regulate business. And the ugly was the potential of an all-out attempt at socialism.
We never got the racial healing from Obama, indeed we got the opposite. Worse, Obama abandoned his people and they are as a group worse off today than they were when he took office. And the amount of controls, regulations and mandates that were imposed over the last eight years is unprecedented and go a long way in explaining the economic stagnation that has plagued this country. It will go down in history as the worst economy since the Great Depression, running at an anemic 2% for eight years -- about half of a normal economic pace after a recession. And the ugly was achieved in the form of Obamacare and Dodd-Frank, which was a move away from free market solutions towards socialism.
But I never envisioned how bad an Obama Administration would be for foreign policy. The world is truly a mess and a far more dangerous place than eight years ago.
Now let's turn this same focus and objectivity toward Donald Trump.
The Trump victory was a surprise of historic proportions. But the election is more than about a presidential choice. Not since just after the Civil War have republicans achieved this kind of across the board political power. That is the real significance of this election. The country has made a significant turn away from the philosophy of the Democratic Party and toward the philosophy of the Republican Party. To illustrate the magnitude of the move, Democrats control only five states in this country.
President Trump has the power to return this country to freedom and prosperity and bring resolution to domestic battles as well as international battles around the world. In my judgement, and a lot of others who have studied the problems we're facing, it can be done. It will take time, but the problems facing us are solvable. Bringing unity to this nation by raising the standard of living of all groups is, in the absence of a divided and grid-locked body politic, an achievable goal.
What we have before us is an agenda that is much like Ronald Reagan brought to America. And once implemented, that resulted in twenty-five years of peace and prosperity. We have the potential of returning to free market solutions to solve problems and away from socialism. Just simplifying taxes, lowering tax rates, encouraging money to return from abroad, and eliminating special interest tax loopholes and deductions, subsidies, and corporate welfare, and reducing and eliminating burdensome controls and regulations, would do wonders to restore prosperity to this nation. That's the good.
The bad is three-fold. If a President Trump regime pursues its trade agenda, we could face major dislocations and even a possible trade war. Trade wars are unwinnable. The trade war that helped bring on the Great Depression which was accompanied by multiple currency devaluations is a testimony to their dangers. Also, those that actually "win" a trade war - such as Japan which has massive export surpluses, a large manufacturing base, and virtually no immigration - have endured twenty-five years of recession, deflation, and stagnation. Donald Trump insists that NAFTA, the North American Free Trade Agreement, was the worst trade deal in history. Yet all three nations, Canada, Mexico, and America, are better off than any other trade block in the world. Messing with free trade can cause an international crisis.
Second is the immigration threats made by Trump which if practiced to extremes could lead to serious clashes between Mexico and the US, to say nothing of the potential clashes within our borders. Americans are not fearful of peaceful working Mexicans. They are concerned about border security and criminals or terrorists entering this country to do our citizens harm. To the degree Trump sticks to protecting the rights of US citizens, America will support him. Set up arrest squads to round up peaceful and productive workers here, and there will be trouble.
And thirdly, monetary and fiscal policy can be good or bad - constructive or destructive. Trump may go after the Fed. He's a hard money guy, and so am I. But unlike most hard money advocates, I don't believe that you can achieve fiscal discipline by strictly limiting the money supply. In fact it is exactly the reverse. A nation needs to get their fiscal house in order before it can have a sound currency.
Any attempt to artificially raise interest rates and reduce the money supply would send us down the same deflationary road as Japan. Trump will likely replace Janet Yellen at the end of her term. I fear he will appoint a Fed Chairman that will pursue a rules-based monetary policy, which is an ill-conceived theory. The results could be disastrous.
To add injury to insult, Trump may end up running huge deficits to implement his infrastructure program. This could lead to skyrocketing interest rates and that could lead to a return to recession and deflation. Fiscal and monetary responsibility is crucial in the process of achieving meaningful tax reform, reconstruction, and a much needed defense build up. In the absence of fiscal discipline lies chaos.
Donald Trump has exhibited authoritarian tendencies. As President of the United States he will have awesome power. The specter of the President going after some of the best and most productive companies in America and treating them as treasonous unpatriotic entities trying to flee the country is obnoxious and obscene. America was based on the freedom of movement of people, property, and money. Donald Trump has an enemies list that challenges those freedoms.
Trump is suggesting that we enslave companies and prevent them from taking their money and property to another country. This is reminiscent of Cuba and other totalitarian states and is totally contrary to the spirit and laws of this nation. Trump is a businessman and he very well may want to be the boss of bosses, and tell companies like Amazon, Apple, Carrier, and Ford what they can and cannot do.
Can he do it? A mandate is a powerful thing to possess. In 1934 Franklin D. Roosevelt with a stroke of the pen confiscated the people’s gold and devalued the dollar by 40%. And this even though gold and silver were explicitly named in the Constitution as Legal Tender. Yes, he can do it.
He can also, without congressional authority, increase tariffs literally overnight by 15%. He can devalue the dollar if he wishes. He can deport any number of illegal aliens he wants. And he can direct all money held abroad to return to America but only if the owners of that money invest it in America's infrastructure.
The ugly is Trump as Tyrant. Is Trump a rational man? We don't know. And the fact that the President has exhibited fits of irrationalism is what concerns many Americans. Will we get the good Trump? Or will we get the ugly Trump?
We will know soon.