Day 74: Smoot-Hawley is Not a Porn Star

 

In my previous post, I predicted that the results of Trump's Smoot-Hawley 2.0 would be bad.  But even I didn't expect that two-day drop-off that we are witnessing in the markets:

As the accompanying New Zork Times article relates: 

The S&P 500 dropped more than 10 percent in two days and the tech-heavy Nasdaq Composite Index closed in a bear market on Friday, capping one of Wall Street’s worst weeks since the start of the coronavirus pandemic in 2020.

The U.S. rout followed losses in global markets. Worries about an escalating global trade war set off by President Trump overshadowed a positive reading on Friday about the health of the American labor market.

To put this in perspective, over the last two days, Donald Trump has presided over a staggering  6.6 trillion dollar loss due to his economic incompetence. To put that in perspective further, since taking office Team Trump has lost over 11 trillion dollars of economic value due to destructive policy.  That is an unmatched record in US political history.  Well done, MAGA voters. 

Throughout today, I heard from many so-called moderates who were bullish on Trump 2.0 as an economic project. They ask, "Doesn't Trump know the long-term damage he is inflicting?"  The answer is prosaic: no. No, he doesn't. And he doesn't care. In fact, I suspect that if you did mention Smoot-Hawley, he would probably think that was the name of one of his favorite porn stars, such as Stormy Daniels, and not a warning from history.  

In Sinclair Lewis's prescient It Can't Happen Here, an American fascist quips that "we don't want all this highbrow intellectuality, all this book-learning."  I believe this is reflective of the all-too-real contemporary fascist-adjacent if not outright fascist MAGA movement.  In many ways, MAGA reminds me of Martin Luther's doctrine that advocated "every man his own priest." This was the "highbrow intellectualism" of Catholicism that Luther's schism targeted. In his reformation, the intensive intellectual formation for a Catholic priest was unnecessary. Instead, the only thing required, in the view of Luther, was a bible and an opinion (I am greatly simplifying here, mind you).  The end result of such an anti-intellectual philosophy led not only to the horrific bloodshed of the Thirty Years' War but also to such peculiarities as Pentecostal snake-handling cults. Populism, be it theological or political, almost always has such a strain of an anti-intellectual bias against book learning because then, as now, such learning does not come cheap. I assure you, it is no coincidence that the evangelical community has been the most diehard of all Trump supporters.

MAGA merely replaces the spiritual with the political in that it makes every man his own political philosopher where no special education is required. If you will recall, Trump often crowed about his dominance with "poorly educated" voters, going so far as to say that those with college degrees are part of the problem afflicting this nation.  Indeed, as is the case with despots the world over, the so-called "low information voter" is the one who is most attracted to authoritarian regimes precisely because, in their ignorance, they lack the understanding of the vastly complex tangle of threads that comprise the civil society, and resent those who do. MAGA is the equivalent of a child playing with matches or running with scissors: in its ignorance, it is unaware of the recklessness of such acts. Trumpism is nothing more than the embodiment of Orwell's totalitarian bullet point that "Ignorance is strength." 

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The day has gotten away from me, so I will wrap this one up as my eyes are starting to close. But there is one last bit of information I want to write about that shows how destructive blanket tariffs can be. Just a day after Nintendo unveiled their much-anticipated Switch 2, the video game giant is forced to announce a pre-order delay as they adjust pricing due to Trump's tariffs. 

Nintendo delays Switch 2 pre-orders in response to Trump tariffs

Nintendo has delayed pre-orders in the United States for the Switch 2 in response to sweeping new tariffs outlined by the Trump administration earlier this week. Pre-orders were scheduled to begin on April 9, but have been delayed indefinitely, Nintendo said Friday.

...

Nintendo announced its next-generation console on Wednesday, setting the price of Switch 2 at $449.99. A few hours later, U.S. President Donald Trump announced “reciprocal tariffs” on dozens of countries, including territories where Nintendo manufactures its hardware. Trump hit China with an additional 34% duty on Wednesday, and hit Vietnam, where Nintendo has moved some of its production, with a 46% tariff. That could mean Switch 2’s already expensive price tag could go up even further for customers in the U.S.

This is a perfect example of the unforeseen consequences of reckless economic policy. The first victim will be the US consumer as he will be inconvenienced by the delay of a product as well as be burdened with an elevated price tag. In response, he might forgo purchasing it altogether. If others do the same, Nintendo could have a ruinous shortfall in revenue, something that might have long-lasting consequences for the financial well-being of the company. But the damage doesn't stop there. When a new console is released, tech companies need accompanying high-profile game titles to go with it to serve as an incentive for gamers to buy the new console. As such, game studios produce expensive top-tier titles with costs often only recouped by the initial flurry of sales that go hand-in-hand with the console release. When there is a delay, those game devs can suddenly find themselves unable to pay the bills because of the delay of the console release and thusly their game. But the damage spreads out even further from there. The console sales are weak which hurts the software end, which in turn, harms the entire games industry as revenue from top to bottom begins to falter, resulting in industry-wide layoffs. Those layoffs then leak into the broader economy as unemployment shoots up, and so on.  

Long short: economics is not a game. Well, it sort of is, but you need to understand the rules to win it. This is an illiterate administration, so... 

I'll end tonight's post with another quote from It Can't Happen Here. 

Why, Windrip's [the novel's fascist authoritarian] just something nasty that's been vomited up. Plenty others still left fermenting in the stomach—quack economists with every sort of economic ptomain! No, Buzz isn't important—it's the sickness that made us throw him up that we've got to attend to..."