Trump's secret belief would leave true Republicans aghast
The Republicans have been using the term “communist” or “Marxist” to describe their opponents for as long as I can remember. Since at least the time of Ronald Reagan, they have accused liberals of using the power of the state to infringe individual rights and liberties, and to violate the promise of capitalism and the principles of free enterprise.
What they really mean, however, has nothing to do with Karl Marx. A government of, by and for the people would by necessity have to tax people of means and property in order to treat and serve everyone equally. From the Republican point of view, that’s the problem. Government shouldn’t do that. Political equality is communism.
As a consequence of the GOP’s monopoly of the word, it’s probably not surprising, though still maddening, that no one seems to have noticed that Donald Trump’s economic policies are downright communist.
Well, not quite nobody.
The famed economist was on MSNBC recently to comment on the destructive impact of the president’s tariff policies. Professor Wolfers read a passage from a recent interview Trump gave to Time magazine, in which he said: “We are a department store, and we set the price. I meet with the companies, and then I set a fair price, what I consider to be a fair price, and they can pay it, or they don’t have to pay it.”
“Milton Friedman is rolling in his grave,” Professor Wolfers said in response. “This is central planning, not even by a central planning committee. A central planning committee would have expertise. This is a bloke in a room who thinks the country is a department store.”
Wolfers isn’t the only one to notice. So has Patrick W. Watson, a senior economic analyst for Mauldin Economics. In this interview with me, he explains why the policies we are now seeing are more reminiscent of those in “command economies,” and how one consequence of tariffs is the government effectively taking control of the means of production.
“Pure Marxism there,” Patrick said.
JS: The president told Time magazine that he’s the one to establish a fair price for things, as if he were the owner of a department store. This would seem to run against the grain of 40 years of economic thinking in which the markets, and markets alone, set prices. What’s going on?
PW: Think about who this is. Trump was born to great wealth. To the degree he has ever actually shopped in a store, he has no idea what it’s like to be price-constrained. He’s talking about a part of everyday life he’s never experienced, so I’m not sure we can impute any logic to it.
But the comment betrays a mostly unnoticed political split. This statement would have once sent Reagan Republicans into orbit. The government should have no role in setting prices, in their view, even metaphorically. Maga is something else. It is aggressively interventionist. In some ways, Trumpism resembles socialism.
JS: I’m very glad you brought up socialism. I’ve been banging that drum. What are the top three signs Trump is bringing a backdoor version?
PW: First, the whole tariff-reindustrialization idea is more normally seen in command economies. As I said in 2020, it’s the government trying to dictate its preferred outcomes, instead of letting market forces decide. Their base assumption is that “laissez faire” failed.
Second, the way business leaders are frantically begging Trump for favors and the almost openly corrupt way in which he is granting them is, in effect, government taking control of the means of production.
Pure Marxism there.
Third, his immigration policies are reshaping the labor market by deporting peaceful people who are simply doing the manual labor our economy needs, while attacks on education seem directed at producing a class of lower-skilled white people to replace them.
JS: I can’t help thinking that if a Democratic president were doing this, there would be howls of socialism from all corners of the business press. I don’t see anyone making connections you’ve made. Why is that?
PW: A really good question. Maybe because for decades “socialism!” has been an attack from right to left. Seeing it go the other direction just doesn’t compute. And maybe also it’s a failure to accept that Reagan-style conservatism is dead. The Republican Party whose corpse maga now inhabits is long gone, but still being used as a shield for economic ideas the old right would not have recognized.
JS: Related to your first answer, Trump does seem to have a weird relationship with money, as in: he doesn’t seem to know what $20 would buy, as he’s never been constrained by price, as you say. I may be going out on a limb here, but that seems to have something to do with his, I dunno, “misunderstanding” of what tariffs can and can’t do.
PW: I think so. It seems to spring from a childlike view of winning and losing. I’m not sure he really understands what a trade deficit is beyond, “Their number is bigger than mine. Bad!” I’m not a psychologist, but I think we underestimate how Trump’s personality drives his policy decisions. There’s a kind of hyper-selfishness there. On any given question, ask yourself “which choice will make Trump feel good” and that’s probably the one he will make. What would be good for the country isn’t part of it. Hence, we get things like tariffs.
JS: The last time we chatted, you said Bidenomics was working. Is it still working? Will it be a mitigating factor in the coming recession?
PW: Biden left a good economy, though it had problems. Remember last September the Fed cut rates because unemployment was creeping up, then paused in December because inflation was coming back.
I think Biden and Trump weren’t far apart in wanting to reindustrialize and address China’s national security issues. The difference is Biden knew it would be a long-term job and did the hard legislative work of setting up structures to get us there. Trump wants instant glory.
He once tweeted something like “trade wars are easy to win” and I think he really believes it. So he tossed aside everything Biden accomplished and is doing it his way. We’re seeing the results.
A tweet by Ivanka Trump.