History has shown that direct interventions like these tend to produce corruption without broader economic gains. Researchers who study authoritarian regimes, where such tactics are common, say that targeting individual companies causes industries to focus less on innovating and more on currying favor. Pleasing the president becomes the fastest path to profits, and businesses race to take advantage.
It could scarcely have been more prescient.
Over the course of the last 15 months, Donald Trump has attempted (with varying degrees of "success") to compel corporate management teams to make decisions that advance his political agenda. For large swaths of the American electorate, that's just fine because after all, that agenda is ostensibly to "Make America Great Again".
Of course that's a completely (and deliberately) nebulous promise. Consider this excerpt from a piece penned by one of my favorite pseudonymous economic/political commentators:
Making promises gets politicians elected. Populists tend to make grand promises, but generally fall short of honoring them. They inevitably vouch to deliver greatness, bring country back to its citizens, restore the national pride, save the culture, create jobs and prosperity, and last but not least, kick some ass along the way. Populism is really there to restore the natural order of things. And while list of promises varies across regions, histories and personalities, restorative commitment to greatness is a must in all of them. Without it, there is no serious candidate.
[With Trump], 'again' is the magic word. It accomplishes three things in one stroke. The first effect is flattery, its purpose eminently seductive – we are the sons and daughters of great ancestors so we are entitled to greatness. Second, it establishes the emotion of self-pity – our greatness has been hijacked. And finally, it automatically provides legitimation for any and all means required to reclaim the lost greatness, and restore the natural order of things
The definition of "great" isn't set and neither are the methods for reclaiming "lost" greatness, but using the term "again" allows Trump to justify otherwise questionable methods in his inherently quixotic quest for reclamation.
Over the past six or so months, the burgeoning trade war has presented Trump's base with something of a paradox. Apparently, reclaiming lost greatness entails being "tough" on trade, but due to the very same globalization of supply chains and markets that Trump claims is hurting America, being "tough" on trade necessarily entails some rather nasty outcomes for the very same Americans whose cause he claims to champion. There are soybean farmers who stand to suffer from the spat with China. There's General Motors which, much to the chagrin of Peter Navarro, last Friday warned that the tariffs could end up costing U.S. jobs. Hell, even America’s largest nail manufacturer is at risk.
The most high-profile example of this is Harley-Davidson, a company Trump heaped praise on at the White House last year but which has now found itself in his cross-hairs after announcing it would be moving some production to Europe in order to retain access to European markets in light of the tit-for-tat trade escalations.
An exasperated Trump responded by (literally) threatening to tax the company "like never before", an egregious threat that seemed to suggest his first priority is not in fact American business, but rather his own reputation.
Sadly, some Harley workers have become so enamored by Trump that they're viewing their own jobs as something that may need to be sacrificed for the greater good, an absurdly ironic scenario given that American manufacturing was supposed to be that greater good.
Last weekend, Peter Navarro showed up on CNN and accused Harley and General Motors of "playing into the hands of foreigners". He also said the companies are "speaking with forked tailpipes". That's where we are: the Trump administration is (effectively) calling some of America's most storied brands treasonous.
On Tuesday, Trump took his one-sided war of words with Harley up another notch still, tweeting this the day before the 4th of July:
Let that sink in.
This is a U.S. President explicitly saying that the federal government is going to actively work with Harley's competitors to undermine its business.
Again, this is the same Harley-Davidson that Trump, just 16 months ago, praised as "a great group of people [who are] doing a fantastic job." He even posed for pictures:
Make no mistake, this will end in tears for the broader economy one way or another. It's entirely possible that irresponsible fiscal policy (i.e., deficit spending in a late-cycle environment) will simply overheat the economy, prompting the Fed to slam the brakes on. That's a delicate situation and one that is rife with recession risk if it's not carefully managed.
But even if, by some miracle, the short-term gains that accrue from the anomalous fiscal path the U.S. is on end up being some semblance of sustainable, flyover America will not, in fact, be "Great Again", if recent warnings from Harley-Davidson and General Motors are any indication.
And on that not-so-happy note, I'll leave you with one more passage from Owen's article linked here at the outset:
The message is clear: show loyalty to Trump and reap the rewards. That may explain why markets have stayed strong even while the media gives Trump credit for “bodyslamming big companies,” as one Post columnist put it. Corporations know that the president’s demands are publicity stunts that will be accompanied by tax cuts, deregulation, and direct access to the levers of government. Wall Street has tried to persuade the public that those policies will accelerate economic growth. But a University of Chicago survey of prominent academics found that while 62 percent agreed that Trump’s policies would increase corporate profits, only 16 percent predicted quicker economic growth that would benefit the average American. Daron Acemoglu, an economic historian at MIT who took part in the survey, condensed his thoughts into a tweet-length summary: “[Trump’s plans],” he wrote, “are much more likely to be disastrous for the economy.”