https://victorhanson.com/the-decline-and-fall-of-our-so-called-degreed-experts/
The first six months of the Trump administration have not been kind to the experts and the degree-holding classes.
Almost daily during the tariff hysterias of March, we were told by university economists and most of the PhDs employed in investment and finance that the U.S. was headed toward a downward, if not recessionary, spiral.
Most economists lectured that trade deficits did not really matter. Or they insisted that the cures to reduce them were worse than the $1.1 trillion deficit itself.
They reminded us that free, rather than fair, trade alone ensured prosperity.
So, the result of Trump’s foolhardy tariff talk would be an impending recession. America would soon suffer rising joblessness, inflation—or rather a return to stagflation—and likely little, if any, increase in tariff revenue as trade volume declined.
Instead, recent data show increases in tariff revenue. Personal real income and savings were up. Job creation exceeded prognoses. There was no surge in inflation. The supposedly “crashed” stock market reached historic highs.
Common-sense Americans might not have been surprised. The prior stock market frenzy was predicated on what was, in theory, supposed to have happened rather than what was likely to occur. After all, if tariffs were so toxic and surpluses irrelevant, why did our affluent European and Asian trading rivals insist on both surpluses and protective tariffs?
Most Americans recalled that the mere threat of tariffs and Trump’s jawboning had led to several trillion dollars in promised foreign investment and at least some plans to relocate manufacturing and assembly back to the United States. Would that change in direction not lead to business optimism and eventually more jobs? Would countries purposely running up huge surpluses through asymmetrical trade practices not have far more to lose in negotiations than those suffering gargantuan deficits?
Were Trump’s art-of-the-deal threats of prohibitive tariffs not mere starting points in negotiations that would eventually lead to likely agreements more favorable to the U.S. than in the past and moderate rather than punitive tariffs?
Would not the value of the huge American consumer market mean that our trade partners, who were racking up substantial surpluses, would agree they could afford modest tariffs and trim their substantial profit margins rather than suicidally price themselves out of a lucrative market entirely?
