Data and Economics

The Trump Trilemma

Rodrik’s Trilemma, named for the Turkish born Harvard economist Dani Rodrik, states that a nation may have two of the following three things: national sovereignty, democracy, or deep, global economic integration. It can have any combination of two. But it cannot have all three. Hence the term trilemma.

The logic behind why is pretty straight forward. Another word for deep economic global integration is economic globalization. Economic globalization is what we call it when we reduce the barriers for trade of goods and flow of capital between nations. In order to have it, we reduce transaction costs (tariffs, import/export quotas etc.) and inherently weaken some aspects of the control of the nation state. If we want to encourage globalism, the democratic process has to have a focus beyond the nation’s own borders to ensure that we govern and make policy in a way that facilitates the global flow of goods and capital. Which causes a bit of a problem. Because it requires the people of free democratic societies sometimes to have to vote for governments that adopt policies that often directly hurt their own outcomes.

When recession or depression hits, the first things to go are the other guy’s interests. Somewhat rationally, people like to put their nation and their people first. So there’s natural friction between democracy and globalization. It’s all painfully logical.

Now, if you want democracy and globalization, you can have it. But you’ve got to give up some of your sovereign identity. You’ve got to expand what you believe to be “your people” beyond what has historically been your people. Think European Union. There is democracy. There is free flow of trade and capital and even a single currency. But there is a loss of sovereignty as lone nations are no longer free to maintain economic policy that suits their interests alone. It is, the European Union after all. If you give absolute sovereignty back to the nations, you break the economic integration. BREXIT is a break in that economic integration. BREXIT is Rodrik’s Trilemma, out of the academic text and onto the front page of the newspaper.

The rise of Donald Trump is explained effectively in the same terms. There’s no real mystery to it. It was surprising because people perhaps underestimated the strength of nationalist fervor in America. But the mechanics are clear. Despite that, we’ve tried to explain it away in other terms. It was the Democrats and their elite mentality. Sure. It’s the internet and fake news. That damn Director Comey. It was the Russians. It’s the dumbing down of the schools so people know less.

Think people are ignorant now? How much did people know in the 19th century American south with only print media and a 60% literacy rate?  None of this is new. None of it is that hard to explain. Some guy named Rodrik that you’ve never heard of made it into his own version of Newton’s Second Law of Physics.

That nationalist swell has it’s upside too. From a purely economical perspective, a shift away from hyper-globalism isn’t an illogical choice. Globalism is a net societal positive, meaning that, it increases GPD, decreases cost of goods and makes the world an “overall” better place. But people don’t vote on the net. They vote on what things look like in their own backyard. And when the red side of the ledger in the great math problem that is the “net positive” of globalization is most of the working class of America, then it’s entirely fair to have some push back against it. And after a slow eight-year recovery from a deep recession, that push clearly graduated to a hearty shove. And that shove, was Trump.

Which brings us to the downside of hyper-nationalism. It’s not just the intolerance that oozed out of the Trump campaign rallies. It’s also the bad policy oozing out of the White House right now. I’ll let the hordes of offended people take on the tone of intolerance the Trump administration used to get elected and has continued for the first three weeks of the administration. There’s plenty of outrage abound. And I’ve written extensively on it already. Someone needs to take a look at the actual policies though. Because so far, they’re not much better.

Pulling out of the Trans Pacific Partnership doesn’t stop hyper-globalization. It just let’s China continue to make the rules for exports in Asia. And unless our workers are willing to compete with Asian wages, or we start slapping on tariffs that drive the price of our goods up, it’s not doing anything for manufacturing in America. So we’re helping China without helping America. That’s bad policy.

Killing Obamacare certainly felt good for many conservatives. But it was put in place for two reasons. 1-Too many Americans don’t have access to healthcare. 2-The cost for those of us that do is crazy. Clearly 1 isn’t a concern for many. And I get that. But 2 should be. Though flawed, Obamacare actually curbed the expense growth a bit. The data is decisive on that. So, it’s fair to ask in the wake of a repeal, what’s the plan gang? You’ve had seven years since it was passed and you’ve got nothing. Remember, Obamacare is basically the same plan that the conservative Heritage Foundation developed and Republican governor Mitt Romney implemented in Massachusetts. Most actually focused on solving the healthcare problem view Obamacare as one of the most conservative measures you can throw at it. Anything less is basically choosing to do nothing. Again, that’s bad policy.

Closing off travel for seven nations identified to be problematic from a potential Islamic fanatical terrorist perspective again, may feel good. But how about places like Saudi Arabia? Where all the 9/11 attackers came from? They’re not closed. How about the three million American Muslims already here that actually are American citizens just like me? But also carried out the last two major terrorist attacks on American soil? How does the new policy solve that problem. How does it make Muslim Americans feel? Or Muslims we depend on to fight the war abroad? Angry is my guess. And how does that make us safer? If you’re capable of ignoring the fact that it’s bigoted (I’m not) than you should probably still take note that it too is bad policy.

There’s a litmus test we should strive to use when judging the effectiveness of governance. It sounds something like this: Are policies and legislation smart enough to be effective, courageous enough to stand up to opposition and compassionate enough to account for the outcomes of the people they impact?

Pretty straight forward right? Well, not so fast.

The mistake of the great polar political debate of our times is that we’ve mistaken those three governing dependencies for a trilemma, like Rodrik’s. Where it appears that we believe that you can’t have all three. But where Rodrik’s trilemma is anchored in logical economic principle and observed empirical outcomes, this false political trilemma is not. And there’s no reason in the world you can’t govern with all three as mandatory first principals.

The political debate splits like this.  Both sides agree that things need to be smart. But both sides also appear to agree that strength and compassion are opposites, and mutually exclusive. Fueled by a $285 billion media apparatus that can’t figure out how to package anything that’s not point/counterpoint we appear doomed to argue about one or the other when the answer is both. That’s Trump’s Trilemma. It’s not his alone. But it’s his to govern right now.

When I first started taking Donald Trump’s candidacy seriously, I voiced my primary concern that Trump was dangerous in two potential ways. The first, least benign way was that he had the stones to do things but not the brains or moral compass to do the most effective or appropriate things. The risk was that he would be a failure, one term president and the American people would realize poor outcomes. The second, more dangerous way was that he had the stones and the brains, but was devoid of a moral compass to keep us from destroying our way of life. The risk there was that we may accomplish some things, maybe even some good things. But he would be effective to motivate people to hyper-nationalist ends that would come at the expense of civil liberties or the safety and well being of anyone who wasn’t on the team. Americans included.

When Donald Trump won the election, it showed me that paired with Steve Bannon’s savvy grip on populous rhetoric, we were likely dealing with the latter. Brains. Balls. No moral compass. And aimed at a singular end. That’s dangerous. About as dangerous as governing gets. And that’s what’s most concerning to me right now. It’s not just that the policies are bad. It’s that they appear to be effectively driving towards a very specific outcome: hyper-nationalism.

Now, if you’re watching the administration’s reaction to the federal ruling overturning the president’s executive order to ban travel and immigration from specific nations, and you’re chuckling to yourself about how it’s clear that they don’t understand the notion of judicial review and the role of the judiciary branch in governing America, I implore you, think again. They know exactly what’s happening. And they are exacting a very clear strategy. The administration’s ham handed attacks on the judiciary and the judge himself who ruled on the case aren’t ham handed at all. They are the political version of screaming at the ref in front of the home crowd. It’s not supposed to work. And it doesn’t mean the ref got it wrong. But if you don’t think it causes him to blink the next time one’s near the line, then you don’t know humans.

There is a clear and intentional attempt to erode the legitimacy of the judiciary in the eyes of the populous masses that brought the administration to power going on as we speak. The goal is to create enough noise to effect outcomes. Or heaven forbid, change the most effective process for governing man our planet has ever seen. And we should be paying close attention to the dialogue over the next few weeks as the appeals process plays out.

There is some good news though for those of us interested in good outcomes for Americans. The Trump administration is not playing in front of the home crowd. Most people who voted didn’t vote for him. And of the people who didn’t vote, very few of them are Trumpers. They either didn’t care or thought Hillary would win. If you were a Trumper, then you voted Trump. And three weeks into the administration, only the most fervent of Trumpers can actually believe that the way he’s conducted himself, represented the country and laid out policy, is aligned with their best hopes for what they voted for. The act is already wearing thin. Wait until the policies that aren’t smart or compassionate, do the thing that policies that aren’t smart or compassionate do…fail, hurt people and piss off the world.

So let the social crusaders continue to hold down the left flank. The Trump administration isn’t winning that group back no matter what. And from what we’ve seen, he’s committed to pouring gas on the fire. For we rational independents and libertarians though, focus on the effectiveness-or lack-of the policies coming out of the White House. And watch the ease at which the administration attacks the Constitution of the United States of America. That’s a document I once swore an oath to defend with my life. Now, I defend it with my words.

If you’re a Constitutional conservative, and what you heard out of the White House this last weeks squares just fine with you, than you are not a Constitutional conservative. You’re a political hedgehog who only knows how to root for one team. And it’s not America. That’s your right. Just go ahead and speak up so we know who to ignore when we try to solve hard problems in the future.

I’ve watched this act for a long time. Born and raised in Atlantic City. It’s not running out of steam. It draws on an endless reservoir of energy, chaos and yearning for eyeballs. For now, the rational people still hold the leash. But we’re a stumbling judiciary that’s perhaps not quite used to standing up to the personal attacks to come away from letting it go. And letting it go will end badly.

The world is watching.





11 replies »

  1. Thank you for a very insightful commentary. I’m bookmarking it for future reference.

    I’ve read these two sentences several times and am still not certain that they say what you mean to say. “How about the three million American Muslims already here that actually are American citizens just like me. But also carried out the last two major terrorist attacks on American soil?” Surely you are not implying that the three million American Muslim citizens collectively carried out the major terrorist attacks? May I request a rewrite for more clarity, please.


  2. great piece. you have moral authority to make these charges. I am inspired by the resistance, and living in WA state, proud of my state leading the charge on the travel ban.


  3. “Both sides also appear to agree that strength and compassion are opposites, and mutually exclusive. Fueled by a $285 billion media apparatus that can’t figure out how to package anything that’s not point/counterpoint we appear doomed to argue about one or the other when the answer is both.”

    This is so insightful. With the Trump team’s anti-media stance and determination to de-legitimize the mainstream media, it’s time for our Fourth Estate (and Fifth Estate) to step up and prove there is more to them, and all of us, than point-counterpoint. The problem is that they’ve figured out that’s where the money is. Remember when news programs weren’t expected to make money? Just to be impartial and report the “factual” news?

    The media must trust that news consumers can handle more than the pablum they are dishing out, which may end up to be one of the positive byproducts of this crazy-making administration.