Earlier this year, I identified Trump’s “worst ever tweet.”
I was wrong. That tweet, which displayed an astounding level of economic ignorance, is now old news.
Trump issued a tweet yesterday that is far worse because it combines bad economic theory with horrifying support for massive economic intervention. Pay special attention to the part circled in red.
Huh?!?
Since when does the President get to dictate where companies can do business?
Unfortunately, whenever he wants to.
Congress has delegated to the President massive “emergency” powers over the economy. Specifically, the International Emergency Economic Powers Act (IEEPA) is a blank check.
Here are some excerpts from a report by the Congressional Research Service.
By the twentieth century, …Congress created statutory bases permitting the President to declare a state of emergency and make use of extraordinary delegated powers. …The International Emergency Economic Powers Act (IEEPA) is one such example of a twentieth-century delegation of emergency authority. …IEEPA grants the President extensive power to regulate a variety of economic transactions during a state of emergency.
…Since 1977, Presidents have invoked IEEPA in 54 declarations of national emergency. On average, these emergencies last nearly a decade. Most emergencies have been geographically specific, targeting a specific country or government. …No President has used IEEPA to place tariffs on imported products from a specific country or on products imported to the United States in general. However, …such an action could happen. In addition, no President has used IEEPA to enact a policy that was primarily domestic in effect. Some scholars argue, however, that the interconnectedness of the global economy means it would probably be permissible to use IEEPA to take an action that was primarily domestic in effect. …Neither the NEA nor IEEPA define what constitutes a “national emergency.” …While IEEPA nominally applies only to foreign transactions, the breadth of the phrase, “any interest of any foreign country or a national thereof” has left a great deal of room for executive discretion.
You can click here for the actual legislative language of IEEPA.
You’ll see that the President has the power, for all intents and purposes, to severely disrupt or even block financial transactions between people and/or companies in the United States and people and/or companies in a designated foreign country.
And there’s no limit on the definition of “emergency.”
One could argue that an emergency declaration and a ban on the movement of money wouldn’t necessarily prohibit a company from doing business in a particular jurisdiction, but it surely would have that effect.
The economic consequences would be profound. In a negative way.
By the way, the White House Bureau Chief for the Washington Post responded to Trump’s tweet with one of his own.
He says the President, who criticizes socialism, is acting like a socialist.
He’s actually wrong, at least technically.
Socialism is government ownership and control of the means of production.
What Trump is seeking is private ownership and government control. And there’s a different word for that economic policy.
P.S. It’s a good idea for the U.S. government to have powers to respond to a genuine emergency. But it shouldn’t be the decision of one person in our separation-of-powers system. It was a bad idea when Obama was in the White House, and it’s a bad idea with Trump in the White House.
In peacetime, an emergency should require the approval of Congress. In wartime, it should require approval of the House and Senate leadership from both parties.
P.P.S. Trade laws are another example of Congress delegating too much power to the executive branch.
[…] ja nimettyyn ulkomaihin kuuluvien ihmisten ja / tai yritysten välisiä rahoitustaloustoimia", muistiinpanot taloustieteilijä Dan Mitchell, vapauden ja hyvinvoinnin keskuksen perustaja. "Ja […]
[…] ở Hoa Kỳ và người dân và / hoặc các công ty ở nước ngoài được chỉ định ghi chú nhà kinh tế Dan Mitchell, đồng sáng lập Trung tâm Tự do và thịnh vượng. Không có […]
I see this is from “International Liberty.”
Is that who this is from? Or is it from “American Oligarchate”???
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Total agree with Burns!Cultural marxism is fall today!Low motivation,low inovation!Only strong concurencial environment generating progress!
Lots to unpack here, Dan. (A) Trump issues a lot of hyperbolic statements, and to jump from this tweet to project the future employment of the International Economic Emergency powers (Congressionally bestowed, btw) is a serious leap. You stated it declaratively, as if it were a fact. It is not. It would be different if you said this because you were raising a concern that this might happen at some point in the future and wanted to debate the policy. It’s a small difference, but an important one in communications.
(B) you cryptically alluded to another form of economics- fascism. One could argue our nation, run as it is by the runaway unaccountable administrative state and oligarchs- some of whom, I’m sure, find your org- operates very similar to a fascist economic model, already, and for quite some time.
(C) Perhaps most disturbingly, your article also employs a significant logical fallacy. You beg the question by assuming the end result (restricting trade w China) is bad, and support your argument with (i) an ad hominem argument against trump and (ii) you set up a straw man re the IEEPA. Interestingly, you’ve never addressed the elephant in the room in most of your articles on Trump and China: the propriety of trading with China (a lot, some, or at all). Which leads me to D…
(D) Propriety of Trade with China. You cite to a few in this blog, but many of your articles argue for “free trade” with China and cite the material benefits to China (eg, massive wealth injection raising tens of millions out of poverty) as proof of the propriety of free trade (not just with China, but also in general). Your articles provide 1) no geopolitical analysis, and 2) you make no comment on whether or not trade with China is a good thing for the American people. 3) Nor do you argue whether or not trade with China is a good thing for almost any country’s people. These three issues are the most compelling and most important, but you’ve chosen to avoid them. I don’t mean to appear mean-spirited, here. I’m just making observations. You consistently pretend as though, from an ivory tower of economic policy, you can exist above the fray as apolitical. However, because US trade with China is an issue which is both political and economic, I’m afraid you’re going to climb down from that tower, into the mud and slime of philosophical and political analysis, with all the rest of us.
(D)(cont.)(1) I recall a lot of the same arguments as yours as a college student a couple years into the new century. Folks like you were arguing, with exuberance and triumphalism, with the demise of the USSR and Fukuyama’s ridiculous “End of History” nonsense, that free trade was the remedy. To what? To no less than all global ills. It wasn’t that it was completely wrong: improvements to material well-being do indeed solve many problems. But in the exuberance and triumphalism of that era, there was an unsupported global proposition that free trade would inexorably lead to liberalism in all locations and in all cases, whatever. Clinton and other geniuses decided to permit China’s entry into the WTO, and the US initially prospered – even if it lost millions of mfg jobs and, ultimately hundreds of thousands of middle-aged men (to suicide because they were dispossessed of their jobs and then their families and then their self respect and then their very lives, and thrown away by a broader society happy to get cheaper crap).
(D)(cont.)(2). And then, there was the next 15-20 years, and the collapse of the pretty fairy tale: China was richer and stronger, its people were better educated and better fed and, materially, on the whole, better off. But in less than a generation, we, the United States, having vanquished one great enemy, on the advice of free trade blind-zealots like yourself, Dan, literally created our next great adversary. And this one might just collapse the global order, entirely. Free Traders has pretty little rules to theoretically limit the gamesmanship in international trade. China read the rules, acknowledged the rules, agreed to the rules, and then promptly disregarded them. China has stolen trillions of dollars of American intellectual property. This is, truly, a theft of a portion of the patrimony of our people. And they don’t give a damn. I’m not going to write a book here (too late) but Chinese leadership is ruthless and single minded: they intend to restore China to what they believe is its rightful place: the hegemon, the ruler of “all under heaven.” In seeking this and in maintaining this paradigm, they continue a Chinese political worldview which has existed and proceeded in an unbroken chain for at least the past…
(D)(cont.)(3)…. for at least the past 3 thousand years. History: read some. And “free trade” was going to change this? The hubris and idiocy is astounding and, in retrospect utterly outrageous. The “spirit animal” of China is The Terminator. Xi and the party leadership cannot be honestly bargained with or reasoned with. It has a singular purpose: domination. And it will not stop unless it is stopped: either by force or by eliminating or at least reducing its economic power. The former is unthinkable. This leaves us with the latter: reducing its economic power. This can be achieved in part in the short term and more lastingly in the intermediate term by American divestment. For now, the Chinese still overall, suck at R&D- which is why they STILL STEAL OUR IP. So divestment is not only the choice of necessity, but a choice with serious teeth. This is a matter of not only ensuring the strength and well-being of the US, but also the West. Colleagues of yours- who delude themselves into a self-superiority of an existence above the fray and denying the existence of cave man concepts like “culture” and “cultural differences” I’m sure bristle at my suggestions here.
(D)(cont.)(4). And And yes, divestment has short term pain. But just look how quickly your “free market” has responded to the tariffs- businesses have very quickly and in staggering numbers, moved their supply chains out of China. Sure that’s not preferable. But it’s also not preferable to have China leading the global politics order. China, you know, the country that has deliberately rounded up over a million (millionS?) Uighurs for cultural reprogramming and cultural genocide (see also the Machu, Tibetans, and countless other ethnicities trampled under the jackboots of Han Chinese tyrants for thousands of years). So pardon me, but why exactly is divestment and Capital redeployment a bad thing? So, in the short term some of your donors take a haircut on their billions and then make it back in Vietnam or elsewhere (or, God forbid, by re-investing in the US). And the US is overall strengthened because we’re NOT DIRECTLY INVESTING IN AND FEEDING THE TIGER THAT OPENLY DECLARES (and which openly mocks us in countless journals we in the English speaking world are too stupid to read) its intention to steamroll us and everyone else to become a global hegemon (read the damned Communist Party Platform and Xi’s China Dream).
(D)(cont.)(5). Problem is, Dan, your economic theory is silent on these issues. It can’t make normative assessments in the topical areas I’m discussing. But let me help you a bit by injecting a new hypothetical variable into your purely economic argument: imagine that your free trade enables a vicious and tyrannical government which, at the end of the day, doesn’t give a damn about your free trade, and which will seek to destroy competition not by efficiency or by voluntary exchange or “dollar democracy,” but by force. In other words, what if free trade simply permits you to sell the rope with which you yourself will be hanged? What then, Dan?
(E). So for the reasons below, Dan, until you address the propriety of trade with China in the first place, your anti-trade war posts are just propaganda which eschews scrutiny.
That is one of Congress’ laws the Constitution requires the prez to see faithfully executed in the kleptocracy. But the Opium Wars drew investment from These States from Jacksonian to Grant’s era. Ignoring those shameful events magnifies the effect of tariffs all out of proportion. This helps slip the Manifesto Plank 2 income tax Mickey into the drinks of those unduly distracted by tariff screeching.