Mercantilism was a subject that we touched on a while ago (to see or review that article, click here). However, given the events of the past few weeks, I thought it might be interesting to take another look, under the covers.
In a recent interview I was asked what I thought about the Economic policies of President Trump. I responded that I really couldn’t quite understand his policies given that we live in the 21st century, that we have developed into a global economy and that a hoard of gold is no longer necessary to pump money into the economy since all Central Banks employ a printing press for their fiat system. Then I realized that the current Mercantilistic approach is more about Trump’s ego than a policy, which betters America and Americans.
In the 16th to the 18th Centuries those that both made and influenced economic policy believed that there were winners and losers, with no room in between. Reading Trump’s books, whether written by him or not, you are always clear on his disrespect for the loser in any situation.
A winner, was the nation, at the end of the day, which had accumulated the most bullion. Aside from conquering another nation, always a risk with no guarantees, the best way to build the Treasury was to export more than was imported. Listen to Trump dis every trade agreement that the US has ever made. If we aren’t bringing more “bullion” in than we are sending out then the deal is a bad one and we are the losers. Donald Trump will not abide as being perceived a loser.
England imposed the Navigation Acts on its colonies to insure that only English goods would be imported thus securing a monopolistic market for English merchants. Unfortunately without competition from other nations the colonists had to pay whatever was dictated. No Walmart allowed in those days. Mercantilists always favor the merchant, the manufacturer and the corporation above the individual. Donald Trump talks to main street but when it comes to action (watch what they do not what they say) every policy decision from tax reform and tariff impositions to military industrial complex spending always ends up being classic Mercantilism at the expense of the average consumer.
The idea that cutting off imports increases employment, a notion that sounds good on the political stump and gives the Pres. great rounds of applause, gets lost in the reality that to increase exports means someone else increases imports. Someone else lays off their people. Someone else (the American public) must pay higher prices because of the lack of competition. All in all not a winning combination. But it certainly is salve for the President’s ego and makes a good tweet.
The more I think about it the more I do understand the Trump economic strategy. I just had to get my head around an 18th century idea embraced in a 21st century world. All for the gratification of someone who has almost always won, come in first most of the time and has accumulated the most “bullion.” When you look at Trump the Mercantilist, not Trump the President, and you read a few of his books, then it all comes together.