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Trump’s Tariffs: Economics in a Post-Fact World

By Wil Paustenbach '20, Staff Writer

· Wil Paustenbach

At a recent fundraising dinner, President Trump gave his audience an intimate look at the way he conducts diplomacy. Trump told the crowd of potential donors that, in a meeting with Canadian Prime Minister Justin Trudeau, he strongly pushed back on Trudeau’s claim that Canada did not run a trade surplus with the US, despite having “no idea” whether it was true. In his characteristically eloquent style, Trump continued, “I didn’t even know… I just said ‘You’re wrong.’ You know why? Because we’re so stupid.”

 

This is not a one-off or unique to the current President. From the infamous £350 bus ad during the Brexit debate, to Macron’s dramatic accusation that Le Pen “lies all the time” in a debate, to the 78% of President Trump’s statements that Politifact has dubbed false, the prevalence of misleading statistics and false statements in public discourse has been on the rise. Indeed, this trend led the Oxford English Dictionary to select “Post-Truth” as its 2016 Word of the Year.

 

Politicians have always had a tenuous relationship with the truth and political spin is nothing new. So, what is it about this current time period that explains why people cling so desperately on to demonstrably false claims? The answer lies in the parallel development of big data and social media.

 

British Economist Alvin Birdi has said “The sheer size of data sets means it becomes possible to tell almost any story, depending on how you look at it.” While big data promised to enlighten civic debate with scientific evidence, it has in many ways facilitated confirmation bias. The rise of social media, at the same time, has created echo chambers in which statistical outliers and misleading presentations are amplified. Paradoxically, the aspects of modernity that were intended to invigorate public debate have exploited our worst psychological tendencies.

 

Naturally, this distrust of statistics has evolved into a broad offensive against sources of objective information and knowledge. For example, the two most recent administrations have attacked the independent, nonpartisan Congressional Budget Office, and one of Conservative Media’s favorite pastimes is maligning academics and the press. These attacks have been very successful: Gallup Polling Trends have seen dramatic declines in confidence in nearly all such institutions.

 

Nowhere has this collision been more intense than in economics debates. As Noah Smith argued in a recent Bloomberg opinion piece, no one since Milton Friedman has been able to successfully make economics—with its increasing reliance on sophisticated mathematics models and big data—accessible to the public. These forces have created fertile soil for the promotion of policies that defy empirical evidence and warnings from independent sources to take root.

 

 

Take Trump’s tariffs for example. So far this year, President Trump has announced tariffs on washing machines, solar panels, steel, and aluminum. The President has claimed these policies will bring millions of jobs to the United States; however, academic and public economists are in consensus that they will not. Indeed, a poll of 43 of the nation’s top economists all agree the tariffs will hurt the economy. More than that, the very issue the administration claims the policy will address does not exist. While these tariffs were sold as a way to reduce the trade deficit, two of the countries that will be most affected—Mexico and Canada—do not run particularly large surpluses with the United States, according to the American Census Bureau. Despite this, these tariffs are set to go into effect at the end of this month.

 

Certainly, these policies will be detrimental to the American economy in the short-term. However, the true harm of these policies is that they threaten the rules-based, liberal economic world order that has brought hundreds of millions of people out of poverty since World War II. Central to this global order is objective data and analyses to facilitate cooperation and international investment in order to increase the welfare of all involved. If US foreign policy makers continue to disparage the very foundation of the liberal economic order, uncertainty will reign, returns will fall, and American economic dominance may well end.

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