The Stupidest Trade War

Plus: Pope Francis (Not So Fondly) Remembered

Residents of the Heard and McDonald Islands. You know why they wear tuxedos? Because they’ve been ripping us off, that’s why.

I have a new piece up at Discourse about how “we’re not just getting a trade war. We’re getting the stupidest possible version of a trade war,” which seems almost designed to demonstrate every problem with protectionism. How bad is it? We declared a trade war on penguins, and somehow it’s not the penguins who are losing.

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Chaos Days Sale

But first, if you’ve been lurking on the free list, remember to take advantage of our one-day-only Chaos Days Sale.

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Central Planning for Conservatives

The trade war with the uninhabited Heard and McDonald Islands is just one demonstration of the arbitrariness of the trade war. I discuss “the central folly of all trade wars.”

They always consist of an elite group of politicians—or in this case, one man—overriding the individual decisions of businesses and consumers. A trade war is central planning, but for conservatives. It involves the same conceit as all central planning: that the politicians or bureaucrats have some special knowledge that overrides everyone else’s judgment. Yet they cannot possibly understand how to balance the millions of choices made by millions of people, each in their individual circumstances.

The tragicomic incompetence with which Trump has implemented his tariffs lays bare the emptiness of that conceit. Supposedly he is charging retaliatory tariffs that are half the tariff rates other countries charge against us. But that’s not what he’s actually doing. In his announcement, the “tariff rates” Trump listed for other countries do not correspond to any actual tariffs they charge. So where do those numbers come from? It did not take long for people to figure out that he had merely taken the trade deficit every country has with the U.S. and divided it by the quantity of that country’s exports to us—and set this, for no reason at all, as the “tariff rate” against which we are retaliating.

Hence all the crazy results.

Behind this is a particular destructive premise that strikes at the root of any economy: the idea that trade as such is bad.

The most revealing defense of Trump’s tariffs is what an unnamed White House official told the New York Post: “The model they use is based on the concept that the trade deficit that we have with any given country is the sum of all unfair trade practices, the sum of all cheating.” This, put in crudely simple form, is the basic idea: Trade is cheating. The only question is whether you’re cheating the other fellow or he’s cheating you.

Trump’s assumption is that trade is always a zero-sum game, in which one player’s gain is always another player’s loss. All the evidence indicates that this is how Trump has habitually run his businesses, stiffing contractors, deceiving lenders and trying to browbeat partners into overpaying for his properties.

All of this is summed up in Trump’s policy toward Canada, which is the example I originally thought of as the world’s stupidest trade war—before the stupidity broadened out to include the entire world.

Notice that he claims Canadian trade is bad for us—so long as Canada is still a separate nation. But then he demands that it become our “51st state” and imagines that suddenly the exact same trade would be good for us, if we simply erased the national border.

Trump is right about one thing. The border between the US and Canada is just an artificial line on a map. It has no economic significance. Yet he imagines trade would go from being bad to good if we simply did away with the imaginary line.

Read the whole thing.

The Stupidest Trade War

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The Unitary Autocratic Executive Theory

The overriding theme of Trump’s presidency is his desire to centralize absolutely all power in his person. The trade war is not the worst of these attempts, but it’s the form in which this is felt directly by most voters because of the economic uncertainty (and consequent stagnation) it imposes on us.

There are millions of people right now who wake up every morning to find out what Donald Trump had for breakfast, how he’s feeling, whether he last met with anti-trade fanatic Peter Navarro or with Treasury Secretary Scott Bessent—and depending on these unpredictable influences and whims, these people have to assess, day by day, whether they still have a viable business.

One of the things that enables this extreme centralization of one-man rule is a constitutional interpretation called “unitary executive theory.” Recently for The UnPopulist, I helped adapt an interesting article from NYU scholar Peter Shane, who makes the strongest case I’ve seen against the unitary executive.

The central issue revolves around officials at certain “independent” federal agencies, like the FTC, the FCC, and—if that doesn’t get your attention—the Federal Reserve. Their independence from direct presidential control was judicially recognized in a 1935 ruling known as “Humphrey’s Executor.”

The theory behind Humphrey’s Executor is straightforward. It starts with the recognition that the executive branch of government draws on two streams of legal authority. Some of what it does involves carrying out powers vested directly in the president by the Constitution. Treaty-making and fulfilling the president’s commander-in-chief role are prominent examples. But most of what the executive establishment does—nearly all of what it does in domestic affairs—draws on authority that Congress has given to the executive branch by creating administrative agencies and assigning them missions, such as protecting the environment or enforcing civil rights. The core of independent agencies’ work in this respect involves both rulemaking, which the Humphrey’s Executor Court called “quasi-legislative,” and administrative adjudication, which it called “quasi-judicial.”

What the Court held in Humphrey’s Executor is that if an agency is of the latter kind—that is, the agency’s job description involves a mixture of quasi-legislative and quasi-judicial functions that are not within the president’s explicit Article II powers—then it is up to Congress to determine whether this kind of agency’s heads serve at the president’s pleasure. If such an agency’s role is essentially “to carry into effect legislative policies embodied in statute,” then Congress may protect its members against discharge except for good cause.

Why is this important? “Many of today’s independent agencies, such as the Federal Communications Commission, were created at a time when Congress was giving executive agencies vast new powers, such as regulating the airwaves, which had obvious potential to be abused. The independence and bipartisanship of these agencies was part of a structural strategy Congress adopted to restrain such abuses and prevent the presidency from acquiring anything approaching dictatorial power.“

This is part of the old 20th-Century “liberal” outlook in which we were going to have a bigger and more powerful government, but we were still going to be a free society.

I have found that many people have a weirdly strong attachment to the unitary executive theory, and not just the authoritarian right, but the libertarians, too. I gather it’s because they were relying on this as one of their big constitutional arguments against regulatory agencies, which they view as an untamable power unto themselves, independent of the president but also unconstitutionally invested with legislative power.

There’s a lot of truth to that, but I think what they really need is a stronger version of non-delegation doctrine. If the regulatory agencies have too much power, and they do, then the solution is to send more of that power back to Congress—and ultimately back to the people. The solution is not to concentrate that power in the hands of a single person, which makes it far, far more dangerous.

At any rate, I am also convinced that a fully “unitary” executive is not well-grounded in our basic law. The Constitution may vest the executive power in the president, but it also contains multiple points at which executive power is clearly shared with or checked by the other branches. Peter Shane runs down some of the most important ones.

First, it cannot be true that Article II gives the president not “some of the executive power, but all of the executive power.” Section 2 of Article II explicitly requires the Senate to participate in the executive powers of treaty-making and appointing so-called principal officers such as Cabinet secretaries. (Section 2 even leaves open the possibility that “Congress may by law vest the appointment of such inferior officers, as they think proper … in the courts of law.”) At most, Article II’s Vesting Clause gives the president whatever executive power is not otherwise constitutionally shared or regulated.

Even within the executive branch, the president is not the sole constitutional entity. One of the president’s Article II authorities is to “require the opinion, in writing, of the principal officer in each of the executive departments, upon any subject relating to the duties of their respective offices.” The executive branch is thus foreseen as involving “executive departments.” With regard to those departments, the president has the duty to “take care that the laws be faithfully executed”—that is, executed by others. The text certainly reads as if “departments” are distinct and separate parts of the executive branch in a structure that can be (and has been) mandated by Congress.

The cabinet system and the “advice and consent” clause, which gives Congress a say in the president’s choice of “principal officers,” really makes no sense unless those principal officers have a constitutional role in executing the laws rather than just being speed bumps the president can run over.

I was already leaning strongly in this direction, and I am now more convinced than ever. The “unitary executive” is really a theory for an autocratic executive—unchecked one-man rule. But the US government is not and never was a system of elected autocracy.

Read the whole thing.

Will Trump Convince the Supreme Court to Embrace an Expansive Unitary Executive Theory and Grab More Power?

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I talk above about the 20th Century “liberal” consensus in which government funding and control would be combined with mechanisms to keep that power from becoming oppressive. One crucial example is government funding for universities, which is supposed to be combined with guarantees of “academic freedom” and the independent administration of the universities.

But Trump and his team are relentlessly searching our constitutional system for flaws and seams that allow the assertion of autocratic power, and they’ve found this one, too. Hence their expansive demands for what amounts to ideological control of Harvard and other universities.

I’ll have more on that soon, but in the meantime, see my recent conversation about this with Stephen Hicks for The Atlas Society.

Or you can sum it all up in an Onion headline.

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Finally, more than three days have passed since the death of Pope Francis, long enough to allow me to speak a little ill of the dead. He was certainly not the worst person in today’s world. There’s a lot of competition for that. But I did go at him hammer-and-tongs every once in a while for his goofy leftist ideas on capitalism, his sympathy for Marxism, and his syncretism with environmentalism—but also for his role in the Church’s sex scandals as the leader of its corrupt Medieval power structure.

Since everybody has been saying such nice things about Francis for the past few days, I thought it was worth reminding you of these stories to provide some perspective.