In the last installment, I was practically fawning (by my standards) over Trump’s ability to see a future the rest of us can’t. With manufacturing, he’s doubling down on the physical world, the place least susceptible to AI disruption. The problem is how he’s doing it. So much of this Master Plan seems chaotic and incoherent. But given our rudderlessness, even a bad strategy might be better than none at all. Enough to move us forward. But we aren’t making friends along the way. Here’s are the five things that bother me most. And if you do nothing else today, please read #5.
First, The Good News
Let’s starts with some positives. There are early signs of re-industrialization, according to libertarian economist Peter St. Onge:
Adjusted GDP growth hit 4.5%, nearing 5% when accounting for reduced government spending, doubling China’s growth rate.
Private sector investment surged 22%, fueling prosperity and re-industrialization, driven by foreign companies relocating production to the U.S.
Announced investments reached $5 trillion, potentially $8 trillion per Trump, compared to pre-COVID gross private investment of $4 trillion, with projects like Taiwan Semiconductor creating 40,000 high-paying jobs.
Consumer spending rose 0.7% monthly, nearing a 9% annualized rate.
Inflation remained flat (though the most recent month showed a small uptick to a 2.7% annualized rate)
Soaring investment and stable inflation signal a strong economic outlook
This popsicle paradise is also a minefield. And Trump is careening through it, unworried about blowing up the dollar, economy, or our reputation. Below are five reasons I am worried.
1. Public Shaming
I mentioned in the video that public shaming is a tool of last resort, especially when dealing with powerful people. What I didn’t mention is how vengeance against powerful bullies might play out, in practice. Remember how cable companies treated us? Constant fee hikes, service windows of four to six hours on work days, inexplicable bundles of things you didn’t want. The minute Netflix and streaming services became viable, millions ran for the hills. They cancelled cable in groves. Few under 40 have cable, anymore. Now imagine that, but with The World. It’s hard to know when – or if – payback will come, but Trump is inviting it. For now, I’ll brace for an extra dusting of arsenic in every Hot Wheels package.
The other part I left out of the video is how bullies trigger patriotism. Shaming a leader shames an entire nation, even if that leader is unpopular. When their citizens start to hate us, any cooperation is perceived as capitulation. Suddenly, those leaders are emboldened to say ‘no’ — even to good deals — just to spite the bully. Trump is building a wellspring of such resentment.
2. China, China, China!!
If our real target is China, why agitate the rest of the world? As I wrote in 2018, Trump was right to target unfair trade with China, but wrong to go it alone. We have far more leverage with allies, who are desperate for leadership, something America used to provide. Trump’s lone wolf take on ‘America first’ leaves us exposed, with all our cards on the table, and everyone rooting against us.
Even though Europe has diminished economically, it still makes up a sizable chunk of China’s trade surplus (24.9% to our 36.4%). That means, together, we’d have more leverage than we would alone. That’s not how Trump operates.
3. The Clinton Mistake
In Econovation, I was all over Clinton for signing NAFTA and other free trade deals that bled manufacturing jobs out of the country, with little to replace them. Like Clinton, Trump has built no manufacturing capacity or incentives, before tinkering with tariffs, weakening the dollar, and endangering its reserve currency status. So we’ll get a weaker dollar loooooong before we get manufacturing. I don’t think we’re prepared for the turmoil in between.
It’s similar to Trump’s Russia “negotiation” strategy. He flashed major concessions to Putin, only for Putin to sniff out weakness and double-down on pummeling Ukraine. In case it’s not clear from this example, American workers are Ukraine…and might get pummeled.
4. Unintended Consequences
I had to cut the video for time, but Trump’s actions are stuffed like a piñata, full of unintended consequences. Just since the tariffs were announced, the President has already floated tax cuts to offset higher cost of tariffed products. He promised carmakers to cut duties on inputs like steel, copper, and aluminum. In his 2018 trade war, he had to pay farmers a $28B bailout, after China imposed retaliatory tariffs. We might need to do it again. And these are just the short-term impacts.
Back in 2017, I wrote that the president is expediting the polarization of the world, where countries must align with either the US or China. This time, he’s created conditions that make choosing China easier. We already see adversaries aligning, as China switches LNG imports from the US to Russia. Allies are leaving, as China switches beef imports from the US to Australia. Even our closest neighbor and ally Canada is looking for deals with Asian partners to escape American tariff chaos.
5. Amputating Organs of American Power
There’s a low-grade cynicism—even nihilism—blanketing America. It feels so alien, compared to the ‘shining city on a hill’ I grew up with. To me, Reagan’s strength and positivity embodied that America. Maybe even Clinton – and the promise of Obama. That America was a magnet for immigrants, like my parents. We came here to chase opportunities unimaginable anywhere else. New immigrants still see America this way, but fewer and fewer citizens do.
“We are not prepared to confront the ugliness that was needed to build our comfort.”
Both over- and under-educated Americans are falling prey to hate, conspiracy, and fringe derangements. What’s unsettling is how many of these contain kernels of truth. It’s easy to denounce wars, slavery, or assassinations. They’re overt expressions of power. It’s soft power that’s truly unnerving. Books like Confessions of an Economic Hitman exposes the dark underbelly of American dominance. New revelations flood social media daily. We are not prepared to confront the ugliness that was needed to build our comfort. I wasn’t. I captured some of my struggle in this X thread:
Turns out, there are two parts to American greatness: The Dream and its underbelly. What if we need both to keep living the good life?
We suspected that Trump might not be the ‘dream builder’. We didn’t realize he’d gouge out our underbelly.
The America we have (not necessarily the one we want) relies on global cooperation and capitulation from other nations. We achieve it through carrots and sticks, administered through programs like CIA, USAID, IMF, NATO, World Bank, and WHO. And we propagate (propagandize?) them through tools like NPR, PBS, Voice of America, and social media. There’s plenty to dislike about all of them. Many are bloated, corrupt, obsolete, or misaligned. But Trump is slashing them with an ax, not a scalpel. He thinks he’s cutting our budget, he might be cutting our power.
As I wrote in The McFuture Manifesto, America is going through a national puberty that could drive us mad. Or, help us grow up.
To make it past puberty, we must reconcile the Myth of America with the ugliness needed to achieve it. And hopefully, emerge from that struggle with an aspirational vision for who we want to be, what we want to achieve, and how to do it.
But what if we never get that chance?
AI is America’s puberty blocker. It suppresses organic human thinking by drowning it in an infinity of synthetic ideas, built from our pre-pubescent knowledge. Effectively, AI hijacks human evolution. Not because its better, but because it’s so powerful and voluminous. We better grow up FAST, or it will do it for us.
Is there a better way?
Clearly, I digressed from manufacturing and tariffs. But don’t worry, the next episode is the big crescendo. It’s where I lay out what America must do to bring manufacturing back. No idea if I can condense it into a coherent, short video, but be sure to sign up to this newsletter for full, glorious, and happy ending. Till then!
