Trump's Road to Socialism
Today the Trump administration is announcing a $12 billion bailout plan for farmers impacted by the response from the Trump administration’s tariffs. As Politico reports:
The administration's plan is expected to use two commodity support programs in the farm bill, as well as the Agriculture Department’s broad authority to stabilize the agricultural economy during times of turmoil by buying up excess supply. The plan is also expected to focus on providing aid to the dairy sector in particular, one of the sources said.
The plan has been in the works for months. It seeks to ensure that U.S. farmers and ranchers — a key constituency for President Donald Trump and Republicans — don’t bear the brunt of an escalating trade fight with China, the European Union and other major economies as the administration pursues an aggressive course to rebalance America's trade relationships.
Trump's moves to slap tariffs on imports from some of America‘s largest foreign buyers have prompted retaliation against U.S. farm goods like pork, beef, soybeans, sorghum and a range of fruits. The administration's trade aid plan is also a bid to shore up support among a slice of the rural electorate ahead of the midterm elections.
In spite of the President’s claim that tariffs are “the greatest,” and trade wars are “easy to win,” the economic backlash was easy to foresee. In fact, as the political success Bernie Sanders and Alexandria Ocasio-Cortez have brought “democratic socialism” into the mainstream of the Democratic Party, Trump’s economic nationalism threatens to pave a road to the same destination.
After all, Trump’s tariffs are not only a new tax for Americans, but a policy of directly picking winners and losers in the economy. The interests of steel workers, for example, are being placed above the interest of consumers and farmers. This leads to the government using tax dollars to prop up farmers. Of course this spending means that tax-paying consumers are hit yet again, with their tax dollars being used for this new welfare program.
Government interventionism doesn’t simply stop there. The natural result of these new government barriers is for businesses to seek ways around them, such as Harley’s decision to move some manufacturing to Europe. This, of course, sparked backlash from President Trump, threatening further retaliation for such a move. As we've seen time and time again, the more Trump digs in to his support for protectionism, the more he will seek to interfere with the actions of individual companies.
In Omnipotent Government, Ludwig von Mises wrote:
Present-day protectionism is a necessary corollary of the domestic policy of government interference with business.
The opposite is also true: The domestic policy of government interference with business is a necessary corollary of present-day protectionism.
The result is an economy that increasingly replaces the market with state control. This is precisely why Mises wrote extensively about how escalating economic interventionism led to socialism. As he wrote in Human Action:
All varieties of interference with the market phenomena not only fail to achieve the ends aimed at by their authors and supporters, but bring about a state of affairs which-from the point of view of their authors' and advocates' valuations—is less desirable than the previous state of affairs which they were designed to alter. If one wants to correct their manifest unsuitableness and preposterousness by supplementing the first acts of intervention with more and more of such acts, one must go farther and farther until the market economy has been entirely destroyed and socialism has been substituted for it.
Of course defenders of the President will argue that Trump’s tariffs are simply meant as a negotiating ploy designed to give America “better trade deals.” The future is impossible to predict, perhaps that will be the end result. Memes about 4d chess, however, are of little help to those Americans hurt by Trump’s tariff policy. And increasingly the Trump administration has signaled its willingness to embrace a prolonged trade war.
Such policies are, in the long run, as great a threat to the American economy as that posed by the Sanderistas.