Enemies must be found. Punishments must be carried out. Mistakes must not be admitted.
That’s the populist playbook that has become all-too-familiar in places like Turkey and Venezuela over the last few years. But now that President Trump’s trade war is beginning to backfire almost before it has even begun to take affect, we’re starting to see the same sort of thing here in the United States, too.
Just ask Harley-Davidson, which, after it announced it was moving some production to Europe to avoid the European Union’s retaliatory tariffs, became the latest subject of Trump’s Two Minutes — or, more accurately, 280 characters — of hate. Or, in a slightly different context, look at Pfizer. The pharmaceutical giant made the mistake of exposing how empty Trump’s rhetoric on bringing down prescription drug costs has been by raising its drug prices higher, prompting Trump to do what he does best: send an angry tweet. The drugmaker has decided to put off the price increases for a few months.
These are the types of things that tend to happen when you tell people that every complicated problem has a simple solution that elites were either too stupid or too corrupt to put in place before. That’s because the kinds of solutions that populists favor — tariffs, price controls and printing money to pay the bills — usually aren’t solutions at all. They make things worse. Which means the only thing populists can do is say that their policies would have worked if it hadn’t been for the nefarious forces fighting a rear-guard action on behalf of the rotten status quo. Those might be the “deep state” or “unpatriotic” companies or even foreign investors, but, in any case, the story is the same: They’re to blame for the government’s failures, not the government itself.
The idea, then, is to keep doing the things that aren’t working and to attack anyone who points that out.
In Venezuela, the Maduro regime has accused companies that refuse to sell things for less than they cost — the result of how high the government has pushed inflation and how low it has set price controls — of waging an “economic war” against the so-called Bolivarian revolution. The government has nationalized their factories in response and then sold things at a loss itself, which, of course, has only added to its money-printing needs.
In Turkey, President Recep Tayyip Erdogan has lashed out at what he calls the “interest-rate lobby” for trying to force the “mother and father of all evil”— higher interest rates — onto the country as a supposedly quack cure for Turkey’s sagging currency and growing inflation. Erdogan, you see, believes against all evidence that lower rates actually cause lower inflation, rather than the other way around, and he has said their central bankers would be guilty of “treason” if they didn’t go along with that.
In the United States, meanwhile, the Trump administration has called for an investigation into its own steel tariffs have sent steel prices up so much. You might think this would be as obvious as it gets — the whole point of tariffs, after all, is to raise prices on imports to protect domestic producers from competition — but, well, apparently not.
“What has been happening is a very unsatisfactory thing,” Commerce Secretary Wilbur Ross said, and “is clearly a result of anti-social behavior by people in the industry.”
This broadside against alleged “profiteering” is even more ridiculous when you consider that Ross had just been caught doing that himself by betting that the share price of a company he used to own stock in would fall after he learned that a reporter was investigating its ties to both Ross and the Kremlin.
But that’s almost besides the point. The real story is that, like President Nicolás Maduro’s inability to understand that price controls cause shortages or Erdogan’s ignorance about the fact that lower interest rates actually lead to higher inflation, the Trump team seems actually shocked to find out that taxing imports so that they cost more makes things, yes, cost more.
Populists, in other words, are surprised that they can’t bully economics into making two plus two equal five.
Now, the good news, if there is any, is that things are much better over here. The bad news, though, is that they’re also slightly worse. Which is to say that we’re lucky that Trump’s delusions — that tariffs won’t make things much more expensive, that companies won’t relocate their factories overseas to avoid them or, as his trade czar Peter Navarro argued, that other countries won’t dare respond in kind — are nowhere near as destructive as Maduro’s or Erdogan’s delusions.
But we’re unlucky in that Trump’s misperceptions don’t seem to be a matter of expediency, like those of the other leaders, but rather of conviction. Maduro and Erdogan might not give up on their mistaken assumptions because they don’t believe they can anymore. But Trump won’t give up because he doesn’t believe in anything else — and so he’ll take it further and further. Trump isn’t going to let the fact that a trade war is never good or easy to win stop him from blaming everyone else for it going badly.
Populists can’t fail. They can only be sabotaged.