Arthur E. Sowers is a resident of Harbeson.
Pro-Trump Elon Musk gave dark warnings of an economic collapse ahead, and these warnings splashed all over the internet Oct. 29-30. He says it will come soon, and it will be necessary. Conversely, on Wednesday — and after getting more than enough electoral votes to return to the White House — Donald Trump said that America will now enter a “golden age” and that he, himself, will “fix everything.” I think “fix(ing) everything” will end up being just like “and Mexico will pay for it.” Though the Musk and Trump outcomes are mutually contradictory, I think I can offer a partial clarification of the situation.
Musk and Donald Trump came together since Musk gave Trump a lot of help to win the election, and Trump has been talking about — to return the favor — making Musk into some kind of government hatchet man (to drastically cut government spending?). Elon said the economic collapse is “necessary” because both government debt and interest being paid on that debt are dangerously high. This line of thinking has been poured into the media — mostly by conservative ideology — for decades. But it gets more attention when ears are open for an important person to overinflate the molehill into a mountain. However, this leads to another contradiction.
In two to three minutes of internet search on “total private-sector debt” (corporate, homeowners with mortgages and credit card), you will find — first — that this debt load is about as big as government total debt. And second, the last time I checked, total private-sector debt was growing faster than government debt. So, why is no one talking about both of these two facts in the same discussion?
Moreover, the total debt in China, as a percentage of its gross domestic product, is higher than ours. And China is going to increase its debt. So, how come China — with its economy nearly as large as ours and growing faster than ours over recent decades — is not worried about debt? And debt financing has an economic history since way before Jesus Christ.
Trump will only talk about the “good side” of his “grand deportation” project (to “cleanse” the USA of “bad” people). He will not talk about the serious economic downsides of the project. An internet search on the string, “how many illegal aliens are employed,” gave me references to numbers like 90%-95%. They work in certain low-paid, unskilled job categories. They get paid, they pay taxes, they pay for food, they pay rent, and they buy stuff. They make up almost 5% of our workforce. Their crime rates are about the same as for legal citizens. If Trump removes 5% of our labor force, our economy shrinks by 5%. We would be in a recession. If product supply falls below demand, then prices go up. That is inflation. Add pretty big cuts to government spending, and corporations on contracts will start laying off employees. It turns into a vicious cycle. But this might be part of Elon Musk’s line of thinking, and I think his story holds some economic water. Trump’s story is about demonizing and scapegoating a class of people to justify deportation. There is no economic benefit to anyone.
Trump, with or without Project 2025 (authored by former Trump White House staff at the right-wing Heritage Foundation), will replace functioning bureaucrats with loyalists and kiss-up “yes-men.” This will more likely lead to more corruption and more dysfunction and more slowdowns in our economy. Maybe more bribes will have to be paid for “approvals.” Those dollars ordinarily spent by the government will all end up in worker paychecks and business gross revenue bank accounts. The economy will shrink in proportion to the reduction in spending.
Trump’s plan to substantially raise tariffs on all imports will push foreign exporters to raise tariffs — in retaliation — on stuff they import from us that is produced by us. Again, this will substantially shrink economies on all sides.
Recessions are bad. Normally, they last one to two years. But economic recovery from the 1930s’ Great Depression took over a decade. Most people don’t realize that the 1930s’ depression was worldwide and involved about 60 countries. It had nothing to do with the 1929 stock market crash because the whole world was already going into a recession before the crash (see the article, “Charles P. Kindleberger,” on Wikipedia).
Russia came out of the Soviet Union through a sudden and disorderly collapse that took only two years. It was followed by a very painful 10-15-year transition to a half-state government/half-capitalist sector. In a second example, and in contrast, China began slow, incremental economic reforms back in the 1950s and now is half-government/half-capitalist, without the pain. In a third example (see the Wikipedia article, “Kansas experiment”), Gov. Sam Brownback, a Republican, slashed taxes suddenly in the ideologically fanatical belief that it would juice up business growth. The experiment failed spectacularly. In a fourth example (see the Wikipedia article, “Liz Truss”), Liz became the U.K. prime minister (2022) and pushed through the largest sudden tax cuts since 1972. This screwed up the U.K. financial markets so badly and caused such a big uproar that she had to resign less than two months after becoming prime minister (shortest PM term in history). Compared to all these real events in economic history, Trump’s “stable genius” ideas are really nothing but poorly thought out and simplistic fairy tales.
Reader reactions, pro or con, are welcomed at civiltalk@iniusa.org.
