Trump's tariffs ARE "the competitive struggle for markets"

Stephen Miran, Chairman of the Council of Economic Advisers, has Trump crying Unfair!: 

The desire to reform the global trading system and put American industry on fairer ground vis-à-vis the rest of the world has been a consistent theme for President Trump for decades.

At best, crying "unfair" is zero-sum economics. And Trump's unfair is far from the best.

From Chapter 24 of The General Theory:

[U]nder the system of domestic laissez-faire and an international gold standard such as was orthodox in the latter half of the nineteenth century, there was no means open to a government whereby to mitigate economic distress at home except through the competitive struggle for markets.

Little has changed since Keynes wrote those words. Laissez-faire is now called "free markets", and the international gold standard has been replaced by floating exchange rates. Things are the same as they were, except our gold standard has no gold, and our laissez-faire has a different name. 

Keynes continues:

But if nations can learn to provide themselves with full employment by their domestic policy (and, we must add, if they can also attain equilibrium in the trend of their population), there need be no important economic forces calculated to set the interest of one country against that of its neighbours.

And then

there would no longer be a pressing motive why one country need force its wares on another or repulse the offerings of its neighbour ... so as to develop a balance of trade in its own favour.

Donald Trump is doing economics that Keynes rejected in 1936. Trump is setting the interests of our country against those of our neighbours, with the goal of developing a balance of trade in our own favour.

Trump's policies do seem specifically designed to set our interests against those of our neighbors. Unfortunately, we still have not learned how to provide ourselves with full employment by domestic policy. This, however, does not mean we must go with Trump's plan.

Now, on domestic policy let me start by saying that our problem is a cost problem... 

Linked-In predicts recession within 3 months

At Linked-In, April 6, 2025:

Drawing on the timeless wisdom of Milton Friedman, this keynote analyzes why America may face a looming recession within the next three months if these policies remain unchecked.

There is a lot in the article that is not my kind of economics. But on this point we agree: Recession is coming. And by the way, I heard somebody on TV the other day say it is all Trump's doing, what with the uncertainty he loves to create and the disruption he is forcing upon our economy.

Stranger Things

The Graph at FRED: https://fred.stlouisfed.org/graph/?g=1Jhhk

This Graph at FRED: https://fred.stlouisfed.org/graph/?g=1Jhiz

1. It is pretty rare that measures of debt go negative. These two graphs show the change in debt for households and for non-financial corporate business. Going negative means that households and NCB owe less than they did a few months ago. That's a good thing on an individual level, but when we reduce debt we reduce the quantity of money in the economy.

2. Money that we borrow and spend is money we put into the economy. If households and non-financial corporate businesses are putting less money into the economy I start to worry, because Milton Friedman said

There is strong evidence that a monetary crisis involving a substantial decline in the quantity of money is a necessary and sufficient condition for a major depression.

3. Not all of the "Debt Securities and Loans; Liability, Level" datasets at FRED went negative at the end of last year. I only find a few. But I have to wonder if this is the best time to cut the federal spending. I have indeed said that Trump's policies are creating a depression, but I say it as a warning, not a wish.

By 2009 we were sure it was a problem

Debt of All Sectors relative to M2 Money

Alt National Park Service

From r/fednews:

Trump’s “Big Beautiful Bill” isn’t just about tax cuts, it quietly guts federal protections and reshapes entire agencies. Here’s what’s buried inside...

Go there. 

It's from the Alt National Park Service, which Google's AI Overview calls "a self-described 'resistance' team of the National Park Service".

I saved GAIO's whole response to my inquiry at Google Docs. It includes these links:

• What is the Alt National Park Service? What to know about group protesting Trump layoffs from USA Today, 26 Feb 2025, and
• Their site, AltNPS. The page reads in part: "The Alt National Park Service (AltNPS) was a movement that began around the time of the inauguration of President Donald Trump in January 2017..."

plus a couple Facebook links.

"Income Velocity"

Profit per Dollar of Labor Cost

I want to look at profit relative to the cost of labor for nonfinancial corporate business. I'm using datasets from FRED's handy data table, so I know I've got datasets that go together.

The graph below shows profit per dollar of labor cost. It consistently shows low profits (and relatively high labor cost) at recessions, and high profit (and relatively low labor cost) between recessions:

The Graph at FRED: https://fred.stlouisfed.org/graph/?g=1IPrF

Profit is now above 30 cents per dollar of labor cost -- and rising in the years since Covid. That puts profit as high today as it was at times in the 1940s, the 1950s, and the 1960s. So I have to ask: If profits are so good, why is our economy so bad? (Excessive private debt, that's my answer: We didn't have excessive household debt in the 40s, 50s, and 60s. In recent decades, however, debt service takes an increasingly hefty chunk of after-tax income. It also eats into business profits.)

Put a straightedge on the lows in the first 50-odd years of data. You see profit in decline for half a century, then increasing since the 2001 recession. Again: If profits have been rising for a generation, why is our economy so bad? And why should we believe Trump when he promises to fix the problem? Is he gonna forgive private-sector debt? Household debt? Student debt, even? 

Maybe he will, if we tell him: Tell him it will boost economic growth. But tell him also, it won't do much for the economy unless he forgives a lot of debt. And tell him if he does, it'll be worth his while: With Solon, Trump will be remembered.