Trump's Economic Plan

Back in 2012, I thought Republican Mitt Romney's economic plan carried one huge flaw: He was going to challenge China's pegging of their currency to the dollar. Basically, if China didn't stop it, he would start a trade war with them. Can you say "dangerously stupid"?

Now we have Donald Trump, and "dangerously stupid" only begins to describe his economic plan. I hope you are sitting down for this...

(Quotes below are from the CNNMoney article, Donald Trump's big economic plan: Fix U.S. trade.)

1. Dr. Trump finds cause of economic problems: Free Trade.

"The American worker is being crushed" by trade, Trump says. As proof, he cites research from the left-leaning Economic Policy Institute that found America has lost 900,000 jobs to Mexico since the North American Free Trade Agreement was signed in late 1993. 

The job losses are the subject of a huge debate. Other research by the right-leaning U.S. Chamber of Commerce says 5 million U.S. jobs have been created because of NAFTA. 

Regardless, this discussion ignores the impact of technology and innovation on traditional middle class jobs.

Before you dismiss the impact of technology, I had a thought about information technology recently: When I used to create reports, the work I did would have taken an entire building of people to compile a hundred years ago. Every year, technology continues to eliminate more jobs, via computers and robots. Don't be surprised if 20 years from now, ALL the jobs are done by computers and robots. What people will do hasn't been decided.

2. Dr. Trump's plan: Economic Chaos! 

Trump solution is to renegotiate trade agreements (the U.S. currently has 20 free-trade deals in place) and put taxes (known as tariffs) on Chinese and Mexican imports. 

The idea is to make Chinese and Mexican goods more expensive so companies will start manufacturing in the U.S. again. 

The problem is China and Mexico aren't likely to send Trump a thank you note. They would probably retaliate by putting taxes on U.S. goods coming into their countries. It could cause a global trade war.

Exhibit A in "What the heck are you thinking, Donald?": The Smoot-Hawley Tariff Act of 1930. From Wikipedia:

Threats of retaliation began long before the bill was enacted into law in June 1930. As it passed the House of Representatives in May 1929, boycotts broke out and foreign governments moved to increase rates against American products, even though rates could be increased or decreased by the Senate or by the conference committee. By September 1929, Hoover's administration had received protest notes from 23 trading partners, but threats of retaliatory actions were ignored.

It is no coincidence the 1929 stock market crash began in October, just a month after the U.S. received those protest notes.

And Donald wants us to relive that? While I accused Romney of dangerous stupidity, I have to call Trump "epically stupid".