We study the economic and political consequences of the 2018-2019 trade war between the United States, China and other US trade partners at the detailed geographic level, exploiting measures of local exposure to US import tariffs, foreign retaliatory tariffs, and US compensation programs. The trade-war has not to date provided economic help to the US heartland: import tariffs on foreign goods neither raised nor lowered US employment in newly-protected sectors; retaliatory tariffs had clear negative employment impacts, primarily in agriculture; and these harms were only partly mitigated by compensatory US agricultural subsidies. Consistent with expressive views of politics, the tariff war appears nevertheless to have been a political success for the governing Republican party. Residents of regions more exposed to import tariffs became less likely to identify as Democrats, more likely to vote to reelect Donald Trump in 2020, and more likely to elect Republicans to Congress. Foreign retaliatory tariffs only modestly weakened that support.
Top-down, nationalized government continues demonstrating its ineptness and scandalous incompetence. The examples keep piling up: The Government Accountability Office reported last September that more than $100 billion was likely misspent or fraudulently stolen in pandemic relief programs, and the Education Department botched the rollout this winter of the new Free Application for Federal Student Aid, delayed for months and marred by a math error that could have cost students $1.8 billion in financial aid.
No wonder Americans regularly express far greater confidence in state and local governments than in the federal leviathan.
Our nonprofit sector should take notice. The massive foundations that command the headlines all too often squander fortunes on programs that produce no detectable improvements, “grand challenges” that remain no less grand after the money is spent.
Isaac Schick is understandably no fan of the Biden administration’s antitrust policy. [DBx: The Biden folks really need to read Harold Demsetz’s pioneering work on this matter.]
But the dismaying reality for people who care about the promotion of conservative ideals is that this has gone way beyond the accommodations that ambitious and unprincipled men feel they must make for their careers and their political objectives. It represents a hollowing out of the Republican Party as a vehicle for those ideals.
You can believe in the importance of party loyalty; you can even believe that Trumpian populism is the right course for the party and the country. You can’t be a democratic Republican and believe that this course requires the purging of all alternatives, the rededication of the party to its purification through loyalty to one man.