Comrade Trump

Move over Mao, we have a new central planner in town

Last August, as Kamala Harris was gearing up her doomed presidential campaign, the primary fear among voters was the creeping inflation fanned by the fiscal flames of Joe Biden’s spending spree. Like any good technocrat, Harris came up with a solution: price controls. She aimed her economic ire at grocers, accusing them of “price gouging” and pledged to control it, ostensibly with some kind of cap on profits.

It was red meat to Donald Trump.

Branding his opponent as “Comrade Kamala,” Trump accused her of going “full Communist.”

“She wants to destroy our country,” he said. “After causing catastrophic inflation, Comrade Kamala announced that she wants to institute socialist price controls.”

Less than a year later, as Trump pulls the levers of power from the Oval-a-Lago, he’s going full Communist, putting the state at the center of everything, from economics to the culture. He went so far as to float his own version of “socialist price controls” when he asked large retailers like Walmart to “eat the tariffs.” Like Harris demonizing grocers for pricing products to generate a reasonable profit, Trump is demonizing retailers for trying to recover the additional costs that the Trump tariffs would impose on a variety of goods. Run your business, he told them, but do not defy the state.

When Amazon floated the idea of telling its customers exactly how much additional costs tariffs would impose, the White House called this gesture of transparency a “hostile and political act.” Better to keep consumers ignorant as the state burdens the market with inflation-by-fiat.

In terms of dictating how the market should operate, Trump makes Harris look like a libertarian. His system of tariffs has turned the global trade system into a giant X-Box, with Trump and Comrades Bessent, Lutnick and Navarro at the controls. We’ve addressed tariffs in previous posts, so let’s just recap our opinion with a quote from Scott Lincicome at the Cato Institute: “Tariffs will reduce economic growth by raising input costs, reducing business investment, disrupting supply chains and prompting foreign retaliation.”

Nonetheless, tariffs are the primary tool for Trump’s new industrial policy, which envisions an America vivified by gleaming new factories making everything from steel to iPhones. In fact, it’s nothing but an old economic policy called import substitution industrialization, based on a theory that an economy can stimulate growth in its industrial sector using tariffs and numerical quotas on imports to protect domestic industries from foreign competition.

There are many problems with this theory, beginning with the premise of state planning. But the biggest drawback is that protectionism, while producing some short-term gains, ultimately leads to what economists call dynamic inefficiency, as domestic producers have no incentive from foreign competitors to reduce costs or improve products. A Pyrrhic victory, in other words. For evidence, look no further than Latin America in the 1960s and 1970s, where import substitution led to the economic malaise afflicting much of the continent today.

Like Mao trying to dictate a one-child-per-family rule, Trump is dictating a two-dolls-per-Christmas rule. Industrial policy eventually seeps into every nook and cranny of economic life. And it’s a long road. Russia was famous for its Seven Year Plan, while China had seven Five-Year-Plans. Trump has his own long plan. “Bear with me,” he told Americans last month. “There will be a little disturbance (from industrial policy),” he said. “But we’re OK with that.”

“We’re OK with that” reflects the fact that state planners are often shielded from the day-to-day impacts of their policies. While average Americans scramble to offset the corrosion of inflation and uncertainty, for instance, Secretaries Bessent and Lutnick have a combined net worth of more than $2 billion, providing a personal buffer against “a little disturbance.” Meanwhile, business leaders are left to navigate the toxic uncertainty created by a centrally planned industrial policy whose goals seem to shift from week to week. Industrial policy often has bad outcomes. While it’s worked well in places like Singapore, South Korea and Japan, the U.S. is unlike any of them. Ours is a large, diverse, dynamic and largely free-market economy that does not comport well with central planning. Have we learned nothing from the lessons of Solyndra?

Trump’s Big Beautiful Bill, or more accurately his Big, Beautiful, Budget-Busting Bill, would perversely accrue more power to the state by supercharging deficits and the national debt. Debt, especially at the multitrillion-dollar scale, is like a black hole in economics, sucking up capital, productivity and jobs while leaving the state as the only and final arbiter of its management. Long-term, chronic debt of the kind we are now amassing turns us all into economic serfs.

Mao and Stalin both knew that their economic policies needed popular support, whether it was voluntary or not. Both aimed at reshaping their respective cultures to align with their goals. Trump is doing the same, whether it was his early salvoes against DEI and woke culture in general (some of which was deserved) or his current jihad against Harvard and other elite universities. Trump is quite canny about this. He understands the real divide in American politics is not conservative v. liberal, whites v. minorities, or evangelicals v. atheists. The brightest dividing line in the recent election was education, with higher eduction voters overwhelmingly leaning liberal and less educated voters leaning conservative. By attacking Harvard, Trump is sending a signal. Musing about redirecting the federal government’s money away from the Ivy Leage to trade schools, as he did this week, is a way to expand and fortify his political base.

That’s not to say that Harvard and other universities aren’t in need of academic and cultural reform, as Steven Pinker pointed out in this powerful essay. But to take draconian actions like cutting off all federally funded university research or banning international students, as Trump has threatened to do, is not only dumb, but counterproductive. The commercial applications of university research are legendary, from vaccines to Wi-Fi and touchscreens. Foreign students educated in the U.S. have gone on to become some of our most dynamic and innovative entrepreneurs. In fact, our higher education system, both in scale and scope, is the envy of the world. Dismantling it, as Trump seems intent on doing, is like taking your best pitcher out of the rotation. But central planners don’t always follow logic or best interests; in fact, sometimes those are just barriers to longer term ideological goals.

Republicans used to be the party of free people and free markets. The last best example of those ideals in a Republican candidate was Paul Ryan, but he became roadkill in the rise of MAGA culture. There are still standard-bearers, for sure — Lincicome, as mentioned earlier, Mark Halperin, Phil Gramm, Ron Johnson and others — but their voices seem diminished in MAGA’s political calculus, which prizes spectacle and speed over accountability, discipline and humility.

Ronald Reagan famously said, "The nine most terrifying words in the English language are: I'm from the government, and I'm here to help.” He was referring, of course, to the growth of government under Democratic leadership. Today, the most terrifying words are: “I’m from the government and I’m going to exert control over everything from the economy to education.” The metastasis has begun; where it will end is anybody’s guess. Which is at the heart of the problem.

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