Erik Explains
Erik Explains offers insights into current events and sociopolitical systems from a unique perspective. I'm not here to change your mind - just offer a different perspective. What you do with it is up to you.
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Trump's Temper Tantrum Tariffs risk making America the world's Delaware

There's no point in discussing the economics of Making America Great Again through temper tantrum tariffs with MAGA. If Trump can sell an idea so absurdly awful that the only other prominent US Presidential candidate to push it during the 21st century was arch-socialist Bernie Sanders, then there's no getting through to people there. Plenty has been written on the concept of mercantilism, plenty of nations have tried it, it works about as well as socialism (an ideological cousin), and if you want to know more then go learn a book.

Are they better than income taxes? Maybe, marginally, with a long list of asterisks and caveats, but in either case it's like arguing about whether it's better to lose an arm or a leg. You can debate your way to a rational answer, but better to keep both your limbs and your money. In any case, it's a topic for another day.

For the sake of discussion here, I'll accept the argument that tariffs are better at face value. The question becomes: how do you go about it?

I'm going to detour briefly to the now familiar saga of the once Great State of Delaware. Delaware is a tiny, insignificant piece of land, smaller than some cities. It has only a very tiny port, no significant natural resources, and isn’t even remarkably pretty. To offset its tiny insignificance, Delaware came up with a superb idea: create a separate court system for business matters ("chancery courts" ), and make them extraordinarily consistent, reliable, and reasonably business-friendly. This would make businesses want to incorporate in their state, and in exchange for the ability to push their disputes through Delaware’s extraordinarily consistent, reliable, and reasonably business-friendly courts the state was able to take a skim of their profits. Freaking brilliant and everybody comes out ahead.

That is, until one day, a certain judge decided to set aside reason and precedent and made a certain very emotion-based ruling on a very significant business dispute. Suddenly, businesses were concerned. Everyone perked up and started paying attention. Would Delaware rally against this insanity? Would it reverse it? Would there be an outcry? No? Seriously? Wow. Suddenly, Delaware isn't reliable. Nobody knows how unreliable it is. Delaware isn't saying. Doesn't seem to be a big deal to them. The business involved in the dispute leaves to Texas, very, very loudly. Delaware shrugs its Shoulders of State. More businesses leave. Delaware does nothing. Why would they? The person who ran that business had very different politics than theirs. They didn’t like him much. They wanted to throw their weight around, show everyone that they’re the boss of things. Feels mighty. Feels powerful. Feels good. Very emotional.

But now the other businesses are worried. The extraordinarily consistent, reliable, and reasonably business-friendly courts are no longer consistent, reliable, or business-friendly and, much worse, nobody in Delaware seems to care. And, thus, the exodus has begun. Generations and generations of solid business, trillions of dollars of corporate residency, banking, legal services, and everything that goes along with that, threatened by one case, in front of one judge, who simply couldn’t control their feelings. As insane as it seems, that’s all it takes to destroy an immense amount of value, because the value was based on trust and now the trust is broken.

Once a major trust is broken, it is incredibly difficult to repair. In fact, it’s impossible to repair completely. No matter what you do or how hard you try, it’s never, ever quite the same afterwards. The doubts always linger. “Remember that one time?” “Oh, yeah, that one time. That one time was pretty bad.”

Now let’s bring this to business in and with the United States in general. If you look around the world, the United States is one of the highest-trust economies to do business with. Never perfect, but its reputation is always among the best. The rules are the rules and, at least the overwhelming majority of the time, a deal is a deal. Business with the US is as good as the gold their currency used to be based on.

Of course, it was never perfect. There’s an endless tug-of-war between progressives and conservatives, but you can rely on the conservatives to keep business matters on a reasonably even keel. And even under the most nutty progressives, major policy changes are given months before they kick in so you can plan around them. Existing arrangements are often grandfathered in. Even at its worst, business with Americans is workable. They aren’t like those third-world, crazy-ass banana republic countries with bizarro dictators that go around suddenly changing the rules whenever they get in a bad mood about something. What a silly notion. Utterly ridiculous. Despite its imperfections, the United States epitomizes what is referred to as “regime certainty.” It’s one of the safest and most reliable place to do business, and so business flocks to it.

Just like business used to flock to Delaware.

And here we get to the method of Trump’s tariff madness.

One President in America is doing to its regime certainty exactly the same thing that one judge in Delaware did to its court certainty. What was once seen as the height of reliability in business dealings is now subject to emotional whims and the random, unannounced, unplannable changes that accompany them. Over a trillion dollars a year of trade affected on two weeks notice, based on a decision that appears to be made out of anger, lashing out at the somehow unacceptable defiance of another sovereign to bend to the will of the Almighty Trump. But it’s not to the indifferent silence of Delaware. It’s to the thunderous applause and roaring cheers of conservatives, the group that was right up until now seen as the bulwark against such insanity. To the world of business inside the United States and out, this is not just an isolated emotional outburst of one individual that somehow got power. It’s everything they’ve put their trust in for generations gone crazy and unpredictable.

Is this as bad as Delaware? No. It’s infinitely worse. Even when Trump is gone, the fear will always remain that conservatives will elect another Trump, because that very clearly makes them very happy.

But this goes well beyond even our unfathomably precious regime certainty, the suddenly eroding bedrock foundation underlying all commerce in and with the United States. It goes to the very moral core of American conservatism.

Trump’s supporters have been politically downtrodden pretty hard the last few years. They imagine these tariffs as chains he can yank, one end in his hand, and the other around the throats of various funny-sounding furriner leaders. They want their President to throw weight around on their behalf, show everyone that they’re the boss of things. Feels mighty. Feels powerful. Feels good. Very emotional.

But the other end of the chain is not around the throats of the various world leaders. It’s around the throats of furriner businesses in those furriner countries. The idea is that the pain caused to those businesses will transfer to their leaders, and force them to do the bidding of the Almighty Trump. And sometimes it works. But what Trump’s supporters don’t care about is that Trump isn’t grabbing the chain from the other end; he’s grabbing it and yanking it from the middle. The other end of the chain is around the throat of an American company, whose business is now damaged for the “crime” of doing business with an “enemy country” that wasn’t even the “enemy” until two weeks ago.

I explicitly say “they don’t care,” because I watch the discussions. The sneering dismissals they give of a few percentage points of business being destroyed by these tariffs echo – with absolute precision – the sneering dismissals of the Branch Covidians that just as callously and maliciously destroyed over a hundred thousand businesses in the United States. It’s not people’s jobs, their lives, their enterprises, and their families. It’s just a few bloodless percentage points of GDP. It is exactly the same evil. There is no difference, whatsoever. Modern human sacrifice and destruction for political points. Absolutely unforgivable, no matter which side does it.

Hopefully Elon Musk or some other person with what’s left of Trump’s ear can walk him back from the edge. The situation can still be salvaged if it’s dealt with quickly. But even if that happens, what should concern all of us is the bitter darkness this has revealed in the very soul of conservatism. Again, hopefully they can step back from the edge and find themselves, before the madness devours them and the rest of us with it.

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Trade restrictions Are COVID-Lite.

Don’t worry!

His “very smart people” are totally right about things this time when it comes to trade.

There is zero - I repeat, zero - moral difference between the people who pushed for "experimenting" with lockdowns because "we have to do something!" and the people who push for "experimenting" with trade wars because "we have to do something!"

https://x.com/ErikExplains/status/1925967571032904060

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Musk finally realized that Trump sold him out.

Musk is out.

Musk put himself in a corner where he can't rip into Trump and he has to play nice probably at least through the midterms, but just look at the guy's face and watch him refuse to give a straight answer here. He put a lot on the line with endorsing Trump and starting DOGE, and Trump absolutely stabbed him in the back. Trump's supporters will blame congress, but Trump has very openly and loudly endorsed all of the DOGE-defying moves that congress has made, and has viciously attacked the one congressman (Thomas Massie) who has stood against it.

The reason is simple: Trump cares about trophies. Cutting the budget is not a trophy. DOGE trying to take a chainsaw to government was a trophy, but as soon as DOGE became more of Musk's than Trump's trophy, Trump stopped caring about it because congress offered him a Big, Beautiful Bill as a trophy instead. Just like the FBI offered the opportunity to build a Big, Beautiful new headquarters building for them (Trump loves buildings!). ...

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Could Twitter have stopped the child porn?
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Doug Stanhope on "unacceptable" humor

As comedy slowly slides into unfunny wokeness hell, the last comedian standing (assuming he doesn't drop dead first, I mean just look at the guy; he's a trainwreck) will be Doug Stanhope. He closed out his recent special "The Dying of the Last Breed" with this bit on how important it is that we be able to make fun of anything. Because making fun.

Language warning, duh.

Doug Stanhope on "unacceptable" humor
A Fourth of July Reminder!

ht/ @PaddyNC

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Preliminary Q2 numbers for Argentina are in. This is still subject to adjustment but so far their preliminaries have been pretty accurate under the Milei administration.

Slashing spending works. Trump and Bessent are very optimistically projecting economic growth of 3% doing the opposite of what Milei is doing to deliver 7.6% - and climbing!

https://x.com/ErikExplains/status/1941148270476288434

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No matter who is in power, they will use the government's completely absurd economic statistics to push their statist agendas.

https://x.com/ErikExplains/status/1940816261103145426

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