Fear itself

Chris Cutrone

This is Trump’s world, and we are just living in it. The only question is how we feel about this. FDR gave his famous speech, “The only thing to fear is fear itself,” to address concerns about his New Deal reforms, which were at the time unprecedented steps and so legitimately frightening. The second Trump Administration — which is really in many ways actually his first — message is the same: the threat is not from any measure he is taking but the scare-mongering about it. Stock- and bond-market panic reaction seemed to temporarily complicate the tariff negotiation process, but these are tactical, not strategic matters: the objective remains the same. And the 10% baseline, already a massive increase, is kept in place. Trump will not be deterred from his goal, which is to restructure the American and global economy. He has already irreversibly affected things. Who knows how it will all work out? Trump and his team seem confident in their knowledge of what they are doing.

Whatever behind-the-scenes drama there might have been (or not) among Trump’s advisors, it was over “sequencing” and not pacing: the 90-day pause was preceded by a similar 30-day delay on the earlier tariffs imposed on Canada and Mexico. It was to give time to negotiate and not avoid them. Trump has at least two years to achieve his goals.

“Liberation day” was not only declared for the U.S. but the world. Not only doesn’t Ukraine “have the cards,” but neither does anyone else — except the U.S., who remains the sole dealer of the game, calling in all the bets. And everyone knows that one should never bet against the house — not least because the casino is owned by the biggest gangsters of all. Trump is neither a protectionist nor an isolationist. If anything, Trump is showing that the era of imperial restraint is over. If everyone is going to take advantage of the empire and complain about it, then Trump is apt to act like it, bringing the recalcitrant to heel — and the delinquent to account. Trump wants to be generous, but he has to put himself in the position to be able. What is easily overlooked is just how much the world needs and wants him to do so. American leadership is not only still possible but necessary.

Treasury Secretary Scott Bessent says that “strategic ambiguity is key to any negotiation,” and so the market jitters are inevitable. But as of this writing, stocks have already recovered. Resistance to Trump’s policy is from all who have an interest in the status quo that he is trying to shake-up and overthrow. He’s resetting the table, and all prior bets are off. We are all concerned, but some are more invested than others. Trump is upping the ante on them, and they will have to fold or risk losing it all. Trump isn’t bluffing: he doesn’t have to. All he has to do is get his own house in order — and it turns out the easiest way for him to do so is to act on the world stage, delivering a restructured world economy as a fait accompli to domestic politics.

Bessent declared that for the past generation Wall Street has done well but now it’s Main Street’s turn. He points out that the economy has worked to advance only the top 10%, while it has worked to the detriment of the bottom 50% who have lost ground; and the middle 40% have struggled merely to tread water. He wants it to serve the 90% and not merely the 10 or 50%. If America is threatening to come apart, Trump has come to repair it.  

Bessent described the opening salvo of the tariffs as sorting the world’s countries into “three buckets: ally, neutral and enemy” — in which China was exposed as a “bad actor.” All that means is driving a harder bargain with them, not an actual trade war — which China can only lose. But Trump is promising benefit to China, whose economy is as much in need of change as America’s. It doesn’t mean casting China into an adversarial position — unless they insist on it — but handling the relationship differently. Though Trump uses zero-sum rhetoric, he does not negotiate that way but rather seeks mutual benefit. Trump considers the world to have already been in a trade war with the U.S., but the U.S. wasn’t fighting back. But what would be the point of the U.S. winning? He thinks the fight has been to everyone’s detriment, and that he can serve not only the U.S.’s but all their interests better. The “war” analogy is perhaps not appropriate, because it has been a parasitic relationship that is slowly killing the host, but to let that happen will drag the world down with it.

Who are the principal actors? The U.S., China and Europe (such as it exists) — the rest of the world just doesn’t want to get gobbled up. But China is the monkey on the U.S.’s back weighing it down; and Europe is a Cold War creation of the U,S. that now thinks it independently exists. The only way for either to become itself would be in tandem with the other, contra the U.S. But neither trusts the other more than the U.S. And there is Russia: when Europe looks at Russia it sees China; when China looks at Russia it sees Europe. And now Trump’s U.S. wants to approach Russia with an offer of normalization as alternative to becoming an appendage of either China or Europe. So the U.S. remains in the priority and privileged position of being able to deal with all and sundry, severally and together. It can also — at least threaten to — withdraw into its own hemisphere and let the Old World consume itself. (Which it would surely do without the U.S. — as shown by all the last and this century’s wars.)

As Trump promised, lowering the price of oil has drained Russia and Iran’s ability to conduct war. They will beg to be brought down from the ledge. The Biden Presidency’s long night of depraved horrors is vanishing as mirages in the mist at the dawn of Trump’s new American Golden Age. Not only the U.S. but the world is eager to wake from the nightmare.

The trade war will not lead to WWIII, but Trump is working to prevent it. The way he is doing so is, as his critics accuse him, leading the U.S. into “bankruptcy.” Trump is preemptively declaring the U.S. “bankrupt,” not to liquidate it but to renegotiate terms with its creditors: as with his companies, they have a greater interest in keeping the U.S. in business. If anything is “too big to fail” it is the U.S. Anticipating eventual default, Trump is getting out ahead of it. As with Nixon breaking and reordering the post-WWII Bretton Woods system by taking the U.S. off the gold standard, and Reagan similarly devaluing the dollar by gaining assent from U.S. creditors in the Plaza Accord, Trump is seeking to revalue the dollar internationally so as to no longer disadvantage the American economy. One advantage that he has for pursuing this is that the U.S. is actually significantly less dependent on international trade than most other countries.

Chair of the Council of Economic Advisors Stephen Miran’s white paper proposing a “Mar-a-Lago Accord” has been adopted as a means towards this end — whether officially or not is deliberately unclear. Miran wrote that the world depends on two “public goods” provided by the U.S.: universal currency for trade; and global military security. This was and remains in the U.S. interest, but the terms became unbalanced once the world recovered from WWII by the 1960s. Since then, the U.S. started accepting an undue burden subsidizing other countries that undermines not only America but the world. Defense costs have been explicitly factored into the trade negotiations, and Miran has even proposed a user’s fee for the dollar as trade currency.

Investor Ray Dalio sees in the present crisis the end of several cycles in domains that have proved unsustainable: financial, trade, geopolitical, and domestic-political — both within the U.S. and many other countries. Trump represents potential transformation in all of them, to a new post-neoliberal political and economic order. The alternative is to try to avoid the necessary changes through a patchwork approach. But the can has already been kicked down the road as far as it could go. The bill has come due, and Trump is willing to pay it — before the cost becomes too high.

But the neoliberalism of the past generation’s “bipartisan consensus” was not a mere policy but an entire complex political, economic, cultural, and even psychological form of capitalism. It was both a change from and in continuity with the prior form of capitalism in the high 20th century. The question is the character of the historical rhythm of transformations in capitalism.

Trump has always wanted to do this: From his earliest intimations of running for President in the late 1980s, Trump has complained about American potential being squandered. That he is implementing it forty years later is typical of prior changes in capitalism: John Maynard Keynes formulated his approach before the first World War but it was only implemented after the second and in the wake of the Great Depression; Milton Friedman sought reforms in the 1940s in response to automation that were adopted after the 1970s crisis and downturn in an era of deindustrialization. Such changes only caught up belatedly with longstanding necessities in capitalism. They all represented a political crisis that altered ideologies and parties and reconfigured electorates. While responding in terms of a state of affairs already past — Trump’s opportunity came after Obama failed to adequately meet the crisis of the post-2008 Great Recession — they nonetheless set conditions for the future.

I have spent the last 10 years — ever since Trump emerged as a candidate — observing the dawning of post-neoliberalism that Trump expresses. It has taken this long for the dismissive denial of Trump as an aberration to wear off. But the confusion and fear continue. Ezra Klein calls Trump a “radical moderate,” which means someone who uses extreme means — for instance intemperate rhetoric — to achieve what are ultimately modest ends. Trump is pursuing changes rather conservatively, but even this is too much to bear for an ossified establishment and a public it has trained to fear.

It is dizzyingly disorienting, but one can find landmarks to steady oneself if willing to open one’s eyes to the signs of the times: Trump as a blast from the past is a reminder that the account of history cannot be settled cheaply. One form of capitalism has run its course. It is fitting that a dissident from its high period should be the one to change it now. Like Bernie Sanders, Trump is a figure of the 1980s Reagan Revolution who warned of its dangerous deficiencies that others failed to acknowledge. The quaintly old-fashioned can appear suddenly up-to-date, meeting the needs of the present. What is required is the will to do so. Trump’s will is terrifyingly implacable. There are those who are exhilarated by it, and others incredulously insisting on its impossibility. But things must change, and they will: they already have.

When Jeb Bush called Trump the “chaos candidate” a decade ago in the 2016 Republican primaries, he meant to warn against someone who would not observe the pieties of the established order — or simply party-loyalty to the Republicans. But it went much further than that: Trump is willing to sacrifice everything and everyone to do what he thinks is right. It is a Cortés “burning the boats,” no-turning-back moment, in which the leader forces his followers to advance to conquer this new world that has been opened up to them. But if they refuse, Trump will not feel culpable for their inaction, for he did everything he could bringing them to this point: it will now be up to them to seize the opportunity.

Trump doesn’t necessarily care about the Republican Party’s fortunes or even those of his voters, as they served merely to place him in the position to act that he is using now. His actions are meant to benefit coming generations: it is for his voters’ (and others’) children and grandchildren, not themselves. Representative democracy means electing politicians to exercise judgment and make decisions on our behalf, not to implement our will, which we can hardly know in matters of state anyway. The only recourse for disappointment is to vote them out. That Trump has nothing to lose as a “lame duck” exacerbates the problem: there is no way to hold him accountable other than (another) impeachment and removing him from office. That is not going to happen. Most of those who even disapprove of his actions won’t support taking him out. And many do continue to support what he is doing.

Will Trump succeed? That is anything but clear. But he will try. Like it or not, we are on this ride now. We have never had a say with the drivers — other than to choose them. Ben Shapiro said that nothing is guaranteed but the adventure in capitalism. It’s times like this that test the basic propositions of the open society, in which nothing is safe and the risks are real. What we can be certain of is that Trump is no empty suit. He has claimed the right and freedom to act. The only thing to count on is what a transaction contracts between the interested parties — at least for the duration of their interaction. Trump is confident there are always deals to be made: he can make clients out of would-be adversaries; and mutual self-interest will win out to hold fast the relationship in the end.

Trump’s gamble is that in this game of chicken others have much more to lose and little to gain in refusing to give way. Staring down his opponents, one thing we can be sure of is that he won’t be the one to blink. Or break faith: he is making commitments for America and the world to last for decades to come. He has nothing to fear, and neither should we.