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Nine Reasons to Fear our Future

March 8, 2018

For anyone who has studied American government or served in government, watching Donald Trump administer the Office of the President is very painful. Somehow, a person of Trump’s character, lack of experience in government and knowledge of how the U.S. government “works,” was able to capture one major Party’s nomination for President, and be elected.

The alternative to the election of Donald Trump was a candidate who represented the worst features of centralized power in our time. Had Hillary Clinton been elected, the centralized administrative “state” would become empowered to serve the dreams of avarice of the Clintons.

Still, we must not look back, but face the situation that is in front of our eyes and assess the consequences. Here’s a list of nine concerns:

1) Imposition of tariffs. Donald Trump believes that imbalances in trade between the United States and other nations is an indication that the U.S. is being disadvantaged. He rejects, or never studied, the doctrine of free trade, first argued by Adam Smith, that trade is a means to achieving efficiency. If other nations make better and less expensive shoes or other labor intensive goods, we benefit from cheaper and better made goods. That frees us to invest resources in services, technology and goods in which we excel. We are not disadvantaged, we are challenged to invest capital in better ways. If we fail that challenge, we disadvantage ourselves.

2) Entitlements. Since the “New Deal,” American Presidents have won elections by offering retirement, health care, and prescription medicine benefits that are financed by borrowing. Collectively they challenge us to pay for them, force cutbacks in benefits, or devalue the dollar. No president has chosen the first two actions and Donald Trump has followed by promising the voters that he will protect those entitlements.

3) Lower taxes. “Supply-side” economic doctrine demonstrates that by lowering certain taxes, government revenue will increase. Former Kansas Governor Sam Brownback believed that, enacted massive cuts in taxes, and nearly bankrupted the state of Kansas with $900 million in deficits. In the long term, greater than the period of time that Governor Brownback remained in power, those cuts would have begun to generate significant revenue–but not right away. In the case of President Trump’s tax cuts, we may expect to see real gains in 2022, but not before. Until then, deficits will reach levels that threaten the solvency of the U.S.

4) Inflation. The U.S. Federal Reserve has printed money in order to fuel the American economy. Now it is time to “Pay the Piper,” and increases in rates of interest that ensue will cause disruptions in the market for registered securities and reduce investment capital. The economy will slow to a crawl and inflation will wreak havoc.

5) Jobs. President Trump’s claim that his policies will create “jobs” omits the reason there is employment opportunity in the first place.  Employment is created by entrepreneurs who put capital at risk to create new ventures. In a free society where millions of citizens have access to capital and are willing to take risks, hundreds of thousands of new ventures are created that create employment. Most new ventures will fail, but some will survive and drive the economy, economic growth and employment opportunity.

The Trump Administration has done little to nothing to provide necessary conditions for wealth, and employment, creation. Tax cuts for the wealthy are valuable, but not enough to release the skill and risk-taking of entrepreneurs.

This is a long term problem aggravated by the founding of the U.S. Securities and Exchange Commission (SEC) that made it illegal for most citizens to invest in securities not registered–i.e. regulated–by the SEC. The so-called “JOBS Act” of 2012 provided for the marketing of non-registered securities by what is called “crowdfunding,” but that legislation was short circuited by the SEC. The great tragedy of the Trump Administration, so top-heavy in former investment bankers who acquired massive wealth in regulated securities is that none–neither Cohn, Mnuchin, Kushner nor the President himself have given one minute of thought about crowdfunding or the nature of entrepreneurship. That blindness to innovation in securities reform neglects one of the greatest tools for economic growth and favors wealth creation by corporations.

6) Foreign policy and national security. The absence of a foreign policy directed at Russia is a glaring example of administrative failure and suggests possible collusion by the President of the United States with a foreign nation. Journalists now publicly suggest that Russia “has something” on Trump. Given the President’s sexual proclivities, we can believe claims that the President of the United States has been compromised by Russia’s security services. That cannae can be refuted by taking measures to confront Russia’s aggressive moves in Ukraine, elections in the U.S. and its allies, and to exploit Russia’s economic weakness. Next to nothing has been done, however.

7) North Korea. Donald Trump has placed three aircraft carriers within striking distance of North Korea. The People’s Republic of China has anti-aircraft carrier cruise missiles that can destroy those carriers, if they approach within striking distance of those missile systems. This Administration seems not to understand the nature of modern warfare and is acting as if this is June 1942. Our strength is not floating, but in Taiwan, South Korea and Japan. Strengthening relations with those nations is imperative.

8) Political Appointees. The gravest mistake President Trump has made is not to make appointments to the more than 1,100 political nominations at his command. President Trump thinks he can run the U.S. government by himself and with the assistance of members of his family. That is simply “crazy” and the erratic behavior of the President of the United State indicates that he is literally being driven crazy by the demands placed on himself by this mistake.

9) The GOP. The reason Donald Trump secured the nomination of the GOP in 2016 was absence of leadership from members of the GOP. The U.S. Congress is lacking skilled, national leaders, and the Republican Governors of the States do not have a single Governor like Ronald Reagan. That vacuum will be filled, but not with a person or persons who are knowledgeable, skilled, or guided by the virtues the times require. That should be our greatest fear.

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