Op-Eds

Uncertainty is the Root of the Current Market Craziness

Leave a comment
English: Donald Trump's signature hairstyle
English: Donald Trump’s signature hairstyle (Photo credit: Wikipedia)

For months after his inauguration, US president Donald Trump bragged that he was single-handedly producing an economic boom, citing a rising stock market as evidence.

Recently, however, he’s stopped that line of self-promotion. The market has seemingly gone nuts. Sudden one-day drops pare back weeks of gains, followed by a cautious recovery of the lost ground. There’s a strong correlation between those swings and Trump’s mouth, whether he’s making formal policy announcements or just tweetstorming his latest obsession.

To understand the problem, let’s look to the seemingly unrelated fields of economics and physics.

In a 1997 paper on the Great Depression, Austrian School economist Robert Higgs articulates his theory of “regime uncertainty.” Simply put (if I get this wrong, blame me, not Higgs), investors dislike unpredictability.

Investors put their money into enterprises under certain tax and regulatory conditions. When  those conditions  start suddenly changing or looking like they may change, the investors worry.  And when they worry, they get more cautious about where their money is and what it’s being used for. They sell off, move their money into what they hope are less volatile assets, and the stock market takes a hit.

German physicist Werner Heisenberg studied uncertainty too, and likewise named a principle for it. Again simply put (and again, blame me, not Heisenberg, if I get this wrong), there are limits to what we can know about multiple aspects of things. Specifically, we cannot precisely determine both the position and the momentum of a particle at a particular moment. The more certain we are about one, the less certain we are about the other.

Donald Trump resembles one of Heisenberg’s particles. Sometimes we know where he’s at on an issue for the moment, but we needn’t bother trying to predict how fast he’s going to move or in what direction. He may double down, or he may turn 180 degrees.

One minute he’s demanding that regulations be slashed. The next minute, he’s nixing multi-billion-dollar aircraft deals over foreign policy. First it’s tax reform and tax cuts. Then suddenly it’s imposing new taxes — tariffs — on steel and aluminum.

This is not to say that any particular idea or policy he comes up with is bad, although some of them obviously are. What matters to investors is predictability.

If there’s one predictable characteristic of Trump, it’s that he is, and will remain, unpredictable. That unpredictability  can only produce negative economic consequences.

Thomas L. Knapp (Twitter: @thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.

PUBLICATION/CITATION HISTORY

Op-Eds

Syria: Is Trump Finally Putting America First?

1 Comment
English: Further Revised Map. Red indicates na...
English: Further Revised Map. Red indicates nations in which military efforts are being made to fight terrorism under the War on Terror campaign. (Photo credit: Wikipedia)

During a visit to Ohio to promote his infrastructure plan on March 29, US president Donald Trump dropped one of the bombshells that Americans have become accustomed to over the last year and a half: “We’ll be coming out of Syria, like, very soon …. Let the other people take care of it now.”

If he’s serious, if the more hawkish members of his administration don’t dissuade him, and if he follows through, Trump will be taking a giant step in the right direction on foreign policy. The US never had any legitimate business in Syria. Its military adventurism there has been both dumb and illegal from the beginning.

Yes, illegal. Congress has never declared war on, or against any force in, Syria. For that matter, it hasn’t even offered the fig leaf of an extraconstitutional “Authorization for the Use of Military Force.” Former president Barack Obama just decided to go to war there, did so … and got away with it.

And yes, dumb. The rise of the Islamic State in Syria was a direct consequence of the US invasion and occupation of Iraq. American military intervention in Syria using the Islamic State as an excuse simply doubled down on that previous mistake.

While I carry no brief for the Ba’athist regime headed by Bashar al-Assad, that regime has never offered the US or its allies anything resembling a legitimate casus belli. US calls for “regime change” and backing for anti-Assad rebels (many of whom seem to be foreign jihadists rather than domestic dissidents) remind one, as they should, of similar calls regarding the Taliban in Afghanistan and Saddam Hussein’s regime in Iraq. After nearly two decades of “war on terror,” following through on those calls would just add a third quagmire to the set.

Then, of course, there are the Russians. Russia and Syria have been allied since the days of Assad’s late father. Syria provides Russia with its only naval base on the Mediterranean (at Tartus), and the two states have been linked by a “Treaty of Friendship and Cooperation” since 1980. Among areas where the new Cold War could turn hot in a hot minute, Syria stands out.

Trump’s first year and change as president has been marked by a bellicosity at odds with his sometimes non-interventionist statements on the campaign trail. Around the globe he has continued and sometimes escalated the war policies of his predecessors. But between a prospective summit with North Korea’s Kim Jong Un and now talk of withdrawal from Syria, perhaps those of us who have considered him “business as usual” on foreign policy, and his remaining non-interventionist supporters naive, will get a big plate of crow to eat. If so, I’ll gladly have seconds.

Thomas L. Knapp (Twitter: @thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.

PUBLICATION/CITATION HISTORY

Op-Eds

Immigration Enforcement: Just as Bad for Americans as it is for Immigrants

4 Comments
English: ICE Special Agents (U.S. Immigration ...
English: ICE Special Agents (U.S. Immigration and Customs Enforcement) arresting suspects during a raid (Photo credit: Wikipedia)

According to President Donald Trump and Attorney General Jeff Sessions, Oakland, California mayor Libby Schaaf prevented nearly 800 arrests by US Immigration and Customs Enforcement agents in early March. That sounds like wishful thinking, but presumably Schaaf’s warning to the public of impending ICE sweeps helped at least some undocumented immigrants avoid the dragnet.

Mayor Schaaf is due our gratitude for her heroism. These ICE raids highlight one side of the case for for reining in (or better yet abolishing) ICE and its sister agencies, US Customs and Border Protection and the US Border patrol. That side is the human cost to immigrants: Workers yanked from factories and farms. Families torn asunder. People seeking better lives dying of dehydration in the wilderness because water caches are destroyed, or killed in crashes as they flee their would-be abductors.

Those are sound reasons for bringing these organizations to heel. But for many Americans, the issue is colored by a mistaken notion that such depredations are the price we pay for protection from … well, something.

Mistaken, yes, but sincerely held. So let’s look at things from the other side of the ledger: The costs “immigration enforcement” imposes on non-immigrants.

The budgets of CBP, Border Patrol and ICE combined top $20 billion per year — ballpark figure, $60 per American citizen, $240 per year for a family of four. That’s several “special occasion” family meals out, spent instead on having ICE drag off your favorite restaurant’s cooks and dishwashers.

Of course, every immigration enforcement “success” makes those meals more expensive even if you eat at home. Every immigrant captured, detained, deported, etc. raises your grocery bill and makes it more expensive to put a new roof on your house. It’s basic supply and demand. Economics 101: Artificially reducing labor supplies raises labor costs.

Why are we paying through the nose for the privilege of paying through the nose?

Then there’s the “Constitution-free zone,” the 100-mile perimeter around the United States in which most of the population lives and in which respect for constitutional protections is treated as, at best, optional. If a federal immigration enforcer doubts which side of the border you’re from, any pretense that America’s a free country goes right out the window.

If you’ve never been stopped at a Border Patrol checkpoint or intercepted by immigration enforcers in the “Constitution-free zone,” just watch a movie set in Nazi Germany or the post-war Soviet bloc. That should give you a sense of the “are your papers in order?” vibe.

What do non-immigrants get out of ICE, Border Patrol and CBP? An expensive police state premised on the silly and evil idea that the peaceful movement of people across imaginary lines drawn by politicians ought to be,  or even can be, controlled.

The whole idea of “immigration enforcement” is bad for immigrants and natives alike. It violates the rights of both groups while damaging the American economy and making us all poorer. These agencies and their activities are a repudiation of America itself. Time to de-fund and eliminate them.

Thomas L. Knapp (Twitter: @thomaslknapp) is director and senior news analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism (thegarrisoncenter.org). He lives and works in north central Florida.

PUBLICATION/CITATION HISTORY