The economic pundit industrial complex has not known peace since last week’s massive global tariffs announcement. The resultant competing theories sketch alternative versions of reality, many of which are mutually exclusive: If they’re a negotiating tool, they can’t also be a long-term plan to reestablish manufacturing, and so on. If you analyze the situation through the lens of the post-WWII global economic consensus on things like free trade, tariffs, and the presumption of US hegemony, the whole ordeal appears completely nonsensical—translating with the language of economics leaves it illegible. That’s why we have to consider using a different language, power, to understand what might be going on.  Theory #1, usually levied more like a dismissal than a fully developed explanation, is that the tariffs are a mere bargaining chip for a man who loves the Art of the Deal. If this is true, they’re technically temporary, and no American company would (or should) begin the long and expensive process of reshoring factories or reconfiguring supply chains, because they’ll be caught with their pants down when deals are reached. If this is the case, the most likely outcomes are short-term market losses and inflation as we continue to buy goods (or parts for goods) made abroad, especially in cases where there is virtually no American alternative, as is true with things like coffee, textiles, and car parts.
One of  the most unique interpretations of this line of thinking comes from an unlikely source, Yanis Varoufakis, the left-wing author of Technofeudalism: What Killed Capitalism. He sees a scaffolding of legitimate—albeit risky—methodology underpinning the disorder, and it boils down to currency manipulation and influencing foreign interest rates. In short, Varoufakis reviewed the material he believes to be circulating around the administration and thinks this is a longer-term gambit to refinance our debt, soften the power of the US dollar while retaining its status as the global reserve currency, and ultimately, function a little like a rogue Hail Mary pass to stave off US imperial decline. In his explanation, the structure of the current system is unsustainable because it prioritizes returns to capital above all else, and will eventually yield disaster if left unimpeded: “For when US deficits exceed some threshold, foreigners will panic. They will sell their dollar-denominated assets and find some other currency to hoard. Americans will be left amid international chaos with a wrecked manufacturing sector, derelict financial markets and an insolvent government. This nightmare scenario has convinced Trump that he is on a mission to save America: that he has a duty to usher in a new international order.” Even though this analysis feels a little too “post hoc rationalization” for a guy who uses phrases like “big, beautiful bill” to describe his policymaking, it’s a strangely satisfying injection of logic into a course of action that otherwise defies it. Varoufakis ultimately disagrees with the strategy, but thinks it’s a mistake to dismiss it outright as unworthy of analysis or devoid of insight about the future of American capitalism. This leads me to  Theory #2, which is probably best captured by Paul Krugman’s headline, “Will Malignant Stupidity Kill the World Economy?” The new tariffs appear to be exactly what AI models come up with when you ask them to create a more isolationist US trade policy. I confirmed this by asking ChatGPT to develop formulaic US tariffs; it spit out a series of equations that suggested 54% for China.  This theory assumes the tariffs are an earnest (if misguided) attempt to reestablish American manufacturing and make the US a more isolationist country—to reverse the globalization consensus and reestablish the supposed mid-twentieth-century panacea of American-made goods. If you accept this premise, that means the tariffs are intended to be permanent, because with an expiration date, they don’t force change. It’s unlikely this explanation is correct: As fan favorite  Kathryn Edwards points out, manufacturing is becoming more automated, not less, which means even a reestablished manufacturing sector wouldn’t recreate an abundance of unionized middle-class jobs for workers without college degrees. (Trump’s anti-union record also makes this explanation dubious.) While manufacturing jobs have long been synonymous with this sort of work, synonymous does not mean singular: If the goal were good jobs with strong wages, there would be easier, far less disruptive approaches available. I don’t find this theory all that compelling. (And if you buy Varoufakis’s analysis, the ChatGPT tariff policy could be true—and still beside the point. The precise size of the tariffs is irrelevant if, in fact, the point is to shock foreign governments into lowering interest rates.) Which leaves us with  Theory #3, the most nihilistic read (literally titled “Paul Krugman is Wrong”), in which Daniel Pinchbeck effectively says we’re witnessing a nakedly “disaster capitalism” playbook being deployed in full force—that the goal is to intentionally cause a US recession, because periods of instability and bear markets are opportunities to further consolidate wealth and power (another variation includes what Senator Chris Murphy suggested; that it’s the groundwork for an elaborate system of personal bribes). On its face, this sounds conspiratorial; it also requires setting aside the reality of Trump’s obsession with the stock market. The primary reason this theory is still plausible is because, in many ways, we’ve seen it before: Recessions tend to be bad for the wage workers in the working and middle classes, who bear the brunt of higher unemployment. They also tend to hobble upper-middle class Americans who own small businesses or work in the “professional-managerial class,” because those groups, while better off than most, typically don’t have the wealth, power, or influence to absorb or sidestep such massive changes to the status quo. The irony is that serious recessions present opportunities for very rich people—those with long-term cash reserve runways like Buffett. (It’s effectively “buy the dip,” but for billionaires hoovering up distressed companies and foreclosed homes.) You get the gist.  Naomi Klein’s Shock Doctrine catalogs a robust history of disaster capitalism, though the difference in this case is that the “disaster” may be self-inflicted. If you’re even a moderately affluent person who believes this is what’s happening, you’re probably gobbling up as many shares of giant-cap companies as you can to align your fate with that of Jeff Bezos. How I’m thinking about this It’s clear the US has been on an unsustainable trajectory for at least 20 years, though probably longer. The government has engaged in a sort of “socialism for the rich” approach to monetary policy since at least 2008, with predictable downsides. (See also: The unironic use of the phrase “eat the rich” in a finance newsletter.) Put another way: The US government’s role for decades has been to resolve the inherent contradictions of capitalism like a game of Whack-a-Union with an occasional rousing match of debt-financed Big Bank Bailout, and this was only possible because of US imperial dominance and the infinite money spigot it enabled. In that sense, US decline spells disaster for the status quo, and it’s possible Trump knows that. As  Chelsea Fagan noted in her most recent iPhone dispatch for The Financial Diet, as terrifying as this is, we also can’t afford more “neoliberal economic consensus” bullshit.  The fact that hedge fund manager Bill Ackman, JPMorgan Chase CEO Jamie Dimon, and billionaire Stan Druckenmiller are sounding the alarm in the pages of The Wall Street Journal that, ‘This is a bad idea, actually,’ underscores that we should be wary of reflexively embracing the concerns of people who, I don’t know, own banks. We might not want this, but we also, I assume, don’t want to revert to The World According to Hedge Fund Managers . I’m not sure if Varoufakis’s rather elaborate explanation is correct, but  🏼 Grace Blakeley’s assessment, that the tariffs are ultimately an attempt at “preserving [US] hegemony—even if it means sacrificing prosperity at home,” rings truer to me than, “The old guy just likes tariffs.” The thrust of American economic policy since the end of WWII has been the religion of “more, cheaper, faster,” and we constructed everything from labor policy to corporate and consumer cultures to retirement frameworks around the priorities of access, growth, and return to capital. While this has led to impressive innovation and improvements in quality of life, it’s also true that we achieved much of it by outsourcing the bulk of the unpleasantness necessary to create an indiscriminate barrage of cheap stuff available via two-day shipping (read: abhorrent working conditions) to poor people in the US and even poorer people abroad. Consider  Joe Weisenthal’s tariff reflections for Bloomberg: “[Nike’s] profitable design work is mostly done in the US. The manufacturing is done in countries like Vietnam…50% of Nike’s products are made in Vietnam, [and] there are half a million people in the country working for at least 155 factories that make Nike goods. Now we’re slapping massive tariffs on them, but the question is ... to what end? Do we think there are hundreds of thousands of people in the US eager to work in sneaker and t-shirt factories at the wages that sneaker and t-shirt factories pay?” This is the quiet part out loud: US stock market dominance (and the returns American retirees have been forced to rely on) itself relies on access to global labor arbitrage; that is, finding people somewhere out of view to do jobs that Americans are not “eager” to do. This is a global order that simply doesn’t work if the US is no longer powerful enough to enforce it. As Blakeley wrote, “The goal of the capitalist state is not to deliver prosperity for all. It’s to maintain order, protect property, and preserve the dominance of capital, both at home and abroad…that’s why governments often make decisions that seem irrational from the perspective of the academic economist. They aren’t serving ‘the economy.’ They’re protecting and expanding their own power.” So what comes next? Regardless of which theory you subscribe to, economic growth and investment will almost certainly slow. (If Dimon and Ackman and Druckenmiller and Musk don’t get their way, that is.) It’s worth noting that the growth has overwhelmingly accrued to a relatively small group of Americans anyway—but in our current paradigm, a shrinking pie is still worse than a growing one. These tariffs blasted a cannonball through the hull of the global order that the US itself created after WWII. (And yes, things will probably cost more.) But those of us who hope to see a truly reimagined economic system that works well for the many rather than the few should remember that such a shift almost certainly requires “the old way” finally breaking down and failing first. It’s possible we’re witnessing another stage in that (inevitable) process, as the contradictions become harder and harder to resolve. | 
. I wanted to share a recent Rich Gigs success story that came in from Rich Girl Ashleigh (who’s also coincidentally sharing another role below)! After submitting a role last year, one of you Rich Gals got the job: “She was hired. She’s a great addition to our team. Looking forward to finding more Rich Girl gems!” 
That’s what I’m talking about.
