Only 1 side can win on trade policy

In a zero-sum game, one or more participants’ gains (or losses) equals the losses (or gains) of the other participants. Thus, a gain for one must result in a loss for one or more others. An example would be your office hockey pool or a friendly poker game.

It would appear the Trump administration regards governing as a zero-sum game writ large.

Be it an unfavourable critic of one of his actions, or an ally who does not entirely agree with him or a legislator who favours an alternative policy option to that advocated by the U.S. president, their gain (fame, fortune or whatever) is his loss and incurs his wrath and denunciation.

In a zero-sum game, “winning” is the only satisfactory outcome because, as Gen. Douglas McArthur once said, “There is no substitute for victory.”

To the combatant in a game where the stakes are high, this goal seems to justify whatever actions are necessary to “win.” Therefore, lying, repeating falsehoods, denigrating opponents, blaming mistakes on others and reacting with gut instincts rather than thoughtful reason, all this and more, constitute justifiable behaviour. Ethical standards are not applicable.

In a business owned by someone with Donald Trump’s zero-sum outlook, the major constraints are the ability to obtain financing and government regulations.

In governing, however, the president’s power is remarkably constrained.

He can hire and fire his immediate staff and he can fire senior diplomats and members of his cabinet, but the hiring for many posts requires approval of the Senate.

His executive orders, as we have seen, can be challenged successfully in the courts. And legislators can stonewall policy proposals.

Governing requires patience, compromise and teamwork, not bluster and threats.

It must be frustrating for someone who thrives on, indeed slavishly seeks, praise and who sees things the way he wants see them, not the way they are in reality.

What is most disturbing in Trump’s zero-sum outlook is how he applies it to international trade.

At its heart, Trump’s policy is a variation of the mercantilist policies of Napoleon in which he tries to adversely affect U.S. trading partners by increasing American exports and reducing imports.

Among other things, such an outlook ignores the immense positive impact trade has had on global commerce since the end of the Second World War.

Growth in those trade flows was not a zero-sum game, but rather was the driving economic force that raised the standard of living for the vast majority of the world’s population.

In trade, by definition, both parties win.

Moreover, the U.S. trade deficit, which was financed by borrowing from other nations, provided the essential ingredient for the growth of the American financial prowess in global financial markets.

It was that prowess that allowed the United States to virtually dictate the terms which have governed international trade using a system of clearly defined rules by the World Trade Organization.

Now all that seems at risk. Trump’s bombastic tweets on existing trade treaties are troubling.

This bombast and his obvious admiration for dictators such as Russia’s Vladimir Putin and Turkey’s Recep Tayyip Erdogan an is starting to hollow out the professional cadres in the State Department.

As a consequence, the ability of the United States to deliver policy messages to friends and foes alike is greatly weakened and global commerce is put at risk.

Finally, Trump seems to constantly change his mind and to speak extemporaneously and in an erratic fashion.

He has often said that in business he found it advantageous to keep his opponents uncertain as to what he would do.

He fails to understand that in international relations such uncertainty leads others to hunker down and avoid alliances with such an unstable entity.

Gertrude Stein once said about Los Angeles that “There is no there there.” The same phrase can now be applied to U.S. foreign policy. As a consequence we all suffer.

David Bond is an author and retired bank economist. Email: curmudgeon@harumpf.com. This column appears Tuesdays in The Herald.