Economics

The following is a transcript of a speech delivered yesterday by the Treasury Secretary Scott Bessent. In the final months of World War Two, Western leaders convened the greatest economic minds of their generation. Their task? To build a new financial system.  At a quiet resort high up in the mountains of New Hampshire, they laid the foundation for Pax Americana.  The architects of Bretton Woods recognized that a global economy required global coordination. To encourage that coordination, they created the IMF and the World Bank.   These twin institutions were born after a period of intense geopolitical and economic volatility.

The first thing revealed by the high and wide-ranging new tariffs President Trump announced on “Liberation Day” is just how limited other recent American presidents have been in their thinking. Their ambition was to get elected and re-elected, then retire comfortably into a tranquil post-presidency. They would finish their days lending their names to charities and writing their memoirs (or rather, commissioning ghostwriters to fulfill their publishing contracts).   The idea of destroying and remaking the global economic order never crossed their minds. But Trump is thinking bigger. He doesn’t want to go to his grave as just another has-been ex-president.

The classical defense of free trade, the one found in Econ 101 textbooks and Ricardo’s comparative advantage model, goes something like this: countries should specialize in what they can produce most efficiently, export the surplus and import the rest. Trade allows global output to increase, everyone gets richer and any government interference – like tariffs or subsidies – just gums up the works. But that’s not the world we live in. David Ricardo, the early 19th-century British economist who developed the theory of comparative advantage, illustrated it with a now-famous example: even though Portugal could produce both wine and cloth more efficiently than England, both countries would benefit if Portugal specialized in wine and England in cloth, then traded.

"You can’t make an omelette without breaking eggs" is a maxim attributed to leaders on both sides of the French Revolution. "Move fast and break things" is today’s equivalent, emanating from Silicon Valley and amply demonstrated by Donald Trump and Elon Musk in their approach to government and geopolitics. "You can’t make omelettes at all if you can’t afford eggs" might be the next variant: inflation and scarcity afflicting America’s favorite breakfast have become a major political issue. In brief, a dozen US eggs used to cost $2 or less but by January this year the supermarket price was $5 and rising – in some places $9 was reported, rationing had to be introduced and Mexican suppliers were spotted smuggling truckloads across the border.

"The art of the deal" is President Trump’s much-vaunted modus operandi as well as the title of his 1987 bestseller. But how smart would he be to make an offer for Greenland to the Danish government? Leaving aside issues of military sites and future unfrozen shipping routes, would the currently still-frozen north Atlantic island be worth a rich price for its mineral deposits alone? I consulted an intrepid investor who spent six years there prospecting for tantalum, a "transition metal" used in capacitors for mobile phones. His answer was not encouraging. There’s no disputing the potential to find everything from gold and uranium to rare earth elements such as neodymium and dysprosium, in demand for advanced electronics. But the operating difficulties are truly formidable.

Throughout the West, particularly the Anglosphere, housing costs are ravaging the middle class. Homeownership, long the key to social mobility, is on the decline, particularly among younger generations and minorities. According to the Organization for Economic Cooperation and Development, house prices in high-income countries have been rising “three times faster than household median income over the last two decades,” causing the standard of living “to stagnate or decline.” Unlike previous housing crises, this one is not primarily caused by mass displacements due to wars or natural disasters or population growth.

Kamala Harris is a master shapeshifter — whether through codeswitching, pandering or just being phony. One moment she’s rolling up masala dosa with Mindy Kaling on live TV; the next she’s FaceTiming the BET Awards, declaring, “Girl, I’m out here in these streets.” Donald Trump’s bumbling attempts to highlight her cultural inconsistencies briefly shifted the election focus to Harris’s race and ethnicity — and away from far more important qualities. Perhaps it’s because her actual policy ideas have been so scant and vague that attacking them directly has proven difficult. Perhaps her chameleonic history has made anything beyond a surface-level attack difficult.