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Despite all the success of 19th-century industrial magnate Joseph Wharton, the 21st century has not been tender with his family's legacy. His great-great-great-grandson, Josh Rosen, was ignored by the Arizona Cardinals as a quarterback curler and sold as peanuts to the Miami Dolphins. Worse still, the family name he gave at the business school he founded at the University of Pennsylvania was irreversibly damaged by one of the graduates of that school, the 45th President of the States United States, Donald Trump.
True, although the Wharton School took money from the Trump family and admitted her children Ivanka and Don, Jr., she never boasted so much about her association with Trump given her past historical. Every school in the Ivy League has had its share of shabby, vulgar and destructive business deals they do not want to discuss. It's just that most of them do not end up becoming president.
Now, Trump's education in Wharton is once again in the spotlight as Trump demonstrates every day how little he has learned in economics while studying. Or while you run businesses. Or never.
This Friday morning only, the world has been treated a trumpian storm about his ill-considered and mismanaged trade war with China which was so profoundly stupid that it would surely have been worth to anyone who would submit it as paper an F in an introductory economics course.
Once again, he boasted of the customs duties he had imposed on China and that he had increased them by 10 to 25% out of $ 250 billion in goods and products. " (the capitalisations are his … a subject for another column, perhaps one by a neuropathologist). Trump then said that the tariffs were "NOW paid for by China in the United States", so that with the "more than $ 100 billion of tariffs we absorb, we will buy agricultural products at our major farmers, in larger quantities than China ". never, and send it to the poor and hungry countries in the form of humanitarian aid. "
He went on to say that tariffs would bring much more wealth to our country than even a phenomenal agreement of the traditional type. In addition, much easier and faster to do. He concluded this particular gap between logic, economics, arithmetic and syntax, stating that "tariffs will make our country MUCH STRONGER, not weaker. Sit down and look.
As usual, Trump started with a lie. The highest rates are not currently paid in the United States. This will not happen until a few weeks, until the goods shipped after the tariff increase reach their destination here.
Then, and most importantly, the tariffs are not paid in the United States by China. Customs duties are paid on Chinese products purchased by consumers and US companies. In other words, the money does not come from China. It comes from the Americans. The president promised to cut taxes, but it was very bad too. The poorest Americans who often buy cheap Chinese manufactured goods, such as shoes and clothes, will end up being the ones who suffer the most, just as they are the ones who have benefited the least from tax cuts. Trump GOP.
Now, it's an error that Trump commits again and again. He just does not understand who pays or who is penalized by the rates. Except, apparently, with regard to farmers. He is concerned about them, which is why he promises to use the tariffs to buy products from farmers that the Chinese, retorting against US tariffs, refuse to buy. He does not seem to understand the magnitude of the deficit accumulated by the United States. To put it in the terms he can follow, it's huge.
So big that tariffs are not going to reduce it. The United States will therefore have to borrow relief payments from farmers. Who are we borrowing? Yes, that's right. We borrow a lot of Chinese. So we are going to pay for the money we will use to pay the farmers hurt by the bad American policies, thus allowing the Chinese to make money through the trade war.
Oh, and whatever you do, do not examine the effect of Trump's tweets on the stock market in recent days. It's not that most Americans have a significant interest in the stock market. But Trump's friends and big cat followers love this uncertainty. (To understand how much Trump plays all this, read Catherine Rampell's excellent article in Friday's. Washington Post.)
Now, the market has rebounded slightly on Friday when Trump and the Chinese said the negotiations were progressing a bit. And frankly, most of the business experts I know think an agreement will finally be reached. But there are even some problems associated with that. First, when China stops buying agricultural and other products from the United States and starts buying them from other countries, it often does not come back to the United States because it has been pre-negotiated because it a greater number of suppliers produces more competitive prices and reduces US leverage.
But the worst part is that everything we've heard about the current agreement suggests that even though the Chinese have promised to buy US products (rarely delivered) and some market openness ( in the financial sector, for example), not significantly addressing the real long-term issues of the US-China relationship focused on trade in technologies and services, intellectual property protection, and the rules of law. investment in these areas.
Moreover, according to some rumors, a bilateral dispute resolution mechanism would be planned. This means that China and the United States will promise to settle their future disputes, bypassing and weakening vital multilateral mechanisms such as the WTO and increasing the likelihood of future trade disputes.
The blow to the WTO would be devastating and would worsen Trump's spooky attacks on international institutions and the international order established after the Second World War that the United States struggled to build for three quarters of a century, including withdrawing from the TPP agreement. , impose tariffs on steel and aluminum, renegotiate NAFTA, which resulted in an agreement that will probably not be ratified by Congress and will not bring any major improvements over the old agreement, and threaten to embark on a trade war with key allies about the automobile. (For a good take on that, see Ed Luce in the Financial Times.)
All that to say: WTF, Wharton?
While Trump's corporate tax evasion and corporate bankruptcies have not made you feel ashamed of revoking your degree, such public manifestations of illiteracy should do so. Yes, we know that Trump did not graduate from Wharton, which is actually the prestige program. And yes, we learned a long time ago that he had not got his first degree in his class, contrary to what we had been announcing for a long time. We even heard that one of his teachers had once called him "the most stupid student I ever had". Which is credible.
We even know that poor old Joseph Wharton was himself a protectionist. But he adopted these policies in the late 19th century and early 20th century, during the period of American history, sometimes called the era of real stupid ideas that did not really work. We know better. And as a researcher, scientist, entrepreneur and poet who also helped found Swarthmore College, Wharton would probably have learned his lesson. And that as a Quaker, educator and man of learning, he would have been repelled and revolted by the school that carries the most ignoble degree of his name.
Rothkopf is CEO of the Rothkopf Group, podcasts presenter, live events and other content of the DSR Network, and adviser to companies and governments, including the United Arab Emirates. He has served as Deputy Secretary of Commerce for International Trade Policy in the Clinton Administration and Acting Deputy Secretary of International Trade.
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