The Donald: Great Disruptor or Idiot Statist?

By David Stockman  |  April 15, 2019

I like bats much better than bureaucrats. I live in the Managerial Age, in a world of ‘Admin.’ The greatest evil is not now done in those sordid ‘dens of crime’ that Dickens loved to paint. It is not done even in concentration camps and labour camps. In those we see its final result. But it is conceived and ordered (moved, seconded, carried, and minuted) in clean, carpeted, warmed and well-lighted offices, by quiet men with white collars and cut fingernails and smooth-shaven cheeks who do not need to raise their voices. Hence, naturally enough, my symbol for Hell is something like the bureaucracy of a police state or the office of a thoroughly nasty business concern.

– C.S. Lewis, “Preface to the 1961 Edition” in The Screwtape Letters(1942)

The Great Disruptor is to be lauded for his enemies – the Deep State, the Duopoly, the authoritarians and dilettantes of empire who, together, are bankrupting America and asphyxiating Main Street…

But when it comes to actual policy, it can no longer be denied: The Donald is out of his mind. Although he’s backed off, just a couple weeks ago he threatened to shut down the entire U.S.-Mexico border. That’s $1.7 billion per day of two-day trade.

“We will close it for a long time,” he said.

Well, it wouldn’t be any sort of “long time.” That’s because the $615 billion of annual two-way trade between the U.S. and Mexico represents not just a massive amount of goods. It’s also thousands of infinitely complex, hair-trigger supply chains that would unravel into chaos within days and cascade through the U.S. economy like a contagion.

The enormity and complexity of the U.S.-Mexico trade relationship is obvious. But the Donald doesn’t get it.

He actually dismissed the entire issue because he truly believes trade is like a basketball game, where the highest score takes all the glory, or an income statement, where the balance is akin to the profit and loss entry: “I’ll just close the border, and with a deficit like we have with Mexico and have had for many years, closing the border will be a profit-making operation.”

No, it won’t. It would be a calamity of monumental proportions, another unforced error the financialized and debt-burdened U.S. economy absolutely couldn’t withstand.

The Donald has gone off the deep end on the Mexico border issue the current backup of mainly asylum seekers from the failed states of Guatemala and Honduras because the “invasion” meme works with his political base. And he needs that 30 to 35%.

But it’s a fake crisis if ever there was one. There is no dangerous horde swarming the border. There’s no outbreak of crime on the U.S. side of the line. There’s not a shred of a national security threat. It’s pure Fox News bunkum.

The 450,000 unauthorized immigrant apprehensions at the southwest U.S. border in 2018, in fact, represented a 73% plunge from the level in the year 2000. And when it comes to Mexican migrants, the decline has been nearly 90%.

U.S. border apprehensions of migrants from Mexico and other countries, 2000  to 2017

Indeed, the surge in border apprehensions in the last several months is entirely attributable to asylum-seekers from Central America. And they become part of the statistics voluntarily. That’s because they turn themselves in at the crossings.

Likewise, there’s no evidence of crime spilling over the borders. To the contrary, on three leading measures of crimes per 100,000 population in 2017, the counties that border Mexico have lower rates than the rest of the U.S.

There are 3.4 homicides per 100,000 in the border counties. And there are 5.2 per 100,000 in the rest of the U.S. In the case of the property crime, it’s 2,207 per 100,000 in the border counties. And it’s 2,256 per 100,000 in the rest of the country. When it comes to all violent crimes, including assault, battery rape, and muggings, the rate is 348 per 100,000 in the border counties and 379 per 100,000 in the rest of the nation.

There is a great irony here, though, and it illustrates how the Donald is playing his enemies’ Statist game here at “Peak Trump”…

There is a serious crime problem associated with the Mexican border. But it’s manufactured in the legislative chambers of Imperial Washington.

It’s the War on Drugs that makes prohibited substances immensely and artificially valuable and fuels a massive and violent underground distribution system. This is the No. 1 source of violent crime in America.

Many if not most illegal drugs can be harmful to personal health, even fatal… just like cigarettes, alcohol, Kentucky Fried Chicken, or sky-diving. But the distributors of Marlboros and Jim Beam don’t kill people who distribute their product. Nor does Colonel Sanders inflict violent mayhem on neighborhoods to enforce business deals or carve out territorial rights.

At the end of the day, handling, processing and caring for asylum-seekers may well be a fiscal problem. But it’s small beans in the scheme of a $4.6 trillion budget.

And it’s most definitely not a national security threat.

Model of Rectitude

Desperate times call for… “common sense” measures.

And these are desperate times… Markets are corrupted by monetary central planning. They’re confused. And the road back is going to be treacherous.

We’re looking at a major re-pricing for all financial assets. And thousand-point intraday or day-to-day swings are part of that equation. Those can be frightening… for “buy and hold” investors.

I have a different approach, one that combines strategy and tactics into a plan flexible enough for you to survive and thrive amid the coming chaos. It’s called “The Stockman Model.”

All we’re after is a little stability, perhaps a chance to pocket a windfall when opportunity presents…

To common sense,

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David Stockman

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David Stockman

David Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.MORE FROM AUTHOR