Platformonomics TGIF #87: April 11, 2025

The “Measles are Bad Ergo Cod Liver Oil Must be the Solution” Fallacy

Identifying a problem doesn’t mean any course of action suggested to address that problem is wise or likely to succeed. “We have a debt problem”, “We are overly financialized”, and “China cheats” can all be true, but that don’t mean any random or half-baked proposed remedy to those problems must be good. Nor does it mean execution isn’t important. Populists, by definition, are much better at railing about problems than fixing them.

BREAKING: Harvard, Wharton Announce Immediate Revamp of Economics Curricula

The universities have come to recognize they are not adequately teaching Ricardian trade fundamentals. Reportedly, they also are considering revoking degrees of specific alumni who have brought this issue to the public’s attention.

BREAKING: Sequel to Lords of Finance Announced

Lords of Finance: The Bankers Who Broke the World is a fabulous recounting of the policy errors that led to and magnified the Great Depression. Lords of Finance 2: The Bozos Who Broke the World will examine present day policy-makers and their efforts to restructure the global economy with a simple if misconceived formula.

In Washington DC a Gaffe is When You Tell the Truth: Howard Nutnick Edition

Trumpression™

Getting my first use claim in for trademark purposes.

Capital Spending Goes on Strike?

How long before the White House has to file a missing Golden Age report and will blame it on a “capital strike“. Will they follow FDR and order the FBI to investigate?

The Art of the Deal? What is the Deal?

So we’re now pretending Trump trade policy to date was just a carefully calibrated exercise to build negotiating leverage to do a flurry of “deals” in the next 90 days.

I have so many questions.

What deals should and will get done? For fanboys of Trump’s infallibility, you get points for explaining in advance what good deals look like versus just endorsing ex post any random outcome as brilliant 7D chess.

What does a successful trade deal with China look like? Trump’s first term trade deal with China failed. Chinese exports continue to boom, and are growing approximately two orders of magnitude faster than their imports. The Chinese Communist Party has not generally proven receptive to foreign input on how to fundamentally restructure their economy. So what does a winning deal with China look like? One answer is we don’t care and really are trying to decouple China from the world economy (there may be consequences from an economic declaration of war).

What do successful deals with the rest of the world look like? Given trade balances globally, how many deals have to get done to claim success? What stops countries like Vietnam from continuing to be huge transshipment channels for Chinese goods?

The administration has made it very clear this is not just about tariffs, but also non-tariff barriers. Tariff equalization is not enough. Any US trade deficit with a country is a sign of cheating, so what will we ask for? Do we expect countries to fundamentally restructure their economies? On what time-frame? Do other countries have domestic interests or agency? Are French farmers on board? What will Lesotho buy from the US ?

Trade deals normally take years, if not decades to negotiate. Can we really do substantive deals quickly? Or will we settle for superficial deals like renaming NAFTA and calling it “yuuuuuuuggggeee”?

The Trump administration has given us a scoreboard to measure their success over time. We can use “the formula” to measure progress. How many countries will qualify for lower “reciprocal” tariffs after doing trade “deals”?

I’ll stop for now.

The Road Not Taken

Rewind 90 days and imagine a Presidential address (I’m resisting having an LLM translate this into a more Trumpian dialect):

We live in the most prosperous time in human history. Global trade is a foundation for that prosperity. It has made America the richest country in the world (America First!), and also helped raise billions of others out of medieval levels of poverty.

But we have a problem: some countries are abusing the system. They take but they don’t contribute. There are mercantilists who happily sell but don’t buy. Trade works best when you export products in order to import products from the rest of the world.

Some of our allies are mercantilists, and we ask them do more to contribute to global demand. But they are minuscule compared to China, which is the biggest mercantilist the world has ever seen. And getting bigger.

We’ve spent years asking China to reform its ways. They are immense beneficiaries from the global system but don’t reciprocate. We’ve asked them to stop their massive subsidies for exports. To stop impoverishing the Chinese people by denying them the fruits of their hard labor.

Because the Chinese Communist Party refuses to change course and fix the imbalances in its economy, the world must take action. Today we are announcing significant tariffs on Chinese goods imported into the United States. Because trade balances globally, this plan will work best with the cooperation of the rest of the world.

Today we are calling on every nation to make a decision whether they support continued global trade and growth, or prefer to live in a poorer world where China undermines manufacturing in every country through its massive subsidies. Countries who don’t join us will find themselves the dumping ground for ever more Chinese exports.

In the next 90 days we will ask every nation to make a decision whether to join us in putting significant tariffs on Chinese exports until China elects to rebalance their economy and embrace two-way trade.

For countries that don’t choose to join us after 90 days, we will place similar tariffs on their trade. Because trade balances globally, it is the only way to prevent trade from being diverted through third nations.

We look forward to a fruitful discussion with every nation about joining us in create the next wave of global prosperity.

This would have gotten us to exactly the same position we are in today, except we wouldn’t have completely trashed the American brand by threatening to steal territory, cozying up to Putin, antagonizing our allies and neighbors, starting senseless trade wars with our two most important trading partners, surprising the world with half-baked tariffs, undermining global security alliances, insulting almost everyone, and throwing out our principles, amongst other things.

These trust-destroying antics can’t help but impact how other countries approach negotiations. It is hard to negotiate with angry, petty, petulant, resentful, small-minded, and impulsive counterparties. Yet we’ve managed to make sure both sides now have those characteristics.

UPDATED: here’s the ChatGPT rewrite to sound Trumpian:

Folks, let me tell you — we are living in the greatest time in human history. It’s true! Tremendous prosperity like never before. And you know what drives that prosperity? Trade. Smart trade. Fair trade. Trade has made America the richest, most powerful country in the world — America First! Nobody’s even close. And yes, it’s lifted billions of people around the world out of poverty — because of us, by the way.

But here’s the problem — and it’s a big problem. Some countries — some very dishonest countries — they love to take, take, take. But they never give back. Total freeloaders. They sell to us, but they don’t buy from us. That’s not trade — that’s cheating.

Trade works when it’s a two-way street. You sell, you buy. Simple. Even some of our friends — our so-called allies — they act like mercantilists. Not great! But nobody — and I mean nobody — is worse than China. China is the biggest mercantilist in the history of the world. Nobody’s even close. And they’re getting bigger. Because they cheat.

We’ve asked China nicely — very nicely — for years: Stop the cheating. Stop the massive subsidies. Let your people enjoy the fruits of their labor — instead of stealing from the rest of the world. But the Chinese Communist Party — very corrupt, very dishonest — refuses to change.

So today, we are taking action. Big action. We are announcing major tariffs on Chinese goods coming into the United States. Massive tariffs. And we’re calling on every country — every responsible nation — to join us.

The choice is very simple. Do you want a world of growth and prosperity? Or do you want a world where China cheats, steals jobs, and destroys industries everywhere it goes? Countries that don’t join us — well, I hate to say it — but they’re going to be the dumping ground for China’s junk.

And here’s the deal — very fair, very tough. In the next 90 days, we’re giving every country the chance to join us. Stand with us. Stand for fair trade. Stand for your workers.

But if they don’t — if they think they can sit on the sidelines while China keeps cheating — then guess what? We’re going to put tariffs on their exports too. Because trade balances globally. And we’re not going to let them get rich off America while they do nothing.

This is how we create the next great era of global prosperity — with smart leaders, tough negotiators, and fair trade that works for everyone.

America First. Fair trade for all. Let’s get it done.

The Road Not Taken Redux

Rewind eight years and imagine teaming up with our allies to approach China as a group. You could call it something like the Trans Pacific Partnership.

CAPEX Clues: Satya’s Oft-Mentioned $80 Billion. Plus Farming

Hard to take any guidance seriously at this point between tariffs, Q2 wiped out by policy uncertainty, plunging economic confidence, rising interest rates, and policy whiplash. But we’re still laser-focused on the $80 billion number.

Why Can’t Oracle Build Data Centers? (Or Subcontract Them?)

Pedal to the Meta: Hipster Antitrust’s Day in Court

GDPR Deathwatch? Or More Empty Words?

Not Available in Europe: ChatGPT Memory Edition

At least he’s optimistic about Liechtenstein.

Previous:

Not Available in Europe: Bird Flies, Not Available in Europe: Open AI Deep Research, Not Available in Europe: A Bubbly Economy, Not Available in Europe: Better Late Than Never Apple Edition, Not Available in Europe: Apple’s Math, Not Available in Europe: This Week’s Edition, Not Available in Europe: Coming Soon to a Continent Near You, Not Available in Europe: Don’t Say You Weren’t Warned (by Meta), Not Available in Europe: A Tipping Point?, Not Available in Europe: Stratechery Edition, Not Available in Europe: Apple Edition, Not Available in Europe: Meta Edition

The Mainframe is the Solution! What Was the Question?

I’ve missed IBM playing the game of “The mainframe is a great place to do <insert latest industry trend here>”. Maybe they got sensitive due to people mocking them?

But they’re back with a mainframe “designed for more than 250 AI use cases”. I’ve been going easy on IBM of late, but that is directly correlated with them not making ridiculous claims.

To revisit some earlier variations on this theme:

How did it take over a decade for IBM to start talking about a mainframe cloud? This is a company that has touted the mainframe as the place to run every imaginable and no matter how ridiculous new workload for decades (remember enterprise-grade Second Life?).