Trump channels Hoover’s economic strategies

President Trump has saved dozens of US jobs from moving to other countries, mostly Mexico, by employing the shock and awe of a personal phone call to CEOs. Had he made the same visits before he became president he likely would have failed. And let’s not discuss the numbers of jobs his policies will cost the US that go unreported.

Another Republican president used a similar style to “encourage” business to comply – Herbert Hoover. Before he scaled the political mountain to the presidency, Hoover had become famous as an organizer of humanitarian efforts. He led 500 volunteers in distributing food, clothing, steamship tickets and cash to Americans in Europe to help them get home after war broke out in Europe in 1914. Later he worked to feed starving Belgians. The Belgian city of Leuven named a prominent square after him – Hooverplein.

Trump's strength is his weakness - businessman economics

President Trump is clearly a good businessman. His wealth proves it. And it was partly his success in business that encouraged many adults to vote for him. The logic seemed sound: if the problem with the US is the economy then surely a successful businessman can fix it. But the fact that he is a successful businessman is Mr. Trump’s weakness as well.

Mises used to say that businessmen are better at predicting the short run than are economists so economists should not try to compete with them in their area of comparative advantage. The job of the good economist is to force business people to look up once in a while and acknowledge the long run. They can spurn the long run and court the short run, but the long run always shows up and the longer she has been ignored the uglier she is. The field of economics was born out of that insight, Mises wrote:

In order to discover the immediate-the short-run-effects brought about by a change in a datum, there is as a rule no need to resort to a thorough investigation. The short-run effects are for the most part obvious and seldom escape the notice of a naive observer unfamiliar with searching investigations. What started economic studies was precisely the fact that some men of genius began to suspect that the remoter consequences of an event may differ from the immediate effects visible even to the most simple-minded layman. The main achievement of economics was the disclosure of such long-run effects hitherto unnoticed by the unaffected observer and neglected by the statesman. (Mises, Human Action, 649)