‘Watch What Trump Does, Not What He Says’

(Bloomberg Opinion) -- It is increasingly common to hear conservatives say that they don’t like President Donald Trump’s political incorrectness and rhetoric, but they do like the policy victories of his administration. In the fight between tweets and policy, the argument goes, policy should win: Conservatives should support the president and the GOP.

Let’s consider this argument first by questioning its premise. Excessive political correctness can be irritating, and even socially damaging. But calling the president politically incorrect is like calling the surface temperature of the sun a little warm.

It is not politically incorrect, to take just one example, to claim moral equivalency between white supremacists and those who protest them, as the president did in his response to the violent demonstrations in Charlottesville, Virginia, a year ago. It is not failing to walk on egg shells around coddled college students. Instead, it is the intentional, irresponsible and shameful poisoning of our culture in an attempt to stoke racial and ethnic anxieties for political gain.

The argument from some conservatives that we should focus on the policy also misunderstands the damage that can be done by “just rhetoric.” Mr. Trump’s naked hostility toward immigrants, for example, is not just rhetoric.

The president’s public posture toward immigration could have significant consequences for the ability of the U.S. to attract the world’s hardest-working, most talented immigrants if some foreign-born workers choose to emigrate to countries with leaders less hostile to immigration. It’s not hard to imagine why some might make that choice when deciding where to put down roots and build a life.

That would hurt the American economy and American exceptionalism. Looking at businesses ranging from Main Street shops to Silicon Valley firms, Sari Pekkala Kerr and William R. Kerr write in a 2016 article for Harvard Business Review that while only accounting for 15 percent of the U.S. workforce, immigrants represent around one in four U.S. entrepreneurs. Immigrants also make up about one-quarter of U.S. inventors. Over one-third of new firms, according to Kerr and Kerr, have at least one immigrant entrepreneur connected to the creation of the firm.

Statements by a president that could have real-world consequences are something more similar to policy than to expressions of private opinion. And at a time when entrepreneurship on the whole is on a downward trend, this behavior is especially foolish.

The same logic applies to the president’s hostility toward international institutions like NATO. Some conservatives suggest ignoring what the president says and looking at his actual policy. But Trump’s excoriations of member states, for example, for underpaying, while at the same time the president cozies up to Russia, acts as policy by weakening the alliance.

Is this fruitful? As I wrote in a recent column, any benefits from getting NATO allies to crank up defense spending a bit are dramatically outweighed by the damage that might be done to the liberal international order — the set of institutions and norms that have significantly advanced economic prosperity for seven decades — if the president’s rhetoric continues to weaken it. Here again, presidential statements could have an effect more similar to actual policy actions than some conservatives want to acknowledge.

I’ll leave you with a last example: the president’s use of Twitter and other public statements to influence the decisions of individual corporations. Markets work best when businesses are making decisions based on economic factors, not on whether the president will attack them on Twitter. A presidential tweet isn’t “just rhetoric” if it is affecting economic behavior.

So far institutions and markets seem to be responding reasonably well in the face of unpresidential comments and behavior. I am not aware of any rigorous evidence that potential immigrants are making decisions based on the president’s attacks. But we are still in the early innings of this administration.

To acknowledge the power of the president’s words is not to dismiss the effects of his policy actions.

Conservatives are right to point to some real accomplishments. Supreme Court justices matter. Over time, the lower corporate tax rate will affect the decisions businesses make, increasing productivity and the wages workers take home in their paychecks. Deregulation can be a real policy accomplishment.

But if your argument is to focus on the president’s policy and not his words, you have to look at the whole policy landscape. Tariffs increase consumer prices and hurt the ability of affected businesses to make a profit and meet payroll. An all-out trade war could be damaging to the economy. The president’s ballooning budget deficits will likely reduce investment and the wages of tomorrow’s workers. The president’s refusal to reform Medicare and Social Security is irresponsible, and will make the U.S. debt problem significantly worse. Industrial policy and crony capitalism — for example, suggesting that the federal government keep ailing coal-fired power plants afloat — hurt economic efficiency.

So yes, pay attention to what the president does as well as what he says. But remember that his words, like his actions, have consequences.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Michael R. Strain is a Bloomberg Opinion columnist. He is director of economic policy studies and resident scholar at the American Enterprise Institute. He is the editor of “The U.S. Labor Market: Questions and Challenges for Public Policy.”

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