Blackcap Blog

Published at 08:43 on 8 January 2017

It’s something I’ve been pondering ever since the results of the election last November. Not whether or not to be part of the resistance, of course: it’s a given that I will be part of it. But how (and more importantly how much, particularly initially) to be part of it is still an issue.

It’s a given that I shouldn’t simply cling to my class privilege and let that compromise my activism. In turn that means I must be willing to risk my home and my material possessions. When I decided to try giving being more settled one last try, it was always on the basis of giving it up and bailing if it didn’t work out. I never anticipated it not working out in this particular way, but the nature of the future is that you cannot always anticipate it. Unexpected turns of events happen.

But, as with many things, it’s not so simple. Let’s play with Establishment economics a bit; it’s still very relevant, considering we still have an Establishment economic system.

It’s possible Trump will start a trade war. Some talk as if its a certainty. I disagree; the capitalist class has a lot of influence in Washington, DC, and a trade war would be bad for business. But it’s definitely a possibility: the capitalist class has gambled — incorrectly — that it can control a fascist more than once, only to later regret its mistake.

If a trade war happens, stagflation is the likely result. That’s because free trade has been the modus operandi for three decades or so, with the result (as Trump keeps correctly pointing out) that US manufacturing jobs have been decimated. Most of those factories closed a decade or more ago. The machinery has been removed and shipped abroad and the buildings have fallen into ruins. It’s called the Rust Belt for a reason.

The result is that at present there simply is not enough domestic manufacturing capacity to supply anything near the domestic demand for manufactured items. If tariffs increase the cost of imported goods buy 25%, 33%, or more, it simply won’t be possible to dodge them by shifting to now-cheaper domestically-made goods. In fact, the few remaining domestic manufacturers will now earn super-profits, because the tariffs will raise the market value of their goods to the price of the tariffed imported ones.

Those super-profits will attract investment in expanding domestic manufacturing, of course, but such expansion cannot happen immediately. It takes time to plan and build a factory. Moreover, building a factory takes extensive amounts of manufactured goods to accomplish (and remember, the trade war has just increased the price of those).

So a trade war will cause a series of price shocks for manufactured goods to hit the economy, much like OPEC caused a series of price shocks for energy to hit the economy in the 1970’s. The result will be the same: stagflation.

That will cause many people to suffer, as prices increase and economic opportunity declines. Hanging on to my home will serve me as a hedge against inflation (and a very effective one, since it’s a leveraged purchase). That will leave me better equipped to financially back the resistance. Moreover, I have room to host a roommate, and can use that space to host a fellow member of the resistance at a below-market rent.

So the correct course to take is at this time unclear. Maybe there will be a trade war, maybe there won’t be. Even if there is, maybe the resistance will most need my help in ways other than financial and housing.

It’s also quite likely that Trump will be impeached and not serve out his full term. Many observers have already predicted this, including both Allan Lichtman and Michael Moore, both of whom correctly foresaw that a Trump win was either likely or possible. In that case, the struggle will be transformed into a far more mundane one of opposition to a more traditionally conservative administration.

All I can say is, at this stage, it is not the time to make any rash decisions with my life. I suspect the correct course to take will manifest itself within six to twelve months.