It is exactly a century since John Maynard Keynes published “The Economic Consequences of Mr. Churchill,” a devastating takedown of the policies of the Conservative government in which Winston Churchill served as Chancellor of the Exchequer—the British equivalent of Treasury Secretary.
Keynes predicted—correctly—that the government’s decision to return the pound to the gold standard would lead to “unemployment and industrial disputes,” “great depression in the export industries,” and “credit restriction.”
“It will not be safe,” he ironically advised Churchill, “politically to admit that you are intensifying unemployment deliberately in order to reduce wages. Thus you will have to ascribe what is happening to every conceivable cause except the true one. … About two years may elapse before it will be safe for you to utter in public one single word of truth.”
The economic objectives of Mr. Trump are somewhat different from the deflationary goals of Churchill and his colleagues, who sought to restore the British economy, by an immense feat of collective belt-tightening, to where it had been on the eve of World War I. But the project of making America great again by means of protectionist tariffs risks having economic consequences painfully similar to those experienced by Britons a hundred years ago.
The economic consequences of policy really matter. I have just read a lively debate between the national conservative N.S. Lyons and classical liberal Noah Smith about whether or not Trump represents the magnificent end of the “long twentieth century,” a “rejection of the neurotic, confrontation-avoidant post-war consensus,” and the restoration of “the strong gods.” Smith’s critique of what he calls Trump’s “Metternich-Lindbergh Theory”—the idea that the United States should cynically extricate itself from most foreign commitments and focus on its own hemisphere—struck me as compelling.
Then I looked at the stock market and emitted a bitter laugh.
Ordinary Americans did not vote for either strong gods or Metternich-Lindbergh Theory. They elected Trump to punish the Democrats for 9 percent inflation at the mid-2022 peak and net migration of 8 million in four years, most of it illegal. They may not fully believe him when the president promises “the golden age of America,” as he did in his State of the Union address on March 4. But they do expect things to get better. Or they did until last week.
What few Trump voters appreciated last year was that they were voting not just for lower inflation and higher border security but for a radical project to turn back the economic clock that is in many ways more ambitious than Churchill’s in 1925. The British Conservatives just wanted to go back 11 years. The Trump administration aims to reverse at least four decades of American economic history.
