When my first column of this calendar year was published, it attracted a single online comment that included the following: “Another completely pointless article by Gouws … His main objective always seems to be to criticise Musk or Trump.”
There are a few things that I could say in response, but perhaps the main one is this: have you actually noticed how both these gentlemen have rather dominated the headlines for the past few months? It would be difficult not to mention them or offer an opinion on the wrecking ball that they’ve brought to US institutions and, in the case of President Donald Trump’s tariffs, to the whole global economy.
Let’s focus on domestic US issues first. Which means we should start with Elon Musk and his much-hyped department of government efficiency. When asked on a client call to look for positives from the new Trump administration a few weeks ago, I mentioned this: clearly there is and has been waste in many areas ultimately funded by the public — not only in the US, where Musk is (literally) bringing a chainsaw to the conversation, but in other countries as well.
Take the UK, for example: the new Labour government recently decided to close down NHS England (which oversees the country’s health service) in a move that will purportedly put as many as 10,000 pen-pushers out of work. This will free up billions to be spent on front-line health workers and medication for patients — clearly a good thing.
Having said that, I do think Musk has taken things too far. To illustrate: a friend is involved with a start-up that provides cutting-edge equipment to hospitals and clinics in North America. He tells me that clients they deal with (who focus on research to cure various forms of cancer) have essentially seen their operations grind to a halt, because their counterparts at the US Food & Drug Administration have been fired, with little consideration for what they are accomplishing. Necessary approvals are therefore not forthcoming and large swathes of US health care have been paralysed, which means people are dying prematurely.
I used to think it went without saying that a restrictive tariff regime is bad for everyone (including good Americans)
And then, Trump and his gung-ho approach to international trade. I’ve avoided writing about this until now, because I used to think it went without saying that a restrictive tariff regime is bad for everyone (including good Americans). It’s like writing about the benefits of oxygen and clean water.
Trump of course begs to differ, harking back to the days when William McKinley was US president and the country collected no income taxes but had an expansive tariff regime in place. He wants us to believe that the Richest Country in the World was a much more prosperous place in those days.
But what Trump fails to mention is that the US was a rather different society when McKinley was elected in 1897. In those days, the equivalent of today’s tech billionaires were the landed gentry. They lived on inherited farms and produced their own food. They didn’t buy cars (the Ford Motor Co only started a few years later); instead, they grew their own donkeys. In a nutshell: they didn’t suffer from tariffs, because they didn’t need to purchase much imported stuff.
Their workers, on the other hand, were not so lucky. Not being landowners, they were the ones going to shops, bearing the brunt of repeated price increases caused by import tariffs. This is one of the main reasons tariffs were eventually abolished by the US. A system of progressive taxation was implemented instead, which means that those who could afford to pay more were asked to do so — clearly a much more equitable system when implemented efficiently.
I have not seen one serious commentator (apart from those on Trump’s payroll) who agrees with him about how tariffs work or any of the benefits that they might eventually lead to. And believe me, I have tried.
If and when I eventually change my mind on this, you’ll be the first to know. Until then, I can only apologise to those readers who became tired of my pointless articles harping on about Trump a few months ago.
Gouws is chief investment officer at Credo, London
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