You are fired, Adam Smith!

The essay of Trump’s trade representative, Ambassador Jamieson Greer, published recently in The New York Times (link below), is quite revealing. Here comes someone to refute Adam Smith with the same mercantilistic arguments that this senior economist had to deal with in his time. The ambassador shows an impressive career; it’s understandable that he may not have had the time to read and ponder The Wealth of Nations.

By the author with AI assistance

It’s important to note that Ambassador Greer is a lawyer, not an economist. As a lawyer, he worked for the US steel industry. The lack of economic theory knowledge, coupled with his allegiance to former business friends, likely contributed to his biased commentary. (https://www.nytimes.com/2025/08/07/opinion/trump-trade-tariffs.html)

Throughout my life, I’ve encountered similar opinions. Whenever these ideas have been employed in government policy, the result has been a debilitation of the economy, benefiting a privileged few while hurting the majority of the population.

For instance, my grandfather worked for ECLAC, the United Nations Economic Commission for Latin America and the Caribbean. During the 1950s and 1960s, Raúl Prebisch, who led ECLAC at the time, advocated for protecting local industries with strong tariffs, sometimes even prohibiting imports of some products altogether.

The Prebisch idea of local industry protection was based on the assumption that eventually an evolution would happen and the country could compete internationally. But this never happened. Local producers had no incentive to do better; there was no competition or pressure to change things. The producers rather preferred to lobby the politicians and maintain things as they were.

The consequences of this approach in the American countries that followed suit were mediocre industrial products at high prices, for years and years. I vividly remember, as a teenager, when we all craved jeans from the USA. Our jeans in Chile were expensive, ill-fitting, and stiff, as if made of wood. Despite their higher price, they were no match for the jeans available in Miami.

Venezuela, a country that still adheres to the Prebisch ideas, aims to establish its own industry for everything and make imports extremely costly or impossible, to protect its domestic production. During my career, I led a car company that assembled US cars in Venezuela. These cars required a certain amount of local content, prompting local and foreign companies to invest in Venezuela to produce these parts. The rest of the cars arrived in boxes unassembled, and we employed 2,000 workers to put them together.

The peculiar aspect of this process is that the cars were initially produced entirely in the US assembly line before being transported to a separate warehouse where they were disassembled and packaged without the parts that should have been sourced from Venezuelan production. This was the most economical approach, but is it efficient? It resulted in significant costs, which were ultimately passed on to the Venezuelan consumer.

Look where Venezuela is now. It is a country with tremendous resources — oil, gas, metals, agriculture — but the majority of its people are extremely poor and see no perspective for them or their children, to the point that many have emigrated. Venezuelans would be much better off importing the whole cars and exporting, besides oil and its derivatives, for instance coffee and cacao, because the Venezuelan variants are considered to be among the best in the world. But their leaders and the established industry prefer to let things as they are. Coffee and cacao have high prices in the world markets. Venezuela does not take advantage of this and prefers to assemble cars, which have already been assembled before at their factory of origin, for a second time.

In Spain, where I worked when the protectionist Franco regime disappeared and the open policy of the European Union was step by step introduced, the car technology of the fifties still was the basis for the local production until the middle of the eighties, when the import prohibition was lifted. It had been good for producers. But bad for consumers.

Chile, on the other hand, underwent a profound transformation. Sadly, it was a brutal military junta that committed numerous atrocities against human rights that finally did the job. It was one of the few things it did right: to abolish the mercantilistic system, leading to the immediate cancellation of tariffs and all import impediments. Many industries failed to survive this upheaval. My father’s car manufacturing company in Arica, which produced a few hundred cars annually in a rather artisanal manner, ceased operations. Consequently, no cars were produced in Chile anymore; all vehicles became imports.

Despite this setback for some industries that had been artificially maintained, Chile emerged economically prosperous. It has since become a leading economy in South America. This transformation was catalyzed by the emergence of entrepreneurs who sought opportunities in areas where Chile possessed genuine expertise or had a competitive advantage over other nations. For instance, Chile quickly became the second producer of salmon, a fish that had previously not existed in the Southern Hemisphere.

The revenue generated from salmon exports alone was sufficient to pay for the import of all the complete cars the Chileans desired, sourced from various countries, such as Korea, the US, Japan, and Europe. The salmon-car trade had even a positive balance: Enough money was left to import huge amounts of whisky, my grandfather’s preferred beverage. He was retired when the new policy came, but the results changed his view on how countries can prosper with free trade.

An important factor in the Chilean export boom was made possible by their diplomats’ exceptional trade deals, which they reached with almost every country. These trade officers didn’t close markets; instead, they welcomed foreign products. This approach gave them leverage to secure fair conditions for the Chilean products in the foreign markets, a strong contrast to Trump and his trade negotiators’ policies, based on the believe that a big tariff stick is more effective.

Adam Smith started from a universal premise: First of all, we humans are consumers. Not the other way around, that we primarily are producers and everything has to give protection and room for profit to the producers of goods. That is nonsense. It only benefits the owners of the production facilities and, maybe, the people working for them. We produce because we have or wish to consume. And we consume cheapest and with the best quality, if we purchase from the best experts in their field, wherever they are.

Undoubtedly, there are national and security interests of a nation that are more important than a total free trade. Strategic industries should exist in a country, avoiding the trouble we all had during the Covid crisis. The defense production should also remain in the country or in the hands of trustful partners. Nevertheless, humanity would do well to remove as many trade barriers as possible. Because it is nothing else than a win/win situation.

But what the US is doing now is not an economically sound policy; it’s an aberration. It will not solve the problem of the deficit — which is mainly the deficit of a government that spends more than it gets, while at the same time reducing taxes for the ones that could afford to pay them.

Tariffs, on the other hand, are taxes consumers of imported goods pay. A significant portion of these consumers are not wealthy and will be hurt by the higher prices they will face.

Attempting to re-industrialize the USA in this manner is a misguided endeavor. It won’t succeed. While Adam Smith’s economic principles, formulated two and a half centuries ago, may be challenging for some to comprehend, they possess greater influence and power to shape reality than any presidential executive order.

The New World Order has no order. 

You are confused, I am confused. But hope remains.

Source: Generated by GPT-4

You might be too young to have watched the Western movies I enjoyed as a teenager. You could join the movie halfway through and still understand the plot perfectly. The good guys were kind and heroic, while the bad guys were cruel and despicable. The good guys wore white hats, while the bad guys wore black ones. The good guys endured the movie until they finally emerged victorious, while the bad guys reveled in their power before getting their just punishment in a satisfyingly happy ending.

Beware of black hats in old cowboy movies

During the Cold War, I resided in a South American country perpetually ensnared in a third-world paradigm. Poverty and misery characterized the lives of a substantial portion of the population. Intellectuals, young students, certain priests, and social workers perceived the United States as an exploitative force, deliberately maintaining our impoverished and subservient status. This perception justified our backwardness. They envisioned a benevolent socialism and aligned themselves with any opposition to the »Imperium.« Che Guevara and Fidel Castro became revered heroes. Conversely, the more elderly and traditional individuals held the opposing viewpoint.

Upon commencing my studies in Germany, I encountered a similar dichotomy. A stark distinction existed between two opposing factions. Individuals aligned themselves with the perspective that resonated with their personal beliefs and preferences, thereby establishing a clear framework for distinguishing between right and wrong. At that time, Iran embarked on a tumultuous struggle against the autocratic regime of the Shah. The United States viewed Iran as a strategic ally that facilitated its dominance in the region, yet it disregarded the aspirations and needs of the Iranian people. When the Shah dared to visit West Germany, substantial street protests erupted. Ultimately, his overthrow led to the establishment of the Islamic Republic, applauded by the segment of the German population that identified as progressives. However, they were largely unaware of the calamitous trajectory the country was on.

It was so easy to choose between the good and the bad guys…

This unequivocal division between two opposing forces, one led by the United States and the other by the Soviet Union, provided a simplistic framework for comprehending the global landscape. It presented a binary opposition, with individuals compelled to choose between the two sides. This dichotomy offered a semblance of order and predictability in an otherwise complex world.

The dissolution of the Soviet Union and the subsequent liberation of Eastern European nations from its oppressive influence demonstrated that the purportedly orderly alignment of countries into two opposing camps was merely superficial. In reality, nations pursued diverse interests and objectives. This became evident, for example, within the dissolution of Yugoslavia and Czechoslovakia.

Previously, once an allegiance had been chosen, it was relatively straightforward to construct a worldview based on the principle that the allies of one’s adversaries were one’s enemies, and the adversaries of one’s adversaries were one’s allies.

… but things got complicated

However, the current situation presents a paradox. Many of my left-leaning acquaintances defend Russia’s aggression against Ukraine as a self-defense measure against NATO’s perceived expansionist tendencies. Consequently, they resort to negative stereotypes about Ukrainians, portraying them as corrupt, claim that Ukrainians are actually Russians, asserting that Russia requires security, and so on. Out of older habits, they see Moscow still as kind of driving force behind progressiveness and accuse the self-preservation of Ukraine’s armed defense of being provoked by evil warmongers.

Now, the situation becomes more confusing for them as the United States becomes friendly with a still-KGB-led Russian Federation while being unfriendly with other democratic Western nations. Consequently, my former lefty friends are talking now like those extremely right positions — the enemy and the friends joining.

Habits are strong: many keep using the old templates

For some, this is overwhelming, leading to emotional outbursts. The Russian invasion of Ukraine is viewed as a proxy war orchestrated by bribed and corrupt Ukrainian elites who endanger their own people.

But who is the proxy of? Of the US administration, as usual? Didn’t it shift its stance? Of NATO? Isn’t it a merely defense body? Looks like these are just projections of people who have lost their bearings. Now, good people, bad people, black and white cowboy hats seem to be mingling on any side, confusing rational but simplistic thinking.

Consequently, the traditional binary opposition of »us« and »them« no longer holds validity. Surprisingly, the left-wingers who still maintain that aligning with the United States is inherently negative and the right-wingers who advocate for ending Western military aid to Ukraine are finding common ground. This stance suggests a willingness to consider Ukraine’s surrender or, at the very least, a temporary ceasefire, albeit one that may result in a decisive defeat.

NATO is aggressive. Is it?

Fact is, NATO is not attempting to provoke or attack Russia. I have never heard any NATO country leader express a desire to annex Russian territory. What NATO members and their citizens genuinely seek is security and peace. They even considered collaborating with Russia through trade and establishing robust connections. However, they neglected their defense spending, relying on the United States to safeguard them and address global issues. Consequently, with the commencement of the Russian invasion in February 2023, Western leaders invoked the term »Zeitenwende«, signifying a profound turning point. Regrettably, the day-to-day political landscape has eroded this sentiment, replacing it with a return to business-as-usual practices.

Similar contradictions, as philosophers often call it when really happening issues do not fit with their theories, occur with the events in the Middle East. There, defenders of an allegedly genocidally attacked group have aligned themselves with individuals who mistreat women, conceal them in dark clothing, murder homosexuals, and stone adulterers, including those who have been raped. Is this consistent with a progressive step forward for humanity? I am inclined to believe that it is not. This situation is reminiscent of my generation’s protests against the Shah while a far more oppressive regime was gaining power. In Iran today, those who fail there to adhere to the ancestral rulings of the ones in power are publicly executed on cranes. Israel, on the other hand, is not doing any good in following extreme positions, going much too far in an initially understandable intent to end the terrorist attacks from Gaza, or by colonizing forcefully portions of West Bank in detriment to the people who already live there.

The Middle East and other conflict zones present an even more confusing picture

It doesn’t help that with the internet and its social media, anything can be published. Something happens, and within minutes, you’ll find there mostly instinctively and unreflected explanations, opinions, and comments of all kinds. You’ll also have posts that follow a stringed path to force a position on someone or a group for more power or to defame those with different opinions.

Is there a way out of this conundrum?

Sure, there is. It has been proposed for generations. During the Renaissance, Enlightenment, and in the U.S. Constitution, the 30 United Nations Human Rights, and the core ideas of our world’s religions, this was underway. All these have something in common: unify mankind and dilute the poisonous effects of any extrem power concentration.

The first step toward overcoming hatred in the world can best be taken within ourselves

It begins with each and every one of us. By accepting different viewpoints without hatred, violence, discrimination, or fear that it would destroy our civilization, we can embrace a diverse range of perspectives and find joy and enrichment in the process.

Why don’t we start with this simple receipt? To have many different hats around us could be a funny and enriching experience for all of us, and it would serve as a promise of improvement for our children, whom we all love so much.

The magic tricks used to rob us without us noticing.

Do we humans differ very much from other animals? Our DNA says no, it's mostly the same. Our behavior doesn't either.

An experiment with monkeys locked in neighboring cages showed how jealous these animals are. Terrible!

Created by ChatGPT

One monkey was given cucumbers, well, not so tasty for a monkey's palate, while its neighbor was given the extremely delicious grapes. When the cucumber recipient noticed this, he became terribly angry, and when he was given one of the tasteless vegetables while his neighbor was given grapes again, he angrily threw the cucumber out of his cage and behaved inappropriately, even for a monkey.

Even though, as far as I know, this experiment was not later repeated with humans by locking them in neighboring cages and feeding them different grapes and cucumbers, it can be assumed from other observations that humans are also envious. 

Have you ever tried to take the bone that your neighbor's dog is currently biting? Probably not. Dogs and other animals have a very clear idea of ownership. If it is not respected, they can quickly become confrontational.

Humans are no exception, even if it's not so much about bones to nibble on. For this species, one's own car or cell phone is a sacred thing that another person had better not touch or even take possession of. Experiments with communal property, in which everyone owns everything and no one owns almost nothing, have regularly failed.

What is special about chimpanzees is their group affiliation. If you have no or only belong to a small group, you are pretty much screwed: You'll be bullied and the bulls won't let you near the feeding places. When another horde approaches a well-populated group's feeding place, the alpha animals decide to take on the fight, mainly encouraging the upcoming generation of beta animals to give the others a good beating and chase them far away – provided that the enemies are still able to walk. For the leaders, this has clear advantages: the foreign horde is gone, several of the contenders who wanted to join or even replace the alpha animals themselves have died for the good cause, and for the time being there is peace both externally and internally.

Created by ChatGPT

I have to make a small incision here before I return to the territorial claims of today's humans. 

In the animal kingdom, there are other forms of territorial defense. Birds, for example, chirp and sing. A peaceful and very civilized way of marking your living space. Birds are descendants of the dinosaurs. And the dinosaurs appeared on our planet more than 245 million years ago. But mammals only 45 million years later. Somehow they are more developed than we are, the dinosaurs or what is left of them. So we still have some time to catch up in our behavior. At least there are signs of progress: in football, for example, the referee can already assert himself with a whistle in front of 22 players and a crowd of angry spectators. And many people in Europe are blowing the whistle on any cucumber king of the Kremlin, and his claim to bring us all under his thumb.

Created by ChatGPT

In the long periods of time I am describing here, the few millennia since humans have settled are, of course, ridiculously short. Therefore, it is basically unfair for me to express criticism or sarcasm about it now. But I dare to do so anyway, in the vague hope of shortening the time for the conditions to improve.

So the humans, a previously wandering mob, have settled, built houses, erected fences. Invented rules about who should own which land. Sowed seeds, kept animals. Land became culture land. And culture developed in other ways, too, only a little differently everywhere. Language too.

For example, I have observed how Germans and Romanians eat bananas. The Germans pull the peel off at the stem. Romanians peel the peel on the other side of the stem and then pull it off. What is interesting in this context is that monkeys usually simply bite into the fruit and spit out the bitter peel on the floor.

Two centuries ago, territorial claims and cultural customs led to the formation of nations. But this division is not yet fully established. Actually, you can only call your nation secure if you have nuclear weapons or a good friend who will use them for you in the event of an attack, and if you don't let anyone into the country who eats bananas differently or speaks an incomprehensible language and could thus fundamentally question your own cultural superiority.

Well, to make a long story short: as with most vertebrates, territory, group and ownership are extremely important to us in relation to third parties. And since goods, except for air (still, but we will see), are scarce, envy of the grapes of others - and also among ourselves - plays a not insignificant role in our attitudes and views.

And that is exactly what our alpha animals have been exploiting over and over again since we became sedentary, to keep us ordinary citizens in line and thus consolidate their power over us. Like the trick of the magician who shows us something with one hand and thus distracts us from the fact that he is hiding the rabbit behind the other hand, which he supposedly conjures out of a hat – so we are made to ignore, with battle cries of national and tribal pride, ownership and envy, that the alpha animals are only concerned with power and a lot of money – and that these things, which we defend for them doggedly, are basically completely meaningless to them. Because they don't need them anyway in their dominant position.

You can watch the amusing video of the envy experiment with the capuchin monkeys at here. And the delightful children's novel by Christine Nöstlinger, “The Cucumber King”, whose text is even understandable to adults, can only be recommended time and again - see here.