.webp)
The economist Thomas Sowell once claimed, “There are no solutions. There are only tradeoffs.”
In the age of abundance, the concept of tradeoffs is hard to grasp. Especially when politicians from both political parties make grandiose claims about their ability to solve inflation, restore American manufacturing, or combat the climate crisis.
But all of these proposals come with opportunity costs and downstream consequences. Rather than acknowledging these inevitable side-effects, both Republicans and Democrats act as if they don’t exist. After all, pitching potential downsides to their policy proposals isn’t exactly a winning campaign strategy.
Diving past surface level into the various proposals by the incoming administration allows us to fully understand the deeper implications. Let’s start with the Department of Government Efficiency (DOGE) Commission headed by entrepreneurs Vivek Ramaswamy and Elon Musk. They write in a Wall Street Journal op-ed, “The entrenched and ever-growing bureaucracy represents an existential threat to our republic, and politicians have abetted it for too long.”
Narrowing in on the federal bureaucracy is an easy place to start and my Classical Liberal inclinations naturally lead me to believe that there’s a tremendous amount of waste due to bureaucratic growth and overreach. There’s the potential for a robust discussion about the specific allocation of resources to each government agency. But to act like the entirety of the bureaucracy is non-essential fails to understand how government functions in a rational society.
The German Sociologist Max Weber believed that a bureaucracy grounded in rationality is the ultimate way to structure modern society. Large governments can’t just run on elected officials, after all. Eliminating sizable chunks of the bureaucracy is likely to have longer-term consequences, prolonged growing pains, and possibly even more inefficiency. The “cut, cut, cut” mentality can work at shoring up our government’s bottom line, but it only creates more issues to be dealt with.
Just this week, President Trump announced plans to put 25% tariffs on goods from Canada and Mexico. The goals are to crack down on countries that he sees driving illegal immigration and drug trafficking, while encouraging consumers to buy American goods. But the unacknowledged tradeoff of these policies is almost certainly higher prices for the American consumer.
Unfortunately, Mexico and Canada aren’t the only targets. The incoming administration is filled with appointees who are China Hawks. And that’s why the administration is proposing an additional 10% tariff on Chinese goods.
It’s important to note, President-elect Trump received the vote of large swathes of Americans because he promised to solve inflation. But according to Goldman Sachs estimates, these proposed tariffs would lead to a nearly 1% boost in inflation.
And in an age of increasing geopolitical tension between the United States and China, there’s genuine fears that a US trade war with China could further deteriorate bilateral relations and diplomatic efforts.
These are tradeoffs worth discussing with the general electorate.
These are just two policy areas where even a layperson can see the potential issues that arise as a result of proposed solutions. But the same line of thinking can be applied elsewhere.
Do we want to roll back climate regulations? Then there will naturally be adverse effects on environmental protection. Not to mention it risks further alienating us from our Western European allies. What about deemphasizing the electric vehicle development in our country? Then we risk losing falling further behind China, who already has a comparative advantage in EV manufacturing.
I’m not giving my personal opinion about any of these policies. There are legitimate merits with all of these solutions, but there are also genuine pitfalls.
The point that needs to be emphasized: tradeoffs need not be ignored, nor ignorance feigned when discussing policy proposals. Don’t spare us the nuance. Ultimately, we bear the burden of public policy decisions. It’s only fair we get a seat at the table.
In 2023, Argentina was facing a stagnant economy with rampant inflation. As a result, they elected the libertarian Javier Milei to enact aggressive policies like dollarizing the economy and slashing the federal bureaucracy, in addition to aggressive austerity.
When these programs were beginning to roll out, Milei warned that there was no alternative to shock-adjustment. He claimed, “We know that in the short term, the situation will worsen.”
Love or hate Milei, you have to acknowledge that he was transparent about the tradeoffs.
Don’t let our world of abundance fool you: tradeoffs are a fact of life. And our elected officials need to start being more transparent with this basic fact.
