One thing is certain after President Trump’s Trumpenomics in The Economist — the Goldman Sachs guys in the White House are acting exactly as America feared they would.
Instead of teaching Trump about the benefits of free-market capitalism, they are sitting by as sycophants, listening to their boss make misstep after misstep, and cleaning up his messes behind the scenes when it’s almost too late. One day, it might be.
Both Goldman Sachs vets Treasury Secretary Steve Mnuchin and White House economic adviser Gary Cohn sat in on this embarrassing interview. Cohn said nothing. Mnuchin acted more like a doting parent watching their child have a tantrum in a crowded store. All he could do was try to make sure Trump didn’t knock down the displays — other than that, Trump was allowed to make ill informed proclamations as he wished.
An example: Trump once again waxed philosophical about how the Chinese government stopped depressing the value of its currency once he got into office. That’s false. They have propping up the value of the yuan since 2014.
But what did Mnuchin say to that? “Right, as soon as the president got elected they [the Chinese] went the other way.”
At one point Mnuchin actually said “Yep yep,” like a cartoon henchman.
This is what everyone was afraid of. Trump may not know anything about economics, but the Goldman guys certainly do. They have spent their entire lives listening to economists like New York Federal Reserve Chair William Dudley, who just this week gave a speech on the merits of globalization and free trade, repudiating Trump’s entire protectionist agenda (yes, it’s protectionist no matter what the president pretends).
Instead of sharing the knowledge they have to improve Trump’s agenda, both Cohn and Mnuchin seem to be playing to his ego. This is self-serving, egotistical, and reckless — exactly what people think of when they think of Wall Street. It doesn’t help that they also became the face of Trump’s hastily crafted tax agenda, which experts say will serve the richest Americans better than anyone else in the country.
To many, the name Goldman Sachs conjured images of a vampire squid wrapping its tentacles around the global economy and squeezing — it represents the Swamp north of Washington, the worst excesses of wealth and the power that comes with it.
But in reality the picture of the firm — and Wall Street — is more complex than that. Goldman is mostly a company of hardworking soldiers trying to get a pragmatic handle on complex topics — economics and finance — that most of the world approaches with apprehension or disdain.
It was that pragmatism, and the fact that both Treasury Secretary Steve Mnuchin and White House economic adviser Gary Cohn are of a more liberal political bent than their boss, that led some to believe that they might serve as a moderating, educating force in a White House full of ideologues. There were whispers that Cohn and Mnuchin would defend capitalism and free markets from the likes of protectionist trade adviser Peter Navarro.
But that barely seems to be the case, and it’s clear they’re not teaching Trump anything. Even though it has been reported that elements of the White House came together to stop Trump from signing a Navarro-craft order to destroy NAFTA, they have allowed Trump to think it was a coincidence that both the president of Mexico and prime minister of Canada both called to cajole him out of it.
From the interview (emphasis ours):
Now at the same time I have a very good relationship with Justin [Trudeau, the Canadian prime minister] and a very good relationship with the president of Mexico. And I was going to terminate NAFTA last week, I was all set, meaning the six-month termination. I was going to send them a letter, then after six months, it’s gone. But the word got out, they called and they said, we would really love to…they called separately but it was an amazing thing. They called separately ten minutes apart. I just put down the phone with the president of Mexico when the prime minister of Canada called. And they both asked almost identical questions. “We would like to know if it would be possible to negotiate as opposed to a termination.” And I said, “Yes, it is. Absolutely.” So, so we did that and we’ll start.
Trump will continue to fix what is unbroken by breaking it, unless he learns more about economic policy. But it’s clear he will not learn it from Cohn and Mnuchin.
Instead we must rely on Republicans who seems to be slowly waking up to the fact that they have exchanged the ideals of their party for a moment in power that is likely to embarrass them in the annals of history. The president has given them more than enough reason to oppose him, and they are beginning to do so. Senators John McCain (R-AZ) and Ben Sasse (R-NE) have said that they will oppose Trump’s nominee for trade representative,
Robert E. Lighthizer, based on his opposition to NAFTA.
And why shouldn’t they? They are dealing in facts, and they know the treaty has been good to their states. The country needs someone in place that understands that. Not someone like Commerce Secretary Wilbur Ross, a businessman with no experience in policy who waffles between saying the agreement must be revised and saying it’s obsolete. Not someone like Trump, who said in the Economist interview that “everything in NAFTA is bad. That’s bad, everything’s bad.”
The president doesn’t know anything at all about economics, but we knew that. He’s demonstrated his ignorance time and time again — on the campaign trail, in interviews, actually anywhere he’s ever discussed the topic.
But Mnuchin and Cohn know better, and it is not enough for them to work behind the scenes. They are not unpaid intern Ivanka Trump.
Their firm doesn’t deserve this either. After years of Goldman attempting to remake its image after the financial crisis, this will only serve to drag down the reputation of the firm once again. There’s a reason why former Goldman communications man Lucas van Praag made his exit during the crisis — it’s because his condescending combative air could not longer represent a firm that wanted to project the idea that it was not entirely made up Wall Street egomaniacs, but that it also employed hard working people trying to do right by their jobs and by the markets.
Cohn and Mnuchin should do the same.
Get the latest Goldman Sachs stock price here.
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