Decoding Trump on Tariffs and Sovereign Wealth Fund

Plus, campus anti-antisemitism coalition shows strains; defining “merit”; religious revival

Canadian products like this maple syrup may become more costly in America under Trump’s tariff policies. Photo credit: The Editors.

Plenty of readers here are new, and some of the non-new ones may have missed our earlier coverage. And even those who saw the earlier coverage may not recall it. But it remains relevant. So we will re-up it.

On the Trump tariffs: From our December 13, 2024 post “Ken Griffin on the Trump tariffs:”

Yesterday’s (December 12) print New York Times included a transcript/excerpt of Citadel founder and CEO Ken Griffin’s appearance at the New York Times “Dealbook” conference, where he was interviewed by New York Times/CNBC personality Andrew Ross Sorkin.

Sorkin: OK. So Let’s now talk about some of those policy issues, perhaps the biggest one being this question mark that nobody knows the real answer to, which revolves around tariffs, because you have a huge and huge impact on the economy.

Griffin: You’re missing the big picture. It’s not even close to the biggest issue.

The biggest issue in the United States is that America is open for business again. The endless amount of regulatory and litigation-induced paralysis from the Biden administration is over. It’s over. So when I’m with a group of American executives, whether it’s in telecommunications, it’s from the consumer space, they are, whether they voted for Trump or for Harris—from a perspective of building their business, they are smiling from ear to ear because they know they can now focus on creating value for customers and creating jobs and growing their business and prospering rather than having to deal with just the endless onslaught of pointless litigation and pointless regulation. I think that for the United States, you know, all these issues around tariffs…It’s all second order. First order: we’re back to business.

I tend to think Griffin’s analysis of it was and is correct. I could be wrong.

On a sovereign wealth fund, which Trump signed an executive order today to begin a process to create: “We’re gonna have a sovereign wealth fund, which we’ve never had,” he said. In announcing it, Commerce Secretary nominee Howard Lutnick said: “If we are going to buy 2 billion Covid vaccines, maybe we should have some warrants and some equities in these companies.” Trump also mentioned TikTok as an example of a holding that could be in the fund. “That’s a big deal, huh?” Trump said.

In a September 5, 2024 post, “Trump’s ‘Sovereign Wealth Fund’ Is a Terrible Idea,” I wrote:

The last thing the American economy needs is another huge politically controlled slush fund. The Federal Reserve balance sheet and the regular federal budget are already big enough. In a Democratic administration, pressure will mount to divest the sovereign wealth fund from fossil fuel companies and military weapons manufacturers.

Every cent in the “sovereign wealth fund” is money that could be sitting in the bank accounts or on the brokerage statements of American companies and taxpayers, who are much better investors of it and allocators of capital than the politicians would be.

America already has state pension funds launching sketchy shareholder lawsuits and putting political pressure on corporate managers to cave in to labor or other demands. A sovereign wealth fund would be that on steroids. Imagine a Biden-Harris administration, or Senator Schumer, or President Alexandia Ocasio-Cortez, controlling a sovereign wealth fund as a significant voter in proxy elections, electing corporate directors with shareholder votes. It’d be Calpers on steroids.

Trump is doing a good job denouncing Harris as a Marxist and a communist, but a proposal for a sovereign wealth fund that would dramatically increase government ownership and power over the private economy is the sort of thing that a socialist would love. It also won’t allay doubts about his supposed tendency toward authoritarianism. America’s true greatness lies not in some huge pot of money controlled by politicians in Washington, but in the decentralized wealth deployed by individual Americans.

The vaccine and TikTok examples support my argument that this is a bad idea. It was hard enough to get the public to trust the vaccines. Imagine how much harder it would be if people suspected the government was profiting on the vaccines. And how is the government supposed to regulate online video from Instagram or YouTube if it owns a big stake in one of the big competing players? A U.S. stake would undermine trust in both the independence of the TikTok content and in the impartiality of the regulation of the other players. And if profit interests and public health or national security interests come into conflict, the government would be in a pickle.

This is a good time and place to remind people that this is not the place to come for reflexive confirmation of your pre-existing outlook about President Trump. Plenty of people hate him and want everything he does attacked. Plenty of people love him and want everything he does praised. I find the value I can add here, in a crowded media landscape, is less in writing about the politicians, who invariably disappoint, and more in writing about the principles and the policies.

Griffin is probably right that the tariffs are not the primary thing in the greater scheme of Trump economic policy. Also, the sovereign wealth fund is a bad idea. That’s not me trying to split the difference or navigate some middle path on defending Trump and criticizing Trump. It’s just my best analysis of the situation. I don’t have a Trump-centric view of the world (unlike Trump and his obsessive fans and critics alike). I have a freedom, growth, truth, rule-of-law, and prosperity-centric view of the world.

Campus anti-antisemitism coalition shows strains: President Trump’s moves against antisemitism are drawing public fire from some of the voices that were active in calling for campus reform in the previous administration.

The Foundation for Individual Rights and Expression, “FIRE,” a free speech group that has had some overlap with those concerned about the campus climate, issued a statement denouncing Trump’s executive order encouraging colleges to monitor pro-Hamas foreign students so that they can be deported.

“The revocation of student visas should not be used to punish and filter out ideas disfavored by the federal government. The strength of our nation’s system of higher education derives from the exchange of the widest range of views, even unpopular or dissenting ones,” FIRE said. “Students who commit crimes — including vandalism, threats, or violence — must face consequences, and those consequences may include the loss of a visa. But if today’s executive order reaches beyond illegal activity to instead punish students for protest or expression otherwise protected by the First Amendment, it must be withdrawn.”

That’s a ridiculous statement. Rather than waiting to see the executive order and reacting to it, the group issued a pre-emptive statement hypothetically — “if” — denouncing it. Then a FIRE staffer, Sarah McLaughlin, wrote a piece in MSNBC asserting, “This development should worry all Americans, regardless of their position on the Israel-Hamas war.”

Sorry, the “strength of our nation’s system of higher education” doesn’t depend on having pro-Hamas, pro-Islamic jihad foreign students breaking into college buildings, taking over areas on campuses, or banging drums while threatening to “shut it down.” And if a foreign student lied on an application to get into America by saying that he or she doesn’t support terrorism when in fact the student does support terrorism, sending that student home makes perfect sense.

Meanwhile, a fellow at the Manhattan Institute, Christopher Rufo, has taken to social media to denounce both the executive order and the Justice Department’s announcement of a task force against antisemitism. Rufo writes, “The cause here is noble, but the implementation, like the related executive order, is a misstep. The whole point of the ‘abolish DEI’ campaign is to stop having special carve-outs, programs, and commitments on the basis of race or ethnoreligious identity. The better approach is to have a single colorblind standard that will fight harassment and discrimination against any group. We can have a Task Force on Campus Equality, which, in practice, will address the significant antisemitism problem, while retaining the higher principle.”

It seems almost comically naive to think that any “Task Force on Campus Equality” would, in practice, do much to protect the Jews from the antisemites, or to assure the flourishing of Jewish communities on hostile college campuses.

I take the public complaints by FIRE and Rufo as positive signs that the Trump administration is ignoring their advice. If they were genuinely in the inner circle, they wouldn’t be publicly whining about what the administration is doing.

Who is in the inner circle? The Justice Department press release mentions “Senior Counsel to the Assistant Attorney General for Civil Rights Leo Terrell, who will be heading the Task Force.” Terrell posted to social media on October 20, 2024, “Harvard will lose much more effective January 2025. America will no longer fund Jew Hating Schools!”

Defining merit: Palantir Founder Joe Lonsdale and Silicon Valley investor and early Facebook employee Sam Lessin announced Merit First, “developing objective tests that measure what actually matters: critical thinking & information processing, problem-solving ability, and the capacity to adapt & execute.”

“America’s dynamism has always come from our ability to identify and empower exceptional talent, regardless of background,” they write. “American companies are in a crisis of broken talent filters. We reflexively screen for the same stale credentials: Ivy League degrees, FAANG experience, ‘prestigious’ employers. It's a modern version of the credentialist bureaucracy that has crept into every American institution. And just like in government, this risk-averse checkbox mentality is making our companies dumber and less competitive.”

It’s a newsworthy development, and one worth watching as it develops. Selling and developing the tests, or hiring people who do well on them, may be a good business. The challenge typically has been it’s hard to make a test that accurately is a general measure of “merit” in this way, as opposed to one that just measures test-taking ability but not qualities needed for real-world success. Some companies figure it’s easier to hire a lot of entry-level employees, promote those who do well, and counsel-out or get rid of those who don’t do well. But that can be more expensive than a test.

Religious revival: “To Save Itself from International Isolation, Israel Must Hold On to the West Bank” is the headline of a new essay in Mosaic, an online journal published by Tikvah. The piece is by “Rafi DeMogge,” which Mosaic says is “the pseudonym of an Israel-based author and researcher who writes on political demography.” As an American, I am reluctant to tell Israelis what they should or shouldn’t do with the West Bank, since I’m not the one either facing an attack from it or having to police the Palestinian Arabs who live there. But for our purposes a passage in the essay was interesting:

Israel has become a more partisan issue over the past two decades: while support among Republicans remains steady, Democrats are now divided between a pro-Israel and a pro-Palestinian faction. Moreover, opinion surveys consistently show that younger voters (especially young Democrats) are less pro-Israel than older ones. …

it is driven by underlying demographic changes in the two parties’ electoral bases and has almost nothing to do with Israel’s actual behavior. It is a truism that the Israel-U.S. alliance is based on “shared values”; it’s rarely spelled what these shared values are. It isn’t just liberal democracy; rather, Israel and America are special in being countries with some of the highest levels of religious observance in the Western world. Strong pro-Israel sentiment in the U.S. is closely related to religiosity and to ordinary Americans’ connection to the Bible. In this regard, the party split is sharp and growing.

According to Ryan Burge’s general social survey, in the 1990s, 63 percent of Democrats and 67 percent of Republicans said that they believed in God “with no doubt,” while the number rises to 80 percent and 84 percent, respectively, when you include those who believe with doubt. In the 2020s, 63 percent of Republicans still believe in God without doubt, and 82 percent believe with or without doubt—a very slight decline. However, only 56 percent of Democrats believe in God at all, and a mere 39 percent believe without doubt. Differential religiosity also explains the generational split: young Democrats are significantly less religious than older ones, so it’s not surprising that they are also less pro-Israel. Polls consistently show that atheists are one of the most anti-Israel of all religious groups, comparable in their hostility to the Jewish state only to Muslims.

I’m strongly convinced that the primary determinant of pro-Israel sentiment or lack thereof in the U.S. today is the strength of religious (typically Christian) belief, and not any particular Israeli policy. This observation is further buttressed by the radically divergent reaction of different groups to Israel’s conduct in the current war. For example, between 2023 and 2024 Israel’s favorability among 18-34-year-olds dropped dramatically (from 64 to 38 percent), whereas among those of 55 years and older it barely changed (from 74 to 71 percent).

… Democrats are drifting away from Israel not because they are becoming increasingly impatient with the lack of a peace process, or with the behavior of this or that Israeli politician. Rather, they are drifting away because they have a much weaker sense of shared Judeo-Christian civilizational identity. Some commentators cite progressivism or “wokeness” as additional reasons, but I see these as downstream from the weakening of religious belief: wokeness gained steam because, for many young people, it seems to fill spiritual needs previously supported by traditional religiosity.

The Mosaic essay goes on to treat this as something as a given or fixed constraint. But the record is that religious attitudes and participation ebbs and flows. As Senator Joseph Lieberman notes in his new book, “Faith’s Answers to America’s Political Crisis: How Religion Can Help Us Out of the Mess We’re In,” “Historians generally agree that we have had four American religious awakenings. They began in 1735, 1805, 1865, and 1965. Each involved a return to religiosity, mostly among Christians.”

There are lots of America-first reasons to hope for another such revival—to help create caring communities, provide meaning and purpose, and address the crises of mental health, loneliness, and partisan division. But a nice additional side benefit for those of us who care about Israel is that such a revival could also be good for Israel. Such awakenings typically are bottom-up rather than top-down. Even so, given the stakes, one might expect a thicker conversation about the public policy levers that might be adjusted—things like creating parity in funding between religious and secular educational institutions, easing building restrictions and regulations that slow the construction or expansion of religious facilities, and removing mandates functionally dictating that government grantees be religion-free.

For a time over the weekend, one of the most shared articles on the New York Times website was Ross Douthat’s column—adapted from his forthcoming book, “Believe: Why Everyone Should Be Religious”—headlined, “Looking for Faith? Here’s a Guide to Choosing a Religion.” The hostile New York Times reader comments are an indication of what a tough sell this is, particularly on the left. One comment, upvoted by 657 users, reads “Though I have been a subscriber to the NYT for years, I have never felt the need to comment on an article before now, but I am aghast. To imply we need to find an organized religion, when they have proven time and time again to be abusive to the vulnerable, is something I would not expect to see in this publication. … my news source should not include this type of call to religion, even in an opinion column. Especially at a time when so many groups are having their rights trampled on by people claiming they are doing it in the name of Christianity. Women are terrified. Anyone with an identity outside the mainstream is terrified. This feels so tone deaf to the current moment here in America.”

John Avlon on a new Democratic Leadership Council: My former New York Sun colleague

John Avlon

writes in

The Bulwark

in favor of re-starting the Democratic Leadership Council, which helped elect Bill Clinton and tug the Democrats toward centrism. Though he notes, “In particular, the bet that free trade agreements with China would be met with rules-playing reciprocity and lead toward liberalization didn’t pay off.”

He writes, “Democrats need to be the party that advances equal opportunity in a diverse liberal democracy. That means incentivizing economic investment to achieve broad-based growth, harnessing market forces to lower the cost of living, and improving the quality of life. It means supporting small businesses by cutting red tape and reducing taxes, reshoring essential manufacturing, expanding energy innovation, and presenting an optimistic vision of the future. It does not mean confusing equality of opportunity with equality of outcomes, which is inconsistent with liberty, fairness, and reality.”