By Gavin Ashenden
The Catholic Herald: The moment a nation’s debt exceeds its GDP, the economic situation moves into banana-republic territory. This ought to cause deep alarm—but equally concerning is the realisation that we are presented with only one side of the argument in the public space.
These are two serious causes for concern for all of us.
President Trump has proposed a radical reform of America’s trading relationships to rescue its economy. Astonishingly, however, the world’s media appears to have moved into panic mode over Trumpian tariffs.
The assumption in the commentary is that all sensible people should position themselves somewhere on a scale between outrage and panic. Yet Catholic social teaching may offer some balm for a disturbed Western economic digestion, partly because it prioritises protecting the poor.
Commentators’ imaginations have been inflamed due to threats to the current world order, which is based on a trading equilibrium between nations. The American government’s strategy to apply tariffs mirroring and reciprocating the financial hurdles other countries impose on American trade has triggered almost universal outrage.
Occasionally, voices have pointed out that current trading arrangements do nothing to address the gargantuan debt crisis. The American national debt has exceeded $36 trillion, a figure which may mean little to most people—but the ratio of debt to GDP should be alarming: it is currently 122 per cent.
In Britain, since the beginning of the 21st century, government debt has escalated from 33 per cent of GDP to the current level of 100 per cent.
For those of us for whom economic theory is at least as complex and inscrutable as the nominalist theology of the 14th century, these figures should ring the loudest of alarm bells. They mean both the UK and the US economies are sliding inexorably into the quicksand of indebtedness, from which there is no recovery or escape short of a complete economic collapse in the West.
Trump has made it clear that, since the present economic order is unsustainable—particularly for the US economy—he aims to reconfigure trading relationships, beginning by establishing reciprocity between the US and its trading partners.
Who is likely to be most drastically affected by runaway debt pushing economies over the cliff? Undoubtedly, the rich will have large percentages wiped off their portfolios—but it will be the poor who cannot afford to eat. It is worth remembering that in the US, 94 per cent of stocks and shares are owned by only eight per cent of Americans. Thus, volatility on the stock market may or may not constructively affect the economy, but it primarily impacts the very rich, not the poor.
The poor are most immediately affected by the price of essentials. Two central principles of Catholic social teaching involve pursuing options for the poor and vulnerable and ensuring the dignity of work and the rights of workers. Will the proposed tariff reset help with that?
Trump’s strategy is to reduce an overpriced stock market by approximately 20 per cent. This will drive investors towards Treasury bonds, seeking stability in government-issued securities. In turn, this allows the Federal Reserve to cut interest rates. Such circumstances would create a new platform from which the US government could renegotiate interest payments on trillions of dollars of debt, thus bringing greater stability to the American economy.
This strategy itself represents a defence of the interests of the poor, especially since this deflationary process lowers prices for ordinary Americans. Despite Chinese propaganda depicting overweight Americans trapped in new factory sweatshops, tariff resets may persuade global businesses to relocate back to the States, providing more jobs—particularly for the poor.
The mainstream media’s capacity to misrepresent tariff negotiations seems limitless. Observers of Trump’s technique will note he pursues “the art of the deal”. His opening position is often shocking and outrageous, designed deliberately to destabilise and seize the initiative. When played out publicly, this causes literal-minded commentators to howl with outrage. Wholly unable to recognise or handle strategic hyperbole, they take him literally and are undone.
The tariff stand-off is yet another example. Trump begins with an aggressive move that deeply unsettles competing negotiators. Then, as so often, he pauses—for 90 days in this case—and waits for a more sensible, accommodating response closer to the median compromise he envisaged all along. He is a wealthy businessman who neither needs his salary nor his job. Yet, he puts his political independence at the service not of the super-rich, who always survive, nor of the comfortable who have a “plan B”, but at the service of the indebted poor, those who have no savings, and those who work two jobs to pay rent and eat.
Commentators whose opinions saturate the media fail to understand either Trump’s technique or his ultimate objective. Catholics have particular reason to be grateful for the platform given to JD Vance, who offers a vision of Catholic ethics as one of several resources potentially guiding government strategy.
Is Trump fully guided by Catholic faith or vision? No. But has he accorded it a privileged position among the ideological and ethical resources the administration may draw on? Although some Catholics express disappointment with certain ethical priorities of the administration, the answer must be “yes”.
Should Trump fail in his attempt to rebalance tariff barriers between the US and its trading partners, the consequences could be catastrophic. The existing global order based on globalisation is already faltering, poised for further breakdown that could trigger civilisational collapse. The poor are always the earliest and most vulnerable casualties. Trump, therefore, might represent their only genuine economic hope.
