It will cause pain for everyone involved

By Loukis Skaliotis

The cat is finally out of the bag. April 2,2025, ‘Liberation Day’ as Trump called it will go down in history as the day America broke up with the world. Trump’s tariffs finally ignited the world trade war that we knew was coming. The spite and venom with which they were delivered in Trump’s inimitable style, left little doubt whether the divorce could be patched back up.

I commented last week how the tariffs have no basis in economic theory and how it will harm not only the world at large but the US itself. Trump’s confidence and conviction in his ideas are unlikely to make him listen to reason, even though stock markets around the world have nosedived spectacularly.

Like in all bad divorces (and for the avoidance of doubt, I recognise that there are amicable ones), the ones who suffer most are the children, which in today’s analogy are the simple people like you and me. The western family is no longer. The children will go to bed in uncertainty and confusion that the world in which they lived is no more, and somehow, they will have to adjust to the new reality.

In bad divorces, parents often have to fight it out to get custody of the kids. In an effort to “win”, they employ tactics of playing the victim so as to extract sympathy for themselves, while at the same time portraying their former partner as the villain who somehow could do nothing right.

And so, in our analogy the same thing applies. While our American siblings seem destined to end up with dad (there was no way I could possibly cast Trump in the role of mum), we here in Europe tend to gravitate towards mum. The ambiguity I observe here in Europe is based on the realisation that a lot of my siblings, while unequivocally appalled at Trump’s economic and foreign policies, seem to entertain the thought that dad, somehow, may have a point on some of the other issues.

Let us examine these in a bit more detail.

First is the issue of climate change. The fight against global warming has been a struggle to convince people worldwide about the need to change our daily habits and adopt a different approach to how we do things. No other issue is perhaps more universally affecting our planet than this. As is well known, resistance to change is perhaps one of the most common characteristics of human behavior. To overcome this, policies to incentivise people have been tried on a global scale. The initial denial that climate change is a big hoax, and the expertise of the scientists was not to be trusted, is being eroded every day by the events we all are observing around us.

The problem, however, remains that the policies being proposed are not without cost. The immediate impact on people’s pockets as opposed to the future intangible benefit of the survival of our great-grandchildren and the planet is for some difficult to swallow.

In the past few years an immense coordinated world effort has been attempted to find the best trade-off between current and future priorities. It has not been an easy endeavour.

Some of the policies, inflexible and built on bureaucracy, invite doubts about the usefulness of the effort. Yet, for myself, I cannot see any other way than persevering and listening to the concerns being voiced in an effort to navigate the path forward. Trump’s approach of pulling the US out of the United Nations COP organisation and reversing all the policies initiated by Biden is not pragmatism but a repudiation of expert opinion for the benefit of specific interests. Make no mistake, “drill baby drill” is not an approach to correct excesses in climate action policies. It is rather about resisting the move away from fossil fuels, and the impact on the pockets of the oil interests, which are behind Trump’s power.

Second is the issue of immigration. The changing trends in world demographics have been behind the rise in immigration flows from developing towards developed countries. The decline in birth rates in the developed world, and the consequent reduction of available labour, have acted as a magnet to people in the developing world to seek employment opportunities and better prospects in the materially rich countries of the Western world.

The asylum process, which has been established to help people escape political persecution with a danger to their very existence, has been abused extensively, acting as a Trojan horse for people looking for a better future. Developing countries have failed to act proactively and manage the flows in a way to address both the humanitarian problem but also the demographic and shortage of labour problem. After the initial instinctive and ineffective reaction to try and build walls and barbwire, (even Trump has stopped talking about building the wall and even in Cyprus our own government has taken down the barbwire), the emphasis has been to improve the speed and effectiveness of the asylum process.

Yet not much is being done to address the need of finding new workers through programmes educating and integrating immigrants into our own societies. The concerns about excessive immigration altering the fabric of our societies may be valid, but treating immigrants as criminals and rapists is reprehensible. Creating a coherent immigration policy that also respects the individuals concerned is the obvious choice. Trump’s policies of mass deportations, which take place without due process, are based on racist sentiment, and nowhere near address the real problems. These are not policies to be followed let alone admired.

But perhaps the problem most people take an issue with and find some justification in Trump’s policies is the desire to make governments more efficient. I have written on many occasions how governments need to be more effective rather than big or small. (See articles in the Sunday Mail on 5/1/2025 and 22/12/2024) The fact that they are not effective – part of why the above two problems have gotten so out of hand – is not going to be solved by indiscriminate cuts across the board.

Trump’s policies are rather dogma disguised as pragmatism. They aim to weaken independent institutions which have been the cornerstone of civilised societies in an effort to concentrate power in the hands of the people in government. There is no space here to outline how governments can become more effective. (For interested readers you can seek the recent book of New York Times columnist Ezra Klein, “Abundance”. For a shorter take, look up Dag Detter’s paper on Project Syndicate titled “Fixing Public Finances without a Chainsaw”).

My aim here, rather, is to warn my fellow European siblings not to be carried away by the song of the Sirens, painting easy and simple solutions. The choice between mum and dad is never easy. Children always dream about mum and dad getting back together. In the morning, however, the stark reality forces them to make a choice. For me, even dad knew I was always a mummy’s boy.

Loukis Skaliotis is an economist