Today, Donald Trump will be sworn in as the 47th president of the United States. With that event, America celebrates the peaceful transfer of power. There was a time when that fundament of American democracy could be taken for granted. The fact that it no longer can be, offers even more reason to cherish its return.
As the second Trump Administration begins, it is important—irrespective of one’s political affiliation—to celebrate the will of the people, as given in a free and fair election. The fact that four years ago, a legitimate election outcome was violently contested and never openly accepted by Trump and many of his followers should not diminish the celebration of democracy Americans rejoice today. On this occasion we are reminded that the greatness of America is our compact to respect the will of the people.
As we rejoice democracy, we are reminded that its virtue is not derived from the magnanimity of the majority. Rather, democracy is grounded in respect for individual rights. Today, we celebrate freedom and liberty. We celebrate that we live in democracy, not under tyranny.
Yet democracy comes with responsibility. Accordingly, we also celebrate and reaffirm:
- Freedom to put truth to power, and that we are obliged to do so when warranted.
- Opposition, and that occasionally we must peacefully yet vigorously oppose.
- An independent judiciary, and that we must vigilantly expose instances of partisan disregard for justice.
- Respect for others, which begins with each of us respecting those with whom we disagree.
- Constitutional checks on the power of the majority, while acknowledging that the will of the people confers power to govern in ways with which we may disagree.
- Legitimacy of all voices and, accordingly, of our duty to speak when the need arises.
Sadly, however, we must also recognize that not all Americans, including President Trump, share the ideals and traditions of American democracy.
Trump’s rhetoric divides us. Trump lies—purposefully, remorselessly, and incessantly. Trump is a convicted felon.
Those statements are not complaints from someone whose candidates or party lost the last election. Nor are they personal opinions. They are facts.
Therefore, as the Trump Administration assumes power today, it is important to set the record straight at the outset. That is because recent history suggests that if we do not safeguard truth, logic, reason, and evidence, then President Trump and his political allies will do their best to disguise or bury them in avalanches of falsehoods and fabrications.
What follows are five observations—based on fact, reasoning, or logic—that are worth underscoring as Trump assumes office.
- Trump inherits a strong economy with room for improvement. Today, US unemployment is low, growth is solid, real median household income is rising, productivity growth is accelerating, private sector borrowing levels are sound, the stock market is near all-time highs, and the US dollar is strong. Consumer price inflation, which had peaked at over 9% in 2022, has fallen to 2.9%. The US budget deficit, however, is -6.3% of GDP, which is too large for an economy operating at full employment. Partly as a result, the US current account deficit (the broadest measure of US trade in goods and services with foreign nations) has widened in recent years to -4.2% of US GDP, roughly twice its average size from 2013-2019. Finally, poverty prevails for more than 12% of Americans, many of them women and children.
- Markets work, but they also fail. Two things can be simultaneously true: 1) Free markets deliver the highest living standards and 2) free markets are frequently suboptimal. Deregulation and extolling the virtues of economic freedom will be hallmarks of the Trump Administration. And in many cases, deregulation can improve outcomes. But as first principles of economics teach us, free markets are not best when they are dominated by a few large firms, when information is not equally shared between buyers and sellers, or when economic activity has adverse impacts on unrelated third parties. Information technology, financial, or industrial giants exist primarily to reward their owners and managers, but at substantial cost to the general welfare. Healthcare insurance and healthcare provision are poorly served by private markets. Most forms of pollution, including climate change, are manifestations of market failure. Accordingly, well-selected deregulation is appropriate. So, too, is well-selected regulation.
- Low taxation does not assure superior economic or human outcomes. All things equal, lower taxation incentivizes individuals to produce more, leading to higher total output. But all things are not equal. The fabric of modern society requires investments that free markets cannot deliver. National defense, police and fire protection, the adjudication of dispute, the protection of property rights, the provision of healthcare and education, the protection of the commons, and the provision of basic research will always be under-produced by private markets given the tendency for free riding (i.e., the enjoyment of benefit without the need to pay). Government, in other words, plays a crucial role in providing public goods and services, which in turn ensure that economic freedom will foster the wealth of the nation. Taxation, and the government it permits, is crucial for national economic success.
- Capitalism and free markets are not synonymous. The aim of the capitalist is to maximize profits. The surest way to achieve high profits is to eliminate one’s competition and become a monopolist. Free markets, in contrast, foster competition, which benefits consumers, innovation, and dynamism. On these points, Adam Smith and Karl Marx agreed, and both feared the tendency for capitalism to evolve toward unwelcome concentrations of economic power. To safeguard free markets, a government must judiciously use its powers to promote competition, including via anti-trust provisions in the law. The prospect of supremely wealthy and powerful monopolists advising the Trump Administration ought to be deeply worrying to ordinary citizens.
- Free trade is preferable. Trade between nations is merely an extension of sound economic principles that promote economic freedom and contribute to superior living standards. When individuals specialize in production and then freely exchange with one another, everyone is vastly better off than under autarky. Trade among nations is no different. Tariffs and other barriers to trade, therefore, are almost always indefensible. They protect the few and harm everyone else. They are vehicles for favoritism and corruption. And even where tariffs might make sense in theory (e.g., by restricting market access to adversaries or by protecting infant industries of promise), the historical record is unkind to their effectiveness in delivering desired outcomes. Finally, recognize that tariffs are a sales tax on Americans.
Conclusions
Every four years, January 20 is a day to celebrate American democracy. The office of the US presidency is the world’s most powerful job, and it has been peacefully handed over from one individual to another for nearly 250 years. That is a remarkable testament to the country, its institutions, and traditions.
Yet democracy places large demands on its citizens, above all the need to respect, nourish, and defend it. Democracy only survives if each of us cares enough to ensure its preservation and vitality. When we are fortunate enough to enjoy the will of voters, it is our responsibility to govern well and in accordance with the language and spirit of the constitution and our laws. When we are in the minority, we are obliged to form an opposition loyal to the constitution, opposing not the powers rightly vested in those elected, but unwarranted infringements on individual rights to liberty and justice.
Today we all celebrate American democracy and reaffirm our dedication to preserve it, whether from a position of power or from the ranks of a respected opposition.