Political Overreach Threatens American Prosperity

WASHINGTON, DC – APRIL 02: U.S. President Donald Trump holds up a chart while speaking during a “Make America Wealthy Again” trade announcement event in the Rose Garden at the White House on April 2, 2025 in Washington, DC. Touting the event as “Liberation Day”, Trump is expected to announce additional tariffs targeting goods imported to the U.S. (Photo by Chip Somodevilla/Getty Images)

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“Two ways. Gradually and then suddenly.”

That’s the famous line from Ernest Hemingway’s The Sun Also Rises where the main character (Mike) describes how he went bankrupt. The rest of the passage, where Hemingway elaborates on Mike’s experience, may not be quite as famous, but it remains oddly topical. It also serves as a timeless reminder of why the founding principles of the American government are so important to the country’s standing in the world.

Hemingway explains that Mike’s troubles were brought on by lots of false friends and creditors, likely “more creditors than anybody in England.”

Hemingway knew the game. Everybody loves you when they’re confident you’ll repay them, so they keep lending you money. And they always love you. Until they don’t.

For a very long time, pretty much everyone has loved the United States. By far, we’re the largest wealthy country, with the best opportunity for moving up the economic ladder.

America Was Not In Decline

Everyone wants access to America’s financial markets. We offer the safest place in the world to invest. Our markets are more diverse and liquid than anywhere else. They’re backed by the strongest and safest property rights, secured by a reliably stable government.

Politically, socially, and economically, our combination of wealth and security is tops. Yet, for whatever reason, many Americans can’t stop flirting with pessimism. No matter how well things are going, everyone is easily convinced that they’re doing worse than the previous generation. It’s shown up in populist movements throughout our history, long before the Civil War and long after World War II.

In the 1990s Americans dealt with major populist uprisings based on themes that might still sound familiar today. Supposedly, free trade was destroying American manufacturing jobs, immigrants were taking all the rest, society was deserving of some kind of Biblical reckoning, and the supposed cure was some kind of nationalist-inspired industrial policy. (Ross Perot and Pat Buchanan were two key purveyors of some of these ideas, though both failed to win the presidency.)

To whatever extent they exist, the philosophical underpinnings of the MAGA world are nearly indistinguishable. And that’s bad even if MAGA never implements a full-blown industrial policy.

I’m not making a purely ideological argument.

America Was Already Great

Yes, socialism and communism are awful. And, yes, a free-enterprise system based on economic and political freedom, secured by a limited government, is far superior. And even though the United States has not been a pure representation of that ideal (possibly ever), it’s remained relatively close.

So, even though the United States has, for example, the Export-Import Bank, the nation’s economy is still mostly based on private businesses. While the U.S. government does give out grants—some would say far too many—most private businesses are not dependent on those grants. To earn a good living, most private businesses do not have to kiss their elected officials’ rings.

Provided the balance remains reasonably in favor of the private system, America will not lose the essence of what makes everyone love it so much. America can withstand a great many creditors and false friends, until it can’t.

The big problem, of course, is that nobody knows exactly what will tip the balance too far in the opposite direction.

America Must Remain American

In the past few months, President Trump has fired the head of the Bureau of Labor Statistics because he didn’t like the job numbers. He’s threatened to fire the Chairman of the Federal Reserve (and a Fed governor) because he doesn’t like the current level of interest rates. The administration is openly using the power of the federal government to intimidate business executives over decisions it does not like and taking ownership stakes in private companies.

The administration is deporting and detaining undocumented immigrants, sometimes without due process, and deploying the National Guard in city streets. It has openly sought political favors in return for approving business mergers between private companies, leading many to question the security of their First Amendment rights. It has haphazardly used tariffs to tax American citizens while bashing private firms for raising their prices, reinforcing the kiss-my-ring way of doing business that only third world countries are proud of.

In isolation, any one of these actions might not signal the death knell of the principles that built America. Collectively, though, they represent a clear shift toward a blatantly politically influenced system instead of a largely private one. They undermine the reasons that make people trust the United States.

At some point, if the shift continues, we will lose the essence of what makes us the United States of America. We might have a long way to go to reach full banana republic status, but it’s a bad idea to keep pressure testing the system to find out where that margin is.

Just like bankruptcy, we’ll end up finding it gradually and then all at once. And that’s not easy to fix.