Good morning. Nobel prize winners Simon Johnson and Daron Acemoglu wrote a whole book, Power and Progress, about the need to seize back control from a small elite of hubristic, messianic leaders pursuing their own interests (it helped them win the prestigious 2024 Economics prize).
I was curious, then, what advice Johnson might have now for Fortune 500 business leaders dealing with the Trump administration’s prohibitive and volatile tariffs today. Surprisingly, Johnson was quite direct about what he thinks CEOs need to do now.
“Trump likes deals. There’s room for all kinds of deals,” he told me. “Go make a deal with someone in the administration. Make a big announcement in the US, with job creation—which may or may not materialize—and in return you ask for temporary dispensation, to keep the business alive and justify building in the US.”
Michigan is a good place to start, he advised. “Or other industrial swing states such as Wisconsin, and Pennsylvania, and perhaps Ohio, Indiana, and Minnesota. It’s not rocket science, either.”
It doesn’t take a Nobel winner to predict that a lot of investment announcements will eventually turn out to be “vaporware” as Johnson puts it. The economics of Made in USA will prove to be impossible, starting with a mismatch in salaries (“Either you pay American workers $3 a day, which they’re not going to do, or the iPhone will cost you many multiples of what it costs now”).
But with few alternative options, Johnson sees the realpolitik of investment-announcements-for-special-deals as the best strategy for business, especially for car makers and, to a lesser degree, high-profile electronics companies, such as Apple.
The companies that will eventually return to the US, Johnson said, are likely to do so in a highly automated way, as opposed to doing so with a lot of job creation.
And even so, in some sectors, such as textiles, toys, or other lower-end manufacturing, “even with the best intentions, it will be impossible” to manufacture in the US, Johnson said. For companies in those sectors, bonding together in trade associations and asking for dispensations would be the most viable alternative.
Finally, companies across sectors would do well to remind the government they need the rule of law to thrive, Johnson advised. “You don’t want to be the squeaky wheel, but [companies] need to be serious about this.” — Peter Vanham
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This story was originally featured on Fortune.com
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