In his influential essay, A Country Is Not a Company, Paul Krugman warned against the seductive but dangerous idea of treating national economies like corporate entities. Over two decades later, that cautionary tale appears to be unfolding in real time under Donald Trump’s economic leadership. With the former president poised to retake the White House, his economic team — comprising market veterans Scott Bessent (Secretary of the Treasury) and Howard W. Lutnick (Secretary of Commerce) — seems more inclined to run the American economy like a hedge fund than a nation-state.
This approach, while superficially bold, is dangerously anachronistic and geopolitically tone-deaf. The administration’s aggressive return to protectionist tariffs and its audacious plan to abolish the Internal Revenue Service (IRS) in favor of a privately managed External Revenue Service (ERS) reflect a worldview rooted less in the realities of global trade and more in the boardroom instincts of financiers who appear to lack a basic understanding of economic history, geo-economics, and international political economy.
When Wall Street Runs Washington
Before entering government, Scott Bessent managed investments for billionaire George Soros and later launched Key Square Group, a macroeconomic hedge fund. Howard Lutnick, on the other hand, is best known for his role as CEO of Cantor Fitzgerald, a global financial services firm specializing in bond markets and brokerage services. While both men possess deep knowledge of capital flows, interest rates, and asset pricing, their resumes are almost entirely devoid of experience in global trade negotiations, development economics, or strategic statecraft.
Their transition from markets to ministries is not just unconventional — it is ideologically loaded. Like many corporate titans, they view trade through a transactional lens. If the balance sheet shows a deficit, the thinking goes, someone must be cheating. If China exports more to the U.S. than it imports, then tariffs must be the fix. It’s a logic that resonates on campaign trails but falters in the real world, where nations are not firms, and trade deficits are not signs of failure but reflections of investment flows, consumer demand, and comparative advantage.
Tariff Policy in the Wrong Century
Trump’s recent tariff hike proposals, aimed at reasserting American manufacturing dominance, are being pitched as a modern revival of Alexander Hamilton’s protectionism and the Smoot-Hawley Tariff Act of 1930. But America in 2025 is not America in 1791 or 1931.
Hamilton’s policies were designed for a fledgling agrarian republic struggling to develop an industrial base. Likewise, Smoot-Hawley emerged in the throes of the Great Depression, when global trade had already collapsed, and nations were desperately trying to protect domestic employment. In both cases, tariffs were seen as a temporary shield for a vulnerable economy.
Today, the United States is a post-industrial service economy deeply embedded in global supply chains. It imports to export, assembles abroad to sell at home, and relies on affordable consumer goods to maintain living standards. Applying 20th-century solutions to 21st-century complexities is not economic patriotism — it is economic malpractice.
Studies have repeatedly shown that tariffs imposed during Trump’s first term did little to “bring back jobs.” Instead, they led to higher input costs for U.S. manufacturers, retaliatory tariffs from key partners, and increased consumer prices. The Tax Foundation estimated that the average American household paid roughly $1,277 more annually due to the trade war. Industries like agriculture and automotive were especially hard hit, prompting emergency subsidies and further inflating the deficit Trump claimed to be fighting.
Yet, the administration now proposes to double down on these failed measures, cloaking them in nationalist rhetoric while ignoring both historical outcomes and empirical data. The reality is that global trade today functions less like a battlefield and more like a circulatory system. Choking one part affects the whole body.
ERS: Privatizing the Taxman
Perhaps the most telling example of the corporate mindset colonizing public policy is Trump’s proposal to dissolve the IRS and replace it with the “External Revenue Service,” or ERS — a semi-autonomous entity allegedly designed to streamline tax collection, improve compliance, and eliminate waste. While the idea may appeal to libertarians and anti-tax conservatives, it betrays a fundamental misunderstanding of what public institutions are meant to do.
In a corporate setting, outsourcing or restructuring for efficiency may make sense. But taxation is not just a technical exercise — it is a sovereign function. It funds collective needs, redistributes wealth, and expresses the values of a polity. Delegating it to an entity driven by metrics, margins, and shareholder logic is a form of institutional hollowing-out. ERS would be less accountable to the public, more vulnerable to political manipulation, and likely to exacerbate existing inequalities by favouring streamlined audits of middle-income households over complex enforcement against elite tax evaders.
Moreover, ERS would sever the symbolic link between government and citizen. The IRS, flawed as it may be, is still a public agency subject to oversight, staffed by civil servants, and built around the principle of democratic accountability. Turning tax collection into a contractual service run by business executives’ risks introducing private incentives into a fundamentally public process.
Geo-Economics, Not Quarterly Earnings
In the world of geo-economics, where power is measured not just in missiles and alliances but in markets and flows, the U.S. must think in systems, not silos. Imposing tariffs to punish adversaries without understanding supply chain interdependencies is like cutting off your own oxygen supply because your lungs are “too reliant” on the atmosphere. America’s economic reach is global precisely because it is open, networked, and trusted. Undermining that with erratic tariffs, weaponized tax policy, and inward-looking industrial strategies weakens its position on the global stage.
Worse still, these actions project uncertainty to allies and partners. The EU, Japan, Canada, and emerging economies have grown wary of America’s oscillation between liberal openness and economic nativism. They are hedging —signing regional trade deals, settling transactions in non-dollar currencies, and looking eastward toward China’s more predictable commercial diplomacy.
In such a moment, what the U.S. needs is not a CEO-in-chief or a hedge fund cabinet. It needs economic stewards who understand that the public interest is not a stock ticker. It needs policymakers who grasp that economic strategy must serve geopolitical goals, not just electoral ones. And it needs leadership that sees citizens not as consumers or inputs but as participants in a shared national enterprise.
A Call for Historical Literacy
Had Scott Bessent or Howard Lutnick been better students of economic history, they might have realized that neither Hamiltonian protectionism nor Depression-era tariffs offer usable templates today. They might have understood that the Bretton Woods system, the WTO, and even NAFTA —imperfect as they are — were built not just to foster growth, but to secure peace and interdependence in a volatile world.
But instead, they appear determined to test old theories on a new world, with little regard for consequences. Their fixation on corporate logic, zero-sum outcomes, and “balance sheet patriotism” ignores the broader purpose of economic governance: to deliver stability, build resilience, and create prosperity that endures beyond a news cycle.
Krugman may not have written his essay with these two men in mind, but his warnings ring truer than ever. A country is not a company. It is something far more fragile, and far more powerful — a collective.
And that collective deserves better than business plans masquerading as policy.
