President Donald Trump, center, surrounded by Speaker of the House Mike Johnson, R-La., and Rep. Lisa McClain, R-Mich., speaks to reporters before a House Republican conference meeting, on May 20, in Washington.Julia Demaree Nikhinson/The Associated Press
The late Charlie Munger, Warren Buffett’s long-time business partner, was a math whiz who began his career as a meteorologist in the U.S. Air Force during the Second World War. He was a weather forecaster in Alaska, responsible for the safe movement of military planes.
One day he asked himself, “How can I kill these pilots?” He did not, of course, want to kill American pilots. He wanted to do the opposite. As he would recount decades later, “I wanted to know what the easiest way to kill them would be, so that I could avoid it.”
He decided the two fatal mistakes would be directing pilots into weather that would ice over the plane’s wings or sending them to an airport socked in by heavy weather, both likely leading to a crash. He said, “I became a fanatic about avoiding those two hazards.”
To up his odds of success, he first figured how to fail. He called this “inverting.”
It was one of the techniques he and Mr. Buffett used to become the world’s most successful investors. The road to avoiding failure and the road to success are one and the same. He said his success was not about acts of genius but mostly about being “consistently not stupid.”
All sorts of good outcomes are possible when you focus on bad outcomes. Say you play hockey, and you want to remain injury-free. Invert: What’s the likeliest way to lose a tooth or an eye, get cut for stitches or suffer a concussion? Don’t wear a helmet or a face mask.
Or let’s say you’re the President of the United States. You want lower unemployment, lower inflation and higher levels of business investment. Invert: How can you injure the U.S. economy? How can you achieve higher unemployment, higher inflation and lower levels of business investment?
A good place to start would be by threatening tariffs against the entire world. And then – to further discourage investment and discomfort business – you could create uncertainty by constantly changing tariff levels, which countries and products they apply to, and when they go into effect.
It’s just one example of how Donald Trump’s second term has been a relentless dose of the opposite of the Munger method. He keeps doing things guaranteed to yield bad outcomes. Instead of inversion being used as a mental exercise for the purpose of avoiding stupid mistakes, it’s like he’s taking the most direct line to them.
Take the budget legislation that passed the House of Representatives last week and is now before the U.S. Senate – the One Big Beautiful Bill. (Yes, that really is its name). The U.S. ran a deficit of more than 6 per cent of GDP last year, and is on track for deficits on that scale for decades to come. (Canada’s federal deficit last year was 2.1 per cent of GDP – add in provincial deficits and the figure was just shy of 2.5 per cent).
Mr. Trump and the MAGA movement claim to be troubled by these persistent and extremely large budget shortfalls, but what’s on offer in the Big Beautiful Bill are hefty tax cuts – with a focus on lowering taxes on the highest earners – that are only partially paid for by spending cuts. And the spending cuts are focused on Medicaid and food stamps, programs for the poorest Americans. Several million people will lose health insurance, even as a large and deeply entrenched perma-deficit is both expanded and further entrenched.
Invert: How do you make the big U.S. budget shortfall bigger? Cut government revenues by far more than government spending.
Invert: How do you transfer a lot of money from poor Americans to rich Americans, and from future generations to the present? This bill. It’s reverse Robin Hood economics. It’s stealing from the poor and the future, to give to the wealthy and the present.
Invert: how do you push up long-term bond yields, and hence borrowing costs? Promise the world that you plan to run historically large budget deficits, forever.
Here are some more Trumpian inversions.
The United States is the world leader in university research. How could a president cause America’s knowledge factories to lose their leading position? Use the power of government to target them. Start by treating the most prestigious university, Harvard, as an enemy of the state. Tell other top universities that they could be next.
What would be the best way to make the U.S. dollar lose its status as the global currency, and American financial institutions lose their status as the planet‘s essential financial intermediaries? Make investors and governments worry that the U.S. is no longer a land under the rule of law. And signal that any country dumb enough to be in a close economic relationship with the U.S. is seen as a patsy primed for a shake down.
What’s a quick and easy way to boost U.S. inflation? A hefty dose of tariffs.
Who would make America’s system of international alliances fall apart? Threatening America’s allies.
What would be the best way to lose global hegemony to China? All of the above.