Kirr, Marbach (KM) was fortunate to have former Indiana Governor and Purdue University President Mitch Daniels as featured speaker at its 50^th Anniversary Celebration.  Governor Daniels (20-years after he took the oath of office in January 2005) sat down with my business partner, Mark Foster, CFA, KM’s Chief Investment Officer for a “fireside chat,” discussing topics including tariffs/trade wars, higher education reform and our nation’s debt crisis.

Mitch displayed a refreshing sense of humility (he used “we” way more than “me”) and soft-spoken expertise and gravitas sadly lacking in today’s society.  A servant leader shares power and leads his community or organization by putting the needs of others first.   Leadership traits like these are instilled by the Mitch Daniels Leadership Foundation, which aims to develop a statewide network of “change agents.”

Explaining his administration’s plan to fix Indiana’s broken Bureau of Motor Vehicles, Daniels said, “we’re going to find good people and we’re going to go to work on every corner of this because the people who pay for it deserve to be served well.”

Mitch was a breath of fresh air.  I miss him already!

This “chat” has been edited and condensed for space and clarity.  The entire program is available at here.

The stated goals of the “Liberation Day” tariffs are strengthening national security, securing better supply chains, leveling the playing field for trade, re-industrializing the U.S. and better U.S. jobs, all of which are admirable.  What advice would you give the Administration?

Well, it’s a little late to give the advice I’d like to have given them.  I don’t pretend to know what they’re up to, but I think the real question is, is it A) “tactical” or B) “strategic?”  If it’s tactical, remember the old line about the guy who hits the mule with a 2×4.  Asked why, “well, first you have to get their attention.”

So, if this is the way of getting the attention of trading partners, many of whom have taken undo advantage of the rules of global trade, then I can understand it.  All I can say is if that’s the game, then it better work fast.  It’s already having a very deleterious effect on businesses, especially smaller businesses.  I’ve heard from several who literally are being pushed to the brink of bankruptcy, in no time at all.  It can’t take months to get the attention of trading partners to bring about new bi=lateral or multi-lateral arrangements.  So, it had better work and work pretty fast or the negative consequences will be a good while unwinding.

Now if it’s strategic, if this is what they think our economy and the world economy ought to look like, then it’s the dumbest thing I’ve ever seen.  So, I really hope it’s Option A.

The other reason I worry is if the President thinks this is good economics, if the game or idea here is to get a fairer world regime versus the Chinese, who have been taking advantage of everybody, then I wouldn’t have started by beating the tar out of all our allies, who you hope will suddenly ignore the slights and join you in seeking this new and more fair arrangement.

But we’ll see.  It could just be that the folks doing it are just so much more clever than the rest of us.  My guess how this plays out over the next month or two is they’ll start retreating and claim it was a win.  The problem is even if they are able to make some new deals they’ll announce with great fanfare, there will be damage.

What’s one policy issue you strongly believe in that isn’t getting enough attention today?

The national debt we are about to dump on people who deserve better.  It has been a sad failure of our democracy.  It will be a black mark on the way my generation and generations adjacent to it are remembered.  This is not the way The Washington Post and some of these people talk about democracy dying.  This is how they die.  They spend themselves broke.

There has never been an empire in history that survived after spending more on debt service than on its national security, which is where we are.  We passed that point last year and it’s going to get much worse.  The problem is we’ve never fashioned a vocabulary to make an adult decision.  Adults don’t borrow huge amounts year after year after year.  If you borrow money to invest in the future, that’s very smart, up to a point.  That’s not what we’ve been doing.  We’re borrowing to spend on ourselves today for government we’re not prepared to pay for directly.

I’m optimistic because we’re going to have a crisis.  I mean a real one.  That’s unfortunate, but I believe this country will come out with a completely different formula and a different view of the world and come out after a lot of hardship better than before.  Today’s younger generation will have the opportunity to reshape institutions, many of which won’t survive the coming crisis.

The opinions expressed in these articles are those of the author as of the date the article was published. These opinions have not been updated or supplemented and may not reflect the author’s views today. The information provided in these articles are not intended to be a forecast of future events, a guarantee of future results and do not provide information reasonably sufficient upon which to base an investment decision and should not be considered a recommendation to purchase or sell any particular stock or other investment.