#277: Think Again

Michael Berman, Ph.D.
April 18, 2025

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One of the best books I have read in a long while is Adam Grant’s Think Again.

Do you recall writing a test and then being faced with the opportunity to go over your answers to check if there were any mistakes? The common wisdom when going over our answers is to stick with our original answer. The same scenario applies equally when placing a trade, making an investment, or making government policy, and countless other scenarios.

Grant cites research showing that people who reconsider and revise their initial answers tend to perform better than those who rigidly stick to their first instincts. I cannot remember the exact statistics, but it was significant. Grant uses this as a broader metaphor for intellectual flexibility, arguing that the willingness to rethink, revise, and change our minds, especially in the face of new evidence, is a powerful trait that leads to better decisions and outcomes. Rather than viewing changing your mind as a weakness, Grant frames it as a mark of wisdom and self-awareness.

It is Thoughtful Friday, when I like to stretch my mind with philosophical and psychological insights.

I cannot help thinking that Trump's tariff and trade policy is flawed. I don’t fault his will to fix problems, but I think his approach has not equalled his intent. I am also not quite sure he has fully grasped the problem, but then who am I to raise such questions?

The US is a world-leading democracy. Trump has the midterm elections to worry about and many other political considerations in order for his government to function orderly. China, on the other hand, is a dictatorship; nobody will challenge Xi. President Xi can play the long game, which is going to continuously frustrate Trump and his administration. Trump is not the most patient fella and is already spinning his story of backdoor negotiations taking place so much so that his hair is giving his spin away [ChatGPT, you are brilliant].

Today President Trump was starting to backpedal a little, suggesting that he doesn’t want this “war” with China to escalate further. He even dropped the hint of reducing tariffs with China.

“At a certain point I don’t want them to go higher because at a certain point you make it where people don’t buy. So I may not want to go higher, or I may not want to even go up to that level,” Trump said. “I may want to go to less because, you know, you want people to buy.”

Frankly, this kind of off-the-cuff mumbling will simply make him look weak and suggest that he was bluffing all along. He needs to remove the uncertainty and make some official policy changes.

I would prefer that he read Grant’s book and consider—Thinking Again.

There is another comment I would like to make. I have heard people come up with the theory that this whole Liberation Day policy was a way for the US to engineer a mild recession so that they could lower interest rates and therefore make the cost of servicing the debt more affordable, as low-interest debt falls off, requiring refinancing at higher prevailing rates.

This is false; the numbers simply don’t stack up, and that assumes that rates come down, which they are not; they are currently going up.

If a 2% drop in interest rates can be engineered by a recession, there will be $568 billion in savings. However, you should remember that during a recession, the government makes less money from taxes and pays out more in welfare. The cost based on historic recession data suggests a cost of $1.2 trillion. Even I can do that math.

And while I brought up the topic of lower interest rates. The biggest mistake Trump could make right now is firing Powell. I remember the name-calling during his first administration like it was yesterday. This is the last thing markets need.

Please don’t get me wrong. If I were an American, I would have voted for Trump. I think he is the man for the job; there is nobody more capable of pushing against the crowd. He has a very rare X factor. My frustration is born out of the wasted potential to truly Make America Great Again and messing it up. By the way, not all that he is doing is wrong, in my not-so-humble opinion.

These are just my ponderings Happy Easter and Passover and long weekend to all the rest.