Uncertainty
By
Leonard Zwelling
Among the first things I was taught in my Finance course in business school was that financial markets hate uncertainty. Not only do the markets hate uncertainty, so do businesses that must plan what they buy, what they sell, and to whom and how much they pay.
In recent weeks we have seen the truth of the lesson I was taught thirty years ago. The inability of President Trump to settle on a trade and tariff policy and his use of his power to make war on our friends and foes alike has roiled the stock market and certainly taken a bite out of the retirement plans of many of those who voted for him.
It is pretty apparent from the president’s conduct that he believes that he alone has the power to wage a trade war and he is justifying his conduct based on perceived injustices of the past with regard to trade policy of other nations as those policies apply to the United States.
Let’s say for a moment that he is correct (and I have no idea if he is or not) that other countries are taking advantage of us. Wouldn’t the better course of action be to open up talks with each of these perceived bad actors and correct the purported imbalance? Instead, Trump is making war on Canada. Canada? Give me a break. There are virtually no real border issues with our northern neighbor. The fentanyl coming in is a trickle and the illegal crossings are very limited. There are no cartels waging war on Canadiens. The Trump tariff policy against Canada makes absolutely no sense at all. In fact, history has shown that tariffs are a very poor tool for fixing trade imbalances. That is even more true in this globalized world where a single car can cross the Mexican, American, and Canadian borders several times before it is completely assembled. The current estimate is that Trump’s tariffs could raise the price of an American car by $12,000. Who does that benefit?
This blog has commented several times that Trump seems to thrive in chaos. The problem is that the American economy does not. Businesses and stock prices can build in the tax effects of any tariff. But they can’t if the tariff rate keeps changing and the duration of the tariff is unclear.
In general, the Trump economic plan is still a mystery. That alone makes the markets queasy. He really ought to consider making up his mind and then sticking with his plan—whatever it is.
Academia too abhors uncertainty. Right now, research universities and their leadership have no idea what is coming next. Will all their grants be withdrawn? What will the final indirect cost rate be? Who next will the government go after for the perception that antisemitism is being tolerated when a pro-Palestinian demonstration may be offensive, but free speech is still important on college campuses? Peaceful protest against issues Trump promotes cannot be silenced by storm troopers. That the federal government is imprisoning green card holders who have committed no crime is very concerning. What exactly is Mr. Trump’s plan to deal with the Palestinians in Gaza and in the West Bank? And what is Bibi’s plan? It appears to be more bombing.
Finally, when it comes to having to deal with uncertainty, perhaps no group is more vulnerable than the Pediatric faculty of MD Anderson. The deal to merge with Texas Children’s oncology service is a fait accompli. So, what is the status of the Pediatrics faculty at Anderson? The claim is that they will remain MD Anderson faculty, but will they lose salary dollars and benefits as do the “MD Anderson faculty” in the Houston Area Locations? Or, will they all become Baylor College of Medicine faculty members? How can faculty from MD Anderson and faculty from TCH be paid differently? There is no chance that’s going to work. And what about the Pediatric faculty left behind at Anderson after the merger? These are the clinicians caring for adolescents and young adults and the research laboratory investigators. Does anyone really believe that these remaining faculty constitute a division? Pediatrics was already the smallest clinical division. Soon it will be smaller than most basic science departments. That is not going to work.
From what I can tell from here, these details have not been worked out. That means the current Pediatrics faculty live in perpetual uncertainty.
Right now, the population of the United States, the leadership of American academia, and the faculty of MD Anderson Pediatrics are all living in precarious times. Only tight rope walkers feel at home in such an environment. These environments are all characterized by a single common factor—poor leadership. Only time will tell if any confidence can be injected into any of these systems. Until then—chaos and uncertainty.
