The three-headed problem throwing the Trump economy into chaos

"There's a rule of thumb in apartment hunting: People want something affordable, spacious, and convenient, but in the end, they can only get two of the three. Big and cheap? Prepare for a long commute. Less expensive and downtown? Enjoy your shoebox. Spacious and well-located? Get ready to shell out big bucks. It's a classic "trilemma," or an impossible triangle: No matter how you, well, triangulate it, one priority has to go if the other two remain."

"President Donald Trump - and the American people along with him - are in the midst of an economic trilemma that is much more serious than deciding whether you should live in the center of town or way out in the suburbs. The president wants to boost US manufacturing, cut down on immigration, and keep prices down all at once. Those work fine as goals on their own, or even in pairs, but many economists and trade experts say he can't accomplish all three at once."

"Sure, you can try to open more factories to build cheap stuff or even expensive, high-tech goods, but cutting off the flow of workers from abroad makes staffing those factories challenging. You may be able to severely curb immigration and make your best efforts at building in the US via tariffs, but that will likely push prices up. Companies could continue to produce less expensive products abroad, especially if trade policy were eased, which would keep consumers happy. The problem is that there are always tradeoffs."

An economic trilemma exists where boosting domestic manufacturing, sharply reducing immigration, and maintaining low consumer prices cannot be accomplished simultaneously without tradeoffs. Policies that raise tariffs aim to bring production back to the United States but increase costs for consumers. Restricting immigration reduces labor availability for expanding factories, making domestic production harder to staff. Allowing production abroad keeps prices lower but undermines the goal of rebuilding U.S. manufacturing. Attempts to pursue all three goals together create conflicts that force policymakers and firms to choose priorities and accept associated consequences.

Read at Business Insider