I’m worried. There’s a lot of talk in Washington about Trump trying to goose the economy with either Keynesian monetary policy or Keynesian fiscal policy.
It would be much better, as I discuss in this interview with Yahoo Finance, if Trump instead declared a ceasefire in the trade wars he’s started.
The interview largely revolved around trade policy and monetary policy, so I was mostly critical of Trump.
But I want to focus on the point I made midway through the discussion, when I said that Trump is undermining and offsetting some of his Administration’s good policies – most notably tax reform and regulatory easing.
As an economist, I’m frustrated by this inconsistency. It’s akin to a watching a kid get good grades in some classes and bad grades in others (and I worry his GPA is declining).
Though I suppose I shouldn’t be surprised. This is what the theory of “public choice” tells us to expect.
I can only imagine, though, how frustrating this must be for Republican political operatives. They’re focused on winning in 2020 and the President is sabotaging that goal with bad trade policy.
P.S. Toward the end of the interview, I pointed out that Trump should have gone through the World Trade Organization in his effort to curtail China’s protectionism. When the history of the Trump presidency is written, I suspect this will be viewed as a major mistake.
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“Every Mainland Chinese in a position of influence whom I’ve spoken to in the past several weeks tells more or less the same story:
1. China has 1.4 billion people and has a domestic market big enough to replace most of the demand lost in a trade war;
2. China has become self-sufficient in virtually all the important technologies it needs to dominate high-tech manufacturing as well as advanced computation;
3. Washington’s failure to dissuade its allies from buying Huawei’s 5G mobile broadband technology shows that China can’t be stopped.”
“Trade Wars: The Empire Strikes Back”
BY DAVID P. GOLDMAN AUGUST 23, 2019
https://pjmedia.com/spengler/trade-wars-the-empire-strikes-back/
Dale McIvor,
Most US manufacturing jobs have been lost over the past 25 years not to foreign trade but to automation and technology. Do you also rail against automation and technology?
The real value of U.S. manufacturing output has increased substantially over the past 25 years despite the job losses. U.S. manufacturing is doing more with fewer people, which grows the economy because labor is freed to do higher value work. Ditto for labor freed up by trade.
Getting rid of the individual income tax is what I vote for. The GOP wrecks the economy with prohibitionist asset-forfeiture of the kind Bert Hoover, Reagan, Bush and Bush used. The Dems simply rot everything by trying to ban electricity and resurrect communism. Tariffs are the least of our problems and way better than the income tax copied from Marx via Bryanist populism
You’re an economist? Back to school with you.
Trump’s understanding of the trade issue far exceeds yours. Your do-nothing but complain to the WTO approach is exactly what has led to the gutting of our manufacturing base over the last 25 years, under so many “brilliant” presidents of both parties.
Get on board (oops, guess you missed the train)! OK then, just stay out of the way.