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Posts Tagged ‘Donald Trump’

Time for some political humor.

Though some may consider this tragedy rather than comedy since the theme will be the potential contest between Donald Trump and Elizabeth Warren in 2020.

But some people are happy about the possible match-up. For instance, both likely candidates are a gold mine for satirists.

We’ll start with Elizabeth “Soul Woman” Warren, She claimed Indian ancestry to give herself an advantage when seeking university jobs, but this produced enough mockery that she felt compelled to get a DNA test.

Which led to some brutal mockery (h/t: Powerline blog). Here’s the one that got the most laughs from me.

Maybe Nike can replace Colin Kaepernick?

Here’s another amusing image.

Let’s look at three additional choices.

If a tiny share of DNA is enough to claim Indian status, then the AFLAC duck gets to be a bald eagle.

And if Warren picks Crazy Bernie as her running mate, they already have a campaign poster.

But before we get to 2020, we have this year’s midterm elections. Trump is dragging down GOP candidates, but Democrats also have some liabilities.

Now let’s turn our attention to Trump.

A friend sent me a great site for Putin/Trump memes. Here’s the one that earned the biggest chuckle from me.

And this one also is amusingly brutal.

And I can’t resist sharing this option as well.

For those of you who like Trump because of his “recreational choices,” you may want to jump ship to someone with better qualifications.

Last but not least, here’s a look back at our dismal choice from 2016.

 

Reminds me of the meme about libertarians.

Given the choice between Trump and Hillary, it is kind of amazing that Gary Johnson did so poorly. Though the Onion has a theory about why that happened.

Makes you wonder how they will bungle (what presumably will be) an equally good opportunity in 2020.

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I’ve advocated for some of the President’s policies, but I’ve never defended Donald Trump when he’s personally attacked.

That’s partly because I’m a policy wonk rather than political pundit, but also because many of the attacks seem justified. Indeed, his boorish behavior is one of the reasons I thought he would lose the presidential race.

Today, though, I’m going to defend Trump. Albeit only because of my disdain for the death tax.

To be more specific, the New York Times published a major hit job last week that asserted the Trump family played all sorts of games – and perhaps even broke the law – to minimize gift taxes when Trump’s father was alive and to minimize death taxes when he passed away.

The president…received at least $413 million in today’s dollars from his father’s real estate empire, much of it through tax dodges in the 1990s. President Trump participated in dubious tax schemes during the 1990s, including instances of outright fraud, that greatly increased the fortune he received from his parents… Much of this money came to Mr. Trump because he helped his parents dodge taxes. He and his siblings set up a sham corporation to disguise millions of dollars in gifts from their parents, records and interviews show. Records indicate that Mr. Trump helped his father take improper tax deductions worth millions more. He also helped formulate a strategy to undervalue his parents’ real estate holdings by hundreds of millions of dollars on tax returns, sharply reducing the tax bill when those properties were transferred to him and his siblings.

That meant less money went to Washington (hopefully helping to starve the beast).

The president’s parents, Fred and Mary Trump, transferred well over $1 billion in wealth to their children, which could have produced a tax bill of at least $550 million under the 55 percent tax rate then imposed on gifts and inheritances. The Trumps paid a total of $52.2 million, or about 5 percent, tax records show.

The article implies the Trump family broke the law, though both the IRS and state government accepted the tax return.

The line between legal tax avoidance and illegal tax evasion is often murky, and it is constantly being stretched by inventive tax lawyers. There is no shortage of clever tax avoidance tricks that have been blessed by either the courts or the I.R.S. itself. The richest Americans almost never pay anything close to full freight. But tax experts briefed on The Times’s findings said the Trumps appeared to have done more than exploit legal loopholes. They said the conduct described here represented a pattern of deception and obfuscation, particularly about the value of Fred Trump’s real estate, that repeatedly prevented the I.R.S. from taxing large transfers of wealth to his children.

There’s not much ambiguity in my reaction to this report. I think the death tax is both immoral and economically misguided. It’s a terrible example of double taxation and it drains job-creating capital from the private economy.

The correct rate for the death tax is zero, so I’m glad the Trump family did everything possible to minimize the amount of money grabbed by Washington.

I’m embarrassed that death taxes are worse in the United States than they are in Venezuela.

Sadly, not everyone shares my perspective. Some folks are even using this NYT story as an excuse to make the death tax more onerous.

Here are some excerpts from a story in the Hill.

Democrats are calling for changes to the estate tax following a bombshell news report detailing how the Trump family navigated the tax code to protect the family’s financial assets. …”We need to look at the estate tax and certainly the issue that is raised by this investigation about the undervaluation of assets and gifts and the use of the various devices,” Rep. Lloyd Doggett (Texas), the top Democrat on the House Ways and Means Subcommittee on Tax Policy, who called for hearings on the matter. Sen. Bob Menendez (D-N.J.) said it was time to reexamine the loopholes. …Democrats say their interest in closing the loopholes are not new.

The last sentence in that excerpt is true. Obama wanted to make the death tax worse. So did Hillary.

And I’m disgusted that there are people in the business of financial planning who support the death tax since it creates business for them.

This awful levy should be repealed. Yesterday, if possible.

P.S. I assume everyone will admit that death taxes impact incentives to build wealth, but how many people realize that death taxes change incentives on when people die?

P.P.S. Smart rich people opted to die in 2010 (admittedly an extreme form of tax avoidance). They also avoid certain states.

P.P.P.S. I’ll defend just about anybody who tries to escape the vicious and destructive death tax, including straight men who marry each other and gay men who arrange fake adoptions.

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I don’t want to write about Trump’s new NAFTA deal (which now has the clunky acronym of USMCA), largely because not much changed since the partial deal with Mexico was unveiled.

Also, it’s hard to get too worked up about the new agreement since it largely tinkers with the status quo. And since I was a fan of NAFTA, I’m relieved Trump didn’t eviscerate that pact.

But several experts have produced very good summaries, which means I can be lazy and share their good work.

Let’s start with Jeffrey Schott of the Peterson Institute, who is underwhelmed by the revised NAFTA.

NAFTA’s benefits had always been primarily through the strengthening of economic integration of the three economies. Contrary to President Trump’s claims, the new pact moves backwards in this critical regard and imposes new restrictions that will impede regional trade and investment, stifling the potential for economic growth. On autos, the deal is innovative in a perverse way: It is the first free trade agreement (FTA) negotiated by the United States that raises rather than lowers barriers to trade and investment. It adds layer upon layer of costly new regulations that producers must follow to qualify for NAFTA’s low tariffs—layers virtually certain to drive up costs of autos for consumers and very likely reduce US jobs in the auto sector. …these steps add up to a step backwards on trade and investment in the United States and the region as a whole that, while not as damaging as it could have been, will do little or nothing to help workers, consumers, and the economies of North America.

Veronique de Rugy of the Mercatus Center is similarly dour, though thankful that the deal isn’t as bad as Trump wanted.

…the Trump administration gave up on its worst demands, including one for a minimum of 50 percent mandatory U.S. content to benefit from the new NAFTA duty-free treatment, a ban on student visas for Chinese nationals and an every-five-year sunset clause. If the U.S. hadn’t dropped these poison pills, I doubt we would have had this new deal. Let’s all be grateful for the willingness to compromise on the part of the U.S. trade negotiators. …in spite of the tiny trade-liberalization measures in the deal, tariffs overall remain significantly higher than they were before president Trump started “negotiating.” …The auto section of the deal is not as bad as what the Trump administration had hoped for, but it is still really ugly. For automobiles to enter the U.S. duty-free from North America, at least 75 percent of their content must originate in the U.S., Mexico, and Canada, up from the current 62.5 percent. It doesn’t take a rocket scientist to understand that this requirement will increase the price that Americans pay.

Ryan Young of the Competitive Enterprise Institute piles on.

Given the Trump administration’s emphasis on government-managed trade, it could have been much worse. Now President Trump can claim a political victory and hopefully turn his attention to non-trade issues, while actual trade policy remains mostly unchanged. …The 1,812-page agreement leaves intact the mostly tariff-free relationship between the U.S., Canada, and Mexico. It even has a few improvements, such as a slight liberalization of Canada’s dairy policy. U.S. agriculture policy will remain heavily subsidized and insulated from competition, however. Among the downsides are new wage and country-of-origin rules that will make cars more expensive… Also troubling is a general NAFTA/USMCA ethos under which some countries determine other countries’ regulatory policies for them. This is generally due to trade-unrelated policies in trade agreements, mostly on labor, environmental, and intellectual property issues. …In short, NAFTA has a new name, but it’s still NAFTA. …a major bullet has been dodged between America and two of its largest trading partners. That the Trump administration is calling it a victory means that a major economic loss has been avoided for the time being. It would have been better to leave well enough alone, but under the circumstances, this may be about the best possible outcome.

Simon Lester and Inu Manak grade the new deal, citing good news on agriculture and bad news on labor regulation and autos.

In terms of liberalization in the USMCA, the most important component is the liberalization of Canadian agriculture imports, such as dairy products, eggs, wheat, poultry, and wine. Dairy market access was a key concern for the United States, which has long complained about Canada’s strict supply management and quota system. …In addition, Canada agreed to give up a pricing system for certain types of milk, as well as expanding the U.S. quota for chicken, eggs, and turkey. …The labor rights provisions go further than past U.S. trade agreements. For some people on the left, this could offer a reason to support the agreement. If you are skeptical about including labor provisions in trade agreements, as we are, this is a negative aspect to the agreement. …The new rules of origin are extremely restrictive, raising costs for auto production in North America. This could lead to more production being done outside of North America, or higher costs for consumers. This is the most negative part of the new agreement.

Speaking of all the new command-and-control regulation in the USMCA, this tweet from Scott Linicome sums up one of the great ironies of the NAFTA revision.

William Reinsch of the Center for Strategic and International Studies adds his two cents, mostly noting that we’re lucky Trump didn’t make things that much worse (a common theme from all the experts).

It is somewhat comforting to see that one of the worst things you can say about U.S.-Mexico-Canada Agreement (USMCA) is that the new trade agreement replaces a term that everyone knows and can say with an unpronounceable acronym. …the business communities in all three countries dodged a serious bullet. …no one had to swallow many of the so-called poison pills. …The fact that many of its efforts to build an economic wall around the United States did not make it to the finish line is also good news, although the Canadians and Mexicans probably deserve more credit for that than our administration does.

Let’s close with some optimism. Dalibor Rohac of the American Enterprise Institute writes for CapX that the new pact shows that Trump’s protectionist instincts can be sidetracked.

…considering the range of possible outcomes, a sigh of relief is in order. President Trump’s zero-sum view of the world and his penchant for grand gestures and publicity stunts created a real risk that NAFTA – one of the great successes of trade liberalisation around the world – would follow the fate of other agreements from which his administration decided to withdraw. Forcing higher wages and labour protection standards on a relatively poor country such as Mexico will have unintended consequences, but that is likely an acceptable price for keeping trade in North America tariff-free. …USMCA shows how President Trump’s protectionism can be constrained by other world leaders: by letting the US President score easy headline-grabbing victories, which will allow him to claim that he has ‘fixed’ previously ‘horrible’ trade deals, while leaving the substance of policies mostly unchanged.

Needless to say, this doesn’t cast Trump in a positive light.

I’ll close by restating a point I made in August about, “The process of NAFTA began under Reagan, negotiations finished under the first President Bush…, and the pact was approved under Clinton.”

And American workers were beneficiaries, though Trump put 1.8 million jobs at risk by threatening to deep six that achievement.

Thankfully, it looks like NAFTA will largely survive Trump.

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I wrote a few days ago about Obama’s weak track record on the economy and included the relevant part of a Fox Business interview.

In that same interview, I also talked about Trump’s performance. As you might expect, I said nice things about tax reform and regulatory relief, but was rather alarmist about his protectionism.

The bottom line is that Trump simply doesn’t understand trade. He thinks a trade deficit is bad, when it’s really just the flip side of a capital surplus.

Investor’s Business Daily opines on the inanity of protectionist spats.

In the tit-for-tat trade war between the U.S. and China, pain is a major theme. The idea is to ratchet up the pain, through tariffs and other punishments, until one side says “uncle.” But what if no one says “uncle”? …President Trump doubled down, proposing $100 billion in added tariffs on Chinese goods, in addition to the $50 billion or so already imposed. …China, meanwhile, on Friday withdrew from trade talks and promised to “fight back with a major response,” calling Friday’s U.S. move “arrogant.” …As the rhetoric heats up, neither side feels it can back down. …China slapped tariffs on products made in states that voted heavily for Trump, including such products as soybeans, SUVs, and small commercial jet planes. …trade disputes and tariffs have a history of becoming nasty economic downturns. …the Smoot-Hawley tariffs…caused a massive contraction in global trade and output in the late 1920s and led to the Great Depression. …in 1971, President Nixon devalued the dollar, imposed a 10% “surtax” on all imports, and the 1970s stagflation began. …trade wars are hardly ever beneficial. So maybe it’s time for both countries to cool their rhetoric, step back, and return to talking. Before we add to the damage and end up with another global economic meltdown.

Amen, especially about the foolishness of copying one of the policies that contributed to the Great Depression.

In a column for the Wall Street Journal, Tunku Varadarajan shares some observations by Douglas Irwin, a prominent trade economist.

Mr. Trump may be the first openly protectionist president since Hoover, but what Mr. Irwin finds most frustrating about him is that “he never really defines what a ‘better’ trade deal is. His judgment of trade comes down to the trade balance, which he uses as a sort of ledger, as a businessman would, rather than think more broadly about the national economic impact of trade.” It is impossible for every country to run a trade surplus, but “Trump thinks about trade in these zero-sum terms, about whether there’s profits or losses, and he views exports as good and imports as bad.” …He fails to see that in international trade, imbalances “aren’t an indication that one country is beating another, or that one is ‘winning’ and the other’s ‘losing.’ ” Mr. Trump’s rhetoric and vocabulary are “not the way economists think about trade at all.”

There are two things from the column that merit extra attention.

First, manufacturing employment primarily has declined because of productivity improvements.

The U.S. has lost steel jobs, but Mr. Irwin says that’s because the domestic industry has become more productive. “In 1980, it used to take 10 worker-hours to produce a ton of steel. Today, it takes less than two worker-hours. So even though we’re producing the same amount of steel, or even more, we use many, many fewer workers to produce that steel.”

Second, Trump has botched the opportunity to create an alliance against China.

The U.S., Mr. Irwin says, needs strong allies in Europe and Asia to “counter China when it violates the letter or spirit of its World Trade Organization commitments, and the Trump administration has done little to cultivate such allies. Instead, it seems bent on alienating them.”

Moving beyond theory and history, Trump’s protectionism is a job killer.

Here are some excerpts from a Bloomberg report about steel tariffs.

Researchers at the Federal Reserve Bank of New York said… “The new tariffs are likely to lead to a net loss in U.S. employment, at least in the short to medium run,” Mary Amiti, Sebastian Heise, and Noah Kwicklis wrote in a blog post… “given the history of protecting industries with import tariffs, we can conclude that the 25 percent steel tariff is likely to cost more jobs than it saves.” …the Fed’s Beige Book…cited one unnamed company in the Boston Fed’s region as saying that “these tariffs are now killing high-paying American manufacturing jobs and businesses.” …the effects of similar tariffs imposed by President George W. Bush in 2002 led to the loss of 200,000 jobs across the U.S. labor market. That number was bigger than the total headcount of U.S. steel producers at the time.

In other words, protectionism is bad for America, even if other countries don’t retaliate (which they often do, further exacerbating the damage of bad policy).

In the New York Times, Veronique de Rugy’s column offers some essential insights about why the trade deficit doesn’t matter.

In 1776, Adam Smith observed that nothing “can be more absurd than this whole doctrine of the balance of trade.” Sadly, almost 250 years later, the president — along with his economic adviser Peter Navarro and Commerce Secretary Wilbur Ross — has elevated this economic fallacy into a pretext for protectionism. Fueling this bipartisan hysteria is the widespread failure to understand that United States trade deficits generally add capital to our economy — more factories, more R & D or more machines. …The notion that trade deficits are always bad for the economy is…simply wrong. …we mustn’t forget that the American dollars we spend on imports eventually return to America, either by foreigners purchasing American exports or making investments. Protectionists like Mr. Trump always complain about the United States’ trade deficit for goods but mention neither the surplus of foreign investment capital that we get nor our trade surplus in services. …Recessions, reduced foreign investment in the United States and a weak dollar are the most effective ways to reduce the trade deficit. I doubt any of us would enjoy these remedies.

Trump isn’t merely wrong on the basic economics of trade. He also doesn’t even understand specific examples. Consider his recent tweets about using tariffs to force Ford to build cars in the United States.

A report in the Detroit Free Press explains why that is nonsense.

Auto analysts groaned on Sunday in response to tweets sent by President Trump that touted his tariffs on Chinese imports and his claim that the trade war would inspire Ford Motor Co. to build its Ford Active crossover in the U.S. rather than overseas. …Jon Gabrielsen, a market economist who advises automakers and auto suppliers, said, “This is further evidence that neither the president nor his trade representatives have any clue of the complexities of global supply chains.”

And Trump’s protectionism will hurt exports by American car companies.

Dziczek said. “China lowered the tariff rate from 25 percent to 15 percent for most-favored nation status — which is offered to World Trade Organization members — but raised it to 40 percent for the U.S. in retaliation to the tariffs we put on Chinese goods.”

If that’s “winning,” I hate to see the definition of losing.

We’ll round out the editorial commentary with Dan Griswold’s piece in the Los Angeles Times.

The U.S.-China trade war escalated again…both sides have a lot — almost exactly the same amount — to lose from commercial warfare. …A recent World Bank study confirms that neither side will win a protracted trade war. At the current level of tariff retaliation, the World Bank estimates that each country will suffer a drop in annual exports of about $40 billion. If retaliation escalates to include all two-way trade in goods and services, Chinese exports to the United States would fall by $190 billion and U.S. exports to China by $166 billion. …a worst-case scenario would result in a $426-billion loss to the Chinese economy and a $313-billion loss to the U.S. economy. The biggest losers in the United States will be agriculture, chemicals and transport equipment. It will be cold comfort to Americans who lose their jobs and their businesses that our loss is somewhat smaller than what our government inflicts on China.

Lots of material today, so if you made it this far, your reward is this amusing remake of the famous Ben Stein clip from Ferris Bueller’s Day Off.

If you want a more substantive video on why trade barriers are bad, I included Don Boudreaux’s excellent presentation at the end of this column.

P.S. If trade policy continues to move in the wrong direction, I suspect Trump’s final “grade point average” on economic policy might be similar to Obama’s final report card.

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President Trump and former President Obama are arguing over who deserves credit for the economy’s performance. Given the less-than-ideal numbers for labor force participation, I’m not convinced we should be celebrating.

Regardless, here’s a quick assessment of whether Obama deserves praise, taken from yesterday’s interview with Neil Cavuto.

To elaborate, I generally don’t blame presidents if there’s a downturn as they take office. In many cases, such a downturn is baked in the cake thanks to bad monetary policy before they ever took office.

But I do hold them at least somewhat accountable for the economic performance after the recession. More specifically, is there strong growth for a year or two, allowing the economy recover the lost output? And does the economy then stabilize at the long-run trend of 3 percent growth (as illustrated by this chart showing U.S. growth from 1870-2008).

Remember, there is no substitute for long-run growth if the goal is higher living standards.

Yet we didn’t get that growth under Obama. We didn’t get a period of above-average growth, which meant we never recovered the lost output from the recession. We never even got back to the historical trendline.

Here’s a chart from Business Insider that reviews what has happened over the past 10 years. As you can see, we haven’t come close to our potential GDP. This is why Obama deserves bad marks.

But this doesn’t mean Trump deserves good marks.

First of all, it’s far too early to give a final grade. And, for what it’s worth, his interim grade is not that great. Good policy on taxes and red tape is being offset by bad policy on spending and trade.

Let me also say something semi-positive about the Obama economy. We may not have enjoyed strong growth, but the economy continued to expand. And if the economists who argue that there are structural reasons causing permanently lower potential growth are correct, maybe Obama did okay (my view is that “secular stagnation” is driven mostly by bad policy choices, so I’m not overly sympathetic to this hypothesis).

Regardless, Obama largely didn’t do anything destructive after his first two years (when we got mistakes such as the fake stimulus, Obamacare, and Dodd-Frank). Indeed, we even got some good policy later in Obama’s tenure, though the overall effect of his policies was negative.

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In a recent interview, I got a chance to pontificate about the recipe for growth and prosperity.

Free market capitalism revolutionized the western world, creating prosperity where there used to be deprivation.

But that observation is the easy part. Later in the interview, I was asked to give my two cents on whether Trump’s policies are helping or hurting.

As you can see, I discussed the benefits of pro-growth reforms, but also warned that monetary policy is the wild card and also admitted that economists are lousy forecasters.

That being said, I speculated that there might be a positive surprise for financial markets if Republicans held Congress and investors believed that might lead to some good policies. Especially spending restraint.

Though I should have mentioned – as I have on many occasions – that Trump is sabotaging himself with his protectionist policies.

Since we’re discussing politics and the economy, let’s look at the debate over Trump’s economic stewardship.

Professors Ed Prescott and Lee Ohanian recently opined in the Wall Street Journal about the positive impact of certain Trump policies.

The growth paths in a market economy depend on the quality of government policies and institutions. These affect the incentives to innovate, start a business, hire workers, and invest in physical and human capital. If policies are reformed to increase incentives for market economic activity—as many have been under President Trump and the Republican-controlled Congress—then investment and labor input expand as the economy rises to a higher growth path. …When policies change to depress these incentives, the economy moves onto a lower long-run growth path. That happened after the 2007-09 recession. …According to our calculations, the U.S. cumulatively lost about $18 trillion in income and output between 2007 and 2016. Everything suggested this shortfall would persist or even grow.

I fully agree that economic performance was anemic during the Obama years. Though I would also give Bush 43 part of the blame.

And I think Prescott and Ohanian are right when they explain that some of Trump’s policies are having a positive effect.

U.S. economic performance is the strongest in years. One policy driving this turnaround is the substantially lower corporate-tax rate, which has made the U.S. more competitive with other countries. Regulatory changes—such as the partial rollback of Dodd-Frank and new leadership within the Consumer Financial Protection Bureau—also have proved helpful, particularly for small businesses, which are benefiting from lower record-keeping and compliance costs. Meanwhile, the number of regulatory pages in the Federal Register has been cut by a third since President Obama’s last year in office. …the U.S. can expect above-normal growth in the coming months, possibly even years.

Moreover, they are correct that more trade is the right approach, not Trump’s myopic protectionism.

Growth rates could improve with further policy changes. One example is a reduction in trade barriers. Since the General Agreement on Tariffs and Trade was signed 70 years ago, international commerce has expanded dramatically, hugely benefiting U.S. consumers by lowering prices and increasing the variety of available goods. The average household’s benefits from trade are greater than $10,000 a year… A second area for reform… The rise of health-care costs is the most important reason wages have not increased more for U.S. workers. The extra compensation is swallowed up by health-insurance premiums. Expanding medical savings accounts and decoupling health plans from employment would create incentives for both consumers and their health-care providers to economize on health-care spending. This would lower costs without compromising quality.

Good health reform would be very beneficial, though I would have explicitly pointed out that the main goal is to mitigate the problems of third-party payer.

Since the economy appears to be doing well, Richard Epstein of the Hoover Institution explores whether Obama deserves any of the credit.

…we easily praise or blame the sitting president for all the economic successes or failures that take place during his term in office. By that standard, President Trump seems to be riding a boom that eluded his predecessor, and that prospect distresses the legion of Trump critics who regard him as an unmitigated disaster. Accordingly, they hope to credit today’s good times to the work of President Obama. …It is well known that economic policies introduced in one year may well have effects long afterwards. …the key measure is whether a president promotes or frustrates competitive behavior. Under this standard, any protection of monopoly institutions is presumptively bad, while deregulation or tax reduction is presumptively good.

Using that benchmark, Obama gets a bad grade, starting with the faux stimulus but also including Dodd-Frank and other statist policies.

Unsound Obama policies help explain the abnormally low rate of economic growth during his eight-year tenure. …the 2009 stimulus package…left a long-term legacy of protectionist legislation for key businesses and labor unions. …Today’s economic successes come in the face of ARRA, not because of it. Obama pushed through three other major pieces of legislation during his first term, all net negatives. The 2010 Affordable Care Act (ACA) created an immense tangle because it incorporated into health-care insurance many unsustainable features—a rich package of mandatory minimum benefits, community rating, mandatory coverage of preexisting conditions, and poor integration of federal and state programs. …In 2010, …the Dodd-Frank legislation… On balance the legislation did more harm than good by concentrating too many assets in banks deemed too big to fail. It invited regulators to pursue an extended definition of a Systematically Important Financial Institution (SIFI) and with it the opportunity to expand the regulatory scope of Dodd-Frank. …I cannot think of a single mid-level Obama policy that counts as a pro-growth initiative.

Trump, by contrast, is a mix of good and bad.

Deregulation of labor and capital markets are not just a short-term shot in the arm, and the lower taxation of corporate income has worked to repatriate capital from overseas and to expand overall levels of investment. So long as these remain permanent features of the economy—a big “if” with an election coming up—private firms have the necessary time horizons to make much-needed long-term investments. That activity will in turn–as has begun to happen–rejuvenate labor markets. …serious Trump-created obstacles. President Trump is no fan of small domestic budgets, and he has run a perverse rearguard campaign to reverse the declining fortunes of the coal industry. Most importantly, he has waged a series of foolish trade wars against our long-term trading partners. His astounding ignorance on the principles of comparative advantage led Trump to unwisely pull out of the Trans-Pacific Partnership.

So what’s the net effect?

Here is the bottom line: the gains from Trump’s (imperfect) domestic program look enormous, given the large economic drag of his trade policies. From this assessment it’s clear that classical liberalism with strong property rights, freedom of contract, and free trade is the only engine to economic prosperity.

I fully agree with the last sentence of that excerpt and I hope the first sentence is true.

But if Trump goes really crazy with his protectionism (and he has lots of bad policies under consideration – dealing with NAFTA, auto trade, China, steel and aluminum, etc), then the net effect of his policies could go from positive to negative.

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Remember the big debate about whether Trump was a closet free trader or a crude protectionist?

Some people claimed he was imposing tariffs and threatening other nations in order to get them to reduce trade barriers.

From the beginning, I was skeptical of this argument, but also acknowledged that we wouldn’t know for sure until we saw a Trump-negotiated deal.

Well, I point out in this interview that my skepticism was warranted. Trump unveiled a quasi-deal on NAFTA yesterday, and it unquestionably will reduce economic liberty.

There’s a lot we still don’t know. Especially about whether this new agreement will actually get approved.

But Claude Barfield of the American Enterprise Institute has a very succinct explanation of the good and bad. He agree with me that it’s good to remove uncertainty.

(1) The best thing about the agreement — if it holds — is that it will remove the extreme uncertainty for businesses in all three NAFTA economies.

And I’m guessing he also agrees that a weakened NAFTA is better than no NAFTA.

By the way, Administration officials have told me that there are a few good provisions, involving matters such as digital goods and property rights.

But Barfield’s list of bad provisions easily trumps (no pun intended) any positive changes.

(2) The tentative “rules of origin” provisions for autos are an abomination — so complex and anti-competitive that they invite endless litigation and corruption (rules of origin govern what percentage of a final product must come from the three NAFTA nations).

(3) The old NAFTA dispute settlement system for investors has been gutted, leaving US industry and Congress with a huge dilemma as to whether to support the new pact.

(4) The auto/labor provisions (forcing Mexico to pay workers $16/hour for a number of jobs in Mexican auto plants, or four times the average hourly pay in Mexico) is a terrible precedent for mandating changes in domestic policy through a trade agreement.

Point #4 is especially terrible. It basically seeks to set wage levels above productivity levels in Mexico, which is a recipe for more unemployment in that already shaky economy (by the way, someone should tell Trump this will lead to more illegal migration from Mexico to the U.S.).

This is the same theory that the French and Germans use when trying to undermine tax competition. It’s supposedly unfair, they argue, when other countries have lower tax rates.

The bottom line is that Trump is hurting America. NAFTA has been good news for the United States, producing more jobs, more exports, and higher living standards.

When grading Trump’s overall economic policy, we just got a big chunk of bad policy to offset some of the good policy.

Sad!

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