Twisting in the wind

As expected, Donald Trump continues to screw around with Mitt Romney. The job of Secretary of State still is dangled before poor old clueless Mitt. But, yesterday dear old Kellyanne was on television stating that the selection of mitt Romney would be very upsetting to trumps true supporters.Our  still clueless press speculated there must be disagreement in the top of trumps team. Bullshit. Kellyanne is just conveying trumps message that anyone who confronts him will be dealt with one way or another. Mitt is dead meat. Trump is toying with him.

On another front, Trump claims he won the popular vote if millions of illegal votes were discarded. Of course, he has no basis for this statement. It appears we can expect him to continue his practice of lying about anything if he deems it convenient. We are getting the lying, Arrogant, Ignorant jerk we voted for.

Our new automatic destabilizers

When the 2008 recession and financial crisis hit what advantage for the Western European countries had over the United States was more automatic stabilizers. Of course, they squandered that with their austerity response. The European countries longer unemployment benefits, government provided health care and other safety net programs. Those programs help to maintain aggregate demand. Now, if in the house have their way we are going to have even fewer stabilizers. Less unemployment compensation, less programs such as food stamps etc. And less Government provided or funded healthcare. Further, they would like to turn social security increasingly into some sort of 401(k) program. They also want to eliminate defined benefit retirement programs for Federal workers and probably for State government employees to the extent they can pressure that to occur. Just imagine what would've happened if in 2008 retirees had a social security program based upon individual 401(k) type plans. They would've had to invade capital, and undoubtedly start spending less. Many state governments have already started switching over from defined benefits to 401(k) type plans for their workers. Ross, we would've had decreased aggregate demand, a further selloff in an already collapsing stockmarket and probably defaults in the housing market. This is apparently what Republicans want although of course their fantasy economics suggest that if we only cut taxes, particularly on the wealthy, we will all have money to burn.

Those business interests who champion the Republican programs constantly harp that they want certainty. What about workers? Where do they get certainty? One place is, for instance, being a unionized government employee with traditional benefits. This also helps to maintain a aggregate demand both from active workers and retirees. It also allows for collective-bargaining which provides at least some small Barrier to increased divergence. If you do a seat-of-the-pants regression analysis, You will see that during the time in the mid-20th century when unions were flourishing so what is the economy and there was some measure of convergence. This was true even though marginal tax rates were much higher than today.(I understand there are many variables I have not accounted for.) I fear the Republicans are really going to screw things up. Other than tax cuts and some measures of economic isolation, who knows what Trump will propose or agree to with the Republican Congress so far, all signs are that he is going to be the ignorant, arrogant jerk that we have seen for the last year.

Drain the swamp

Continuing his practice of following no policies or strategies that cannot fit on a bumper sticker, Trump is now going to "drain the swamp". Apparently build the wall and lock her up will take a backseat for a while. The swamp is of course Washington D.C. If drain the swamp includes changing Congress, that's not going to happened. If it means changing administrations that will happen. But then, it nearly always does. Part of this strategy is apparently some sort of ban on ex Congressman senators and high officials becoming lobbyists. This would be accompanied by term limits. Good luck Donnie. What Donnie apparently has in mind is changing ideas he doesn't like for his own which fascinate him. I guess pouring toxic chemicals into a swamp could be the first step in draining and cleaning it.

Something cute was announced today. Mitt Romney has been invited to fly to trumps feet to discuss the position of Secretary of State. You may remember what Romney has said about Trump and how Trump typically reacts to such statements. Hey Mitt, he is screwing with you. Trump won't really have a cabinet. He will have a posse. The two qualifications will be first to tell Trump what he wants to hear and second to agree with every crackpot idea he has.

Trump has to figure out how to give good manufacturing jobs to the rust belt from Michigan through Pennsylvania. Will he require car manufacturers in South Carolina California etc. to move back to the Rust Belt? He is not into education and retraining. About the only way he could accomplish what he promised those people is to phase-in a total ban on the importation of steel ,steel products and automobiles. Or, place tariffs so high that importation would be cost prohibitive. Most economists seem to think that the type of trade isolationism he is advancing would cost millions of jobs. Maybe we will find out.

It is hard not to believe that within a short time of becoming president, Donnie will do something truly stupid. At this point, it is unbearable to try to think about Donnie as guiding foreign-policy.

Isn't there enough to go around?

Sometime ago I heard Warren Buffett state that the GDP of the United States amounted to $50,000 per citizen. I don't know how that was calculated and whether it was net of costs to produce that result. However, it makes me wonder. If the US economy private and public sectors was working at full capacity, available capital was fully employed and a trade policy was followed that took into consideration comparative advantage, would there not be enough for everyone?

For instance, assume an economy where all citizens got good but reasonable education, housing, food and medical care in addition to clean air and clean water. What percent of GDP would that use? How much would be left over to be distributed in a competitive fashion?

I think it would be useful if at least some economists go through such an exercise, Tell us the results and indicate what mix of private and public sectors would most efficiently create that result. I think that would be far more useful than endlessly arguing about the merits of each others DS GE models. It would also allow politicians, should they be so bold, to tell the populace that there is enough for everyone and it doesn't have to be taken from somebody else who feels disadvantaged. It probably would require diminishing the share of those who are hyper advantaged.

Perhaps this information is available and I just don't know where to get it.

Returning to dismal reality. The Republicans now own the economy. They will have a short honeymoon if some measure of fiscal stimulus is inacted and if they allow money from foreign affiliates to be repatriated at little or no tax. (it would be nice if the recipients were required to spend it on capital expansion  research and development and not stock buybacks. More fantasy) they will not be able to fulfill their promises. Even now, their economic–you should excuse the expression–team is probably devising anticipatory lists of negative externalities and exogenous as events.

For the next four years, Shakespeare was right. Life really is a tale told by an idiot, Full of sound and fury and signifying nothing.