The bully in the pulpit

Recalling the misplaced hysteria that accompanied the election of Barack Obama in 2008, I have tried to react to the election of Donald the Trump with some measure of equanimity. As it was completely apparent during the campaign that nearly every thing he said was either bullshit or lying, one could adopt a posture of wait and see. I suppose I am still in that mode. But, it does continually appear that what we saw is what we get. As became apparent, his approach to business has been to whenever possible strong-arm those with whom he deals. He readily took advantage of his superior position to beat down subs and suppliers. It looks like that will be his approach to trade policy and perhaps foreign-policy in general. The best example is his treatment of Boeing, whose executives have the temerity to criticize him. It is also quite clear that that will be his approach to Mexico. Because the United States is the richest and most powerful nation on earth and has by far the most military capabilities, he can probably get away with it in the short run with respect to certain companies and countries. He will of course claim total victory, much like George W. Bush on the deck of that aircraft carrier before everything went to hell.

How will that work with China? Drop is still talking about China's currency valuations when that is a problem in the past. He undoubtedly does not know that there was a dual system of currency valuations for quite some time where the more developed countries flooded their currencies and the emerging nations pegged theirs. And he obviously has no knowledge of the Washington consensus circa 1999 and how that affected international trade. He does not know what happen to the Asian Tigers and how they started hoarding dollars and protecting their currencies. To the extent Trump is successful in beating down companies and countries, it will serve to increase the price of goods in this country wether made here or imported. It is not going to bring back those jobs lost in the Rust Belt to any great extent. Trump seems oblivious to the effect of technological innovations on manufacturing, service and other employment. The cruel irony is that those Midwestern voters who elected trunk Will not to any extent to get their jobs back and will be paying far more for goods, particularly the type of goods they buy at Walmart which are manufactured in the Far East.

It remains to be seen what Trump and Paul Ryan can agree upon, other than tax cuts at the top. Even his proposed infrastructure program which could increase employment and add to aggregate demand, seems to be cluttered up with some crazy tax scheme that also involves privatization of public facilities.

There seems to be no indication of how Trump would deal with the EEC. He hasn't discussed, For instance, retaliating against Ireland for their role in ace erosion of this country, as witnessed by their dealings with Apple.

Perhaps the most frightening thing about Trump his Is obvious galloping megalomania. To paraphrase something said about George W. Bush, the combination of arrogance ignorance and incompetence is breathtaking. One can only hope that some of the predictions of loss of jobs an worldwide economic distress his trade policies make create do not occur, Either because he changes his mind or perhaps the Lord will smile upon us in this hour hour of need.

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.

Apparently no dagger through the heart yet

As of today, particularly in Florida, Trump is experiencing a kind of resurgence. This is probably attributable to the recent announced premium rises associated with the affordable care act as well as the continuing drip of WikiLeaks. However, it is also probably a sign that many of the Republican" never Trump" are backsliding. The rush away from him among Republicans was primarily on the basis he was a crude jerk. Their current thinking is probably along the lines of he maybe a crude jerk but he is our crude jerk.

It is too bad there has been so little discussion of him on the merits. He is surpassingly ignorant about foreign affairs and clearly has no semblance of a strategy. His series of tax and budget proposals are in their own way just like those of Paul Ryan. That is they are at best implausible. It is also curious that he is not being attacked on his claim he is a builder. As far as I know, there is no trump construction Company. For years all he has done is license his name to projects. It would be interesting to hear how the new Trump hotel in Washington DC was financed and built. Particularly, does trump or his companies own any of the real estate ?

In the best of all possible worlds, not only would he lose the presidency but his brand would be tarnished beyond repair. But, I will take a losing presidential bid and be happy.

A debate on the issues?

The campaign leading to the presidential election has become grotesque. At this point it is clear that Donald Trump has no regard for common sense, facts or the smallest measure of good taste it is shameful that the nominal leaders of the Republican Party have not, Without mincing words, tell party loyalists not to vote for Donald Trump.

There is a debate scheduled for Wednesday night. One of two things should happen. Either it should be canceled or the moderator, Chris Wallace, should force each candidate to discuss only the two most serious issues–the economy and foreign-policy.

What would the discussion of the economy and the candidates proposals look like? It would in many respects to be a debate between the economic theories of Arthur Laffer on one hand and Joseph Stieglitz on the other. Trump should be question on his proposed tax cuts which nearly entirely go to the top including major US corporations. He should be asked why there would be any stimulus affect by giving more money to people and corporations that are already awash in cash. He should be asked what sort of multiplier he expects. He should be questioned on the deficit that nonpartisan Analysis says he will be creating. This should be an extended and probing question.

Both candidate should be questioned on their infrastructure building proposals. How would they work? Do they propose an infrastructure bank? How quickly can they be up and running? Each candidate should be questioned as to whether they propose job training and other relief for those who have been disadvantaged by the effects of globalization and technological advance.

There has been no real discussion of foreign-policy. There needs to be extensive questions about strategy in the middle east particularly. What alliances will work? How do you deal with the fact that our putative allies are at odds often with each other? Should we enforce no fly zones? Do we commit troops and if so in what circumstance?

I have a little hope this will happen. If Wallace would do this it would be an act of patriotism. We shall see.