It’s no secret, I think, that I believe US President Donald Trump is a semi-literate buffoon. In selecting him to be their president, tens of millions of Americans took counsel of their fears (and prejudices) rather than their interests and, I think, shot themselves in the proverbial foot. I do not believe that Hillary Clinton would be a much better president: I think she is a deeply, deeply flawed human being who has no business holding a high office, but it’s hard to say that she could be worse than “The Donald.”
A few days ago The Economist published a pretty scathing report on “Trumponomics” after the editors had a tête-à-tête with President Trump and some of his top advisors. They described his views as being “unimaginative” and “incoherent,” all based on President Trump’s uninformed “gut feel” and, generally, devoid of anything like reality or analysis.
But it gets worse, according to The Economist: in a second article, published just a day later, that renowned newspaper says that “Mr Trump’s plan for the economy … treats orthodoxy, accuracy and consistency as if they were simply to be negotiated away in a series of earth-shattering deals. Although Trumponomics could stoke a mini-boom, it, too, poses dangers to America and the world.“
The problem, according to The Economist, is that while “America can bully Canada and Mexico into renegotiating NAFTA … [and] … For all their sermons about fiscal prudence, Republicans in Congress are unlikely to deny Mr Trump a tax cut. Stimulus and rule-slashing may lead to faster growth. And with inflation still quiescent, the Federal Reserve might not choke that growth with sharply higher interest rates … [and all this} … Unleashing pent-up energy would be welcome, but Mr Trump’s agenda comes with two dangers. The economic assumptions implicit in it are internally inconsistent. And they are based on a picture of America’s economy that is decades out of date … [because] … Contrary to the Trump team’s assertions, there is little evidence that either the global trading system or individual trade deals have been systematically biased against America (see article). Instead, America’s trade deficit — Mr Trump’s main gauge of the unfairness of trade deals — is better understood as the gap between how much Americans save and how much they invest (see article). The fine print of trade deals is all but irrelevant. Textbooks predict that Mr Trump’s plans to boost domestic investment will probably lead to larger trade deficits, as it did in the Reagan boom of the 1980s. If so, Mr Trump will either need to abandon his measure of fair trade or, more damagingly, try to curb deficits by using protectionist tariffs that will hurt growth and sow mistrust around the world … [but] … A deeper problem is that Trumponomics draws on a blinkered view of America’s economy. Mr Trump and his advisers are obsessed with the effect of trade on manufacturing jobs, even though manufacturing employs only 8.5% of America’s workers and accounts for only 12% of GDP. Service industries barely seem to register. This blinds Trumponomics to today’s biggest economic worry: the turbulence being created by new technologies. Yet technology, not trade, is ravaging American retailing, an industry that employs more people than manufacturing (see article). And economic nationalism will speed automation: firms unable to outsource jobs to Mexico will stay competitive by investing in machines at home. Productivity and profits may rise, but this may not help the less-skilled factory workers who Mr Trump claims are his priority.” I pretty much agree with everything The Economist says.
“Trumponomics,” the famous newspaper concludes, “is a poor recipe for long-term prosperity. America will end up more indebted and more unequal. It will neglect the real issues, such as how to retrain hardworking people whose skills are becoming redundant. Worse, when the contradictions become apparent, Mr Trump’s economic nationalism may become fiercer, leading to backlashes in other countries—further stoking anger in America. Even if it produces a short-lived burst of growth, Trumponomics offers no lasting remedy for America’s economic ills. It may yet pave the way for something worse.“
There you have it … despite his protestations, President Trump is a protectionist and an ill-informed economic nationalist: both are dangerous to his trading partners (Canada is the largest of these) and, in fact, to world peace. Tens of millions of Americans may have decided to invite the world into a circular firing squad.