Donald Trump and economic policy

Just received this very nice note so thought I would say something about the question asked. Here is the note:

I enjoy reading your contributions to Catallaxy on a regular basis. I can’t say I know a lot about economics, but I especially like hearing you arguments to current economic theory. Rational debate is a powerful tool.

Recently, I was at work and a conversation around the lunch room turned to America politics.

Most of my work colleagues are “Never Trumpers”, but when I pointed out the American economy was currently doing very well, with record high stocks and decade low unemployment, one of my colleagues said something thatade me questions Donald Trump’s success. The comment was…

“The current economic success in American has nothing to do with Donald Trump. It wouldn’t matter who was President at the moment. The economy just goes through natural peaks and troughs in a capitalist society.”..

Knowing that the President has now been in place 12 months, and knowing that the Republicans still have not released their tax plan, is the above statement true?

Nothing like magical thinking to make you believe in the tooth fairy.

The parlous state that Obama left the American economy in will require an astonishing amount of luck combined with a great deal of very well constructed policy to move past. You do know that in the entire eight years Obama was president, the US economy on not a singe occasion achieved a growth rate as high as 3%. Trump has now achieved it twice, with more to come. Obama even inherited the recovery phase following the GFC which is almost invariably an economy’s period of strongest growth since part of what happens is the recovery of ground lost during the recession. Instead, there were eight years of low growth and stagnant employment. There is not an economic story to tell to his credit, even with interest rates at near zero and public spending at an all-time high, which in standard economic theory are a good thing. Of course, both are harmful to an economy’s prospects but don’t expect your friend to know it or believe it if you tell him.

But why take my word for it. Here is Conrad Black pointing out that Trump is already the most successful U.S. president since Ronald Reagan. And as you can see from the beginning of this excerpt he is not PDT’s greatest admirer, but even so:

He can be a tiresome and implausible public figure at times, and the reservations widely held about him, in the United States and elsewhere, are understandable and not unfounded. He is, however, the most effective U.S. president since Reagan. In the 20 pre-Trump years there [occurred] the greatest world economic crisis since the 1930s, American GDP per capita growth and capital investment shrunk by 75 per cent, the work force lost over 15 million people, millions of unskilled, illegal migrants were admitted, and the national debt of 233 years of American independence more than doubled in the last seven years of Obama. Those 20 years were the only time of absolute decline in American history, as well as a period of prolonged economic stagnation. Americans, unlike the older great nations of Europe and the Far East, have never experienced such setbacks and stagnation, and don’t like or accept them. It was in these circumstances that this unusual president was elected.

In addition to these American problems, there is the international phenomenon of ever-widening disparity of wealth and income, with no obvious solution — taking money from people who have earned it and giving it to those who haven’t will just drive out the high economic achievers who provide most of the personal income tax revenue already. And there is the problem that, for the first time, higher technology produces unemployment rather than employment, and increased productivity, unlike in the Reagan years, has not, until Trump was elected, led to job creation.

There is more at the link than just the economy but here we will stick to the economic issues.

The political business cycle works like this. The left elects a typically economically ignorant numbskull (voted in by people such as your colleague at work) who think markets don’t matter and public spending plus socialist rhetoric plus charisma are all that is required. The result is economic damage that goes on until finally enough of the socialists in our midst finally decide to get rid of these incompetents and bring in someone who knows what they are doing. Very old story. Whitlam in the 1970s gave way to Fraser, Rudd-Gillard in the 2000s was replaced by Abbott, Jimmy Carter replaced by Reagan, Labour in the UK followed by Thatcher etc. The return to market principles lasts just long enough before another adventure in socialist central direction, which is why we can never rid ourselves of bad economic policy (imagine voting out Howard-Costello for Rudd-Swan!). Most of the time, socialists wreck things followed by conservatives who fix things up (and it is weird that Shorten is being looked at as a better economic manager than Turnbull). Your mate is one of those who cannot bear to recognise that anti-market policies never work and just getting rid of them does work. Had Hillary been elected, the certainty is that no recovery of any kind would have been visible nor probably have ever occurred. Ignorance of the necessities of market-based policies is the rule on the left, and only deep deep pain for a large number of people for a considerable period of time finally get them to turn around. Venezuelans may just be there now, but the entire country invited the problems it has and the cure, if they ever get around to one, will be short-lived because the world is filled with people who believe strong economies are like good weather, just part of the nature of things, and into every economy a bit of rain must fall, etc etc. You won’t convince him, but at least you can see it for yourself.

I will discuss international trade and free markets some other time. In the meantime, here are a few specifics of what Trump has done and is doing from a previous post:

• reducing public spending
• rolling back regulations
• cuts to taxation – business and personal
• interest rate increases although limited
• more room provided for entrepreneurial decision making
• crony-capitalism [Keynesian theory] no longer at the centre of policy

Nothing you can do to convince such people, but it isn’t bad luck that causes leftist governments to wreck things but bad policies. They can’t help it, but at least we can do something by not electing them in the first place.

AND WHILE WE’RE AT IT: Don’t be misled by the title: Why I Have Given Up on Trumpism. Here’s his point but feel free to read it all:

“But just think about these subjects: illegal immigration (down by more the 60 percent), energy (America is now the world’s biggest producer of energy), unemployment (4 and a bit percent), growth (3 percent for two quarters running), the market (up more than 5,000 points since November 2016), regulation (huge progress in turning back the counterproductive regulatory environment that has stymied American business), consumer confidence (the highest it’s been in a generation), the military (revitalized), taxes (a bracing if imperfect plan wending its way through Congress), Iran (declining to recertify a deal that paved the way for Iran to become a nuclear power). Et, need I say, cetera.”

For the #NeverTrumps and the #NoTrumps you waste your breath in saying anything at all. But this is what I say. You may not have preferred PDT to some other as many did. But if you are still banging on about Trump and where he might lead us, rather than starting to think he might in the end be all right, you are simply a partisan fool, utterly clueless about policy, and have no business even pretending you are on the right side of politics.

If it’s political leadership you want I have just the man for you

As soon as I saw the title – The West is in strife — and looking for leaders – I went looking for what I knew would be there:

Since Trump’s elevation to the most powerful position in the world, his supporters are finding it difficult to point out his achievements.

This is written like a typical leftist nonce – Graeme Richardson in this case – as he tiptoes past the graveyard of dead socialist ideas. And dead though they be, they live on within the putrid and decaying minds of those who believe that though they have ruined everything they touch, next time will be better. As for PDT, two items from just today:

Rand Paul: “Biggest Free Market Reform of Healthcare in a Generation”

U.S. to withdraw from Jewish-history-denying Islamic-supremacist-promoting UNESCO

As it happens, just yesterday pretty well everyone who had supported Trump publicly during the election met up together for dinner. It wasn’t a dinner about Trump, but just a get together but the President did get mentioned and all of us were still ecstatic that he won. But you do have to wonder what Graeme is looking for if he can write this:

It may seem hard to believe but I am horrified at the thought of ­Labour leader Jeremy Corbyn becoming Britain’s prime minister.

His brand of magic pudding economics will send the country broke, yet his appeal to younger voters is growing rather than ­diminishing. His vows to end austerity and start spending have a ready-made audience as many Brits consider they have been squeezed too often and for too long. Brexit will be difficult to negotiate and the power vacuum at the top in Britain is a real worry.

You know, if that really is the kind of thing on his mind, then PDT ought to be just the political leader he should want.

The Trump effect

A perusal of mostly Drudge at the moment brings to mind what a difference it has made that Donald Trump is now president rather than the pathetic Hillary or the incompetent buffoon who was there before.

ISIS Fighters, Having Pledged to Fight or Die, Surrender en Masse

Trump says N. Korea diplomacy has failed, ‘Only one thing will work’

Trump to Sign Order Easing Health Plan Rules, Official Says: Executive action expected next week would roll back some Obamacare requirements


In a switch, GOP deserts its budget-cutting mantra

New Democratic ads would give Steve Bannon assist in war against Paul Ryan, GOP incumbents

The anti-Trump late-night comedy lineup keeps plummeting

Shock poll: NFL now least liked sport, core fans down 31%

Trump proclaims Columbus Day, without Obama’s qualms

White House Press Pool Goes Silent When Asked Why They Ignore Violence Of The Left (VIDEO)

The ‘Resistance,’ Raising Big Money, Upends Liberal Politics

After winning awards for mocking Trump, here’s what SNL said about Weinstein sex scandal

Weinstein sexual harassment controversy exposes Hollywood’s double standard

Being the weekend, there’s nothing on the economy, but the economy is also doing well. People who vote Democrat are wilfully ignorant, hypocritical beyond redemption and a massive danger not just to normal people but ultimately to themselves as well.

My goodness, a golfing tweet about Hillary by the President of the United States!

The vid is by Mark Dice:

A hilarious retweet by President Trump of an animated gif showing him hit Hillary Clinton with a golf ball caused the liberal media to absolutely freak out. Subscribe now for more videos every day, and I’ll see you tomorrow!

I’m sure not everyone found it hilarious. And do I have to point out that Hillary was not really hit by a golf ball hit by PDT or anyone else, but fell over by herself?

My thanks to max for sending this along.

Give Peace a Chance is NOT Peace at Any Price

It is hard to believe that LIQ was actually ever a general if he cannot see how fortunate we are that Donald Trump is President and not Hillary and no longer Obama. I particularly find it wonderful how invisible Obama has become since he has nothing to say about anything that would not make people on his own side wince at their stupidity. A cipher before and a cipher since, but alas, eight disastrous years as president in between. For a very good summary of what Trump said at the UN and why it matters, there is this which you can enjoy end to end. Much to choose from, but North Korea has almost disappeared from the news since the Democrats, and the left in general, have nothing constructive to add to the conversation, which is why the media have dropped this as a story. So let me focus here.

In particular, and in detail, Trump called out the rogue states of North Korea and Iran. He did not follow a script of pollysyllabic diplomatic enumerations of unacceptable activities. He reminded the UN members of Pyongyang’s “deadly abuse” of American student Otto Warmbier. He talked about North Korea’s kidnapping of a Japanese 13-year-old girl “to enslave her as a language tutor for North Korea’s spies.” And he cited “the assassination of the dictator’s brother using banned nerve agents in an international airport.”

He caused a stir, and inspired plenty of headlines, with his comments:

“The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea. Rocket Man is on a suicide mission for himself and for his regime.”

That’s not bombast. That’s a pointed and useful warning to a totalitarian tyrant, who in contravention of nine UN sanctions resolutions and all basic decency has been threatening preemptive nuclear strikes on the U.S. and its allies, advertising the testing of hydrogen bombs and shooting intercontinental ballistic missiles over Japan. Let’s hope Kim Jong Un takes it seriously, despite decades of U.S. compromise and retreat that led to this pass.

As for the derision implicit in the label “Rocket Man,” I’d say that Trump in describing the murderous despot of North Korea displayed a distinct delicacy simply by avoiding the use of raw profanity from the UN podium. Would it have been better to deferentially describe Kim as the supreme leader of North Korea? Mockery has its uses in facing down despots. The confrontation here is of North Korea’s making — and the dangers have grown all the worse over the years for such nonconfrontational approaches as the nuclear deals of Presidents Bush and Clinton, and the do-nothing “strategic patience” of President Obama.

And I don’t wish to leave out this which will be quoted far into the future:

“The problem in Venezuela is not that socialism has been poorly implemented, but that socialism has been faithfully implemented. From the Soviet Union to Cuba to Venezuela, wherever true socialism or communism has been adopted, it has delivered anguish and devastation and failure.”

How long has it been since we have heard any political leader say things like that, never mind an American president? Our enemies are not only our worst enemies, they are their own worst enemies but are too ignorant even to know that.

Donald Trump’s speech to the UN

Starts 45 minutes in. You can either watch it yourself or let his enemies interpret it for you. As good as any speech of its kind you have ever heard, and it holds its strength right to the end. From Drudge:

 

“Be very careful” is their sage advice to PDT on North Korea

There is an article on the editorial page of The AFR titled, The West is sleepwalking to war with North Korea. The joint authors are Admiral Chris Barrie, a former Chief of Defence Force and an honorary professor at the Strategic and Defence Studies Centre, Roger Bradbury professor at the National Security College, and Dmitry Brizhinev who is a researcher. All three are at the ANU. And if you want reason to worry, but also gain a deeper insight how we ended up in the mess we are in, read this article. It is almost as terrifying as Kim. Let me begin with this:

In June, Jim Clapper, the recently retired US Director of National Intelligence, spoke at the Australian National University. He made his view clear when he said “there are no acceptable military solutions to the problem of North Korea”. It seems that Washington is not listening to his sage advice.

Maybe “there are no acceptable military solutions” but whatever solutions there are will never include saying things like “there are no acceptable military solutions”. If these people truly believe that Clapper was providing “sage advice” then I have no further reason to think I will learn anything worth knowing about the military by reading what they write. They then naturally go on with their virtue signalling about what a mistake it is that Trump is president:

Unlike the cautiousness of President Kennedy in 1961 over the Cuban Missile Crisis [who almost blundered us int a nuclear war with the soviets], today we have an untrusted and untested leader in Washington whose entire previous career has depended on winning the bluff in the world of business in general, and New York property development in particular. But, even in terms of his business career, Donald Trump has had a record of bankruptcy from which he doesn’t seem to have learnt anything about changing his behaviour.

Kennedy had commanded a PT boat which was sunk in the Pacific in the middle of the war before becoming a senator and then president, all of which no doubt is the kind of background one needs in dealing with a psychopath with his hands on atomic weapons and an ICBM delivery system that can reach both Los Angeles and Sydney. The following outlines where we are at, which seems like a reasonable place to be, even while being as frightening as one can imagine:

We cannot easily dismiss the reasonable likelihood that a trigger event leads to a US pre-emptive strike “intended to disable all North Korean offensive capabilities”.

This is the very idea that should be implanted in the minds of every North Korean leader, and in the minds of their protectors in China and Russia. What else can you do short of war? And this is no doubt part of the American calculation:

[The possibility that] because of imperfect intelligence, the strike fails absolutely, after which the DPRK military unleashes all its remaining capabilities on South Korea and Tokyo.

So here is their inane conclusion:

Does anyone think that Donald Trump and Kim Jong-un are statesmen? Can we imagine either of them having a “Kennedy” moment and walking the world away from war? The potential for this crisis to turn bad is very real – we should all be very careful.

Really, that is their final sentence. But beyond that, how do you make a deal with someone you cannot trust not to do what he is clearly planning to do and will lie without compunction if it suits him? If this is the kind of advice they have, our greatest good luck today is that none of these characters is offering advice directly to the American president.