Wednesday, February 8, 2017

Edward Harrison — If Donald Trump remains a cultural warrior, he will fail

Early on in President Trump’s new administration, too much of his energy is being placed on divisive ‘cultural’ issues and not enough attention is being paid to economic policies. To the degree Trump has turned to the economy, much of his policy has been focused on issues that will not yield long-term economic benefits but contain considerable risk, like trade with Mexico and China. And so, while Donald Trump is only a few weeks into his presidency, I think we can begin to take stock of what his presidency will mean for the US economy....
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So from where I sit I see a Cultural warrior President, who is getting bogged down over divisive and non-economic issues. I also see a President, who when he does turn to economic policy, is at risk of favoring existing businesses rather than promoting markets. And finally I don’t see a President who is focused on the things that will engender more domestic consumption and investment — improving the after-tax incomes of ordinary Americans by lowering middle income tax burdens and increasing wages.
When Donald Trump focuses on middle class incomes, that’s when you should expect consumption and investment — and hence economic growth — to increase. Until then, don’t expect much.
Credit Writedowns
If Donald Trump remains a cultural warrior, he will fail
Edward Harrison

6 comments:

Andrew Anderson said...

Agree. Trump needs to take on the fiat and credit creation system if he wants to be a true hero.

Hey Donald, they ain't killed me yet and I'm hacking at the root.

Matthew Franko said...

Fed needs to get the rates headed back up and Trump will be fine....

Tom Hickey said...

Fed needs to get the rates headed back up and Trump will be fine....

Probably not happening with the US economy rolling over and Trump not prioritizing spending increase and middle class tax reduction.

Andrew Anderson said...

Fed needs to get the rates headed back up Franko

How? By selling inherently risk-free positive yielding sovereign debt, i.e. with welfare proportional to wealth? Or with IOR (interest on reserves), also welfare proportional to wealth?

There's an ethical way to increase interest rates - increase the demand for fiat by allowing everyone to use it in account form and not just depository institutions and by abolishing government provided deposit insurance.

And if interest rates in fiat then get too high then lower them via equal fiat distributions to all citizens.

Ralph Musgrave said...

The obvious flaw in Harrison’s argument is that cultural (and perhaps racial) issues are crucial to economic outcomes. Look at the economies of Muslim countries: absolutely pathetic compared to Europe or North America!

A significant proportion of Muslims may be thoroughly nice and hard working PEOPLE. Unfortunately the NET EFFECT of seriously Islamising a country is DISASTER.

Tom Hickey said...

Not a great argument, Ralph. The Zoroastrian world under the ancient Persians was superior to the West, which was only beginning to develop. The Islamic world was superior to the West during the Middle Ages. Chinese civilization was predominant for most of human history.

The West became predominant at the time of the Great DivergenceGreat Divergence, which began gradually after 1492 (European discovery of America and beginning of colonization) and went exponential in the 19th c.

A lot of the lag in development has been owing to Western imperialism and colonization. "Comparative advantage" meant that the Western powers monopolized technology and innovation and the ROW supplied the raw materials.

Now that imbalance is beginning to be corrected, and powerful forces in the West are resisting it mightily.